EXHIBIT 10.10
TERM LOAN AND SECURITY AGREEMENT
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between
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FC CAPITAL CORP.,
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as the Lender
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and
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MORTGAGE PLUS EQUITY AND LOAN CORP.
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as the Borrower
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$1,500,000
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Dated as of December 18, 1997
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TERM LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
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1. AMOUNT AND TERMS OF TERM LOAN 1
1.1 Term Loan 1
1.2 Use of Proceeds 2
1.3 Interest 2
1.4 Receipt of Payments 2
1.5 Application and Allocation of Payments 3
1.6 Records 3
1.7 Indemnity 3
1.8 Access 3
1.9 Taxes 4
1.10 Security Interest in the Collateral 4
1.11 Definitions; Schedules; Annexes and Exhibits 5
2. CONDITIONS PRECEDENT 6
2.1 Conditions to the Term Loan 6
3. REPRESENTATIONS AND WARRANTIES 6
3.1 Corporate Existence; Compliance with Law 7
3.2 Executive Offices; Corporate or Other Names 7
3.3 Corporate Power; Authorization; Enforceable Obligations 7
3.4 Financial Statements 7
3.5 Material Adverse Change 7
3.6 Ownership of Property; Liens 8
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness 8
3.8 Government Regulation 8
3.9 Margin Regulations 8
3.10 Taxes 8
3.11 ERISA 9
3.12 No Litigation 9
3.13 Brokers 9
3.14 Full Disclosure 9
3.15 Hazardous Materials 10
3.16 Representations and Warranties Regarding the Collateral 10
4. FINANCIAL STATEMENTS AND INFORMATION 10
4.1 Reports and Notices 10
4.2 Communication with Accountants 10
5. AFFIRMATIVE COVENANTS 11
5.1 Maintenance of Existence and Conduct of Business 11
5.2 Payment and Discharge of Charges 11
5.3 Insurance, Casualties or Condemnation of Collateral 11
5.4 Compliance with Laws 12
5.5 Agreements 12
5.6 Supplemental Disclosure 12
5.7 Covenants Regarding the Collateral 12
5.8 Lender's Appointment as Attorney-in-Fact 13
5.9 Consolidated Tangible Equity 13
5.10 Compliance with Other Agreements 13
6. NEGATIVE COVENANTS 14
6.1 Liens 14
6.2 Sale of Assets 14
6.3 Accounting Firm 14
6.4 Dividends 14
6.5 Compensation 14
6.6 Bonuses 14
6.7 Borrowing 14
6.8 Other Prohibitions 14
7. TERM 14
7.1 Duration 14
7.2 Survival of Obligations 14
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES 15
8.1 Events of Default 15
8.2 Remedies 17
8.3 Waivers 18
9. SUCCESSORS AND ASSIGNS 18
9.1 Successors and Assigns 18
10. ASSIGNMENTS 18
11. MISCELLANEOUS 19
11.1 Complete Agreement; Modification of Agreement 19
11.2 Fees and Expenses 19
11.3 No Waiver 19
11.4 Remedies 19
11.5 Severability 20
11.6 Right of Set-off 20
11.7 Authorized Signature 20
11.8 Governing Law 20
11.9 Notices 21
11.10 Section Titles 22
11.11 Counterparts 22
11.12 Time of the Essence 22
11.13 Waiver of Jury Trial 22
11.14 Press Releases 22
11.15 Reinstatement 23
11.16 Advice of Counsel 23
11.17 No Strict Construction 23
11.18 Dating 23
TERM LOAN AND SECURITY AGREEMENT
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This TERM LOAN AND SECURITY AGREEMENT, dated as of December 18, 1997,
between MORTGAGE PLUS EQUITY AND LOAN CORP., a New York corporation (the
"Borrower"), and FC CAPITAL CORP., a New York corporation, as lender hereunder
(the "Lender").
RECITAL
The Borrower desires to borrow a term loan in the amount of $1,500,000 from
the Lender, and the Lender is willing to make such term loan to the Borrower
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
I. AMOUNT AND TERMS OF TERM LOAN
A. Term Loan.
1. Upon and subject to the terms and conditions hereof, the Lender agrees
to make available to the Borrower, on the Closing Date, and the Borrower hereby
requests from the Lender, the Term Loan in an original principal amount of ONE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000). The Term Loan made by the
Lender shall be evidenced by a single promissory note of Borrower substantially
in the form of Exhibit A hereto, dated the Closing Date, payable to the Lender
in the original principal amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($1,500,000). The date and the amount of the Term Loan made by Lender and each
payment of principal with respect thereto shall be recorded on the books and
records of the Lender, which books and records shall, absent manifest error,
constitute prima facie evidence of the accuracy of the information therein
recorded.
1. The Borrower unconditionally promises to pay to the Lender monthly
installments of principal in an amount equal to the greater of (i) $100,000.00
and (ii) the Premium Repayment Amount for the immediately preceding calendar
month for which the principal payment is due, which principal payments shall
commence on February 5, 1998, and shall continue to be due on the fifth (5th)
day of each calendar month thereafter together with a final installment of
principal on the Term Loan which shall be due on the Termination Date in an
amount equal to the entire aggregate remaining unpaid principal balance of the
Term Loan. Borrower hereby authorizes and directs Lender for so long as the
Master Purchase and Sale Agreement is in effect, and Lender purchases any
mortgage thereunder for which it is required to pay any premium or other amounts
to Borrower, to (i) retain the Premium Repayment Amount from any and all such
payments which Lender would otherwise be required to pay to Borrower under the
terms of the Master Purchase and Sale Agreement and (ii) apply such amounts
against any principal due Lender under this Agreement; provided, further, that
notwithstanding any such retention and application of funds by Lender, Borrower
shall remain obligated to pay to Lender the entire amount of any monthly
principal installment required pursuant to this Section 1.1(b) to the extent not
satisfied in full by such withholding, including, without limitation, any
shortfall
between the amount of funds retained and applied by Lender pursuant to the
foregoing proviso and the full amount of principal due pursuant to this Section
1.1(b).
1. The Borrower shall have the right at any time to voluntarily prepay
the Term Loan in whole or in part without any penalty or premium.
A. Use of Proceeds. The Borrower shall use the proceeds of the Term Loan
for the financing of the Borrower's ordinary working capital needs.
A. Interest.
1. The Borrower shall pay interest on the Term Loan to the Lender until
the Termination Date (or through any prepayment date, as the case may be) on the
unpaid principal balance of the Term Loan, from and including the Closing Date,
at the Interest Rate as accrued during the applicable Accrual Period. Interest
for each Accrual Period shall be payable in arrears on the fifth (5th) day of
each calendar month, commencing on February 5, 1998, and continuing to be due on
the fifth (5th) day of each succeeding calendar month thereafter; provided,
however, that in all cases accrued interest on the Term Loan shall be payable by
the Borrower to the Lender on the Termination Date (or through any prepayment
date, as the case may be). If any interest on the Term Loan accrues or remains
payable after the Termination Date, such interest shall be payable by the
Borrower upon demand.
1. All computations of interest hereunder shall be made by the Lender on
the basis of a three hundred and sixty (360) day year, in each case for the
actual number of days occurring in the Accrual Period for which such interest is
payable. Each determination by the Lender of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error.
1. So long as any Default shall have occurred and be continuing, the
interest rate applicable to the Term Loan or other Obligations shall be
increased by the Lender by five percentage points (5%) per annum above the
Interest Rate otherwise applicable thereto (the "Default Rate").
1. Notwithstanding anything to the contrary set forth in this Section
1.3, if, at any time until payment in full of all of the Obligations, the
Interest Rate payable hereunder by the Borrower exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder by the Borrower shall be equal
to the Maximum Lawful Rate; provided, however, that if at any time thereafter
the rate of interest payable by the Borrower hereunder is less than the Maximum
Lawful Rate, the Borrower shall continue to pay interest hereunder at the
Maximum Lawful Rate until such time as the total interest received by the Lender
from the making of advances hereunder to the Borrower is equal to the total
interest which the Lender would have received had the interest rate payable-
hereunder by the Borrower been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, the interest rate payable by the Borrower hereunder
shall be the Interest Rate otherwise provided in this Section 1.3, unless and
until the Interest Rate again exceeds the Maximum Lawful Rate, in which event
this paragraph shall again apply. In the event the Maximum Lawful Rate is
calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.
A. Receipt of Payments. The Borrower shall make each payment under this
Agreement not later than 11:00 a.m. (New York time) on the day when due in
lawful money of the United States of America by wire transfer in immediately
available funds to the Lender. Amounts received after 11:00 A.M. (New York
time) on any day shall be deemed received on the next succeeding Business Day.
Whenever any payment to be made by the Borrower shall be stated to be due on a
day that is not a Business Day, such payment may be made on the next succeeding
Business Day. Any such adjustment of the time of payment shall correspondingly
increase the amount of accrued interest.
A. Application and Allocation of Payments. The Borrower irrevocably
waives the right to direct the application of any and all payments at any time
or times hereafter received from or on behalf of the Borrower, and the Borrower
irrevocably agrees that the Lender shall have the continuing exclusive right to
apply any and all such payments against the then due and payable obligations of
the Borrower as the Lender may deem advisable.
A. Records. The Lender shall maintain accounts in which it will record
(i) the amount of the Term Loan made hereunder and the interest rate applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to the Lender hereunder and (iii) the
amount of any sum received by the Lender hereunder from the Borrower. The
entries made in such accounts shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the failure
of the Lender to maintain such accounts or any error therein shall not in any
manner affect the obligations of the Borrower to repay the Term Loan in
accordance with their terms.
A. Indemnity. The Borrower shall indemnify and hold the Lender and its
Affiliates, officers, directors, employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
costs, fines, deficiencies, penalties, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys' fees and disbursements
and other costs of investigations or defense, including those incurred upon any
appeal) (each, a "Claim") which may be instituted or asserted against or
incurred by such Indemnified Person as the result of credit having been extended
under this Agreement or in connection with or arising out of the transactions
contemplated hereunder, including any and all environmental liabilities and
costs, provided, that the Borrower shall not be liable for any indemnification
to such Indemnified Person with respect to any portion of any such claim which
results solely from such Indemnified Person's gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS.
A. Access. The Borrower shall (unless a Default shall have occurred and
be continuing, in which event no notice shall be required and the Lender shall
have access at any and all times): (i) provide access during normal business
hours to the Lender and any of its
officers, employees and agents, as frequently as the Lender determines to be
appropriate in Lender's reasonable discretion, upon reasonable advance notice to
the properties and facilities of the Borrower; (ii) permit the Lender and any of
its officers, employees and agents to inspect, audit and make extracts from all
of the Borrower's records, files and books of account; and (iii) permit the
Lender to conduct audits to inspect, review and evaluate the Collateral, and the
Borrower agrees to render to the Lender at the Borrower's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto. Borrower shall make available to the Lender and its counsel, as quickly
as practicable under the circumstances, originals or copies of all books,
records, board minutes, contracts, insurance policies, environmental audits,
business plans, files, financial statements (actual and pro forma), filings with
federal, state and local regulatory agencies, and other instruments and
documents which the Lender may reasonably request. Borrower shall deliver any
document or instrument reasonably necessary for the Lender, as it may from time
to time request, to obtain records from any service bureau or other Person which
maintains records for Borrower, and shall maintain duplicate records or
supporting documentation on media, including computer tapes and discs owned by
Borrower. Borrower shall instruct its certified public accountants and its
banking and other financial institutions to make available to the Lender such
information and records as the Lender may reasonably request.
A. Taxes.
1. Any and all payments by or on behalf of the Borrower hereunder or
under the Term Note shall be made, in accordance with this Section 1.9, free and
clear of and without deduction for any and all present or future Taxes. If
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Term Note to the Lender, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.9) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within 30
days after the date of any such payment of Taxes, the Borrower shall furnish to
the Lender the original or a certified copy of a receipt evidencing payment
thereof.
1. The Borrower shall indemnify and pay, within ten (10) days of demand
therefor, the Lender for the full amount of Taxes (including any Taxes imposed
by any jurisdiction on amounts payable under this Section 1.9) paid by the
Lender and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.
A. Security Interest in the Collateral.
1. To secure the prompt and complete payment, performance and observance
of all of the Obligations, and to induce the Lender to enter into this Agreement
and to make the Term Loan available to the Borrower, the Borrower hereby grants
to the Lender (and such grant shall survive the Termination of this Agreement
until such time as all Obligations of Borrower to Lender under this Agreement or
any other agreement are fully repaid) a first priority security interest,
subject to 1.10(b) below in all of the Borrower's right, title and interest in,
to and under the following, whether now owned or hereafter acquired by the
Borrower, and regardless of where located (all of which being hereinafter
collectively referred to as the "Collateral"):
a) all mortgage loans and other loans originated or purchased
by the Borrower other than those mortgage loans pledged to
Summit Bank pursuant to its warehouse facility with
Borrower;
a) all securities held by the Borrower, including, without
limitation, the securities of any subsidiary of the
Borrower;
a) all equipment in all of its forms, wherever located,
including, without limitation, all furniture, furnishings,
fixtures, office supplies and all other similar types of
tangible personal property and all parts thereof and all
accessions thereto, together with all parts, fittings,
alterations, substitutions, additions, accessories,
replacements and accessions thereto;
a) all approvals, permits, licenses, franchises, and
certificates that are, by their terms or pursuant to
applicable law, assignable without the consent of the
Governmental Authority or the counterparty thereto, as the
case may be;
a) all contracts or agreements to which the Borrower is a
party;
a) all leases, real property and leasehold interests;
a) all general intangibles, including, but not limited to,
goodwill and tax refunds;
a) all bank accounts now or hereafter held by the Borrower and
all funds in such accounts together with all monies (other
than monies used to pay taxes), proceeds or sums due or to
become due thereon or therefrom, and all documents or
instruments (including, but not limited to, passbooks,
certificates of deposit and receipts necessary to be
presented to withdraw funds or investments held in the bank
accounts; and
a) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds which constitute
property of the types described in any of the paragraphs of
this Section) and, to the extent not otherwise included, all
payments under insurance (whether or not the Lender is the
loss payee thereof, or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral).
1. With respect to the assets set forth in clauses (ii) through (ix) of
Section 1.10(a), during the 30 days immediately following the date of this
Agreement, Lender
shall only hold a second priority security interest subject only to the liens in
favor of Summit Bank, and from and after such 30-day period Lender shall hold a
first priority security interest.
A. Definitions; Schedules; Annexes and Exhibits. Capitalized terms used
herein shall have the meanings ascribed to them on Annex A hereto. All
Schedules, Annexes and Exhibits hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together, shall
constitute but a single agreement. Unless otherwise expressly set forth herein,
or in a written amendment referring to such Schedules and Annexes, all Schedules
and Annexes referred to herein shall mean the Schedules and Annexes as in effect
at the Closing Date. As used herein, the plural shall include the singular, the
singular includes the plural, and pronouns in any gender (masculine, feminine or
neuter) apply to all genders.
I. CONDITIONS PRECEDENT
A. Conditions to the Term Loan. Notwithstanding any other provision of
this Agreement and without affecting in any manner the rights of the Lender
hereunder, the Borrower shall have no rights under this Agreement (but shall
have all applicable obligations hereunder, and the Lender shall not be obligated
to make the Term Loan or to take, fulfill, or perform any other action
hereunder, until the following conditions have been fulfilled to the
satisfaction of the Lender:
1. Borrower's representations and warranties contained herein shall be
true and correct on and as of such date, as though made on and as of such date,
except to the extent that any such representation or warranty expressly relates
to an earlier date;
1. No event shall have occurred and be continuing, or would result from
the making of the Term Loan which constitutes a Default;
1. The Lender shall have received this Agreement and all other documents,
instruments, agreements and other materials listed in the Schedule of Documents,
each duly executed and delivered and in form and substance satisfactory to the
Lender including, but not limited to, that certain Warrant Agreement of Common
Stock of Mortgage Plus Equity and Loan Holdings Corp. in favor of Lender dated
as of the date hereof;
1. Evidence satisfactory to the Lender that Borrower has obtained
consents and acknowledgments of all Persons whose consents and acknowledgments
may be required, and all requisite Governmental Authorities, to the terms and to
the execution and delivery, of this Agreement and the consummation of the
transactions contemplated hereby and thereby;
1. No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages
in respect of, or which is related to or arises out of this Agreement or the
consummation of the transactions contemplated hereby and which, in the Lender's
sole judgment, would make it inadvisable to consummate the transactions
contemplated by this Agreement;
1. The Lender, in its sole judgment, shall not have determined that a
Material Adverse Effect shall have occurred since the date of the Borrower's
most recent audited financial statements; and
1. The Lender shall be satisfied, in its sole judgment, with the
corporate, capital, tax, legal and management structure of Borrower, and shall
be satisfied, in its sole judgment exercised reasonably, with the nature and
status of all contractual obligations, securities, labor, tax, ERISA, employee
benefit, environmental, health and safety matters involving or affecting
Borrower.
I. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, Borrower represents and
warrants to the Lender that:
A. Corporate Existence; Compliance with Law. Borrower (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to do business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification; (ii) has
the requisite power and authority and the legal right to execute, deliver and
perform its obligations under this Agreement and the Term Note and to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease, and to conduct its business as now, heretofore
and proposed to be conducted; (iii) has all material licenses, permits, consents
or approvals from or by, and has made all filings with, and has given all
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (iv) is in compliance with
its certificate or articles of incorporation and by-laws and (v) is in
compliance in all material respects with all applicable provisions of law.
A. Executive Offices; Corporate or Other Names. The current locations of
the Borrower's executive office and principal place of business is set forth in
Schedule 3.2, and, except as set forth on Schedule 3.2, such location has not
changed during the preceding twelve months. During the prior five years, except
as set forth on Schedule 3.2, the Borrower had not been known as or used any
corporate, fictitious or trade name other than the names set forth on Schedule
3.2.
A. Corporate Power; Authorization; Enforceable Obligations. The
execution, delivery and performance by the Borrower of this Agreement and the
Term Note and all other instruments and documents to be delivered by Borrower
hereunder and the creation of all Liens provided for herein: (i) have been duly
authorized by all necessary corporate and shareholder action; (ii) are not in
contravention of any provision of Borrower's certificate or articles of
incorporation or by-laws; (iii) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality; (iv) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any material indenture,
mortgage, deed of trust, lease, agreement or other instrument to which Borrower
is a party or by which Borrower or any of its property is bound; (v) will not
result in the creation or imposition of any Lien upon any of the property of
Borrower other than those in favor of the Lender, all pursuant to this Agreement
and (vi) do not require the consent or approval of any Governmental Authority or
any other Person. At or prior to the Closing Date,
this Agreement, the Term Note and each other document or instrument delivered
hereunder shall have been duly executed and delivered by the Borrower and shall
then constitute a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors, rights and to equitable principles of general applicability.
A. Financial Statements. The Borrower has delivered the Financial
Statements identified on Schedule 3.4, and such Financial Statements present
fairly the financial condition and results of operations of the Borrower as of
and for the periods reflected therein.
A. Material Adverse Change. From the date of Borrower's last audit: (a)
Borrower has not incurred any obligations, contingent or non-contingent
liabilities, or liabilities for Charges or long-term commitments which could,
alone or in the aggregate, reasonably be expected to have a Material Adverse
Effect; (b) no contract, lease, agreement or other instrument to which Borrower
has become a party or by which it or any of its properties or assets is bound or
affected, and no provision of applicable law or governmental regulation has had
or could reasonably be expected to have a Material Adverse Effect; (c) Borrower
is not in default, and to Borrower's knowledge no third party is in default,
under or with respect to any Material Contract; and (d) no event has occurred,
and Borrower will not permit or suffer to occur any event or events, which alone
or in the aggregate could reasonably be expected to have a Material Adverse
Effect.
A. Ownership of Property; Liens. Borrower holds (i) good and insurable
fee simple title to all of its real estate, (ii) valid leasehold interests in
all of its leases of real property (both as lessor and lessee, sublessee or
assignee) and (iii) good and insurable title to, or valid leasehold interests
in, all of its other properties and assets. None of the properties and assets
of Borrower are subject to any Liens, except (x) Permitted Encumbrances and
Liens set forth on Schedule 3.6 and (y) from and after the Closing Date, the
Lien in favor of the Lender pursuant to this Agreement. Borrower is not in
default under any of its leases, and to Borrower's knowledge, no other party to
any such leases is in default of any of its material obligations thereunder or
has delivered or received any notice of default under any such leases, and no
event has occurred which, with the giving of notice, the passage of time, or
both, would constitute a default under any such Lease.
A. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth on Schedule 3.7(a), Borrower does not have
any Subsidiaries and is not engaged in any joint venture or partnership with any
other Person. Borrower is the record and beneficial owner of all of the issued
and outstanding Stock of each Subsidiary set forth on Schedule 3.7(a), and such
Stock is free and clear of any all Liens. Schedule 3.7(a) sets forth a list of
all Indebtedness of Borrower and the party to whom such Indebtedness is owed.
A. Government Regulation. Borrower is not (i) an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended; (ii) subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or any
other federal or state statute that restricts or limits Borrower's ability to
incur Indebtedness, pledge its assets, or to perform its obligations hereunder.
A. Margin Regulations. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock and no
proceeds of the Term Loan will be used to purchase or carry any Margin Stock or
to extend credit to others for the purpose of purchasing or carrying any Margin
Stock. Borrower will not take or permit to be taken any action which might
cause this Agreement or any document or instrument delivered pursuant hereto to
violate any regulation of the Board of Governors of the Federal Reserve Board.
A. Taxes. All federal, state, local and foreign tax returns, reports and
statements, required to be filed by Borrower, have been filed with the
appropriate Governmental Authority and all Charges and other impositions shown
thereon to be due and payable have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (after taking into account any applicable extensions), or any such fine,
penalty, interest, late charge or loss has been paid. Borrower has paid when
due and payable (after taking into account any applicable extensions) all
material Charges required to be paid by it. Proper and accurate amounts have
been withheld by Borrower from its employees for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities.
Schedule 3.10 sets forth those taxable years for which any of the tax returns of
Borrower are currently being audited by the IRS or any other applicable
Governmental Authority; and any assessments or threatened assessments in
connection with such audit or otherwise currently outstanding. Except as
described in Schedule 3.10, Borrower has not executed or filed with the IRS or
any other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges.
A. ERISA. (a) Schedule 3.11 lists and separately identifies all Title IV
Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of all such
listed Plans, together with a copy of the latest form 5500 for each such Plan,
have been delivered to Lender. Each Qualified Plan has been determined by the
IRS to qualify under Section 401 of the IRC, and the trusts created thereunder
have been determined to be exempt from tax under the provisions of Section 501
of the IRC, and nothing has occurred which would cause the loss of such
qualification or tax-exempt status. Each Plan is in compliance with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA. Neither Borrower nor any ERISA Affiliate has
failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
Neither Borrower nor any ERISA Affiliate has engaged in a prohibited
transaction, as defined in Section 4975 of the IRC, in connection with any Plan,
which would subject Borrower to a material tax on prohibited transactions
imposed by Section 4975 of the IRC.
(b) Except as set forth in Schedule 3.11: (i) no Title IV Plan has any
Unfunded Pension Liability; (ii) no ERISA Event or event described in Section
4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably
expected to occur; (iii) there are no pending, or to the knowledge of Borrower,
threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan; (iv) neither Borrower nor any ERISA
Affiliate has incurred or reasonably expects to incur any liability as a result
of a complete or partial withdrawal from a Multiemployer Plan; (v) within the
last five years no Title IV Plan
with Unfunded Pension Liabilities has been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of
Borrower or any ERISA Affiliate and (vi) no liability under any Title IV Plan
has been satisfied with the purchase of a contract from an insurance company
that is not rated AAA by the Standard & Poors Corporation or the equivalent by
another nationally recognized rating agency.
A. No Litigation. Except as set forth on Schedule 3.12, no action, claim
or proceeding is now pending or, to Borrower's knowledge, threatened against
Borrower, at law, in equity or otherwise, before any court, board, commission,
agency or instrumentality of any federal, state, or local government or of any
agency or subdivision thereof, or before any arbitrator or panel of arbitrators,
(i) which challenges Borrower's right, power, or competence to enter into or
perform any of its obligations hereunder or the validity or enforceability of
this Agreement or any action taken hereunder or (ii) which if determined
adversely, could have or result in a Material Adverse Effect.
A. Brokers. No broker or finder acting on behalf of Borrower brought
about the obtaining, making or closing of the credit extended pursuant to this
Agreement or the transactions contemplated and Borrower does not have any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
A. Full Disclosure. No information contained in this Agreement, the
Financial Statements or any written statement furnished by or on behalf of
Borrower or any Affiliate thereof pursuant to the terms of this Agreement, which
has previously been delivered to the Lender, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
A. Hazardous Materials. All real property owned, leased or operated by
Borrower is free of any Hazardous Material. Schedule 3.15 discloses existing or
potential environmental liabilities of Borrower which could constitute or result
in a Material Adverse Effect. Borrower has not caused or suffered to occur any
Release at, under, above or within any such real property.
A. Representations and Warranties Regarding the Collateral.
1. The Borrower is the sole owner of each item of the Collateral in which
it purports to grant a security interest hereunder, having good and marketable
title thereto free and clear of any and all Liens except the security interest
granted to the Lender under this Agreement or any other financing agreement with
Lender and those Liens described on Schedule 3.6 attached hereto. The Borrower
will warrant and defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest thereon. No Person other
than the Borrower has any right, title or interest in or to any of the
Collateral.
1. No effective security agreement, financing statement, equivalent
security or Lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except (i) such
as have been filed in favor of the Lender pursuant to this Agreement or any
other agreements between the Lender and Borrower, (ii) which are being
terminated and released on the Closing Date or (iii) pursuant to those Liens
described on Schedule 3.6.
1. As a result of the filing of appropriate financing statements in the
jurisdictions listed on Schedule 3.16(c) hereto and payment of any filing fees
relating thereto, this Agreement is effective to create a valid and continuing
Lien on and perfected security interest in favor of the Lender in the Collateral
with respect to which a security interest may be perfected by filing pursuant to
the Code, which lien and security interest is prior to all other Liens except
those described in Schedule 3.6, and is enforceable as such as against creditors
of and purchasers from the Borrower. All action (including all filings,
registrations and recordings and the filing of UCC-1 financing statements by
Lender) necessary or desirable to create, protect and perfect the security
interest granted to the Lender hereby in respect of each item of the Collateral
has been duly accomplished. The Borrower shall ▇▇▇▇ its books and records
pertaining to the Collateral to evidence this Agreement and the Liens granted
hereunder.
1. The location of Borrower's chief executive office, principal place of
business, corporate offices, all warehouses and premises within which Collateral
is stored or located, and the locations of all of its records concerning the
Collateral are set forth on Schedule 3.16(d). Such Schedule 3.16(d) correctly
identifies any of such facilities or locations that are not owned by the
Borrower and sets forth the names of the owners and lessors of, and the holders
of any mortgages on, such facilities and locations.
I. FINANCIAL STATEMENTS AND INFORMATION
A. Reports and Notices. The Borrower covenants and agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to the
Lender monthly Financial Statements and notices at the times and in the manner
set forth on Annex C hereto.
A. Communication with Accountants. Borrower authorizes the Lender to
communicate directly with Borrower's independent certified public accountants
and tax advisors and authorizes those accountants to disclose to the Lender any
and all financial statements and other supporting financial documents and
schedules including copies of any management letter with respect to the
business, financial condition and other affairs of Borrower.
I. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, unless the Lender shall otherwise
consent in writing, from and after the date hereof and until the Termination
Date:
A. Maintenance of Existence and Conduct of Business. Borrower shall (a)
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence and its rights and franchises; (b) continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; and (c) at all times maintain, preserve and protect all of its
property in use or useful in the conduct of its business and keep the same in
good repair, working order and condition (taking into consideration ordinary
wear and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times. The Borrower shall
transact business only under the names set forth on Schedule 3.2.
A. Payment and Discharge of Charges. Borrower shall pay and discharge or
cause to be paid and discharged promptly all Charges payable by it, including
(A) Charges imposed upon it, its income and profits, or any of its property
(real, personal or mixed) and all charges with respect to tax, social security
and unemployment withholding with respect to its employees, and (B) lawful
claims for labor, materials, supplies and services or otherwise, before any
thereof shall become past due (taking into account any lawful extensions of the
due date); provided, however, that Borrower may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges or claims
described if (i) at the time of commencement of any such contest no Event of
Default shall have occurred and be continuing, (ii) adequate reserves with
respect to such contest are maintained on Borrower's books in accordance with
GAAP, (iii) such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection of enforcement of such Charges or
claims or any Lien in respect thereof and (iv) Lender has not advised the
Borrower in writing that the Lender reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect.
A. Insurance, Casualties or Condemnation of Collateral.
1. Borrower shall, at its sole cost and expense, maintain policies of
insurance of a type customary and usual for comparable businesses. If Borrower
at any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required or to pay all premiums relating thereto, the
Lender may at any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which the Lender deems advisable in Lender's reasonable discretion. All sums so
disbursed, including reasonable attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by the Borrower to the Lender and
shall be additional obligations hereunder secured by the Collateral.
1. All Proceeds which are to be made available to the Borrower to
replace, repair, restore or rebuild the Collateral shall be held by the Lender
as additional Collateral. Thereafter, such funds shall be made available to the
Borrower to provide funds to replace, repair, restore or rebuild the Collateral
as follows: (i) the Borrower shall request such funds be made to the Borrower in
the amount requested to be released; and (ii) so long as no Default has occurred
and is continuing the Lender shall make such funds available to the Borrower.
To the extent not used to replace, repair, restore or rebuild the Collateral,
such proceeds shall be applied to prepayment of the Term Loan as provided above.
A. Compliance with Laws. Borrower shall comply in all material respects
with all federal, state and local laws, permits and regulations applicable to
it, including those relating to licensing, Environmental, ERISA and labor
matters.
A. Agreements. Borrower shall perform, within all required time periods
(after giving effect to any applicable grace periods), all of its obligations
and enforce all of its rights under each agreement, contract, instrument or
other document to which it is a party, including any leases and customer
contracts to which it is a party where the failure to so perform and enforce
could have or result in a Material Adverse Effect. Borrower shall not terminate
or modify any provision of any agreement, contract, instrument or other document
to which it is a party which termination or modification could have or result in
a Material Adverse Effect.
A. Supplemental Disclosure. From time to time as may be requested by the
Lender (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default), Borrower shall supplement
each Schedule hereto, or any representation herein, with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Schedule or as an
exception to such representation or which is necessary to correct any
information in such Schedule or representation which has been rendered
inaccurate thereby (and, in the case of any supplements to any Schedule, such
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Schedule or representation
shall be or be deemed a waiver of any Default resulting from the matters
disclosed therein, except as consented to by the Lender in writing; and (b) no
supplement shall be required as to representations and warranties that relate
solely to the Closing Date. The Borrower shall, if so requested by the Lender,
furnish to the Lender as often as it reasonably requests, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Lender may reasonably request,
all in reasonable detail, and, the Borrower shall advise the Lender promptly, in
reasonable detail, of (i) any Lien, other than as permitted pursuant to this
Agreement, attaching to or asserted against any of the Collateral, (ii) any
material change in the composition of the Collateral and (iii) the occurrence of
any other event which would have a Material Adverse Effect upon the Collateral
and/or the Lender's Lien thereon.
A. Covenants Regarding the Collateral.
1. Further Assurances. At any time and from time to time, upon the
written request of the Lender and at the sole expense of the Borrower, Borrower
shall promptly and duly execute and deliver any and all such further instruments
and documents and take such further action as the Lender may reasonably deem
desirable to obtain the full benefits of this Agreement and of the rights and
powers herein granted including (i) filing any financing or continuation
statements under the Code with respect to the liens and security interests
granted hereunder or under any other Loan Document and (ii) transferring
Collateral to the Lender's possession (if a security interest in such Collateral
can be perfected only by possession). The Borrower also hereby authorizes the
Lender to file any such financing or continuation statement without the
signature of the Borrower to the extent permitted by applicable law.
1. Change of Corporate Name or Location. The Borrower shall not (a)
change its corporate name or (b) change its chief executive office, principal
place of business, corporate offices or locations at which Collateral is held or
stored, or the location of its records concerning the Collateral, in any case
without at least thirty (30) days prior written notice to the Lender and after
the Lender's written consent thereto, which consent shall not be unreasonably
withheld or delayed, and acknowledgment that any reasonable action requested by
the Lender in connection therewith, including to continue the perfection of any
Liens in favor of the Lender in any Collateral, has been completed or taken.
Without limiting the foregoing, the Borrower shall not change its name, identity
or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code except upon prior written notice to the Lender and after
the Lender's written acknowledgment, which shall not be unreasonably withheld or
delayed, that any reasonable action requested by the Lender in connection
therewith, including to continue the perfection of any Liens in favor of the
Lender in any Collateral, has been completed or taken.
A. Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement.
(b) The Borrower hereby ratifies, to the extent permitted by law, all
that said attorneys shall lawfully do or cause to be done by virtue hereof. The
power of attorney granted pursuant to this Section 5.8 is a power coupled with
an interest and shall be irrevocable until the Termination Date.
(c) The powers conferred on the Lender hereunder are solely to protect
the Lender's security interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers and
none of its officers, directors, employees, agents or representatives shall be
responsible to the Borrower for any act or failure to act, except for their own
gross negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
A. Consolidated Tangible Equity. Borrower shall maintain, at all times,
Consolidated Tangible Equity at an amount greater than: (i) $300,000 before the
occurrence of an IPO and (ii) $3,000,000 after the occurrence of an IPO, from
the date of execution of this Agreement through the Termination Date and the
Borrower shall certify to the Lender on a quarterly basis, within 30 days
following each such quarter, in the form of a certificate from the chief
financial officer or chief executive officer of the Borrower, that the Borrower
satisfies such Consolidated Tangible Equity requirement as set forth herein in
this Section 5.9.
A. Compliance with Other Agreements. Borrower shall, at all times,
remain in compliance with all representations, warranties, and covenants
(negative and affirmative), set forth in the Working Capital Financing
Agreement, the Mortgage Warehouse Credit Agreement (if applicable), and any
other agreement between Borrower and Lender, whether or not such agreement is
still in full force and effect, so long as any portion of the Obligation is owed
to Lender by Borrower.
I. NEGATIVE COVENANTS
The Borrower covenants and agrees that, without the Lender's prior written
consent, from and after the date hereof and until the Termination Date:
A. Liens. Borrower shall not create or permit to exist any Lien on any
of its properties or assets (other than the Collateral), except for (i)
presently existing or hereafter created Liens in favor of the Lender to secure
the obligations or any other obligations of Borrower to Lender under any other
agreements with Lender, (ii) Permitted Encumbrances and
(iii) those Liens described in Schedule 3.6 which Liens will only continue to
exist subsequent to 30 days from the date hereof with respect to Mortgage Loans
Pledged to Summit Bank under the Summit Bank warehouse facility.
A. Sale of Assets. Borrower shall not sell, transfer, convey, assign or
otherwise dispose of any of its assets or properties, including any Collateral;
provided, however, that the foregoing shall not prohibit the sale of mortgage
loans in the ordinary course of business.
A. Accounting Firm. Borrower shall not change its current accounting
firm unless such firm is replaced by another accounting firm of nationally-
recognized standing, acceptable to Lender.
A. Dividends. Borrower shall not declare or authorize any dividends or
other distributions on any capital stock or other securities of the Borrower to
any Person.
A. Compensation. Borrower shall not increase the salary, benefits or
other compensation of any of the shareholders referenced in the Change of
Control definition by more than 10% of that existing on the date hereof.
A. Bonuses. Borrower shall not pay aggregate bonuses in any twelve month
period to its employees in excess of 20% of the pre-tax income of the Borrower
(determined in accordance with GAAP) during such period.
A. Borrowing. Borrower shall not borrow from any person other than Lender
except for borrowings pursuant to a warehouse facility with Summit Bank,
provided such facility is for less than $15 million dollars.
A. Other Prohibitions. Borrower shall not do anything which is prohibited
under the Working Capital Financing Agreement, the Mortgage Warehouse Credit
Agreement (if applicable) or any other agreement between Borrower and Lender,
whether or not such agreement is still in full force and effect, so long as any
Obligation remains outstanding from Borrower to Lender.
I. TERM
A. Duration. On the Termination Date, the Term Loan and all other
Obligations shall immediately become due and payable in full, in cash.
A. Survival of Obligations. Except as otherwise expressly provided for
herein, no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
Obligations, duties, indemnities, and liabilities of Borrower or Guarantor, or
the rights of the Lender relating to any obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of which
is not required until after the Termination Date. Except as otherwise expressly
provided herein, all undertakings, agreements, covenants, warranties and
representations of or binding upon Borrower, and all rights of the Lender, all
as contained herein shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect
until such time as all of the obligations have been indefeasibly paid in full in
accordance with the terms of the agreements creating such Obligations.
I. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
A. Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
(a) Borrower shall fail to make any payment in respect of any principal of
or interest on the Term Loan or any other Obligations when due and payable or
declared due and payable.
(b) Borrower shall fail to perform, keep or observe any term or provision
of this Agreement (other than any such provision referred to in paragraph (a)
above), and the same shall remain unremedied for a period ending on the first to
occur of ten (10) Business Days after the Borrower shall receive written notice
of any such failure from the Lender or thirty (30) days after Borrower shall
become aware thereof.
(c) A default shall occur under any other agreement, document or instrument
to which Borrower or Guarantor is a party or by which Borrower, or Guarantor, or
its respective property is bound, and such default (i) involves the failure to
make any payment (whether of principal, interest or otherwise) due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) in
respect of any Indebtedness of Borrower in an aggregate amount exceeding
$25,000, (ii) permits any holder of such Indebtedness or a trustee to cause such
Indebtedness, or a portion thereof in an aggregate amount exceeding $25,000, to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, (iii) causes any Indebtedness of the Borrower in an aggregate
amount exceeding $1,000,000 to become due prior to its stated maturity or prior
to its regularly scheduled dates of payment, or (iv) permits Lender to cause any
Indebtedness of Borrower to Lender to become due prior to its stated maturity or
prior to its regularly scheduled dates of payment.
(d) Borrower shall fail to fulfill any of its obligations to Lender under
Article III, Section (A)(1) of the First Amendment.
(e) Any representation or warranty herein or in any written statement
pursuant hereto, any report, financial statement or certificate made or
delivered to the Lender by Borrower shall be untrue or incorrect in any material
respect as of the date when made.
(f) Any of the assets of Borrower or Guarantor shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and shall remain unstated or undismissed for sixty (60) consecutive
days; or any Person shall apply for the appointment of a receiver, trustee or
custodian for any Borrower's assets and shall remain unstayed or undismissed for
sixty (60) consecutive days; or Borrower or Guarantor shall have concealed,
removed or permitted to be concealed or removed, any part of its property, with
intent to hinder, delay or defraud its creditors or any of them or made or
suffered a transfer of any of its property or the incurring of an obligation
which may be fraudulent under any bankruptcy, fraudulent conveyance or other
similar law.
(g) A case or proceeding shall have been commenced against Borrower or
Guarantor in a court having competent Jurisdiction seeking a decree or order (i)
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower or Guarantor or of any
substantial part of its properties or (iii) ordering the winding up or
liquidation of the affairs of Borrower or Guarantor and such case or proceeding
shall remain undismissed or unstayed for sixty (60) consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding.
(h) Borrower or Guarantor shall (i) file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Borrower or of any substantial part of Borrower's properties, (iii) fail
generally to pay its debts as such debts become due, (iv) take any corporate
action in furtherance of any such action or (v) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due.
(i) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $25,000 in the aggregate
shall be rendered against Borrower, unless the same shall be (i) fully covered
by insurance (after taking into account any applicable policy deductible) or
(ii) vacated, stayed, bonded, paid or discharged within a period of thirty (30)
days from the date of such judgment.
(j) There shall occur any Material Adverse Effect since December 31, 1996
which shall not have been cured (or waived by the Lender) within thirty (30)
days of notice thereof from the Lender to the Borrower.
(k) Any material provision of this Agreement shall for any reason cease to
be valid, binding and enforceable in accordance with its terms (or Borrower
shall challenge the enforceability of this Agreement or shall assert in writing,
or engage in any action or inaction based on any such assertion, that any
provision of this Agreement has ceased to be or otherwise is not valid, binding
and enforceable in accordance with its terms), or any security interest created
under this Agreement shall cease to be a valid and perfected first priority
security interest or Lien (except as otherwise permitted herein) in any of the
Collateral purported to be covered thereby.
(l) There shall occur a Change of Control.
(m) There shall occur an event of default or default under the Working
Capital Financing Agreement, the Mortgage Warehouse Credit Agreement (if
applicable) or any other agreement between Borrower and Lender.
(n) The Mortgage Warehouse Credit Agreement is not in full force and effect
by February 20, 1998.
A. Remedies.
(a) If any Default shall have occurred and be continuing, the rate of
interest applicable to the Term Loan may, at the Lender's sole discretion, be
increased, effective as of the date of the occurrence of such Default, to the
Default Rate. If any Event of Default shall have occurred and be continuing,
the Lender may, without notice, take any one or more of the following actions:
(a) declare all or any portion of the obligations to be forthwith due and
payable whereupon such Obligations shall become and be due and payable or (b)
exercise any rights and remedies provided to the Lender under this Agreement
and/or at law or in equity, including all remedies provided under the Code;
provided, however, that upon the occurrence of an Event of Default specified in
Section 8.1 (e), (f) or (g), the rate of interest applicable to all Obligations
shall be increased automatically to the Default Rate, and the Term Loan and the
other obligations shall become immediately due and payable, in each case,
without declaration, notice or demand by any Person.
(b) Without limiting the generality of the foregoing, Borrower expressly
agrees that in any such event the Lender without demand of performance or other
demand (except as otherwise required hereunder), advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon Borrower or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code and other applicable law), may forthwith enter upon the
premises of the Borrower where any Collateral is located through self-help,
without judicial process, without first obtaining a final judgment or giving
Borrower notice and opportunity for a hearing on the Lender's claim or action,
and without paying rent to Borrower, and collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver the Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase for its benefit the whole or any
part of the Collateral so sold, free of any right or equity of redemption, which
equity of redemption the Borrower hereby releases. Such sales maybe adjourned
or continued from time to time with or without notice. The Lender shall have
the right to conduct such sales on Borrower's premises or elsewhere and shall
have the right to use Borrower's premises without charge for such sales for such
time or times as the Lender deems necessary or advisable.
(c) The Borrower further agrees, at the Lender's request, to assemble the
Collateral and make it available to the Lender at places which the Lender shall
reasonably select, whether at the Borrower's premises or elsewhere. Until the
Lender is able to effect a sale, lease, or other disposition of the Collateral,
the Lender shall have the right to use or operate the Collateral on behalf of
the Lender, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving the Collateral or its value or for any other purpose
deemed appropriate by the Lender. The Lender shall have no obligation to
maintain or preserve the rights of the Borrower as against third parties with
respect to the Collateral while the Collateral is in the possession of the
Lender. The Lender may, if it so elects, seek the appointment of a receiver or
keeper to take
possession of the Collateral and to enforce any of the Lender's remedies with
respect to such appointment without prior notice or hearing. The Lender shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale against any outstanding Obligations, with the Borrower
remaining liable for any unpaid deficiency after such application, and only
after so paying over such net proceeds and after the payment by the Lender of
any other amount required by any provision of law, including Section 9-
504(l)(c) of the Code (but only after the Lender has received what the Lender
considers reasonable proof of a subordinate party's security interest), need the
Lender account for the surplus, if any, to the Borrower. To the maximum extent
permitted by applicable law, Borrower waives all claims, damages, and demands
against the Lender arising out of the, repossession, retention or sale of the
Collateral except such which may arise out of the gross. negligence or willful
misconduct of such party. The Borrower agrees that ten (10) days' prior notice
by the Lender of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.
The Borrower shall remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay all amounts to which
the Lender is entitled, the Borrower also being liable for any reasonable
attorneys, fees incurred by the Lender to collect such deficiency.
(d) The Borrower agrees to pay any and all costs of the Lender, including
reasonable attorneys, fees, incurred in connection with the enforcement of any
of its rights and remedies hereunder.
(e) Except as otherwise specifically provided herein, the Borrower hereby
waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Agreement or
any Collateral.
A. Waivers. Except as otherwise provided for in this Agreement and
applicable law to the full extent permitted by applicable law, Borrower waives
(i) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of this
Agreement, notes, commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by the Lender on
which Borrower may in any way be liable, and Borrower hereby ratifies and
confirms whatever the Lender may do in this regard, (ii) all rights to notice
and a hearing prior to the Lender's taking possession or control of, or to the
Lender's replevin, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing the Lender to
exercise any of their remedies, and (iii) the benefit of any right of redemption
and all valuation, appraisal and exemption laws. Borrower acknowledges that it
has been advised by counsel of its choice with respect to this Agreement and the
transactions contemplated by this Agreement.
I. SUCCESSORS AND ASSIGNS
A. Successors and Assigns. This Agreement shall be binding on and shall
inure to the benefit of the Borrower, the Lender and their respective successors
and assigns, except as otherwise provided herein or therein. Borrower may not
assign, delegate, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder without the prior express written
consent of the Lender. Any such purported assignment, transfer, hypothecation
or other conveyance by Borrower without such prior express written consent shall
be void. The terms and provisions of this Agreement are for the purpose of
defining the relative
rights and obligations of the Borrower and the Lender with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement.
I. ASSIGNMENTS
(a) The Lender (without the Borrower's consent) may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a part of the Term Note).
(b) In the case of an assignment by the Lender under this Section 10, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were the Lender hereunder. The Borrower
hereby acknowledges and agrees that any assignment will give rise to a direct
obligation of the Borrower to the assignee and that the assignee shall be
considered to be a "Lender."
I. MISCELLANEOUS
A. Complete Agreement; Modification of Agreement. This Agreement and the
Term Note constitutes the complete agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements, commitments,
understandings or inducements (oral or written, expressed or implied). Neither
this Agreement or the Term Note nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the Lender and the Borrower.
Upon indefeasible payment in full in cash and performance of all of the
Obligations (other than indemnification obligations under Section 1.8) and so
long as no suits, actions proceedings, or claims are pending or threatened
against any Indemnified Person asserting any damages, losses or liabilities that
are Indemnified Liabilities, the Lender shall deliver to the Borrower
termination statements and other documents necessary or appropriate to evidence
the termination of the Liens securing payment of the Obligations.
A. Fees and Expenses. The Borrower shall reimburse the Lender for all
fees, costs and expenses, including the fees, costs and expenses of counsel or
other advisors (including environmental and management consultants and
appraisers) for advice, assistance, or other representation in connection with
(i) any amendment, modification or waiver of, or consent with respect to, this
Agreement, (ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the Lender or any other Person) in any way relating to
the Collateral or (iii) any attempt to enforce any remedies of the Lender
hereunder, including, in each case, all attorneys' and other professional and
service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs, charges and
other fees incurred by such counsel and others in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section 11.2 shall be payable, on demand, by the Borrower to the Lender.
A. No Waiver. No failure on the part of the Lender, at any time or
times, to require strict performance by Borrower of any provision of this
Agreement shall waive, affect or diminish any right of the Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver of
a Default shall not suspend, waive or affect any other Default 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 and no Default by
Borrower shall be deemed to have been suspended or waived by the Lender, unless
such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of the Lender if required hereunder and directed to
the Borrower specifying such suspension or waiver.
A. Remedies. The rights and remedies of the Lender under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which the
Lender may have under any other agreement, including the Loan Documents, by
operation of law or otherwise. Recourse to the Collateral shall not be
required.
A. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
A. Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default, the Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (generator special, time or demand, provisional or final) at any
time held and other indebtedness (including without limitation whole loan
premiums) at any time owing by the Lender to or for the credit or the account of
Borrower against any and all of the obligations now or hereafter existing
irrespective of whether or not the Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of the
Lender under this Section 11.6 are in addition to the other rights and remedies
(including other rights of set-off) which the Lender may have.
A. Authorized Signature. Until the Lender shall be notified by the
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto and believed by the Lender or any of the Lender's
officers, the Lender, or employees to be that of an officer or duly authorized
representative of the Borrower listed on Schedule 11.7 shall bind the Borrower
and be deemed to be the act of the Borrower affixed pursuant to and in
accordance with resolutions duly adopted by the Borrower's Board of Directors,
and the Lender shall be entitled to assume the authority of each signature and
authority of the person whose signature it is or appears to be unless the person
acting in reliance of such signature shall have actual knowledge of the fact
that such signature is false or the person whose signature or purported
signature is presented is without authority.
A. Governing Law. THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THE BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK COUNTY SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT, PROVIDED, THAT THE LENDER AND
BORROWER ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK, YORK COUNTY AND, PROVIDED, FURTHER, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER FROM BRINGING SUIT
OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE
OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
LENDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE BORROWER HEREBY
WAIVES ANY OBJECTION WHICH THE BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE BORROWER AT THE ADDRESS SET FORTH IN SECTION 11.8 OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER IS ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
A. Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon either of the parties by
the other party, or whenever either of the parties desires to give or serve upon
the other party any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (i) upon the earlier of actual receipt and five (5) days after deposit
in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (ii) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.9, (iii) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (iv) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated below or to such other address (or facsimile number)
as may be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than the Borrower or the Lender) designated below to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
(a) If to the Lender, at:
FC Capital Corp.
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▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Vice President of Finance and Accounting
With copies to:
▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P.
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Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to Borrower, at:
Mortgage Plus Equity and Loan Corp.
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Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, CFO
With copies to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇., Esq.
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Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A. Section Titles. The Section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of this Agreement.
A. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
A. Time of the Essence. Time is of the essence of this Agreement.
A. Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
A. Press Releases. Borrower agrees that neither it nor its Affiliates
will in the future issue any press releases or other public disclosure using the
name of FC Capital Corp. or its affiliates or referring to this Agreement
without at least five (5) Business Days' prior notice to FC Capital Corp. and
without the prior written consent of FC Capital Corp. unless (and only to the
extent that) Borrower or its Affiliate is required to do so under law and then,
in any event, Borrower or its Affiliate will consult with FC Capital Corp.
before issuing such press release or other public disclosure. Borrower consents
to the publication by the Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this Agreement.
A. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Borrower
for liquidation or reorganization, should Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Borrower's assets, and
shall continue to be effective or to be reinstated, as the case may be, if at
any time payment and performance of the obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
A. Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
Sections 1.8 and 11.13, with its counsel.
A. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
A. Dating. Although this Agreement is dated as of the date first written
above for convenience, this Agreement shall be effective on the Closing Date.
[REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES TO FOLLOW.]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
Borrower:
MORTGAGE PLUS EQUITY AND LOAN
CORP.
By:
Name:
Title:
Lender:
FC CAPITAL CORP.
By:
Name:
Title:
[SIGNATURE PAGE TO TERM LOAN AND SECURITY AGREEMENT]
ANNEXES, SCHEDULES AND EXHIBITS
TO
TERM LOAN AND SECURITY AGREEMENT
Dated as of December 18, 1997
between
MORTGAGE PLUS EQUITY AND LOAN CORP.,
as Borrower,
and
FC CAPITAL CORP.,
as Lender
ANNEX A
to
TERM LOAN AND SECURITY AGREEMENT
Dated as of December 18, 1997
DEFINITIONS
In addition to the defined terms appearing below, capitalized terms used in
this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used in this Agreement:
"Accrual Period" means,(i) with respect to the initial Accrual Period
relating thereto, the period commencing on the date of the initial funding and
ending on the last day of the calendar month in which such initial funding
occurs and, (ii) with respect to any subsequent Accrual Period, the calendar
month following the calendar month of the prior Accrual Period.
"Affiliate", shall mean, with respect to any Person, (i) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (iii) each of such Person's officers,
directors, joint ventures and partners. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Term Loan and Security Agreement to which this
Annex A is attached and of which it forms a part including all Annexes,
Schedules, and Exhibits attached or otherwise identified thereto, restatements
and modifications and supplements hereto and any appendices, attachments,
exhibits or schedules to any of the foregoing, and shall refer to this Agreement
as the same may be in effect at the time such reference becomes operative;
Provided, however that any reference to the Schedules to this Agreement shall be
deemed a reference to the Schedules as in effect on the Closing Date or in a
written amendment thereto executed by the Borrower and the Lender.
"Borrower" shall mean Mortgage Plus Equity and Loan Corp., a New York
corporation.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
the Borrower, any such lease under which the Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such lessee in respect of such Capital
Lease or otherwise be disclosed in a note to such balance sheet.
"Change of Control", shall mean any event, transaction or occurrence as a
result of which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and the
Estate of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and their respective Family Members (each "Permitted
Holders") cease to own and control all of the economic and voting rights
associated with ownership of fifty percent (50%) of the outstanding capital
stock of all classes of Borrower on a fully diluted basis, or (b) a majority of
the members of the board of directors of Borrower then in office are no longer
individuals elected or designated by the Permitted Holders. "Family Members"
shall mean, with respect to any Person, (i) members of such Person's immediate
family (including, parents, spouse, children and siblings) or (ii) a trust for
the benefit of such Person or members of such Person's immediate family, which
trust is under the control of such Person or members of such Person's immediate
family.
"Charges" shall mean all federal, state, county, city municipal, locale
foreign or other governmental taxes (including, without limitation, taxes owed
to PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the employees, payroll, income or gross receipts of Borrower,
(iv) Borrower's ownership or use of any of its assets or (v) any other aspect of
Borrower's business.
"Claim" shall have the meaning assigned to it in Section 1.8.
"Closing Date" shall mean the Business Day on which the conditions
precedent set forth in Section 2 have been satisfied or waived and the Term Loan
has been made.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code", shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
"Collateral", shall have the meaning provided in Section 1.10.
"Consolidated Tangible Equity" means the aggregate "assets" of the
Guarantor, Borrower and its subsidiaries less the aggregate "liabilities" of the
Borrower and its subsidiaries and less all intangible assets, with the term
"asset" having the meaning ascribed to such term by GAAP and the term
"liability" being those obligations or liabilities of the Borrower and its
subsidiaries which, in accordance with GAAP, would be included in the liability
side of the Borrower's balance sheet (either long-term or short-term) on a
consolidated basis.
"Default" shall mean any Event of Default or any event which, with the
passage of time or notice or both, would, unless cured or waived, become an
Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.3(c).
"Dollars" and "$" shall mean lawful money of the United States of America.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances, orders and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. (S)(S) 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. 1801 et seq. the Federal Insecticide,
Fungicide, and Rodenticide Act, as amended (7 U.S.C. (S)(S) 136 et seq.); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. (S)(S) 6901 et
seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. (S)(S)
2601 et seq.); the Clean Air Act, as amended (42 U.S.C. (S)(S) 740 et seq.); the
Federal Water Pollution Control Act, as amended (33 U.S.C. (S)(S) 1251 et seq.);
the Occupational Safety and Health Act, as amended (29 U.S.C. (S)(S) 651 et
seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. (S)(S)
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state and local counterparts or equivalents and any transfer of
ownership notification or approval statutes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to the Borrower, any trade or
business (whether or not incorporated) under common control with the Borrower
and which, together with the Borrower, is treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to Borrower or any ERISA Affiliate,
(i) a Reportable Event with respect to a Title IV Plan or a Multiemployer Plan;
(ii) the withdrawal of Borrower, any Subsidiary or any ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a) (2) of ERISA; (iii)
the complete or partial withdrawal of Borrower or any ERISA Affiliate from any
Multiemployer Plan; (iv) the filing of a notice of intent to terminate a Title
IV Plan or the treatment of a plan amendment as a termination under Section 4041
of ERISA; (v) the institution of proceeding to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vi) the failure to make required contributions
to a Qualified Plan; or (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA.
"Event of Default" shall have the meaning assigned to it in Section 8.1.
"Executive officers" shall mean the Chairman, President, Chief Executive
officer, Chief Operating Officer, Chief Financial officer, Executive Vice
President(s), Senior Vice President(s), Vice President, Treasurer, Controller
and Secretary of Borrower.
"Financial Statements" shall mean the financial statements referred to in
Schedule 3.4.
"First Amendment" shall mean the First Amendment to the Master Purchase
Agreement for Sale and Purchase of Mortgages between the Borrower and the Lender
dated as of the date hereof.
"FC Capital Corp." shall mean FC Capital Corp., a New York corporation.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, which are applicable to the circumstances
as of the date of determination.
"Guarantor" means Mortgage Plus Equity and Loan Holdings Corp.
"Guaranty" means that certain Guaranty Agreement executed by Guarantor to
Lender dated as of the date hereof, as an unconditional guarantee of Borrower's
Obligations hereunder.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Material" shall mean any (a) element, material, compound,
mixture, solution, chemical, substance, or pollutant within the definition of
"hazardous substance", under Section 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 USC (S) 9601(14); petroleum or any
fraction, byproduct or distillation product thereof; asbestos, polychlorinated
biphenyls, or any radioactive substances; and any material regulated as a
hazardous substance by any jurisdiction in which Borrower owns or operates or
has owned or operated a facility and (b) element, pollutant, contaminate or
discarded material (including any radioactive material) within the definition of
Section 103(6) of the Resource Conservation and Recovery Act, 42 USCA (S)
6903(6); and any material regulated as a hazardous waste by any jurisdiction in
which Borrower owns or operates or has owned or operated a facility, or to which
Borrower sends material for. treatment, storage or disposal as waste.
"Indebtedness" of any Person shall mean (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers, acceptances, whether or
not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all Capital Lease Obligations, (v)
all guaranteed Indebtedness, (vi) all Indebtedness referred to in clause (i),
(ii),
(iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, (vii) the Obligations,
and (viii) all liabilities under Title IV of ERISA.
"Indemnified Person" shall have the meaning assigned to it in Section 1.8.
"Interest Rate" means, with respect to any Accrual Period, the Prime Rate
with respect to such Accrual Period, determined as the Prime Rate on the first
Business Day of such period, plus 1%.
"IPO" means the initial public offering of Borrower's common stock.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Lender" shall have the meaning provided in the first paragraph of this
Agreement.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Margin Stock" shall have the meaning specified in Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
business, assets, operations, prospects, or financial or other condition of the
Borrower, (ii) Borrowers ability to pay or perform its obligations under the
Agreement, (iii) the Collateral or Lender's Lien on the Collateral or the
priority of any such Lien or (iv) the rights and remedies of the Lender under
this Agreement.
"Material Contracts" shall mean each contract to which Borrower is now or
hereafter a party involving aggregate consideration payable to or by Borrower,
contingent or otherwise, in excess of $25,000, except contracts as to which the
remaining consideration payable to or by the Borrower is less than $25,000 in
the aggregate.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section 1.3.
"Master Purchase and Sale Agreement" shall mean the Master Purchase and
Sale Agreement, dated December 7, 1995, between the Borrower and Lender,
relating to the offer for sale by Borrower of mortgages to Lender, as amended
and supplemented from time to time.
"Mortgage Warehouse Credit Agreement" that certain credit agreement to be
executed by and between Borrower and Lender, for the purpose of financing
various mortgage loans.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a) (3) of ERISA, and to which the Borrower or any ERISA Affiliate
is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable) owing by the Borrower to
the Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument. This term includes, without limitation, all principal and
interest (including, without limitation, interest which accrues after the
commencement of any case or proceeding referred to in Section 8.1(f) or (g) on
the Term Loan, all Charges, expenses, attorneys' fees and any other sum
chargeable to the Borrower under any of the Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" shall mean an employee pension benefit plan, as defined in
Section (3) (2) of ERISA (other than a Multiemployer Plan), which is not an
individual benefit plan, as defined in Section 3 (34) of ERISA, and which the
Borrower or, if a Title IV Plan, any Subsidiary of the Borrower or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens
for taxes or assessments or other governmental Charges or levies not yet due and
payable; (ii) pledges or deposits securing obligations under workers
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Borrower is a party as lessee made in the ordinary course of business; (iv)
inchoate and unperfected workers', mechanics', suppliers, or similar liens
arising in the ordinary course of business; (v) carriers', warehousements or
other similar possessory liens arising in the ordinary course of business and
securing indebtedness not yet due and payable in an outstanding aggregate amount
not in excess of $10,000 at any time; (vi) any attachment or judgment lien not
constituting an Event of Default hereunder; and (viii) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or
other minor irregularities in title (including leasehold title) thereto, so long
as the same do not materially impair the use, value, or marketability of such
real property, leases or leasehold estates.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to the Borrower or any ERISA Affiliate, at
any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
the Borrower maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Premium Repayment Amount" shall mean, as of any date of determination, an
amount equal to 50% of the whole loan premiums paid by Lender to Borrower in
connection with the purchase by Lender, during the immediately preceding
calendar month, of any loans originated by Borrower.
"Prepayment Fee" shall have the meaning given it in Section 1.4.
"Prime Rate" means the interest rate set forth in the Wall Street Journal
as the prime rate.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include, with respect to any Person, (i) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to such
Person from time to time with respect to any of its property or assets, (ii) any
and all payments (in any form whatsoever) made or due and payable to such Person
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of such Person's property
or assets by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority), (iii)'any recoveries by such
Person against third parties with respect to any litigation or dispute
concerning any of such Person's property or assets, and (iv) any and all other
amounts from time to time paid or payable under or in connection with any of
such Person's property or assets, upon disposition or otherwise.
"Qualified Plan" shall mean an employee pension benefit plan, as defined in
Section 3(2) of ERISA, which is intended to be tax-qualified under Section
401(a) of the IRC, and which Borrower or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Release" shall mean, as to any Person, any release or any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing or migration of a Hazardous Material into the
indoor or outdoor environment by such Person (or by a person under such Person's
direction or control), including the movement of a Hazardous Material through or
in the air, soil, surface water, ground water or property; but shall exclude any
release, discharge, emission or disposal in material compliance with a then
effective permit or order of a Governmental Authority.
"Reportable Event" shall mean any of the events described in Section
4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company, participation or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of 50% or more of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or other wise and (ii) any partnership in which such Person
and/or one or more Subsidiaries of such Person shall have an interest (whether
in the form of voting or participation in profits or capital contribution) of
50% or more or of which any such Person is a general partner or may exercise the
powers of a general partner.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding franchise
taxes and taxes imposed on or measured by the net income of the Lender by the
United States, the jurisdiction under the laws of which the Lender is organized
or the jurisdiction in which the Lender's applicable lending office is located
or, in each case, any political subdivision thereof.
"Term Loan" shall mean the Term Loan in the principal amount of $1,500,000
made by the Lender to the Borrower pursuant to Section 1.1(a) of the Agreement
and any renewals, extensions, modifications or replacements thereof.
"Term Note", shall mean the promissory note provided for by Section 1.1(a)
which evidence the Term Loan and all promissory notes delivered in substitution
or exchange therefor, in each case as the same shall be modified and
supplemented and in effect from time to time.
"Termination Date" shall mean the earliest to occur of (i) the date on
which all Obligations have been indefeasibly paid in full, provided that in no
event shall the Termination Date extend beyond April 15, 1999 at which time all
remaining unpaid principal and all accrued and unpaid interest shall mature and
be immediately due and payable or (ii) the date which is 30 days after the date
hereof if, by such date, Lender shall not have obtained a first priority
security interest in all of the assets of the Borrower other than the Mortgage
Loans, the collateral securing such loans and the related documentation Pledged
to Summit Bank pursuant to the warehouse facility with Summit Bank.
"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA.
"Unfunded Pension Liability" shall mean, at any time, the aggregate amount,
if any, of the sum of (i) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions in effect under such Title IV Plan, and
(ii) for a period of five (5) years following a transaction reasonably likely to
be covered by Section 4069 of ERISA, the liabilities (whether or not accrued)
that could be avoided by Borrower or any ERISA Affiliate as a result of such
transaction.
"Welfare Plans" shall mean any welfare plan, as defined in Section 3(i) of
ERISA, which is maintained or contributed to by the Borrower or any ERISA
Affiliate.
"Withdrawal Liability" shall mean, at any time, the aggregate amount of the
liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in
contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
"Working Capital Financing Agreement" means that certain agreement between
Borrower and Lender dated as of the date hereof.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain items or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed to
limit the foregoing.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of New York to the extent the same are used or
defined therein. Unless otherwise specified, references in this Agreement or
any of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in this Agreement. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same
may from time to time be amended, restated, modified or supplemented, and not to
any particular section, subsection or clause contained in this Agreement or any
such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, And
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include," shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of Borrower, such words are intended to signify that Borrower has actual
knowledge or awareness of a particular fact or circumstance or that Borrower, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
ANNEX B
to
TERM LOAN AND SECURITY AGREEMENT
Dated as of December 18, 1997
SCHEDULE OF CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described in
Section 2.1 of this Agreement, pursuant to Section 2.1(c), the following items
must be received by the Lender in form and substance satisfactory to the Lender
on or prior to the Closing Date (each Capitalized term used but not otherwise
defined herein shall have the meaning ascribed thereto in Annex A to this
Agreement):
Term Note. A duly executed original of the Term Note dated the Closing
Date.
Guaranty Agreement. An unconditional guaranty of Guarantor, satisfactory
to Lender, executed and delivered as of the Closing Date.
Security Interests and Code Filings. Evidence satisfactory to the Lender
that the Lender has a valid and perfected first priority security interest in
the Collateral, including (i) such documents duly executed by the Borrower
(including financing statements under the Code and other applicable documents
under the laws of any jurisdiction with respect to the perfection of Liens) as
the Lender may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name the Borrower as debtor, together with copies of
such financing statements, none of which shall cover the Collateral, except for
those relating to the Prior Lenders obligations (all of which shall be
terminated on the Closing Date).
* Board Resolutions and Incumbency Certificates. A certificate of the
Secretary or an Assistant Secretary of Borrower certifying (A) the resolutions
adopted by the Board of Directors or other applicable authority of Borrower
approving the Agreement and the transactions contemplated thereby, (B) all
documents evidencing other necessary corporate action by Borrower and required
governmental and third party approvals with respect to the Agreement and (C) the
names and true signatures of the authorized officers of Borrower.
* Articles of Incorporation; By-Laws and Good Standing Certificates. Each of
the following documents:
(i) the certificate of incorporation of Borrower as in effect on the
Closing Date, certified by the Secretary of State or other appropriate authority
of the State or country of its incorporation as of a recent date, together with
a bring-down certificate from such Secretary of State or other appropriate
authority in the form of a telex or telecopy dated the Closing Date, and
--------------------------------
* Similar board resolutions and corporate documents will be required to be
provided for Guarantor.
the by-laws of Borrower as in effect on the Closing Date, certified by the
Secretary, Assistant Secretary or other appropriate officer or director of
Borrower; and
(ii) a good standing certificate for the Borrower from the Secretary of
State of its incorporation as of a recent date, together with a bring-down
certificate in the form of a telex or telecopy dated the Closing Date.
* Officer's Certificate. The Lender shall have received duly executed
originals of a certificate of the Chief Executive Officer and Chief Financial
Officer of the Borrower, dated the Closing Date, stating that, since December
31, 1996, (a) no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) there has been no
material adverse change in the industry in which the Borrower operates; (c) no
litigation has been commenced which, if successful, would have a Material
Adverse Effect or could challenge any of the transactions contemplated by this
Agreement and (d) there has been no material increase in liabilities, liquidated
or contingent, and no material decrease in assets of the Borrower or any of the
other Loan Parties.
Financial Statements. Copies of the Financial Statements.
Legal Opinions. An opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., counsel to the
Borrower and Guarantor, in form and substance satisfactory to the Lender (which
shall include an opinion as to enforceability of the Agreement under New York
law) as to validity and perfection of Liens and other matters, and such other
matters incident to the transactions contemplated hereby as the Lender may
require.
Other Documents. Such other certificates, documents and agreements as the
Lender may, in its sole discretion, request.
ANNEX C
to
TERM LOAN AND SECURITY AGREEMENT
Dated as of December 18, 1997
FINANCIAL STATEMENTS AND NOTICES
The Borrower shall deliver or cause to be delivered to the Lender the
following:
(a) Monthly Financials. Within thirty (30) days after the end of each
calendar month, consolidated and consolidating financial information regarding
the Borrower and its consolidated Subsidiaries, certified by the Chief Financial
Officer of the Borrower, including (i) unaudited balance sheets as of the close
of such month and the related statements of income and cash flow for that
portion of the fiscal year ending as of the close of such month and (ii)
unaudited statements of income and cash flows for such fiscal month, in each
case setting forth in comparative form the figures for the corresponding period
in the prior year, all prepared in accordance with GAAP (subject to normal year-
end adjustments).
(b) Annual Audited Financials. Within ninety (90) days after the end of
each fiscal year, audited Financial Statements for the Borrower and its
consolidated Subsidiaries on a consolidated and consolidating basis, consisting
of balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case, the figures for the previous
fiscal year, which Financial Statements shall be prepared in accordance with
GAAP, certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to the Lender.
(c) Default Notices. As soon as practicable, and in any event within five
(5) Business Days after an executive officer of the Borrower has actual
knowledge of the existence of any Default or other event which has had a
Material Adverse Effect, telephonic or telecopied notice specifying the nature
of such Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day.
(d) Supplemental Schedules. Supplemental disclosures, if any, required by
Section 5.6 of this Agreement.
(e) Litigation. Promptly upon learning thereof, written notice of any
litigation commenced or threatened against Borrower that (i). seeks damages in
excess of $100,000, (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or against Borrower
or ERISA Affiliate in connection with any Plan, (iv) alleges criminal misconduct
by Borrower or (v) alleges the violation of any law regarding, or seeks remedies
in connection with, any environmental liabilities.
(f) Other Documents. Such other financial and other information as the
Lender shall, from time to time, request.
EXHIBIT A
---------
FORM OF TERM NOTE
-----------------
New York, New York
$1,500,000 December 18, 1997
FOR VALUE RECEIVED, the undersigned MORTGAGE PLUS EQUITY AND LOAN CORP., a
New York corporation ("Borrower"), hereby promises to pay to the order of FC
CAPITAL CORP., a New York corporation ("Lender"), in lawful money of the United
States of America and in immediately available funds, the principal amount of
ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000). All capitalized terms,
unless otherwise defined herein, shall have the respective meanings assigned to
such terms in the Loan Agreement.
This Term Note is issued pursuant to that certain Term Loan and Security
Agreement, dated December 18, 1997, between the Borrower and Lender (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"). This Term Note is the Term Note referred to in the Loan Agreement,
evidences the Term Loan made thereunder and is entitled to the benefit and
security of the Loan Agreement and reference is hereby made to the Loan
Agreement for a statement of all of the terms and conditions under which the
loan evidenced hereby was made.
The principal amount of the indebtedness evidenced hereby shall be payable
in United States Dollars in the amounts and on the dates specified in the Loan
Agreement. Interest thereon shall be paid until such principal amount is paid
in full at such interest rates and at such times as are specified in the Loan
Agreement. The outstanding principal and interest under this Term Note shall be
immediately due and payable on the Termination Date.
If any payment on this Term Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of an Event of Default, this Term Note may,
as provided in the Loan Agreement, and without demand, notice or legal process
of any kind, be declared and immediately shall become due and payable.
To the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent to
accelerate protest, default, nonpayment, maturity, acceleration release,
compromise, settlement, extension or renewal of any or all Loan Documents or
this Term Note; (b) all rights to notice and a hearing prior to Lender's taking
possession or control of, or to Lenders replevy, attachment or levy upon, the
Collateral or any bond or security that might be Lender to exercise required by
any court prior to allowing any of its remedies; and (c) the benefit of all
valuation, appraisal and exemption laws.
THIS TERM NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MORTGAGE PLUS EQUITY AND LOAN
CORP.
By:
Name:
Title: