EXHIBIT 10.17
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TERM LOAN AND REVOLVING CREDIT AGREEMENT
among
FIRSTCITY FINANCIAL CORPORATION
as Borrower
and
THE FINANCIAL INSTITUTIONS LISTED
ON THE SIGNATURE PAGES HEREOF
as Lenders,
with
BANK OF SCOTLAND,
acting through its New York Branch,
as Agent
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Dated as of December 12, 2002
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TERM LOAN AND REVOLVING CREDIT AGREEMENT
TERM LOAN AND REVOLVING CREDIT AGREEMENT, dated as of December 12, 2002
among FIRSTCITY FINANCIAL CORPORATION, a Delaware corporation (the "Borrower"),
the financial institutions from time to time party hereto (each a "Lender" and
collectively, the "Lenders") and BANK OF SCOTLAND, acting through its New York
branch, as agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, on and subject to the terms hereof, the Lenders are willing to
make available to the Borrower the credit facilities provided for herein;
NOW, THEREFORE, it is agreed:
Section 1. DEFINITIONS.
(a) Terms used in this Agreement which are defined in Annex I hereto
shall have the meanings specified in such Annex I hereto (unless otherwise
defined herein) and shall include in the singular number the plural and in the
plural number the singular.
(b) Unless otherwise specified, each reference in this Agreement or
in any other Loan Document to a Loan Document shall mean such Loan Document as
the same may from time to time be amended, extended, restated, supplemented or
otherwise modified.
(c) All references to Sections in this Agreement or in Annex I
hereto shall be deemed references to Sections in this Agreement unless otherwise
specified.
(d) As used in this Agreement and the other Loan Documents, the
terms "including" and "such as" are illustrative and not limitative.
Section 2. THE LOANS.
2.1 The Loans.
(a) Subject to the terms and conditions set forth herein, each
Lender severally agrees, at any time and from time to time during the Commitment
Period (Term) to make one or more loans to the Borrower (each a "Term Loan" and
collectively, the "Term Loans") in an aggregate principal amount for all such
Term Loans not exceeding the amount of its Term Loan Commitment. The borrowings
from the Lenders pursuant to this Section 2.1(a) shall be (1) in an aggregate
principal amount (aggregating Term Loans then being requested with Term Loans
previously made) not to exceed the Total Term Loan Commitment then in effect;
(2) made from each Lender pro rata on the basis of the Term Loan Commitment of
such Lender; provided, that in no event shall the aggregate principal amount of
Term Loans made in respect of the acquisition by a PFAL Portfolio Entity of any
Asset Pool exceed the lowest of (x) the Total Term
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Loan Commitment then in effect minus the aggregate amount of Term Loans
theretofore made; (y) the Applicable Borrowing Percentage of the Acquisition
Price for such Asset Pool and (z) $7,500,000; and (3) used by Borrower solely
(x) to make advances to FC Commercial evidenced by the FC Commercial (PFAL)
Pledged Note, the full amount of which advances are used by FC Commercial (as
more fully set forth in other portions of this Section 2, in Section 6B and in
other Sections of this Agreement) to make a contribution to the capital of a
PFAL Portfolio Entity in connection with such PFAL Portfolio Entity's
acquisition of an Asset Pool and (y) if requested by Borrower in the Notice of
Borrowing for such Term Loans, to pay the Utilization Fee in respect of the Term
Loans made pursuant to clause (x) (the Term Loans included in each such
borrowing by Borrower in respect of an Asset Pool, together with any borrowing
of the Utilization Fee in respect thereof, being referred to herein as a
"Tranche" of Term Loans, each borrowing of Term Loans in respect of an Asset
Pool (and related Utilization Fee) constituting a different Tranche of Term
Loans distinct from each other Tranche (or borrowing) of Term Loans (and any
related Utilization Fee) borrowed in respect of any other Asset Pool) and
provided further that
(i) in no event shall the aggregate principal amount of Term Loans
made during the one year period commencing on (and including) the
Effective Date exceed $25,000,000;
(ii) in no event shall the aggregate principal amount of Term Loans
made under this Agreement (after giving effect to all pending requests for
Loans, and whether or not all or any portion of the Term Loans theretofore
made remain outstanding in whole or in part) exceed the amount by which
$77 million exceeds the aggregate principal amount of loans outstanding
under the Amended and Restated Agreement;
(iii) in no event shall the aggregate amount (after giving effect to
all pending requests for Term Loans) of Term Loans made in respect of
Asset Pools-NL exceed 25% of the Total Term Loan Commitment at such time;
and
(iv) in no event shall the aggregate amount of Term Loans made in
respect of Asset Pools acquired from Non-US Sellers exceed 50% of the
amount of all Term Loans theretofore made (including the Term Loans then
being requested).
(b) Subject to the terms and conditions set forth herein, each
Lender severally agrees at any time and from time to time during the Commitment
Period (Revolving) to make loans to the Borrower (each a "Revolving Credit Loan"
and collectively, the "Revolving Credit Loans") up to its Revolving Credit Loan
Commitment; provided that in no event shall the aggregate principal amount of
Revolving Credit Loans outstanding at any time exceed the Total Revolving Credit
Loan Commitment then in effect. During the Commitment Period (Revolving), the
Borrower may utilize the Revolving Credit Loan Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part without premium or
penalty, and reborrowing, all in accordance with the terms and conditions
hereof. Revolving Credit Loans shall be made from each Lender pro rata on the
basis of the Revolving Credit Loan Commitment of such Lender.
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2.2 Notice of Borrowing.
(a) Whenever the Borrower desires to utilize the Term Loan
Commitments hereunder, it shall deliver to the Agent a Notice of Borrowing not
later than 11:00 a.m., Closing Office Time, on the third Business Day preceding
the date of the proposed borrowing of Term Loans, which Notice of Borrowing
shall, among other items, (A) specify (i) the Portfolio Entity-Post AE to whose
capital FC Commercial will contribute the proceeds of the Loans; (ii) the Asset
Pool to be acquired by such PFAL Portfolio Entity; (iii) the date of the
proposed borrowing (which shall be a Business Day during the Commitment Period
(Term) (each, a "Borrowing Date"); (iv) if such Borrowing Date is a Payment
Date, whether such Loans shall constitute Base Rate Loans or Eurodollar Loans
(if not specified or if such date is not a Payment Date, Base Rate Loans shall
be deemed to have been requested); (v) the total amount of such borrowing (which
shall be in a minimum amount of $100,000 and integral multiples of $100,000 in
excess thereof and shall not exceed the Applicable Borrowing Percentage of the
Acquisition Price for the related Asset Pool (rounded downward to the nearest
$100,000); and (vi) the amount, if any, of the Utilization Fee in respect of
such Borrowing requested to be borrowed, and (B) certify that (x) the Borrower
delivered the Final Asset Pool Acquisition Certificate in respect of such Asset
Pool not later than ten Business Days before the Borrowing Date specified in
such notice and that all information set forth in Asset Pool Acquisition
Certificate (as revised through the Final Asset Pool Acquisition Certificate and
as further revised to the extent permitted by Section 6B.4) remains true and
correct and (y) on or prior to the date of such Notice of Borrowing, Borrower
has delivered to the Agent a Final NPV Pool Certificate in respect of such Asset
Pool, Without the consent of the Agent, Borrower shall not be entitled to make
borrowings under the Term Loan Commitments more than twice in any calendar month
and not more than once during any ten Business Day period.
(b) Whenever the Borrower desires to utilize the Revolving Credit
Loan Commitments hereunder, it shall deliver to the Agent a Notice of Borrowing
not later than 11:00 a.m., Closing Office Time, on the third Business Day
preceding the date of the proposed borrowing of Revolving Credit Loans, which
notice shall specify (i) the date of the proposed borrowing (which shall be a
Business Day during the Commitment Period) (each, also a "Borrowing Date"), (ii)
if such Borrowing Date is a Payment Date, whether such Loans shall constitute
Base Rate Loans or Eurodollar Loans (if not specified or if such date is not a
Payment Date, Base Rate Loans shall be deemed to have been requested) and (iii)
the total amount of such borrowing (which shall be in a minimum amount of
$250,000 plus, if greater, in integral multiples of $100,000). Without the
consent of the Agent, Borrower shall not be entitled to make borrowings under
the Revolving Credit Loan Commitments more than twice in any calendar month.
(c) The Agent shall promptly notify (in writing or by telephone,
confirmed as soon as possible thereafter in writing) each of the Lenders of the
date and type (i.e., Term Loan or Revolving Credit Loan) of the proposed Loans,
the amount of the Loan or Loans such Lender is being requested to make and
whether such Loans shall constitute Base Rate Loans or Eurodollar Loans. Each
Lender will make the amount of its Loan or Loans available to the Agent, at the
Closing Office, before 1:00 p.m. Closing Office Time on the date specified in
the notice for the proposed borrowing in same day funds. Such proceeds shall be
made available to the Borrower (subject to Section 2.2(d)) by the Agent, in the
same type of funds received by the
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Agent, at the Closing Office against delivery to the Agent for the account of
each Lender of such instruments, documents and papers as are provided for
herein; provided that the Agent may pay the portion of any Utilization Fee
borrowed in connection with any such borrowing directly to the Lenders entitled
thereto. The Agent shall deliver the instruments, documents and papers received
by it for the account of each Lender to such Lender or upon its order.
(d) Unless the Agent shall have received notice from a Lender prior
to 11:00 a.m., Closing Office Time, on the date of any borrowing that such
Lender will not make available to the Agent such Lender's ratable portion of
such borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date of such borrowing in accordance with Section
2.2(c) and the Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent such
Lender shall not have so made such ratable portion available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the rate from time to time prevailing on the
applicable Note; provided that to the extent such interest is paid by a Lender,
interest shall be at the rate specified in Section 11.10 hereof. If such Lender
shall pay to the Agent such corresponding amount, such amount so paid shall
constitute such Lender's Loan as part of such borrowing for purposes of this
Agreement.
(e) The failure of any Lender to make the Loan to be made by it as
part of any borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Loan on the date of such borrowing. No Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender on the date of any borrowing.
2.3 The Notes.
(a) The Borrower's obligation to pay (x) the principal of, and
interest on, the Term Loans of each Lender shall be evidenced by a Term Note
payable to the order of such Lender and (y) the principal amount of, and
interest on, the Revolving Credit Loans of each Lender shall be evidenced by a
Revolving Credit Note payable to the order of such Lender.
(b) The Term Note and Revolving Credit Note of each Lender shall:
(i) be dated the Effective Date; (ii) be in an original principal amount, with
respect to each Lender, as set forth on Schedule 2.1(a) hereto; (iii) be payable
in full (x) in the case of the Term Notes, on the Maturity Date (Term) (subject
to mandatory prepayment as herein provided); and (y) in the case of the
Revolving Credit Notes, on the Final Maturity Date (Revolving) (subject to
mandatory prepayment as herein provided).
(c) The Term Notes and Revolving Credit Notes shall be, and hereby
are, secured by the Collateral and the Security Documents.
2.4 Mandatory Prepayments of Term Loans.
(a) In addition to the other prepayments required by this Section
2.4, on the last CFCCA-P Business Day of each month (each such last CFCCA-P
Business Day, a "Payment Date") commencing with December 31, 2002, the Borrower
shall make a prepayment of the
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Term Loans (and, to the extent indicated in Section 2.4(e) or (f), of the
Revolving Credit Loans) in an amount equal to the sum of the Asset Pool
Prepayment Amounts in respect of such Payment Date as determined for each Asset
Pool. Each such prepayment shall be applied (x) until the Tranche of Term Loans
made in respect of such Asset Pool has been paid in full, to such Tranche of
Term Loans (ratably as among Lenders to which such Loans are outstanding) and
shall be applied first to the principal amount of such Tranche which would be
due under Section 2.4(c) on the next Annual Payment Date with respect to such
Asset Pool (or on such Annual Payment Date, if such Payment Date falls on such
Annual Payment Date), and then to amounts that would be due on succeeding Annual
Payment Dates of Asset Pool, in direct order of maturity and (y) thereafter, as
set forth in Section 2.4(e).
(b) In addition to the other prepayments required by this Section
2.4, not later than the Payment Date following the occurrence of an NPV
Deficiency in respect of any Asset Pool, the Borrower shall make a prepayment of
the Term Loans in an amount sufficient so that after giving effect to such
payment, the NPV Deficiency will no longer exist. Each such prepayment shall be
applied to the Tranche of Term Loans made in respect of such Asset Pool (ratably
as among Lenders to which such Loans are outstanding) and shall be applied first
to the principal amount of such Tranche which would be due under Section 2.4(c)
on the last Annual Payment Date with respect to such Asset Pool, and then to the
amounts of such Tranche that would be due on earlier Annual Payment Dates with
respect to such Asset Pool, in inverse order of maturity.
(c) In addition to the other prepayments required by this Section
2.4, on each Payment Date occurring in the month in which the anniversary
(whether first, second, third or fourth) of the acquisition of an Asset Pool
occurs (each said anniversary month Payment Date with respect to an Asset Pool,
an "Annual Payment Date" for such Asset Pool), Borrower shall make a prepayment
of the principal amount of the Term Loans equal to the sum of the Annual Term
Loan Prepayment Amounts as determined for each Asset Pool for which such Payment
Date constitutes an Annual Payment Date after giving effect to the application
of other prepayments made pursuant to other subsections of this Section 2.4 (to
the extent that pursuant to such other subsections, such other prepayments are
applied to such Annual Term Loan Prepayment Amount). Each such prepayment shall
be applied to the Term Loan Tranche relating to the Asset Pool in respect of
which such payment is made or, if the Agent determines that the appropriate
application as among Asset Pools is not free from doubt, to such Tranches of
Term Loans as the Agent shall determine (in each case, ratably as among Lenders
to which such Loans are outstanding).
(d)
(i) In addition to the other prepayments required by this Section
2.4, Borrower shall pay or cause to be paid to the Agent the full amount
of Extraordinary Transaction Proceeds (or, in the case where such proceeds
are received by FC Holdings and do not relate directly or indirectly to
any PFAL Portfolio Entity, the amount thereof to which FC Holdings is
entitled, after payment of any portion thereof required to be remitted to
CFSC pursuant to the Holdings CFSC Loan Agreement) on each date when such
Proceeds or any portion thereof are received by Borrower or any Primary
Obligor or, in the case of the receipt of any such proceeds by any
Secondary Obligor, on the
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earlier of (x) of the day on which such Proceeds or any portion thereof
are paid to Borrower or a Primary Obligor and (y) the sixtieth day after
receipt thereof by such Secondary Obligor, for application to the unpaid
principal amount of the Term Notes and accrued interest on such principal
amount being prepaid (and to the extent indicated in Section 2.4(f), to
the Revolving Credit Loans). If Borrower delivers to the Agent evidence
satisfactory to the Agent that such amounts were received in respect of
one or more specified Asset Pools, or if the Agent otherwise determines
that there is a reasonable basis for allocating such prepayment to one or
more particular Asset Pools, such prepayment shall be applied to the
outstanding Tranche(s) of Term Loans made in respect of such Asset Pool(s)
(if applied to more than one Tranche, ratably as among different Tranches
or in such other proportions as the Agent may determine, and ratably as
among Lenders to which such Loans are outstanding) and, after any such
Tranche is repaid in full, the remaining amount of such prepayment (if
any) which would have been applied to such Tranche shall be applied
ratably to all other outstanding Tranches of Term Loans (or in such other
proportions as the Agent may determine, and ratably as among Lenders to
which such Tranches of Term Loans are outstanding). Otherwise, such
prepayment shall be applied in accordance with clause (iii) below. All
amounts applied to a particular Tranche of Loans shall be applied first to
the principal amount of such Tranche which would be due under Section
2.4(c) on the final Annual Payment Date of such Tranche, and then to the
amounts of such Tranche that would be due on earlier Annual Payment Dates
of such Tranche, in inverse order of maturity.
(ii) In addition to the other prepayments required by this Section
2.4 (but without duplication of any such prepayment), in the event that FC
Commercial makes any voluntary prepayment of principal of the FC
Commercial (PFAL) Pledged Note, Borrower shall prepay the Term Loans in an
amount equal to the amount of such voluntary prepayment of principal on
the day on which such prepayment is received by Borrower. If Borrower
delivers to the Agent evidence satisfactory to the Agent that such amount
represents proceeds of payments received in respect of one or more
specified Asset Pools or if the Agent otherwise determines that there is a
reasonable basis for allocating such amount to one or more particular
Asset Pools, such prepayment shall be applied to the outstanding
Tranche(s) of Term Loans made in respect of such Asset Pool(s) (if applied
to more than one Tranche, ratably as among different Tranches or in such
other proportions as the Agent may determine, and ratably as among Lenders
to which Loans of such Tranche(s) are outstanding) and, after any such
Tranche is repaid in full, the remaining amount of such prepayment (if
any) which would have been applied to such Tranche shall be applied
ratably to all other outstanding Tranches of Term Loans (or in such other
proportions as the Agent may determine, and ratably as among Lenders to
which such Tranches of Term Loans are outstanding). Otherwise, such
prepayment shall be applied in accordance with clause (iii) below. All
amounts applied to a particular Tranche of Loans shall be applied first to
the principal amount of such Tranche which would be due under Section
2.4(c) on the final Annual Payment Date of such Tranche, and then to the
amounts of such Tranche that would be due on earlier Annual Payment Dates
of such Tranche, in inverse order of maturity.
(iii) If the Agent determines that any amount of Extraordinary
Transaction Proceeds received pursuant to clause (i) or any prepayment of
the FC Commercial
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(PFAL) Pledged Note received pursuant to clause (ii) arises from payments
received in respect of one or more PFAL Portfolio Entities but in the
Agent's opinion the proper allocation of such Proceeds among Asset Pools
of any such PFAL Portfolio Entity is not clear, the portion of such
Proceeds which the Agent determines is allocable to such PFAL Portfolio
Entity shall be applied to such Tranches of Term Loans made in respect of
Asset Pools of such PFAL Portfolio Entity as the Agent may determine (if
applied to more than one Tranche, ratably as among different Tranches or
in such other proportions as the Agent may determine, and ratably as among
Lenders to which Loans of such Tranche(s) are outstanding) and, after any
such Tranche is repaid in full, the remaining amount of such prepayment
(if any) which would have been applied to such Tranche shall be applied
ratably to all other outstanding Tranches of Term Loans of such PFAL
Portfolio Entity (or in such other proportions as the Agent may determine)
or, if there remain no other such outstanding Tranches, ratably to all
other outstanding Tranches of Term Loans (or in such other proportions as
the Agent may determine, in each case ratably as among Lenders to which
such Tranches of Term Loans are outstanding). If the Agent determines that
any such Extraordinary Transaction Proceeds or prepayment are not received
by or in respect of one or more particular Asset Pools or PFAL Portfolio
Entities or that there is not a reasonable basis for allocating such
Proceeds as among certain different Asset Pools or PFAL Portfolio
Entities, then such amounts shall be applied to such outstanding Tranches
of Term Loans as the Agent may determine (ratably as among Lenders to
which such Tranches are outstanding). In making application determinations
pursuant to this Section 2(d), the Agent may use any method (including,
without limitation, relative Asset Pool sizes, relative amounts of
outstanding Tranches of Loans made in respect of different Asset Pools,
relative Asset Pool NPV Percentages or otherwise, or determine to make
application ratably as among PFAL Portfolio Entities and/or Asset Pools or
in any other proportion as among PFAL Portfolio Entities or Asset Pools or
otherwise) as the Agent in its discretion deems appropriate.
(e) If on any Payment Date (x) there is any Asset Pool Prepayment
Amount in respect of an Asset Pool in respect of which the related Tranche of
Term Loans has been paid in full (either on that date or previously) or (y)
there is any Existing PF Amount, such amount shall be applied to prepay the Term
Loans ratably as among the different outstanding Term Loan Tranches (and ratably
as among Lenders to which such Loans are outstanding) and, with respect to a
particular Tranche of Term Loans to which such amount is so applied, first to
the principal amount of any Tranche of Term Loans which would be due in respect
of the related Asset Pool under Section 2.4(c) on the final Annual Payment Date
of such Asset Pool, and then to the amounts of such Tranche that would be due on
earlier Annual Payment Dates of such Asset Pool, in inverse order of maturity.
If any Existing PF Amount remains or arises after all Term Loans have been paid
in full, such amount shall be applied to repay the Revolving Credit Loans.
(f) If the Term Loans shall have been paid in full, at any time when
any amount would be required to be applied to repayment of the Term Loans
pursuant to Section 2.4 if any Term Loans were outstanding and all Tranche I
Loans and Tranche II Loans outstanding or permitted to be outstanding under the
Amended and Restated Agreement as in effect on the date hereof have been repaid,
such amount that would otherwise have been applied to the Term Loans (had any
been outstanding) shall be applied to repay outstanding Revolving Credit Loans
(ratably as among Lenders to which such Loans are outstanding).
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(g) Borrower shall repay the outstanding amount of the Term Loans in
full on the Maturity Date (Term).
(h) Amounts prepaid or repaid pursuant to this Section 2.4 may not
be reborrowed.
(i) Amounts which are to be applied ratably to or as among different
Tranches of Term Loans pursuant to this Section shall be applied ratably on the
basis of the outstanding principal amount of such Tranches of Term Loans.
2.5 Mandatory Prepayments of Revolving Credit Loans. The Borrower shall
immediately prepay the Revolving Credit Notes held by the Lenders to the extent
that the aggregate outstanding principal amount thereof on any day shall exceed
the amount of the Total Revolving Credit Loan Commitment in effect on such day;
provided that if the Total Revolving Credit Loan Commitment is terminated in
full, then the Borrower shall immediately prepay in full the aggregate
outstanding principal amount of all Revolving Credit Notes. Amounts so repaid
may not be reborrowed.
2.6 Voluntary Prepayments of Term Loans. Borrower may, upon not less than
three CFCCA-P Business Days prior written notice to the Agent (which notice the
Agent shall promptly transmit to the Lenders in writing or by telephone,
confirmed as soon as possible thereafter in writing) prepay the Term Loans in
whole at any time, or from time to time in part in amounts equal to $250,000
(and, if greater, in integral multiples of $50,000), and without premium
(subject to Section 3.9) or penalty; provided that at the time of any such
prepayment of the Term Loans, Borrower shall pay all interest accrued on the
principal amount of such prepayment. Amounts prepaid pursuant to this Section
2.6 may not be reborrowed. Prepayments pursuant to this Section 2.6 shall be
applied (ratably as among Lenders holding the Loans to which applied) to such
Tranches of Term Loans and in such order as the Borrower may at the time in
writing direct or, if no such direction is given, as determined by the Agent.
Amounts prepaid pursuant to this Section 2.6 may not be reborrowed. All notices
pursuant to this Section 2.6 and Section 2.7 shall be irrevocable and result in
the principal amount of Loans specified therein becoming due and payable on the
prepayment date specified therein.
2.7 Voluntary Repayment of Revolving Credit Loans. The Borrower may, at
any time and from time to time, upon not less than three Business Day's prior
notice to the Agent (which notice the Agent shall promptly transmit to the
Lenders in writing or by telephone, confirmed as soon as possible thereafter in
writing) prepay the Revolving Credit Loans in whole, or in part in amounts equal
to $250,000 (and, if greater, in integral multiples of $50,000) and without
premium or penalty, provided that at the time of any such prepayment of the
Revolving Credit Loans in full and if the Total Revolving Credit Loan Commitment
is no longer in effect), the Borrower shall pay all interest accrued on the
amount of such prepayment. Subject to the terms and conditions of this
Agreement, amounts prepaid under this Section 2.7 may be reborrowed.
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2.8 Reduction of Commitments.
(a) The Borrower shall have the right at any time and from time to
time upon at least three Business Days' prior written notice to the Agent (which
notice the Agent shall promptly transmit to the Lenders in writing or by
telephone, confirmed as soon as possible thereafter in writing) to reduce
permanently in amounts equal to $500,000 (and if greater, in integral multiples
of $100,000) or terminate the unutilized (after giving effect to all pending
requests for Loans) Total Revolving Credit Loan Commitment. Any reduction
pursuant to this Section 2.8(a) shall apply proportionately to the Revolving
Credit Loan Commitment of each Lender. Any reduction or termination of a
Commitment pursuant to this Section 2.8(a) shall be accompanied by the payment
in full of any Revolving Credit Loan Commitment commission then accrued
hereunder.
(b) The Borrower shall have the right at any time and from time to
time upon at least three Business Days' prior written notice to the Agent (which
notice the Agent shall promptly transmit to the Lenders in writing or by
telephone, confirmed as soon as possible thereafter in writing) to reduce
permanently in amounts equal to $500,000 (and if greater, in integral multiples
of $100,000) or terminate the unutilized (after giving effect to all pending
requests for Loans) Total Term Loan Commitment. Any reduction pursuant to this
Section 2.8(b) shall apply proportionately to the Term Loan Commitment of each
Lender. Any reduction or termination of a Commitment pursuant to this Section
2.8(b) shall be accompanied by the payment in full of any Term Loan Commitment
commission then accrued hereunder.
2.9 Extension of Final Maturity Date (Revolving). No more than 60 and no
less than 30 days prior to the then Final Maturity Date (Revolving), the
Borrower may request, through the Agent, that each Lender extend the Final
Maturity Date (Revolving) for a 364-day period as herein provided, which
decision will be made by each Lender in its sole discretion. Upon receipt of any
such request, the Agent shall promptly notify each Lender thereof. Each Lender
shall notify the Agent and the Borrower of its willingness or refusal to consent
to such extension of the Final Maturity Date (Revolving) as soon as practical
after receiving such notice, and in any event by the 15th day preceding the then
current Final Maturity Date (Revolving) (the "Response Date"). If any Lender
does not expressly notify the Agent that it is willing to extend the Final
Maturity Date (Revolving) prior to the Response Date such Lender shall be deemed
to be to have refused to extend the Final Maturity Date (Revolving) and the
Borrower's request to extend the Final Maturity Date (Revolving) then in effect
shall be deemed denied. If (i) all Lenders have agreed by the Response Date to
extend the Final Maturity Date (Revolving) and (ii) as of the Final Maturity
Date (Revolving) then in effect, no Event of Default shall have occurred and be
continuing, such Final Maturity Date (Revolving) shall be extended to the date
which is 364 days following such Final Maturity Date (Revolving) or, if such day
is not a Business Day, the next preceding Business Day.
Section 3. INTEREST.
3.1 Rate of Interest.
(a) Subject to the provisions of Section 3.3 hereof, the Borrower
agrees to pay interest in respect of the unpaid principal amount of the Loans
from the date such Loans are
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made until maturity (whether by acceleration or otherwise) at the following
rates of interest: (i) Eurodollar Loans, at a rate per annum equal to 2.75% in
excess of LIBOR for the Eurodollar Interests Period then in effect and (ii) Base
Rate Loans, the Base Rate, such rate to change as and when the Base Rate shall
change.
(b) Loans which are made on a date other than a Payment Date shall
constitute Base Rate Loans until converted in accordance with Section 3.11.
3.2 Interest Payment Dates. Interest on and prior to maturity in respect
of each Loan shall be payable in arrears (i) on each Payment Date; (ii) upon any
repayment or prepayment (to the extent accrued on the principal amount so
repaid); and (iii) at maturity (whether by acceleration or otherwise) and, after
maturity, on demand.
3.3 Past Due Rate. Each Loan (and any overdue interest in respect of each
Loan) shall bear interest for each day on which an Event of Default exists
(after as well as before judgment), payable on demand, at a rate per annum (the
"Past-Due Rate") equal to the greater of 5% in excess of the interest rate
otherwise applicable to such Loan on such day or 4.5% in excess of the Base Rate
in effect on such day.
3.4 Capital Adequacy. If any Lender shall have determined that the
applicability of any law, rule, regulation or guideline adopted after the date
hereof (it being agreed that "adopted after the date hereof" shall include
compliance by a Lender or any lending office or holding company of a Lender with
any Basle Law whether or not such Basle Law was in effect, applicable or phased
in on or prior to or after the date hereof pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards" or pursuant to or arising out of any report, agreement or convention
of any international banking group adopted subsequent to such 1988 report (said
laws, rules, regulations and guidelines pursuant to or arising out of such 1988
report or any such subsequently adopted report, agreement or convention being
sometimes collectively herein referred to as "Basle Laws"), or the adoption
after the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy (any such other law, rule, regulation or guideline being
sometimes herein referred to as "Other Laws"), or any change in any of the
foregoing (after the date hereof in respect of Other Laws; before or after the
date hereof in respect of Basle Laws) or in the enforcement or interpretation or
administration of any of the foregoing (after the date hereof in respect of
Other Laws; before or after the date hereof in respect of Basle Laws) by any
Government Authority, central bank or comparable agency charged with the
enforcement or interpretation or administration thereof, or compliance by any
Lender (or any lending office of any Lender) or any holding company of any
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of its Commitments, Loans or any of its obligations hereunder to a
level below that which such Lender or such Lender's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then, upon demand by such Lender (or by the Agent on such Lender's
behalf), the Borrower shall pay to such Lender from time to time such
10
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered, together with interest on each
such amount from the date demanded until payment in full (after as well as
before judgment) thereof at the Base Rate. Each Lender shall endeavor to give
the Borrower notice of its intention to require compensation under this Section
3.4 within a reasonable time after the loan officer of such Lender with
responsibility for this Agreement becomes aware of its entitlement to such
compensation under this Section 3.4, but no failure to give any such notice
shall affect or relieve the Borrower of any of Borrower's obligations under this
Section 3.4 or under any other provision of this Agreement or any other Loan
Document or result in any obligation or liability of the Agent or any Lender to
the Borrower or any other Person. A certificate of a Lender as to the amount
required to be paid by Borrower under this Section 3.4 and showing in reasonable
detail the basis for the calculation thereof shall, absent manifest error, be
final and conclusive (it being understood that in no event shall any Lender be
required to disclose in such certificate or otherwise any non-public
information). In determining such amount or amounts, a Lender may use any method
of averaging and attribution as it (in its sole and absolute discretion) shall
deem applicable.
3.5 [Intentionally omitted.]
3.6 Determination of Rate of Borrowing. As soon as practicable after 10:00
A.M. (New York time) on each Eurodollar Interest Determination Date, the Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the rate of interest (the "Rate of
Borrowing") which shall be applicable to the Eurodollar Loans for the next
succeeding Eurodollar Interest Period and shall promptly give notice thereof in
writing or by telephone (confirmed in writing) to the Borrower and the Lenders.
3.7 Substituted Rate of Borrowing.
(a) In the event that on any Eurodollar Interest Determination Date
any Lender shall have reasonably determined (which determination shall be final
and conclusive and binding upon all parties but, with respect to the following
clauses (i), (ii)(y) and (ii)(z), shall be made only after consultation with the
Agent on the date of such determination) that:
(i) by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market or affecting the position of
such Lender in such market, adequate and fair means do not exist for
ascertaining the applicable Rate of Borrowing by reference to LIBOR with respect
to the Eurodollar Loans as to which an interest rate determination is then being
made; or
(ii) by reason of (x) the requirements of Regulation D, (y)
any change after the date hereof in any other applicable law or governmental
rule, regulation or order (or any interpretation thereof and including the
enactment of any new law or governmental rule, regulation or order) or (z) other
circumstances affecting such Lender or the interbank Eurodollar market or the
position of such Lender in such market (such as for example but not limited to a
change in official reserve requirements or increased capital reserves required
or imposed by any regulatory authority or entity (domestic or foreign) having
jurisdiction over or with respect to such Lender to the extent not provided for
in clause (ii)(x) above), LIBOR shall not represent the
11
effective pricing to such Lender for U.S. dollar deposits of comparable amounts
for the relevant periods;
then, and in any such event, the Lender so affected shall on such date give
notice in writing or by telephone (confirmed in writing) to the Borrower and to
the Agent of such determination. Thereafter, Borrower shall pay to such Lender,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its reasonable discretion shall determine) as shall be
required to cause such Lender to receive interest with respect to its Eurodollar
Loan for the Eurodollar Interest Period following such Eurodollar Interest
Determination Date and for any preceding Eurodollar Interest Period with respect
to which such changes or requirements apply (each such period, an "Affected
Interest Period") at a rate per annum equal to 2.75% in excess of the effective
pricing to such Lender for U.S. dollar deposits to make or maintain its
Eurodollar Loans, provided that in the case of any such determination pursuant
to clause (ii)(x), the written notice from such Lender to the Agent and the
Borrower on the relevant Eurodollar Interest Determination Date shall specify
(x) any such amount on account thereof theretofore incurred, and such amount
shall be paid at such time and (y) the additional amount required to be paid
with respect to the relevant Affected Interest Period (with such amount so
stated to be final with respect to the relevant Affected Interest Period) and
such additional amount shall be paid at the same time, and together with, the
interest otherwise payable in respect of such Eurodollar Loans for such Affected
Interest Period. A certificate as to additional amounts owed any such Lender,
showing in reasonable detail the basis for the calculation thereof, submitted to
the Borrower by such Lender through the Agent shall, absent manifest error, be
final and conclusive and binding upon all of the parties hereto.
(b) In lieu of paying additional moneys to any Lender affected by
Section 3.7(a), other than clause (ii)(x) thereof (any such Lender, together
with any Lender affected by subsection 3.8(a), an "Affected Lender"), Borrower
may (subject to Section 3.9), by giving notice in writing or by telephone
(confirmed in writing) to the Affected Lender, the Agent and the other Lenders
on such Eurodollar Interest Determination Date, (x) require the Affected Lender
to convert its Eurodollar Loan then outstanding or requested that is so affected
into a Base Rate Loan (bearing interest at a rate equal to the Base Rate as in
effect from time to time) on the first day of the Affected Interest Period, such
notice to pertain only to the Loans of the Affected Lender and to have no effect
on the obligations of the other Lenders to maintain Eurodollar Loans, or (y)
terminate the obligations of the Lenders to make or maintain Loans as, or
convert Loans into, Eurodollar Loans and in such event, on the first day of what
would have been the next Eurodollar Interest Period, all Eurodollar Loans shall
be outstanding as Base Rate Loans.
3.8 Required Termination and Prepayment.
(a) In the event that at any time any Affected Lender shall have
reasonably determined (which determination shall be final and conclusive and
binding upon all parties) that the making or continuation of its Eurodollar
Loans has become unlawful by compliance by such Lender in good faith with any
law, governmental rule, regulation, guideline or order, the Affected Lender
shall on such date give notice in writing or by telephone (confirmed in writing)
to the Agent and the Borrower of such determination. The obligation of the
Affected Lender to
12
make or maintain its Eurodollar Loan or Loans so affected shall be terminated
and the Borrower shall forthwith and in any event no later than the earliest of
(x) the termination of the Eurodollar Interest Period in effect at the time any
such determination pursuant to this Section 3.8(a) is made, (y) the first day of
the Eurodollar Interest Period commencing immediately thereafter if such
determination is made in respect of a requested Eurodollar Loan, or (z) five
Business Days after receipt of notice from an Affected Lender under this Section
3.8(a), take one of the actions specified in Section 3.8(b). If by the earliest
of (x). (y) or (z). Borrower has not exercised one of the options specified in
Section 3.8(b). Borrower shall be deemed to have exercised the option set forth
in clause (iii) of Section 3.8(b) and to have given the notice specified
therein.
(b) Upon receiving any notification provided in Section 3.8(a). the
Borrower may (subject to Section 3.9) exercise one of the following options:
(i) If the determination by an Affected Bank relates only to
Eurodollar Loans then being requested by Borrower pursuant to a Notice of
Borrowing or to Base Rate Loans then being requested by Borrower to be
converted to Eurodollar Loans pursuant to a Notice of Conversion, the
Borrower may by giving notice in writing to the Agent and the Lenders
prior to the date on which such Eurodollar Loan is to be made or
converted, withdraw such Notice of Borrowing or Notice of Conversion for
all Lenders;
(ii) Upon written notice to the Lenders, the Borrower may terminate
the obligations of the Lenders to make or maintain Loans as, or convert
Loans into, Eurodollar Loans and in such event, the Borrower, shall not
later than the time specified in subsection 3.8(b), convert all Eurodollar
Loans into Base Rate Loans by giving notice thereof to the Agent and the
Lenders.
(iii) The Borrower may, by giving notice in writing to the Affected
Lender, the Agent and the other Lenders require the Affected Lender to
make the Eurodollar Loan then being requested as a Base Rate Loan (or to
keep outstanding as a Base Rate Loan the Base Rate Loan then being
converted), such notice to pertain only to the affected Eurodollar Loans
of the Affected Lender and to have no effect on the obligations of the
other Lenders to make or maintain Eurodollar Loans.
3.9 Compensation. The Borrower shall compensate each Lender, upon written
request by such Lender (which request shall be made through the Agent and shall
set forth the basis for requesting such amounts), for all losses, expenses and
liabilities (including, without limitation, any interest paid by such Lender to
lenders of funds borrowed by it to make or carry its Eurodollar Loans to the
Borrower, losses sustained by such Lender in connection with the liquidation or
re-employment of such funds and all other funding losses) which such Lender may
sustain: (i) if for any reason a conversion of any Eurodollar Loan does not
occur on a date specified therefor pursuant to Section 3.7, 3.8 or 3.11, or any
conversion into a Eurodollar Loan does not occur on the date specified therefor
in Section 3.11, (ii) if for any reason any prepayment or repayment or
conversion of any of its Eurodollar Loans occurs on a date which is not the last
day of a Eurodollar Interest Period applicable thereto, (iii) if any prepayment,
repayment or conversion of any of its Eurodollar Loans occurs on such last day
of the Eurodollar Interest Period applicable thereto in any amount in excess of
the amount notified to the Agent in writing not less than three Business Days
prior to such last day of such Eurodollar Interest
13
Period, (iv) if any prepayment, repayment or conversion of any of its Eurodollar
Loans occurs without at least three Business Days prior written notice thereof
having been given to the Agent (v) if any prepayment or repayment of any of its
Eurodollar Loans is not made on any date specified in a notice thereof given by
the Borrower or if any prepayment or repayment contemplated or required by a
Waterfall Certificate is not made on the Payment Date following the date such
Waterfall Certificate is delivered, or (vi) as a consequence of any default
under this Agreement or the delivery of any Certified Error Certificate.
3.10 Eurodollar Interest Period Determination.
(a) Each Eurodollar Interest Period for any Loan shall commence on a
Payment Date and expire on the succeeding Payment Date.
(b) No Eurodollar Interest Period in respect of any Loan shall
extend beyond its stated maturity date.
(c) Each Tranche of Term Loans (or portion thereof) outstanding as
Eurodollar Loans shall constitute a distinct group of Eurodollar Loans and,
although the Eurodollar Interest Period for such Tranche (or portion thereof)
shall be identical to the Eurodollar Interest Period for each other Tranche of
Term Loans and for Revolving Credit Loans, the Eurodollar Interest Period for
each Tranche of Term Loans shall be deemed separate and distinct.
(d) Subject to Section 3.10(e), if the Agent shall not have received
written notice from the Borrower on or prior to 11:00 a.m. (Closing Office time)
at least three Business Days prior to a Payment Date that the Borrower has
elected to convert all or a portion of a Tranche of Term Loans outstanding as
Eurodollar Loans to Base Rate Loans in accordance with the other provisions of
this Agreement, the Borrower shall be deemed to have elected to have such
Tranche of Term Loans (or portion thereof, as the case may be) continued as
Eurodollar Loans for a new Eurodollar Interest Period.
(e) Unless the Majority Lenders specifically agree in writing, no
Eurodollar Interest Period may be selected at any time that a Default or Event
of Default exists and Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans.
(f) The Borrower shall not be permitted to maintain as Eurodollar
Loans any Tranche of Loans or for Revolving Credit Loans if the outstanding
amount of such Tranche or of the Revolving Credit Loans to be maintained as
Eurodollar Loans is less than $1,000,000 or an integral multiple of $100,000 in
excess thereof.
3.11 Conversions. Borrower shall have the option to convert, on any
Payment Date, all or any portion of a Tranche of Term Loans from Base Rate Loans
to Eurodollar Loans or from Eurodollar Loans to Base Rate Loans; provided that
(i) after giving effect to any such conversion the amount of such Tranche
outstanding as a Eurodollar Loans shall be an amount equal to $1,000,000 or an
integral multiple of $100,000 in excess thereof and the amount thereof
outstanding as Base Rate Loans shall be an amount equal to not less than
$20,000; and (ii) unless the Majority Lenders specifically agree in writing, no
conversion to Eurodollar Loans shall be
14
permitted at any time that a Default or Event of Default exists. Each such
conversion shall be effected by Borrower giving the Agent written notice thereof
(a "Notice of Conversion") on or prior to 11:00 a.m. (Closing Office time) at
least three Business Days prior to a Payment Date, specifying the amount of
Loans to be converted, whether the Loans to be converted are Term Loans or
Revolving Credit Loans and, if Term Loans, the Tranche of Loans to which such
conversion relates.
Section 4. FEES.
4.1 Facility Fee. The Borrower agrees to pay to the Agent, for the ratable
account (based on the Commitments of each Lender) of each Lender party to this
Agreement on the Effective Date the fee set forth in the Fee Letter on the dates
set forth therein (such fee, the "Facility Fee").
4.2 Commitment Commission.
(a) The Borrower agrees to pay to the Agent for the account of each
Lender Commitment commission with respect to their respective Revolving Credit
Loan Commitments for the period commencing on the Effective Date, to and
including the Final Maturity Date (Revolving), computed at a rate per annum
equal to 1/4 of 1% on the average daily Unutilized Revolving Credit Loan
Commitment of such Lender during the period for which payment is made. Such
Commitment commission shall be payable quarterly in arrears on each Payment
Date, commencing with the Payment Date scheduled to occur on March 31, 2003 (the
first such Payment Date to include the full period from the Effective Date until
said first Payment Date).
(b) The Borrower agrees to pay to the Agent for the account of each
Lender Commitment commission with respect to their respective Term Loan
Commitments for the period commencing on the Effective Date, to and including
the last day of the Commitment Period (Term), computed at a rate per annum equal
to 1/4 of 1% on the average daily Unutilized Available Commitment of such Lender
during the period for which payment is made. Such Commitment commission shall be
payable quarterly in arrears on each Payment Date, commencing with the Payment
Date scheduled to occur on March 31, 2003 (the first such Payment Date to
include the full period from the Effective Date until said first Payment Date).
(c) The Borrower agrees to pay to the Agent for the account of each
Lender Commitment commission with respect to their respective Term Loan
Commitments for the period commencing on the day which is one year after the
Effective Date to and including the last day of the Commitment Period (Term),
computed at a rate per annum equal to 1/8 of 1% on the average daily Unutilized
Term Loan Commitment of such Bank during the period for which payment is made.
Such Commitment commission shall be payable quarterly in arrears on each Payment
Date, commencing with the Payment Date scheduled to occur on March 31, 2004, and
on the Maturity Date (Term) (the first such Payment Date to include the full
period from the first anniversary of the Effective Date until said first Payment
Date).
4.3 Utilization Fee. The Borrower agrees to pay to the Agent, for the
ratable account each Lender with a Term Loan Commitment a Utilization Fee equal
to 1% of the amount of each
15
Term Loan made by such Lender such fee to be paid on each date on which Term
Loans are made (each such fee, a "Utilization Fee").
Section 5. PAYMENTS, ETC.
5.1 Payments on Non-Business Days; Calculations. Whenever any payment to
be made hereunder or under any Note shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest shall be payable at the applicable rate
during such extension. Interest on Base Rate Loans hereunder and under the Notes
shall be calculated on the basis of a 365-day year and the actual number of days
elapsed and interest on Eurodollar Loans hereunder and under the Notes shall be
calculated on the basis of a 360-day year and the actual number of days elapsed.
If for any reason a Loan is repaid on the same day on which it is made, one
day's interest (subject to the other provisions of this Agreement) shall be paid
on that Loan. The Borrower hereby authorizes and directs the Agent and each
Lender to charge any account of the Borrower maintained at any office of the
Agent or such Lender with the amount of any principal, interest or fee when the
same becomes due and payable under the terms hereof or of the Notes; provided,
however, that neither the Agent nor any Lender shall be under any obligation to
charge any such account.
5.2 Net Payments; Application.
(a) All payments hereunder and under the Loan Documents (including,
without limitation, repayments and prepayments pursuant to Section 2) shall be
made by the Borrower to the Agent in freely transferable U.S. dollars and in
same day funds at the Closing Office without setoff or counterclaim and in such
amounts as may be necessary in order that all such payments (after (i)
withholding for or on account of any present or future taxes, levies, imposts,
duties or other similar charges of whatsoever nature imposed on the amounts
described above by any government or any political subdivision or taxing
authority thereof, other than any tax (other than such taxes referred to in
clause (ii) below) imposed on a Lender pursuant to the income tax laws of the
jurisdiction where such Lender's principal or lending office or offices are
located (collectively, the "Taxes") and (ii) deduction of an amount equal to any
taxes on or measured by the net income payable to such Lender with respect to
the amount by which the payments required to be made by this Section 5.2 exceed
the amount otherwise specified to be paid under this Agreement and the Notes)
shall not be less than the amounts otherwise specified to be paid under this
Agreement and the Notes. With respect to each such deduction or withholding
imposed in respect of any payment by or on behalf of the Borrower, the Borrower
shall promptly (and in no event later than 30 days thereafter) furnish to the
Agent such certificates, receipts and other documents as may be required to
establish any tax credit, exemption or reduction in rate to which any Lender or
holder of a Note may be entitled. Each Lender, other than a Lender organized and
existing under the laws of the United States of America or any political
subdivision thereof, agrees to furnish the Borrower, as soon as practicable
after any written request of the Borrower to such effect, any executed form
reasonably requested by the Borrower such as IRS Form W-8BEN or W-8ECI, and any
other applicable form as to such Lender's entitlement, if any, to exemption
from, or a reduced rate of, or its subjection to, United States withholding tax
on amounts payable to it hereunder by the Borrower or under the Notes of the
Borrower and each such Lender undertakes to use its best efforts promptly to
notify the Borrower of any material change in any information, statement or
16
form so furnished to the Borrower; provided, however, that any failure on the
part of any Lender to furnish any such information, statements or forms shall in
no way affect the obligations of the Borrower or the rights of any Lender under
the terms of this Agreement or of the Notes.
(b) Unless otherwise specifically provided herein, all payments
under or pursuant to, or in satisfaction of any of the Borrower's obligations
under this Agreement or under the Notes (including any received in connection
with the foreclosure upon or other realization on any Collateral) will be
applied in the following order of priority: (i) to any amounts not otherwise
listed in this Section 5.2(b) then due and payable by the Borrower under this
Agreement, the Notes or the Security Documents, (ii) to any fees then due and
payable pursuant to Section 4 of this Agreement, pro rata according to the
aggregate amount of fees then due and payable, (iv) to any interest on the Notes
(unless otherwise specified by the Borrower, pro rata according to the aggregate
amount of interest then due and payable on the Notes) then due and payable, (v)
to any principal amount then due under the Notes (first to the Term Notes and
then to the Revolving Credit Notes), (vi) to any amounts not then due on the
Term Notes, unless otherwise provided herein, to be applied first to amounts due
at final maturity thereof and thereafter to the installments due thereon in
inverse order of maturity (each such amount being applied ratably (based on
outstanding amounts) to the different Tranches of Term Loans), and (vii) to
reduce the unpaid principal amount of the Revolving Credit Loans.
5.3 Distribution by Agent. All payments received by the Agent on behalf of
the Lenders on account of principal and interest under this Agreement or the
Notes or on account of any fees payable for the account of the Lenders shall be
promptly distributed by the Agent to the Lenders (in the type of funds received
by the Agent) as follows: (a) if in respect of principal of any Loans made to
the Borrower then on a pro rata basis to each of the Lenders holding the Loans
in respect of which such payment is being made (b) if in respect of interest
paid on the Loans pursuant to Section 3 and the Borrower has designated (in
accordance with applicable provisions (if any) of this Agreement relating
thereto) that the payments are being made in respect of the Term Loans or
Revolving Credit Loans, then on a pro rata basis to each of the Lenders having
Term Loans or Revolving Credit Loans, as the case may be, outstanding; (d) if in
respect of interest on the Notes and the Borrower has not designated and this
Agreement does not otherwise specify whether such payments are being made in
respect of Term Loans or Revolving Credit Loans, then to each Lender in the
proportion that the aggregate amount of such unpaid interest due on the Loans of
each such Lender bears to the aggregate amount of such unpaid interest due on
all such Loans; (e) if in respect of fees, then to the Lenders in accordance
with their entitlement thereto (based on each Lender's share of the Total
Commitment, in the case of the Facility Fee, based on each Lender's share of the
Total Revolving Credit Loan Commitment, in the case of the fee described in
Section 4.2(a), based on each Lender's share of the Total Term Loan Commitment,
in the case of the fees described in Sections 4.2(b) and 4.2(c) and based on
each Lender's share of the applicable Term Loans described in Section 4.3, in
the case of the Utilization Fee); and (f) if in respect of a payment under
Section 5.2(a) hereof, to each Lender in accordance with its entitlement
thereto.
Section 6. CONDITIONS PRECEDENT TO EFFECTIVENESS
This Agreement shall become effective when and as of the date (the
"Effective Date") that] each of the following conditions have been satisfied to
the satisfaction of the Agent (or
17
waived by the Agent). If the Effective Date shall not have occurred by the close
of business (New York time) on December 31, 2002 (or such later date as is
agreed to by the Agent in writing), this Agreement shall not become effective
and shall be deemed rescinded, null and void.
6.1 Default, etc. On the Effective Date (both before and after giving
effect to the occurrence of the Effective Date) there shall exist no Default or
Event of Default and all representations and warranties made by the Loan Parties
herein or in the other Loan Documents or otherwise by the Loan Parties in
writing in connection herewith or therewith shall be true and correct in all
material respects with the same effect as though such representations and
warranties have been made at and as of such time.
6.2 Notes. The Agent shall have received for each of the Lenders the Term
Notes and Revolving Credit Notes, each duly executed and completed by the
Borrower.
6.3 Checklist Documents. The documentation set forth on the Closing
Checklist (Schedule 6.3), including, without limitation, the Guaranties, Pledge
Agreements and Security Agreements listed thereon, satisfactory to the Agent in
form and substance, shall have been delivered to the Agent, and such other
actions referred to on such Schedule and in such documentation shall have been
taken.
6.4 Supporting Documents of the Borrower. There shall have been delivered
to the Agent (with sufficient copies for each of the Lenders) such information
and copies of documents (if any), approvals (if any) and records (certified
where appropriate) of corporate and legal proceedings (if any) in addition to
those listed on the Closing Checklist as the Agent or any Lender may have
reasonably requested relating to the Loan Parties' entering into and performance
of the Loan Documents or any other agreements or documents related thereto.
6.5 Officer's Certificate. There shall have been delivered to the Agent
(with sufficient copies for each of the Lenders) a certificate of an Executive
Officer of the Borrower certifying, as of the date of the Loan, compliance with
the conditions of Sections 6.1, 6.14, 6.16, 6.17, 6.18 and 6.19 and also the
absence of any Material Adverse Changes of the type referred to in Section 6.10.
6.6 UCC Statements. Evidence satisfactory to the Agent of all filings of
financing statements (and assignments thereof) under the applicable Uniform
Commercial Code, satisfactory Lien search requests on Form UCC-11 and analogous
forms confirming the absence of any perfected Liens prior to the Lenders' and of
any other Liens other than Liens permitted hereunder shall have been delivered
to the Agent and all other actions with respect to the Liens created by the
Security Documents as are necessary or appropriate to perfect such Liens shall
have been taken.
6.7 Certifications; Financial Statements. The Borrower shall have
delivered to the Agent such financial statements and certifications of financial
statements as the Agent may have requested, which statements shall include, in
any event, month end financial statements of the type required by Section
7.02(a) and certified by the CFO as of the most recent month ending 30 days
prior to the date of such Loan, the annual financial statements required by
Section 7.2(b)
18
and (c) for the Fiscal Year most recently ended (or the prior Fiscal Year, if
less than 105 days have passed since the end of a Fiscal Year) accompanied by
the certifications required by Section 7.2(d).
6.8 Approvals and Consents. All orders, permissions, consents, approvals,
licenses, authorizations and validations of, and filings, recordings and
registrations with, and exemptions by (all of the foregoing, "Requisite
Consents", any Government Authority, or any other Person, required to authorize
or required in connection with the execution, delivery and performance of this
Agreement or the other Loan Documents and the transactions contemplated hereby
and thereby by an Loan Party shall have been obtained (and, if so requested,
furnished to the Agent, with sufficient copies for the Lenders).
6.9 Legal Opinions. The Agent shall have received legal opinions (in
sufficient counterparts for each of the Lenders) dated the Effective Date from
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, counsel to Borrower and each other Loan Party, in form
and substance satisfactory to the Agent.
6.10 Adverse Change. There shall have been, in the Agent's opinion, no
Material Adverse Change with respect to Borrower, any Primary Obligor, any
Secondary Obligor or any other Loan Party since December 31, 2001. None of the
Agent nor any Loan Party shall have become aware of any previously undisclosed
information with respect to any Loan Party which, in the Agent's opinion, would
have a Material Adverse Effect
6.11 Change in Law; No Opposition.(i) No change shall have occurred in
applicable law or in applicable regulations thereunder or in the interpretations
thereof by any Governmental Authority which, in the opinion of any Lender, would
make it illegal for such Lender to make one or more Loans hereunder; and (ii) no
suit, action or proceeding shall be pending or threatened before or by any
Governmental Authority seeking to restrain or prohibit the making of any Loan or
the consummation of the transactions contemplated hereby.
6.12 All Proceedings to be Satisfactory. All corporate, partnership,
limited liability company and legal proceedings and all instruments, documents
and papers in connection with the transactions contemplated by this Agreement
and the other Loan Documents and the other documents referred to herein shall be
satisfactory in form and substance to the Agent, and the Agent and any Lender
shall have received all such information and copies of all documents which the
Agent or such Lender may reasonably have requested in connection herewith, such
documents where appropriate to be certified by proper corporate officials or
governmental authorities.
6.13 Fees and Expenses. The fee referred to in Section 4.1 and the legal
fees and expenses of the Agent's New York counsel and (if any) local or special
counsel in connection with the transactions contemplated by this Agreement shall
(to the extent demand for payment thereof shall have been made) have been paid
in full.
6.14 FC Holdings Purchase. Agent shall have received evidence satisfactory
to it that FC Commercial shall have purchased the 20% ownership in FC Holdings
held by management on terms satisfactory to all parties thereto and the Agent.
6.15 [Intentionally omitted.]
19
6.16 FC Consumer Note. FC Consumer Lending shall have borrowed $16 million
in accordance with the FC Consumer Note.
6.17 Amended and Restated Agreement The Amendment Effective Date shall
have occurred under the Amended and Restated Agreement.
6.18 Exchange Offer.
(a) Holders of no fewer than 80% of the outstanding shares of New
Preferred Stock shall have accepted the Exchange Offer, irrevocably tendered
their shares to the Exchange Agent for exchange in accordance with the terms
thereof and not withdrawn their shares. The Agent shall have received a
certificate from the Exchange Agent, in form and substance satisfactory to
Agent, on the Effective Date to that effect.
(b) The Registration Statement shall have become effective and not
be the subject of any "stop order." No Legal Action shall be pending or
threatened before or by any Government Authority seeking to withdraw any shares
tendered pursuant to the Exchange Offer if the result of such Legal Action (if
adversely determined) would cause the aggregate number of outstanding shares
tendered and not withdrawn or sought to be withdrawn to be fewer than 80% of the
outstanding shares of New Preferred Stock.
(c) The opinions of counsel delivered to any Loan Party by counsel
for such Loan Party in connection with the Exchange Offer or any matter related
to the Exchange Offer, shall have been delivered to Lender, together with a
letter from each such counsel stating that Lender may rely upon such opinions
with the same effect as if said opinions were addressed to them.
6.19 Repayment of Loans. No Existing Loans shall be outstanding and the
aggregate principal amount of Loans (as defined in the Amended and Restated
Agreement) outstanding under the Amended and Restated Agreement shall not exceed
$50,400,000.
6.20 Copies of Other Loan Agreements. The Borrower shall have delivered to
the Agent certified copies of the Amended and Restated Agreement and of the FC
Consumer Note.
All documents, agreements, instruments, certificates, financial
statements, legal opinions, analyses, reports and other papers required to be
delivered by this Section 6 shall be in form and substance satisfactory to the
Agent and shall be delivered (with sufficient copies for each of the Lenders) to
the Agent at its Closing Office or as the Agent may otherwise direct.
Section 6A. CONDITIONS PRECEDENT TO ALL LOANS.
The Lenders shall not be obligated to make any Loans on or after the
Effective Date unless, at the time of the making of such Loan (except as
hereinafter indicated) the following conditions (unless waived in writing by the
Majority Lenders) have been satisfied:
6A.1 Certain Conditions. At the time of the making of such Loan, and
immediately after giving effect thereto, (a) all deficiencies, if any, with
respect to conditions precedent to any
20
prior Loan shall have been corrected to the satisfaction of the Agent, (b) all
of the conditions specified in Sections 6.1, 6.8, 6.10, 6.11 and 6.12 (with any
reference in any such Section to the Effective Date being deemed to be a
reference to the date of such Loans) shall be satisfied to the satisfaction of
the Agent, (c) each of the Notes, the Guaranties and the Security Documents
shall be in full force and effect and no party thereto shall have failed to
perform in any material respect any of its obligations thereunder, (d) no issuer
of any legal opinion issued in connection with any Loan Document or the making
of any Loan shall have rescinded or qualified any such legal opinion, (e) no
issuer thereof shall have rescinded or qualified any of the financial
statements, certificates, letters, reports, analyses, Requisite Consents or
other opinions referred to in Section 6, and (f) there shall have been, in the
Majority Lenders' opinion, no Material Adverse Change since the Effective Date
with respect to Borrower, any Primary Obligor, any Mid-Tier Company or any
Wholly-Owned Subsidiary.
6A.2 Subsequent Opinions of Counsel. If reasonably requested by the Agent
or Majority Lenders, the Agent shall have received from any or all of the
counsel referred to in Section 6.9 (or other counsel satisfactory to the Agent)
such favorable supplemental legal opinions addressed to the Agent and the
Lenders and dated the date of such Loan and covering such matters incidental to
the transactions contemplated by this Agreement as the Agent or the Majority
Lenders shall reasonably request, each of which opinions shall be in form and
substance satisfactory to the Agent and the Lender requesting same.
6A.3 Officer's Certificate.
(a) If requested by the Agent, the Agent shall have received a
certificate of an Executive Officer of the Borrower certifying, as of the date
of the Loan then being made, compliance with the provisions of Section 6.1 (with
the reference therein to the Effective Date being deemed a reference to the
Loans being made on the date of said certificate) and further to the effect that
the conditions specified in Section 6A.1 are satisfied at such time.
(b) The making of each Loan subsequent to the Effective Date shall
constitute a representation and warranty by the Borrower to the Agent that, at
the time of said subsequent Loan (and after giving effect thereto), (i) all
representations and warranties contained herein or in the other Loan Documents
or otherwise made by the Borrower or any other Loan Party in connection herewith
or therewith are true and correct in all material respects with the same effect
as though such representations and warranties were being made at and as of such
time, (ii) no Default or Event of Default exists and (iii) the conditions
specified in Section 6A.1 are satisfied at such time.
6A.4 Fees and Expenses. To the extent demand therefor shall have
been made, all legal fees and expenses of the Agent's New York counsel and (if
any) local or special counsel in connection with the transactions contemplated
by this Agreement shall have been paid in full.
Section 6B. ADDITIONAL CONDITIONS PRECEDENT TO TERM LOANS
The Lenders shall not be obligated to make any Term Loans unless, at
the time of making of such Loans, the following conditions (unless waived in
writing by the Majority Lenders), in
21
addition to the conditions set forth in Section 6A (unless waived in writing by
the Majority Lenders), have been satisfied:
6B.1 Eligible PFAL Portfolio Entity. (i) The PFAL Portfolio Entity (the
"Subject PFAL Entity") identified in the related Asset Pool Acquisition
Certificate as the entity which will acquire the Asset Pool specified therein
with a contribution to its capital made by FC Commercial with the proceeds of
such Loans which are advanced to FC Commercial by the Borrower in accordance
with the terms hereof (together with other equity contributions made by the
Person holding other Equity Interests pursuant to Section 6B.2(a) and the
proceeds of Indebtedness (if any) incurred pursuant to Approved Portfolio
Leverage Arrangements) shall be an Eligible PFAL Entity; (ii) there shall have
been no change to the Charter Documents of such Person or to any Shareholder
Agreement relating to such Person from the Charter Documents and Shareholder
Agreement provided with such Asset Pool Acquisition Certificate (or, if the Term
Loans are being requested in respect of an Asset Pool other than the first Asset
Pool acquired by such Subject PFAL Entity, since the Charter Documents and
Shareholder Agreement delivered in connection with the acquisition of such first
Asset Pool, except for any such changes consented to in writing by the Agent),
such Charter Documents and Shareholder Agreement shall be the sole agreements
with respect to equity ownership arrangements with respect to such Subject PFAL
Entity and such Charter Documents and Shareholder Agreement shall evidence
Permitted Shareholder Arrangements with respect to such Subject PFAL Entity; and
(iii) all action contemplated by Section 7.15 in connection with such Subject
PFAL Entity, including, without limitation, the amendment of Section 2 to the
Subsidiary Collateral Assignment or Subsidiary Pledge Agreement (as applicable)
to specify such Subject PFAL Entity, and the delivery of any stock certificates
or other certificates or instruments issued by such Subject PFAL Entity and of
an acknowledgement of lien by such Subject PFAL Entity, all in form and
substance satisfactory to the Agent, shall have been taken and completed.
6B.2 Capital Structure.
(a) A Person (such Person, a "Third Party Investor") other than FC
Commercial or an Affiliate of FC Commercial shall have made a cash contribution
to the Subject PFAL Entity's capital of not less than 25% and not more than 50%
of the total equity of such Subject PFAL Entity; provided that the foregoing
condition shall apply only if after giving effect to such Term Loans an
aggregate amount of Term Loans in excess of 25% of the Total Term Loan
Commitment shall have been made in respect of PFAL Portfolio Entities which at
the time of the making of such Loans had received cash capital contributions of
less than 25% or more than 50% of their total equity from Third Party Investors.
(b) No Third Party Investor shall have greater rights with respect
to such Subject PFAL Entity than FC Commercial (except to the extent that, if
such Third Party Investor has acquired more Equity Interests in such Subject
PFAL Entity than FC Commercial (and was permitted to do so pursuant to the terms
hereof), such greater rights are commensurate with and derive solely from, such
larger holding of Equity Interests.
(c) No Third Party Investor shall have acquired equity interests or
voting rights in such Subject PFAL Entity on a basis more favorable to such
Person than the arrangements pursuant to which FC Commercial acquired its equity
interests in such Subject
22
PFAL Entity (and without limiting the foregoing, no Third Party Investor shall
have acquired its Equity Interests at a cash cost per unit or interest lower
than that paid by FC Commercial) and no Third Party Investor acquiring any
Equity Interests in such Subject PFAL Entity shall have been given any
consideration (other than issuance of such Equity Interests) for making its
equity contribution.
6B.3 Consummation of Asset Acquisition. There shall have been delivered to
the Agent evidence satisfactory to the Agent that the acquisition of the Asset
Pool described in the related Asset Pool Acquisition Certificate shall have been
consummated in accordance with the terms of the applicable asset purchase
agreement (without any waiver of any material provision thereof by the Subject
PFAL Entity) and the Asset Pool conforms to the description thereof contained in
the Asset Pool Acquisition Certificate as modified by revisions permitted by
Section 6B.4, that the entire amount of proceeds of such Loans were loaned to FC
Commercial under the FC Commercial (PFAL) Pledged Note and contributed by FC
Commercial to the capital of the Subject PFAL Entity simultaneously with the
closing of such acquisition, that the entire amount of the capital contribution
by other holders of the Equity Interests in such Subject PFAL Entity were
contributed, and the proceeds of all Indebtedness incurred by such Subject PFAL
Entity were received by such Subject PFAL Entity, at the same time as or before
such FC Commercial contribution, and that such Subject PFAL Entity used all such
capital contributions together all such proceeds of Indebtedness to acquire such
Asset Pool.
6B.4 Notices.
(a) The Final Asset Pool Acquisition Certificate in respect of the
Asset Pool in respect of which such Loans are requested shall have been
delivered to the Agent not less than 10 Business Days prior to the Borrowing
Date of such Term Loans; provided that additional written revisions to the
applicable Asset Pool Acquisition Certificate may be delivered to the Agent
until 11:00 a.m. (Closing Office time) on the day which is two Business Days
preceding the Borrowing Date for such Loans if such revisions relate only to the
Acquisition Price, the amount of Loans being requested (three Business Days
notice being required if such Loans are to be Eurodollar Loans) or provide
additional details as to the related Asset Pool which do not result in the Asset
Pool as so described being different in any material respect from the Asset Pool
as most recently described on prior to the tenth Business Day preceding such
Borrowing Date.
(b) A Notice of Borrowing and Final NPV Pool Certificate in respect
of the related Asset Pool, each in accordance with Section 2.2, shall have been
delivered to the Agent.
(c) The Agent shall have been provided with such other information
as to the Asset Pool as it shall have reasonably requested.
6B.5 Asset Pool.
(a) The Asset Pool shall be an Eligible Asset Pool.
(b) The sellers of the Asset Pool shall be Eligible Sellers.
6B.6 Officer's Certificate.
23
(a) Borrower shall have delivered to the Agent a certificate of an
Executive Officer certifying compliance with Sections 6B.1, 6B.2, 6B.3 and 6B.5
and 6B.10.
(b) In addition to the representations and warranties applicable to
the making of such Loan set forth in Section 6A.3, the making of each Term Loan
shall constitute a representation and warranty by the Borrower to the Agent
that, at the time of said Term Loan (and after giving effect thereto) all
conditions specified Sections 6B.1, 6B.2, 6B.3 and 6B.5 and 6B.10 are satisfied
at such time.
6B.7 Opinion of Counsel. If requested by the Agent, in the case of a
Subject PFAL Entity which is a US Person, ▇▇▇▇▇▇ and ▇▇▇▇▇ LLP or other counsel
to the Borrower satisfactory to the Agent and, in the case of any other Subject
PFAL Entity, counsel satisfactory to the Bank, shall have delivered to the Agent
an opinion of counsel as to matters relating to the Subject PFAL Entity or such
other matters as the Agent may reasonably request.
6B.8 Utilization Fee. The Utilization Fee in respect of such Term Loans
shall have been paid in full to the Agent.
6B.9 Leverage Arrangements. Not less than five Business Days prior to the
proposed Borrowing Date for such Term Loans (or such lesser period of time (if
any) to which the Agent consents in writing) the Borrower shall have delivered
to the Agent copies, certified by an Executive Officer as complete and correct
of each instrument, agreement and other document evidencing any of the
arrangements with respect to Indebtedness incurred and to be incurred by the
Subject PFAL Entity and as constituting Approved Portfolio Leverage
Arrangements, or a certificate from an Executive Officer that such Subject PFAL
Entity has not incurred any Indebtedness with respect to any other Asset Pool
and will not incur any Indebtedness with respect to the Asset Pool in respect of
which such Term Loans are requested.
6B.10 Adverse Waterfall Event. No Adverse Waterfall Event shall have
occurred for six months with respect to any Asset Pool owned by the Subject PFAL
Entity.
6B.11 Effective Date. The Effective Date shall have occurred.
6B.12 Deficiency Letter. The Borrower shall have satisfied its obligations
under the Agreement entitled "Post-Closing-PFAL" dated on or about the Effective
Date, as the same be from time to time amended, supplemented or otherwise
modified.
6B.13 Pledged Note. The Borrower shall have delivered to the Agent a
promissory note in the principal amount of $54,000,000 payable by FC Commercial
to the order of the Borrower, duly endorsed in blank (the "FC Commercial (PFAL)
Pledged Note").
All documents, agreements, instruments, certificates, financial
statements, legal opinions, analyses, reports and other papers required to be
delivered by this Section 6B shall be in form and substance satisfactory to the
Agent and shall be delivered (with sufficient copies for each of the Lenders) to
the Agent at its Closing Office or as the Agent may otherwise direct
24
Section 7. AFFIRMATIVE COVENANTS.
Borrower warrants and represents to and covenants to the Lenders and the
Agent that, so long as this Agreement is in effect and until the Commitments are
terminated and all of the Loans, together with interest and all other
obligations incurred hereunder are paid in full, Borrower will perform the
obligations set forth in this Section 7 (unless it shall have first procured the
written consent of the Majority Lenders to do otherwise), and will cause each
Primary Obligor, Secondary Obligor and other Loan Party to perform the
obligations set forth in this Section 7 which are applicable to such Person
(unless it shall have first procured the written consent of the Majority Lenders
to do otherwise).
7.1 Financial Statements. The Borrower will furnish to the Agent and each
Lender:
(a) As soon as available and in any event within 30 days after the
close of each calendar month, as at the end of such month and for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such month, a consolidated and consolidating balance sheet of Borrower and the
other members of the Consolidated Group, and the related statement of operations
for such period, all certified by the chief financial officer of the Borrower
and each other member of the Consolidated Group as being prepared in accordance
with GAAP and to present fairly the financial position and results of operation
of such Person for such period;
(b) As soon as available but not later than one hundred five (105)
days after the close of each Fiscal Year of the Borrower, as at the end of and
for the Fiscal Year just closed, an audited consolidated balance sheet of
Borrower and the other members of the Consolidated Group, the related statement
of operations (including income statement) and a reconciliation of capital for
such year, all certified on an unqualified basis by a firm of independent
certified public accountants selected by the Borrower and acceptable to Agent in
Agent's sole and absolute discretion;
(c) As soon as available but not later than one hundred five (105)
days after the close of each Fiscal Year of the Borrower, as at the end of and
for the Fiscal Year just closed, an unaudited consolidating balance sheet of
Borrower and the other members of the Consolidated Group, the related statements
of operations (including income statement) and a reconciliation of capital for
such year, prepared by the chief financial officer of Borrower;
(d) Concurrently with the delivery of the financial statements
described in subsection (b) above: (A) a certificate of the aforesaid
independent certified public accountants certifying to Agent that based upon
their examination of the affairs of Borrower and the other members of the
Consolidated Group, performed in connection with the preparation of said
financial statements, they are not aware of the occurrence or existence of any
condition or event which constitutes an Event of Default or Default, or, if they
are aware thereof, the nature thereof, and (B) a reliance letter executed by an
authorized partner of the aforesaid independent certified public accountants, in
form and substance reasonably acceptable to Agent, and acknowledging that Agent
and Lenders may rely on such financial statements in connection with this
Agreement notwithstanding that Agent and Lenders are not in privity with such
independent certified public accountants in connection with such financial
statements.
25
(e) (i) Concurrently with delivery to its stockholders copies of all
financial and other information delivered by Borrower to such Persons, including
without limitation, its proxy statements and annual reports to stockholders.
Within two (2) Business Days after delivery to the SEC by Borrower, which in all
cases shall be on a timely basis in accordance with the applicable document and
the Securities Laws, copies of all reports and other filings filed by Borrower
with the SEC, including without limitation, all reports on Forms 10K, 10Q or 8K
promulgated under the Securities Exchange Act of 1934, as amended, and all
registration statements filed under the Securities Act of 1933, as amended.
(ii) Concurrently with delivery of the financial statements required
pursuant to Sections 7.1(a) and (b) hereof, a certificate executed by the
President, Treasurer or Chief Financial Officer of Borrower that (A) no
Event of Default or Default has occurred and is continuing under this
Agreement, (B) that Borrower is in compliance with the covenants set forth
in Section 8.20 hereof, setting forth the Borrower's calculations with
respect to such compliance; and that (C) no event of default and no event
or condition which, with the passage of time or the giving of notice or
both, would constitute an event of default has occurred and is continuing
under any other Indebtedness Instrument ("Other Indebtedness Instrument
Unmatured Default") or, if an Event of Default or Default has occurred
under this Agreement or an event of default or Other Indebtedness
Instrument Unmatured Default has occurred under any other Indebtedness
Instrument, setting forth the details of such event and the action which
Borrower proposes to take with respect thereto.
(f) [Intentionally omitted].
(g) Promptly upon receipt thereof, copies of all detailed financial
reports and Management Letters, if any, submitted to any member of the
Consolidated Group by the Auditors, in connection with each annual or interim
audit of their respective books by such Auditors;
(h) As soon as possible and in any event (A) within 30 days after a
Loan Party, or any of the respective ERISA Affiliates of any Loan Party, knows
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Pension Plan has occurred or is expected
to occur and (B) within 10 days after a Loan Party or any of its ERISA
Affiliates knows that any other Termination Event with respect to any Pension
Plan has occurred or is expected to occur, a statement of the CFO of the
Borrower describing such Termination Event and the action, if any, which the
affected Loan Party or ERISA Affiliate proposes to take with respect thereto;
(i) Promptly and in any event within five Business Days after
receipt thereof by a Loan Party or any of its ERISA Affiliates from the PBGC,
copies of each notice received by such Person of the PBGC's intention to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, any notice of noncompliance issued by the PBGC with respect to a
proposed standard termination of a Pension Plan, and any notice issued by the
PBGC with respect to a proposed distress termination of a Pension Plan;
26
(j) Promptly and in any event within 30 days after the filing
thereof with the IRS, copies of each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) with respect to each Pension Plan;
(k) Promptly and in any event within five Business Days after
receipt thereof by a Loan Party or any of its ERISA Affiliates from a
Multiemployer Plan sponsor, a copy of each notice received by such Person
concerning (x) the imposition or amount of withdrawal liability under Subtitle E
of Title IV of ERISA or (y) any determination by a Multiemployer Plan sponsor
that such Multiemployer Plan is, or is expected to be, in "reorganization"
(within the meaning of Section 4241 of ERISA) or "insolvent" (within the meaning
of Section 4245 of ERISA), or has incurred or is expected to incur an
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code);
(l) Upon request of the Agent made from time to time, deliver to the
Agent a copy of any Pension Plan sponsored, contributed to, participated in or
maintained by Borrower or any ERISA Affiliate; and
(m) With reasonable promptness, such other information respecting
the business, properties, operations, prospects or condition (financial or
otherwise) of any member of the Consolidated Group and any other Primary
Obligor, Mid-Tier Company, Secondary Obligor-Existing or Secondary Obligor-R
and, to the extent reasonably available, any other Secondary Obligor as the
Agent or any Lender may from time to time in writing reasonably request
provided, that Borrower shall not be required to furnish to the Agent or any
Lender any such information relating to a Portfolio Entity-Post AE which is not
a PFAL Portfolio Entity if (i) the Charter Documents of, or Shareholder
Agreement relating to, such Person, in each case as in effect on the date of
formation of such Person, prohibit such disclosure and (ii) notice of such
prohibition on disclosure is provided to the Agent within five days of formation
of such Person (any such restriction, a "Disclosure Restriction").
7.2 Other Required Notices.
(a) [Intentionally omitted].
(b) Borrower shall notify Agent promptly after obtaining knowledge
of:
(i) except as otherwise previously disclosed, any event or
occurrence which Borrower has determined has caused a material loss or
decline in value of the Assets of Borrower, any Primary Obligor, any
Mid-Tier Company or any Secondary Obligor other than, prior to the REO
Post-25% Time, an REO Affiliate, due to casualty or any other adverse
occurrence and the estimated (or actual, if available) amount of such loss
or decline;
(ii) the institution of (x) any suit or administrative proceeding
which, if determined adversely to Borrower, any Primary Obligor, any
Mid-Tier Company, any Wholly-Owned Subsidiary or any other Secondary
Obligor is reasonably likely to or could reasonably be expected to
materially adversely affect the operations, financial condition or
business of any obligor of a Pledged Note or have a Material Adverse
Effect on the Borrower, any Primary Obligor, any Mid-Tier Company, after
the REO Post-25%
27
Time, an REO-PFAL Affiliate, or any Wholly-Owned Subsidiary other than
(except as set forth with respect to an REO-PFAL Affiliate) an REO
Affiliate, and (y) any other such suit or administrative proceeding
against Borrower, any Primary Obligor or any Mid-Tier Company in which the
uninsured amount involved is $750,000 or more, such notice to be given on
or prior to the end of the calendar month in which the applicable event
occurs;
(iii) Borrower, any Primary Obligor or any Mid-Tier Company becoming
subject to any Charge, restriction, judgment, decree or order which could
reasonably be expected to have a Material Adverse Effect or any Secondary
Obligor becoming subject to any Charge, restriction, judgment, decree or
order if the same could reasonably be expected to have a Material Adverse
Effect on Borrower, any Primary Obligor, any Mid-Tier Company or any
Wholly-Owned Subsidiary other than an REO Affiliate;
(iv) the commencement of any lockout, strike or walkout relating to
any labor contract to which Borrower, any Primary Obligor, or any Mid-Tier
Company is a party, or, if the same could reasonably be expected to have a
Material Adverse Effect on Borrower, any Primary Obligor, any Mid-Tier
Company or any Wholly-Owned Subsidiary other than an REO Affiliate, the
commencement of any lockout, strike or walkout relating to any labor
contract to which any other Secondary Obligor is a party;
(v) except as otherwise previously disclosed, any event or
occurrence (x) in respect of Borrower, any Primary Obligor, any Mid-Tier
Company or any Wholly-Owned Subsidiary which could reasonably be expected
to have a Material Adverse Effect, (y) in respect of any other Secondary
Obligor which could reasonably be expected to have a Material Adverse
Effect on the Borrower, any Primary Obligor, any Mid-Tier Company or any
Wholly-Owned Subsidiary other than an REO Affiliate or (z) in respect of
Borrower, any Primary Obligor or any Secondary Obligor if the same could
reasonably be expected to have a material adverse effect on the ability of
any obligor of a Pledged Note to repay such Pledged Note;
(vi) (x) the occurrence of a default by Borrower, any Primary
Obligor or any Mid-Tier Company under any agreement, document or
instrument to which such Person is a party which could reasonably be
expected to have a Material Adverse Effect, (y) the occurrence of a
default by any other Secondary Obligor under any agreement, document or
instrument to which it is a party which could reasonably be expected to
have a Material Adverse Effect on the Borrower, any Primary Obligor, any
Mid-Tier Company or any Wholly-Owned Subsidiary other than an REO
Affiliate or (z) the occurrence of any default by Borrower, any Primary
Obligor or any Secondary Obligor which could reasonably be expected to
materially and adversely affect any such Person's ability to perform its
respective obligations under the Loan Documents;
(vii) the filing of a petition by or against Borrower, any Primary
Obligor, Secondary Obligor, any other Pledged Entity or any other Loan
Party under any section or chapter of the United States Bankruptcy Code or
any similar law or regulation or any such Person shall make an assignment
for the benefit of its creditors or if any case or proceeding is filed by
or against any such Person for its dissolution or liquidation;
28
(viii) the making of an application for the appointment of a
receiver, trustee or custodian for any of the assets of Borrower, any
Primary Obligor or any Secondary Obligor or any other Loan Party;
(ix) the exercise by any holder of any option, warrant or right to
purchase any Equity Interest in Borrower, any Primary Obligor or any
Secondary Obligor;
(x) any breach of the covenant set forth in Section 8.11;
(xi) the issuance or sale of any Securities by Borrower, any Primary
Obligor or any Secondary Obligor, whether or not permitted pursuant to the
terms hereof; and
(xii) the occurrence of the REO Post -25% Time.
(c) On the 25th day of each month or, if sooner, on the fourth to
last CFCCA-P Business Day of each month, Borrower shall deliver to the Agent (i)
Waterfall Certificates in respect of each Asset Pool and PFAL Portfolio Entity,
certified by an Executive Officer of Borrower; (ii) a Summary Waterfall
Certificate in respect of all Asset Pools; and (iii) a copy of each certificate
and notice delivered pursuant to Section 7.2 (other than Section 7.2(b)) of the
Amended and Restated Agreement as in effect on the date hereof (or, if such
Agreement is terminated, each such certificate and notice that it would have
been required to have so delivered had such Agreement not been terminated);
(d) Borrower shall notify the Agent of the occurrence of any
Extraordinary Transaction on or prior to the occurrence of such event and of the
receipt by Borrower, any Primary Obligor or any Secondary Obligor of
Extraordinary Transaction Proceeds on or prior to such receipt (or, in either
case, at such earlier time (if any) as may be specified with respect thereto
elsewhere in this Agreement).
(e) (i) The Borrower shall give the Agent notice that a Secondary
Obligor has become a Mid-Tier Company (due to the amount of assets contributed
to it on the date of its formation or an increase in assets thereafter) within
30 days of such Person becoming a Mid-Tier Company.
(ii) The Borrower shall give the Agent notice that a Tier IV Company
has ceased to constitute a Tier IV Company (due to an increase in the fair
market value of its assets or such company engaging in any business)
within 30 days of such Person ceasing to constitute a Tier IV Company and
shall promptly deliver to Lender a revised Schedule 10.43 to reflect such
change.
(iii) The Borrower shall give the Agent notice that a Tier V Company
has ceased to constitute a Tier V Company within 30 days of such Person
ceasing to constitute a Tier V Company.
(f) The Borrower shall give the Agent notice that it or any Primary
Obligor, Mid-Tier Company, Wholly-Owned Subsidiary or Loan Party intends to
acquire Equity Interests in any Person or to form a Subsidiary prior to the
making of any such acquisition or any such formation and, if requested in
writing by the Agent, forthwith upon the making of such
29
acquisition or any such formation, shall deliver to the Agent an addendum to
Schedule 10.23 reflecting the same and, if such acquisition or formation is of
an REO Affiliate, a new Schedule 10.46 reflecting the same.
(g) On or before the fourth to last CFCCA-P Business Day of each
month, Borrower shall deliver to the Agent a Portfolio Protection Expense Report
in form and detail satisfactory to the Agent showing as of the close of business
on the last Business Day of the preceding calendar month the aggregate amount
retained by Secondary Obligors as Portfolio Protection Expenses to pay Portfolio
Protection Expenses not theretofore paid (the "Aggregate PPE Amount"), the
aggregate amount of Portfolio Protection Expenses theretofore paid and the
aggregate amount of Portfolio Protection Expenses withheld (in the aggregate) by
such Persons during the immediately preceding calendar month. In addition, such
Report shall itemize each item of the Aggregate PPE Amount in excess of $25,000
(each such item, an "Itemized PPE Amount"), and Borrower shall provide to the
Agent such other information with respect thereto as the Agent may request. If
the Agent gives the Borrower notice that it disputes the inclusion of any
Itemized PPE Amount as a Portfolio Protection Expense (whether due to the
reasonableness thereof, the time such amount has been or is expected to be
retained in advance of payment of the related expense or otherwise), such
challenged item shall constitute a "Challenged Portfolio Protection Expense."
(h) On or before the fourth to last CFCCA-P Business Day of each
month, Borrower shall deliver to Agent an Asset Pool NPV Percentage Certificate
with respect to each Asset Pool (which shall detail for each Asset Pool the Net
Present Value of the assets of such Asset Pool and the amount of Indebtedness
relating to such Asset Pool and the amount of Guaranty Equivalents issued by
PFAL Portfolio Entity which owns such Asset Pool) certified by an Executive
Officer.
(i) The Borrower shall deliver to the Agent an Asset Pool
Acquisition Certificate in respect of each Asset Pool in respect of which it
desires that Term Loans be made not less than ten Business Days prior to the AP
Funding Date for such Asset Pool.
(j) The Borrower shall give the Agent notice that any PFAL Portfolio
Entity has formed an REO- PFAL Affiliate within five days after such formation
and such other information as the Agent may request with respect thereto
promptly following such request.
(k) The Borrower shall give the Agent notice of the transfer of any
property by a PFAL Portfolio Entity to one of its REO-PFAL Affiliates within
five days of any such transfer and such other information as the Agent may
request with respect thereto promptly following such request.
(l) If at any time the Net Present Value of Assets of REO-PFAL
Affiliates exceeds 15% of the Net Present Value of the Assets of all PFAL
Portfolio Entities, the Borrower shall give the Agent written notice thereof and
shall thereafter, on or prior to fourth to last Business Day of each month,
report to Agent such percentage and provide such other information as to
REO-PFAL Affiliates as the Agent may reasonably request.
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(m) The Borrower shall give the Agent notice of the occurrence of an
Adverse Waterfall Event within three days of such occurrence.
7.3 Payment of Charges.
(a) Other than Charges payable by First X or First B, Borrower, each
Primary Obligor, each Mid-Tier Company, each Wholly-Owned Subsidiary other than
(subject to Section 7.3(b)) any REO Affiliate shall pay promptly, when due, all
Charges and Borrower, each Primary Obligor and each Mid-Tier Company and each
such Wholly-Owned Subsidiary shall not permit Charges to arise or to remain
unpaid and will promptly discharge the same. In the event Borrower, any Primary
Obligor or Secondary Obligor other than (subject to Section 7.3(b)) an REO
Affiliate, at any time or times hereafter, shall fail to pay the Charges or to
obtain such discharges as required herein, Borrower shall so advise Agent
thereof in writing. Agent may, without waiving or releasing any obligation,
covenant or agreement of Borrower or any Event of Default or Default, in its
sole and absolute discretion, at any time or times thereafter, make such
payment, or any part thereof, or obtain such discharge and take any other action
with respect thereto which Agent deems advisable. All sums so paid by Agent and
any expenses relating thereto, including reasonable attorneys' fees, court
costs, expenses and other charges, shall be part of the Obligations, payable by
Borrower to Agent on demand. Notwithstanding the foregoing, Borrower, any
Primary Obligor, any Mid-Tier Company or Wholly-Owned Subsidiary may permit or
suffer the Charges to attach to its Assets and may dispute, without prior
payment thereof, the Charges, on the conditions that: (i) Borrower or the
applicable Primary Obligor, Mid-Tier Company or Wholly-Owned Subsidiary, in good
faith, shall be contesting the same in an appropriate proceeding diligently
pursued; (ii) enforcement thereof against any Assets of Borrower or the
applicable Primary Obligor or Mid-Tier Company or Wholly-Owned Subsidiary shall
be stayed; and (iii) appropriate reserves therefor shall have been established
on the Records of Borrower or the applicable Primary Obligor or Mid-Tier Company
or Wholly-Owned Subsidiary in accordance with GAAP.
(b) Borrower shall ensure that each REO-PFAL pays promptly, when
due, all Charges to the extent necessary to ensure that the Net Present Value of
REO-PFAL Affiliates (based on the Net Present Value of their respective assets)
which have not so paid their Charges does not exceed 25% of the Net Present
Value of all REO-PFAL Affiliates (based on the Net Present Value of their
respective assets), unless the Net Present Value of REO-PFAL Affiliates (as so
determined) not paying Charges does not exceed $1,000,000. In the event an
REO-PFAL Affiliate, at any time or times hereafter, shall fail to pay any
Charges, Agent may, without waiving or releasing any obligation, covenant or
agreement of Borrower or any Event of Default or Default, in its sole and
absolute discretion, at any time or times thereafter, make such payment, or any
part thereof, or obtain discharge of such Charge and take any other action with
respect thereto which Agent deems advisable. All sums so paid by Agent and any
expenses relating thereto, including reasonable attorneys' fees, court costs,
expenses and other charges, shall be part of the Obligations, payable by
Borrower to Agent on demand.
7.4 Insurance. Borrower and each Primary Obligor, Mid-Tier Company, each
REO-PFAL Affiliate and each Wholly-Owned Subsidiary at each of such respective
Person's sole cost and expense, shall keep and maintain: (i) policies of
insurance against all hazards and risks ordinarily insured against by other
owners or users of properties in similar business or as
31
reasonably requested in writing by Agent; and (ii) public liability insurance
relating to such Person's ownership and use of its Assets. All such policies of
insurance shall be in form, with insurers and in such amounts as may be
satisfactory to Agent. Borrower shall deliver to Agent the original (or
certified) copy of each policy of insurance, and evidence of payment of all
premiums for each such policy. Such policies of insurance of the Borrower,
Primary Obligors and Wholly-Owned Subsidiaries (except those of public
liability) shall contain an endorsement, in form and substance acceptable to
Agent, showing losses payable to Agent for the ratable benefit of Lenders. Such
endorsement or an independent instrument furnished to Agent, shall provide that
all insurance companies will give Agent at least thirty (30) days prior written
notice before any such policy or policies of insurance shall be altered or
canceled and that no act or default of Borrower or any other Person shall affect
the right of Agent for the ratable benefit of Lenders, to recover under such
policy or policies of insurance in case of loss or damage. Upon request by Agent
and, whether or not such request is made, upon the occurrence of an Event of
Default or Default, Borrower hereby directs all insurers under such policies of
insurance (except those of public liability) to pay all proceeds payable
thereunder directly to Agent. Upon request by Agent and upon the occurrence of
an Event of Default or Default, Borrower, irrevocably, appoints Agent (and all
officers, employees or agents designated by Agent) as Borrower's true and lawful
agent and attorney-in-fact for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of Borrower on any
check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect to such policies of insurance. In the event Borrower, any Primary
Obligor or any Mid-Tier Company or Wholly-Owned Subsidiary at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay any premium in whole or in part relating thereto, then
Agent, without waiving or releasing any obligation, covenant or agreement of
Borrower or any Event of Default or Default, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premium and take any other action with respect thereto
which Agent deems advisable. All sums so disbursed by Agent, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be part of the Obligations, payable by Borrower to Agent on
demand. Agent shall also be named as an additional insured with respect to
Borrower's, each Primary Obligor's and each Wholly-Owned Subsidiary's liability
insurance.
7.5 Maintenance of Records. Borrower will keep, and will cause each
Primary Obligor and each Wholly-Owned Subsidiary other than REO Affiliates which
are not REO-PFAL Affiliates to keep, at all times books of record and account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs, and each such Person will
provide, and will cause each such other Person to provide, adequate protection
against loss or damage to such books of record and account.
7.6 Preservation of Existence. Each of Borrower, each Primary Obligor,
each Mid-Tier Company, each Secondary Obligor-Existing, after the REO Post 25%
Time, each REO PFAL Affiliate and each Subsidiary of Borrower other than a Tier
IV Company or (except as provided) an REO Affiliate or a Harbor Debtor, and ,
will maintain and preserve its respective corporate, limited liability company
or partnership existence, rights, privileges and franchises in its jurisdiction
of organization, and qualify and remain qualified to do business in, and
maintain its rights, privileges and franchises in each other jurisdiction which
in the opinion of the
32
respective board of directors, manager, general partner or other governing
Person of Borrower, such Primary Obligor, Mid-Tier Company, Secondary
Obligor-Existing, other Subsidiary of Borrower or REO PFAL Affiliate continue to
be advantageous to it and each such Person (including each Tier IV Company and
REO Affiliate which is a Subsidiary of Borrower) shall comply in all material
respects with all applicable Legal Requirements. Without limiting the generality
of the foregoing, the Borrower agrees to (and to cause each such other Person
to) qualify to do business as a foreign corporation in each jurisdiction where
the nature of its business and the operations conducted by it therein require it
to be so qualified.
7.7 Preservation of Assets. Each of Borrower and each Primary Obligor will
keep its property material to the conduct of its business in good repair,
working order and condition and from time to time make all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, so that the business carried on by it may be conducted at
all times in accordance with prudent business management.
7.8 Inspection of Books and Assets. Borrower shall permit Agent, Lenders
and each of their respective representatives reasonable access during normal
business hours to its properties and personnel, and shall disclose and make
available to Agent and Lenders all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations, and liabilities of
Borrower, its Subsidiaries, each Mid-Tier Company, each Secondary
Obligor-Existing, each other Secondary Obligor-R and each PFAL Portfolio Entity
(and shall use its best efforts to cause each other Existing S Co. and each
other Portfolio Entity-Post AE to do the same), including, but not limited to,
all books of account (including the general ledger), tax records, minute books
of meetings of boards of directors (and any committees thereof) and
shareholders, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, accountants' work papers
(other than those that are the property of its independent outside auditors),
litigation files, loan files, plans affecting employees, and any other business
or prospects in which the Lenders may have a reasonable interest in connection
with the Loans, provided that such access shall be reasonably related to the
transactions contemplated hereby and not unduly interfere with normal
operations, and provided further that in the event that any of the foregoing are
in the control of any third party, Borrower shall use its reasonable best
efforts to cause such third party to provide access to such materials to the
Agent and Lenders who shall request the same. In the event that Borrower is
prohibited by law from providing any of the access referred to in the preceding
sentence to the Agent and Lenders, it shall use its reasonable best efforts to
obtain promptly waivers thereof so as to permit such access. Borrower shall make
the directors, officers, employees and agents and authorized representatives
(including counsel and independent public accountants) of Borrower, its
Subsidiaries, each Mid-Tier Company, each Secondary Obligor-Existing and each
other Secondary Obligor-R available (and shall use its best efforts to cause
each other Existing S Co. and Portfolio Entity-Post AE to do the same) to confer
with Agent and Lenders and their respective representatives, provided that (i)
such access shall be reasonably related to the transactions contemplated hereby
and not unduly interfere with normal operations and (ii) unless a Default or
Event of Default exists, counsel to Borrower shall be permitted to be present at
any meeting between Borrower's independent public accountants and the Agent or
the Lenders).
7.9 Payment of Indebtedness. Each of Borrower, each Primary Obligor, each
Mid-Tier Company and, subject to the final sentence of this Section 7.9, each
Wholly-Owned
33
Subsidiary will duly and punctually pay, or cause to be paid, the principal of
and the interest on all Indebtedness heretofore or hereafter incurred or assumed
by such Person, when and as the same shall become due and payable, provided that
neither Borrower, nor any Primary Obligor, any Wholly-Owned Subsidiary or PFAL
Portfolio Entity shall be required to pay any Indebtedness (other than
Indebtedness incurred under this Agreement or any other Loan Document) while the
same is being contested by it in good faith and by appropriate proceedings so
long as Borrower or such Primary Obligor or Wholly-Owned Subsidiary or PFAL
Portfolio Entity (as the case may be) shall have set aside on its books
appropriate reserves in accordance with GAAP with respect thereto and title to
any property of Borrower or the applicable Primary Obligor or Wholly-Owned
Subsidiary or PFAL Portfolio Entity is not jeopardized. The provisions of this
Section 7.9 do not relate to Indebtedness of FC Capital, Bosque Asset Corp. or
other Wholly-Owned Subsidiaries which are REO Affiliates or Harbor Debtors.
7.10 Further Assurances. Each of Borrower, each Primary Obligor, each
Subsidiary and each other Loan Party will, and will cause each of its respective
Subsidiaries to, make, execute or endorse, and acknowledge and deliver or file,
all such vouchers, invoices, notices, and certifications and additional
agreements, undertakings, conveyances, transfers, assignments, or further
assurances, and take any and all such other action, as the Agent or any Lender
may, from time to time, deem necessary or proper in connection with this
Agreement, the obligations of such Person hereunder or under the Notes or any of
the other Loan Documents to which such Person is a party, or for the better
assuring and confirming unto the Agent on behalf of the Lenders, with the
Requisite Priority, all or any part of the security for the Obligations.
7.11 Notice of Default. Forthwith and in any event within five days after
Borrower shall have obtained knowledge of the existence of a Default or Event of
Default, Borrower will deliver to the Agent a certificate signed by an Executive
Officer of Borrower setting forth the details of such event, the period of
existence thereof, and what action the Borrower proposes to take with respect
thereto.
7.12 Reserves. Each of Borrower, each Primary Obligor, each PFAL Portfolio
Entity and, subject to the last sentence of this Section 7.12, each Wholly-Owned
Subsidiary and each Secondary Obligor-R will set up on its books from its
earnings, reserves for bad debt in accordance with GAAP and in an aggregate
amount deemed adequate in the judgment of such Person and accepted by the
outside auditors in their annual audits and Borrower shall use its best efforts
to cause each other Mid-Tier Company to do the same. The provisions of this
Section 7.12 shall not apply to any Wholly-Owned Subsidiary or Secondary
Obligor-R which is an REO Affiliate, a Harbor Debtor, a Tier IV Company or Tier
V Company.
7.13 Representation and Warranties; Covenants as to Other Persons,
Amendment of Schedules.
(a) To the extent any representation or warranty contained herein
refers to an event or state of facts which exists on or after the date hereof,
on or after the Execution Date or on or after the Effective Date or on or after
the date of any Loan and shall exist during the term hereof or at the time of
any or each Loan hereunder, to the extent not already a covenant, said
representation or warranty shall be deemed to be an affirmative covenant by
Borrower to take all actions, omit to take such actions or cause such actions to
be taken which shall be necessary or
34
desirable to cause such representation or warranty to be true and accurate at
all times during the term hereof. To the extent any representation, warranty or
covenant herein (including the covenants set forth in Section 8 and in this
Section 7) relates to any other Person (including but not limited to a Primary
Obligor, a Secondary Obligor, any Pledged Entity or any other Loan Party) other
than Borrower, it shall be deemed to be a covenant of Borrower to cause such
Person to comply with or otherwise perform such representation, warranty or
covenant, whether or not Borrower has the legal, corporate or other ability to
cause such compliance or performance.
(b) No delivery of any new or supplemented Schedule to this
Agreement (whether or not such delivery is required by this Agreement or any
other Loan Document) shall waive or cure any Default or Event of Default which
would occur absent such delivery (other than a Default or Event of Default
arising solely from the breach of an obligation to deliver such Schedule and
other than as may be set forth in writing in a consent or amendment (if any)
pursuant to which any such new or supplemented Schedule is delivered).
7.14 Perform Obligations. Borrower and each Primary Obligor, Secondary
Obligor and other Loan Party shall duly and punctually pay and perform each of
its obligations under this Agreement and the other Loan Documents in accordance
with the terms hereof and thereof.
7.15 New Debt and Equity Interests.
(a) Borrower shall ensure that at the time that Borrower, any
Primary Obligor, any other Loan Party, any PFAL Portfolio Entity or any
Wholly-Owned Subsidiary other than any PFAL Portfolio Entity or Wholly-Owned
Subsidiary which is not a US Person, acquires an Equity Interest in any Person
other than, in the case of a Secondary Obligor, an REO Affiliate of such
Secondary Obligor, such new Equity Interest is subject to a perfected security
interest of the Requisite Priority in favor of the Agent and the Lenders and, in
connection therewith, shall take such action and execute and deliver such pledge
agreements or amendments to pledge agreement and such other instruments and
agreements, including, without limitation, delivery of notices of lien to the
Pledged Entity, acknowledgement of such notice from the Pledged Entity, delivery
of the original certificates of certificated securities to Collateral Agent,
together with an assignment separate from certificate therefor, in each case in
form and substance satisfactory to the Collateral Agent, as the Collateral Agent
may require. If requested in writing by the Agent, Borrower shall also deliver
to the Agent a supplement to Schedule 10.5(b) hereto to reflect the acquisition
of such new Equity Interest. The provisions of this Section 7.15(a) are in
addition to, and not in limitation of, other provisions of this Agreement
limiting the investments, the acquisition of Equity Interests and the
acquisition of other assets by Borrower, Primary Obligors, Secondary Obligors or
other Persons. Notwithstanding the foregoing, no Primary Obligor, PFAL Portfolio
Entity or Wholly-Owned Subsidiary shall be required to pledge to the Agent (x)
shares of stock, partnership interests, membership interests or other similar
equity interests consisting of more than 66.66% of the shares of stock,
partnership interests, membership interests or other similar equity interests in
any Person which is not a US Person or (y) any Equity Interest issued by an REO
Affiliate.
(b) Borrower shall ensure that at the time that Borrower or any
Primary Obligor makes any loan or acquires any rights to any other indebtedness
or acquires any note,
35
bond or other indebtedness instrument (any such note, bond or other instrument,
a "Subject Debt Instrument"), all rights of the Borrower or such Primary Obligor
with respect to such loan, other indebtedness and Subject Debt Instrument are
subject to a perfected security interest of the Requisite Priority in favor of
the Agent and the Lenders and, in connection therewith, shall take such action
and execute and deliver such pledge agreements or amendments to pledge agreement
and such other instruments and agreements, including, without limitation,
delivery of notices of pledge to the issuer of such indebtedness,
acknowledgement of such notice from such issuer, delivery of the Subject Debt
Instruments and each other original note evidencing such indebtedness to
Collateral Agent, together with an assignment separate from certificate such
note or Subject Debt Instrument or allonge thereto, and estoppel certificates
from the issuer thereof, in each case in form and substance satisfactory to the
Collateral Agent, as the Collateral Agent may require. The provisions of this
Section 7.15(b) are in addition to, and not in limitation of, other provisions
of this Agreement limiting the investments, the acquisition of Equity Interests
and the acquisition of other assets by Borrower, Primary Obligors, Secondary
Obligors or other Persons.
7.16 Cooperation. At the Agent's request, Borrower will meet from time to
time with (and provide then available financial information to) other financial
institutions to which any Lender may wish to grant participations in the Loans,
including potential Lender Assignees and potential Purchasing Lenders.
7.17 Approvals and Consents. In the event that any approval, consent or
non-objection need be obtained by Borrower, any Primary Obligor and/or any
Secondary Obligor or other Loan Party from, or a notice or other filing need be
filed by Borrower or any such other Person, with, any Governmental Authority in
connection with the execution, delivery and performance of this Agreement or any
Loan Document by Borrower or any such other Person, the Borrower shall take and
cause such other Person (as applicable) to take, all actions reasonably
necessary to obtain any such approval, consent or non-objection or file such
notice or other filing as promptly as practicable, and the Lenders agree to
cooperate with Borrower in obtaining or filing the same.
7.18 [Intentionally Omitted.]
7.19 Payment of Dividends from Primary Obligors and Subsidiaries. In
furtherance and not in limitation of other provisions hereof (including Section
8.29) regarding required distributions, to the extent necessary to enable it to
make payments of the Obligations in accordance with the terms hereof, unless
prohibited by applicable law Borrower shall cause dividends to be paid to it by
each Primary Obligor and each other Subsidiary of the Borrower (whether in
existence as of the date hereof or hereafter formed or acquired) in amounts
which are sufficient to enable Borrower to satisfy its payment obligations under
the terms hereof.
7.20 Stay, Extension and Usury Laws. Borrower covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive it from
paying all or any portion of the principal of, premium, if any, or interest on
the Notes, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of its obligations under the Notes, and
Borrower (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantages of any such law.
36
7.21 Compliance with Laws. Borrower shall comply with, and shall cause
each Primary Obligor, each Secondary Obligor and each other Loan Party to comply
with, all laws, rules, regulations and governmental orders (federal, state and
local), including all Environmental Laws, having applicability to it or to the
business or businesses at any time conducted by it, where the failure to so
comply would have, or could reasonably be expected to have, a Material Adverse
Effect on Borrower, any Primary Obligor or any Mid-Tier Company, or on any
Wholly-Owned Subsidiary other than an REO Affiliate.
Section 8. NEGATIVE COVENANTS.
Borrower warrants and represents to and covenants to the Lenders and the
Agent that, so long as this Agreement is in effect and until the Commitments are
terminated and all of the Loans, together with interest and all other
obligations incurred hereunder are paid in full, Borrower will perform the
obligations set forth in this Section 8 (unless it shall have first procured the
written consent of the Majority Lenders to do otherwise), and will cause each
Primary Obligor, Secondary Obligor and other Loan Party to perform the
obligations set forth in this Section 8 which are applicable to such Person
(unless it shall have first procured the written consent of the Majority Lenders
to do otherwise).
8.1 Amend Charter Documents; Engage in Same Type of Business.
(a) None of Borrower, any Primary Obligor, Secondary
Obligor-Existing, Mid-Tier Company or any Secondary Obligor-R or other Loan
Party shall (i) make or consent to any change: (i) in its Charter Documents, in
any Shareholder Agreement or in its capital structure or (ii) make any change in
any of its business objectives, purposes and operations, including by
undertaking additional business activities or (iii) waive any material right
under its Charter Documents or any Shareholder Agreement. None of Borrower, any
Primary Obligor, Mid-Tier Company or any Secondary Obligor-R shall engage in any
business not of the same general type as those conducted by it on the Execution
Date or, in the case of a newly formed entity, any business not of the same
general type as those conducted by the Primary Obligors or the Secondary
Obligors (as the case may be) on the Execution Date. Without limiting the
foregoing, no PFAL Portfolio Entity shall engage in any business other than
purchasing Asset Pools in accordance with the terms hereof and causing such
Asset Pools to be serviced in accordance with Section 8.32.
(b) None of Borrower, any Primary Obligor, any Mid-Tier Company or
Secondary Obligor-R or Secondary Obligor-Existing shall enter into any
Shareholder Agreement after the Execution Date other than a Permitted
Shareholder Agreement.
8.2 Liens. None of Borrower, any Primary Obligor, any Mid-Tier Company
(other than MCS and other than, unless constituting a PFAL Portfolio Entity, any
Mexican Acquisition Entity or any French Acquisition Entity), any REO-PFAL
Affiliate, any Wholly-Owned Subsidiary (other than a Harbor Debtor or an REO
Affiliate which is not an REO-PFAL Affiliate) or any other Loan Party will
grant, contract, create, incur, assume or suffer or permit to exist any Lien
upon or with respect to, or by transfer or otherwise subject to the prior
payment of any indebtedness (other than the Loans), any of its Assets, whether
now owned or hereafter acquired, except (i) Permitted Liens or (ii) in the case
of an REO-PFAL Affiliate, Liens in favor
37
of its REO Owner, and to the extent not resulting in a default under Section
7.3(b), non-consensual Charges.
8.3 Other Indebtedness. None of Borrower, any Primary Obligor, any
Mid-Tier Company (other than MCS and other than, unless constituting a PFAL
Portfolio Entity, any Mexican Acquisition Entity or any French Acquisition
Entity), any REO-PFAL Affiliate, any Wholly-Owned Subsidiary or any other Loan
Party will contract, create, incur, assume or suffer to exist any Indebtedness;
except
(i) the Loans;
(ii) Indebtedness of the Borrower under the Amended and Restated
Agreement not in excess of the amount outstanding on the date hereof plus
additional Tranche I Bosque Loans thereunder in an amount not to exceed
the Bosque Loan Commitment thereunder as in effect on the Effective Date
and Permitted Liens relating thereto;
(iii) other Indebtedness existing on the Effective Date listed on
Schedule 10.19 to this Agreement;
(iv) Indebtedness of a PFAL Portfolio Entity, incurred under
Approved Portfolio Leverage Arrangements on the day that such PFAL
Portfolio Entity acquires an Asset Pool, in a principal amount not in
excess of (x) 75% (or, such higher percentage, if any, approved by the
Agent in writing with respect to a particular Asset Pool) of the lower of
(i) the Acquisition Price of such Asset Pool and (ii) the Net Present
Value of such Asset Pool, or (y) such principal amount which, when added
to the principal amount of the Tranche of Term Loans made in respect of
the acquisition of such Asset Pool (less any Utilization Fee amount
included therein) plus the full amount then or thereafter contributed to
the capital of such PFAL Portfolio Entity by any holder of Equity
Interests therein other than FC Commercial (and other than any such amount
thereafter contributed to the capital of such PFAL Portfolio Entity in
respect of the subsequent acquisition of a different Asset Pool), would
not result in the sum of such principal amount of Indebtedness of such
PFAL Portfolio Entity plus the principal amount of such Tranche of Term
Loans and the amount of such contributions to capital exceeding the lower
of (i) the Acquisition Price of such Asset Pool and (ii) the Net Present
Value of such Asset Pool (it being agreed that a PFAL Portfolio Entity
shall not contract, create, incur, assume or suffer to exist any
Indebtedness other than Indebtedness under Approved Portfolio Leverage
Arrangements incurred in respect of the acquisition by it of any Asset
Pool on the AP Funding Date for such Asset Pool in accordance with the
above provisions of this clause (iv));
(v) Indebtedness of any Portfolio Entity Post-AE which is not a PFAL
Portfolio Entity;
(vi) Indebtedness of FC Holdings under the FC Holdings Line of
Credit;
(vii) Indebtedness of FC Consumer Lending under the FC Consumer Note
and Permitted Liens relating thereto;
38
(viii) unsecured trade payables incurred in the ordinary course of
business;
(ix) Indebtedness of Secondary Obligors in respect of loans
permitted to be made by MCS pursuant to Section 8.13 up to an aggregate
principal amount of such Indebtedness at any one time outstanding not
exceeding $1,000,000;
(x) in the case of any REO Affiliates, Indebtedness owed to its REO
Owner and trade payables incurred in the ordinary course of business and,
to the extent constituting Indebtedness, Charges incurred by such REO
Affiliate;
(xi) Indebtedness described on Schedule 8.3 to this Agreement, not
to exceed the amounts set forth under "Cargill Senior Debt Leverage" on
such Schedule, provided that such Indebtedness is incurred on or prior to
June 1, 2003 and under and pursuant to the Wamco XXX Loan Agreement and
solely for the purposes described on said Schedule 8.3;
(xii) Indebtedness of Borrower to FC Consumer Lending under the
Borrower-FCL Note;
(xiii)Indebtedness under Pledged Notes to the extent permitted by
Section 8.13(a)(i)-(iii);
(xiv) Indebtedness of Secondary Obligors in respect of loans
permitted to be made by FC Servicing pursuant to Section 8.13(a)(vii); and
(xv) Indebtedness of Secondary Obligors in respect of loans
permitted to be made by ASDM pursuant to Section 8.13(a)(viii);
(xvi) up to $1,000,000 in aggregate principal amount of Indebtedness
incurred by FC Properties, Ltd., FCS ▇▇▇▇▇▇▇, Ltd., FCS Wood Ltd. and FCS
Wildhorse Ltd. or other REO Affiliates to finance developmental expenses
of with respect to real property owned by such entities.
8.4 Sell Assets. None of Borrower, any Primary Obligor, any Mid-Tier
Company, or any Wholly-Owned Subsidiary or after the REO Post 25% Time, any
REO-PFAL Affiliate shall assign, sell or transfer any of its Assets to any
Person, other than in the ordinary course of business (and, in the case of
Assets constituting Equity Interests, only to the extent permitted by Section
8.8(a)) (it being acknowledged by Borrower that no assignment, sale or transfer
of assets by Borrower, any Primary Obligor, any Mid-Tier Company, any Subsidiary
of Borrower or any REO-PFAL Affiliate to any Affiliate or Associate or
Subsidiary of Borrower (whether or not wholly owned) or of any Mid-Tier Company
or to any other Secondary Obligor or any Affiliate or Associate thereof shall be
deemed to constitute a transaction in the ordinary course of business); provided
that the foregoing shall not restrict (i) an REO Affiliate from transferring its
assets to the Person which owns all of its equity interests or to any other
Person which is not a Subsidiary or Affiliate of the Borrower or such REO
Affiliate or (ii) any Person which owns all of the equity interests in an REO
Affiliate from transferring distressed notes secured by real estate (and such
real estate security) to such REO Affiliate.
39
8.5 Attachment. None of Borrower, any Primary Obligor, any Mid-Tier
Company, after the REO Post 25% Time, any REO PFAL Affiliate, or any
Wholly-Owned Subsidiary other than (except as set forth) an REO Affiliate or ,
or, if the same would have a Material Adverse Effect on the Borrower, any
Primary Obligor or any Mid-Tier Company, no other Secondary Obligor or REO
Affiliate, shall permit or suffer any levy, attachment, seizure, or restraint to
be made of, upon or affecting any of its Assets or permit any of its Assets to
be subject to a writ of distress.
8.6 Receiver. None of Borrower, any Primary Obligor, any Mid-Tier Company,
after the REO Post 25% Time, any REO PFAL Affiliate, or any Wholly-Owned
Subsidiary, other than (except as set forth) an REO Affiliate, or, if the same
would have a Material Adverse Effect on the Borrower, any Primary Obligor or any
Mid-Tier Company, no other Secondary Obligor or REO Affiliate, shall permit or
suffer any receiver, trustee or assignee for the benefit of creditors, or any
other custodian to be appointed to take possession of all or any of its Assets,
or for all or any of its Assets to come within the possession of any receiver,
trustee, assignee for the benefit of creditors or custodian, other than a
custodian pursuant to a Non-Default Voluntary Custodial Arrangement.
8.7 Mergers and Acquisitions. None of Borrower, any Primary Obligor, any
other Loan Party, any Mid-Tier Company, after the REO Post 25% Time, any REO
PFAL Affiliate, or any Wholly-Owned Subsidiary other than (except as set forth)
an REO Affiliate shall wind up, liquidate or dissolve its affairs or merge or
consolidate with any Person (or agree to do any of the foregoing at any future
time) or fail to maintain its corporate, partnership or limited liability
company or other formal existence.
8.8 Stock Transfers.
(a) Except as permitted pursuant to Section 8.8(b), none of
Borrower, any Primary Obligor, any Mid-Tier Company, any Wholly-Owned
Subsidiary, any REO-PFAL Affiliate or any other Pledged Entity shall (i) except
for options, warrants or other rights to purchase Equity Interests in the
Borrower pursuant to plans or instruments described in Schedule 10.5(c) as
amended from time to time with Majority Lenders' written consent and for Equity
Interests in the Borrower issued upon exercise thereof, (x) grant any option,
warrant or other right to purchase any Equity Interest in Borrower, any Primary
Obligor, any Mid-Tier Company, any Wholly-Owned Subsidiary or any other Pledged
Entity or (y) issue any other Equity Interests other than, in the case of a
Secondary Obligor, (subject to Section 7.15) upon its formation, or (ii)
transfer any Equity Interests (whether its own or Equity Interests issued by any
Person other than itself) without, in each case, the prior written consent of
Majority Lenders.
(b) Notwithstanding anything to the contrary contained herein,
Borrower shall have the right to register on Form S-3, and publicly offer and
sell equity Securities of Borrower under the following terms and conditions: (w)
Borrower shall deliver notice to Agent, within twenty-four (24) hours of the
filing with the SEC; (x) Borrower shall fully and timely comply with all
Securities Laws and with all terms and provisions of the underwriting agreement
pursuant to which such Securities are offered for sale; (y) the prospectus and
all other selling materials used by Borrower in such offering shall not contain
any misstatement of material fact or omit to state any fact which would render
the statements contained therein false or misleading,
40
and (z) Borrower shall pay the proceeds of such offering to Agent, in accordance
with the terms hereof.
8.9 Adverse Transactions. None of Borrower, any Primary Obligor, any
Mid-Tier Company, any Wholly-Owned Subsidiary or other Loan Party shall enter
into any transaction which materially and adversely affects its ability to
perform its obligations under the Loan Documents or to pay any other
Indebtedness.
8.10 Investments.
(a) Subject to the further limitations set forth in Sections
8.10(b), (c) and (d), after the date hereof, neither Borrower, any Primary
Obligor, any Mid-Tier Company, any PFAL Portfolio Entity nor any Secondary
Obligor shall make any investment in Equity Interests of any Person or any note,
bond, other debt instruments or obligations of or issued by any Person or any
other assets, except (subject to compliance in each case with Section 7.15 and,
in the case of any investment consisting of the making of a loan, only if the
making of such loan is permitted by Section 8.13) for (i) the acquisition by a
PFAL Portfolio Entity of an Asset Pool in accordance with the other terms hereof
on the funding date of the Tranche of Term Loans relating thereto in accordance
with the Asset Pool Acquisition Certificate relating thereto (or of any other
asset pool in respect of which no Loans have been requested if such acquisition
is in the ordinary course of business for the Consolidated Group and is
otherwise permitted hereunder) and (ii) investments by any such Person, other
than by a PFAL Portfolio Entity or, except as permitted by the immediately
succeeding sentence, by Borrower or FC Commercial, in the ordinary course of
business. In furtherance and not in limitation of the foregoing, under no
circumstances shall Borrower or any Primary Obligor other than FC Servicing
acquire any assets other than (v) in the case of the Borrower or any Primary
Obligor, loan advance receivables evidenced by Pledged Notes (to the extent
otherwise permitted by the Agreement) and assets acquired with Capital
Expenditures made pursuant to Section 8.31, (w) in the case of Borrower, Equity
Interests in Primary Obligors, (x) in the case of Primary Obligors other than FC
Commercial, Equity Interests in Subsidiaries of such Primary Obligors and in
other Secondary Obligors engaged in the business engaged in by the Consolidated
Group on the date hereof, (y) in the case of FC Commercial, Equity Interests
acquired in a PFAL Portfolio Entity in accordance with the terms hereof on the
date of the making of the Tranche of Term Loans relating to such PFAL Portfolio
Entity upon purchase of its first Asset Pool (and, to the extent constituting
the acquisition of additional assets and subject to compliance with Section 8.33
hereof, Equity Interests issued by such PFAL Portfolio Entity to FC Commercial
in respect of additional capital contributions made by FC Commercial in
connection with the acquisition by such PFAL Portfolio Entity of subsequent
Asset Pools; and (z) in the case of FC Servicing, assets acquired in the
ordinary course of its servicing business.
(b) As used in Sections 8.10 (a),(c) and (d) "invest" shall include,
but not be limited to (x) contributions to the capital of a Person, (y) the
acquisition of Securities of other assets and (z) making loans or other
financial accommodations (including without limitation, payment of a Person's
debts or other obligations and any other expenditure of funds or credit for the
benefit or on behalf of a Person) to a Person.
41
(c) In furtherance and not in limitation of the other restrictions
herein and in the other Loan Documents under no circumstances shall any of
Borrower, any Primary Obligor, any Secondary Obligor or other Affiliate of the
Borrower at any time invest in any of the Harbor Debtors.
(d) In furtherance and not in limitation of other restrictions
herein and in the other Loan Documents on such contributions, loans, gifts,
investments and Guaranty Equivalents set forth, none of Borrower, any Primary
Obligor, any Secondary Obligor or any other Loan Party shall make capital
contributions, loans or gifts to, investments in or enter into or issue any
Guaranty Equivalent with respect to the obligations of any entity identified on
Schedule 10.43 or any other Tier IV Company at any time during the term hereof.
8.11 Dividends; Payment of Fees, etc.
(a) Borrower will not and will not permit any Primary Obligor,
Secondary Obligor or other Subsidiary to authorize, declare, or pay any
dividends or return any capital to its stockholders as such or authorize or make
any other distribution, payments or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for a consideration any shares of any class of its capital stock
now or hereafter outstanding or any options, warrants or other securities (now
or hereafter outstanding) convertible into or exercisable for any equity or
other securities of the Borrower, any Primary Obligor, any Secondary Obligor or
any other Subsidiary or set aside funds for any of the foregoing and Borrower
will not permit any Primary Obligor, Secondary Obligor or other Subsidiary to
purchase any Equity Interests of Borrower or any other Primary Obligor,
Secondary Obligor or other Subsidiary or set aside funds for any of the
foregoing (any such authorization, declaration, payment, dividend, return of
capital, distribution, delivery, redemption, retirement, purchase, acquisition
or setting aside of funds, a "Dividend"), provided, that (i) any Subsidiary,
Primary Obligor or Secondary Obligor may declare or pay Dividends to the
Borrower or any Wholly-Owned Subsidiary and (ii) any Subsidiary, Primary Obligor
or Secondary Obligor may pay cash Dividends to holders of its shares of stock,
partnership interests, limited liability company interests or similar equity
interests generally so long as the Borrower or its respective Subsidiaries which
own such equity interests in the Person paying such Dividends receives at least
its proportionate share thereof (based on its relative holdings of such equity
interests in the Person paying such Dividends). Notwithstanding the foregoing,
Borrower shall be permitted to consummate the Exchange Offer as described in
Section 6.18 and FC Commercial shall be permitted to consummate the purchase of
20% of Holdings as described in Section 6.14.
(b) Neither Borrower, any Primary Obligor, any Mid-Tier Company, any
Secondary Obligor-R or any Wholly-Owned Subsidiary shall pay any director's fees
or, unless such shareholder or director is directly and actively employed by
Borrower or such Primary Obligor, Mid-Tier Subsidiary, or Secondary Obligor-R,
any salaries to any director or shareholder; provided that Borrower may pay
outside directors of Borrower, Primary Obligors, and other Subsidiaries director
fees in an amount not to exceed $25,000 per director per calendar year minus the
aggregate amount of director fees paid to such director by any Primary Obligors
and/or Secondary Obligors, and provided further that Primary Obligors and
Secondary Obligors,
42
other than any PFAL Portfolio Entity or REO PFAL Affiliate, may pay outside
directors fees in an aggregate amount not to exceed $10,000 per director per
annum.
8.12 [Intentionally Omitted].
8.13 Loan; Guaranty Debt.
(a) None of Borrower, any Primary Obligor, Mid-Tier Company or
Wholly-Owned Subsidiary or REO-PFAL Affiliate shall make any loan to any Person,
except (subject to compliance with Section 7.15) (i) for loans made by Borrower
to FC Commercial pursuant to the terms of this Agreement which are evidenced by
the FC Commercial (PFAL) Pledged Note; (ii) for loans made by Borrower to FC
Commercial with cash from the Operating Account which are on loaned by FC
Commercial to FC Servicing for use by FC Servicing to pay operating expenses,
which loans to FC Commercial are evidenced by the FC Commercial Pledged
Note-Existing and which loans by FC Commercial to FC Servicing are evidenced by
the FC Servicing Pledged Note or (iii) for loans made by Borrower to FC Capital
to fund the litigation expenses and servicing expenses to the extent permitted
by Section 8.26(b) (in amounts not exceeding the amounts permitted by such
Section), which loans are evidenced by the FC Capital Pledged Note; (iv) the
accepting by a Secondary Obligor of a note from its 100% owned REO Affiliate
evidencing the deferred purchase price of a mortgage note sold to such REO
Affiliate by such Secondary Obligor; (v) the accepting by an REO Affiliate, MCS,
a Mexican Acquisition Entity which is not a PFAL Portfolio Entity or a French
Acquisition Entity which is not a PFAL Portfolio Entity of a note from the
transferee of real property sold by such REO Affiliate, MCS, such Mexican
Acquisition Entity or such French Acquisition Entity (as the case may be) in the
ordinary course of business evidencing a portion of the deferred purchase price
of such property; (vi) in the case of FC Servicing, short term servicer advances
in the ordinary course of business with respect to portfolios which it is
servicing in aggregate principal amount at any one time outstanding not in
excess of $1,000,000; (vii) in the case of ASDM, short term servicer advances in
the ordinary course of business with respect to portfolios which it is servicing
in aggregate principal amount at any one time outstanding not in excess of
$1,000,000; (viii) in the case of MCS short term servicer advances in the
ordinary course of business with respect to portfolios which it is servicing;
(ix) for loans made by FC Holdings or a Mexican Lending Entity- Post AE to a
Mexican Acquisition Entity-Post AE for the acquisition by such Mexican
Acquisition Entity-Post AE of assets from a Mexican financial institution or a
Mexican governmental entity acting as a receiver of a Mexican financial
institution; or (x) for loans required to be made by WAMCO XXX or by any
Portfolio Entity-Post AE pursuant to Obligor Funding Obligations acquired by
such Person as part of the purchase by such Person of a portfolio of loans which
were made by Persons, none of whom who are Affiliates or Associates of the
Borrower or WAMCO XXX or such Portfolio Entity-Post AE, which portfolio was
acquired in a transaction of the sort which is in the ordinary course of
business for Secondary Obligors which was permitted to be made by such Person
pursuant to Section 8.10 hereof; provided that the aggregate principal amount of
Obligor Funding Obligations of all Secondary Obligors at any one time shall not
exceed $5,000,000. Without limiting the foregoing, under no circumstances shall
Borrower, any Primary Obligor, Mid-Tier Company, Wholly Owned Subsidiary, other
Subsidiary, Existing S Co. or other Secondary Obligor make any loan to FC
Holdings. The foregoing provisions of this Section 8.13 shall not prohibit Wamco
XXX or a Portfolio Entity-Post AE other than any PFAL Portfolio Entities, from
acquiring assets
43
consisting of loans made by Persons who are not Affiliates or Associates of the
Borrower or of Wamco XXX or such Portfolio Entity-Post AE which are included in
a portfolio of assets purchased by such Secondary Obligor to the extent that
such acquisition of assets is permitted to be made by such Person pursuant to
Section 8.10 and is of the sort which is in the ordinary course of business for
Secondary Obligors, or prohibit any PFAL Portfolio Entity from acquiring assets
consisting of loans made by Persons which are not Affiliates or Associates of
the Borrower or of such PFAL Portfolio Entity which are included in any Asset
Pool purchased by such PFAL Portfolio Entity to the extent that such Asset Pool
acquisition is permitted to be made by such PFAL Portfolio Entity pursuant to
the other terms of this Agreement.
(b) Except as set forth on Schedule 8.13B, none of Borrower, any
Primary Obligor, any Mid-Tier Company, any REO-PFAL Affiliate or any
Wholly-Owned Subsidiary shall enter into or issue any Guaranty Equivalents;
provided that FC Holdings and/or FC Commercial shall be permitted to guaranty
Indebtedness of FC Properties, Ltd., FCS ▇▇▇▇▇▇▇, Ltd., FCS Wood Ltd., FCS
Wildhorse Ltd. and/or any other REO Affiliate incurred to finance developmental
expenses with respect to real property owned by such entities provided that the
sum of the principal amount of Indebtedness guaranteed pursuant to such
guaranties does not exceed $1,000,000.
8.14 Pay Indebtedness. None of Borrower, any Primary Obligor, any Mid-Tier
Company, or any Secondary Obligor-R other than an REO Affiliate, shall defease,
prepay, purchase, redeem or otherwise acquire or repay any of its Indebtedness
for borrowed money, except for prepayments and repayments thereof when due.
8.15 Issue Power of Attorney. Except pursuant to the other provisions of
this Agreement or the Security Documents to which the Agent is a party, none of
Borrower, any Primary Obligor, any Wholly-Owned Subsidiary or any Mid-Tier
Company shall issue any power of attorney or other contract or agreement giving
any Person power or control over the day-to-day operations of any such Person's
business ; provided that, FC International, FC Holdings, FC Mexico, FC
Commercial Asset Servicing de Mexico and Servicios Efectivos de Recuperacion,
S.A. de C.V. shall have the right to ▇▇▇▇▇ ▇▇▇▇▇▇ of attorney necessary to
consummate asset acquisitions outside the United States which are undertaken in
the ordinary course of such respective company's business.
8.16 Amendment of Credit Agreements. None of Borrower, any Primary
Obligor, any Mid-Tier Company, any Secondary Obligor-Existing or any
Wholly-Owned Subsidiary shall amend, modify or extend (or agree to amend, modify
or extend or give any notice of any sort the result of which would amend, modify
or extend (whether or not, without limitation, any such extension would occur
pursuant to a renewal or extension option contained therein or any other term
thereof)) any note, credit agreement, security agreement or other document,
instrument or agreement evidencing or securing Indebtedness of such entity;
provided that (i) Borrower, any Primary Obligor, any Mid-Tier Company, any
Secondary Obligor-Existing or any Wholly-Owned Subsidiary may extend the term of
existing credit facilities (other than (x) this Agreement, (y) any Approved
Portfolio Leverage Arrangement or (z) the Holdings/CFSC Loan Agreement or any
other Holdings CFSC Loan Document) under financial terms no more onerous than
those provided for in the applicable existing credit facility, including
interest rate, costs, and fees payable to the provider of such facility and (ii)
the foregoing shall not restrict the Borrower
44
from entering into any agreement (with the other applicable parties thereto)
which amends, modifies or extends the term of the Amended and Restated Agreement
or any A&R Loan Document or of the FC Consumer Note or any FC Consumer Loan
Document; provided that the same does not increase the principal amount of any
loan or of the loans available under either said credit facilities or increase
the rate of interest or any fee or other financial obligation thereunder.
8.17 Use of Proceeds. The proceeds of each Tranche of Term Loans shall be
used by the Borrower solely to make an advance evidenced by the FC Commercial
(PFAL) Pledged Note in the same amount to FC Commercial for FC Commercial to
contribute (minus any portion thereof utilized to pay any utilization fee
pursuant to the FC Commercial (PFAL) Pledged Note) to the capital of the PFAL
Portfolio Entity identified in the Notice of Borrowing, the full amount of which
contribution to capital is used by such Entity to pay a portion of the
Acquisition Price of the Asset Pool identified in the related Notice of
Borrowing to the seller of such asset pool previously identified to the Agent
and Lenders pursuant to the terms hereof. The Borrower shall so on-lend 100% of
the proceeds of each such Tranche of Term Loans and shall ensure that FC
Commercial so contributes an amount equal to 100% of such loans (less the
portion relating to the utilization fee, as set forth above) to the capital of
the PFAL Portfolio Entity identified in the Notice of Borrowing and that such
contribution to capital is so used to pay a portion of the Acquisition Price for
such Asset Pool. The proceeds of the Revolving Credit Loans shall be used solely
for working capital purposes of the Borrower.
8.18 Payments for Consent. None of the Borrower or any Primary Obligor or
Secondary Obligor shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest fee or otherwise, to any Lender as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of any Loan Document unless such consideration is paid to all Lenders.
8.19 Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries. Borrower shall not, and shall not permit any Primary Obligor, any
other Subsidiary, any Mid-Tier Company ( in each case, whether in existence as
of the date of initial issuance of the Notes or thereafter formed or acquired)
or any REO-PFAL Affiliate to, create, assume or otherwise cause or suffer to
exist or to become effective any consensual encumbrance or restriction on the
ability of any such Person to:
(i) pay any dividends or make any other distribution on its Stock or
other Equity Interests to Borrower or any of its Subsidiaries or any
Secondary Obligor;
(ii) make payments on or in respect to any Indebtedness owed to
Borrower or any other Subsidiary of Borrower or any Secondary Obligor; or
(iii) make loans or advances to Borrower or any of its Subsidiaries
or to guarantee Indebtedness of Borrower or any other Subsidiary of
Borrower;
other than, in the case of (i), (ii) and (iii),
(1) Permitted Restrictions on payment of dividends by FC
Holdings existing under agreements listed on Schedule 8.19;
45
(2) restrictions with respect to a Subsidiary other than a
PFAL Portfolio Entity or an REO-PFAL Affiliate imposed pursuant to
an agreement which has been entered into for the sale or disposition
of all or substantially all the assets (which term may include the
capital stock) of such Subsidiary provided that such restrictions
terminate upon the closing of such sale or disposition or
termination of such agreement;
(3) to the extent the same result in a restriction of non-cash
in-kind distributions of such assets, restrictions on the transfer
by any Secondary Obligor other than a PFAL Portfolio Entity or an
REO-PFAL Affiliate of non-cash assets which are subject to Permitted
Liens;
(4) restrictions existing under any agreement which refinances
or replaces any of the agreements containing the restrictions in
clauses (1) or (5), provided that the terms and conditions of any
such restrictions are not materially less favorable to the Lenders
or materially more burdensome to the applicable Person bound thereby
than those under the agreement evidencing or relating to the
Indebtedness refinanced;
(5) Permitted Restrictions on payment of dividends by a
Mid-Tier Company or Subsidiary of Borrower under a loan agreement
listed on Schedule 10.19 to which such Mid-Tier Company or
Subsidiary of Borrower is a party;
(6) restrictions under this Agreement;
(7) Permitted Restrictions imposed under Approved Portfolio
Leverage Arrangements; and
(8) Permitted Restrictions on the payment of dividends by a
Portfolio Entity Post-AE other than a PFAL Portfolio Entity under
credit agreements under which such Portfolio Entity Post-AE is a
borrower.
8.20 Financial Covenants.
(a) Borrower and all other members of the Consolidated Group, on a
consolidated basis, shall, at all times during the term hereof, measured
quarterly:
(i) maintain a ratio of Indebtedness to Tangible Net Worth equal to
or less than the ratio set forth below as at the end of each quarter
ending during the applicable period set forth below:
12/31/02 through 9/30/03: 5.5:1;
12/31/03 through 9/30/04: 4.5:1;
12/31/04 and each quarter
ending thereafter: 3.0:1;
46
(ii) maintain a Tangible Net Worth equal to or greater than the
amount set forth below as at the end of each quarter ending during the
applicable period set forth below:
12/31/02 through 9/30/03: $18,000,000
12/31/03 through 9/30/04: $24,000,000
12/31/04 through 9/30/05: $45,000,000
12/31/05 and each quarter
ending thereafter: $75,000,000
(iii) maintain a ratio of EBITDA to Interest Coverage no less than:
(i) 1.75 to 1 for as at the quarter ending December 31, 2002; (ii) 1.20 to
1 for the quarter ending March 31, 2003; (iii) 1.40 to one for the
quarters ending June 30 and September 30, 2003; and (iv) 2.5 to one for
the quarter ending December 31, 2003 and each quarter ending thereafter.
The foregoing ratios shall be measured on a trailing three month basis.
(b) All covenants set forth herein shall be measured quarterly, upon
receipt of the Financial Statements delivered to Agent pursuant to Section
7.1(a), and also upon receipt of the annual consolidated Financial Statements
delivered in accordance with Section 7.1(b).
(c) In the event that any Financial Statement required to be
delivered pursuant to Section 7.1(a) or (b) or any certificate required to be
delivered pursuant to Section 7.1(e)(ii) hereof (in the case of any such
certificate required in connection with monthly financial statements, at the end
of any month which is also a fiscal quarter end date) is not delivered within 10
days after the date required therefor pursuant to said clause, the Borrower
shall be deemed to be in default of this Section 8.20 for purposes of Section
9.3 hereof.
8.21 Payment of Extraordinary Proceeds; Form of Proceeds, Payments and
Distributions.
(a) [Intentionally omitted].
(b) Except as set forth in Section 2.4(d)(i), all Extraordinary
Transaction Proceeds shall be paid on the date of the closing of the applicable
transaction or, if earlier, on the date when received or payable, directly to
the Agent. Borrower shall cause the applicable purchaser and/or lender and/or
other payor of Extraordinary Transaction Proceeds to make payment thereof by
wire transfer of immediately available funds directly to Agent.
(c) Borrower shall not permit any portion of the consideration paid
in respect of an Extraordinary Transaction or constituting Extraordinary
Transaction Proceeds to be in any form other than immediately available cash
funds.
(d) Borrower shall not permit any Primary Obligor or Secondary
Obligor to consent to (and shall not itself consent to) any payment, dividend or
distribution being made to such Primary Obligor, Secondary Obligor or the
Borrower in any form other than immediately available cash.
47
8.22 Accounting Changes. None of the Borrower, any Primary Obligor, any
PFAL Portfolio Entity or REO-PFAL Affiliate or any Subsidiary of Borrower will
make any significant change in (x) accounting treatment and reporting practices
except as permitted or required by GAAP or Legal Requirements or (y) unless
Agent consents thereto in writing (which consent shall not be unreasonably
withheld), its Fiscal Year; provided that in any such case, if any such change
would affect any computation required by Section 8.20 hereof or any amount
required to be paid by Section 2.4 or 2.5 hereof, appropriate amendment shall
have been made to this Agreement with respect thereto (or, in the case of change
required at such time by a Legal Requirement, appropriate amendment is made to
this Agreement contemporaneous with such change and, and if such amendment is
not made, Borrower shall be deemed in default under Section 8.20).
8.23 Related Transactions. Borrower has not and shall not, and shall not
permit any Primary Obligor, Mid-Tier Company, REO-PFAL Affiliate or any
Subsidiary of Borrower to, enter into any transactions with any Affiliate or
Associate, including, without limitation, agreements for the purchase, sale or
exchange of property or the rendering of any services to or by any Affiliate or
Associate of Borrower or any Parent, or enter into, assume or suffer to exist
any employment, management, administration, advisory or consulting contract with
any Affiliate or Associate of Borrower or any Parent or, in each of the
foregoing cases, with any officer, director or partner of any Affiliate or
Associate of Borrower or any Parent or modify any Fee Agreement unless, in any
such case, such transaction (a) is otherwise not in violation of this Agreement
or any other Loan Document and (b) is in the ordinary course of its business and
is upon fair and reasonable terms no less favorable to Borrower, such Primary
Obligor, Mid-Tier Company, REO-PFAL Affiliate or Subsidiary (as the case may be)
than Borrower, such Primary Obligor, Mid-Tier Company, REO-PFAL Affiliate or
Subsidiary (as the case may be) would obtain in a comparable arm's-length
transaction with a Person not an Affiliate or Associate; provided, that the
foregoing shall not restrict a Subsidiary which is a Secondary Obligor from
entering into a transaction contemplated by the definition of "REO Affiliate" to
sell real estate (or distressed notes secured by real estate) to its wholly
owned REO Affiliate.
8.24 Leasebacks. None of Borrower, any Primary Obligor or any Secondary
Obligor will enter into any arrangement with any bank, insurance company or
other lender or investor providing for the leasing to any of the foregoing
Persons of real property (i) which at the time has been or is to be sold or
transferred by any of the foregoing Persons to such lender or investor, or (ii)
which has been or is being acquired from another Person by such lender or
investor or on which one or more buildings or facilities have been or are to be
constructed by such lender or investor for the purpose of leasing such property
to Borrower, any Primary Obligor or Secondary Obligor.
8.25 Compliance with ERISA. None of Borrower, any Primary Obligor, any Mid
Tier Company, any REO-PFAL Affiliate or Subsidiary of Borrower or any other Loan
Party (each, an "Applicable Person") will (i) terminate, or permit any of its
Subsidiaries to terminate, any Pension Plan so as to result in any material (in
the opinion of the Agent or the Majority Lenders) liability of any such Person
or Subsidiary to the PBGC, (ii) permit to exist the occurrence of any Reportable
Event (as defined in Section 4043 of ERISA), or any other event or condition,
which presents a material (in the opinion of the Agent or the Majority Lenders)
risk of such a termination by the PBGC of any Pension Plan, (iii) allow, or
permit any of its Subsidiaries to
48
allow, the aggregate amount of "benefit liabilities" (within the meaning of
Section 4001(a)(16) of ERISA) under all Pension Plans of which any Applicable
Person or any ERISA Affiliate is a "contributing sponsor" (within the meaning of
Section 4001(a)(13) of ERISA) to exceed $100,000, (iv) allow, or permit any of
its Subsidiaries to allow, any Plan to incur an "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether
or not waived, (v) engage, or permit any of its Subsidiaries or any Plan to
engage, in any "prohibited transaction" (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) resulting in any material (in the opinion of
the Agent or the Majority Lenders and considered by itself or together with all
other such liabilities of the Borrower and all ERISA Affiliates) liability to
any Applicable Person or any ERISA Affiliate, (vi) allow, or permit any of its
Subsidiary to allow, any Plan to fail to comply with the applicable provisions
of ERISA and the Code in any material respect, (vii) fail, or permit any of its
Subsidiaries to fail, to make any required contribution to any Multiemployer
Plan, or (viii) completely or partially withdraw, or permit any of its
Subsidiaries to completely or partially withdraw, from a Multiemployer Plan, if
such complete or partial withdrawal will result in any material (in the opinion
of the Agent or the Majority Lenders) withdrawal liability under Title IV of
ERISA.
8.26 Liquidation of FC Capital.
(a) Borrower shall not permit FC Capital to engage in any new
transaction or business or to invest in any new assets;
(b) Borrower shall not use, or permit any Primary Obligor, Secondary
Obligor or any Affiliate to use, any loan proceeds, funds, distributions,
dividends, contributions or any other monies obtained, earned or acquired from
any other source whatsoever to make any loans, capital contributions, gifts or
other payments to or for the benefit of FC Capital provided that subject to the
further proviso set forth below (i) the Borrower shall be permitted to pay (or
transfer funds to FC Capital for the payment of) litigation expenses not in
excess of $250,000 in 2003; and, $200,000 per calendar year thereafter, and (ii)
the Borrower shall be permitted to advance to FC Capital up to $200,000 per
year, not exceeding $400,000 in aggregate principal amount, for FC Capital to
use (and only if FC Capital so uses such advances) to pay expenses incurred by
it as servicer under the Sale and Servicing Agreements under the FirstCity
Capital Home Equity Loan Trust 1998-1 and the FirstCity Capital Home Equity Loan
Trust 1998-2 securitizations and to make the compensating interest payments
required to be made by it in such capacity thereunder; provided that the
payments and transfers referred to in clause (i) and the advances referred to in
clause (ii) constitute advances under, and are evidenced by, the FC Capital
Pledged Note.
8.27 FC Holdings Line of Credit.
(a) Borrower shall not permit the outstanding principal balance
under the Holdings/CFSC Loan Agreement to exceed $35,000,000.
(b) Borrower shall not permit the amendment, modification,
supplement, waiver, forbearance, restatement or replacement of any Holdings/CFSC
Loan Document (including without limitation, any waiver or modification of the
borrowing base, advance rate, or purpose for which funds are being disbursed).
49
(c) Borrower shall not permit FC Holdings, any Primary Obligor or
any Secondary Obligor or any other Person to ▇▇▇▇▇ ▇ ▇▇▇▇ on any property to
secure payment and performance of any obligation or liability under the
Holdings/CFSC Loan Documents, except as expressly set forth on Schedule
10.37(c).
(d) From time to time after the date hereof, if any additional
collateral is pledged to CFCS in accordance with the Holdings/CFCS Loan
Documents, Borrower shall not fail to execute and deliver, or cause the
applicable affiliated entity to execute and deliver, to Agent, for the ratable
benefit of Lenders, such documents, instruments and agreements as shall be
necessary or desirable to create and perfect a security interest with the
Requisite Priority in any such collateral in favor of Agent for the ratable
benefit of the Lenders.
(e) From time to time after the date hereof, Borrower shall not fail
to deliver to Agent, upon request, such information as Agent shall request
relating to the Holdings/CFSC Loan Agreement or the Holdings/CFSC Loan
Documents, the amounts outstanding thereunder, the use of the proceeds thereof,
or the collateral pledged therefor.
8.28 Cash Collateral-Existing. Borrower shall not and shall not permit any
Primary Obligor or Secondary Obligor to enter into any cash collateral agreement
for the benefit of any lenders party to the Amended and Restated Agreement
unless such agreement also secures the obligations hereunder and is in form and
substance satisfactory to the Agent.
8.29 Distributions to Primary Obligors and the Borrower.
(a) Subject to Section 8.21(b) in the case of Extraordinary
Transaction Proceeds, the Borrower shall each calendar month (i) cause each PFAL
Portfolio Entity and each REO-PFAL Affiliate to distribute to FC Commercial (as
a Dividend in accordance with Section 8.11(a)) on or prior to the 25th day of
such calendar month (or, if earlier, on the fourth to last CFCCA-P Business Day
of such month, each such 25th day or earlier day, a Calculation Date") an amount
equal to (I) the sum of (x) the Asset Pool Prepayment Amount in respect of the
Payment Date occurring on the last Business Day of such month plus (y) interest
on all Term Loans payable on such next Payment Date or, if greater, (II) the sum
of (x) 75% of the FC Percentage in respect of each such PFAL Portfolio Entity of
all Collections of each Asset Pool owned by such PFAL Portfolio Entity and of
all amounts received by such REO PFAL Affiliate since the preceding Calculation
Date (or, in the case of the Calculation Date occurring after the first Term
Loans are made hereunder, since the date such Loans were made) and (y) the
amount calculated pursuant to clause (II) of the definition of "Asset Pool
Prepayment Amount" and (ii) cause FC Commercial to pay to Borrower, upon
receipt, each such Dividend received by FC Commercial under clause (i) above by
prepaying the FC Commercial (PFAL) Pledged Note and, if no amount then remains
outstanding thereunder, by prepaying any other outstanding Pledged Note from FC
Commercial to Borrower and distributing any remaining portion of such Dividend
as a Dividend (in accordance with Section 8.11(a)) to the Borrower.
(b) The Borrower shall comply, and shall cause each Primary Obligor,
Subsidiary and other Person referred to therein to comply, with each covenant
set forth in Section 8.29 of the Amended and Restated Agreement as in effect on
the Effective Date (without
50
giving effect to any modification thereof not consented to in writing by the
Majority Lenders or termination of the Amended and Restated Agreement).
(c) The Borrower and FC Commercial shall cause each amount required
to be distributed or paid to Borrower or FC Commercial pursuant to this Section
8.29 to be distributed or paid to Borrower by deposit or wire transfer directly
to the Cash Flow Cash Collateral Account.
8.30 Operating Account. Borrower shall disburse funds from the Operating
Account only for selling, general and administrative expenses of the Borrower
and the Primary Obligors incurred in the ordinary course of business.
8.31 Capital Expenditures. Borrower will not make any Capital Expenditures
and will not permit any of its Subsidiaries to make any Capital Expenditures,
except that the Borrower and its Subsidiaries may make Capital Expenditures in
an aggregate amount (excluding the capitalization of insurance premiums) not
exceeding (x) $150,000 during the one- year period ending December 31, 2003 or
(y) $50,000 during the one year periods ending on December 31, 2004, December
31, 2005 and December 31, 2006.
8.32 Servicing.
(a) Borrower shall ensure that FC Servicing or Minn Servicing is the
servicer for each Secondary Obligor which is a US Person.
(b) Borrower shall (i) cause FC Servicing to deposit all fee income
and all other funds received by it not constituting Servicing Restricted Funds
to the Cash Collateral Account-Servicing upon receipt of each such amount and
(ii) cause Minn Servicing to distribute to FC Servicing all fee income and all
other funds received by it not constituting Servicing Restricted Funds by wiring
all such amounts directly to the Cash Collateral Account-Servicing upon receipt
of each such amount.
8.33 PFAL Entity Ownership. In furtherance and not in limitation of
Section 8.8(a), Borrower shall ensure that (x) there is no change after the AP
Funding Date in respect of the first Asset Pool acquired by a PFAL Portfolio
Entity in the percentage ownership by FC Commercial of any class of Equity
Interests issued by such PFAL Portfolio Entity or in the percentage ownership by
FC Commercial of all Equity Interests issued by such PFAL Portfolio Entity ; (y)
unless otherwise consented to in writing by the Agent, the percentage ownership
by FC Commercial of any class of Equity Interests issued by a PFAL Portfolio
Entity and of all Equity Interests issued by such PFAL Portfolio Entity, in each
case, on the AP Funding Date in respect of such PFAL Portfolio Entity and the
initial Asset Pool of such PFAL Portfolio Entity is the same as set forth in the
Final Asset Pool Acquisition Certificate with respect to the acquisition of the
initial Asset Pool of such PFAL Portfolio Entity (as revised up to the time of
the giving of the Notice of Borrowing in respect of such Asset Pool); and (z) no
Affiliate of FC Commercial owns any Equity Interests issued by a PFAL Portfolio
Entity.
8.34 Activities of PFAL Entity.
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(a) In furtherance and not in limitation of the other restrictions
set forth in this Agreement, the Borrower shall ensure that (i) no PFAL
Portfolio Entity engages in any activity other than owning asset pools
consisting of receivables and shall have no assets other than such asset pools,
collections thereon and interests in REO Affiliates of which it is the REO
Owner; and (ii) each REO-PFAL Affiliate shall be formed in respect of a specific
asset pool of its REO Owner and shall not hold assets other than from such asset
pool (and, without limiting the foregoing) in no event shall hold any Assets
acquired in respect of more than one Asset Pool or any other asset pool).
(b) No non-cash collections on any Asset Pool shall be property
which, if included in the Asset Pool on the AP Funding Date for such Asset Pool
would have resulted in such Asset Pool not constituting an Eligible Asset Pool
on such AP Funding Date.
8.35 Foreign Perfection. On or before June 1, 2003 (or such later date (if
any) specified in writing by the Agent), the Borrower will and will cause each
applicable Primary Obligor and Secondary Obligor to take such action as is
reasonably requested by the Agent to ensure that the perfection and priority of
its Liens on Equity Interests issued by Non-US Entities is recognized in the
jurisdiction of organization of such issuers and, if requested by the Agent,
will deliver to the Agent an opinion of counsel from foreign counsel acceptable
to the Agent in form and substance satisfactory to the Agent, with respect to
such perfection.
8.36 Intercompany Security Agreements. On or before April 10, 2003 (or
such later date (if any) specified in writing by the Agent), or, if earlier, the
first Borrowing Date hereunder, the Borrower will (i) cause each Primary Obligor
to deliver intercompany security agreements in form and substance satisfactory
to the Agent securing each such Person's obligations under its Pledged Note
together with such other documents and instruments relating thereto and records
of company proceedings and (if requested by Agent), legal opinions, as Agent may
reasonably request and (ii) cause each maker of a Pledged Note to deliver to the
Agent an amended and restated Pledged Note in form and substance satisfactory to
the Agent.
Section 9. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.1 Principal and Interest. The Borrower shall default in the due and
punctual payment of any principal, interest or other amount due hereunder or
under any Note or any other Loan Document; provided, that the failure to make
any interest payment when due shall not constitute an Event of Default if such
interest payment is made within three days of the date when due and the Borrower
has not been late in making any other interest payment on any Note more than
once in the preceding 12 months; or
9.2 Representations and Warranties. Any representation, warranty,
statement, report or certificate made or delivered by Borrower, any Primary
Obligor, any Secondary Obligor or any other Loan Party or any officer, director,
manager or authorized employee or agent thereof herein or in any other Loan
Document or otherwise in writing by such Person in connection with any of the
foregoing or in any certificate, report or other statement furnished pursuant to
or in
52
connection with any of the foregoing, shall be breached or shall prove to be
untrue in any material respect; or
9.3 Negative and Certain Other Covenants. Borrower shall fail to perform
or observe, or shall fail to cause any Primary Obligor, Secondary Obligor or any
other Loan Party or other Person covered thereby to perform or observe, any
term, covenant or agreement to be performed or observed by Borrower or such
Primary Obligor, Secondary Obligor, Loan Party or other Person, as the case may
be, pursuant to Section 7.2, 7.4, 7.11, 7.19, Section 8 or Section 14; or
9.4 Other Covenants. Borrower shall fail to perform or observe, or shall
fail to cause Primary Obligor, Secondary Obligor, other Loan Party or other
Person covered thereby to perform or observe, any term, covenant or agreement to
be performed or observed by Borrower or such Primary Obligor, Secondary Obligor,
other Loan Party or other Person, as the case may be, pursuant to any of the
provisions of this Agreement (other than those referred to in Sections 9.1, 9.2
or 9.3) or any other Loan Document and such default (which shall be capable of
cure) shall continue unremedied for a period of fifteen days, after the earlier
of the date on which (x) the Agent or any Lender gives the Borrower notice
thereof, or (y) Borrower obtains knowledge of such default; or
9.5 Other Indebtedness of Borrower. Any Applicable Indebtedness of
Borrower (i) shall be declared to be or shall become due and payable prior to
the stated maturity thereof or (ii) shall not be paid as and when the same
becomes due and payable; or any other event of default (however denominated)
shall occur under the Amended and Restated Agreement or any other Indebtedness
Instrument (other than a Loan Document) relating to any Indebtedness of
Borrower; or any other event the effect of which is to permit the holder or
holders of the Indebtedness evidenced thereby (or any trustee, agent or other
representative on behalf of such holder or holders) to cause such Indebtedness
to become due prior to its stated maturity, shall occur under any other
Indebtedness Instrument (other than a Loan Document) relating to any
Indebtedness of Borrower; or
9.6 Other Indebtedness of other Loan Parties.
(a) Any Applicable Indebtedness of any Primary Obligor, other
Subsidiary of Borrower, Mid-Tier Company, REO PFAL Affiliate or any other Loan
Party (other than (x) any Indebtedness under the Bosque Notes; (y) any
Indebtedness of any one or more of the Harbor Debtors; or (x) any Indebtedness
of an REO Affiliate owed to its REO Owner) (i) shall be declared to be or shall
become due and payable prior to the stated maturity thereof or (ii) shall not be
paid as and when the same becomes due and payable; or any other default or event
of default (however denominated) shall occur under any Indebtedness Instrument
relating to any Indebtedness of any such Person (other than any Loan Document)
and such default or event of default is not cured within 10 days after the
occurrence thereof (or such shorter period applicable thereto under any other
Section of this Article 9); provided that such cure period shall not apply if:
(i) a default occurs by such Primary Obligor, other Subsidiary, Mid-Tier Company
or other Loan Party under the terms of any other Indebtedness Instrument
securing or evidencing a different borrowing, or (ii) if any other Primary
Obligor, other Subsidiary, Mid-Tier Company or other Loan Party defaults under
the terms of any Indebtedness Instrument during such ten (10) day cure period or
(iii) if the Indebtedness evidenced by any such Indebtedness instrument is
53
accelerated or has otherwise become due or (iv) such event is described in
Section 9.16. (Notwithstanding the foregoing, if any two or more such Persons
are obligated for the same Indebtedness and a default occurs thereunder, it
shall be deemed to be a default by a single Person for the purposes of this
Section 9.6); or
(b) Any default shall occur under any Holdings /CFSC Loan Document
and, if under the Holdings/CFSC Loan Agreement a cure period is applicable to
such default, such default is not cured before the earlier of (x) 15 days after
such default occurs and (y) the cure period applicable thereto under the
Holdings/CFSC Loan Agreement; or
9.7 Trigger Events, etc. If any servicer default, servicing termination
event, amortization event or similar event or condition occurs under any
agreement relating to any securitization of assets of any Primary Obligor,
Secondary Obligor or securitization entity established by any Primary Obligor or
Secondary Obligor relating to a securitization transaction entered into after
the Execution Date; or
9.8 Undistributed Amounts. The amount of Aggregate Undistributed Secondary
Obligor Funds at any time exceeds $2,000,000; or
9.9 Insolvency. (i) Borrower, any Primary Obligor, any Secondary Obligor
(other than, prior to the REO Post-25% Time, an REO Affiliate) or any other
Pledged Entity or Loan Party (Borrower and each of the other foregoing Persons
being a "Section 9.9 Entity") shall make an assignment for the benefit of
creditors or a composition with creditors; or (ii) any Section 9.9 Entity shall
admit in writing its inability to pay its debts as they mature, shall file a
petition in bankruptcy, shall be adjudicated insolvent or bankrupt, shall
petition or apply to any tribunal for the appointment of any receiver,
liquidator, trustee or custodian of or for it or any of its assets; or (iii) any
application is made by any other Person for the appointment of any receiver,
liquidator, trustee or custodian for any Section 9.9 Entity or for any of the
assets of any Section 9.9 Entity, or (iv) any Section 9.9 Entity shall commence
any proceedings relating to it under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect; or (v) there
shall be commenced against any Section 9.9 Entity any such proceeding which
shall remain undismissed for a period of 60 days or more, or any order, judgment
or decree approving the petition in any such proceeding shall be entered; or
(vi) any Section 9.9 Entity shall by any act or failure to act indicate its
consent to, approval of or acquiescence in, any such proceeding or in the
appointment of any receiver, liquidator, trustee or custodian (other than a
custodian under Non-Default Voluntary Custodial Arrangements) of or for it or
any of its assets, or shall suffer any such appointment to exist; or (vii) any
Section 9.9 Entity shall take any action for the purpose of effecting any of the
foregoing; or any court of competent jurisdiction shall assume jurisdiction with
respect to any such proceeding or a receiver or trustee or other officer or
representative of a court or of creditors, or any court, governmental officer or
agency, shall under color of legal authority, take and hold possession of any
substantial part of the property or assets of any Section 9.9 Entity; or (viii)
any Section 9.9 Entity shall become insolvent (howsoever such insolvency may be
evidenced) or shall be unable to pay its debts as they mature (except that the
occurrence of any condition set forth in this clause (viii) with respect to FC
Capital, Bosque Asset Corp. or, so long as such companies are paying their debts
as they mature, FC Mexico or any Mexican Acquisition Entity which is an Existing
S Co. shall not constitute an Event of
54
Default under this Section 9.9 unless the occurrence of any such condition with
respect to any such Person is an Event of Default under any other clause of this
Section 9.9); or
9.10 Security Documents. The breach by Borrower or any other Loan Party of
any term or provision of, or the occurrence of any default under, any Security
Document or other Loan Document (other than this Agreement) or other agreement,
instrument or document delivered in connection therewith to which such Person is
a party, which breach or default is in the opinion of the Agent, material, or
any other such breach or default (other than such a material breach or default)
occurs and is not cured within the time, if any, specified therefor therein or
fifteen days thereafter, if no such time is specified or such time is less than
15 days; or if any such Security Document or Loan Document is at any time not in
full force and effect; or any of the Security Documents shall fail to grant to
the Agent on behalf of the Lenders the Liens (if any) intended to be created
thereby; or if any Loan Party shall assert that it is not liable with respect to
any Security Document to which it is a party; or any Guarantor shall assert that
it is not liable as a guarantor the Guaranty to which it is party; or
9.11 Notice of Charge. Except as expressly permitted pursuant to Section
7.3, if a notice of any Charge is filed of record with respect to all or any of
the Assets of Borrower, any Primary Obligor, any Mid-Tier Company or any
Wholly-Owned Subsidiary or, if prohibited by Section 7.3, REO-PFAL Affiliate; or
9.12 Judgments.
(a) Any final non-appealable judgment for the payment of money in
excess of $300,000 (after giving effect to any amount covered by insurance as to
which the insurer shall not have denied or questioned its obligation to pay)
shall be rendered against Borrower, any Primary Obligor or any Secondary Obligor
other than an REO Affiliate; or
(b) Final judgment for the payment of money in excess of $300,000
shall be rendered against Borrower, any Primary Obligor or any Secondary Obligor
other than an REO Affiliate, and the same shall remain undischarged for a period
of 30 days during which execution shall not be effectively stayed or diligently
contested in good faith by appropriate proceedings; or
9.13 Stock Issuance or Transfer. Except as expressly permitted pursuant to
the terms hereof, if Borrower, any Primary Obligor or any Secondary Obligor or
any other Pledged Entity issues to (except upon formation of a Person permitted
by this Agreement) or transfers to any Person any Stock or other Equity Interest
issued by Borrower, any Primary Obligor, any Secondary Obligor or any other
Pledged Entity; or
9.14 ERISA. Any ERISA Affiliate of Borrower or of any other Applicable
Person under Section 8.25 which is not a Subsidiary of Borrower or such
Applicable Person shall fail in the performance or observance of any term,
provision or agreement with respect to a Plan or Multiemployer Plan set forth in
Section 8.25 as if such ERISA Affiliate were a Subsidiary of Borrower or an
Applicable Person; or
9.15 Material Effect Defaults. To the extent that the same does not
constitute an Event of Default under any other provision of this Section 9, a
default by Borrower, any Primary Obligor or any Secondary Obligor shall occur
under any agreement, document or instrument
55
(other than this Agreement or any of the other Loan Documents) now or hereafter
existing, to which Borrower, any Primary Obligor or any Secondary Obligor is a
party and the effect of such default could reasonably be expected to have a
material adverse effect on the financial conditions or business operations of
Borrower, any Primary Obligor or any Mid-Tier Company; or
9.16 Other Acceleration. To the extent not otherwise constituting an Event
of Default, if any lender to Borrower, any Primary Obligor, any Secondary
Obligor or any Subsidiary thereof terminates any agreement to forbear or waive
any default by a Harbor Debtor or any other event of default arising under the
terms of any Indebtedness Instrument (other than any Bosque Note constituting an
Indebtedness Instrument) of Borrower, any Primary Obligor any Mid-Tier Company,
or any other Subsidiary of Borrower other than any such other Subsidiary which
is a Harbor Debtor or REO Affiliate; or
9.17 Asserted Claims. If any proceeding is commenced against Borrower in
which the amount claimed is greater than $1,000,000 and such proceeding is not
dismissed with prejudice with no judgment having been entered against or other
relief granted against Borrower within thirty (30) days after the filing date
thereof; or
9.18 Change in Control. A Change in Control shall occur (for purposes
hereof, a Change in Control shall mean the occurrence of any of the following
events after the date hereof: (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly, or indirectly, of
more than fifty percent (50%) of the aggregate voting power of all classes of
Capital Stock of Borrower entitled to vote generally in an election of
directors; (ii) Borrower is merged with or into another corporation or another
corporation is merged with or into Borrower with the effect that immediately
after such transaction the stockholders of Borrower immediately prior to such
transaction hold less than a majority in interest of the total voting power
entitled to vote in the election of directors, managers or trustees of the
entity surviving the transaction; (iii) to the extent not otherwise then
constituting an Event of Default, all or substantially all of the assets of
Borrower or a Primary Obligor or a Mid-Tier Company or any other Wholly Owned
Subsidiary other than a Wholly-Owned Subsidiary described on Schedule 9.18 are
sold to any person or persons (as an entirety in one transaction or a series of
related transactions); or (iv) the voluntary or involuntary dissolution,
liquidation or winding up of Borrower. For purposes of this Section 9.18,
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents in the equity (however designated) of such
Person and any rights (other than debt securities convertible into an equity
interest), warrants or options to acquire an equity interest in such Person); or
9.19 Management. If ▇▇▇▇▇ ▇▇▇▇▇▇▇ ceases to be employed full-time with
Borrower and responsible for the day to day management of Borrower. Such
occurrence shall be an Event of Default without notice or cure period, unless
Borrower employs a replacement officer of the Borrower having the duties of ▇▇.
▇▇▇▇▇▇▇ acceptable to Lenders in their reasonable discretion within ninety (90)
days after ▇▇. ▇▇▇▇▇▇▇ ceases to be employed; or
9.20 Court Orders. To the extent not otherwise constituting an Event of
Default, if Borrower, any other Loan Party, any Primary Obligor, any Mid-Tier
Company, any Secondary
56
Obligor-Existing or any Wholly-Owned Subsidiary other than a Tier IV Company, or
any other Loan Party is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business or affairs and
such Person consents (by action, inaction or otherwise) to such order or such
order remains in effect for a period of 30 days; or
9.21 Dissolution. Borrower, any Primary Obligor, any Mid-Tier Company or
any Loan Party shall dissolve, liquidate or suspend or discontinue its business,
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may (and shall, if instructed in writing by
the Majority Lenders) by written notice to the Borrower: (i) declare the
principal of and accrued interest on the Loans of the Borrower to be, whereupon
the same shall forthwith become, due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; and/or (ii) declare the Commitments of the Lenders to make Loans
terminated, whereupon such Commitments shall forthwith terminate immediately;
provided that if any Event of Default described in Section 9.9 shall occur with
respect to the Borrower, the result which would otherwise occur only upon the
giving of written notice by the Agent to the Borrower as herein described shall
occur automatically, without the giving of any such notice.
Section 10. GENERAL REPRESENTATIONS AND WARRANTIES AND RELATED COVENANTS.
In order to induce the Lenders to enter into this Agreement and to
maintain the Loans provided for herein, each Loan Party party hereto makes the
following representations, covenants and warranties, both as of the Execution
Date and (after giving effect to the transactions contemplated hereby to occur
on the Effective Date) as of the Effective Date (unless otherwise specified),
which representations, covenants and warranties shall survive the execution and
delivery of this Agreement and the other documents and instruments referred to
herein:
10.1 Organization.
(a) Borrower is and at all times hereafter shall be a corporation,
duly organized and validly existing and in good standing under the laws of the
State of Delaware and qualified or licensed to do business and in good standing
in all states in which the laws thereof require Borrower to be so qualified
and/or licensed and in which the failure to so qualify could have a Material
Adverse Effect, including, without limitation, the State of Texas. Schedule
10.1(a) identifies each jurisdiction in which Borrower has qualified or been
licensed to do business and describes the nature and current status of any such
qualification or license.
(b) Each Primary Obligor and each Secondary Obligor and each other
Loan Party is a corporation or limited liability company or a limited
partnership, duly organized and validly existing and in good standing under the
laws of the state of its organization and each Primary Obligor, Mid-Tier
Company, Secondary Obligor-Existing and other Loan Party and, if the failure to
do so could reasonably be expected to have Material Adverse Effect on Borrower,
any Primary Obligor, any Mid-Tier Company, Secondary Obligor-Existing or other
Loan Party, each other Secondary Obligor, is and at all times hereafter shall be
qualified or licensed to do business and in good standing in all states in which
the laws thereof require such Primary
57
Obligor, Secondary Obligor and other Loan Party to be so qualified and/or
licensed and in which the failure to so qualify could have a Material Adverse
Effect on the Borrower, any Primary Obligor or any Mid-Tier Company. Schedule
10.1(b) identifies each jurisdiction in which each Primary Obligor, Mid-Tier
Company, Secondary Obligor-Existing and each other Loan Party has qualified or
been licensed to do business and describes the nature and current status of any
such qualification or license.
(c) Schedule 10.1(c) lists all Shareholder Agreements to which
Borrower, any other holder of any Equity Interest in any Primary Obligor or any
holder of any Equity Interest in any Mid-Tier Company, Secondary
Obligor-Existing or Secondary Obligor-R or other Pledged Entity is a party.
10.2 Entity Power.
(a) Borrower has the right, power and capacity and is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and the other Loan Documents to which it is a party.
(b) Each Primary Obligor and each Secondary Obligor and each other
Loan Party has the right, power and capacity and is duly authorized and
empowered to enter into, execute, deliver and perform those Loan Documents to
which it is a party.
10.3 Violation of Charter Documents.
(a) The execution, delivery and/or performance by Borrower of this
Agreement and the other Loan Documents to which it is a party and the
consummation of the transactions contemplated hereunder have been duly
authorized by all necessary corporate and shareholder action and none of such
execution, delivery, performance or consummation shall, by the lapse of time,
the giving of notice or otherwise, constitute a violation of any Legal
Requirement or a breach of any provision contained in the Charter Documents of
Borrower, or contained in any agreement, instrument or document to which
Borrower is now or hereafter a party or by which it or any of its Assets is or
may become bound, other than agreements, instruments or documents that are
immaterial to Borrower the breach of which could not have a Material Adverse
Effect on Borrower.
(b) The execution, delivery and/or performance by each Primary
Obligor, Secondary Obligor and other Loan Party of each Loan Document to which
it is a party and the consummation of each such Person of the transactions
contemplated hereunder have been duly authorized by all necessary corporate,
partnership or limited liability company action (as the case may be) and other
action by the holders of the Equity Interests thereof and none of such
execution, delivery, performance or consummation shall, by the lapse of time,
the giving of notice or otherwise, constitute a violation of any Legal
Requirement or a breach of any provision contained in the Charter Documents of
such Primary Obligor or such Secondary Obligor or other Loan Party, or contained
in any agreement, instrument or document to which such Primary Obligor or such
Secondary Obligor or other Loan Party is now or hereafter a party or by which it
or any of its Assets is or may become bound, other than agreements, instruments
or documents that are immaterial to such Primary Obligor, Secondary Obligor and
other Loan Party the breach
58
of which could not have a Material Adverse Effect on Borrower or any such
Primary Obligor or any Mid-Tier Company, Secondary Obligor-Existing or other
Loan Party.
10.4 Enforceability.
(a) This Agreement and the other Loan Documents to which the
Borrower is a party are and will be the legal, valid and binding agreements of
Borrower, enforceable in accordance with their respective terms, except as
enforcement thereof may be subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and to general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law); and
(b) Those other Loan Documents to which each other Loan Party is a
party are and will be the legal, valid and binding agreements of such Loan
Party, enforceable in accordance with their respective terms, except as
enforcement thereof may be subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and to general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
10.5 Ownership.
(a) Schedule 10.5(a) sets forth all classes of stock of Borrower,
the shareholders thereof (other than members of the general public), addresses
of each shareholder, number of shares owned and how the shares are held;
(b) Schedule 10.5(b) sets forth all classes of stock and/or other
Equity Interests (other than options, warrants and rights to acquire Stock or
other Equity Interests) issued by each Primary Obligor and each Secondary
Obligor, the shareholders and other equity holders thereof, and the addresses,
number of shares and/or partnership interests owned and how the shares are held.
(c) Schedule 10.5(c) sets forth all options, warrants and other
rights to acquire Stock or other Equity Interests of Borrower, any Primary
Obligor, any Mid-Tier Company, any Secondary Obligor-Existing, Secondary
Obligor-R and any other Pledged Entity, the nature of such option, warrant or
right and the conditions for the exercise thereof. Lenders hereby expressly
consent to the transfer, issuance or conveyance of Stock and/or other Equity
Interests of Borrower in accordance with such options, warrants and rights;
provided that the same does not result in a Change of Control.
(d) All Equity Interests of Borrower, each Primary Obligor, each
Secondary Obligor and each other Loan Party have been duly and validly issued,
are fully paid and are non-assessable.
10.6 Fictitious Names.
(a) Each of the fictitious names, if any, used by Borrower during
the five (5) year period preceding the Execution Date is set forth on Schedule
10.6 attached hereto (as
59
amended from time to time) and none of such fictitious names are registered
trademarks or tradenames with the U.S. Patent and Trademark Office, except as
set forth in Schedule 10.6;
(b) Each of the fictitious names, if any, used by each Primary
Obligor, Mid-Tier Company, Secondary Obligor-Existing and any other Loan Party,
during the five (5) year period preceding the Execution Date is set forth on
Schedule 10.6 attached hereto (as amended from time to time), and none of such
fictitious names are registered trademarks or tradenames with the U.S. Patent
and Trademark Office; provided that, variations on the corporate name of any
Primary Obligor, Mid-Tier Company, Secondary Obligor-Existing and Secondary
Obligor-R in states where used solely for qualifying to do business therein
shall and have been excluded from such schedule, with Lender's consent and
approval.
10.7 Title.
(a) Schedule 10.7 is a true, accurate and complete list of all Liens
relating to the Pledged Property on the Execution Date and Effective Date.
(b) First X and First B shall at all times own fee title to its real
estate subject to no liens other than the Permitted Liens.
(c) Borrower and each Primary Obligor, Mid-Tier Company, Secondary
Obligor-Existing and other Loan Party shall at all times have good, indefeasible
and merchantable title to and ownership of all of its Assets.
10.8 Financial Warranty. Except as set forth on Schedule 10.8, on the
Effective Date Borrower and at all times thereafter (including, without
limitation, at the time of and after giving effect to each Loan) (i) is and
shall be paying its debts as they mature, (ii) owns and shall own, property
which, at a fair valuation, is greater than the sum of its debt, and (iii) has
and shall have, capital sufficient to carry on its business and transactions and
all businesses and transactions in which it is about to engage. Except as set
forth on Schedule 10.8, on the Effective Date and at all times thereafter
(including, without limitation, at the time of and after giving effect to each
Loan) each Primary Obligor, Mid-Tier Company and Secondary Obligor-Existing: (i)
is and shall be paying its respective debts as they mature, (ii) owns and shall
own, property which, at a fair valuation, is greater than the sum of its debt
and (iii) has and shall have capital sufficient to carry on its business and
transactions and all businesses and transactions in which it is about to engage.
10.9 Proceedings. Except as set forth on Schedule 10.9, there are no
actions or proceedings which are pending or threatened against Borrower, any
Primary Obligor, any Secondary Obligor or any other Loan Party which could
reasonably be expected to have a Material Adverse Effect on Borrower, any
Primary Obligor, Mid-Tier Company or Secondary Obligor-Existing. None of the
actions or proceedings referred to on Schedule 10.9 could have a Material
Adverse Effect on Borrower, any Primary Obligor other than FC Capital or any
Secondary Obligor.
10.10 Government Contracts. Except as set forth on Schedule 10.10, neither
Borrower, nor any Primary Obligor, Mid-Tier Company, Secondary Obligor-Existing
or other Loan Party has any government contracts.
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10.11 Adequate Licenses. Borrower, and each Primary Obligor, Secondary
Obligor and other Loan Party possesses adequate Assets, licenses, patents,
copyrights, trademarks and tradenames to continue to conduct its business as
previously conducted by it and as contemplated in the foreseeable future except
such licenses, patents, copyrights, trademarks and trade names the failure of
which to obtain could not be reasonably expected to have a Material Adverse
Effect on Borrower, any Primary Obligor, Mid-Tier Company or Secondary
Obligor-Existing.
10.12 Government Permits; Approvals and Consents.
(a) Except for matters which could not result in a Material Adverse
Change with respect to Borrower, any Primary Obligor, Mid-Tier Company,
Secondary Obligor-Existing or any other Loan Party, Borrower and each Primary
Obligor, each Secondary Obligor and each other Loan Party has been and is in
good standing with respect to all governmental permits, certificates, consents
and franchises necessary to continue to conduct its business as previously
conducted prior to the date hereof and prior to the Execution Date and to own or
lease and operate its properties as now owned or leased by it. None of said
permits, certificates, consents or franchises contain any term, provision,
condition or limitation more burdensome than such as are generally applicable to
Persons engaged in the same or similar business as the applicable Person.
(b) Except for those consents and other items set forth on Schedule
10.12, neither Borrower, nor any Primary Obligor, Secondary Obligor or other
Loan Party requires the approval, consent, waiver, order, permission, license,
authorization, registration or validation of, or filing with or exemption by,
any Government Authority or any other Person (including but not limited to
shareholders, partners, members, equity owners, holders of Indebtedness
Instruments, or any owner of any lien upon the Assets of any one or more of them
or their Affiliates) for the execution and delivery of, and the consummation of
the transactions contemplated by, this Agreement and the other Loan Documents,
including but not limited to the borrowing of any Loans, the pledge of the
Pledged Property, and the payment and performance of all Obligations. Borrower
and each other Primary Obligor, Secondary Obligor and other Loan Party have
received the consents and other items described on Schedule 10.12 and has
delivered a copy thereof to Agent, which consents are in full force and effect,
unmodified and unamended on the date hereof and on the Execution Date.
10.13 Charge; Restrictions.
(a) On the Execution Date and on the Effective Date, neither
Borrower, nor any Primary Obligor nor any Secondary Obligor or any other Loan
Party is a party to (nor are any of such Person's Assets otherwise subject to)
any contract or agreement or restriction, judgment, decree or order that could
have a Material Adverse Effect on Borrower, any Primary Obligor, Mid-Tier
Company or Secondary Obligor-Existing or that materially and adversely affects
the business, property, assets, operations or condition, financial or otherwise
of Borrower, any Primary Obligor, Mid-Tier Company or Secondary
Obligor-Existing. At no time after the Execution Date will the Borrower, any
Primary Obligor, any Mid-Tier Company, any PFAL Portfolio Entity or any
Wholly-Owned Subsidiary be a party to (or permit any of its Assets to be subject
to) any contract or agreement or restriction, judgment, decree or order
materially and
61
adversely affecting, or which could materially and adversely affect, its
business, property, assets, operations or condition, financial or otherwise.
(b) On the Execution Date and on the Effective Date, none of
Borrower, nor any Primary Obligor, Mid-Tier Company, Secondary Obligor-Existing,
any Secondary Obligor-R other than an REO Affiliate, or any other Loan Party is
subject to (nor are any such Person's Assets otherwise subject to) any Charge
(other than Charges owed by First B or First X). At no time after the Effective
Date will the Borrower, any Primary Obligor, Mid-Tier Company, Secondary
Obligor-Existing, Secondary Obligor-R, other than, except as set forth below, an
REO Affiliate, or any other Loan Party or any Wholly-Owned Subsidiary (other
than, except as set forth below, an REO Affiliate) or, except to the extent
permitted in Section 7.3, any REO-PFAL Affiliate, be a party to (or permit any
of its Assets to be subject to) any Charge.
10.14 Compliance with Laws. Except for matters which could not result in a
Material Adverse Change with respect to Borrower, any Primary Obligor, Mid-Tier
Company, Secondary Obligor-Existing or any other Loan Party, neither Borrower,
nor any Primary Obligor nor any Secondary Obligor nor any other Loan Party is,
or will be during the term hereof, in violation of any applicable statute,
regulation, order or ordinance of the United States of America, of any state,
city, town, municipality, county or of any other jurisdiction, or of any agency
thereof, including the Federal Reserve Board, in any respect.
10.15 Compliance with Indebtedness Instruments. Other than those defaults
set forth on Schedule 10.15, Borrower is not and at no time during the term
hereof shall be in default under any Indebtedness Instrument or any other
material agreement to which it is a party. Other than those defaults set forth
on Schedule 10.15, no Primary Obligor, Mid-Tier Company, Secondary
Obligor-Existing, Secondary Obligor-R or any other Loan Party is, on the date
hereof, or will be on the Effective Date, in default under any Indebtedness
Instrument.
10.16 Financials. The Financial Statements delivered by Borrower, any
Primary Obligor, any Secondary Obligor or any other Loan Party to Agent, fairly
and accurately present the Assets, liabilities and financial conditions and
results of operations of Borrower, and such other Persons described therein as
of and for the periods ending on such dates and have been prepared in accordance
with GAAP and such principles have been applied on a basis consistently followed
in all material respects throughout the periods involved.
10.17 Tax Returns. Borrower and each other member of the Consolidated
Group has filed or caused to be filed all tax returns which are required to be
filed, and has paid all Charges shown to be due and payable on said returns or
on any assessments made against it or any of its property, and all other Charges
imposed on it or any of its properties by any Governmental Authority, except for
Charges arising at any time after the Effective Date, which Borrower is
disputing in accordance with the final sentence of Section 7.3.
10.18 No Material Adverse Change. Except as set forth in Schedule 10.18,
since December 31, 2001, no event or circumstance has occurred that had, has or
could reasonably be expected to have a Material Adverse Effect.
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10.19 No Indebtedness. None of Borrower, any Primary Obligor, Mid-Tier
Company, Wholly-Owned Subsidiary or Secondary Obligor or other Loan Party (i)
has any Indebtedness except for Indebtedness described in Schedule 10.19,
Schedule 10.21 and Schedule 8.13B and except for Indebtedness permitted by this
Agreement which (other than in the case of MCS, any Mexican Acquisition Entity
or any French Acquisition Entity) is reflected in the most recent Financial
Statements delivered pursuant to Section 7.1(a) or (b) (except for any such
Indebtedness permitted by this Agreement (x) incurred since such most recent
Financial Statements were delivered, or (y) constituting unsecured trade
payables arising in the ordinary course of business since the dates reflected in
the September 30, 2002 Financial Statements that is not Indebtedness for
borrowed money or Indebtedness of any REO Affiliate to its REO Parent evidenced
by a note payable to such REO Parent, in each case, to the extent, if any, not
required by GAAP to be reflected in Financial Statements) or (ii) has guaranteed
any indebtedness or entered into or issued any Guaranty Equivalent (other than
as a result of the endorsement of any instrument of items of payment for deposit
or collection in the ordinary course of business or as otherwise expressly
permitted pursuant to the terms hereof) in respect of the obligations of any
Person.
10.20 [Intentionally omitted]
10.21 Affiliate Notes. Attached hereto as Schedule 10.21 is a true,
accurate and complete schedule of all promissory notes made by any Affiliate
payable to the order of a Borrower, a Primary Obligor or a Secondary Obligor,
other than the Pledged Notes and the Excluded Notes. In furtherance and not in
limitation of any restriction thereon set forth herein or in the other Loan
Documents, if at any time after the Effective Date, any Affiliate borrows money
or otherwise incurs Indebtedness from Borrower or a Primary Obligor or a
Secondary Obligor (i) unless such borrowing is under and pursuant to the terms
of a Pledged Note, Borrower shall immediately give Agent notice thereof and
deliver a copy of the note evidencing such Indebtedness to Agent, (ii) if such
Indebtedness is permitted pursuant to the terms hereof or consented to by the
Majority Lenders and if requested in writing by the Agent, Borrower shall
prepare a Schedule 10.21A setting forth the maker and holder of such note, the
principal amount thereof and the payment terms thereof, and (iii) Borrower shall
take the action required by Section 7.15(b).
10.22 No Liability on Lenders or Agent. None of the execution, delivery
and performance by Borrower or any other Loan Party of this Agreement and/or the
other Loan Documents will impose on or subject any of the Lenders or the Agent
to any liability, whether fixed or contingent, in respect of any Environmental
Law, whether relating to the operation of Borrower's business or otherwise. None
of the Lenders' or the Agent's exercise of any of the rights or remedies
described in this Agreement or in any of the other Loan Documents shall
constitute a breach of any provision contained in any agreement, instrument or
document concerning the assignment or license of, or the payment of royalties
for, any patents, patent rights, tradenames, trademarks, trade secrets,
know-how, copyrights or any other form of intellectual property now or at any
time or times hereafter protected as such by any applicable law.
10.23 Affiliates. Schedule 10.23 attached hereto is a true, accurate and
complete schedule of Borrower's Affiliates (including each Secondary Obligor) as
of the Effective Date,
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together with a description of Borrower's relationship to each such Affiliate.
Attached as Schedule 10.23(B) is a true, accurate and complete schedule of each
Secondary Obligor - Existing . Attached as Schedule 10.23(C) is a true, accurate
and complete schedule of each Existing S Co.
10.24 Real Property; Environmental Issues. Except as set forth on Schedule
10.24, neither Borrower, any Primary Obligor or any Secondary Obligor other than
First X, First B, FCS ▇▇▇▇▇▇▇, Ltd., FCS Wood Ltd., and FCS Wildhorse Ltd., FCS
▇▇▇▇▇▇▇ Ltd. , any REO Affiliate, any Mexican Acquisition Entity or French
Acquisition Entity now owns or, in the case of US Persons, leases or at any time
in the five (5) years preceding the Execution Date has owned or leased any real
property. Neither Borrower, any Primary Obligor, any Secondary Obligor, any Tier
IV Company, any Tier V Company, any Harbor Debtor or any other Loan Party has
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other Governmental Authority concerning any action or
omission resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment with respect to any real property.
10.25 Investment Company Act and Public Utility Holding Company Act.
Neither Borrower nor any Primary Obligor or any PFAL Portfolio Entity nor any
other Loan Party or the entering into of any Loan Documents, nor the issuance of
the Notes is subject to any of the provisions of the Investment Company Act of
1940, as amended. Neither Borrower, nor any Primary Obligor or any Secondary
Obligor or any PFAL Portfolio Entity or any other Loan Party is a "holding
company" as defined in the Public Utility Holding Company Act of 1935, as
amended, or subject to any other federal or state statute or regulation limiting
its ability to incur Indebtedness for money borrowed.
10.26 Disclosure. Neither this Agreement nor any other Loan Document nor
any statement, list, certificate or other document or information, nor any
schedules to this Agreement or any other Loan Document, delivered or to be
delivered to Lenders or Agent, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading. Copies of all documents delivered to Lenders
and/or Agent pursuant to this Section 10 or any other provision of this
Agreement are true, correct and complete copies thereof and include all
amendments, restatements, supplements and other modifications thereto and
thereof.
10.27 Qualification.
(a) Solely by reason of (and without regard to any other activities
of Lenders and/or Agent in any state in which Assets of the Borrower, any
Primary Obligor, Secondary Obligor or other Loan Party are located) the entering
into, performance and enforcement of this Agreement, the Notes, the other Loan
Documents and the documents, instruments and agreements delivered in connection
therewith by Lenders and/or Agent will not constitute doing business by Lenders
and/or Agent in any of such states or result in any liability of Lenders and/or
Agent for taxes or other governmental charges; and qualification by Lenders
and/or Agent to do business in such jurisdiction is not necessary in connection
with, and the failure to so qualify will
64
not affect, the enforcement of, or exercise of any rights or remedies under, any
of such documents.
(b) No "business activity," "doing business" or similar report or
notice is required to be filed by the Lenders and/or Agent in any such
jurisdiction in connection with the Loans or the transactions contemplated by
this Agreement or any other Loan Document, and the failure to file any such
report or notice will not affect the enforcement of, or the exercise of any
rights or remedies under, this Agreement or any of the other Loan Documents.
10.28 SEC Filings. The Borrower has filed and made available to the Agent
and Lenders each form, registration statement, schedule, report, proxy statement
and document required to be filed by Borrower with the SEC since January 1, 1995
(collectively, the "SEC REPORTS"). Except as set forth on Schedule 10.28, the
SEC Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in the SEC
Reports or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Borrower is the
only Loan Party required to file pursuant to the Exchange Act. Since January 1,
1995, Borrower has made all filings with the SEC in a timely manner (except as
set forth on Schedule 10.28, each of which filing deficiencies was subsequently
cured in a manner that brought Borrower into full compliance with law) as
required by law and no event has occurred that requires an additional filing or
any amendment to a prior filing, which has not been made or filed.
10.29 [Intentionally omitted.]
10.30 Federal Reserve Margin Regulations; Use of Proceeds
(a) Neither Borrower, any Primary Obligor, any Secondary Obligor or
any other Loan Party or member of the Consolidated Group or Subsidiary of any of
the foregoing is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System). No part of the proceeds of any Loan will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.
(b) Neither the Loans nor the use of proceeds therefrom will result
in a violation of any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), or any
ruling issued thereunder or any enabling legislation or Presidential Executive
Order in connection therewith.
10.31 Intellectual Property. All patents, trademarks, registered
copyrights and trade names of Borrower, each Primary Obligor, each Mid-Tier
Company, each Secondary Obligor-Existing and each other Loan Party are listed in
Schedule 10.31A to this Agreement; all of those so listed are in full force and
effect. If any member of the Consolidated Group at any time acquires,
establishes, invents or develops any patent, trademark, copyright or trade name
that is
65
or becomes material to such Person's business or operations, it will promptly
notify the Agent of same and take such action as the Agent shall request to
grant to the Agent on behalf of the Lenders a perfected, first priority security
interest in same.
10.32 Compliance with ERISA. Schedule 10.32 describes the Pension Plans to
which Borrower or any ERISA Affiliates may have obligations. Each Loan Party and
each ERISA Affiliate and each Plan and the trusts maintained pursuant to such
plans are in compliance in all material respects with the presently applicable
provisions of Sections 401 through and including 417 of the Code, and of ERISA
and (i) no event which constitutes a Reportable Event as defined in Section 4043
of ERISA has occurred and is continuing with respect to any Plan which is or was
covered by Title IV of ERISA, (ii) no Plan which is subject to Part 3 of
Subtitle B of Title 1 of ERISA has incurred any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code) whether
or not waived, and (iii) no written notice of liability has been received with
respect to any Loan Party or any Subsidiary for any "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of ERISA), nor
has any such prohibited transaction resulting in liability to any Loan Party or
ERISA Affiliate occurred.
Neither any Loan Party nor any ERISA Affiliate (i) has incurred any
liability to the PBGC (or any successor thereto under ERISA), or to any trustee
of a trust established under Section 4049 of ERISA, in connection with any Plan
(other than liability for premiums under Section 4007 or ERISA), (ii) has
incurred any withdrawal liability under Subtitle E of Title IV of ERISA in
connection with any Plan which is a Multiemployer Plan, nor (iii) has
contributed or has been obligated to contribute on or after September 26, 1980,
to any "multiemployer plan" (within the meaning of Section 3(37) of ERISA) which
is subject to Title IV of ERISA.
The consummation of the transactions contemplated by this Agreement
(i) will not give rise to any liability on behalf of any Loan Party or any ERISA
Affiliate under Title IV of ERISA to the PBGC (other than ordinary and usual
PBGC premium liability), to the trustee of a trust established pursuant to
Section 4049 of ERISA, or to any Multiemployer Plan, and (ii) will not
constitute a "prohibited transaction" under Section 406 of ERISA or Section 4975
of the Code.
10.33 The Security Documents.
(a) Each Security Document heretofore delivered grants, and each
Security Document hereafter delivered when delivered will ▇▇▇▇▇ ▇ ▇▇▇▇ in the
properties or rights intended to be covered thereby (the "Collateral") which (i)
will constitute a valid and enforceable security interest under the Uniform
Commercial Code of the State (x) in which the Collateral is located and (y) by
which any Security Document is governed (as applicable, the "UCC"), (ii) will be
entitled to all of the rights, benefits and priorities provided by the UCC, and
(iii) when such Security Documents or financing statements with respect thereto
are filed and recorded as required by the UCC, will be superior and prior to the
rights of all third Persons now existing or hereafter arising whether by way of
mortgage, pledge, lien, security interest, encumbrance or otherwise, except for
Permitted Liens, and will provide the Agent and Lenders the Requisite Priority.
All such action as is necessary in law has been taken, or prior to the Effective
Date will have been taken, to establish and perfect the security interest of the
Agent and the Lenders in the
66
Collateral and to entitle the Lenders or the Agent on behalf of the Lenders to
exercise the rights and remedies provided in each of the Security Documents and
the UCC, as applicable, and no filing, recording, registration or giving of
notice or other action is required in connection therewith except such as has
been made or given or will have been made or given prior to such dates. All
filing and other fees and all recording or other tax payable with respect to the
recording of any of the Security Documents and UCC financing statements have
been paid or provided for.
(b) In furtherance (and not in limitation) of Section 10.33(a),
after giving effect to the Pledge Agreements and Security Agreements listed on
Schedule 10.33(c), (i) each of Borrower and each Primary Obligor will have
granted the Agent a Lien on (x) each Pledged Note and on each other note,
instrument or other evidence of indebtedness, other than any Excluded Note, in
which it has any right, title or interest; and (y) each Equity Interest, other
than Equity Interests in Excluded Entities, in which it has any right, title or
interest.
(c) In furtherance (and not in limitation) of the foregoing, on each
AP Funding Date, FC Commercial will have granted to the Agent pursuant to the
Pledge Agreements to which it is a party a perfected Lien on each Equity
Interest issued to it by the PFAL Portfolio Entity acquiring an Asset Pool on
such day which will be superior and prior to the rights of all third Parties now
existing or hereafter arising.
10.34 Other Loan Documents. All representations and warranties contained
in the other Loan Documents are true and correct.
10.35 Exclusion of Harbor Debtors. No representation, warranty or covenant
set forth in this Section 10 shall be deemed to be a representation, warranty or
covenant with respect to or by a Harbor Debtor.
10.36 FC Capital Liquidation. It is Borrower's intent to cause FC Capital
to cease doing business and liquidate the assets of FC Capital.
10.37 FC Holdings Line of Credit.
(a) FC Holdings has entered into that certain Loan Agreement dated
as of April 6, 2000 by and between FC Holdings and CFSC (said agreement as in
effect on such date and as amended with the written consent of the Majority
Lenders, the "Holdings/CFSC Loan Agreement") pursuant to which FC Holdings
obtained the FC Holdings Line of Credit. In addition, Agent (on behalf of
Lenders), certain subordinated lenders (whose indebtedness was subsequently
repaid) and CFSC have entered into two separate subordination agreements dated
as of April 6, 2000 (as from time to time amended, restated, supplemented or
otherwise modified), one relating to their respective rights to the Shared
Collateral and one (as from time to time amended, restated, supplemented or
otherwise modified, the "CFSC Guaranty Subordination Agreement") relating to
their respective rights relating to payments which may be made by FC Commercial
pursuant to guarantees to CFSC or the Lenders (collectively, the "CFSC
Intercreditor Agreement").
(b) Attached hereto as Schedule 10.37(b) is a true, complete and
accurate schedule of all material documents, instruments and agreements
executed, delivered or caused to
67
be delivered by FC Holdings or any other Person to CFSC to evidence, guaranty or
secure the FC Holdings Line of Credit (the "Holdings/CFSC Loan Documents").
(c) Attached hereto as Schedule 10.37(c) is a true, accurate and
complete schedule of all property (including but not limited to all equipment,
partnership interests, stock, membership interests, general intangibles,
instruments, bank accounts, accounts, accounts receivable, contract rights) (the
"Shared Collateral") in which a Lien has been or will be granted to secure
payment or performance of any obligation or liability of Borrower, FC Holdings,
any Primary Obligor, any Secondary Obligor, any Pledged Entity or any other
Person to CFSC under the Holdings/CFSC Loan Documents.
(d) Borrower has caused FC Holdings to deliver to Agent a true,
accurate and complete copy of the Holdings/CFSC Loan Agreement and all
Holdings/CFSC Loan Documents.
(e) Neither the Holdings/CFSC Loan Agreement nor any other
Holdings/CFSC Loan Document has been amended, extended, restated, supplemented
or otherwise modified, nor have any of the provisions thereof been waived.
(f) The Holdings/CFSC Loan Agreement has been duly executed and
delivered by FC Holdings and is in full force and effect.
(g) [Intentionally omitted.]
(h) All representations, warranties and covenants in the
Holdings/CFSC Loan Documents of FC Holdings, the other Primary Obligors party
thereto and the Secondary Obligors party thereto, are legal, valid and binding
obligations of such Persons, enforceable in accordance with the terms thereof.
All obligations of CFSC under the CFSC Guaranty Subordination Agreement are the
legal, valid and binding obligations of CFSC, enforceable against CFSC in
accordance with its terms.
(i) With respect to that FC Commercial Guaranty in favor of CFSC (as
identified on Schedule 10.37(i)) Borrower acknowledges that said guaranty is
subordinate in right of payment to the obligations of FC Commercial under that
certain Guaranty Agreement executed by FC Commercial in favor of Lenders and
Agent and that certain Amended and Restated Guaranty Agreement executed by FC
Commercial in favor of agent and the lenders under the Amended and Restated
Agreement and that Borrower shall not permit any payment to be made by FC
Commercial with respect to such guaranty in favor of CFSC at any time prior to
indefeasible payment in full of all Obligations and the termination of this
Agreement and all obligations of Lenders hereunder.
(j) Borrower hereby represents and warrants that it has pledged or
caused to be pledged to Agent, for the benefit of Lenders, a subordinated
security interest in all Shared Collateral, except a security interest in a
promissory note in the amount of $268,345.11 payable by Cartera en
Administration Y Cobranza, SA de CV to FC Holdings, in which promissory note
Lenders have elected not to take a security interest.
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10.38 FCS ▇▇▇▇▇▇, Ltd. Transactions.
(a) FC Holdings borrowed approximately $1,000,000 under the FC
Holdings Line of Credit which it used to make a capital contribution to FCS
▇▇▇▇▇▇, Ltd. in the amount of $24,666.67 and a loan to FCS ▇▇▇▇▇▇, Ltd. in the
amount of $898,012, secured by a deed of trust dated March 31, 2000, as amended
which is a lien against a 183 acre tract of land located in Bexar County, Texas
(the "▇▇▇▇▇▇▇ Property").
(b) Borrower has (i) caused FC Holdings to pledge to Lender the note
by FCS ▇▇▇▇▇▇, Ltd. to FC Holdings and all collateral pledged to secure payment
thereof; (ii) delivered said note, together with an endorsement thereof to
Agent, for the benefit of Lenders; and (iii) pledged to Agent, for the benefit
of Lenders, all of its right, title and interest in FCS ▇▇▇▇▇▇, Ltd. and FCS
▇▇▇▇▇▇▇, ▇.▇., Corp.
(c) FCS ▇▇▇▇▇▇▇, Ltd. is the fee title holder of the ▇▇▇▇▇▇▇
Property, subject to no liens or encumbrances other than that certain Deed of
Trust in favor of CFSC, as agent dated March 31, 2000.
(d) FC Holdings owns an aggregate 25% interest in equity of FCS
▇▇▇▇▇▇▇ Ltd. and its general partner, free and clear of all liens and
encumbrances, except those in favor of Agent (on behalf of Lenders).
10.39 Bosque Notes.
(a) Bosque is a wholly owned subsidiary of Borrower. Bosque has
issued $93,900,000 in 7.66% Asset Backed Notes (the "Bosque Notes") due June 5,
2002 pursuant to a Note Agreement dated as of June 6, 1997 (as amended from time
to time, the "Bosque Note Agreement") by and among Bosque, Realty Companies
(identified therein) and Bankers Trust Company of California, N.A., as Trustee;
(ii) Deutsche Bank is the successor in interest to the trustee under the Bosque
Note Agreement ("Bosque Trustee"); (iii) the unpaid principal balance of the
Bosque Notes as of December 5, 2002 is $4,573,603.49 and as of such date there
was no accrued but unpaid interest thereon.
(b) UCC financing statements in favor of Lenders have been filed
against Borrower and Bosque with respect to the Bosque Notes, along with an
acknowledgement of notice by Trustee of the security interest described in the
UCC financing statements.
10.40 Fee Agreements. Attached hereto as Schedule 10.40 is a true,
accurate and complete schedule, as of the Effective Date, of all Fee Agreements
to which Borrower or any Primary Obligor, Mid-Tier Company or Secondary
Obligor-Existing is a party.
10.41 Securitization Agreements. Attached hereto as Schedule 10.41 is a
true, accurate and complete schedule as of the Execution Date of all sales and
servicing agreements and similar agreements relating to securitizations to which
Borrower, any Primary Obligor or any other Subsidiary of Borrower is a party.
10.42 Incorporation by Reference. The provisions of Sections 4.7 and 4.9
of the FC Consumer Note, in each case as in effect on the Execution Date and as
amended with the consent
69
of the Majority Lenders from time to time, are incorporated herein by reference
as fully as if set forth herein in their entirety, except that references
therein (or in any related definition) to: (i) "Guarantor" or "Borrower" shall
be deemed references to Borrower hereunder; (ii) "Lender" shall be deemed
references to Majority Lenders; (iii) references to "Agreement" or "this
Agreement" shall be deemed references to this Agreement; (iv) "Loan Documents"
shall be deemed references to the Loan Documents hereunder ; (v)delivery of any
material to the "Lender" thereunder pursuant to any of the foregoing provisions
of such agreement shall be deemed delivery also to the Lenders for purposes of
this Section.
10.43 Tier IV Companies. Schedule 10.43 lists each Subsidiary of Borrower
and each other Secondary Obligor with Assets with a fair market value of less
than $100,000. The aggregate fair market value of Assets of all entities listed
on Schedule 10.43 does not exceed $1,500,000. No Person listed on Schedule 10.43
engages in any business.
10.44 Waterfall Restrictions. No loan agreement or other borrowing
arrangement of any PFAL Portfolio Entity contains any provision (x) pursuant to
which such agreement or arrangement would cross-default to a loan agreement or
other borrowing arrangement of any other PFAL Portfolio Entity or to a different
loan agreement or other borrowing arrangement of such PFAL Portfolio Entity or
(y) which would in any way restrict, reduce or prohibit distributions by a PFAL
Portfolio Entity on account of any event or condition with respect to any
Affiliate of such PFAL Portfolio Entity or with respect to that PFAL Portfolio
Entity under any other borrowing or credit arrangement.
10.45 Wholly Owned Subsidiary Interests. Attached as Schedule 10.45 hereto
is a true and complete list, as of the Effective Date, of each Wholly-Owned
Subsidiary which owns Equity Interests issued by any other Person other than an
REO Affiliate of such Wholly-Owned Subsidiary,
10.46 REO Affiliates. Attached as Schedule 10.46 hereto is a true and
complete list, as of the Effective Date, of each REO Affiliate.
10.47 Large Net Asset Value. Attached hereto as Schedule 10.47 is a true
and complete list, as of the Effective Date, of each Secondary Obligor with a
Net Asset Value in excess of $2,000,000.
Section 11. AGENT.
11.1 Appointment. The Lenders hereby irrevocably appoint Bank of Scotland,
acting through its New York branch, to act as Agent hereunder and as Agent or
Collateral Agent or "Assignee" or "Secured Party" (or in any other similar
representative capacity designated in any Security Document) under the Security
Documents (in such capacity, the "Agent"). Each Lender hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Agreement, the Notes, the Security Documents, the
other Loan Documents and any other instruments and agreements referred to
therein and to exercise such powers thereunder as are specifically delegated to
or required of it by the terms thereof and such other powers as are reasonably
incidental thereto; provided that the Agent shall not take any action to realize
upon
70
any security interest in any of the Collateral, or release any substantial
portion of the Collateral, without the consent of the Majority Lenders. The
Agent may perform any of its duties under any of the Loan Documents by or
through its agents or employees.
11.2 Nature of Duties. The Agent shall have no duties or responsibilities
except those expressly set forth in the Loan Documents. Neither the Agent nor
any of its officers, directors, employees or agents shall be liable to any
Lender for any action taken or omitted by it under any of the Loan Documents, or
in connection therewith unless caused by its or their gross negligence or
willful misconduct. Nothing in the Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of the Loan Documents except as expressly set forth therein. The
duties of the Agent under the Loan Documents shall be mechanical and
administrative in nature and the Agent shall not have by reason of its duties
under the Loan Documents a fiduciary relationship in respect of any Lender. The
Agent agrees to deliver promptly to each Lender (i) copies of notices received
by it pursuant to Sections 7.1, 7.2 and 7.11 of this Agreement, and (ii) copies
of all documents required to be delivered hereunder by the Borrower to the
Lenders directly but that are not so delivered to any Lender (but were delivered
to the Agent) if such Lender notifies the Agent that it has not received such
document or documents, specifying same.
11.3 Lack of Reliance. Independently and without reliance on the Agent,
each Lender to the extent it deems appropriate has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of the Loan Parties in connection with the making and the continuance of
the Loans and its Commitments hereunder and the taking or not taking of any
action in connection herewith, (ii) its own appraisal of the creditworthiness of
the Loan Parties and (iii) its own independent investigation and appraisal of
the Collateral; and, except as expressly provided in the Loan Documents, the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the date hereof or at any
time or times thereafter. The Agent shall not be responsible to any Lender for
any recitals, statements, representations or warranties herein or in any
certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency of any of the Loan Documents, the
financial condition of the Loan Parties or the condition of any of the
Collateral, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of any of the Loan
Documents, the financial condition of the Loan Parties or the existence or
possible existence of any Event of Default or Default.
11.4 Certain Rights. If the Agent requests instructions from the Lenders
or Majority Lenders with respect to any interpretation, act or action (including
failure to act in connection with this Agreement or any of the other Loan
Documents) the Agent shall be entitled to refrain from such act or taking such
actions unless and until it shall have received instructions from the Lenders or
the Majority Lenders, as the case may be; and the Agent shall not incur
liability to any Person by so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder or under any of the
other Loan Documents in accordance with the instructions of the Majority Lenders
(as to matters requiring the consent of the Majority Lenders) or all the Lenders
(as to matters requiring the consent of all the Lenders). The Agent shall be
fully justified in
71
failing or refusing to take any action under any Loan Document unless, if it
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking, continuing to take or not taking any such action.
11.5 Reliance. The Agent shall be entitled to rely upon any written notice
or any telephone message believed by it to be genuine or correct and to have
been signed, sent or made by the proper Person, and, with respect to all legal
matters pertaining to the Loan Documents and its duties thereunder, upon advice
of counsel selected by it.
11.6 Indemnification. TO THE EXTENT THE AGENT IS NOT REIMBURSED OR
INDEMNIFIED BY THE BORROWER, THE LENDERS WILL REIMBURSE AND/OR INDEMNIFY THE
AGENT, IN PROPORTION TO THE AGGREGATE AMOUNT OF THEIR RESPECTIVE COMMITMENTS
(OR, IF COMMITMENTS ARE TERMINATED, LOANS OUTSTANDING) UNDER THIS AGREEMENT, FOR
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED OR SUSTAINED BY OR ASSERTED
AGAINST THE AGENT, ACTING PURSUANT HERETO OR ANY OF THE OTHER LOAN DOCUMENTS IN
ITS CAPACITY PROVIDED FOR IN THIS SECTION 11, IN ANY WAY RELATING TO OR ARISING
OUT OF THIS AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, HOWEVER,
THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS RESULTING FROM THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
THE OBLIGATIONS OF THE LENDERS UNDER THIS SECTION 11.6 SHALL SURVIVE THE
REPAYMENT OF THE NOTES AND THE LOANS AND THE TERMINATION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
11.7 Agent, Individually. With respect to its Commitments under this
Agreement, the Loans made by it and any Note issued to or held by it, the Agent
shall have and may exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent set forth herein
for any other Lender or holder of a Note. The terms "Lender", "holders of Notes"
or any similar terms shall, unless the context clearly otherwise indicates, not
exclude the Agent in its individual capacity as a Lender or holder of a Note.
The Agent may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with the Loan Parties and their
Subsidiaries as if it were not acting pursuant hereto, and may accept fees and
other consideration from the Loan Parties and their Subsidiaries for services as
the Agent in connection with this Agreement and the other Loan Documents and for
services otherwise than as the Agent without having to account for the same to
the Lenders.
11.8 Holders of Notes. The Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been received by the Agent. Any
request, authority or consent of any Person, who at the time of making such
request or of giving such authority or consent is the payee of any Note, shall
be conclusive and binding on any subsequent holder, transferee, assignee or
payee of such Note or of any Note or Notes issued in exchange therefor.
11.9 Resignation. The Agent may resign at any time from the performance of
all its functions and duties hereunder and under the other Loan Documents by
giving 30 days prior written notice to the Borrower and each Lender. Such
resignation shall take effect upon the expiration of such 30-day period or upon
the earlier appointment of a successor.
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Notwithstanding any such resignation, the provisions of Sections 11.6 and 12.3
shall inure also to the benefit of each Agent who has so resigned with respect
to the period it served as Agent. In case of the resignation of the Agent, the
Majority Lenders, with the prior consent of the Borrower, which consent may not
be unreasonably withheld, may appoint a successor by a written instrument signed
by the Majority Lenders. Any successor shall execute and deliver to the Agent an
instrument accepting such appointment, and thereupon such successor, without
further act, shall become vested with all the estates, properties, rights,
powers, duties and trusts of the Agent hereunder and with like effect as if
originally named as "Agent" herein and therein, and upon request, the
predecessor Agent shall take all actions and execute all documents necessary to
give effect to the foregoing. In the event the Agent's resignation becomes
effective at a time when no successor has been named, all notices, other
communications and payments hereunder required to be given by or to the Agent
shall be sufficiently given if given by the Majority Lenders (or all Lenders, if
the consent of all Lenders is required therefor hereunder) or to each Lender, as
the case may be. In such event, all powers specifically delegated to the Agent
may be exercised by the Majority Lenders and the Majority Lenders shall be
entitled to all rights of the Agent hereunder.
11.10 Reimbursement. Without limiting the provisions of Section 11.6, the
Lenders and the Agent hereby agree that the Agent shall not be obligated to make
available to any Person any sum which the Agent is expecting to receive for the
account of that Person until the Agent has determined that it has received that
sum. The Agent may, however, disburse funds prior to determining that the sums
which the Agent expects to receive have been finally and unconditionally paid to
the Agent, if the Agent wishes to do so. If and to the extent that the Agent
does disburse funds and it later becomes apparent that the Agent did not then
receive a payment in an amount equal to the sum paid out, then any Person to
whom the Agent made the funds available shall, on demand from the Agent:
(a) refund the Agent the sum paid to that Person; and
(b) reimburse the Agent for the additional amount certified by the
Agent as being necessary to indemnify the Agent against any funding or other
cost, loss, expense or liability sustained or incurred by the Agent as a result
of paying out the sums before receiving it; provided, however, that if such
funds were made available to any Lender, such additional amount shall be limited
to interest on the sum to be repaid, for each day from the date such amount was
disbursed until the date repaid to the Agent, at (for the first three days) the
customary rate set by the Agent for correction of errors among banks, and
thereafter at the Base Rate (or, if greater and in respect of a Loan, the rate
from time to time prevailing on such Loan).
Section 12. MISCELLANEOUS.
12.1 Calculations and Financial Data. Calculations hereunder (including,
without limitation, calculations used in determining, or in any certificate of
any Loan Party delivered reflecting compliance by any Loan Party with the
provisions of this Agreement) shall be made and financial data required hereby
shall be prepared both as to classification of items and as to amount in
accordance with GAAP, consistent with the audited Financial Statements described
in Section 10.16; provided that for purposes of Section 8.20 no effect shall be
given to any change in GAAP from those in effect on December 31, 2001.
73
12.2 Amendment and Waiver. Except as otherwise provided, no provision of
any of the Loan Documents may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Majority Lenders (or
the Agent on their behalf) and, if the Borrower is a party thereto, the
Borrower, except that waivers of provisions relating to a Loan Party's
performance or non-performance of its obligations hereunder or thereunder need
not be signed by such Loan Party or any other Loan Party; provided however that
the written consent of the Agent shall also be required to change, waive,
discharge or terminate provisions of Section 11; and provided further that
without the consent of all of the Lenders (or the Agent on their behalf) no
change, waiver, discharge or termination may be made that would increase the
amount of any Commitment of any Lender, decrease the principal of any Loan;
decrease the interest rate payable on any Loan; decrease the amount of any fee
or Commitment commission; extend the final maturity date of any Loan; change the
definition of "Majority Lenders" or modify this Section 12.2. Any such change,
waiver, discharge or termination shall be effective only in the specific
instance and for the specific purposes for which made or given.
12.3 Expenses; Indemnification.
(a) Whether or not the transactions hereby contemplated shall be
consummated, the Borrower shall pay all out-of-pocket costs and expenses of (x)
the Agent incurred in connection with the preparation, execution, delivery,
administration, filing and recording of, and (y) the Agent and the Lenders
incurred in connection with the amendment (including any waiver or consent) or
modification of (including any amendment, waiver, consent or modification at any
time requested by the Borrower, whether or not same is finalized or executed),
any failure of Borrower to perform or observe any provision of, and enforcement
of or preservation of any rights under, this Agreement, the other Loan
Documents, the making and repayment of the Loans, and the payment of all
interest and fees, including, without limitation, (A) the fees and expenses of
▇▇▇▇▇▇▇▇ & Worcester LLP, counsel for the Agent, and any special or local
counsel retained by the Agent or the Lenders, and with respect to enforcement,
the reasonable fees and expenses of counsel for the Agent or any Lender, (B) the
reasonable fees and expenses of accountants, other consultants, appraisers and
other professionals retained by the Agent in connection with the transactions
contemplated hereunder, and (C) printing, travel, title insurance, mortgage
recording, filing, communication and signing taxes and costs.
(b) THE BORROWER AGREES TO PAY, AND TO SAVE THE AGENT AND THE
LENDERS HARMLESS FROM (x) ALL PRESENT AND FUTURE STAMP, FILING AND OTHER SIMILAR
TAXES, FEES OR CHARGES (INCLUDING INTEREST AND PENALTIES, IF ANY), WHICH MAY BE
PAYABLE IN CONNECTION WITH THE LOAN DOCUMENTS OR THE ISSUANCE OF THE NOTES OR
ANY MODIFICATION OF ANY OF THE FOREGOING, AND (y) ALL FINDER'S AND BROKER'S FEES
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.
(c) THE BORROWER AGREES TO INDEMNIFY, PAY AND HOLD HARMLESS THE
AGENT, EACH LENDER, ANY LENDER ASSIGNEE AND EACH HOLDER OF A NOTE AND THEIR
RESPECTIVE PRESENT AND FUTURE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
(COLLECTIVELY, THE "INDEMNIFIED PARTIES") FROM AND AGAINST ALL LIABILITY,
LOSSES, DAMAGES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, LEGAL FEES AND
EXPENSES) ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, OR AS A RESULT OF (I)
THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE
DOCUMENTS OR TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY OR THE PERFORMANCE BY
THE
74
PARTIES HERETO OR THERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER AND
THEREUNDER OR RELATING THERETO; OR (II) ANY CLAIM, ACTION, SUIT, INVESTIGATION
OR PROCEEDING (IN EACH CASE, REGARDLESS OF WHETHER OR NOT THE INDEMNIFIED PARTY
IS A PARTY THERETO OR TARGET THEREOF) IN ANY WAY RELATING TO THE BORROWER, ANY
PRIMARY OBLIGOR, ANY SECONDARY OBLIGOR OR SUBSIDIARY OF ANY THEREOF OR ANY
COLLATERAL OR ANY AFFILIATE OF THE BORROWER OR ANY SUBSIDIARY OF ANY SUCH
AFFILIATE OR IN ANY WAY RELATING TO ANY OF THE FOREGOING PERSONS OR ANY OTHER
LOAN PARTY, OR ANY AFFILIATE OF ANY OF THE FOREGOING IN RESPECT OF THIS
AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT OR TRANSACTION IN
CONNECTION HEREWITH OR THEREWITH OR RELATING HERETO OR THERETO; OR (III) ANY
ACTUAL OR ALLEGED VIOLATION BY THE BORROWER, ANY PRIMARY OBLIGOR, SECONDARY
OBLIGOR, ANY LOAN PARTY, ANY AFFILIATE OF ANY OF THE FOREGOING PERSONS OR ANY
SUBSIDIARY OF ANY OF THE FOREGOING PERSONS (OR ANY PREDECESSOR IN INTEREST OF
ANY OF THEM) OF ANY ENVIRONMENTAL LAW; PROVIDED THAT THE BORROWER SHALL NOT BE
LIABLE TO AN INDEMNIFIED PARTY FOR ANY PORTION OF SUCH LIABILITIES, LOSSES,
DAMAGES AND EXPENSES SUSTAINED OR INCURRED AS A DIRECT RESULT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT, ANY LENDER OR SUCH INDEMNIFIED
PARTY IF SUCH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IS DETERMINED TO HAVE
OCCURRED BY A FINAL AND NON-APPEALABLE DECISION OF A COURT OF COMPETENT
JURISDICTION. EACH LENDER SHALL ENDEAVOR TO GIVE THE BORROWER NOTICE OF ANY
MATERIAL CLAIM, ACTION, SUIT OR PROCEEDING (IF NOT RESTRICTED BY APPLICABLE LAW,
REGULATION OR GOVERNMENT AUTHORITY FROM SO DOING OR UNLESS THE SAME WOULD BE
INCONSISTENT WITH A REQUEST FROM A GOVERNMENT AUTHORITY) REFERRED TO IN CLAUSE
(II) WHICH HAS BEEN FILED AGAINST SUCH LENDER WITHIN A REASONABLE TIME AFTER THE
LOAN OFFICER OF SUCH LENDER WITH RESPONSIBILITY FOR THIS AGREEMENT BECOMES AWARE
OF THE SAME, BUT NO FAILURE TO GIVE ANY SUCH NOTICE SHALL AFFECT, OR RELIEVE THE
BORROWER OF, ANY OF BORROWER'S OBLIGATIONS UNDER THIS SECTION 12.3 OR UNDER ANY
OTHER PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RESULT IN ANY
OBLIGATION OR LIABILITY OF THE AGENT OR ANY LENDER TO THE BORROWER OR ANY OTHER
PERSON.
(d) All obligations provided for in this Section 12.3 and Sections
3.4, 3.9, 4.1, 4.2, 4.3, 5.2 and 11.6 shall survive any termination of this
Agreement and the Commitments and the payment in full of the Obligations.
12.4 Benefits of Agreement; Descriptive Headings.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns, and, in particular, shall inure to the benefit of the holders from time
to time of the Notes; provided, however, that no Loan Party party hereto may
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Agent and the Lenders and any such purported assignment
or transfer shall be void. In furtherance of the foregoing, each Lender shall be
entitled at any time to grant participations in the whole or any part of its
rights and/or obligations under this Agreement, the Loan Documents or any Loan
or Note to any Person; provided, however, that no Lender Assignee shall be
permitted by the terms of its participation agreement with the relevant Lender
to require such Lender to take or omit to take any action hereunder except to
the extent that if the Lender Assignee were a Lender hereunder, its consent to
taking or omitting to take such action would be required by the terms of the
second proviso of Section 12.2 hereto. No such participation pursuant to this
Section 12.4(a) shall relieve any Lender from its obligations hereunder and the
Borrower need deal solely with the Agent and the Lenders with
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respect to waivers, modifications and consents to this Agreement, the Loan
Documents or the Notes. Any such participant is referred to in this Agreement as
a "Lender Assignee". The Borrower agrees that the provisions of Sections 3.4,
3.7, 3.9, 5.2 and 12.3 shall run to the benefit of each Lender Assignee and its
participations or interests herein, and any Lender may enforce such provisions
on behalf of any such Lender Assignee; provided, however, that if any Lender
grants a participation in the whole or any part of its rights and/or obligations
pursuant to this Section 12.4(a), then the amounts that the Borrower is required
to pay pursuant to this Agreement (including, without limitation, additional
amounts made pursuant to Section 5.2) shall not exceed the amounts that the
Borrower would have been required to pay to such Lender pursuant to this
Agreement had such Lender not granted such participation. The Borrower hereby
further agrees that any such Lender Assignee may, to the fullest extent
permitted by applicable law, exercise the right of setoff with respect to such
participation (and in an amount up to the amount of such participation) as fully
as if such Lender Assignee were the direct creditor of the Borrower. Upon a
participation in accordance with the foregoing, the Borrower shall execute such
documents and do such acts as any Lender may reasonably request to effect such
assignment. Any Lender may furnish any information concerning the Loan Parties
in its possession from time to time to Lender Assignees (including prospective
Lender Assignees) and prospective Purchasing Lenders. Each Lender shall notify
Borrower of any participation granted by it pursuant to this Section 12.4(a) but
neither the approval of the Borrower nor that of any other Loan Party shall be
required for any such participation. The Borrower shall not be responsible for
any due diligence costs or legal expenses of such Lender Assignees in connection
with their entering into such participation.
(b) The descriptive headings of the various provisions of this
Agreement and the other Loan Documents are inserted for convenience of reference
only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
(c) Any Lender may at any time assign to any other Lender or any
affiliate of any Lender, or (subject to obtaining the prior written consent of
the Borrower (but no other Loan Party), such consent not to be unreasonably
withheld) to one or more additional banks or financial institutions ("Purchasing
Lenders"), all or any part of its Commitments (and corresponding Loans and Note)
pursuant to a Transfer Supplement ("Transfer Supplement"), the form and
substance satisfactory to the Agent; provided, however, that each such
assignment shall be for an amount not less than $1,000,000 (or, if the Lender's
Term Loan or Revolving Credit Loan Commitment (as applicable) at the time is
less, such amount) and integral multiples of $500,000 above such amount, or such
other amount or multiple to which the Agent may consent. Upon (i) such execution
of such Transfer Supplement, (ii) delivery of an executed copy thereof to the
Borrower and the Agent, (iii) payment by such Purchasing Lender to such
transferor Lender of an amount equal to the purchase price agreed between such
transferor Lender and such Purchasing Lender, (iv) payment by the Purchasing
Lender to the Agent of a $3,000 processing fee, and (v) any consent of the
Borrower required by the first sentence of this Section 12.4(c), such Purchasing
Lender shall for all purposes be a Lender party to this Agreement and shall have
all the rights and obligations of a Lender under this Agreement to the same
extent as if it were an original party hereto and thereto with the percentage
share of the Commitment(s) set forth in Schedule I to such Transfer Supplement,
and no further consent or action by the Borrower, any other Loan Party, the
Lenders or the Agent shall be required. Such Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the
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addition of such Purchasing Lender and the resulting adjustment of the
percentage of the Commitment(s), Notes and Loans (and related rights and
obligations) held by the transferor Lender and the Purchasing Lender arising
from the purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender pursuant to the Transfer Supplement.
Upon the consummation of any transfer to a Purchasing Lender pursuant to this
Section 12.4(c), the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a replacement Note or Notes
(dated the same date as the Note or Notes being replaced) is issued to such
transferor Lender and a new Note or Notes (dated the same date as the Note or
Notes being replaced) or, as appropriate, a replacement Note or Notes (dated the
same date as the Note or Notes being replaced) is issued to such Purchasing
Lender, in each case in principal amounts reflecting their outstanding Loans and
Commitment(s), as adjusted pursuant to such Transfer Supplement.
(d) Notwithstanding anything to the contrary contained herein or in
any of the Loan Documents, unless the Agent, the Borrower or a Lender otherwise
request with respect to any specific exhibit, exhibits to this Agreement shall
not be required to be attached to the execution or any other copy of this
Agreement, and any references in this Agreement or the other Loan Documents to
such exhibits as "Exhibits hereto," "Exhibits to this Agreement" or words of
similar effect shall be deemed to refer to such document as executed by the
parties thereto and delivered on the Effective Date.
12.5 Notices, Requests, Demands, etc. Except as otherwise expressly
provided herein, all notices, requests, demands or other communications to or
upon the respective parties hereto shall be deemed to have been duly given or
made when delivered if sent by Federal Express or other similar overnight
delivery service, or three Business Days after mailing (when mailed, postage
prepaid, by registered or certified mail, return receipt requested) or (in the
case of telex, telegraphic, telecopier or cable notice) when delivered to the
telex, telegraph, telecopier or cable company, or (in the case of telex or
telecopier notice sent over a telex or telecopier owned or operated by a party
hereto) when sent; in each case addressed as follows, except that notices and
communications to the Agent pursuant to Sections 2 and 9 shall not be effective
until received by the Agent: (i) if to the Agent, at the Closing Office, (ii) if
to a Lender, at the address specified with its signature below or (if a
Purchasing Lender) on the applicable Transfer Supplement, and (iii) if to a Loan
Party, at its address specified with its signature below (Attention: President),
or to such other addresses as any of the parties hereto may hereafter specify to
the others in writing, provided that communications with respect to a change of
address shall be deemed to be effective when actually received.
12.6 Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE THAT WOULD RESULT IN THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION, except (as to any other Loan Document) to
the extent specifically set forth otherwise in that Loan Document.
12.7 Counterparts; Telecopies. This Agreement and the other Loan Documents
may be executed in any number of counterparts, and by the different parties
hereto and thereto on the same or separate counterparts, each of which when so
executed and delivered shall be deemed to
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be an original; all the counterparts for each such Loan Document shall together
constitute one and the same agreement. Telecopied signatures hereto and to the
other Loan Documents shall be of the same force and effect as an original of a
manually signed copy.
12.8 Waiver; Remedies Cumulative; Payment of Claims; Full Recourse.
(a) No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege under this Agreement or any other Loan
Document, and no course of dealing between Borrower, any Primary Obligor, any
Secondary Obligor or any other Loan Party or any Subsidiary thereof and the
Agent or any Lender shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.. No notice to or demand on Borrower, any Primary Obligor, any
Secondary Obligor or any other Loan Party in any case shall entitle such Loan
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the right of the Agent or any Lender to any other or
further action in any circumstances without notice or demand.
(b) The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Lender would
otherwise have pursuant to such documents or at law or equity.
(c) In furtherance and not in limitation of the other rights and
remedies of the Agent and the Lenders, upon the occurrence of an Event of
Default or Default, Agent, in its sole and absolute discretion, without waiving
or releasing any covenant, agreement or other obligation of Borrower or any
Default or Event of Default, may at any time or times hereafter, but shall be
under no obligation to, pay, acquire and/or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person against the Assets
of Borrower, or any Primary Obligor, any Mid-Tier Company, any Secondary
Obligor-Existing or any Wholly-Owned Subsidiary. All sums paid by Agent in
respect thereof and all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel to the Agent) relating thereto incurred
by Agent or for which Agent becomes obligated on account thereof shall be part
of the Obligations payable by a Borrower to Agent on demand and any amount not
paid on demand shall bear interest at the Past Due Rate.
(d) The Borrower's obligations to pay principal, interest, fees and
other amounts when due under this Agreement and the other Loan Documents is
absolute and unconditional and a full recourse obligation of Borrower,
notwithstanding any fact or circumstance and, without limiting the generality of
the foregoing, whether or not there are funds available in the Cash Flow Cash
Collateral Account for application to any such obligation.
12.9 Recoveries; Pro Rata Sharing.
(a) Any Recoveries (after deduction and payment of all expenses and
costs permitted by this Agreement, the Security Documents or applicable law)
shall be applied against the Loans held by the Lenders until satisfaction in
full of all amounts due thereunder.
(b) The Lenders agree among themselves that, with respect to all
sums received by the Lenders applicable to the payment of the principal of or
interest on the Notes
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(except as otherwise provided in Section 3.4, 5.2 or 5.3), equitable adjustment
will be made between the Lenders so that, in effect, all such sums shall be
shared ratably by each of the Lenders (in accordance with the outstanding
principal amount of their respective applicable Loans) whether received by
voluntary payment, by realization upon security, by the exercise of the right of
set-off or banker's lien, by counterclaim or cross-action or by the enforcement
of any or all of the Notes or otherwise. If any Lender receives any payment on
its Notes of a sum or sums in excess of its pro rata portion (except as
otherwise provided in Section 3.4, 5.2 or 5.3), then such Lender receiving such
excess payment shall purchase for cash from the other Lenders with outstanding
Loans to the Borrower an interest in their Note or Notes in such amount as shall
result in a ratable participation by all of the Lenders in the aggregate unpaid
amount of applicable Notes then outstanding; provided, however, that if all or
any portion of such excess payment is thereafter recovered by such Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. The Borrower hereby agree that any Lender
so purchasing a participation from another Lender pursuant to this Section
12.9(b) may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of setoff) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
12.10 Jurisdiction. THE BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH OR
THEREWITH MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS THE AGENT OR ANY
LENDER MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, THE BORROWER ACCEPTS
AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH
JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY THE AGENT AND THE MAJORITY
LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY IT
AGAINST THE AGENT OR ANY LENDER AND ANY QUESTIONS RELATING TO USURY. THE
BORROWER AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT
TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE
BASIS OF FORUM NON CONVENIENS. BORROWER HEREBY IRREVOCABLY CONSENTS THAT ALL
PROCESS SERVED OR BROUGHT AGAINST BORROWER WITH RESPECT TO ANY SUCH PROCEEDING
IN ANY SUCH COURT IN NEW YORK SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT IF SENT BY REGISTERED MAIL, OR (IF PERMITTED BY LAW) BY FEDERAL EXPRESS
OR OTHER SIMILAR OVERNIGHT COURIER SERVICE, TO SUCH LOAN PARTY AT ITS ADDRESS
SET FORTH ALONGSIDE ITS SIGNATURE BELOW (OR SUCH OTHER ADDRESS AS THE AGENT IS
NOTIFIED OF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12.5). NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
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12.11 Severability. If any provision of this agreement shall be held or
deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatever.
12.12 Right of Set-off. In addition to any rights now or hereafter granted
under applicable law or otherwise and not by way of limitation of any such
rights, upon the occurrence of an Event of Default each of the Lenders is hereby
authorized at any time or from time to time, without notice to any Loan Party or
to any other Person, any such notice being hereby expressly waived, to set-off
and to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final) and any other indebtedness at any time held or
owing by such Lender to or for the credit or the account of such Loan Party
against and on account of the obligations and liabilities of such Loan Party now
or hereafter existing under any of the Loan Documents irrespective of whether or
not any demand shall have been made thereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured. The
Lender or Lenders exercising any rights granted under this Section 12.12 shall
thereafter notify the affected Loan Party and the Agent of such action; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
12.13 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Agent and the Lenders and the Borrower and the respective
successors and assigns of the Agent and the Lenders and nothing contained herein
shall be deemed to confer upon anyone other than the Borrower any right to
insist on or to enforce the performance or observance of any of the obligations
of the Agent or the Lenders contained herein. All conditions to the obligations
of the Lenders to make Loans hereunder are imposed solely and exclusively for
the benefit of the Lenders and their respective successors and assigns and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms and no other Person shall under any circumstances be
deemed to be beneficiary of such conditions.
12.14 [Intentionally Omitted]
12.15 Survival; Integration.
(a) Each of the representations, warranties, terms, covenants,
agreements and conditions contained in this Agreement shall specifically survive
the execution and delivery of this Agreement and the other Loan Documents and
the making of the Loans and shall, unless otherwise expressly provided, continue
in full force and effect until the Commitments have been terminated and the
Loans together with interest thereon, the Commitment commissions, the fees and
compensation of the Agent, and all other sums payable hereunder or thereunder
have been indefeasibly paid in full.
(b) This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on the subject matter hereof and thereof. In the event of any direct conflict
between the provisions of this Agreement and those of any other Loan Document,
the provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of the Agent or the
Lenders in any other
80
Loan Document shall not be deemed a conflict with this Agreement. Each Loan
Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.
12.16 Domicile of Loans. Any Lender may make, maintain or transfer any of
its Loans hereunder to, or for the account of, any branch office, subsidiary or
affiliate of such Lender.
12.17 No Usury. It is expressly stipulated and agreed to be the intent of
the Agent, the Lenders and the Borrower to comply at all times with applicable
usury laws. If at any time such laws would ever render usurious any amount
called for under any of the Loan Documents, then it is the express intention of
the parties hereto that such excess amount be immediately credited on the
applicable Notes, or if the applicable Notes have been fully paid, refunded by
the Lenders (pro rata in accordance with their respective principal amount of
the affected Loans), to the Borrower (and the Borrower shall accept such refund)
and the provisions hereof and thereof be immediately deemed to be reformed to
comply with the then applicable laws, without the necessity of the execution of
any further documents, but so as to permit the recovery to the fullest amount
otherwise called for hereunder and thereunder. Any such crediting or refunding
shall not cure or waive any default by the Borrower under the Loan Documents. If
at any time following any such reduction to the interest rate payable by the
Borrower there remains unpaid any principal amounts under the Notes and the
maximum interest rate permitted by applicable law is increased or eliminated,
then the interest rate payable to the Lenders shall be readjusted, to the full
extent permitted by applicable law, so that the total amount of interest
thereunder payable by the Borrower to the Lenders shall be equal to the amount
of interest which would have been paid by the Borrower without giving effect to
applicable usury laws. The Borrower agree, however, that in determining whether
or not any interest payable under the Notes or any of the other Loan Documents
exceeds the highest rate permitted by law, any non-principal payment (except
payments specifically stated in the Notes or such other Loan Documents to be
"interest"), including fees and commissions and all other sums payable hereunder
or thereunder or in connection herewith or therewith, shall be deemed, to the
full extent permitted by law, to be an expense, fee, premium or penalty rather
than interest.
12.18 Waiver of Jury Trial. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF THE BORROWER, ANY PARTNER THEREOF, ANY OTHER LOAN PARTY, THE AGENT OR
THE LENDERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE
LENDERS ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12.19 Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS,
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CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY ANY OF THE LENDERS AND/OR THE AGENT ON WHICH BORROWER MAY IN ANY
WAY BE LIABLE; (B) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO AGENT'S TAKING
POSSESSION OR CONTROL OF, OR TO REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL
OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
ANY OF THE LENDERS AND/OR THE AGENT TO EXERCISE ANY OF ITS RESPECTIVE REMEDIES;
AND (C) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION
LAWS.
12.20 Waiver of Marshaling. All rights of marshaling of assets of
Borrower, including any such right with respect to the Pledged Property, are
hereby waived by Borrower.
12.21 Waiver of Claims; Release by Borrower.
(a) Borrower releases Lenders and the Agent from any and all causes
of action or claims which Borrower may now or hereafter have for any asserted
loss or damage to Borrower claimed to be caused by or arising from any act or
omission to act on the part of any Lenders and/or the Agent, their respective
officers, agents or employees, except, in the case of any Lender or the Agent,
the willful misconduct or gross negligence of such Lender or the Agent (as the
case may be).
(b) Borrower hereby acknowledges, agrees and affirms, as of the
Execution Date and as of the Effective Date, that it possesses no claims,
defenses, offsets, recoupment or counterclaims of any kind or nature against or
with respect to the enforcement of this Agreement or any other Loan Document or
any amendments thereto (collectively, the "CLAIMS"), nor does Borrower now have
knowledge of any facts that would or might give rise to any Claims. If facts now
exist which would or could give rise to any Claim against or with respect to the
enforcement of this Agreement or any other Loan Document, as may have been
amended by the amendments thereto, Borrower hereby unconditionally, irrevocably
and unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.
12.22 Confidentiality. The Agent and each Lender, severally and with
respect to itself only, covenants and agrees that any information obtained by
the Agent or such Lender pursuant to this Agreement shall be held in confidence
(it being understood that documents provided to the Agent hereunder may in all
cases be distributed by the Agent to the Lenders) except that the Agent or such
Lender may disclose such information (i) to its officers, directors, employees,
agents, counsel, accountants, auditors, advisors or representatives, (ii) to the
extent such information has become available to the public other than as a
result of a disclosure by or through the Agent or such Lender, (iii) to the
extent such information was available to the Agent or such Lender in a capacity
other than Agent or Lender hereunder or on a nonconfidential basis prior to its
disclosure to the Agent or such Lender hereunder, (iv) with the consent of
Borrower, (v) to actual or prospective Lender Assignees or Purchasing Lenders or
(vi) to the extent the Agent or such Lender should be (A) required in connection
with any legal or regulatory proceeding or (B) requested by any Government
Authority to disclose such information.
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Section 13. TEXAS LANGUAGE.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE MATTERS COVERED HEREBY AND THEREBY
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
FIRSTCITY FINANCIAL CORPORATION
a Delaware corporation
By:
-------------------------------------
Title:
----------------------------------
BANK OF SCOTLAND, acting through its New
York branch, individually and as Agent
By:
-------------------------------------
Title:
----------------------------------
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TABLE OF CONTENTS
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EXHIBITS(1)
Annex I Definitions
--------
(1) Certain exhibits may not be attached to this Agreement. See Section
12.4(d).
LIST OF SCHEDULES
ANNEX I
DEFINITIONS
As used in the Term Loan and Revolving Credit Agreement to which this
Annex I is annexed, the following terms shall have the meanings herein specified
or as specified in the Section of such Loan Agreement or in such other document
herein referenced:
"A&R Agent " shall mean the "Agent" under the Amended and Restated
Agreement.
"A&R Note" shall mean a "Note" as defined in the Amended and Restated
Agreement.
"A&R Loan Document" shall mean a "Loan Document" as defined in the Amended
and Restated Agreement.
"A&R Termination Date" shall mean the date on which all obligations to the
lenders under the Amended and Restated Agreement have been paid and all
commitments of the lenders thereunder terminated.
"Acquisition Price" with respect to any Asset Pool means the purchase
price to be paid to the seller of the Asset Pool by the PFAL Portfolio Entity
acquiring such Asset Pool for the acquisition of all rights to all property
included in such Asset Pool plus transaction costs relating to the acquisition
of such Asset Pool of up to 2% of the purchase price of such pool. Unless
otherwise set forth in a written consent from the Agent, unless the full
purchase price for an Asset Pool is cash and a certification to such effect is
set forth in the related Asset Pool Acquisition Certificate, the Acquisition
Price for such Asset Pool shall be deemed to be zero.
"Adverse Waterfall Event" shall mean with respect to any PFAL Portfolio
Entity owning more than one Asset Pool or assets in addition to those contained
in its initial Asset Pool, that any lender to such PFAL Portfolio Entity has for
any reason diverted (whether to make up for a shortfall with respect to any
other pool or asset or otherwise) any portion of collections from any Asset Pool
of such PFAL Portfolio Entity to a different asset or asset pool (or waterfall
with respect thereto) of such PFAL Portfolio Entity or otherwise subsidized any
other such asset or asset pool with collections from any Asset Pool or otherwise
restricted distributions from, or reduced waterfall amounts arising from,
collections of any Asset Pool on account of any condition or occurrence other
than a condition or occurrence arising directly from such Asset Pool.
"Affected Lender" - Section 3.7(b).
"Affected Interest Period"- Section 3.7(a)
"Affiliate" shall mean any Person (i) in which Borrower and/or any Parent,
individually, jointly and/or severally, now or at any time or times hereafter,
has or have an equity or other ownership interest equal to or in excess of
twenty-five percent (25%) of the total equity of or other ownership interest in
such Person; and/or (ii) which directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control with
Borrower; and/or (iii) any officer or director of Borrower or any Primary
Obligor. For purposes of this definition, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Stock, by
contract or otherwise, and in any case shall include direct or indirect
ownership (beneficially or of record) of, or direct or indirect power to vote,
25% or more of the outstanding shares of any class of capital stock of such
Person (or in the case of a Person that is not a corporation, 25% or more of any
class of equity interest). Notwithstanding the foregoing, none of the Harbor
Debtors shall be deemed to be an Affiliate for the purposes of this Agreement
other than Section 8.23.
"Agent" - introductory paragraph.
"Aggregate Undistributed Secondary Obligor Funds" at any time shall mean
the aggregate amount of (x) the FC Percentage with respect to each Secondary
Obligor which is not a PFAL Portfolio Entity of the aggregate amount of the
funds held by each such Secondary Obligor, which funds are (i) not held for
payment by such Secondary Obligor, within the next 30 days, of indebtedness to a
Permitted Portfolio Company Creditor of such Secondary Obligor which is
permitted by the terms of this Agreement to be so repaid or (ii) not retained by
such Secondary Obligor to satisfy a leverage covenant (a "Usage Leverage
Covenant") imposed on such Secondary Obligor by the Permitted Portfolio Company
Creditor of such Secondary Obligor pursuant to a covenant under a loan agreement
between such creditor and such Secondary Obligor as in effect on the Execution
Date of which the Agent has been given written notice or (iii) do not constitute
Portfolio Protection Expenses plus (y) the Excess Portfolio Protection Expense
Amount plus (x) all amounts constituting Challenged Portfolio Protection
Expenses. Without limiting the foregoing, funds held by a Secondary Obligor
(other than a PFAL Portfolio Entity) for the payment of operating expenses shall
be included in the computation of "Aggregate Undistributed Secondary Obligor
Funds" regardless of whether (without limitation) such funds are excluded from
the computation of "Net Receipts".
"Agreement" or "Loan Agreement" shall mean this Term Loan and Revolving
Credit Agreement, as it may from time to time be amended, extended, restated,
supplemented or otherwise modified.
"Amended and Restated Agreement" shall mean the Amended and Restated Loan
Agreement dated as of the date hereof among the Borrower, Bank of Scotland
acting through its New York branch, as agent, and the lenders from time to time
party thereto as it may from time to time be amended, extended, restated,
supplemented or otherwise modified.
"Annual Payment Date"-Section 2.4(c).
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"Annual Term Loan Prepayment Amount" shall mean for each Annual Payment
Date for any Asset Pool, (x) (i)for the first Annual Payment Date for such Asset
Pool, the amount equal to 10% of the Tranche of Term Loans made in respect of
the acquisition of such Asset Pool and (ii) for each subsequent Annual Payment
Date for such Asset Pool, the amount equal to 10% of the principal amount of
such Tranche of Term Loans outstanding as of close of business on immediately
preceding Annual Payment Date.
"AP Funding Date" with respect to any PFAL Portfolio Entity and any Asset
Pool acquired by such PFAL Portfolio Entity shall mean the date on which the
Tranche of Term Loans in respect of the PFAL Portfolio Entity's acquisition of
such Asset Pool was made.
"Applicable Borrowing Percentage" shall mean, with respect to the
Acquisition Price of any Asset Pool the amount determined by multiplying (A) the
percentage of outstanding shares of stock, membership interests, or partnership
interests (as the case may be) or, in the case of a non-U.S. entity, similar
equity interests, issued to FC Commercial by the PFAL Portfolio Entity acquiring
such Asset Pool, and (B) (x) 100% until June 30, 2004; (y) 85% from July 1, 2004
until June 30, 2005 and (z) 75% from and after July 1, 2005
"Applicable Indebtedness" of any Person shall mean all Indebtedness of
such Person other than trade payables incurred in the ordinary course of
business which are not evidenced by an Indebtedness Instrument.
"Approved Portfolio Leverage Arrangement" shall mean a borrowing
arrangement between a PFAL Portfolio Entity and a financial institution on terms
and conditions reasonably satisfactory to the Agent (as indicated in writing by
the Agent) pursuant to which a loan is made to a PFAL Portfolio Entity on or
prior to the date such PFAL Portfolio Entity acquires an Asset Pool, all of the
proceeds of which loan are used to pay a portion of the Acquisition Price of
such Asset Pool. Without limiting the scope of the Agent's discretion pursuant
to the preceding sentence, (i) no borrowing arrangement shall be deemed an
Approved Portfolio Leverage Arrangement if such arrangement cross-defaults to a
credit arrangement of any other PFAL Portfolio Entity or contains any provisions
which would in any way restrict, reduce or prohibit distributions by a PFAL
Portfolio Entity on account of any event or condition with respect to any
Affiliate of such PFAL Portfolio Entity; and (ii) references herein to an
Approved Portfolio Leverage Arrangement shall be limited to such borrowing
arrangements governed by the terms of the loan agreement and other documents in
the form delivered to the Agent at the time such arrangements were approved by
the Agent, as amended, supplemented or otherwise modified with the written
consent of the Agent.
"ASDM" shall mean Asset Servicing de Mexico S.A. de C.V.
"Asset Pool" shall mean (x) prior to the acquisition thereof by a PFAL
Portfolio Entity, a portfolio of loans described in an Asset Pool Acquisition
Certificate, and (y) if acquired by a PFAL Portfolio Entity in whole or in part
with the indirect proceeds of a Tranche of Term Loans, a portfolio of loans so
acquired. Any portfolio of loans in which any Secondary Obligor has any interest
which is not acquired in whole or in part with the indirect proceeds of a
Tranche of Term Loans shall not constitute an Asset Pool.
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"Asset Pool Acquisition Certificate" shall mean a certificate from an
Executive Officer of Borrower in the form of Exhibit I-A to the Agreement, to
which is attached (as contemplated by the form of such certificate), (i) the
asset purchase agreement relating to the assets proposed to be purchased, (ii)
the Charter Documents for the PFAL Portfolio Entity and (iii) any Shareholders
Agreement entered into or proposed to be entered into by the holders of the
Equity Interests of such PFAL Portfolio Entity.
"Asset Pool-NL" shall mean an Asset Pool acquired at a time when the
acquiring PFAL Portfolio Entity had (x) received proceeds of Indebtedness for
the acquisition of such Asset Pool from a Person other than FC Commercial or an
Affiliate thereof (it being understood that the foregoing reference to proceeds
of Indebtedness from FC Commercial or an Affiliate shall not be construed to
affect or modify any prohibition or other limitation on any such advances
contained herein or in any other Loan Document) such amounting to less than 25%
of the Acquisition Price of such Asset Pool or (y) received no proceeds of
Indebtedness for the acquisition of such Asset Pool from a Person other than FC
Commercial or an Affiliate thereof.
"Asset Pool NPV Percentage" of a Tranche of Term Loans at any time, shall
mean the decimal (expressed as a percentage) obtained by dividing (x) the
aggregate outstanding principal amount of such Tranche of Term Loans by (y) the
FC Equity Value of the Related Asset Pool of such Tranche.
"Asset Pool NPV Percentage Certificate" shall mean a certificate in a form
approved by the Agent prior to the first Borrowing Date of Term Loans under this
Agreement which requires details as to the Asset Pool NPV Percentage and such
other related information as the Agent may require.
"Asset Pool Prepayment Amount" for any Asset Pool in respect of any
Payment Date shall mean the sum of (I) 75% of the FC Percentage of the amount by
which (A) Collections in respect of that Asset Pool (including amounts received
in respect of any asset that constituted part of such Asset Pool which was sold
to an REO Affiliate) during the most recently ended Waterfall Certificate Period
exceeds (B) the amount of Permitted Portfolio Expenses in respect of such Asset
Pool which during such period were expended or retained (excluding any such
Permitted Portfolio Expenses expended or retained during any previous Waterfall
Certificate Period) and, in the case of Leveraged Asset Pool, excluding any such
Permitted Portfolio Expenses which were excluded from the computation, in clause
(y) of the definition of "Collections", of the gross aggregate amount received
during such period by such Asset Pool, plus (II) to the extent not constituting
Extraordinary Transaction Proceeds, any proceeds of transfer of any Equity
Interests issued by the PFAL Portfolio Entity owning such Asset Pool to FC
Commercial and the FC Percentage of any proceeds of transfer of any Equity
Interests issued by any REO Affiliate thereof formed in respect of such Asset
Pool or otherwise holding any assets which at any time were part of such Asset
Pool or collateral for any such assets (it being understood that no reference to
any transfer of Equity Interests issued by any PFAL Portfolio Entity or REO
Affiliate shall be construed to affect or modify any prohibition thereof or
requirement for the obtaining of any consent relating thereto) or, in the case
of the sale of any Equity Interests issued to FC Commercial by any PFAL
Portfolio Entity with more than one Asset Pool, the share of such proceeds of
the sale of such Equity Interests allocable to such Asset Pool (such share as
among different Asset Pools as determined by the Agent in its discretion,
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whether on the basis of the relative sizes of different Asset Pools, the
relative amounts of Tranches of Term Loans made in respect of different Asset
Pools, the relative Asset Pool NPV Percentages of different Asset Pools or
otherwise ); plus (III) to the extent not constituting Extraordinary Transaction
Proceeds, 75% of any other amounts received by or on behalf of such PFAL
Portfolio Entity or any REO Affiliate thereof or, if such PFAL Portfolio Entity
owns more than one Asset Pool, such portion of such other amounts which the
Agent determines is allocable to such Asset Pool (such share as among different
Asset Pools as determined by the Agent in its discretion, whether on the basis
of the relative sizes of different Asset Pools, the relative amounts of Tranches
of Term Loans made in respect of different Asset Pools, the relative Asset Pool
NPV Percentages or otherwise).
"Assets" shall mean any and all real, personal and intangible property of
a Person, including, without limitation, accounts, chattel paper, contract
rights, letters of credit, instruments and documents, equipment , general
intangibles, inventory, leases, options, licenses, real property, and Equity
Interests issued by any other Person whether now existing or hereafter acquired
or arising.
"Associate", when used to indicate a relationship with a Person, shall
mean (i) another Person (other than a Loan Party or a Subsidiary thereof) of
which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (ii)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person or an immediate member of his family serves
as trustee or in a similar capacity, and (iii) any relative or spouse of such
Person or any relative of such spouse.
"Auditors" shall mean KPMG LLP or other independent certified public
accountants of recognized standing selected by Borrower and satisfactory to the
Agent.
"Base Rate" shall mean, for any day, the higher of (x) the fluctuating
interest rate per annum, in effect from time to time, established by Bank of
Scotland in New York as its base, prime or reference rate for U.S. domestic
commercial loans in Dollars, or (y) the Federal Funds Rate in effect on such day
plus 0.5%. Any change in the interest rate resulting from a change in the Base
Rate shall be effective as of the opening of business on the day on which such
change becomes effective; it is understood and agreed that the aforesaid rates
and the Base Rate are reference rates only and do not necessarily represent the
lowest or best rate actually charged to any customer.
"Base Rate Loan" shall mean any Loan during any period that it bears
interest determined by reference to the Base Rate.
"Basle Laws" - Section 3.4.
"Borrower" - introductory paragraph.
"Borrower-FCL Note " shall mean the Promissory Note dated December 16,
2002 in the stated principal amount of $16,000,000 payable by Borrower to FC
Consumer Lending.
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"Borrower Pledge Agreement" shall mean the Amended and Restated Pledge
Agreement (Stock and Debt) made by Borrower in favor of the Collateral Agent
dated as of the date hereof delivered pursuant to Section 6 and each other
pledge agreement with respect to shares of stock or affiliate indebtedness from
time to time hereafter delivered by Borrower in respect of the Obligations., as
each such agreement may be from time to time amended, extended, restated,
supplemented or otherwise modified.
"Borrower Security Agreement" shall mean the Amended and Restated Security
Agreement made by the Borrower in favor of the Collateral Agent dated as of the
date hereof delivered pursuant to Section 6 and each other security agreement
from time to time hereafter delivered by Borrower in respect of the Obligations,
as each such agreement may be from time to time amended, extended, restated,
supplemented or otherwise modified (including, without limitation, by the
addition of additional parties thereto).
"Borrowing Date"- Section 2.2.
"Bosque" shall mean Bosque Asset Corp., a Texas corporation.
"Bosque Note Agreement" - Section 10.39(a).
"Bosque Notes" - Section 10.39(a).
"Bosque Trustee" - Section 10.39(a).
"Business Day" shall mean any day that is not a Saturday, Sunday or legal
holiday in the State of New York or the State of Texas or a day on which banking
institutions chartered by the State of New York, the State of Texas or the
United States are legally required or authorized to close, and, when used in
connection with LIBOR, means any such Business Day which is also a day on which
deposits in Dollars may be dealt in on the London interbank market.
"Calculation Date" - Section 8.29(a).
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with GAAP) and the amount of obligations
under Capitalized Leases incurred by such Person.
"Capitalized Lease" shall mean any lease which is, or is required under
GAAP to be, capitalized on the balance sheet of the lessee at such time, and
"Capitalized Lease Obligation" of any Person at any time shall mean the
aggregate amount of rental expenses which is, or is required under GAAP to be,
capitalized on the books of such Person under Capitalized Leases.
"Cash Collateral Account-A&R" shall mean each account specified in the
Cash Collateral Agreement-A&R as subject to that Agreement.
"Cash Collateral Account - Servicing" shall mean shall mean the account at
the Depositary specified in the Cash Collateral Agreement-Servicing and in the
letter agreement
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between the Collateral Agent and the Depositary relating thereto or such other
account, if any, which is specified in a cash collateral agreement (in form and
substance satisfactory to Agent) between FC Servicing and Collateral Agent and
letter agreement (in form and substance satisfactory to the Collateral Agent)
between the Collateral Agent and the depositary bank with respect to such other
account.
"Cash Collateral Agreement-A&R" shall mean the Collateral Assignment of
Account (Cash Flow Cash Collateral Account) made by the Borrower in favor of the
Collateral Agent pursuant to the Amended and Restated Agreement, as such
agreement may be from time to time amended, extended, restated, supplemented or
otherwise modified.
"Cash Collateral Agreement-P" shall mean the Collateral Assignment of
Account (Cash Flow Cash Collateral Account-PFAL) dated as of the date hereof
made by Borrower in favor of the Collateral Agent as such agreement may be from
time to time amended, extended, restated, supplemented or otherwise modified.
"Cash Collateral Agreement- Servicing "shall mean the Collateral
Assignment of Account (FC Servicing) dated as of the date hereof made by
Borrower in favor of the Collateral Agent as such agreement may be from time to
time amended, extended, restated, supplemented or otherwise modified
"Cash Flow Cash Collateral Account" and "CFCCA-P" shall mean the account
at the Depositary specified by account number in the Cash Collateral Agreement-P
and in the letter agreement between the Collateral Agent and the Depositary
relating thereto or such other account, if any, which is specified by account
number in a cash collateral agreement (in form and substance satisfactory to
Agent) between Borrower and Collateral Agent and letter agreement (in form and
substance satisfactory to the Collateral Agent) between the Collateral Agent and
the depositary bank with respect to such other account.
"Certified Error Certificate" shall have the meaning set forth in the form
of Waterfall Certificate approved by the Agent prior to the first Borrowing Date
of Term Loans under this Agreement (as the form of certificate constituting the
"Waterfall Certificate" for the purposes of this Agreement may be from time to
time amended, supplemented, restated or otherwise modified).
"CFCCA-P Business Day" shall mean any Business Day that is not a day on
which banking institutions in the state (which is Connecticut and, for these
purposes will remain such state until 30 days after written notice of a change
of such location is delivered by Borrower to the Agent) where the CFCCA-P is
maintained are legally required or authorized to close which is also a day on
which deposits in Dollars may be dealt in on the London interbank market.
"CFO", as to any Loan Party shall mean such Loan Party's chief financial
officer.
"CFSC" shall mean CFSC Capital Corp. XXX, a Delaware corporation.
"CFSC Guaranty Subordination Agreement" - Section 10.37(a).
"CFSC Intercreditor Agreement" - Section 10.37(a).
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"Challenged Portfolio Protection Expense" - Section 7.2(g)
"Charges" shall mean all national, Federal, state, county, city, municipal
and/or other governmental (or any instrumentality, division, agency, body or
department thereof, including without limitation the PBGC) taxes, levies,
assessments, charges, liens, claims or encumbrances upon and/or relating to the
Obligations, a Person's Assets, a Person's business, a Person's ownership and/or
use of any of its Assets, a Person's income and/or gross receipts and/or a
Person's ownership and/or use of any of its Assets.
"Charter Document" shall mean (i) with respect to a corporation: its
certificate or articles of incorporation or association and its by-laws or
comparable documents under non-US laws; (ii) with respect to a partnership: its
partnership agreement, certificate of partnership (if a limited partnership) and
its certificate of doing business under an assumed name (if a general
partnership); (iii) with respect to a trust, its trust agreement or declaration
of trust; and (iv) with respect to a limited liability company, its certificate
of formation and operating agreement or analogous documents; in each case, with
such other similar documents as the Agent shall request or specify.
"Closing Checklist" shall mean the Closing Checklist in the form of
Schedule 6.3 to the Agreement.
"Closing Office" shall mean the office of the Agent at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other office as may be designated in writing to
the Borrowers by the Agent.
"Closing Office Time" shall mean the local time in effect at the Closing
Office.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" - Section 10.33. Without limiting the generality of the
foregoing, the term "Collateral" also includes all other real and personal
property and interests therein granted or purported to be granted as security to
the Agent on behalf of the Lenders pursuant to any Security Document, whether
before, on or after the Effective Date.
"Collateral Agent" shall mean the Agent in its capacity as agent under one
or more of the Security Documents and its successor and assigns (the Agent, in
such capacity, being sometimes referred to herein and in other Loan Documents as
the "Collateral Agent" and sometimes as the "Agent").
"Collection Period", with respect to a Payment Date, shall mean the period
from and including the preceding Payment Date (or, in the case of the first
Collection Period with respect to any Asset Pool, the period from and including
the AP Funding Date for such Asset Pool) to and excluding such Payment Date.
"Collections" of an Asset Pool for any applicable period shall mean (x) in
the case of an Asset Pool other than a Leveraged Asset Pool, the gross aggregate
amount received during such period on account of such Asset Pool by or on behalf
of the PFAL Portfolio Entity owning such
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Asset Pool (including, in addition, amounts received by any REO Affiliate of
such PFAL Portfolio Entity formed in respect of such Asset Pool and any amounts
otherwise received by any REO Affiliate of such PFAL Portfolio Entity on account
of assets which at any time were part of such Asset Pool or collateral therefor
) and (y) in the case of a Leveraged Asset Pool, the gross aggregate amount
received during such period on account of such Asset Pool by or on behalf of the
PFAL Portfolio Entity owning such Asset Pool (including, in addition, amounts
received by any REO Affiliate of such PFAL Portfolio Entity formed in respect of
such Asset Pool and any amounts otherwise received by any REO Affiliate of such
PFAL Portfolio Entity on account of assets which at any time were part of such
Asset Pool or collateral therefor, and including amounts received on account of
such Asset Pool prior to the commencement of such period which were released to
or for the benefit of such PFAL Portfolio Entity during the current Waterfall
Certificate Period), excluding (in the case of this clause (y)) amounts which
were paid directly to the Permitted Portfolio Company Creditor of such PFAL
Portfolio Entity under an Approved Portfolio Leverage Arrangement with respect
to such Asset Pool or amounts which were remitted to such Creditor, in either
case pursuant to the requirements of such Approved Portfolio Leverage
Arrangement, which, in any such case, have not been released by such Creditor to
(or for the benefit of) such PFAL Portfolio Entity (and/or any REO-PFAL
Affiliate thereof), plus such additional amount (if any) which was available to
be released to or for the benefit of such PFAL Portfolio Entity (and/or REO-PFAL
Affiliate thereof) during such period under such arrangements (whether or not
such additional amount was in fact so released) minus, in each case, the amounts
received during such period by or on behalf of such PFAL Portfolio Entity
constituting Extraordinary Transaction Proceeds allocable to such Asset Pool (as
reasonably determined by Agent based on information provided by Borrower or, if
the Agent determines that no such allocation would be supported by such
information, as reasonably allocated (whether on a ratable basis or otherwise)
by the Agent).
"Commitment Period (Revolving)" shall mean the period from the Effective
Date to and including the Final Maturity Date (Revolving).
"Commitment Period (Term)" shall mean the period from the Effective Date
to and including June 1, 2006, or such earlier date as the Term Loan Commitments
may terminate in full as provided in the Agreement.
"Commitments" shall mean the Term Loan Commitments and the Revolving
Credit Loan Commitments.
"Consolidated Group" shall mean the Borrower and its consolidated
Subsidiaries, other than the Harbor Debtors.
"Default" shall mean any event which with notice or lapse of time, or
both, would become an Event of Default.
"Depositary" shall mean Fleet National Bank.
"Disclosure Restriction" - Section 7.1 (m).
"Dividend"- Section 8.11(a).
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"Dollars", "U.S. $", "$" and "U.S. dollars" shall mean the lawful currency
of the United States of America.
"Drive Collateral Assignment" shall mean the Collateral Assignment of
Partnership and LLC Interests made by FC Consumer Lending and FirstCity Funding,
L.P. dated as of the date hereof and each other collateral assignment from time
to time hereafter delivered by FC Consumer Lending and FirstCity Funding, L.P.
in respect of the Obligations, as such agreements may be from time to time
amended, extended, restated, supplemented or otherwise modified.
"Drive LP" shall mean Drive Financial Services LP.
"EBITDA" for any period, shall mean net income (excluding extraordinary
and non-recurring items, including those which are non-cash in nature) for such
period plus (i) all interest expense, plus (ii) income tax expenses, plus (iii)
depreciation and amortization (including amortization of any goodwill or other
intangibles), minus or plus (iv) without duplication, gains and losses
attributable to any sale of assets not in the ordinary course of business, plus
or minus (v) any other non-cash charges or gains which have been subtracted or
added in calculating such net income other than gains on asset-securitizations
and loan loss provision charges.
"Effective Date" - Section 6.
"Eligible Asset Pool" shall mean an Asset Pool to be acquired by a PFAL
Portfolio Entity for an all cash purchase price which (unless Agent in its
discretion otherwise consents in writing) conforms in every respect with the
requirements of Exhibit I-B to the Agreement.
"Eligible PFAL Entity" shall mean a partnership, corporation or limited
liability company or, if not formed in the United States, a similar foreign
organized entity which is a Portfolio Entity-Post AE formed after the Effective
Date (i) of which, unless the condition set forth in Section 6B.2(a) would be
inapplicable to Loans to be made to such Entity (because the 25% basket set
forth therein had then not been exceeded), not less than 50% nor more than 75%
of each class of Equity Interests is owned directly by FC Commercial; (ii) no
Equity Interests in which are owned by any Affiliate of FC Commercial , (iii)
the Charter Documents and Shareholder Agreement of which provide FC Commercial
with the rights set forth on Exhibit I-C to the Agreement or greater rights,
(iv) which Charter Documents and Shareholder Agreements result in Permitted
Shareholder Arrangements, (v) which has no Indebtedness other than Indebtedness
pursuant to Approved Portfolio Leverage Arrangements incurred pursuant to
Section 8.3(iv) and (vi) in respect of which no Disclosure Restriction exists.
"Eligible Seller" shall mean (i) a seller of an Asset Pool which has its
principal place of business and is selling the Asset Pool in the United States
or (ii) a Non-US Seller which has its principal place of business and is selling
an Asset Pool in France, Mexico, Germany, Italy or the United Kingdom.
"Environmental Laws" shall mean all laws, common law, statutes, rules and
regulations, and all judgments, decrees, franchises, orders or permits, issued,
promulgated, approved or entered thereunder by any Government Authority relating
to pollution or protection of the environment or occupational health and safety,
including, without limitation, those relating to
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emissions, discharges, releases or threatened releases of any waste, pollutant,
chemical, hazardous material, hazardous substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or waste, or any
constituent of any such pollutant material, substance or waste, into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any waste, pollutant, chemical, hazardous material,
hazardous substance, toxic substance, hazardous waste, special waste, petroleum
or petroleum-derived substance or waste.
"Equity Interests" shall mean any equity interests issued by any Person,
including, without limitation, Stock (including, without limitation, common
stock and preferred stock), partnership interests or limited liability company
interests, any other securities convertible into, or exercisable for, any of the
foregoing or other securities of such Person, and options and warrants or other
rights to acquire any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any Person which is from time to time a
member of a controlled group or a group under common control with any Loan Party
within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the Code or
Section 4001(a)(14) of ERISA.
"Eurodollar Interest Determination Date" shall mean the date as of which
LIBOR is determined, which shall be two Business Days prior to the commencement
of a Eurodollar Interest Period.
"Eurodollar Interest Period" shall mean, with respect to each Eurodollar
Loan, the interest period applicable pursuant to Section 3.10 hereof.
"Eurodollar Loan" shall mean a Loan during any period that it bears
interest determined by reference to LIBOR.
"Event of Default" shall mean each of the Events of Default defined in
Section 9.
"Excess Portfolio Protection Expense Amount" at any time shall mean the
amount (if any) by which (A) the aggregate amount (for all Secondary Obligors)
of Portfolio Protection Expenses (which term, for purposes of this definition,
shall include (in addition to all amounts included as "Portfolio Protection
Expenses" in the definition of such term) (x) all amounts that would constitute
Portfolio Protection Expenses except that prior written notice thereof was not
given to the Agent and (y) all other amounts expended by Secondary Obligors in
respect of their assets (other than (for purposes of this clause (y)) amounts
expended to acquire portfolios of loan receivables) and/or retained by Secondary
Obligors) at such time exceeds (B) $20,000,000.
"Excluded Notes" shall mean those notes listed on Schedule I-(EN).
"Excluded Entity" shall mean each Person listed on Schedule I-(EE).
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"Excluded Initial Foreign MT" shall mean each of the following companies,
but only for the period of time when the respective Net Asset Value of such
company is less than $3,000,000: Adminstracion de Carteras Empresariales, S. de
▇. ▇. de C.V.; Cobranza Nacional de Carteras, S. de ▇.▇. de C.V.; and
Recuperacion de Carteras Mexican, S. de ▇. ▇. de C.V.
"Executive Officer" shall mean the President of Borrower, the CFO of
Borrower or any Senior Vice President of Borrower.
"Execution Date" shall mean the date on which all parties to this
Agreement shall have signed a copy this Agreement (whether the same or different
copies) and shall have delivered the same to the Agent.
"Existing Loans"- shall have the meaning ascribed thereto in the Amended
and Restated Agreement.
"Existing PF Amount" shall mean the amount on deposit in the Cash
Collateral Account-AR on any day on or after the A&R Termination Date.
"Existing S Co." shall mean each Secondary Obligor in existence
immediately prior to the Effective Date.
"Extraordinary Transaction": shall mean (i) a sale, conveyance, lease, or
other transfer by Borrower, any Primary Obligor or any Secondary Obligor of any
of its Assets, not in the ordinary course of its business; (ii) a sale,
conveyance, or other transfer of any previously issued Equity Interests in any
Affiliate (x) by any Primary Obligor or any Secondary Obligor unless such sale,
conveyance or other transfer is the functional equivalent of a sale, conveyance,
lease or other transfer by such Affiliate of Assets in the ordinary course of
business or (y) by Borrower; (iii) any sale, conveyance or other transfer of any
Indebtedness by a Secondary Obligor unless such Indebtedness is owed to such
Secondary Obligor by a Person which is not Borrower, a Primary Obligor or any
Affiliate of such Secondary Obligor, and any sale, conveyance or other transfer
of Indebtedness (regardless of by whom owed) by Borrower or any Primary Obligor;
(iv) the issuance of any Equity Interests by Borrower, any Primary Obligor or
any Secondary Obligor other than the issuance of Equity Interests by a Secondary
Obligor upon formation thereof where the capital raised by such issuance is used
for the acquisition of portfolio assets; (v) any transaction identified on
Schedule I -(ET), (vi) receipt of any proceeds by Borrower or any Subsidiary of
Borrower in respect of any sale of any Equity Interests in Drive LP or its
general partner or any Subsidiary of either thereof excluding any portion of
such proceeds paid to the payee of the FC Consumer Note pursuant to the FC
Consumer Loan Documents , pursuant to the terms thereof as in effect on the
Execution Date as amended by Permitted FC Consumer Amendments ; (vii) receipt of
proceeds by a Secondary Obligor of settlement or payments received from
litigation other than from a collection proceeding of such Secondary Obligor in
the ordinary course of business and receipt of proceeds by Borrower or any
Primary Obligor of settlement or payments received from litigation , excluding
(x) any such proceeds or payments payable to FC Servicing and/or its
Subsidiaries in its capacity as servicer and collector of debt portfolios and
(y) receipt of proceeds by FC Capital of settlement or payments received from
any litigation listed on Schedule I-(LIT); or (viii) the incurrence by Borrower,
any Primary Obligor, any Mid-Tier Company, any Secondary Obligor-Existing or any
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Wholly-Owned Subsidiary of any Indebtedness (other than Indebtedness of an REO
Affiliate to its REO Owner evidencing the purchase price of property purchased
by such REO Affiliate from such REO Owner) or the receipt by any such Person of
the proceeds thereof (it being understood that the inclusion for purposes of
this definition of any item or transaction which is restricted or prohibited by
this Agreement or any other Loan Document shall not be construed to modify or
eliminate such restriction or prohibition, but is in furtherance (and not in
limitation) of such restriction or prohibition) except for:
(A) indebtedness incurred by any Portfolio Entity-Post
AE other than a PFAL Portfolio Entity (provided
that recourse for any such indebtedness is limited
to such borrowing Portfolio Entity- Post AE) in
connection with purchase money financing extended
to such borrowing entity for the acquisition of
portfolio assets in the ordinary course of
business (whether secured or unsecured),
(B) Indebtedness incurred under existing facilities
identified on Schedule 10.20, incurred in the
ordinary course of business;
(C) the FC Holdings Line of Credit;
(D) indebtedness of the Borrower under this Agreement,
indebtedness of FC Commercial under the FC
Commercial (PFAL) Pledged Note, permitted
indebtedness of other Primary Obligors evidenced
by Pledged Notes and indebtedness of a PFAL
Portfolio Entity under Approved Portfolio Leverage
Arrangements;
(E) up to $16 million in indebtedness under the FC
Consumer Note; or
(F) Indebtedness outstanding under the Amended and
Restated Agreement on the Execution Date and
Tranche I Bosque Loans in an aggregate principal
amount not to exceed $1,165,000 thereunder.
"Extraordinary Transaction Proceeds" shall mean the consideration paid
with respect to any Extraordinary Transaction or the proceeds of any loan
received from any Extraordinary Transaction, minus, without duplication, (w)
such portion of such consideration or proceeds which, pursuant to the
Intercreditor Agreement, is to be applied to obligations under a different
credit arrangement, (x) such portion of such consideration required to be paid
by a PFAL Portfolio Entity to a Permitted Portfolio Company Creditor of such
PFAL Portfolio Entity; (y) if such consideration is payable to any Secondary
Obligor, such portion of such consideration which exceeds the percentage thereof
equal to the FC Percentage in such Secondary Obligor and (z) such other amounts
for necessary and commercially reasonable expenses incurred with respect to such
Extraordinary Transaction and approved by Lenders, which approval shall not be
unreasonably withheld, which may include attorney's fees and payment of any
indebtedness secured to by assets being conveyed payable to any independent
third party lender to secure a release of a lien or security interest on such
assets being conveyed.
"Facility Fee" - Section 4.1.
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"FC Capital" shall mean FC Capital Corp., a New York corporation.
"FC Capital Pledged Note" shall mean the Pledged Note dated December 12,
2002 in the stated principal amount of $2,000,000 payable by FC Capital to
Borrower, as the same may be amended, restated, supplemented or otherwise
modified with the consent of the Agent..
"FC Commercial" shall mean FirstCity Commercial Corporation, a Texas
corporation.
"FC Commercial (PFAL) Pledged Note" shall mean the promissory note
delivered pursuant to Section 6B.13, , as the same may be amended, restated,
supplemented or otherwise modified with the consent of the Agent.
"FC Commercial Pledged Note-Existing" shall mean the Pledged Note dated
May 31, 2002 in the stated principal amount of $60,000,000 payable by FC
Commercial to Borrower, as the same may be amended, restated, supplemented or
otherwise modified with the consent of the Agent.
"FC Consumer Collateral" shall mean the collateral securing the
obligations under the FC Consumer Note pledged pursuant to the Security
Documents (as defined in the FC Consumer Note) as in effect on the Execution
Date.
"FC Consumer Lending" shall mean FirstCity Consumer Lending Corporation, a
Texas corporation.
"FC Consumer Loan Documents" shall mean the "Loan Documents" as defined in
the FC Consumer Note.
"FC Consumer Note" shall mean that certain Promissory Note in the
principal amount of $16,000,000 dated December 16, 2002 made by FC Consumer
Lending to the order of The Governor & Company of the Bank of Scotland.
"FC Equity Value" of any Asset Pool shall mean the amount determined by
multiplying (A) the FC Percentage in the PFAL Portfolio Entity which owns such
Asset Pool by (B) the amount by which (x) the Net Present Value of the assets of
such Asset Pool exceeds (y) the sum of outstanding principal amount of
Indebtedness of the PFAL Portfolio Entity incurred with respect to the
acquisition of such Asset Pool plus the proportional amount (determined on the
basis of the Net Present Value of such Asset Pool relative to the Net Present
Value of all Asset Pools) of other Indebtedness (if any) of such PFAL Portfolio
Entity other than any such Indebtedness incurred to finance the acquisition of a
different Asset Pool of such PFAL Portfolio Entity plus the proportional amount
(determined on the basis of the Net Present Value of such Asset Pool relative to
the Net Present Value of all Asset Pools) of the outstanding amount of all other
obligations in respect of which such PFAL Portfolio Entity has issued any
Guaranty Equivalent (if any).
"FCHM Collateral Assignments" shall mean the Partnership Interest and
Limited Liability Company Interest Collateral Assignment Agreement made by
FirstCity Holdings Corporation of Minnesota ("FCHM") dated as of the date hereof
and each other collateral assignment from time to time hereafter delivered by
FCHM in respect of the Obligations, as such
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agreements may be from time to time amended, extended, restated, supplemented or
otherwise modified.
"FCHM Pledge Amount" shall mean the Pledge Agreement (Stock and Debt) made
by FCHM dated as of the date hereof and each other pledge agreement from time to
time delivered hereafter by FCHM in respect of the Obligations, as such
agreements may be from time to time amended, extended, restated, supplemented or
otherwise modified
"FC Holdings" shall mean FirstCity Holdings Corporation, a Texas
corporation.
"FC Holdings Line of Credit" shall mean, subject to Section 8.27, the
loans made by CFSC to FC Holdings pursuant to the Holdings/CFSC Loan Agreement.
"FC International" shall mean FirstCity International Corporation, a Texas
corporation.
"FC Mexico" shall mean FirstCity Mexico, Inc., a Texas corporation.
"FC Percentage" (x) with respect to any PFAL Portfolio Entity or any other
Secondary Obligor shall mean the percentage of outstanding shares of stock,
limited liability company interests or partnership interests (or, in the case of
a non-US entity, similar equity interests) of such PFAL Portfolio Entity or
Secondary Obligor owned directly or indirectly by the Borrower and (y) with
respect to any Asset Pool owned by any PFAL Portfolio Entity or REO-PFAL
Affiliate or any related assets, the FC Percentage with respect to such PFAL
Portfolio Entity and REO-PFAL Affiliate.
"FC Servicing" shall mean FirstCity Servicing, Inc., a Texas corporation.
"FC Servicing Pledged Note" shall mean the Pledged Note dated December 12,
2002 2001 in the stated principal amount of $2,000,000 payable by FC Servicing
to FC Commercial, as the same may be amended, restated, supplemented or
otherwise modified with the consent of the Agent.
"Federal Funds Rate" shall mean the rate of interest charged by banks with
excess reserves at a Federal Reserve district bank to banks needing overnight
loans to meet reserve requirements.
"Fee Agreements" shall mean any partnership agreement, management
agreement, consulting agreement, or other agreement pursuant to which Borrower,
any Primary Obligor or any Secondary Obligor is to be paid fees, distributions,
allocations, expense reimbursements, consideration, salary or other compensation
in consideration for providing management, personnel or services, in any form
whatsoever, from any Affiliate or from any other Person. Services to be rendered
under Fee Agreements may include, but not be limited to consulting, collecting
revenues, paying operating expenses not paid directly by others, and providing
clerical and bookkeeping services.
"Fee Agreement-Existing" shall mean each Fee Agreement in existence on the
Effective Date, each agreement in full or partial substitution or replacement
thereof, and each other Fee Agreement relating to any Existing S Co. or any
assets thereof.
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"Fee Letter" shall mean the letter dated December 16, 2002 from Borrower
to the Agent regarding the facility fee in respect of this Agreement.
"Final Asset Pool Acquisition Certificate" with respect to an Asset Pool
at any time, shall mean the Asset Pool Acquisition Certificate with respect to
such Asset Pool or, if such Asset Pool Acquisition Certificate has been
supplemented or revised, the last supplement or revision of such Certificate.
"Final Maturity Date (Revolving)" shall mean the day which is 364 days
after the Execution Date or, if such date is extended in accordance with Section
2.9 of the Agreement, such date as so extended or, in any case, such earlier
date as the Revolving Credit Loan Commitments may terminate in full as provided
in the Agreement.
"Final NPV Pool Certificate" with respect to any Asset Pool shall mean a
certificate in a form approved by the Agent prior to the first Borrowing Date of
Term Loans under this Agreement which sets forth the anticipated cash flows and
Net Present Value of each asset included in such Asset Pool and lists each item
of collateral for any asset in such Asset Pool.
"Financial Statements" shall mean, with respect to any Person, the
statement of financial position (balance sheet) and the statement of earnings,
cash flow, and stockholders' (or partners' or members) equity of such Person.
"First B" shall mean First B Realty L.P., a Texas limited partnership.
"First X" shall mean First X Realty L.P., a Texas limited partnership.
"Fiscal Year" shall mean each January 1 to December 31 period. "Fiscal
Year" followed by a year means the Fiscal Year with its Fiscal Year-End in such
calendar year.
"French Acquisition Entity" shall mean a European entity formed for the
purpose of acquiring, owning and managing assets acquired from one or more
French financial institutions.
"GAAP" shall mean generally accepted accounting principles (as promulgated
by the Financial Accounting Standards Board or any successor entity) in the
United States provided, that when with respect to a Person which is not a US
Person, GAAP shall mean the equivalent in such Person's jurisdiction of
organization.
"Government Authority" shall mean any nation or government, any state or
political subdivision thereof, any agency, authority, regulatory body, bureau,
central bank, commission, department or instrumentality of any of the foregoing
or any other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantor" shall mean any Person which is a guarantor under any Guaranty.
"Guaranty" shall mean any one or more of the guaranties or amended and
restated guaranties delivered pursuant to Section 6 and each other guaranty
agreement delivered in respect of the Obligations, as each such agreement may be
from time to time amended, extended, restated, supplemented or otherwise
modified.
-▇▇-
"▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇" shall mean any agreement, document or instrument
pursuant to which a Person directly or indirectly guarantees, becomes surety
for, endorses, assumes, agrees to indemnify the obligee of any other Person
against, or otherwise agrees, becomes or remains liable (contingently or
otherwise) for, such obligation, other than by endorsements of instruments in
the ordinary course of business. Without limitation, a Guaranty Equivalent shall
be deemed to exist if a Person agrees, becomes or remains liable (contingently
or otherwise), directly or indirectly: (i) to purchase or assume, or to supply
funds for the payment, purchase or satisfaction of, an obligation; (ii) to make
any loan, advance, capital contribution or other investment in, or a purchase or
lease of any property or services from, a Person; (iii) to maintain the solvency
of such Person; (iv) to enable such Person to meet any other financial
condition; (v) to enable such Person to satisfy any obligation or to make any
payment; (vi) to assure the holder of an obligation against loss; (vii) to
purchase or lease property or services from such Person regardless of the
non-delivery of or failure to furnish of such property or services; or (viii) in
respect of any other transaction the effect of which is to assure the payment or
performance (or payment of damages or other remedy in the event of nonpayment or
nonperformance) of any obligation.
"Harbor Debtors" shall mean, collectively, (i) Harbor Financial Mortgage
Corp., (ii) NAF, Inc. (f/k/a New America Financial, Inc.), (iii) ▇▇▇▇▇▇▇▇
Financial Services Corp., (iv) Community National Mortgage Corp., (v) CalCap,
Inc. and (vi) Harbor Financial Group, Inc, and any Subsidiary of such Person.
"Harbor Proceedings" shall mean the jointly administered Chapter 11
bankruptcy cases, bearing Case No. 99-37255-SAF-11, styled as In Re Harbor
Financial Group, Inc., et al., pending in the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division, as converted to a Chapter 7
proceeding on December 14, 1999, under which the Harbor Debtors are operating as
debtors-in-possession.
"Holdings/CFSC Loan Agreement":- Section 10.37(a).
"Holdings/CFSC Loan Documents": Section 10.37(b).
"Incidental Equity Interests" shall mean Equity Interests in a Person
acquired by a Secondary Obligor in settlement of collection of an asset in the
portfolio of such Secondary Obligor if such Equity Interests so acquired (i)
constitute Equity Interests in a Person engaged in a business unrelated to the
business of the Consolidated Group and such Person is not Borrower or an
Affiliate of Borrower or a Person in which or in an Affiliate of which any other
Equity Interest is owned by Borrower, any Primary Obligor or any Secondary
Obligor at the time such Equity Interest is so acquired; (ii) which Equity
Interests have a value of less than $500,000; and (iii) which Equity Interests
constitute less than 50.1% of the class of Equity Interests in the issuer
thereof of which such Equity Interests are a part or such lower percentage of
any such class of equity interests which results in control of such Person.
"Indebtedness" shall mean, with respect to any Person (without
duplication): (i) all obligations on account of money borrowed by, or credit
extended to or on behalf of, or for or on account of deposits with or advances
to, such Person; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments; (iii) all obligations of such Person
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for the deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business and on terms customary in
the trade and not more than sixty (60) days past due; (iv) all obligations
secured by a Lien on property owned by such Person (whether or not assumed); and
all obligations of such Person under Capitalized Leases (without regard to any
limitation of the rights and remedies of the holder of such Lien or the lessor
under such Capitalized Lease to repossession or sale of such property); (v) the
face amount of all letters of credit issued for the account of such Person and,
without duplication, the unreimbursed amount of all drafts drawn thereunder, and
all other obligations of such Person associated with such letters of credit or
draws thereon; (vi) all obligations of such Person in respect of acceptances or
similar obligations issued for the account of such Person; (vii) all obligations
of such Person under a project financing or similar arrangement; (viii) all
obligations of such Person under any interest rate or currency protection
agreement, interest rate or currency future, interest rate or currency option,
interest rate or currency swap or cap or other interest rate or currency hedge
agreement; and (ix) all obligations and liabilities with respect to unfunded
vested benefits under any "employee benefit plan" or with respect to withdrawal
liabilities incurred under ERISA by Borrower or any ERISA Affiliate to a
"multiemployer plan", as such terms are defined under the Employee Retirement
Income Security Act of 1974.
"Indebtedness Instrument" shall mean any note, mortgage, indenture,
chattel mortgage, deed of trust, loan agreement, hypothecation agreement,
Guaranty Equivalent, pledge agreement, security agreement, financing statement
or other document, instrument or agreement evidencing or securing the payment of
or otherwise relating to the borrowing of monies. Indebtedness Instruments shall
include, but not be limited to the Loan Documents.
"Indemnified Party" - Section 12.3.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated as
of December 16, 2002 among the Agent, the PFAL Agent and the initial payee of
the FC Consumer Note, as such agreement may be from time to time amended,
extended, restated, supplemented or otherwise modified.
"Interest Coverage" shall mean, for any period, total interest expense
(including that attributable to Capital Leases under GAAP) of the Consolidated
Group on a consolidated basis determined in accordance with GAAP.
"IRS" shall mean the Internal Revenue Service of the United States.
Itemized PPE Amount" - Section 7.2(g).
"Legal Requirements" shall mean, with respect to any Person, all laws,
common law, statutes, rules and regulations of any Government Authority to which
such Person or any of its assets is subject or any judgment, decree, franchise,
order or permit of any Government Authority applicable to such Person or any of
its assets.
"Lender Assignee" - Section 12.4(a).
"Lenders" - introductory paragraph.
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"Leveraged Asset Pool" shall mean an Asset Pool in respect of the
acquisition of which the PFAL Portfolio Entity which acquired such Asset Pool
incurred Indebtedness pursuant to Approved Portfolio Leverage Arrangements.
"LIBOR" shall mean, for each Eurodollar Interest Period, (x) the per annum
rate of interest at which U.S. Dollar deposits in the amount of the outstanding
principal balance of the Loan are or would be offered for such Eurodollar
Interest Period in the London interbank market at 11:00 A.M. London time two
Business Days prior to the start of such Eurodollar Interest Period by the Bank
of Scotland to prime banks and, in case of variations in rates, the arithmetic
average thereof rounded upward if necessary to the nearest 1/16th of 1%
calculated by the Agent, divided (and rounded upward to the nearest 1/16 of 1%)
by (y) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including without limitation any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in the United States in respect
of Eurocurrency funding or liabilities.
"Lien" shall mean any mortgage, deed of trust, security deed, pledge,
security interest, encumbrance, lien or other charge of any kind or any other
agreement or arrangement having the effect of conferring security (including any
agreement to give any of the foregoing, any assignment or lease in the nature
thereof, and any conditional sale or other title retention agreement), any lien
arising by operation of law, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction (or
any similar or comparable law of any jurisdiction that has not enacted the
Uniform Commercial Code).
"Loan(s)" shall mean, individually and collectively, each or all, as the
context may indicate, of the Term Loans and the Revolving Credit Loans.
"Loan Documents" shall mean, individually and collectively, this
Agreement, the Notes, the Fee Letter, the Guaranties, the Pledge Agreements, the
Security Agreements, the other Security Documents and all other instruments and
agreements heretofore or from time to time hereafter executed by or on behalf of
Borrower, any Primary Obligor, any Secondary Obligor or any other Loan Party in
connection herewith or therewith, in each case as amended, extended, restated,
supplemented or otherwise modified from time to time. Without limiting the
generality of the foregoing, each amendment to (or constituting part of) this
Agreement or any other Loan Document and each instrument and agreement
(including, without limitation, consents or waivers, but excluding any
amendment, consent or waiver executed prior to the Effective Date) executed in
connection with any Loan Document shall be deemed to be a Loan Document for all
purposes of the Agreement and the other Loan Documents.
"Loan Party" shall mean, individually and collectively, the Borrower, each
Primary Obligor and each other party to any Loan Document (other than the Agent,
any Lender or any Harbor Debtor and other than a Person which has executed a
Loan Document solely to consent to or acknowledge the same (and not as a party
thereto) and has not executed that or any other Loan Document in any other
capacity or for any other purpose) or (y) a Person which has delivered a
certificate certifying as to the accuracy and completeness of a Charter Document
and has not executed any other Loan Document). For avoidance of doubt, in
addition to the Borrower and each Primary Obligor, each Person which has
executed any Security Document as a pledgor or
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grantor of collateral thereunder and each person executing any guaranty of all
or any part of the Obligations shall constitute a Loan Party. Notwithstanding
the foregoing, for purposes of Sections 7.1(h), (i) and (k), 8.25 and 10.32, and
for purposes of the definitions of the terms "Pension Plan", Multiemployer Plan"
and "Plan", each PFAL Portfolio Entity shall be deemed a Loan Party and ERISA
Affiliate.
"Majority Lenders" as of a particular date shall mean the holders of at
least 51% of the aggregate unpaid principal amount of all Loans at the
particular time outstanding or, if no Loans are then outstanding, Banks whose
Commitments aggregate at least 51% of the Total Commitment.
"Management Letter" shall mean any correspondence or report submitted by
the Auditors to a Loan Party's chief executive officer, its Board of Directors
or any committee thereof containing comments and suggestions concerning a Loan
Party's accounting procedures and systems based upon the work done by the
Auditors during their annual or other audit.
"Material Adverse Change" shall mean a material adverse change in (i) the
business, properties, operations, prospects or condition (financial or
otherwise) of the Borrower and/or any of its Subsidiaries, any Primary Obligor
or any Secondary Obligor or (ii) the ability of the Borrower or any other Loan
Party to perform, or of the Agent to enforce, any of the Obligations.
"Material Adverse Effect" shall mean an effect that would result in a
Material Adverse Change.
"Maturity Date (Term)" shall mean November 30, 2006.
"MCS" shall mean MCS et Associes S.A.
"Mexican Acquisition Entity" shall mean a Mexican entity formed for the
purpose of acquiring, owning and managing assets acquired from one or more
Mexican financial institutions.
"Mid-Tier Company" shall mean each PFAL Portfolio Entity, each Person
listed on Schedule I-(MT) (each Person listed on such Schedule, a "Listed MT")
and each other Secondary Obligor (other than an Excluded Initial Foreign MT and
any other Person (if any) specified by the Agent in writing as not constituting
a Mid-Tier Company) with a Net Asset Value of $2,000,000 or more and each
general partner or manager or member (or foreign equivalent) of any of the
foregoing Persons (other than any such partner, manager, member or equivalent
which is the Borrower or a Primary Obligor) and each other Secondary Obligor
directly or indirectly owning any Equity Interests in any of the foregoing
Persons (each such general partner, manager, member or other owner of Equity
Interests, an "MT Owner"), each PFAL Portfolio Entity, Listed MT and MT Owner
thereof to continue at all times to constitute a Mid-Tier Company (regardless of
the Net Asset Value of any PFAL Portfolio Entity or Listed MT or of any such MT
Owner). Any Person, other than a PFAL Portfolio Entity, Listed MT or any MT
Owner thereof, which at any time so constitutes a Mid-Tier Company shall
continue to constitute a Mid-Tier Company until the time (if any) when the
Borrower sends to the Agent written notice (a "Redesignation Notice") executed
by an Executive Officer of Borrower
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certifying, as to such Person that the Net Asset Value of such Person (the
"Subject MT") and its MT Owners is below $2,000,000 and has been below
$2,000,000 for the preceding period of 90 consecutive day or more, and
requesting that such Subject MT and, if specified, its MT Owners no longer
constitute Mid-Tier Companies . Provided that the Borrower provides such
additional information, if any, that the Agent may request with respect to such
Subject MT and its MT Owners and that the Agent has not given the Borrower
notice that it disputes such redesignation of such Subject MT and, if so
specified by Borrower, MT Owners, within 30 days after receiving such
Redesignation Notice or, if later, within 30 days after the Agent received
additional information (if any) requested by it with respect to such requested
redesignation, the Subject MT and such specified MT Owners (in each case,
provided that no such Subject MT or MT Owner is a Listed MT or MT Owner thereof
or MT Owner of any other Mid-Tier Company) shall cease to constitute a Mid-Tier
Company (until, the time, if any, that such Subject MT (and/or any MT Owner
thereof) again satisfies the criteria applicable to Mid-Tier Companies). For
avoidance of doubt, the foregoing redesignation procedures shall not apply to
any PFAL Portfolio Entity, to any Listed MT or to any Secondary Obligor directly
or indirectly owning any Equity Interests in any PFAL Portfolio Entity or Listed
MT.
"Mid-Tier Company Post AE" shall mean a Mid-Tier Company formed after the
Effective Date.
"Minn Servicing" shall mean FirstCity Serving of Minnesota, Inc.
"Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA and to which
any Loan Party or any ERISA Affiliate of either Borrower contributes or has been
obligated to contribute.
"Net Asset Value" shall mean, with respect to any Person, the amount
determined by multiplying (x) the FC Percentage in respect of such Person and
(y) the Net Present Value of the assets of such Person.
"Net Present Value" with respect to an Asset Pool, shall mean the value of
such Asset Pool discounted pursuant to the criteria set forth on Exhibit I-D to
the Agreement.
"Non-Default Voluntary Custodial Arrangement" shall mean an arrangement to
perfect a lien in favor of the Agent or the holder of a different Permitted
Lien, in each case, on certain specified Assets of a Person entered into
voluntarily by a Secondary Obligor at a time when no Default or Event of Default
has occurred and is continuing.
"Non-US Seller" shall mean a Person selling or proposing to sell an Asset
Pool to a PFAL Portfolio Entity which Person is domiciled in or has its
principal place of business in a country other than the United States or which
acquired a significant portion of the assets contained in the Asset Pool outside
the United States.
"Notes" shall mean the Term Notes and Revolving Credit Notes.
"Notice of Borrowing" shall mean notice of borrowing in a form approved by
the Agent prior to the first Borrowing Date under this Agreement which requires
the information described in Section 2.2 and such other information as the Agent
shall require.
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"NPV Deficiency" with respect to any Asset Pool shall mean that the Asset
Pool NPV Percentage with respect of the Tranche of Term Loans made in respect of
such Asset Pool (x) exceeds 100% at any time prior to the end of the 18th month
after the AP Funding Date in respect of such Asset Pool, (y) exceeds 85% at any
time during the period from the end of such 18th month to the end of the 30th
month after such the AP Funding Date, or (z) exceeds 70% at any time after the
end of such 30th month (for purposes of foregoing computations, the month in
which the Loans were made shall be counted as the first of the applicable 18 and
30 months).
"Obligations" shall mean (x) with respect to each Loan Party other than
the Borrower, all obligations of such Loan Party with respect to the repayment
or performance of any obligations (monetary or otherwise) of the Borrower
arising under or in connection with this Agreement, the Notes or any other Loan
Document, and (y) with respect to the Borrower, all obligations of Borrower with
respect to the repayment or performance of obligations (monetary or otherwise)
arising under or in connection with this Agreement, the Notes or any other Loan
Document.
"Obligor Funding Obligations" shall mean obligations (whether pending,
contingent or otherwise) of a Secondary Obligor to make one or more advances to
a Person which is the obligor of one or more outstanding loans the rights to
which were acquired by such Secondary Obligor pursuant to a purchase by such
Secondary Obligor of a portfolio of loans made by one or more Persons who are
not Affiliates or Associates of the Borrower or of such Secondary Obligor;
provided that such obligation to make an advance was not any prior time an
obligation of an Affiliate or Associate of the Borrower or such Secondary
Obligor.
"Operating Account" shall mean account no. 7300044156 at Bank of America
(which Borrower represents and warrants is its operating account on the
Execution Date) and such other accounts that Borrower may from time to time
maintain as operating accounts of which the Borrower shall give the Agent
written notice (which shall include the account number and depositary
institution and location of such account).
"Original A&R Closing Date" shall mean December 20, 1999.
"Other Laws" - Section 3.4.
"Parent" shall mean any Person now or at any time hereafter owning or
controlling (alone or with Borrower, any Subsidiary and/or any other Person) at
least a majority of the issued and outstanding Stock or other ownership interest
of Borrower or any Subsidiary. For purposes of this definition, "control" shall
have the same meaning ascribed to such term in the definition of "Affiliate".
Notwithstanding the forgoing, no Person shall be a Parent which is not a Parent
of Borrower or a 51% or more owned subsidiary, directly or indirectly, of
Borrower.
"Past-Due Rate" - Section 3.3.
"Payment Date" - Section 2.4(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA.
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"Pension Plan" shall mean any employee pension benefit plan subject to
Title IV of ERISA and maintained by any Loan Party or any ERISA Affiliate of any
Loan Party or any such plan to which any Loan Party or any ERISA Affiliate is or
has been required to contribute on behalf of any of its employees, other than a
Multiemployer Plan.
"Permitted FC Consumer Amendments" shall mean any amendment, supplement or
other modification to the FC Consumer Note which (i) is consented to in writing
by the Majority Lenders or (ii) does not increase the principal amount of loans
under the FC Consumer Loan Documents or increase the interest rate or increase
or impose any fee or other payment obligation on the FC Consumer Lending.
"Permitted Liens" shall mean (i) any liens created pursuant to the Loan
Documents in favor of Agent for the benefit of Lenders and Agent to secure the
Obligations; (ii) liens for Charges which are not yet due and payable, or claims
and unfunded liabilities under ERISA not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently pursued; (iii)
liens arising in connection with worker's compensation, unemployment insurance,
old age pensions and social security benefits which are not overdue or are being
contested in good faith by appropriate proceedings diligently pursued, provided
that in the case of any such contest any proceedings commenced for the
enforcement of such lien shall have been duly suspended and such provision for
the payment of such lien has been made on the books of the Borrower (or the
applicable Affiliate) as may be required by GAAP; (iv) liens incurred in the
ordinary course of business to secure the performance of statutory obligations
arising in connection with progress payments or advance payments due under
contracts with the United States Government or any agency thereof entered into
in the ordinary course of business; (v) any liens securing Indebtedness of
Borrower (or any Affiliate) to any Persons in an aggregate amount less than
$200,000; (vi) Charges relating to Assets of First B and First X; (vii) as to
any Affiliate, other than Borrower, a Primary Obligor or a PFAL Portfolio
Entity, purchase money liens securing permitted indebtedness incurred in
connection with the acquisition of Assets and other indebtedness incurred under
the credit agreement under which such permitted indebtedness to acquire such
assets was incurred so long as such liens encumber only the Assets acquired,
(viii) as to any Affiliate, other than Borrower or a Primary Obligor or a PFAL
Portfolio Entity, liens relating to permitted Indebtedness incurred in
connection with the warehousing of assets or the securitization of Assets, so
long as such liens encumber only the Assets warehoused or securitized; (ix)
those liens disclosed on Schedule (PL) (x) those liens granted to CFSC in the
Shared Collateral pursuant to the Holdings/CFSC Loan Documents (as in effect on
the date of the execution and delivery of the Holdings/CFSC Loan Documents);
(xi) liens on assets of a PFAL Portfolio Entity in favor of the Person providing
financing under an Approved Portfolio Leverage Arrangement in respect of the
acquisition of assets acquired pursuant to such Approved Portfolio Leverage
Arrangement to the extent such liens are required by, and secure only
obligations under, such Approved Portfolio Leverage Arrangement; and (xii) Liens
on the FC Consumer Collateral securing the obligations under the FC Consumer
Note as in effect on the Execution Date and as amended, supplemented or
otherwise modified by Permitted FC Consumer Amendments.
"Permitted Portfolio Company Creditor" shall mean (i) with respect to an
Existing S Co., those creditors listed on Schedule I-(PFC) alongside the details
of the related credit arrangement, (ii) with respect to a PFAL Portfolio Entity,
those creditors of such Entity which have provided
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loans pursuant to Approved Portfolio Leveraged Arrangements, but only in respect
of and to the extent of such loans so provided and (iii) with respect to any
other Portfolio Entity-Post AE, any other creditor of such entity which has
provided permitted indebtedness to such entity but only in respect of and to the
extent of such permitted indebtedness.
"Permitted Portfolio Expenses" with respect to an Asset Pool during any
Waterfall Certificate Period or Collection Period shall mean the Portfolio
Protection Expenses which are currently budgeted (pursuant to a budget
previously provided to the Agent) for such Asset Pool and described in the most
recently delivered Portfolio Protection Expense Report to the extent that such
Portfolio Protection Expenses do not constitute Challenged Portfolio Protection
Expenses and only if such Portfolio Protection Expenses do not constitute Excess
Portfolio Protection Expenses and there are no other Excess Portfolio Protection
Expenses.
"Permitted Restrictions" on the payment of dividends by a Person shall
mean provisions of a loan agreement, as in effect when first entered into, to
which such Person is a party as borrower which prohibit such Person from paying
dividends for either of the following reasons:
(x) the funds restricted from being distributed are required to satisfy a
leverage or required reserve amount covenant (but only if such covenant would
not reasonably be expected to significantly impair such Person's ability to pay
dividends if anticipated cash flows are received as and when anticipated and in
approximately the amounts anticipated); and
(y) such dividends are restricted when there exists an event of default of
a customary type to be found in such agreements and that also permits the
relevant lender to accelerate the maturity of indebtedness outstanding under
such agreement.
"Permitted Shareholder Agreement" shall mean a Shareholder Agreement
entered into after the Execution Date with terms permitted by Exhibit I-C.
"Permitted Shareholder Arrangements" shall mean arrangements which would
arise from a Permitted Shareholder Agreement.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, a trust, an unincorporated association, a joint venture or
other entity or a government or an agency or political subdivision thereof.
"PFAL Portfolio Entity" shall mean any Portfolio Entity-Post AE formed
after the Effective Date for the purpose of investing in notes, bonds or other
evidences of indebtedness and in connection with the acquisition by which of an
Asset Pool Term Loans have been made to Borrower or requested to be made to
Borrower.
"Plan" shall mean any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) maintained by any Loan Party or any ERISA Affiliate or
any such plan to which any Loan Party or any ERISA Affiliate is or has been
required to contribute on behalf of any of its employees, other than a
Multiemployer Plan.
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"Pledge Agreement" means each of (or, as the context requires, any of) the
Borrower Pledge Agreement, Subsidiary Pledge Agreement, Subsidiary Collateral
Assignment, the FCHM Pledge Agreement, FCHM Collateral Assignment and the Drive
Collateral Assignment and any other pledge agreement made for the benefit of the
Lenders (and, if therein specified, the lenders under the Amended and Restated
Agreement).
"Pledged Entities" shall mean those entities any Equity Interest in which
has been pledged to the Agent to secure the Obligations.
"Pledged Notes" shall mean those certain promissory notes listed on
Schedule I-(PN) which have been delivered to the Agent and in which the
Collateral Agent holds a perfected security interest of the Requisite Priority
pursuant to a Pledge Agreement to which the Collateral Agent is party.
"Pledged Property" shall mean any and all property (real, personal or
intangible) pledged by Borrower, any Primary Obligor, any Secondary Obligor or
any other Loan Party to secure payment and performance of the Obligations,
including but not limited to: (i) any and all Collateral under any Security
Agreement; and (ii) any and all property pledged under any Pledge Agreement.
"Portfolio Entity-Post AE" shall mean any Secondary Obligor, other than an
REO Affiliate, formed or in which Borrower first acquired a direct or indirect
interest on or after the Amendment Effective Date.
"Portfolio Protection Expense Report"- Section 7.2(g).
"Portfolio Protection Expenses" with respect to a Secondary Obligor shall
mean expenses or other amounts of which the Agent has been given prior written
notice which (w) such Secondary Obligor has reasonably determined are necessary
to advance to one of its REO Affiliates for reasonable and necessary expenses to
preserve or protect real property owned by such REO Affiliate or (x) constitute
reasonable and customary, necessary leasing commissions, reasonable and
necessary tenant improvement costs paid by such Secondary Obligor or REO
Affiliate pursuant to a written lease or capital improvements to such property
required in order for the property to be so leased or (y) such Secondary Obligor
has reasonably determined are necessary to protect other assets securing
indebtedness owed to such Secondary Obligor, or (z) constitute Obligor Funding
Obligations, such expenses or other amounts to constitute Portfolio Protection
Expenses when amounts therefor are retained by such Secondary Obligor or REO
Affiliate or, if earlier, when such expenses or other amounts are paid, but
shall cease to constitute Portfolio Protection Expenses other than for purposes
of the Portfolio Protection Expense Report if such expenses or other amounts
remain unexpended but the purpose for which the same were originally retained is
no longer applicable and such expenses or other amounts are not being retained
for a different purpose set forth above of which the Agent has been given prior
written notice.
"Primary Obligors" shall mean, collectively, (i) FC Commercial; (ii) FC
Capital; (iii) FC Consumer Lending; (iv) FC Servicing: (v) FC Holdings; (vi) FC
International; and (vii) FC Mexico.
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"Purchasing Lenders" - Section 12.4(c).
"Rate of Borrowing" - Section 3.6.
"Records" shall mean all books, records, computer records, computer
software, ledger cards, programs and other computer materials, customer and
supplier lists, invoices, orders and other property and general intangibles at
any time evidencing or relating to Assets.
"Recoveries" shall mean any funds, or substitution of receipts or
collateral, received by the Lenders or the Agent (a) from the sale, collection
or other disposition of Collateral pursuant to the Security Documents, or (b)
from any distribution to any of the Lenders or the Agent, or abandonment to any
of them, or substitute Liens or payment given to any of them pursuant to events
or proceedings of the nature referred to in Section 9.9 of the Agreement, or
otherwise, which distribution or abandonment pertains to the Collateral.
"Regulatory Change" means, relative to any Lender or the Agent, any change
after January 1, 2002 in any (or the adoption after January 1, 2000 of any new):
(a) United States Federal, state or local law or foreign law
applicable to the Agent or such Lender; or
(b) regulation, interpretation, directive, or request (whether
or not having the force of law) applying to the Agent or any Lender
of any Government Authority charged with the interpretation or
administration of any law referred to in clause (a) or of any
fiscal, monetary, central bank or other authority having
jurisdiction over the Agent or such Lender.
"Related Asset Pool" with respect to any Tranche of Term Loans shall mean
the Asset Pool specified in the Notice of Borrowing with respect to such
Tranche.
"REO Affiliate" shall mean a Person, other than Borrower, a Primary
Obligor or a Mid-Tier Company, which is a corporation, limited liability company
or partnership 100% of the Equity Interests in which are owned by a Secondary
Obligor (the "REO Owner") (or, in the case of such an entity which is a limited
partnership, 100% of the limited partnership interest of which is owned by the
REO Owner and 100% of the interest in the general partner is owned by the REO
Owner), which Person has been established solely to acquire from the REO Owner
title to (and owns no assets other than) parcels of real property (or distressed
notes secured by real property for purposes of obtaining title to real property
securing such loans) in exchange for, with respect to each such parcel, a
promissory note in a principal amount no less than 96% of the value (as
reasonably determined by the REO Owner and the REO Affiliate) of the property;
provided that no Person shall constitute or continue to constitute an REO
Affiliate if (A) such Person acquires property from any Person other than (x)
the REO Owner, (y) in the case where it has acquired a note from the REO Owner
solely for purposes of acquiring title to the real property securing such note,
the obligor of such note; or (z) except in the case of an REO-PFAL Affiliate,
any other seller of real property securing distressed notes or (B) engages in
any business other than business incidental to owning and selling the parcels of
real property so acquired by such REO Affiliate.
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"REO-PFAL Affiliate" shall mean an REO Affiliate of a PFAL Entity.
"REO Post-25% Time" shall mean any time on or after the aggregate Net
Present Value of Assets of REO-PFAL Affiliates exceeds the greater of (x) 25% of
the aggregate Net Present Value of Assets of all PFAL Portfolio Entities and
their REO Affiliates and (y) $1,000,000, until two Business Days after Borrower
gives the Agent written notice along with evidence satisfactory to the Agent
that such Net Present Value of Assets of REO-PFAL Affiliates no longer so
exceeds 25 % of such value of such assets of all PFAL Portfolio Entities.
"Repayment Fee" - Section 4.2.
"Reportable Event" shall mean a Reportable Event described in Section 4043
of ERISA and the regulations issued thereunder.
"Requisite Consents"- Section 6.8.
"Requisite Priority" shall mean (x) except with respect to the Shared
Collateral and except as set forth in the Intercreditor Agreement, first
priority and (y) with respect to Shared Collateral second priority, subject only
to the liens of CFSC to which the Agent and the Lenders are subordinate pursuant
to the CFSC Intercreditor Agreement.
Revolving Credit Note" shall mean a promissory note of Borrower
substantially in the form of Exhibit A-2 to this Agreement or otherwise
identified on the Effective Date as the Revolving Credit Note, as such note may
from time to time be amended, extended, restated, supplemented or otherwise
modified.
"Revolving Credit Loan"- Section 2.1(b).
"Revolving Credit Loan Commitment" shall mean, as to each Lender, the
amount set forth opposite its name on Schedule 2.1 under the heading "Revolving
Credit Loan Commitment" as such amount may be modified by the provisions of any
Transfer Supplement from time to time entered into and as the same may from time
to time be reduced or terminated pursuant to Section 2.8(a), Section 9 or any
other Section of the Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Secondary Obligor" shall mean each entity identified on Schedule I-(SO),
as well as, subject to the final sentence of this definition, any other entity,
other than a Primary Obligor, any Equity Interest (other than Equity Interests
constituting Incidental Equity Interests) of or in which is owned by Borrower,
any Primary Obligor or any other Secondary Obligor. Notwithstanding the
foregoing, no Tier IV Company or Tier V Company or any Harbor Debtor shall
constitute a Secondary Obligor.
"Secondary Obligor-Existing" means each entity identified on Schedule
I-SOX) and each successor thereof.
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"Secondary Obligor-R" shall mean any Secondary Obligor 50% or more of the
voting interests or any class of other Equity Interests of which are owned
directly or indirectly by Borrower.
"Securities" shall have the meaning ascribed to that term in the
Securities Act of 1934.
"Securities Laws" shall mean all applicable Federal and state securities
laws and regulations promulgated pursuant thereto.
"Security Agreements" shall mean any one or more of the security
agreements or amended and restated security agreements delivered pursuant to
Section 6 and each other security agreement or amended and restated security
agreement heretofore or from time to time hereafter delivered in respect of the
Obligations, as each such agreement may be from time to time amended, extended,
restated, supplemented or otherwise modified.
"Security Documents" shall be the collective reference to (x) each of the
agreements referred to in Section 6 (or on the document checklist referred to
therein) pursuant to which Collateral is or was granted or is or was intended to
be granted, directly or indirectly, to the Agent on behalf of the Lenders, (y)
each agreement entered into after the Execution Date pursuant to which any
collateral is or was granted or is or was intended to be granted, directly or
indirectly, to the Agent on behalf of the Lenders and any other Person (if any)
sharing an interest in such collateral, and (z) all amendments, supplements or
other modifications to such agreements or replacements thereof. Without limiting
the generality of the foregoing, each Security Agreement, each Pledge Agreement,
each cash collateral agreement securing any Obligation, each depositary bank
acknowledgement relating to any bank account of any Loan Party, the CFSC
Guaranty Subordination Agreement, each other agreement pursuant to which any
obligations are subordinated to any of the Obligations (whether pursuant to a
subordination agreement, subordination provisions in any other agreement or
instrument or otherwise), each Pledged Note, and each security agreement
securing the obligations under any Pledged Note shall constitute Security
Documents . However, as to a Loan Party, the term "Security Document" shall not
include any such document as to which such Loan Party is released from all its
obligations thereunder by the Agent or the Lenders in accordance with the terms
hereof or thereof.
"Servicing Restricted Funds" means funds received by FC Servicing or Minn
Servicing in the ordinary course of such company's servicing business for the
account of Persons other than FC Servicing, Minn Servicing, the Borrower or any
other Subsidiary of the Borrower.
"Shared Collateral" - Section 10.37(c).
"Shareholder Agreement" shall mean any agreement (other than a certificate
of incorporation, customary by-laws, a limited liability company formation
certificate or a partnership formation certificate but including resolutions of
any Person owning any Equity Interests in such Person) among any holders of
Equity Interests issued by Borrower, any Primary Obligor or any Secondary
Obligor relating to the management of any such Person or any of the rights or
privileges of any holders of Equity Interests of any such Person.
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"Stock" shall mean all shares and other Equity Interests issued by a
corporation, whether voting or non-voting, including but not limited to, common
stock, warrants, preferred stock, convertible debentures, and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
or all of the foregoing.
"Subject PFAL Entity" - Section 6B.1.
"Subsidiary" of any Person (the "First Person") shall mean any other
Person more than 50% of the indicia of equity rights (whether capital stock or
otherwise) of which is at the time owned, directly or indirectly by the First
Person and/or by one or more of such First Person's Subsidiaries. Unless
otherwise indicated, references to Subsidiaries shall refer to Subsidiaries of
the Borrower.
"Subsidiary Collateral Assignment" shall mean the Amended and Restated
Partnership Interest and Limited Liability Company Interest Collateral
Assignment Agreement made by certain Primary Obligors in favor of the Collateral
Agent dated as of the date hereof delivered pursuant to Section 6 and each other
collateral assignment from time to time hereafter delivered by one or more
Primary Obligors or Secondary Obligors in respect of the Obligations., as each
such agreement may be from time to time amended, extended, restated,
supplemented or otherwise modified.
"Subsidiary Pledge Agreement" shall mean the Amended and Restated Pledge
Agreement (Stock and Debt) made by certain Primary Obligors in favor of the
Collateral Agent dated as of the date hereof delivered pursuant to Section 6 and
each other pledge agreement from time to time hereafter delivered by one or more
Primary Obligors or Secondary Obligors in respect of the Obligations, as each
such agreement may be from time to time amended, extended, restated,
supplemented or otherwise modified (including, without limitation, by the
addition of additional parties thereto).
"Subsidiary Security Agreement" shall mean the Amended and Restated
Security Agreement made by the Primary Obligors in favor of the Collateral Agent
dated as of the date hereof delivered pursuant to Section 6 and each other
security agreement from time to time hereafter delivered by one or more Primary
Obligors or Secondary Obligors in respect of the Obligations, as each such
agreement may be from time to time amended, extended, restated, supplemented or
otherwise modified (including, without limitation, by the addition of additional
parties thereto).
"Summary Waterfall Certificate" shall mean a certificate in a form
approved by the Agent prior to the first Borrowing Date of Term Loans under this
Agreement which sets forth summary information as to all Waterfall Certificates
being delivered on or about the same day as such certificate
"Tangible Net Worth", at any time, shall mean the total of shareholders'
equity (including capital (both common and preferred) stock, additional paid-in
capital and retained earnings after deducting treasury stock of a Person, less
the sum of the total amount of any intangible assets, which, for purposes of
this definition, shall include, without limitation, general intangibles and, if
applicable, all accounts receivable not incurred in the ordinary course of
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business from any Affiliate of such Person or any loans to directors or officers
of any Affiliate of such Person, unamortized deferred charges and good will, all
as determined in accordance with GAAP.
"Taxes" - Section 5.2.
"Termination Event" shall mean (i) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), or (ii) the withdrawal of any Loan Party or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the issuance of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, or (iv) receipt by any
Loan Party or any ERISA Affiliate of notice of the PBGC's intention to terminate
any Pension Plan or to have a trustee or the PBGC appointed to administer any
Pension Plan or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan.
"Term Loan"- Section 2.1(a).
"Term Loan Commitment" shall mean, as to each Lender, the amount set forth
opposite its name on Schedule 2.1 under the heading "Term Loan Commitment" as
such amount may be modified by the provisions of any Transfer Supplement from
time to time entered into and as the same may from time to time be reduced or
terminated pursuant to Section 2.8(b) , Section 9 or any other Section of the
Agreement.
"Term Note" shall mean a promissory note of Borrower substantially in the
form of Exhibit A-1 to this Agreement or otherwise identified on the Effective
Date as the Term Note, as such note may from time to time be amended, extended,
restated, supplemented or otherwise modified.
"Tier IV Company" shall mean each Person listed on Schedule 10.43;
provided, that if any such Person engages in business or has assets with an
aggregate fair market value of $100,000 or more, such Person shall cease to
constitute a Tier IV Company.
"Tier V Company" shall mean each Person listed on Schedule I-TV; provided
that if any such Person engages in a business other than a business engaged in
by it on the Execution Date, such Person shall cease to constitute a Tier V
Company.
"Total Commitment" shall mean the sum of the Total Revolving Credit Loan
Commitment and the Total Term Loan Commitment.
"Total Revolving Credit Loan Commitment" shall mean the sum of the
Revolving Credit Loan Commitments of all of the Lenders.
"Total Term Loan Commitment" shall mean the sum of the Term Loan
Commitments of all of the Lenders.
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"Tranche " - Section 2.1(a).
"Transfer" shall mean any sale, conveyance, lease or other disposition
(and "Transferred", "Transferring" and other variations thereof shall have
correlative meanings).
"Transfer Supplement" - Section 12.4(c).
"UCC" - Section 10.33.
"United States," "US" or "U.S." shall mean the United States of America.
"Unutilized Available Commitment" at any time shall mean (i) for the
period from and including the Effective Date to and excluding the day which is
one year after the Effective Date, the amount by which $25,000,000 exceeds the
principal amount of Term Loans which have been made, and (ii) from (and
including) the day which is one year after the Effective Date, the amount by
which (A) $25,000,000 plus the lesser of (x) $29,000,000 and (y) the aggregate
principal amount of Tranche I Loans and Tranche II Loans under the Amended and
Restated Agreement which has been repaid after the Effective Date exceeds (B)
the principal amount of Term Loans which have been made and, as to each Lender
at any time means such Lender's proportionate share (based on the aggregate
amount of such Lender's Term Loan Commitments relative to the Total Term Loan
Commitment) of the amount determined pursuant to the foregoing provisions of
this definition.
"Unutilized Revolving Credit Loan Commitment" shall mean, as to each
Lender, the amount by which the Revolving Credit Loan Commitment of such Lender
on any day exceeds the aggregate principal amount of Revolving Credit Loans
theretofore made by such Lender.
"Unutilized Term Loan Commitment" at any time shall mean the amount by
which the Total Term Loan Commitment exceeds the sum of (x) the principal amount
of Term Loans which have been made plus (y) the amount of the Unutilized
Available Commitment at such time (and, if such amount as so determined would be
less than zero, it shall be deemed to be zero).
"US Person" shall mean a Person formed under the laws of the United
States, any of the 50 states or the District of Columbia [or any territory of
the United States].
"Usage Leverage Covenant" shall have the meaning ascribed to such term in
the definition of "Aggregate Undistributed Secondary Obligor Funds".
"Utilization Fee" Section 4.3.
"Waterfall Certificate" in respect of any Payment Date shall mean a
completed certificate in a form approved by the Agent prior to the first
Borrowing Date of Term Loans under this Agreement which sets forth information
with respect to Collections of an Asset Pool during the preceding period to
which such certificate is applicable and such other information as the Agent
shall require.
"Waterfall Certificate Period" in respect of any Asset Pool and any
Payment Date shall mean the period from and excluding the date of the Waterfall
Certificate delivered in the
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calendar month immediately preceding such Payment Date (or, in the case of the
first Waterfall Certificate Period for any Asset Pool, from and including the AP
Funding Date for such Asset Pool) to and including the date that the Waterfall
Certificate with respect to the such Payment Date is delivered.
"Wholly-Owned Subsidiary" shall mean any Subsidiary of Borrower of which
all of the outstanding shares of stock, limited liability company interests or
partnership interests (as the case may be) are owned by the Borrower and/or one
or more wholly owned direct or indirect Subsidiaries of the Borrower.
"Written," "in writing" and other variations thereof shall mean any form
of written communication or a communication by means of telex, telecopier,
telegraph or cable.
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