SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 15, 1998
----------
IMC MORTGAGE COMPANY
--------------------
(Exact name of registrant as specified in its charter)
Florida 333-3954 59-3350574
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
5901 E. Fowler Avenue,
Tampa, Florida 33167
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (813) 984-8801
<PAGE>
Item 5. Other Events.
IMC Mortgage Company (the "Company") executed a Loan Agreement (the
"Greenwich Loan Agreement") on October 15, 1998 with Greenwich Street Capital
Partners II L.P., Greenwich Fund, L.P. and GSCP Offshore Fund, L.P.
(collectively "Greenwich"), pursuant to which Greenwich will provide the Company
a $33 million standby revolving credit facility for a period of up to 90 days.
The facility bears interest at 10% per annum and matures in 90 days. In
consideration of providing the facility, Greenwich received a $3.3 million
commitment fee and exchangeable preferred stock representing the equivalent of
40% of the common stock of the Company on a fully diluted basis. Upon maturity
of the facility or if the Company enters into a definitive agreement for a
transaction that will result in a change in control of the Company, Greenwich
may elect to receive (i) repayment of the facility, plus accrued interest and a
take-out premium, if any, or (ii) additional preferred stock. The amount of
take-out premium is based upon the average outstanding balance of the facility
and the time elapsed between the Greenwich Loan Agreement and the date of such
definitive agreement or maturity date, as applicable, and may range from 20% to
200% of the facility balance. The amount of additional preferred stock is based
upon the time elapsed between the Greenwich Loan Agreement and the date of such
definitive agreement or maturity date, as applicable, and may range from zero to
the equivalent of 50% of the common stock of the Company on a fully diluted
basis (in addition to the 40% initially received upon provision of the
facility).
The Company has also entered into intercreditor arrangements with its
three largest warehouse and interest only and residual certificate lenders,
which have agreed to a "standstill," subject to certain conditions, keeping
their facilities in place for up to 90 days in order for the Company to explore
its financial alternatives, and a forbearance and intercreditor agreement with
respect to its $95 million revolving bank credit facility, of which $87.5
million is outstanding and had matured by its terms. These agreements were, in
each case, dependent upon entering into the Greenwich Loan Agreement.
The Forbearance and Intercreditor Agreement (the "Forbearance
Agreement") among the Company, BankBoston, N.A. ("BankBoston"), and Greenwich
provides that, subject to certain conditions, for a period of 45 days,
BankBoston will take no action, including collection, with respect to its $95
million revolving credit facility, of which $87.5 million is outstanding and had
become due. The term of the Forbearance Agreement will automatically be extended
for an additional 45 days if, within the initial 45-day period, the Company
enters into a letter of intent with a third party relating to a potential change
in control of the Company. In consideration of BankBoston's agreement, the
Company will pay BankBoston $1 million upon the earlier to occur of the
expiration of the term of the Forbearance Agreement or a change in control of
the Company. The Company also entered into an additional Loan Agreement with
BankBoston (the "BankBoston Loan Agreement"). Pursuant to the BankBoston Loan
Agreement, BankBoston will provide the Company a revolving credit facility of up
to $5 million, depending on the pledge of certain specific collateral, and will
make $2.5 million (in
<PAGE>
addition to the $87.5 million presently outstanding) available to the Company
under the parties' prior facility agreement. The facility provided by the
BankBoston Loan Agreement bears interest at 10% per annum and matures in 90
days.
The three Intercreditor Agreements (each, an "Intercreditor Agreement")
are among the Company, Greenwich and each of (x) Bear Stearns Home Equity Trust
and Bear, Stearns International Limited (collectively, "Bear Stearns"), (y)
Paine Webber Real Estate Securities, Inc. ("Paine Webber"), and (z) German
American Capital Corporation and Aspen Funding Corp. (collectively, "DMG") (each
of Bear Stearns, Paine Webber and DMG, a "Lender"). Each Intercreditor Agreement
provides that, subject to certain conditions, the Lender in question will take
no action, including issuing margin calls, with respect to its loan facility for
45 days. The term of each Intercreditor Agreement will automatically be extended
for an additional 45 days if, within the initial 45-day period, the Company
enters into a letter of intent with a third party relating to a potential change
in control of the Company. In consideration of the Lenders' agreements, the
Company will pay each Lender $1 million upon consummation of a change in control
of the Company.
To induce DMG to enter into an Intercreditor Agreement, the Company
agreed to allow DMG's committed warehouse facility to become uncommitted and
issued DMG a warrant (the "Warrant") to purchase 2.5% of the common stock of the
Company on a fully diluted basis. The Warrant is exercisable for $1.72 per share
of common stock. To induce Paine Webber to enter into an Intercreditor
Agreement, the Company reduced the percentage advanced over the par value of the
mortgage loans from Paine Webber's uncommitted facility from 4% over par to 3%
over par.
The Company has retained Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") to advise the Company as to financial and strategic
alternatives. The Company is actively working with DLJ to seek a long-term
investor in the Company or a sale or similar transaction resulting in a change
in control of the Company.
The foregoing discussion is qualified by reference to the full text of
the documents relating to the transactions described, including the Greenwich
Loan Agreement, the Forbearance Agreement, the BankBoston Loan Agreement, the
Intercreditor Agreements and the Warrant, which are attached hereto as Exhibits
3.1, 4.7, and 10.53 through 10.60 and are incorporated herein by reference in
their entirety.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
3.1 Amended and Restated Articles of Amendment
Designating the Preferences, Rights and Limitations
of Class A Preferred Stock, Class B Preferred Stock,
Class C Exchangeable Preferred Stock and Class D
Preferred Stock of the Company
2
<PAGE>
4.7 Form of Stock Purchase Warrant issued to German American
Capital Corporation
10.53 Letter Agreement dated October 15, 1998 between BankBoston,
N.A. and the Company regarding a Line of Credit
10.54 Forbearance and Intercreditor Agreement dated as of October 12,
1998 among the Company, BankBoston, N.A., Greenwich Street
Capital Partners II L.P., Greenwich Fund, L.P. and GSCP
Offshore Fund, L.P.
10.55 Intercreditor Agreement dated as of October 12, 1998
among the Company, Bear Stearns Home Equity Trust,
Bear, Stearns International Limited, Greenwich Street
Capital Partners II L.P., Greenwich Fund, L.P. and
GSCP Offshore Fund, L.P.
10.56 Intercreditor Agreement dated as of October 12, 1998
among the Company, Paine Webber Real Estate
Securities, Inc., Greenwich Street Capital Partners
II L.P., Greenwich Fund, L.P. and GSCP
Offshore Fund, L.P.
10.57 Intercreditor Agreement dated as of October 12, 1998 among the
Company, German American Capital Corporation, Aspen
Funding Corp., Greenwich Street Capital Partners II L.P.,
Greenwich Fund, L.P. and GSCP Offshore Fund, L.P.
10.58 Loan Agreement dated as of October 12, 1998 among the
Company, Greenwich Street Capital Partners II L.P.,
Greenwich Fund, L.P. and GSCP Offshore Fund, L.P.
10.59 Borrower Security Agreement dated as of October 12,
1998 among the Company, Greenwich Street Capital
Partners II L.P., Greenwich Fund, L.P. and GSCP
Offshore Fund, L.P. and Greenwich Street Capital
Partners II L.P., as collateral agent
10.60 Registration Rights Agreement among the Company, Greenwich
Street Capital Partners II L.P., Greenwich Fund, L.P. and GSCP
Offshore Fund, L.P.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
IMC Mortgage Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: October 21, 1998 IMC MORTGAGE COMPANY
By: /s/ THOMAS G. MIDDLETON
---------------------------
Thomas G. Middleton
President, Chief Operating Officer
and Assistant Secretary
By: /s/ STUART D. MARVIN
------------------------
Stuart D. Marvin
Chief Financial Officer
4
AMENDED AND RESTATED ARTICLES OF AMENDMENT
DESIGNATING THE PREFERENCES, RIGHTS AND LIMITATIONS
OF THE CLASS A PREFERRED STOCK
OF
IMC MORTGAGE COMPANY
Pursuant to Section 607.0602 of the Florida Business Corporation Act,
IMC Mortgage Company, a Florida corporation (the "Company"), hereby certifies
that the following amended and restated amendments were duly adopted by the
Board of Directors of the Company (the "Board") on October 13, 1998, pursuant to
authority conferred upon the Board by the provisions of the Articles of
Incorporation of the Company (the "Articles of Incorporation").
Designation of Class A Preferred Stock. The Class, designated as Class
A Preferred Stock will have the designations, preferences, voting powers,
relative, participating, optional or other special rights and privileges, and
the qualifications, limitations and restrictions as follows:
SECTION 1. Designation, Rank. This series of preferred stock shall be
designated the "Class A Preferred Stock," with a par value of $0.01 per share
(the "Preferred Stock"). The Preferred Stock will rank, with respect to rights
on liquidation, winding-up and dissolution, (i) senior to all classes of common
stock of the Company, as they exist on the date hereof or as such stock may be
constituted from time to time (the "Common Stock"), and each other class of
capital stock or class or series of preferred stock established by the Board to
the extent the terms of such stock do not expressly provide that it ranks on a
parity with the Preferred Stock as to rights on liquidation, winding-up and
dissolution (collectively, together with the Common Stock, the "Junior
Securities"); (ii) on a parity with each class of capital stock or class or
series of preferred stock established by the Board to the extent the terms of
such stock expressly provide that it will rank on a parity with the Preferred
Stock as to rights on liquidation, winding-up and dissolution (collectively, the
"Parity Securities"); and (iii) junior to each other class of capital stock or
class or series of preferred stock established by the Board to the extent the
terms of such stock expressly provide that it will rank senior to the Preferred
Stock as to rights on liquidation, winding-up and dissolution (collectively, the
"Senior Securities").
SECTION 2. Authorized Number. The authorized number of shares
constituting the Preferred Stock shall be 500,000 shares.
<PAGE>
SECTION 3. Dividends. Holders of Preferred Stock will not be entitled
to any dividends.
SECTION 4. Liquidation Rights. The liquidation value of each share of
Preferred Stock shall be $100.00 (the "Liquidation Value"). In the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
after satisfaction of the claims of creditors and before any payment or
distribution of assets is made on any Junior Securities, including, without
limitation, the Common Stock but after any payment or distribution of assets to
holders of Senior Securities, if any, (i) the holders of Preferred Stock shall
receive a liquidation preference equal to the Liquidation Value of their shares
and (ii) the holders of any Parity Securities shall be entitled to receive an
amount equal to the full respective liquidation preferences (including any
premium) to which they are entitled and shall receive an amount equal to all
accrued and unpaid dividends with respect to their respective shares through and
including the date of distribution (whether or not declared). If, upon such a
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the assets of the Company are insufficient to pay in full the amounts described
above as payable with respect to the Preferred Stock and any Parity Securities,
the holders of the Preferred Stock and such Parity Securities will share ratably
in any distribution of assets of the Company in proportion to their respective
liquidation preferences. After payment of the Liquidation Value, the Preferred
Stock will not be entitled to any further participation in any distribution of
assets by the Company. Neither the sale or transfer of all or any part of the
assets of the Company, nor the merger or consolidation of the Company into or
with any other corporation or a merger of any other corporation with or into the
Company, will be deemed to be a liquidation, dissolution or winding-up of the
Company.
SECTION 5. Voting Rights.
Except as provided below or as may be required by the law of the State
of Florida or provided by the resolution creating any other series of preferred
stock, the holders of Preferred Stock will not be entitled to vote. So long as
any shares of Preferred Stock are outstanding, the vote or consent of the
holders of 66 2/3% of the outstanding shares of Preferred Stock, voting together
as a single class, shall be necessary to (i) increase or decrease the par value
of the shares of Preferred Stock or (ii) amend Article IV of the Articles of
Incorporation, except with respect to changes in the par value of, or the number
of authorized shares of Common Stock, or alter or change the powers,
preferences, or special rights of the shares of Preferred Stock, so as to affect
them adversely, either directly or indirectly, or through a merger or
consolidation with any person, or (iii) authorize or issue any additional class
or series
2
<PAGE>
of Parity Securities or Senior Securities, or any security convertible into
Parity Securities or Senior Securities; provided, however, that the Company may
amend such Article IV to authorize Parity Securities not to exceed, in the
aggregate, $100 million in liquidation value without the consent of holders of
66 2/3% of the outstanding shares of Preferred Stock.
SECTION 6. Mandatory Redemption.
(a) The Company shall be required to redeem (x) 33 1/3% of the
Preferred Stock outstanding on July 14, 2008, (y) 50% of the Preferred Stock
outstanding on July 14, 2009 and (z) the balance of the Preferred Stock
outstanding on July 14, 2010, at a redemption price per share equal to the
Liquidation Value. In addition, the Company shall be required to redeem, in the
event of a Change of Control, all of the Preferred Stock then outstanding no
later than 30 days following the occurrence of such Change of Control, at a
redemption price per share equal to 110% of the Liquidation Value (such payment,
together with each of the redemption payments required to be made pursuant to
the immediately preceding sentence, a "Redemption Payment"). In accordance with
subsection (b) below, the Company shall mail to each record holder of Preferred
Stock written notice of its requirement to redeem shares of Preferred Stock held
by such holder. For purposes of this Section 6, "Change of Control" means the
occurrence of any of the following events (other than as a consequence of the
issuance of capital stock of the Company to the initial holder or holders of the
Preferred Stock): (i) any "Person" (as such term is 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, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire within
one year), directly or indirectly, of more than 50% of the voting stock of the
Company; (ii) individuals who on the date hereof constituted the Board (together
with any such individuals whose election by the Board or whose nomination for
election by the shareholders of the Company was approved by a majority of the
directors then still in office who were directors on the date hereof or persons
whose election as directors or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board then in
office; (iii) the Company or any of its subsidiaries consummates any sale,
lease, exchange or other disposition of all or substantially all of the assets
of the Company and its subsidiaries, taken as a whole, in any transaction or
series of transactions not in the ordinary course of business; or (iv) the
Company engages in a merger, consolidation or similar business combination with
any third party.
3
<PAGE>
(b) Mechanics of Redemption. In the event the Company shall be required
to redeem shares of Preferred Stock, notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 10 days nor more than 30
days prior to the redemption date, to the holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Corporation. Each such notice shall state: (i) the redemption date; (ii) the
redemption price; and (iii) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price. The redeemed
shares of Preferred Stock shall no longer be deemed to be outstanding and shall
be canceled and shall not be available for reissue or redesignation, and all
rights of the holders thereof as a shareholder of the Company (except the right
to receive from the Company the redemption price) shall cease.
SECTION 7. Status of Reacquired Shares. If shares of Preferred Stock
are redeemed pursuant to Section 6 hereof, the shares so redeemed shall, upon
compliance with any statutory requirements, assume the status of authorized but
unissued shares of preferred stock of the Company, but may not be reissued as
Preferred Stock.
SECTION 8. Preemptive Rights. The Preferred Stock is not entitled to
any preemptive or subscription rights in respect of any securities of the
Company.
SECTION 9. Notices. Except as otherwise provided herein, all notices,
requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered by and when sent by telex
or telecopier (with receipt confirmed) on the business day following receipt,
provided a copy is also sent by express (overnight, if possible) courier,
addressed (i) in the case of a holder of Preferred Stock, to such holder's
address as it appears on the books of the Company, and (ii) in the case of the
Company, to the Company's principal executive offices to the attention of the
Company's Chief Financial Officer.
SECTION 10. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
4
<PAGE>
IN WITNESS WHEREOF, IMC Mortgage Company has caused these Articles of
Amendment to be duly executed by its duly authorized officer and attested by its
Secretary this 13th day of October, 1998.
IMC MORTGAGE COMPANY
By:
-----------------------
Name:
Title:
ATTEST:
- -----------------------
Name:
Title:
<PAGE>
AMENDED AND RESTATED ARTICLES OF AMENDMENT
DESIGNATING THE PREFERENCES, RIGHTS AND LIMITATIONS
OF THE CLASS B PREFERRED STOCK
OF
IMC MORTGAGE COMPANY
Pursuant to Section 607.0602 of the Florida Business Corporation Act,
IMC Mortgage Company, a Florida corporation (the "Company"), hereby certifies
that the following amended and restated amendments were duly adopted by the
Board of Directors of the Company (the "Board") on October 13, 1998, pursuant to
authority conferred upon the Board by the provisions of the Articles of
Incorporation of the Company (the "Articles of Incorporation").
Designation of Class B Preferred Stock. The Class, designated as Class
B Preferred Stock will have the designations, preferences, voting powers,
relative, participating, optional or other special rights and privileges, and
the qualifications, limitations and restrictions as follows:
SECTION 1. Designation, Rank. This series of preferred stock shall be
designated the "Class B Preferred Stock," with a par value of $0.01 per share
(the "Preferred Stock"). The Preferred Stock will rank, with respect to rights
on liquidation, winding-up and dissolution, (i) senior to all classes of common
stock of the Company, as they exist on the date hereof or as such stock may be
constituted from time to time (the "Common Stock"), and each other class of
capital stock or class or series of preferred stock established by the Board to
the extent the terms of such stock do not expressly provide that it ranks on a
parity with the Preferred Stock as to rights on liquidation, winding-up and
dissolution (collectively, together with the Common Stock, the "Junior
Securities"); (ii) on a parity with each class of capital stock or class or
series of preferred stock established by the Board to the extent the terms of
such stock expressly provide that it will rank on a parity with the Preferred
Stock as to rights on liquidation, winding-up and dissolution (collectively, the
"Parity Securities"); and (iii) junior to each other class of capital stock or
class or series of preferred stock established by the Board to the extent the
terms of such stock expressly provide that it will rank senior to the Preferred
Stock as to rights on liquidation, winding-up and dissolution (collectively, the
"Senior Securities").
SECTION 2. Authorized Number. The authorized number of shares
constituting the Preferred Stock shall be 300,000 shares.
<PAGE>
SECTION 3. Dividends. Holders of Preferred Stock will not be entitled
to any dividends.
SECTION 4. Liquidation Rights. The liquidation value of each share of
Preferred Stock shall be $100.00 (the "Liquidation Value"). In the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
after satisfaction of the claims of creditors and before any payment or
distribution of assets is made on any Junior Securities, including, without
limitation, the Common Stock but after any payment or distribution of assets to
holders of Senior Securities, if any, (i) the holders of Preferred Stock shall
receive a liquidation preference equal to the Liquidation Value of their shares
and (ii) the holders of any Parity Securities shall be entitled to receive an
amount equal to the full respective liquidation preferences (including any
premium) to which they are entitled and shall receive an amount equal to all
accrued and unpaid dividends with respect to their respective shares through and
including the date of distribution (whether or not declared). If, upon such a
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the assets of the Company are insufficient to pay in full the amounts described
above as payable with respect to the Preferred Stock and any Parity Securities,
the holders of the Preferred Stock and such Parity Securities will share ratably
in any distribution of assets of the Company in proportion to their respective
liquidation preferences. After payment of the Liquidation Value, the Preferred
Stock will not be entitled to any further participation in any distribution of
assets by the Company. Neither the sale or transfer of all or any part of the
assets of the Company, nor the merger or consolidation of the Company into or
with any other corporation or a merger of any other corporation with or into the
Company, will be deemed to be a liquidation, dissolution or winding-up of the
Company.
SECTION 5. Voting Rights.
Except as provided below or as may be required by the law of the State
of Florida or provided by the resolution creating any other series of preferred
stock, the holders of Preferred Stock will not be entitled to vote. So long as
any shares of Preferred Stock are outstanding, the vote or consent of the
holders of 66 2/3% of the outstanding shares of Preferred Stock, voting together
as a single class, shall be necessary to (i) increase or decrease the par value
of the shares of Preferred Stock or (ii) amend Article IV of the Articles of
Incorporation, except with respect to changes in the par value of, or the number
of authorized shares of Common Stock, or alter or change the powers,
preferences, or special rights of the shares of Preferred Stock, so as to affect
them adversely, either directly or indirectly, or through a merger or
consolidation with any person, or (iii) authorize or issue any additional class
or series
2
<PAGE>
of Parity Securities or Senior Securities, or any security convertible into
Parity Securities or Senior Securities; provided, however, that the Company may
amend such Article IV to authorize Parity Securities not to exceed, in the
aggregate, $100 million in liquidation value without the consent of holders of
66 2/3% of the outstanding shares of Preferred Stock.
SECTION 6. Mandatory Redemption.
(a) The Company shall be required to redeem (x) 33 1/3% of the
Preferred Stock outstanding on July 14, 2008, (y) 50% of the Preferred Stock
outstanding on July 14, 2009 and (z) the balance of the Preferred Stock
outstanding on July 14, 2010, at a redemption price per share equal to the
Liquidation Value. In addition, the Company shall be required to redeem, in the
event of a Change of Control, all of the Preferred Stock then outstanding no
later than 30 days following the occurrence of such Change of Control, at a
redemption price per share equal to 110% of the Liquidation Value (such payment,
together with each of the redemption payments required to be made pursuant to
the immediately preceding sentence, a "Redemption Payment"). In accordance with
subsection (b) below, the Company shall mail to each record holder of Preferred
Stock written notice of its requirement to redeem shares of Preferred Stock held
by such holder. For purposes of this Section 6, "Change of Control" means the
occurrence of any of the following events (other than as a consequence of the
issuance of capital stock of the Company to the initial holder or holders of the
Preferred Stock): (i) any "Person" (as such term is 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, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire within
one year), directly or indirectly, of more than 50% of the voting stock of the
Company; (ii) individuals who on the date hereof constituted the Board (together
with any such individuals whose election by the Board or whose nomination for
election by the shareholders of the Company was approved by a majority of the
directors then still in office who were directors on the date hereof or persons
whose election as directors or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board then in
office; (iii) the Company or any of its subsidiaries consummates any sale,
lease, exchange or other disposition of all or substantially all of the assets
of the Company and its subsidiaries, taken as a whole, in any transaction or
series of transactions not in the ordinary course of business; or (iv) the
Company engages in a merger, consolidation or similar business combination with
any third party.
3
<PAGE>
(b) Mechanics of Redemption. In the event the Company shall be required
to redeem shares of Preferred Stock, notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 10 days nor more than 30
days prior to the redemption date, to the holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Corporation. Each such notice shall state: (i) the redemption date; (ii) the
redemption price; and (iii) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price. The redeemed
shares of Preferred Stock shall no longer be deemed to be outstanding and shall
be canceled and shall not be available for reissue or redesignation, and all
rights of the holders thereof as a shareholder of the Company (except the right
to receive from the Company the redemption price) shall cease.
SECTION 7. Status of Reacquired Shares. If shares of Preferred Stock
are redeemed pursuant to Section 6 hereof, the shares so redeemed shall, upon
compliance with any statutory requirements, assume the status of authorized but
unissued shares of preferred stock of the Company, but may not be reissued as
Preferred Stock.
SECTION 8. Preemptive Rights. The Preferred Stock is not entitled to
any preemptive or subscription rights in respect of any securities of the
Company.
SECTION 9. Notices. Except as otherwise provided herein, all notices,
requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered by and when sent by telex
or telecopier (with receipt confirmed) on the business day following receipt,
provided a copy is also sent by express (overnight, if possible) courier,
addressed (i) in the case of a holder of Preferred Stock, to such holder's
address as it appears on the books of the Company, and (ii) in the case of the
Company, to the Company's principal executive offices to the attention of the
Company's Chief Financial Officer.
SECTION 10. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
4
<PAGE>
IN WITNESS WHEREOF, IMC Mortgage Company has caused these Articles of
Amendment to be duly executed by its duly authorized officer and attested by its
Secretary this 13th day of October, 1998.
IMC MORTGAGE COMPANY
By: /s/
-----------------------
Name:
Title:
ATTEST:
/s/
- -----------------------
Name:
Title:
<PAGE>
ARTICLES OF AMENDMENT
DESIGNATING THE PREFERENCES, RIGHTS AND LIMITATIONS
OF THE CLASS C EXCHANGEABLE PREFERRED STOCK
OF
IMC MORTGAGE COMPANY
Pursuant to Section 607.0602 of the Florida Business Corporation Act
(the "Act"), IMC Mortgage Company, a Florida corporation (the "Company"), hereby
certifies that the following amendments were duly adopted by the Board of
Directors of the Company (the "Board") on October 13, 1998, pursuant to
authority conferred upon the Board by the provisions of the Articles of
Incorporation of the Company (the "Articles of Incorporation").
DESIGNATION OF CLASS C EXCHANGEABLE PREFERRED STOCK. The Class,
designated as Class C Exchangeable Preferred Stock will have the designations,
preferences, voting powers, relative, participating, optional or other special
rights and privileges, and the qualifications, limitations and restrictions as
follows:
SECTION 1. Designation, Rank. This series of preferred stock shall be
designated the "Class C Exchangeable Preferred Stock," with a par value of $0.01
per share (the "Exchangeable Preferred Stock"). The Exchangeable Preferred Stock
will rank, with respect to rights on liquidation, winding-up and dissolution,
(i) senior to all classes of common stock of the Company, as they exist on the
date hereof or as such stock may be constituted from time to time (the "Common
Stock"), and each other class of capital stock or class or series of preferred
stock established by the Board to the extent the terms of such stock do not
expressly provide that it ranks on a parity with the Exchangeable Preferred
Stock as to rights on liquidation, winding-up and dissolution (collectively,
together with the Common Stock, the "Junior Securities"); (ii) on a parity with
the Class A Preferred Stock, Class B Preferred Stock and Class D Preferred Stock
of the Company (the "Class D Preferred Stock"), and each other class of capital
stock or class or series of preferred stock established by the Board to the
extent the terms of such stock expressly provide that it will rank on a parity
with the Exchangeable Preferred Stock as to rights on liquidation, winding-up
and dissolution (collectively, the "Parity Securities"); and (iii) junior to
each other class of capital stock or class or series of preferred stock
established by the Board to the extent the terms of such stock expressly provide
that it will rank senior to the Exchangeable Preferred Stock as to rights on
liquidation, winding-up and dissolution (collectively, the "Senior Securities").
<PAGE>
SECTION 2. Authorized Number. The authorized number of shares
constituting the Exchangeable Preferred Stock shall be 800,000 shares.
SECTION 3. Dividends. (a) The holders of shares of Exchangeable
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board out of funds legally available therefor, dividends payable in cash equal
to 1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, including, without limitation, evidences of
indebtedness, equity securities (including equity interests in the Company's
subsidiaries) or other assets, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by reclassi
fication or otherwise), declared on the Common Stock.
(b) The Company shall declare a dividend or distribution on the
Exchangeable Preferred Stock as provided in paragraph (a) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Exchangeable Preferred Stock from the date the Company declares a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock). Dividends paid on the shares of Exchangeable Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
may fix a record date for the determination of holders of shares of Exchangeable
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
SECTION 4. Liquidation Rights. The liquidation value of each share of
Exchangeable Preferred Stock shall be $10.00 (the "Liquidation Value"). In the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, after satisfaction of the claims of creditors and before any
payment or distribution of assets is made on any Junior Securities, including,
without limitation, the Common Stock but after any payment or distribution of
assets to holders of Senior Securities, if any, (i) the holders of Exchangeable
Preferred Stock shall receive a liquidation preference equal
2
<PAGE>
to the greater of (A) the Liquidation Value of their shares, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment and (B) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock and (ii) the holders of any Parity Securities shall be entitled to receive
an amount equal to the full respective liquidation preferences (including any
premium) to which they are entitled and shall receive an amount equal to all
accrued and unpaid dividends with respect to their respective shares through and
including the date of distribution (whether or not declared). In the event the
Company shall at any time declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Exchangeable Preferred Stock are entitled immediately
prior to such event under the provision in clause (A) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event. If, upon such a voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the assets of
the Company are insufficient to pay in full the amounts described above as
payable with respect to the Exchangeable Preferred Stock and any Parity
Securities, the holders of the Exchangeable Preferred Stock and such Parity
Securities will share ratably in any distribution of assets of the Company in
proportion to their respective liquidation preferences. After payment of such
liquidation preference, the Exchangeable Preferred Stock will not be entitled to
any further participation in any distribution of assets by the Company. Neither
the sale or transfer of all or any part of the assets of the Company, nor the
merger or consolidation of the Company into or with any other corporation or a
merger of any other corporation with or into the Company, will be deemed to be a
liquidation, dissolution or winding-up of the Company.
SECTION 5. Voting Rights. Except as provided below or as may be
required by the laws of the State of Florida or by resolution creating any other
series of preferred stock, the holders of Exchangeable Preferred Stock will not
be entitled to vote. So long as any shares of Exchangeable Preferred Stock are
outstanding, the vote or consent of the holders of 66 2/3% of the outstanding
shares of Exchangeable Preferred Stock, voting together as a single class, shall
be necessary to (i) increase or decrease the
3
<PAGE>
par value of the shares of Exchangeable Preferred Stock or (ii) amend Article IV
of the Articles of Incorporation, or alter or change the powers, preferences, or
special rights of the shares of Exchangeable Preferred Stock, so as to affect
them adversely, either directly or indirectly, or through a merger or
consolidation with any person, or (iii) authorize or issue any additional class
or series of Parity Securities or Senior Securities, or any security convertible
into Parity Securities or Senior Securities.
SECTION 6. Certain Transactions.
(a) Consolidation, Merger or Sale of Assets. If any transaction shall
occur, including without limitation (i) any recapitalization or reclassification
of shares of Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock), (ii) any consolidation or
merger of the Company with or into another person or any merger of another
person into the Company (other than a merger in which the Company is the
surviving corporation and that does not result in a reclassification,
conversion, exchange or cancellation of Common Stock), (iii) any sale, lease or
transfer of all or substantially all of the assets of the Company or (iv) any
compulsory share exchange, pursuant to any of which holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that each share of Exchangeable Preferred
Stock then outstanding shall be converted into the right to receive without any
further action on the part of the holder thereof, the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, sale, lease, transfer
or share exchange by a holder of the number of shares of Common Stock issuable
upon conversion of such share of Exchangeable Preferred Stock immediately prior
to such recapitalization, reclassification, consolidation, merger, sale, lease,
transfer or share exchange, assuming solely for such purpose that each share of
Exchangeable Preferred Stock is convertible at the option of the holder thereof
into 1,000 (one thousand) fully paid and non-assessable shares of Common Stock
(such assumed rate of conversion, as adjusted from time to time, the "Adjustment
Rate"), and the Company shall not enter into any such merger, consolidation,
sale, lease transfer or share exchange unless the company formed by such
consolidation or resulting from such merger or that acquires such assets or that
acquires the Company's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation, other constituent document or the
agreements relating to such transaction to assume or establish such right.
4
<PAGE>
(b) Adjustment Rate Adjustments. The Adjustment Rate is subject to
adjustment from and after October 14, 1998, whether or not any Exchangeable
Preferred Stock is outstanding, from time to time as follows:
(i) In case the Company shall (1) pay a dividend or make a
distribution on Common Stock in shares of Common Stock, (2) subdivide
its outstanding shares of Common Stock into a greater number of shares
or (3) combine its outstanding shares of Common Stock into a smaller
number of shares, the Adjustment Rate in effect immediately prior to
such action shall be adjusted so that if the holder of any Exchangeable
Preferred Stock were able to convert such stock into Common Stock, such
holder would be entitled to receive the number of shares of Common
Stock which such holder would have been entitled to receive immediately
following such action had the holder's Exchangeable Preferred Stock
been converted at the Adjustment Rate immediately prior thereto. An
adjustment made pursuant to this subsection (i) shall become effective
immediately (except as provided in subsection (vi) below) after the
record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision or combination.
(ii) In case the Company shall (x) issue, sell or otherwise
distribute any shares of Common Stock or (y) issue rights, options or
warrants entitling the holder thereof to subscribe for or purchase
shares of Common Stock ("Options") or any indebtedness, shares of stock
or other securities which are convertible into or exchangeable for,
with or without payment of additional consideration, shares of Common
Stock, either immediately or upon the arrival of a specified date or
the happening of a specified event or both ("Convertible Securities")
to any person, in the case of clause (x) above, at a price per share,
or in the case of clause (y) above, at an exercise or conversion price
per share, less than the Current Market Value per share (as defined in
subsection (iv) below) of the Common Stock on the record date mentioned
below (other than a dividend payable to holders of Common Stock which
is also distributed to holders of shares of Exchangeable Preferred
Stock pursuant to Section 3 hereof), then the Adjustment Rate in effect
immediately prior thereto shall be adjusted so that it shall equal the
rate determined by multiplying the Adjustment Rate in effect
immediately prior to the date of issuance of such Common Stock, Options
or Convertible Securities by a fraction of which
5
<PAGE>
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance,
sale, transfer or distribution of such Common Stock, Options
or Convertible Securities immediately prior to such issuance,
sale, transfer or distribution plus (B) the number of
additional shares of Common Stock which are so offered for
subscription or purchase, or subject to issuance upon
exercise, conversion or exchange of such Options or
Convertible Securities, and
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Common Stock, Options or Convertible
Securities immediately prior to such issuance, sale, transfer
or distribution plus (B) the number of shares of Common Stock
which the aggregate offering price of the total number of
shares so offered would purchase at such Current Market Value
(determined by multiplying such total number of shares offered
for subscription or purchase or subject to issuance upon
exercise, conversion or exchange of such Options or
Convertible Securities by the sum of the exercise price of
such Options or Convertible Securities plus the value of any
consideration per share paid to the Company for such Common
Stock, Options or Convertible Securities and dividing the
product so obtained by such Current Market Value).
Such adjustment shall be made successively whenever any Common
Stock is issued, sold or otherwise distributed or any Convertible
Securities or Options are issued, and shall become effective
immediately (except as provided in subsection (vi) below) after the
record date for the determination of shareholders entitled to receive
such Convertible Securities or Options, as the case may be. In
determining the value of any consideration received by the Company for
such Common Stock, Convertible Securities or Options, as the case may
be, the determination of the Board in good faith shall be conclusive
and shall be described in a Board resolution, provided that any shares
of Common Stock issued or issuable as contingent consideration or
earn-out payments in respect of acquisition agreements made by the
Company on or prior to the date hereof shall give rise to an adjustment
hereunder when the number of such shares to be issued becomes fixed and
shall be deemed to have been issued for no consideration. If such an
adjustment is made and such Options or Convertible Securities are later
exchanged, redeemed, invalidated or terminated, or expire by their
terms, then
6
<PAGE>
a corresponding reversing adjustment shall be made to the Adjustment
Rate, on an equitable basis, to take account of such event.
(iii) Notwithstanding subsection (ii) above, any adjustments
to the Adjustment Rate to account for the issuance of "Rights" under a
Shareholder Rights Plan or Agreement (a "Rights Agreement") adopted
subsequent to the date hereof shall be made when such Rights are
exercised or exchanged by the Company for Common Stock (Common Stock
issued pursuant to the exercise of, or exchange by the Company for,
such Rights are referred to as "Rights Stock") pursuant to a Rights
Agreement or like arrangement at a price per share less than the
Current Market Value per share of Common Stock on the date of such
exercise or exchange. The Adjustment Rate in effect immediately prior
to such exercise or exchange shall be adjusted so that it shall equal
the rate determined by multiplying the Adjustment Rate in effect
immediately prior to the date of such exercise or exchange by a
fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance
of such Rights Stock immediately prior to such issuance plus
(B) the number of additional shares of Rights Stock which are
so issued, and
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Rights Stock immediately prior to such
issuance plus (B) the number of shares of Common Stock which
the aggregate consideration received for the total number of
shares of Rights Stock so issued would purchase at such
Current Market Value (determined by multiplying such total
number of shares of Rights Stock by the consideration received
per share of such Rights Stock and dividing the product so
obtained by such Current Market Value).
Such adjustment shall be made successively whenever any Rights
Stock is issued, and shall become effective immediately (except as
provided in subsection (vi) below) after the issuance of Rights Stock.
If after the "Distribution Date" or a similar date (as defined in a
Rights Agreement), holders converting shares of Exchangeable Preferred
Stock are, for any reason, not entitled to receive the Rights or
similar rights, options or warrants which would otherwise be
7
<PAGE>
attributable (but for the date of conversion) to the shares of Common
Stock received upon such conversion, then an increasing adjustment
shall be made in the Adjustment Rate to reflect the fair market value
of the Rights or similar rights, options or warrants. If such an
adjustment is made and the Rights or similar rights, options or
warrants are later exchanged, redeemed, invalidated or terminated,
then a corresponding reversing adjustment shall be made to the
Adjustment Rate, on an equitable basis, to take account of such event.
(iv) For the purpose of any computation under subsections (ii)
and (iii) above, the "Current Market Value" per share of stock on any
date shall be deemed to be (i) if shares of Common Stock are then
listed or admitted to trading on any national securities exchange or
traded on any national market system, the average of the last sale
prices of a share of such stock for the 15 consecutive trading days
commencing 20 trading days before the earliest of the date in question
and the date before the "ex date" with respect to the issuance or
distribution requiring such computation, or, if there shall have been
no sales of such stock on any such trading day, the average of the
closing bid and asked prices at the end of such trading day or (ii) if
no shares of Common Stock are then listed or admitted to trading on any
national securities exchange or traded on any national market system,
the Current Market Value of a share of Common Stock shall be determined
in good faith by an independent investment bank of nationally
recognized standing. For purposes of clause (ii) of the preceding
sentence, the determination of "Current Market Value" shall be made
without consideration of (w) the lack of an actively trading public
market for the Common Stock, (x) any restrictions on the transfer of
shares of Common Stock and (y) any discount for holdings of less than a
majority or controlling interest of the outstanding capital stock of
the Company. For purposes of this subsection (iv), the term "ex date",
when used with respect to any issuance or distribution, means the first
date on which the stock trades regular way on the principal national
securities exchange on which the stock is listed or admitted to trading
(or if not so listed or admitted, on NASDAQ, or a similar organization
if NASDAQ is no longer reporting trading information) without the right
to receive such issuance or distribution.
(v) If any event occurs as to which the other provisions of
this Section 6(b) are not strictly applicable but the failure to make
any adjustment would not fairly protect the economic rights of the
Exchangeable Preferred Stock in accordance with the essential intent
and principles hereof, then, in each such case,
8
<PAGE>
the Company shall appoint a firm of independent public accountants of
recognized national standing which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 6(b), necessary to preserve,
without dilution, the economic rights of the Exchangeable Preferred
Stock. Upon receipt of such opinion, the Company shall promptly mail a
copy thereof to the holders of the Exchangeable Preferred Stock and
shall make the adjustments described therein.
(vi) In any case in which this Section 6(b) shall require that
an adjustment be made immediately following a record date or
immediately following the exercise of, or exchange of Rights Stock for,
a Right, the Company may elect to defer the effectiveness of such
adjustment (but in no event until a date later than the later of the
"ex date" as defined above and the effective date of the event giving
rise to such adjustment).
(vii) Whenever the Adjustment Rate is adjusted as provided
above:
(1) the Company shall compute the adjusted Adjustment
Rate and shall promptly file with the stock transfer or
conversion agent, as appropriate, for the Exchangeable
Preferred Stock, a certificate signed by a principal financial
officer of the Company setting forth the adjusted Adjustment
Rate and showing in reasonable detail the facts upon which
such adjustment is based and the computation thereof; and
(2) a notice stating that the Adjustment Rate has
been adjusted and setting forth the adjusted Adjustment Rate
shall, as soon as practicable, be sent by first-class mail to
the holders of record of the Exchangeable Preferred Stock.
In case:
(A) the Company shall authorize the issuance, sale,
transfer or distribution of Common Stock, Options or
Convertible Securities to any person;
(B) of any reorganization or reclassification of the
Common Stock (other than a change in par value, or from par
value to no par value, or
9
<PAGE>
from no par value to par value, or a subdivision or
combination of its outstanding Common Stock), or of any
consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is
required, or of the sale, lease or transfer of all or
substantially all the assets of the Company; or
(C) of the voluntary or involuntary liquidation,
dissolution or winding-up of the Company;
then the Company shall cause to be mailed to the stock transfer or
conversion agent, as appropriate, for the Exchangeable Preferred Stock
and to the holders of record of Exchangeable Preferred Stock, at least
20 days (or 10 days in any case described in subsection (A) above)
prior to the applicable record date or effective date specified below,
a notice stating (x) the date as of which such persons to be entitled
to such Common Stock, Options or Convertible Securities are to be
determined, or (y) the date on which such reorganization,
reclassification, consolidation, merger, sale, lease, transfer,
liquidation, dissolution or winding-up is expected to become effective,
and the date as of which it is expected that holders of record of
Common Stock shall be entitled to exchange their shares for securities
or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, transfer,
liquidation, dissolution or winding-up. Neither the failure to give the
notice required by this subsection (vii), nor any defect therein, to
any particular holder shall affect the sufficiency of the notice or the
legality or validity of any such Common Stock, Option, Convertible
Security, reorganization, reclassification, consolidation, merger,
sale, lease, transfer, liquidation, dissolution or winding-up, or the
vote authorizing any such action with respect to the other holders.
(c) Exchange. Each share of Exchangeable Preferred Stock shall be
exchangeable at any time following the occurrence of an Exchange Event (as
hereafter defined) at the option of the holder thereof for 1 (one) fully paid
and non-assessable share of Class D Preferred Stock.
SECTION 7. Approval Rights. For so long as there are any outstanding
shares of Exchangeable Preferred Stock, the Company shall not take, and shall
not permit any of its subsidiaries to take, any of the following actions without
the written consent of the holders of a majority of the shares of Exchangeable
Preferred Stock then outstanding:
10
<PAGE>
(i) declare or pay any dividend on, or make any payment on
account of, or set apart any assets (other than setting aside Common
Stock for exercise of options or conversion rights) for a sinking or
other analogous fund, for the purchase, redemption, defeasance,
retirement, or other acquisition of, any shares of any class of capital
stock of the Company or any Options to purchase any such capital stock,
whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or in
obligations or other securities of the Company, except that the Company
may:
(A) make cash payments of up to $10,000,000 in any fiscal
year of the Company to redeem any shares of any class
of capital stock of the Company or any Options to
purchase any such capital stock, whether now or
hereafter outstanding; and
(B) make any redemptions of any shares of any class of
capital stock of the Company or any Options to
purchase any such capital stock to the extent such
redemption is expressly approved by the holders of a
majority of the shares of Exchangeable Preferred
Stock then outstanding;
(ii) consummate any transaction that would result in a Change
of Control; provided, however that no consent of the holders of the
Class D Preferred Stock shall be required in the event of: (A) a
merger, consolidation, share exchange, business combination or other
similar transaction which results in the outstanding Common Stock being
converted into the right to receive cash or securities of a company the
outstanding common stock or other common equity securities of which is
listed on the New York Stock Exchange or NASDAQ National Market System
and which has a publicly traded float of at least $500 million (a
"Qualifying Issuer"); (B) a sale, conveyance, lease, exchange, transfer
or other disposition of all or substantially all the assets of the
Company and its subsidiaries, taken as a whole, in a single transaction
or in a series of transactions outside of the ordinary course of
business, and the consideration for such transaction is cash or
securities of a Qualifying Issuer; (C) a tender offer or exchange offer
for any or all of the outstanding shares of Common Stock, and the
consideration for such transaction is cash or securities of a
Qualifying Issuer; or (D) any of the foregoing transactions described
in clauses (A), (B) and (C), in which the holder of any Exchangeable
Preferred Stock receives consideration in
11
<PAGE>
connection with such transaction upon consummation thereof equal to the
consideration that would have been payable to such holder had such
Exchangeable Preferred Stock been converted into Common Stock of the
Borrower assuming for such purpose conversion at the Adjustment Rate in
effect immediately prior to the closing or record date for such
transaction, regardless of whether there were sufficient shares of
Common Stock authorized to permit such conversion. "Change of Control"
means the occurrence of any of the following events:
(a) any "Person" (as such term is 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, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire within one year), directly or indirectly, of more than
35% of the voting capital stock of the Company; or
(b) individuals who at the date hereof constituted
the Board (together with any such individuals whose election
by the Board or whose nomination for election by the
shareholders of the Company was approved by a majority of the
directors then still in office who were directors on the date
hereof or persons whose election as directors or nomination
for election was previously so approved) cease for any reason
to constitute a majority of the Board then in office; or
(c) the Company or any of its subsidiaries
consummates any sale, lease, exchange or other disposition of
all or substantially all of its assets in any transaction or
series of transactions not in the ordinary course of business;
or
(d) The Company engages in a merger, consolidation or
similar business combination with any third party;
(iii) acquire by purchase the business, assets or stock of any
business for an aggregate purchase price (as determined in good faith
by the Board) of more than $100 million;
12
<PAGE>
(iv) effect any voluntary liquidation, dissolution or winding
up of the Company; or
(v) issue (A) any shares of Exchangeable Preferred Stock,
except pursuant to the terms of the Loan Agreement, dated the date
hereof, among the Company, Greenwich Street Capital Partners II, L.P.,
Greenwich Fund, L.P. and Greenwich Offshore Fund, L.P., or (B) any
shares of Exchangeable Preferred Stock, except in exchange for shares
of Exchangeable Preferred Stock pursuant to Section 6 hereof.
SECTION 8. No Impairment. The Company will not, by amendment of the
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms hereof, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Exchangeable
Preferred Stock against dilution or other impairment.
SECTION 9. Redemption.
(a) Redemption Option. In the event of a Change of Control
which is not subject to Section 6(a) hereof, in addition to such other rights as
are provided hereunder to the holders of Exchangeable Preferred Stock, such
holders shall have the option to require the Company to redeem all or any part
of such holders' shares of Exchangeable Preferred Stock at a redemption price
per share of Exchangeable Preferred Stock, payable in cash, equal to (x) the
Fair Market Value of the greatest consideration per share payable to holders of
Common Stock in connection with such Change of Control multiplied by (y) the
Adjustment Rate then in effect, plus (z) an amount equal to all accrued and
unpaid dividends on such share of Exchangeable Preferred Stock through the date
of such redemption. For the purposes of this Section 9, "Fair Market Value" for
any consideration other than cash shall be deemed to be (i) if such
consideration is securities then listed or admitted to trading on any national
securities exchange or traded on any national market system, the average of the
last sale prices of a share of such securities for the 15 consecutive trading
days commencing 20 trading days before the date of such Change of Control, or,
if there shall have been no sales of such securities on any such trading day,
the average of the closing bid and asked prices at the end of such trading day
or (ii) if such consideration is other property or securities not then listed or
13
<PAGE>
admitted to trading on any national securities exchange or traded on any
national market system, as determined in good faith by an independent investment
bank of nationally recognized standing.
(b) Mechanics of Redemption. The Company shall send, by first class
mail, postage prepaid, a notice to each holder of Exchangeable Preferred Stock
at such holder's address as it appears on the stock books of the Company. Such
notice shall state:
(i) that a Change of Control which is not subject to Section 6(a)
hereof has occurred, and that such holder shall have the
option to require the Company to redeem all or any part of
such holder's shares of Exchangeable Preferred Stock;
(ii) the redemption price (including the amount of accrued
dividends, if any) and the redemption date (which shall be no
earlier than 30 days nor later than 60 days from the date such
notice is mailed, other than as may be required by law) (the
"Change of Control Payment Date");
(iii) that any shares of Exchangeable Preferred Stock not redeemed
will continue to accrue dividends;
(iv) that, unless the Company defaults in making payment therefor,
any share of Exchangeable Preferred Stock accepted for
redemption shall cease to accrue dividends after the Change of
Control Payment Date;
(v) that holders electing to have any shares of Exchangeable
Preferred Stock redeemed will be required to surrender the
certificate or certificates representing such shares, properly
endorsed for transfer together with such customary documents
as the Company and the transfer agent may reasonably require,
in the manner and at the place specified in the notice prior
to the close of business on the business day prior to the
Change of Control Payment Date;
(vi) that holders will be entitled to withdraw their election if
the Company receives, not later than five business days prior
to the Change of Control Payment Date, a facsimile
transmission or letter setting forth the name of such Holder,
the number of shares of Exchangeable Preferred Stock such
14
<PAGE>
holder delivered for redemption and a statement that such
holder is withdrawing his election to have such shares of
Exchangeable Preferred Stock redeemed;
(vii) that holders whose shares of Exchangeable Preferred Stock are
redeemed only in part will be issued a new certificate
representing the unredeemed shares of Exchangeable Preferred
Stock; and
(viii) the circumstances and relevant facts regarding such Change of
Control.
(c) Payment on Redemption. On the Change of Control Payment
Date, the Company shall (A) accept for payment the shares of Exchangeable
Preferred Stock to be redeemed, (B) pay to the holders of shares to be redeemed
the redemption price therefor in cash and (C) cancel and retire each surrendered
certificate. Unless the Company defaults in the payment for the shares of
Exchangeable Preferred Stock to be redeemed, dividends shall cease to accrue
with respect to such shares and all rights of holders of such shares shall
terminate, except for the right to receive payment therefor.
SECTION 10. Status of Reacquired Shares. If shares of Exchangeable
Preferred Stock are exchanged pursuant to Section 6 hereof or redeemed pursuant
to Section 9 hereof, the shares so exchanged or redeemed shall, upon compliance
with any statutory requirements, assume the status of authorized but unissued
shares of preferred stock of the Company, but may not be reissued as
Exchangeable Preferred Stock.
SECTION 11. Preemptive Rights. The Exchangeable Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Company.
SECTION 12. Fractional Shares. Exchangeable Preferred Stock may be
issued in fractions of a share (in one one-thousandths (1/1000) of a share and
integral multiples thereof) which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Exchangeable Preferred Stock.
SECTION 13. Notices. Except as otherwise provided herein, all notices,
requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered by and when sent by telex
or telecopier (with
15
<PAGE>
receipt confirmed) on the business day following receipt, provided a copy is
also sent by express (overnight, if possible) courier, addressed (i) in the case
of a holder of Exchangeable Preferred Stock, to such holder's address as it
appears on the books of the Company, and (ii) in the case of the Company, to the
Company's principal executive offices to the attention of the Company's Chief
Financial Officer.
SECTION 14. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
16
<PAGE>
IN WITNESS WHEREOF, IMC Mortgage Company has caused these Articles of
Amendment to be duly executed by its duly authorized officer and attested by its
Secretary this 14th day of October, 1998.
IMC MORTGAGE COMPANY
By: /s/
---------------------
Name:
Title:
ATTEST:
/s/
- -----------------------
Name:
Title:
17
<PAGE>
ARTICLES OF AMENDMENT
DESIGNATING THE PREFERENCES, RIGHTS AND LIMITATIONS OF
THE CLASS D PREFERRED STOCK
OF
IMC MORTGAGE COMPANY
Pursuant to Section 607.0602 of the Florida Business Corporation Act
(the "Act"), IMC Mortgage Company, a Florida corporation (the "Company"), hereby
certifies that the following amendments were duly adopted by the Board of
Directors of the Company (the "Board") on October 13, 1998, pursuant to
authority conferred upon the Board by the provisions of the Articles of
Incorporation of the Company (the "Articles of Incorporation").
DESIGNATION OF CLASS D PREFERRED STOCK. The Class, designated as Class
D Preferred Stock will have the designations, preferences, voting powers,
relative, participating, optional or other special rights and privileges, and
the qualifications, limitations and restrictions as follows:
SECTION 1. Designation, Rank. This series of preferred stock shall be
designated the "Class D Preferred Stock," with a par value of $0.01 per share
(the "Class D Preferred Stock"). The Class D Preferred Stock will rank, with
respect to rights on liquidation, winding-up and dissolution, (i) senior to all
classes of common stock of the Company, as they exist on the date hereof or as
such stock may be constituted from time to time (the "Common Stock"), and each
other class of capital stock or class or series of preferred stock established
by the Board to the extent the terms of such stock do not expressly provide that
it ranks on a parity with the Class D Preferred Stock as to rights on
liquidation, winding-up and dissolution (collectively, together with the Common
Stock, the "Junior Securities"); (ii) on a parity with the Class A Preferred
Stock, Class B Preferred Stock and Class C Exchangeable Preferred Stock of the
Company, and each other class of capital stock or class or series of preferred
stock established by the Board to the extent the terms of such stock expressly
provide that it will rank on a parity with the Class D Preferred Stock as to
rights on liquidation, winding-up and dissolution (collectively, the "Parity
Securities"); and (iii) junior to each other class of capital stock or class or
series of preferred stock established by the Board to the extent the terms of
such stock expressly provide that it will rank senior to the Class D Preferred
Stock as to rights on liquidation, winding-up and dissolution (collectively, the
"Senior Securities").
SECTION 2. Authorized Number. The authorized number of shares
constituting the Class D Preferred Stock shall be 800,000 shares.
<PAGE>
SECTION 3. Dividends. (a) The holders of Class D Preferred Stock shall
be entitled to receive, when, as and if declared by the Board out of funds
legally available therefor, dividends payable in cash equal to 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, including, without limitation, evidences of indebtedness, equity
securities (including equity interests in the Company's subsidiaries) or other
assets, other than a dividend payable in shares of Common Stock or a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock.
(b) The Company shall declare a dividend or distribution on the Class D
Preferred Stock as provided in paragraph (a) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Class D Preferred Stock from the date the Company declares a dividend
or distribution on the Common Stock (other than a dividend payable in shares of
Common Stock). Dividends paid on the shares of Class D Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board may fix a record date
for the determination of holders of Class D Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the payment thereof.
SECTION 4. Liquidation Rights. The liquidation value of each share of
Class D Preferred Stock shall be $10.00 (the "Liquidation Value"). In the event
of any voluntary or involuntary liquidation, dissolution or winding-up of the
Company, after satisfaction of the claims of creditors and before any payment or
distribution of assets is made on any Junior Securities, including, without
limitation, the Common Stock but after any payment or distribution of assets to
holders of Senior Securities, if any, (i) the holders of Class D Preferred Stock
shall receive a liquidation preference equal to the greater of (A) the
Liquidation Value of their shares, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment and (B) an aggregate amount per share, subject to the provision for
ad justment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of Common Stock and (ii) the holders of any
Parity Securities shall be entitled to receive an amount equal to the full
respective liquidation
2
<PAGE>
preferences (including any premium) to which they are entitled and shall receive
an amount equal to all accrued and unpaid dividends with respect to their
respective shares through and including the date of distribution (whether or not
declared). In the event the Company shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of Class D Preferred
Stock are entitled immediately prior to such event under the provision in clause
(A) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event. If, upon such a voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the assets of the Company are insufficient to pay in
full the amounts described above as payable with respect to the Class D
Preferred Stock and any Parity Securities, the holders of the Class D Preferred
Stock and such Parity Securities will share ratably in any distribution of
assets of the Company in proportion to their respective liquidation preferences.
After payment of such liquidation preference, the Class D Preferred Stock will
not be entitled to any further participation in any distribution of assets by
the Company. Neither the sale or transfer of all or any part of the assets of
the Company, nor the merger or consolidation of the Company into or with any
other corporation or a merger of any other corporation with or into the Company,
will be deemed to be a liquidation, dissolution or winding-up of the Company.
SECTION 5. Voting Rights. The holders of Class D Preferred Stock shall
have the following voting rights:
(a) Subject to the provisions for adjustment as hereinafter
set forth, each share of Class D Preferred Stock shall entitle the
holder thereof to 1,000 votes (and each one one-thousandth of a share
of Class D Preferred Stock shall entitle the holder thereof to one
vote) on all matters submitted to a vote of the shareholders of the
Company. In the event the Company shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of Class D Preferred Stock were entitled
immediately prior to
3
<PAGE>
such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) If (i) a Change of Control (as defined in Section 7(ii),
but substituting 50% for 35% where such number appears in paragraph (a)
thereof) shall not have occurred on or prior to April 14, 1999, and
(ii) on or after such date, the Class D Preferred Stock constitutes a
majority of the voting power of the issued and outstanding capital
stock of the Company (together, a "Board Triggering Event"), then the
number of directors constituting the Board of Directors shall be
adjusted to permit the holders of Class D Preferred Stock, voting
separately as one class, to elect a majority of the directors. Holders
of a majority of the issued and outstanding shares of the Class D
Preferred Stock, voting separately as one class, shall have the
exclusive right to elect a majority of the directors at a meeting
therefor called upon occurrence of such Board Triggering Event, and at
every subsequent meeting at which the terms of office of the directors
so elected by the holders of Class D Preferred Stock expire (other than
as described in paragraph (c) below).
(c) The right of the holders of Class D Preferred Stock voting
separately as one class to elect members of the Board of Directors as
set forth in paragraph (b) above shall continue until such time as the
Class D Preferred Stock ceases to constitute a majority of the voting
power of the issued and outstanding capital stock of Company. At any
time after voting power to elect directors shall have become vested and
be continuing in the holders of the Class D Preferred Stock, voting
separately as a class pursuant to paragraph (b), or if vacancies shall
exist in the offices of directors elected by the holders of the Class D
Preferred Stock, a proper officer of the Company may, and upon the
written request of the holders of record of at least 10% of the shares
of Class D Preferred Stock then outstanding addressed to the Secretary
of the Company shall, call a special meeting of the holders of Class D
Preferred Stock, for the purpose of electing the directors which such
holders are entitled to elect. If such meeting shall not be called by
the proper officer of the Company within 20 days after personal service
of said written request upon the Secretary of the Company, or within 20
days after mailing the same within the United States by certified mail,
addressed to the Secretary of the Company at its principal executive
offices, then the holders of record of at least 20% of the outstanding
shares of the Class D Preferred Stock may designate in writing one of
their numbers to call such meeting at the expense of the Company, and
such meeting
4
<PAGE>
may be called by the person so designated upon not more than 15 days
notice of the Company and shall be held at the place for holding the
annual meetings of stockholders or such other place in the United
States as shall be designated in such notice. Notwithstanding the
provisions of this paragraph (c), no such special meeting shall be
called if any such request is received less than 30 days before the
date fixed for the next ensuing annual or special meeting of
stockholders of the Company. Any holder of Class D Preferred Stock so
designated shall have, and the Company shall provide, access to the
lists of holders of Class D Preferred Stock for purposes of calling a
meeting pursuant to the provisions of this paragraph (c).
(d) At any meeting held for the purpose of electing directors
at which the holders of Class D Preferred Stock shall have the right,
voting separately as one class, to elect directors as aforesaid, the
presence in person or by proxy of the holders of at least a majority of
the outstanding Class D Preferred Stock shall be required to constitute
a quorum of such Class D Preferred Stock.
(e) Any vacancy occurring in the office of a director elected
by the holders of Class D Preferred Stock may be filled by the
remaining director elected by the holders of Class D Preferred Stock
unless and until such vacancy shall be filled by the holders of Class D
Preferred Stock.
(f) Except as otherwise provided herein, in the Articles of
Incorporation, in any other certificate of designation creating a
series of preferred stock or any similar stock, or by law, the holders
of Class D Preferred Stock and the holders of Common Stock and any
other capital stock of the Company having general voting rights shall
vote together as one class on all matters submitted to a vote of
shareholders of the Company.
(g) So long as any shares of Class D Preferred Stock are
outstanding, the vote or consent of the holders of 66 2/3% of the
outstanding shares of Class D Preferred Stock, voting together as a
single class, shall be necessary to (i) increase or decrease the par
value of the shares of Class D Preferred Stock or (ii) amend Article IV
of the Articles of Incorporation, or alter or change the powers,
preferences, or special rights of the shares of Class D Preferred
Stock, so as to affect them adversely, either directly or indirectly,
or through a merger or consolidation with any person, or (iii)
authorize or issue any additional class or series of Parity Securities
or Senior Securities, or any security convertible into Parity
Securities or Senior Securities.
5
<PAGE>
SECTION 6. Certain Transactions.
(a) Consolidation, Merger or Sale of Assets. If any transaction shall
occur, including without limitation (i) any recapitalization or reclassification
of shares of Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock), (ii) any consolidation or
merger of the Company with or into another person or any merger of another
person into the Company (other than a merger in which the Company is the
surviving corporation and that does not result in a reclassification,
conversion, exchange or cancellation of Common Stock), (iii) any sale, lease or
transfer of all or substantially all of the assets of the Company or (iv) any
compulsory share exchange, pursuant to any of which holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that each share of Class D Preferred
Stock then outstanding shall be converted into the right to receive without any
further action on the part of the holder thereof, the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, sale, lease, transfer
or share exchange by a holder of the number of shares of Common Stock issuable
upon conversion of such share of Class D Preferred Stock immediately prior to
such recapitalization, reclassification, consolidation, merger, sale, lease,
transfer or share exchange, assuming solely for such purpose that each share of
Class D Preferred Stock is convertible at the option of the holder thereof into
1,000 (one thousand) fully paid and non-assessable shares of Common Stock (such
assumed rate of conversion, as adjusted from time to time, the "Adjustment
Rate"), and the Company shall not enter into any such merger, consolidation,
sale, lease transfer or share exchange unless the company formed by such
consolidation or resulting from such merger or that acquires such assets or that
acquires the Company's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation, other constituent document or the
agreements relating to such transaction to assume or establish such right.
(b) Anti-dilution Provisions. The Adjustment Rate is subject to
adjustment from and after October 14, 1998, whether or not any Class D Preferred
Stock is outstanding, from time to time as follows:
(i) In case the Company shall (1) pay a dividend or make a
distribution on Common Stock in shares of Common Stock, (2) subdivide
its outstanding shares of Common Stock into a greater number of shares
or (3) combine its outstanding shares of Common Stock into a smaller
number of shares, the Adjustment Rate in effect immediately prior to
such action shall be adjusted so that if the holder of any Class D
Preferred Stock were able to convert such
6
<PAGE>
stock into Common Stock, such holder would be entitled to receive the
number of shares of Common Stock which such holder would have been
entitled to receive immediately following such action had the holder's
Class D Preferred Stock been converted immediately prior thereto. An
adjustment made pursuant to this subsection (i) shall become effective
immediately (except as provided in subsection (vi) below) after the
record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision or combination.
(ii) In case the Company shall (x) issue, sell or otherwise
distribute any shares of Common Stock or (y) issue rights, options or
warrants entitling the holder thereof to subscribe for or purchase
shares of Common Stock ("Options") or any indebtedness, shares of stock
or other securities which are convertible into or exchangeable for,
with or without payment of additional consideration, shares of Common
Stock, either immediately or upon the arrival of a specified date or
the happening of a specified event or both ("Convertible Securities")
to any person, in the case of clause (x) above, at a price per share,
or in the case of clause (y) above, at an exercise or conversion price
per share, less than the Current Market Value per share (as defined in
subsection (iv) below) of the Common Stock on the record date mentioned
below (other than a dividend payable to holders of Common Stock which
is also distributed to holders of Class D Preferred Stock pursuant to
Section 3 hereof), then the Adjustment Rate in effect immediately prior
thereto shall be adjusted so that it shall equal the rate determined by
multiplying the Adjustment Rate in effect immediately prior to the date
of issuance of such Common Stock, Options or Convertible Securities by
a fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance,
sale, transfer or distribution of such Common Stock, Options
or Convertible Securities immediately prior to such issuance,
sale, transfer or distribution plus (B) the number of
additional shares of Common Stock which are so offered for
subscription or purchase, or subject to issuance upon
exercise, conversion or exchange of such Options or
Convertible Securities, and
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Common
7
<PAGE>
Stock, Options or Convertible Securities immediately prior to
such issuance, sale, transfer or distribution plus (B) the
number of shares of Common Stock which the aggregate offering
price of the total number of shares so offered would purchase
at such Current Market Value (determined by multiplying such
total number of shares offered for subscription or purchase or
subject to issuance upon exercise, conversion or exchange of
such Options or Convertible Securities by the sum of the
exercise price of such Options or Convertible Securities plus
the value of any consideration per share paid to the Company
for such Common Stock, Options or Convertible Securities and
dividing the product so obtained by such Current Market
Value).
Such adjustment shall be made successively whenever any Common
Stock is issued, sold or otherwise distributed or any Convertible
Securities or Options are issued, and shall become effective
immediately (except as provided in subsection (vi) below) after the
record date for the determination of shareholders entitled to receive
such Convertible Securities or Options, as the case may be. In
determining the value of any consideration received by the Company for
such Common Stock, Convertible Securities or Options, as the case may
be, the determination of the Board in good faith shall be conclusive
and shall be described in a Board resolution, provided that any shares
of Common Stock issued or issuable as contingent consideration or
earn-out payments in respect of acquisition agreements made by the
Company on or prior to the date hereof shall give rise to an adjustment
hereunder when the number of such shares to be issued becomes fixed and
shall be deemed to have been issued for no consideration. If such an
adjustment is made and such Options or Convertible Securities are later
exchanged, redeemed, invalidated or terminated, or expire by their
terms, then a corresponding reversing adjustment shall be made to the
Adjustment Rate, on an equitable basis, to take account of such event.
(iii) Notwithstanding subsection (ii) above, any adjustments
to the Adjustment Rate to account for the issuance of "Rights" under a
Shareholder Rights Plan or Agreement (a "Rights Agreement") adopted
subsequent to the date hereof shall be made when such Rights are
exercised or exchanged by the Company for Common Stock (Common Stock
issued pursuant to the exercise of, or exchange by the Company for,
such Rights are referred to as "Rights
8
<PAGE>
Stock") pursuant to a Rights Agreement or like arrangement at a price
per share less than the Current Market Value per share of Common Stock
on the date of such exercise or exchange. The Adjustment Rate in effect
immediately prior to such exercise or exchange shall be adjusted so
that it shall equal the rate determined by multiplying the Adjustment
Rate in effect immediately prior to the date of such exercise or
exchange by a fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance
of such Rights Stock immediately prior to such issuance plus
(B) the number of additional shares of Rights Stock which are
so issued, and
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Rights Stock immediately prior to such
issuance plus (B) the number of shares of Common Stock which
the aggregate consideration received for the total number of
shares of Rights Stock so issued would purchase at such
Current Market Value (determined by multiplying such total
number of shares of Rights Stock by the consideration received
per share of such Rights Stock and dividing the product so
obtained by such Current Market Value).
Such adjustment shall be made successively whenever any Rights
Stock is issued, and shall become effective immediately (except as
provided in subsection (vi) below) after the issuance of Rights Stock.
If after the "Distribution Date" or a similar date (as defined in a
Rights Agreement), holders converting shares of Class D Preferred Stock
are, for any reason, not entitled to receive the Rights or similar
rights, options or warrants which would otherwise be attributable (but
for the date of conversion) to the shares of Common Stock received upon
such conversion, then an increasing adjustment shall be made in the
Adjustment Rate to reflect the fair market value of the Rights or
similar rights, options or warrants. If such an adjustment is made and
the Rights or similar rights, options or warrants are later exchanged,
redeemed, invalidated or terminated, then a corresponding reversing
adjustment shall be made to the Adjustment Rate, on an equitable basis,
to take account of such event.
9
<PAGE>
(iv) For the purpose of any computation under subsections (ii)
and (iii) above, the "Current Market Value" per share of stock on any
date shall be deemed to be (i) if shares of Common Stock are then
listed or admitted to trading on any national securities exchange or
traded on any national market system, the average of the last sale
prices of a share of such stock for the 15 consecutive trading days
commencing 20 trading days before the earliest of the date in question
and the date before the "ex date" with respect to the issuance or
distribution requiring such computation, or, if there shall have been
no sales of such stock on any such trading day, the average of the
closing bid and asked prices at the end of such trading day or (ii) if
no shares of Common Stock are then listed or admitted to trading on any
national securities exchange or traded on any national market system,
the Current Market Value of a share of Common Stock shall be determined
in good faith by an independent investment bank of nationally
recognized standing. For purposes of clause (ii) of the preceding
sentence, the determination of "Current Market Value" shall be made
without consideration of (w) the lack of an actively trading public
market for the Common Stock, (x) any restrictions on the transfer of
shares of Common Stock and (y) any discount for holdings of less than a
majority or controlling interest of the outstanding capital stock of
the Company. For purposes of this subsection (iv), the term "ex date",
when used with respect to any issuance or distribution, means the first
date on which the stock trades regular way on the principal national
securities exchange on which the stock is listed or admitted to trading
(or if not so listed or admitted, on NASDAQ, or a similar organization
if NASDAQ is no longer reporting trading information) without the right
to receive such issuance or distribution.
(v) If any event occurs as to which the other provisions of
this Section 6(b) are not strictly applicable but the failure to make
any adjustment would not fairly protect the economic rights of the
Class D Preferred Stock in accordance with the essential intent and
principles hereof, then, in each such case, the Company shall appoint a
firm of independent public accountants of recognized national standing
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in this
Section 6(b), necessary to preserve, without dilution, the economic
rights of the Class D Preferred Stock. Upon receipt of such opinion,
the Company shall promptly mail a copy thereof to the holders of the
Class D Preferred Stock and shall make the adjustments described
therein.
10
<PAGE>
(vi) In any case in which this Section 6(b) shall require that
an adjustment be made immediately following a record date or
immediately following the exercise of, or exchange of Rights Stock for,
a Right, the Company may elect to defer the effectiveness of such
adjustment (but in no event until a date later than the later of the
"ex date" as defined above and the effective date of the event giving
rise to such adjustment).
(vii) Whenever the Adjustment Rate is adjusted as provided
above:
(1) the Company shall compute the adjusted Adjustment
Rate and shall promptly file with the stock transfer or
conversion agent, as appropriate, for the Class D Preferred
Stock, a certificate signed by a principal financial officer
of the Company setting forth the adjusted Adjustment Rate and
showing in reasonable detail the facts upon which such
adjustment is based and the computation thereof; and
(2) a notice stating that the Adjustment Rate has
been adjusted and setting forth the adjusted Adjustment Rate
shall, as soon as practicable, be sent by first-class mail to
the holders of record of the Class D Preferred Stock, and to
holders of record of the Class C Exchangeable Preferred Stock
of the Company.
In case:
(A) the Company shall authorize the issuance, sale,
transfer or distribution of Common Stock, Options or
Convertible Securities to any person;
(B) of any reorganization or reclassification of the
Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or a
subdivision or combination of its outstanding Common Stock),
or of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the
Company is required, or of the sale, lease or transfer of all
or substantially all the assets of the Company; or
11
<PAGE>
(C) of the voluntary or involuntary liquidation,
dissolution or winding-up of the Company;
then the Company shall cause to be mailed to the stock transfer or
conversion agent, as appropriate, for the Class D Preferred Stock and
to the holders of record of Class D Preferred Stock, and to holders of
record of the Class C Exchangeable Preferred Stock of the Company, at
least 20 days (or 10 days in any case described in subsection (A)
above) prior to the applicable record date or effective date specified
below, a notice stating (x) the date as of which such persons to be
entitled to such Common Stock, Options or Convertible Securities are to
be determined, or (y) the date on which such reorganization,
reclassification, consolidation, merger, sale, lease, transfer,
liquidation, dissolution or winding-up is expected to become effective,
and the date as of which it is expected that holders of record of
Common Stock shall be entitled to exchange their shares for securities
or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, transfer,
liquidation, dissolution or winding-up. Neither the failure to give the
notice required by this subsection (vii), nor any defect therein, to
any particular holder shall affect the sufficiency of the notice or the
legality or validity of any such Common Stock, Option, Convertible
Security, reorganization, reclassification, consolidation, merger,
sale, lease, transfer, liquidation, dissolution or winding-up, or the
vote authorizing any such action with respect to the other holders.
SECTION 7. Approval Rights. For so long as there are any outstanding
shares of Class D Preferred Stock, the Company shall not take, and shall not
permit any of its subsidiaries to take, any of the following actions without the
written consent of the holders of a majority of the shares of Class D Preferred
Stock then outstanding:
(i) declare or pay any dividend on, or make any payment on
account of, or set apart any assets (other than setting aside Common
Stock for exercise of options or conversion rights) for a sinking or
other analogous fund, for the purchase, redemption, defeasance,
retirement, or other acquisition of, any shares of any class of capital
stock of the Company or any Options to purchase any such capital stock,
whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or in
obligations or other securities of the Company, except that the Company
may:
12
<PAGE>
(A) make cash payments of up to $10,000,000 in any fiscal
year of the Company to redeem any shares of any class
of capital stock of the Company or any Options to
purchase any such capital stock, whether now or
hereafter outstanding; and
(B) make any redemptions of any shares of any class of
capital stock of the Company or any Options to
purchase any such capital stock to the extent such
redemption is expressly approved by the holders of a
majority of the shares of Class D Preferred Stock
then outstanding;
(ii) consummate any transaction that would result in a Change
of Control; provided, however that no consent of the holders of the
Class D Preferred Stock shall be required in the event of: (A) a
merger, consolidation, share exchange, business combination or other
similar transaction which results in the outstanding Common Stock being
converted into the right to receive cash or securities of a company the
outstanding common stock or other common equity securities of which is
listed on the New York Stock Exchange or NASDAQ National Market System
and which has a publicly traded float of at least $500 million (a
"Qualifying Issuer"); (B) a sale, conveyance, lease, exchange, transfer
or other disposition of all or substantially all the assets of the
Company and its subsidiaries, taken as a whole, in a single transaction
or in a series of transactions outside of the ordinary course of
business, and the consideration for such transaction is cash or
securities of a Qualifying Issuer; (C) a tender offer or exchange offer
for any or all of the outstanding shares of Common Stock and the
consideration for such transaction is cash or securities of a
Qualifying Issuer; or (D) any of the foregoing transactions described
in clauses (A), (B) and (C), in which the holder of any Class D
Preferred Stock receives consideration in connection with such
transaction upon consummation thereof equal to the consideration that
would have been payable to such holder had such Class D Preferred Stock
been converted into Common Stock of the Borrower assuming for such
purpose conversion at the Adjustment Rate in effect immediately prior
to the closing or record date for such transaction, regardless of
whether there were sufficient shares of Common Stock authorized to
permit such conversion. "Change of Control" means the occurrence of any
of the following events:
13
<PAGE>
(a) any "Person" (as such term is 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, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire within one year), directly or indirectly, of more than
35% of the voting capital stock of the Company; or
(b) individuals who at the date hereof constituted
the Board (together with any such individuals whose election
by the Board or whose nomination for election by the
shareholders of the Company was approved by a majority of the
directors then still in office who were directors on the date
hereof or persons whose election as directors or nomination
for election was previously so approved) cease for any reason
to constitute a majority of the Board then in office; or
(c) the Company or any of its subsidiaries
consummates any sale, lease, exchange or other disposition of
all or substantially all of its assets in any transaction or
series of transactions not in the ordinary course of business;
or
(d) The Company engages in a merger, consolidation or
similar business combination with any third party;
(iii) acquire by purchase the business, assets or stock of any
business for an aggregate purchase price (as determined in good faith
by the Board) of more than $100 million; or
(iv) effect any voluntary liquidation, dissolution or winding
up of the Company.
SECTION 8. No Impairment. The Company will not, by amendment of the
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms hereof, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such
14
<PAGE>
action as may be necessary or appropriate in order to protect the rights of the
holders of the Class D Preferred Stock against dilution or other impairment.
SECTION 9. Redemption.
(a) Redemption Option. In the event of a Change of Control which is not
subject to Section 6(a) hereof, in addition to such other rights as are provided
hereunder to the holders of Class D Preferred Stock, such holders shall have the
option to require the Company to redeem all or any part of such holders' shares
of Class D Preferred Stock at a redemption price per share of Class D Preferred
Stock, payable in cash, equal to (x) the Fair Market Value of the greatest
consideration per share payable to holders of Common Stock in connection with
such Change of Control multiplied by (y) the Adjustment Rate then in effect,
plus (z) an amount equal to all accrued and unpaid dividends on such share of
Class D Preferred Stock through the date of such redemption. For the purposes of
this Section 9, "Fair Market Value" for any consideration other than cash shall
be deemed to be (i) if such consideration is securities then listed or admitted
to trading on any national securities exchange or traded on any national market
system, the average of the last sale prices of a share of such securities for
the 15 consecutive trading days commencing 20 trading days before the date of
such Change of Control, or, if there shall have been no sales of such securities
on any such trading day, the average of the closing bid and asked prices at the
end of such trading day or (ii) if such consideration is other property or
securities not then listed or admitted to trading on any national securities
exchange or traded on any national market system, as determined in good faith by
an independent investment bank of nationally recognized standing.
(b) Mechanics of Redemption. The Company shall send, by first class
mail, postage prepaid, a notice to each holder of Class D Preferred Stock at
such holder's address as it appears on the stock books of the Company. Such
notice shall state:
(i) that a Change of Control which is not subject to Section 6(a)
hereof has occurred, and that such holder shall have the
option to require the Company to redeem all or any part of
such holder's shares of Class D Preferred Stock;
15
<PAGE>
(ii) the redemption price (including the amount of accrued
dividends, if any) and the redemption date (which shall be no
earlier than 30 days nor later than 60 days from the date such
notice is mailed, other than as may be required by law) (the
"Change of Control Payment Date");
(iii) that any shares of Class D Preferred Stock not redeemed will
continue to accrue dividends;
(iv) that, unless the Company defaults in making payment therefor,
any share of Class D Preferred Stock accepted for redemption
shall cease to accrue dividends after the Change of Control
Payment Date;
(v) that holders electing to have any shares of Class D Preferred
Stock redeemed will be required to surrender the certificate
or certificates representing such shares, properly endorsed
for transfer together with such customary documents as the
Company and the transfer agent may reasonably require, in the
manner and at the place specified in the notice prior to the
close of business on the business day prior to the Change of
Control Payment Date;
(vi) that holders will be entitled to withdraw their election if
the Company receives, not later than five business days prior
to the Change of Control Payment Date, a facsimile
transmission or letter setting forth the name of such Holder,
the number of shares of Class D Preferred Stock such holder
delivered for redemption and a statement that such holder is
withdrawing his election to have such shares of Class D
Preferred Stock redeemed;
(vii) that holders whose shares of Class D Preferred Stock are
redeemed only in part will be issued a new certificate
representing the unredeemed shares of Class D Preferred Stock;
and
(viii) the circumstances and relevant facts regarding such Change of
Control.
(c) Payment on Redemption. On the Change of Control Payment Date, the
Company shall (A) accept for payment the shares of Class D Preferred Stock to be
redeemed, (B) pay to the holders of shares to be redeemed the redemption price
16
<PAGE>
therefor in cash and (C) cancel and retire each surrendered certificate. Unless
the Company defaults in the payment for the shares of Class D Preferred Stock to
be redeemed, dividends shall cease to accrue with respect to such shares and all
rights of holders of such shares shall terminate, except for the right to
receive payment therefor.
SECTION 10. Status of Reacquired Shares. If shares of Class D Preferred
Stock are redeemed pursuant to Section 9 hereof, the shares so redeemed shall,
upon compliance with any statutory requirements, assume the status of authorized
but unissued shares of preferred stock of the Company, but may not be reissued
as Class D Preferred Stock.
SECTION 11. Preemptive Rights. The Class D Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Company.
SECTION 12. Fractional Shares. Class D Preferred Stock may be issued in
fractions of a share (in one one-thousandths (1/1000) of a share and integral
multiples thereof) which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Class D Preferred Stock.
SECTION 13. Notices. Except as otherwise provided herein, all notices,
requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered by and when sent by telex
or telecopier (with receipt confirmed) on the business day following receipt,
provided a copy is also sent by express (overnight, if possible) courier,
addressed (i) in the case of a holder of Class D Preferred Stock, to such
holder's address as it appears on the books of the Company, and (ii) in the case
of the Company, to the Company's principal executive offices to the attention of
the Company's Chief Financial Officer.
SECTION 14. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may
17
<PAGE>
make such change as shall be necessary to render the provision in question
effective and valid under applicable law.
18
<PAGE>
IN WITNESS WHEREOF, IMC Mortgage Company has caused these Articles of
Amendment to be duly executed by its duly authorized officer and attested by its
Secretary this 14th day of October, 1998.
IMC MORTGAGE COMPANY
By: /s/
------------------------
Name:
Title:
ATTEST:
/s/
- -----------------------
Name:
Title:
19
THIS WARRANT, AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS, AND MAY NOT BE
TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE AND THE TRANSFEROR PROVIDES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE
TRANSFER OF THIS WARRANT, OR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF, MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS.
IMC MORTGAGE COMPANY
STOCK PURCHASE WARRANT
Date of Issuance: October 12, 1998 Certificate No. W-001
FOR VALUE RECEIVED, IMC Mortgage Company, a Florida corporation (the
"Company"), hereby grants to German American Capital Corporation, a Maryland
corporation, or its registered assigns (the "Registered Holder"), the right to
purchase from the Company 868,960 shares (the "Initial Exercisable Amount") of
Common Stock at a price per share of $1.71875 (as adjusted from time to time
hereunder, the "Exercise Price"). This Warrant shall automatically become void
and of no force and effect in the event that (i) the Standstill Period (as
defined in the Intercreditor Agreement) shall have been terminated pursuant to
Section 1(b)(v), (vi) or (vii) of the Intercreditor Agreement or (ii) the
conditions precedent to the Intercreditor Agreement set forth in Section 6 of
the Intercreditor Agreement shall not have been satisfied. Certain capitalized
terms used herein are defined in Section 1 hereof. The amount and kind of
securities obtainable pursuant to the rights granted hereunder and the purchase
price for such securities are subject to adjustment pursuant to the provisions
contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Definitions. The following terms have meanings set forth
below:
"Affiliate" means with respect to a Person, a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person. For purposes of this definition, the term
"control" of a Person means the possession, direct or indirect, of the power to
(i) vote 50% or more of the voting securities of such Person or (ii) direct or
cause the direction of the management and policies of such Person, whether by
contract or otherwise, and the terms and phrases "controlling," "controlled by"
and "under common control with" have correlative meanings.
<PAGE>
"Adjusted Exercisable Amount" has the meaning ascribed to such term in
Section 3(e) hereof.
"Aggregate Exercise Price" has the meaning ascribed to such term in
Section 2(b)(i)(D) hereof.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Common Stock" means, collectively, the Company's common stock, par
value $.01 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company.
"Common Stock Deemed Outstanding" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Sections 3(b)(i) and
3(b)(ii) hereof regardless of whether the Options or Convertible Securities are
actually exercisable at such time, including any shares of Warrant Stock
issuable upon exercise of the Warrants but excluding any shares of Common Stock
issuable upon a Greenwich Conversion until actually issued.
"Company" has the meaning ascribed to such term in the Preamble hereof.
"Convertible Securities" means any stock or securities (directly or
indirectly) convertible into or exchangeable for Common Stock.
"Exercise Period" has the meaning ascribed to such term in Section 2(a)
hereof.
"Exercise Price" has the meaning ascribed to such term in the Preamble
hereof.
"Exercise Time" has the meaning ascribed to such term in Section
2(b)(i) hereof.
"Greenwich" means collectively Greenwich Street Capital Partners II,
L.P., Greenwich Fund, L.P. and GSCP Offshore Fund, L.P.
"Greenwich Preferred Stock" means any preferred stock issued by the
Company to Greenwich upon any exercise of the Exchange Option by Greenwich
pursuant to Section 7.1 of the Loan Agreement.
"Greenwich Conversion" means any conversion of Greenwich Preferred
Stock into shares of Common Stock.
2
<PAGE>
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 25% of the Company's
Common Stock on a fully-diluted basis (a "25% Owner"), who is not an Affiliate
of any such 25% Owner and who is not a descendant (by birth or adoption) of any
grandparent of any such 25% Owner, a descendant (by birth or adoption) of any
grandparent of the spouse of any such 25% Owner or a trust for the benefit of
such 25% Owner or any such descendant.
"Initial Exercisable Amount" has the meaning ascribed to such term in
the Preamble hereof.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as
of October 12, 1998, between the Company, Greenwich, German American Capital
Corporation and Aspen Funding Corp.
"Liquidating Dividend" has the meaning ascribed to such term in Section
4 hereof.
"Loan Agreement" means the Loan Agreement, dated as of October 12,
1998, between the Company and Greenwich.
"Market Price" of any class of Common Stock on any date means the
average of the daily mean between the high and low sales prices regular way of
the shares of such class of Common Stock on the exchange or quotation system on
which such shares are listed as specified below for the 10 consecutive trading
days (as defined below) preceding such date (or, if earlier, the date on which
such class of Common Stock commences trading on an exdistribution basis). If
there shall not have been a sale regular way on any such trading day, the mean
of the last reported bid and asked quotations regular way on the specified
exchange on such day shall be deemed to be the only sale price. The quotation
system specified for purposes of this definition shall be the Nasdaq National
Market if the shares of the applicable class of Common Stock are listed thereon
or, if the shares of the applicable class of Common Stock shall not be listed on
such quotation system, then that national securities exchange or quotation
system on which the applicable class of Common Stock is listed having the
largest volume of trading in the applicable class of Common Stock during the
calendar year or portion thereof next preceding such computation. If the shares
of the applicable class of Common Stock shall not be listed on any such exchange
or quotation system on all such 10 trading days, the average of the closing high
bid and low asked prices for the applicable class of Common Stock in the
over-the counter market on each trading day on which such shares are not so
listed as reported by the National Association of Securities Dealers Automatic
Quotation System or, if not so reported, then as reported by the National
Quotation Bureau Incorporated, or if such organization is not in existence, by
an organization providing similar services (as determined by the Board of
Directors of the Company), shall be deemed to be the only sale price on such
trading day. If the shares of the applicable class of Common Stock shall not be
so reported on any of such trading days, then the Market Price of such shares of
Common Stock shall be the fair market value thereof as determined in the
reasonable judgment of the Board of Directors of the Company. For purposes
hereof, "trading day" means a day on which the securities
3
<PAGE>
exchange or quotation system specified for purposes hereof shall be open for
business or, if the shares of the applicable class of Common Stock shall not be
listed on such exchange or quotation system for such period, a day with respect
to which quotations of the character specified for purposes hereof shall be
reported.
"Options" means any rights or options to subscribe for or purchase
Common Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Purchaser" has the meaning ascribed to such term in Section 2(b)(i)(A)
hereof.
"Registered Holder" has the meaning ascribed to such term in the
Preamble hereof.
"Sale Notice" has the meaning ascribed to such term in Section 6
hereof.
"Sale of the Company" means the sale or transfer to an Independent
Third Party, or two or more Independent Third Parties that are Affiliates of
each other, pursuant to which such party or parties acquire (i) capital stock of
the Company possessing the voting power, under normal circumstances, to elect a
majority of the Board of Directors (whether such acquisition is accomplished by
merger, recapitalization, consolidation, reorganization, combination, or sale or
transfer of the capital stock of the Company) (provided, that the issuance of
preferred stock to Greenwich or the issuance of Common Stock upon conversion of
any preferred stock issued to Greenwich shall not constitute a Sale of the
Company for purposes hereof) or (ii) all or substantially all of the assets of
the Company determined on a consolidated basis (including an acquisition of all
or substantially all of the assets of the Company's Subsidiaries or the
acquisition of all of the capital stock of the Company's Subsidiaries (whether
by merger, recapitalization, consolidation, reorganization, combination, or
issuance or transfer of such capital stock)).
"Securities Act" means the Securities Act of 1933, any successor
statute, and the rules and regulations thereunder, as amended.
"Selling Person" has the meaning ascribed to such term in Section
5(b)(ii) hereof.
"Stockholders" has the meaning ascribed to such term in Section 5(a)
hereof.
"Subsidiary" means any entity of which the Company owns securities or
interests having a majority of the ordinary voting power, either directly or
through one or more Subsidiaries.
4
<PAGE>
"Warrant" means collectively this Warrant and any other Warrant(s)
resulting from the transfer, in whole or in part, of this Warrant.
"Warrant Stock" means the Common Stock issued or issuable pursuant to
the Warrants.
Other capitalized terms used in this Warrant but not defined herein
shall have the meanings set forth in the Loan Agreement.
Section 2. Exercise of Warrant.
(a) Exercise Period. The Registered Holder may exercise all or any part
of the purchase rights represented by this Warrant at any time after the first
to occur of (i) the expiration of the Commitment Period, (ii) the entrance by
the Company or any Subsidiary into a Definitive Agreement and (iii) the
commencement of any tender offer, exchange offer, solicitation of proxies or
consents, or the entrance by the Company or any Subsidiary into any definitive
agreement, in each case referred to in clause (ii) or (iii) in connection with
any transaction which, upon consummation, would result in a Change of Control to
the Company and before the 5th anniversary of the Date of Issuance (the
"Exercise Period").
(b) Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(A) a completed Exercise Agreement, as described in Section
2(c) hereof, executed by the Person exercising the purchase
rights represented by this Warrant (the "Purchaser");
(B) this Warrant;
(C) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in
Exhibit II hereto evidencing the assignment of this Warrant to
the Purchaser, in which case the Registered Holder shall have
complied with the provisions set forth in Section 11 hereof; and
(D) either (1) a check payable to the Company in an amount
equal to the product of the Exercise Price multiplied by the
number of shares of Warrant Stock being purchased upon such
exercise (the "Aggregate Exercise Price"), or (2) a written
notice to the Company that the Purchaser is exercising this
Warrant by authorizing the Company to withhold from issuance a
number of shares of Warrant Stock issuable upon such exercise of
the Warrant which when multiplied by the Market Price of the
Common Stock is equal to the Aggregate Exercise Price (and such
withheld shares shall no longer be issuable under this Warrant).
5
<PAGE>
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the
Purchaser within 5 Business Days after the date of the Exercise Time.
(iii) The Warrant Stock issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the
Exercise Time, and the Purchaser shall be deemed for all purposes to
have become the record holder of such Warrant Stock at the Exercise
Time.
(iv) The issuance of certificates for shares of Warrant Stock
upon exercise of this Warrant shall be made without charge to the
Registered Holder or the Purchaser for any issuance tax in respect
thereof or other cost incurred by the Company in connection with such
exercise and the related issuance of shares of Warrant Stock. Each
share of Warrant Stock issuable upon exercise of this Warrant shall,
upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon
the exercise of this Warrant in any manner which interferes with the
timely exercise of this Warrant. The Company shall from time to time
take all such action as may be necessary to assure that the par value
per share of the unissued Warrant Stock acquirable upon exercise of
this Warrant is at all times equal to or less than the Exercise Price
then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or
obtain any governmental approvals prior to or in connection with any
exercise of this Warrant (including, without limitation, making any
filings required to be made by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of this Warrant is to be made in connection with the Sale of the
Company, the exercise of this Warrant may, at the election of the
holder hereof, be conditioned upon the consummation of the Sale of the
Company, in which case such exercise shall not be deemed to be
effective until the consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for
the purpose of issuance upon the exercise of the Warrants, such number
of shares of Common Stock issuable upon the exercise of all
outstanding Warrants. The Company shall take all such actions as may
be necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange or
quotation system upon which shares of Common Stock may be listed
(except for official notice of issuance which shall be immediately
delivered by the Company upon each such issuance). The Company shall
not take any action which would cause the number of authorized but
unissued shares of Common Stock to be less than the number of such
shares required to be reserved hereunder for issuance upon exercise of
the Warrants.
6
<PAGE>
(ix) Upon any exercise of this Warrant, the Company may require
customary investment representations from the Registered Holder and
the Purchaser to assure that the issuance of the Warrant Stock
hereunder shall not require registration or qualification under the
Securities Act or any state securities laws or "blue sky" laws.
(c) Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
except that if the shares of Warrant Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Warrant Stock are to be issued. Such Exercise Agreement shall be dated the
actual date of execution thereof.
(d) Fractional Shares. If a fractional share of Warrant Stock would be
issuable upon exercise of the rights represented by this Warrant, the Company
shall, within 5 Business Days after the date of the Exercise Time, deliver to
the Purchaser a check payable to the Purchaser in lieu of such fractional share
in an amount equal to the difference between the Market Price of such fractional
share as of the date of the Exercise Time and the Exercise Price of such
fractional share.
Section 3. Adjustment of Exercise Price and Number of Shares. In order
to prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 3,
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 3; provided, however, that in no event shall the number of shares of
Warrant Stock issued and issuable upon exercise of the Warrants exceed 2.5% of
the total number of shares of Common Stock Deemed Outstanding.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock.
(i) If and whenever during the Exercise Period the Company issues
or sells, or in accordance with Section 3(b) is deemed to have issued
or sold, any shares of Common Stock for a consideration per share less
than the Market Price of the Common Stock determined as of the date of
such issue or sale, then immediately upon such issue or sale the
Exercise Price shall be reduced to the Exercise Price determined by
multiplying the Exercise Price in effect immediately prior to such
issue or sale by a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale multiplied by the Market Price
of the Common Stock determined as of the date of such issuance of
sale, plus (B) the consideration, if any, received by the Company upon
such issue or sale, and the denominator of which shall be the product
derived by multiplying the Market Price of the Common Stock by the
number of shares of Common Stock Deemed Outstanding immediately after
such issue or sale.
7
<PAGE>
(ii) Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Warrant Stock acquirable upon exercise of this
Warrant shall be adjusted to the number of shares determined by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Warrant Stock acquirable upon
exercise of this Warrant immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
(iii) Notwithstanding the foregoing, there shall be no adjustment
to the Exercise Price or the number of shares of Warrant Stock
obtainable upon exercise of this Warrant with respect to (A) the
granting of stock options to employees, directors, consultants and
vendors of the Company and its Subsidiaries (other than Persons
employed by Greenwich) or the exercise thereof or (B) the exercise of
any Convertible Securities in existence on the date hereof.
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 3(a), the following shall
be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
grants or sells any Options and the price per share for which Common
Stock is issuable upon the exercise of such Options, or upon
conversion or exchange of any Convertible Securities issuable upon
exercise of such Options, is less than the Market Price determined as
of the date of such grant or sale of Options, then the total maximum
number of shares of Common Stock issuable upon the exercise of such
Options, or upon conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise of such
Options, shall be deemed to be outstanding and to have been issued and
sold by the Company at such time for such price per share. For
purposes of this Section 3(b)(i), the "price per share for which
Common Stock is issuable upon exercise of such Options, or upon
conversion or exchange of such Convertible Securities" is determined
by dividing (A) the total amount, if any, received or receivable by
the Company as consideration for the granting or sale of such Options,
plus the minimum aggregate amount of additional consideration payable
to the Company upon the exercise of all such Options, plus in the case
of such Options which are exercisable for the acquisition of
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such Options. No further adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
8
<PAGE>
(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities and the price per
share for which Common Stock is issuable upon conversion or exchange
thereof is less than the Market Price determined as of such time, then
the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such
price per share. For the purposes of this Section 3(b)(ii), the "price
per share for which Common Stock is issuable upon conversion or
exchange thereof" is determined by dividing (A) the total amount
received or receivable by the Company as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment of
the Exercise Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities, and
if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Exercise Price
had been or are to be made pursuant to other provisions of this
Section 3(b), no further adjustment of the Exercise Price shall be
made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time,
the Exercise Price in effect at the time of such change shall be
adjusted immediately to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of shares of
Common Stock shall be correspondingly adjusted.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of
any right to convert or exchange any Convertible Securities without
the exercise of such Option or right, the Exercise Price then in
effect and the number of shares of Warrant Stock acquirable hereunder
shall be adjusted immediately to the Exercise Price and the number of
shares which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or
termination, never been issued. For purposes of this Section 3(b)(iv),
the expiration or termination of any Option or Convertible Security
which was outstanding as of the date of issuance of this Warrant shall
not cause the Exercise Price hereunder to be adjusted unless, and only
to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant.
9
<PAGE>
(v) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor
shall be deemed to be the net amount received by the Company therefor.
In case any Common Stock, Options or Convertible Securities are issued
or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the
fair value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the
date of receipt. In case any Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving
entity the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Options
or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined
jointly by the Company and the Registered Holders of Warrants
representing a majority of the shares of Warrant Stock obtainable upon
exercise of such Warrants. If such parties are unable to reach
agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the
Registered Holders of Warrants representing a majority of the shares
of Warrant Stock obtainable upon exercise of such Warrants. The
determination of such appraiser shall be final and binding on the
Company and the Registered Holders of the Warrants, and the fees and
expenses of such appraiser shall be paid by the Company.
(vi) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options shall be deemed to have been issued without consideration.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by
or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an
issue or sale of Common Stock.
(viii) Record Date. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.
10
<PAGE>
(c) Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Warrant
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Warrant Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
(d) Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
which in each case is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change." Prior to the consummation of any Organic
Change, the Company shall make appropriate provision to insure that each of the
Registered Holders of the Warrants shall thereafter have the right to acquire
and receive, in lieu of or in addition to (as the case may be) the shares of
Warrant Stock immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Warrant Stock immediately theretofore acquirable and receivable upon exercise
of such holder's Warrant had such Organic Change not taken place. After the
consummation of such Organic Change, this Warrant shall be exercisable solely
for, and holders of Warrants shall be entitled to receive upon exercise thereof,
only such shares of stock, securities or assets which holders of Common Stock
were entitled to receive by reason of such Organic Change (and, without
limitation, no other securities of the Company or any successor entity shall
thereafter be issuable upon exercise of any Warrant). In any such case, the
Company shall make appropriate provision (in form and substance reasonably
satisfactory to the Registered Holders of the Warrants representing a majority
of the Warrant Stock obtainable upon exercise of all Warrants then outstanding)
with respect to such holders' rights and interests to insure that the provisions
of this Section 3 and Section 4 hereof shall thereafter be applicable to the
Warrants. The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance reasonably
satisfactory to the Registered Holders of Warrants representing a majority of
the Warrant Stock obtainable upon exercise of all of the Warrants then
outstanding), the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
(e) Adjustment of Initial Exercisable Amount. The Company hereby
represents and warrants that the Initial Exercisable Amount represents 2.5% of
the Common Stock Deemed Outstanding (after giving effect to the issuance of this
Warrant) as of the Date
11
<PAGE>
of Issuance (the "Required Percentage"). To the extent the Initial Exercisable
Amount does not represent the Required Percentage, the Initial Exercisable
Amount shall be adjusted (the "Adjusted Exercisable Amount") so that it
represents the Required Percentage and all adjustments pursuant to this Section
3 shall be made as if the Initial Exercisable Amount had been the Adjusted
Exercisable Amount since the Date of Issuance.
(f) Greenwich Preferred Stock and Greenwich Conversion. Notwithstanding
any other provision contained herein, the provisions of Section 3(b) hereof
shall not apply to any issuance of Greenwich Preferred Stock. A Greenwich
Conversion shall be deemed to be an issuance and sale of shares of Common Stock
for no consideration for purposes of, and the Exercise Price and the number of
shares of Warrant Stock acquireable upon exercise of this Warrant shall be
adjusted pursuant to, Section 3(a) hereof. If shares of Warrant Stock are issued
and outstanding at the time of a Greenwich Conversion, then the Company shall
issue to each holder of Warrant Stock for no consideration the number of shares
of Common Stock equal to the total number of shares of Warrant Stock held by
such holder at the time of the applicable Greenwich Conversion divided by the
Common Stock Deemed Outstanding immediately prior to the applicable Greenwich
Conversion and multiplied by the number of shares of Common Stock issued
pursuant to the applicable Greenwich Conversion. The rights and obligations
contained in the immediately preceding sentence shall be of full force and
effect notwithstanding that this Warrant has been exercised in full and shall
extend to any transferee of Warrant Stock (provided that such transfer be made
in accordance with the terms hereof).
Section 4. Liquidating Dividends. If the Company declares or pays a
dividend upon the Common Stock payable otherwise than in cash out of earnings or
earned surplus (determined in accordance with generally accepted accounting
principles, consistently applied) except for a stock dividend payable in shares
of Common Stock (a "Liquidating Dividend"), then the Company shall give the
Registered Holder of this Warrant 5 Business Days notice before the record date
of such Liquidating Dividend, or if no record is taken, then 5 Business Days
notice before the actual distribution of such Liquidating Dividend.
Section 5. Registration Rights.
(a) If the Company at any time proposes to register any of its Common
Stock under the Securities Act (other than pursuant to a registration on Form
S-8 or any successor form) for sale for the account of holders of Common Stock
(the "Stockholders") or for the account of such Stockholders and its own
account, it will each such time give written notice to the Registered Holder of
this Warrant or the Purchaser(s) of the shares of Warrant Stock of its intention
so to do. Upon the written request of any such Person, given within 10 Business
Days after receipt of any such notice, to register any of its Warrant Stock
issuable or previously issued, the Company will use its commercially reasonable
efforts to cause the Warrant Stock, as to which registration shall have been so
requested, to be included in the securities to be covered by the registration
statement proposed to be filed by the Company; provided, however, that if at any
time after giving written notice of its intention to register the Warrant Stock
and prior to the effective date of the registration statement filed in
connection
12
<PAGE>
with such registration, the Company shall determine, in its sole discretion, for
any reason not to register such Common Stock, the Company may notify the
Registered Holder or Purchaser, who made a request as herein provided, and
thereupon shall be relieved of its obligation to register such Warrant Stock.
Further, if the managing underwriter of such offering shall be of the opinion
that the number of shares of Common Stock to be included in a registration
pursuant to this Section 5(a) shall be limited, then the Company will include in
such registration the Common Stock requested to be included in such registration
that in the opinion of such managing underwriter can be sold, such amount first
to be allocated to the Common Stock to be sold by the Company, and second to be
allocated pro rata among the Stockholders and such requesting Registered Holder
or Purchaser(s) on the basis of the relative number of shares of Common Stock
each such Person had requested to be included in such registration.
(b) The Company will:
(i) furnish to each Selling Person (as defined below) such copies
of each preliminary and final prospectus and such other documents as
such holder may reasonably request to facilitate the public offering
of its Common Stock;
(ii) use its commercially reasonable efforts to register or
qualify the Common Stock covered by said registration statement under
the securities or "blue sky" laws of such jurisdictions within the
United States of America as any holder selling under such registration
statement (the "Selling Person") may reasonably request; provided,
however, that the Company shall not be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to the service of process in
suits other than those arising out of the offer or sale of the
securities in jurisdiction where it is not now so subject;
(iii) furnish to each Selling Person a signed counter-part of an
opinion of counsel for the Company, dated the effective date of the
registration statement, and "comfort letters" signed by the Company's
independent public accountants who have examined and reported on the
Company's financial statements included in the registration statement,
to the extent permitted by the standards of the American Institute of
Certified Public Accountants, each covering substantially the same
matters with respect to the registration statement (and the prospectus
included therein) and (in the case of the accountants' comfort
letters) with respect to events subsequent to the date of the
financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities, to the
extent that the Company is required to deliver or cause the delivery
of such opinion or comfort letters to the underwriters in an
underwritten public offering of securities;
(iv) permit a representative of the Selling Persons to inspect
and copy such corporate documents and records as may reasonably be
requested by such representative;
13
<PAGE>
(v) furnish to each Selling Person a copy of all documents filed
and all correspondence from or to the Securities and Exchange
Commission in connection with any such offering; and
(vi) use its commercially reasonable efforts to obtain all
necessary approvals from the National Association of Securities
Dealers, Inc. and appropriate exchanges or quotation systems.
(c) In the event of any registration under the Securities Act pursuant
to this Section 5 of any Warrant Stock, the Company will indemnify, to the
extent permitted by law, the holders of the Warrant Stock whose shares are
included therein and each Person, if any, who controls any such holder within
the meaning of Section 15 of the Securities Act against all claims, losses,
damages and liabilities (or actions in respect thereof), under the Securities
Act or otherwise, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement
pursuant to which such shares were registered or in any amendment thereto or
prospectus or prospectus supplement or other document relating thereto or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse such holder for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such holder specifically for use therein. The holder(s) of Warrant Stock issued
upon the exercise of this Warrant will, if shares of such Warrant Stock are
included among the securities as to which such registration is being effected,
indemnify, to the extent permitted by law, the Company, each of its directors,
each of its officers who signs such a registration statement, each underwriter
and each Person, if any, who controls the Company or any underwriter within the
meaning of Section 15 of the Securities Act against all claims, losses, damages
and liabilities (or actions in respect thereof), under the Securities Act or
otherwise, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement pursuant
to which such shares were registered or in any amendment thereto or prospectus
or any prospectus supplement or other document relating thereto or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading and will
reimburse the Company and such underwriters, directors, officers or Persons for
any legal or any other expenses reasonably incurred in connection with
investigation or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) was made in such
registration statement, amendment, prospectus, prospectus supplement or other
document relating thereto in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such holder specifically
for use therein.
14
<PAGE>
(d) Any Person entitled to indemnification hereunder will: (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification; and (ii) unless, in such indemnified party's
reasonable judgment, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim which makes such
representation inappropriate, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. The failure to give timely notice will not relieve the indemnifying party
of any obligation unless such delay unduly prejudices such party's ability to
defend such claim. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel (and one local counsel) for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim.
(e) The rights and obligations contained in this Section 5 shall extend
to any transferee of this Warrant and of the Warrant Stock (provided that such
transfer be made in accordance with the terms hereof).
Section 6. Tag Along. At least 10 Business Days prior to any Sale of
the Company, Greenwich shall give the Registered Holder or Purchaser(s) a
written notice (the "Sale Notice") to the Registered Holder or Purchaser(s),
specifying in reasonable detail the identity of such Independent Third Party,
the number of shares of Common Stock to be transferred and the terms and
conditions of such Sale of the Company. The Registered Holder may elect to
participate in such contemplated Sale of the Company by exercising this Warrant
prior to the consummation of such Sale of the Company and receiving in exchange
for the Warrant Stock the same price per share and same terms as Greenwich
receives for its Common Stock or Convertible Securities convertible into Common
Stock as if such Convertible Securities were converted into Common Stock by
giving Greenwich written notice within 10 Business Days after receipt of the
Sale Notice, and the Purchaser may elect to participate in such contemplated
Sale of the Company at the same price per share and same terms as Greenwich
receives (including the execution of the same document as Greenwich executes in
connection with such Sale of the Company) by giving Greenwich written notice
within 10 Business Days after receipt of the Sale Notice. Greenwich shall use
commercially reasonable efforts to include all such requested shares in such
Sale of the Company. If the prospective buyer refuses to buy all shares at the
contemplated price, the number of shares to be sold to such buyer shall be
allocated pro rata between Greenwich and such requesting Registered Holder or
Purchaser on the basis of the relative number of shares of Common Stock held by
each Person who desired to include stock in such Sale of the Company.
15
<PAGE>
Section 7. Transfer and Registration.
(a) Restrictions on Transfer Generally. Transfers of this Warrant (and
the related Warrant Stock) shall be conditional upon satisfaction of the
conditions specified in this Section 7. Such conditions are intended, among
other things, to insure compliance with the provisions of the Securities Act in
respect of the exercise of this Warrant or transfer of this Warrant. The holder
of this Warrant (or the related Warrant Stock) agrees that it will not transfer
this Warrant (or the related Warrant Stock) prior to delivery to the Company of
the opinion of counsel referred to in Section 7(b) hereof.
(b) Opinion of Counsel. So long as this Warrant (or the related Warrant
Stock) bears a legend required by Section 8 hereof, the holder agrees that
subject to Section 7(a), prior to any transfer or attempted transfer it shall
give written notice to the Company of its intention to effect such transfer.
Each such notice shall describe the manner and circumstances of the proposed
transfer in sufficient detail, and, if the Company so requests, shall be
accompanied by an opinion of the holder's counsel reasonably satisfactory in
form and substance to the Company that such proposed transfer may be effected
without registration under the Securities Act or the applicable state securities
or "blue sky" laws. Subject to Section 7(a) hereof, upon delivery of such notice
and opinion to the Company, such holder shall be entitled to consummate such
transfer in accordance with the terms of the notice delivered to the Company.
Each Warrant issued to a transferee in such Transfer shall bear the legend set
forth in Section 8(a) hereof if required by such Section, unless in the opinion
of counsel referred to above such legend is not required or appropriate in order
to insure compliance with the Securities Act.
Section 8. Legend.
(a) Each Warrant issued in exchange, transfer, or replacement of this
Warrant shall (unless otherwise permitted by Section 7(b) hereof or unless such
Warrant shall be subject to an effective registration statement under the
Securities Act or unless such Warrant does not constitute "restricted
securities" pursuant to Rule 144 promulgated under the Securities Act or any
successor rule) be stamped or otherwise imprinted with a legend substantially in
the following form:
THIS WARRANT, AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS, AND MAY NOT
BE TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE AND THE TRANSFEROR PROVIDES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE
TRANSFER OF THIS WARRANT, OR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF, MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS.
16
<PAGE>
(b) Each certificate for Warrant Stock shall (unless such Warrant Stock
shall be subject to an effective registration statement under the Securities Act
or unless such Warrant Stock does not constitute "restricted securities"
pursuant to Rule 144 promulgated under the Securities Act or any successor rule)
be stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS OR "BLUE SKY" LAWS, AND MAY NOT BE TRANSFERRED UNLESS SO
REGISTERED OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND THE TRANSFEROR PROVIDES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE TRANSFER OF THE
SHARES REPRESENTED HEREBY MAY BE EFFECTED WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS. MOREOVER, THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE RESTRICTIONS SET FORTH IN THAT CERTAIN STOCK
PURCHASE WARRANT DATED OCTOBER, 12, 1998, A COPY OF WHICH IS ON FILE
WITH THE COMPANY'S SECRETARY.
(c) The provisions of this Section 8 shall be binding upon all
subsequent holders of this Warrant or certificates for Warrant Stock bearing a
legend set forth in this Section 8.
Section 9. Representations and Warranties of the Holder. The Registered
Holder hereby represents and warrants to the Company as set forth in this
Section 9 and each holder shall, upon its acquisition of this Warrant, be deemed
to represent and warrant to the Company (severally and not jointly) as set forth
in this Section 9. The representations and warranties set forth in this Section
9 shall be deemed to be remade by a holder from time to time to the Company when
a Warrant is exercised by such holder.
(a) This Agreement is made with each holder of this Warrant in reliance
upon such holder's representations to the Company, which by its acceptance
hereof such holder hereby confirms, that this Warrant and the Warrant Stock to
be received will be acquired for investment for its own account, and not with a
view to the sale or distribution of any part thereof, but subject nevertheless
to any requirement of law that the disposition of its property shall at all
times be within its control.
(b) Each holder of this Warrant understands that this Warrant currently
is not registered under the Securities Act on the ground that the issuance
hereof is exempt
17
<PAGE>
pursuant to Section 4(2) thereof, and that the Warrant Stock may not be issued
unless they are either registered under the Securities Act or an exemption from
registration is available and such Holder provides an opinion of counsel
reasonably satisfactory to the Company to the effect that the issuance of the
Warrant Stock may be effected without registration under the Securities Act or
the applicable state securities or "blue sky" laws.
(c) Each holder of this Warrant is an "accredited investor" as defined
in Regulation D under the Securities Act.
Section 10. No Voting Rights; Limitations of Liability. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Warrant Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Warrant Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 11. Warrant Transferable. Subject to the transfer conditions
referred to in the legend endorsed hereon and the provisions of Section 7
hereof, this Warrant and all rights hereunder are transferable, in whole or in
part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit II hereto) at the
principal office of the Company.
Section 12. Notices. Unless otherwise provided herein, any notice,
request, instruction, or other document to be given hereunder by any party to
the other parties shall be in writing and delivered in person or by courier or
by facsimile transmission as follows (or at such address or facsimile number of
which notice shall have been duly given in accordance with this Section 12):
If to the Registered Holder, to:
German American Capital Corporation
31 West 52nd Street
New York, NY 10019
Telephone: 212-469-8925
Facsimile: 212-469-5923
Attention: Vijay Radhakishun
18
<PAGE>
with copies to:
Deutsche Bank A.G.
31 West 52nd Street
New York, NY 10019
Telephone: 212-469-3987
Facsimile: 212-469-5160
Attention: Greg Amoroso
and
Telephone: 212-469-7730
Facsimile: 212-469-5103
Attention: Richard Uhlig
and
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Telephone: 212-504-6172
Facsimile: 212-504-6735
Attention: Robert Link, Esq.
If to the Company, to:
IMC Mortgage Company
5901 East Fowler Avenue
Tampa, FL 33617
Telephone: 813-984-2533
Facsimile: 813-984-2593
Attention: President
with a copy to:
Mitchell W. Legler, Esq.
300 A Wharfside Way
Jacksonville, FL 32207
Telephone: 904-346-3200
Facsimile: 904-346-3299
Section 13. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is a financial institution or other institutional
investor its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at its
expense) execute and deliver in lieu of such
19
<PAGE>
certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section 14. Amendment and Waiver. Except as otherwise provided herein,
the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Warrant
Stock obtainable upon exercise of the Warrants.
Section 15. Descriptive Headings; Governing Law. The descriptive
headings of the several sections of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to the conflicts of law principles thereof.
[SIGNATURE ON THE FOLLOWING PAGE]
20
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal as of the
Date of Issuance hereof.
IMC MORTGAGE COMPANY
By:
-------------------------
Name:
Title:
ATTEST:
By:
-------------------------
Name:
Title:
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
--------------------------- --------------------------
--------------------------- --------------------------
--------------------------- --------------------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-_____), hereby agrees to subscribe for the purchase
of __________ shares of the Warrant Stock covered by such Warrant and makes
payment herewith in full therefor at the price per share provided by such
Warrant.
Signature
------------------------
Address:
------------------------
------------------------
------------------------
I-1
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED,_________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Warrant (Certificate No. W-_____) with respect to the number of shares
of the Warrant Stock covered thereby set forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
---------------- ------- -------------
Dated:
--------------------- ------------------------
Signature
Witness:
- ------------------------
Signature
II-1
October 15, 1998
IMC Mortgage Company
5901 E. Fowler Avenue
Tampa, Florida 33617-2362
Re: Line of Credit
Gentlemen:
BankBoston, N.A. (the "Bank") hereby established in favor of IMC
Mortgage Company (the "Borrower") a revolving line of credit (the "Credit") in
an amount up to $5,000,000.00. The Credit shall be on the following terms and
conditions:
BORROWER: IMC Mortgage Company.
GUARANTORS: All direct and indirect Subsidiaries of the Borrower.
FACILITY: Secured Revolving Credit of up to $5,000,000.
USE OF PROCEEDS: Together with advances under the Greenwich Facility (defined
below), to finance the Borrower's working capital needs and other expenses set
forth in the Base Case Model Cash Flow annexed hereto as Exhibit "A" (the "Cash
Flow") during the Standstill Period (defined below). In no event shall advances
under the Credit be utilized for the payment of any margin calls or other
principal payments to the Other Existing Lenders (as defined in a certain
Forbearance and Intercreditor Agreement among the Bank, the Borrower and
Greenwich dated as of October 12, 1998 (as amended and in effect, the
"Forbearance Agreement")) or to Greenwich (provided that the foregoing shall not
prohibit payment of the commitment fee payable to Greenwich from the initial
advance under the Greenwich Facility or as otherwise contemplated in the Cash
Flow). As used herein, "Greenwich Facility" shall mean the Loan Agreement dated
October 12, 1998 between the Borrower and Greenwich Street Capital Partners II,
L.P., Greenwich Fund, L.P., and GSCP Offshore Fund, L.P. (collectively,
"Greenwich").
ADVANCES UNDER THE CREDIT: The Bank shall advance to the Borrower such amounts
as the Borrower may request under the Credit proportionately with the amounts
then to be advanced under the Greenwich Facility. Specifically, 18.5185% of any
loans requested by the Borrower shall be advanced by the Bank under the Credit
or the New 1996 Advances (defined below) and 81.4815% of any loans requested by
the Borrower shall be advanced by Greenwich under the Greenwich Facility. The
Borrower shall furnish the Bank with one business days' written notice of any
advance requested under the Credit, which notice shall be accompanied by (i) a
certificate from the Borrower that it has made a request for borrowing from
Greenwich with respect to its share of the
<PAGE>
IMC Mortgage Company
October 15, 1998
Page 2
aggregate amounts requested to be advanced, and (ii) a certificate from the
Borrower of the intended use of the proceeds of such advance. The Bank shall
have no obligation to make any advance if (A) Greenwich fails to also advance
its pro rata share of the loan so requested or (B) if any event described in
Section 1(b) or 1(c) of the Forbearance Agreement (or any event which, solely
with the passage of time, the giving of notice or both, would constitute an
event described in those sections) then exists or would arise from such
borrowing, or (C) the Bank does not then hold Cash Collateral (defined below) in
an amount at least equal to 110% of the outstanding principal balance of the
Credit after giving effect to the requested advance, or (D) any default exists
under this Agreement, or (E) immediately prior to making such advance, it has
not received advice, which shall be in writing unless otherwise agreed by the
Bank and Greenwich, that Greenwich is funding its advance under the Greenwich
Facility (it being understood that the Bank shall furnish Greenwich similar
advice as to the funding of the Bank's advance prior to Greenwich's funding of
any advance under the Greenwich Facility).
MATURITY DATE: The date of termination of the Standstill Period (as defined in
the Forbearance Agreement).
REPAYMENTS: The Credit and the New 1996 Advances (defined below) shall be repaid
at the same times as any principal payments are made to Greenwich under the
Greenwich Facility. Repayments under the Credit and the New 1996 Advances and
the Greenwich Facility shall be allocated 18.5185% to the Bank and 81.4815% to
Greenwich. The Borrower agrees to distribute any such repayments made by it in
the manner set forth herein. The Borrower may repay amounts outstanding under
the Credit by directing the Bank to apply a portion of the Cash Collateral to
repayment thereof, so long as after giving effect to such repayment, the Cash
Collateral is not then less than 110% of the principal amount of the advances
outstanding. Subject to the terms of this Agreement, amounts repaid may be
reborrowed.
INTEREST RATE: Ten percent (10%) per annum, payable weekly in arrears. Upon the
occurrence of any event described in Section 1(b) or 1(c) of the Forbearance
Agreement, interest shall accrue at the rate of fourteen percent (14%) per annum
and be payable upon demand.
COLLATERAL: The Credit shall be secured by a first priority pledge of cash to be
held on deposit at the Bank (the "Cash Collateral"). The Credit shall also be
secured by a security interest in all other assets of the Borrower and the
Guarantors, subject to the liens, if any, of the Other Existing Lenders and the
liens in favor of the Bank under the 1996 Agreement and the 1997 Agreement (each
as defined below). As provided in the Forbearance Agreement, the liens of Bank
in all Collateral and Cash Collateral shall be prior to the liens, if any, of
Greenwich therein.
DOCUMENTATION: The Borrower and the Guarantors shall execute such documents as
shall be reasonably requested by the Bank in connection with the Credit.
EXPENSES AND
INDEMNIFICATION: The Borrower will pay the Bank's reasonable legal,
consultant's, and other out-of-pocket expenses incurred in connection with the
negotiation, preparation and execution of the documentation and the
establishment of the Credit.
<PAGE>
IMC Mortgage Company
October 15, 1998
Page 3
GOVERNING LAW
AND JURISDICTION: The Commonwealth of Massachusetts.
In addition to the foregoing, the Bank agrees to make up to the sum of
$2,500,000.00 available to the Borrower under the 1996 Agreement ("New 1996
Advances"), subject to the following terms and conditions:
LAST-IN ADVANCES: No New 1996 Advances shall be made under the 1996 Agreement
unless and until all availability under the Credit has been exhausted.
REPAYMENT OF ADVANCES: New 1996 Advances shall be repaid at the same times and
manner as set forth above under the Credit, provided that, all repayments shall
first be applied to the Credit until paid in full prior to any application of
such repayments to the New 1996 Advances.
INCORPORATION BY REFERENCE: All provisions of the Credit are hereby incorporated
by reference and shall be applicable to the New 1996 Advances, with the
following exceptions:
a. The New 1996 Advances shall not be secured by the Cash Collateral.
The New 1996 advances shall be secured by the same collateral, with the
same priority, as secures the other obligations under the 1996
Agreement and the 1997 Agreement. As provided in the Forbearance
Agreement, the liens of Bank in all Collateral and Cash Collateral
shall be prior to the liens, if any, of Greenwich therein.
b. Any amounts prepaid with respect to the New 1996 Advances may not be
reborrowed.
c. All provisions of the 1996 Agreement and other related Loan
Documents remain in full force and effect.
PROVISIONS APPLICABLE TO ALL ADVANCES:
a. This Agreement shall be binding upon, and enure to the benefit
of, the Borrower and the Bank and their respective successors
and assigns. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or
unenforceable in any respect in any instance shall not affect
the validity, legality, or enforceability of such provision in
any other instance, or the validity, legality, or
enforceability of any other provision of this Agreement.
b. No delay or omission by the Bank in exercising or enforcing
any of its rights and remedies shall operate as, or
constitute, a waiver thereof. No waiver by the Bank of any of
its rights and remedies on any one occasion shall be deemed a
waiver on any subsequent occasion, nor shall it be deemed a
continuing waiver.
c. This Agreement, the Forbearance Agreement, and all other
documents, instruments, and agreements executed in connection
herewith incorporate all discussions and negotiations between
the Borrower and the Bank, either express or implied,
concerning the matters included herein and in such other
instruments, any custom, usage, or course of dealings to the
contrary notwithstanding. No such discussions, negotiations,
custom, usage, or course of dealings shall limit, modify, or
otherwise
<PAGE>
IMC Mortgage Company
October 15, 1998
Page 4
affect the provisions hereof. No modification, amendment, or
waiver of any provision of this Agreement or of any provision
of any other agreement between the Borrower as the Bank shall
be effective unless executed in writing by the party to be
charged with such modification, amendment and waiver.
d. All terms and conditions of the 1996 Agreement, the 1997
Agreement and the other related loan documents remain in full
force and effect. The Bank is not hereby waiving any events of
default thereunder and the Bank reserves the right upon
expiration of the Standstill Period to undertake such action
as a result of such events of default as the Bank may
determine.
e. The Borrower makes the following waiver knowingly,
voluntarily, and intentionally, and understands that the
Bank, in entering into this Agreement, is relying thereon.
THE BORROWER, TO THE EXTENT OTHERWISE ENTITLED THERETO,
HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THE
BORROWER TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY
IN WHICH THE BANK IS OR BECOMES A PARTY (WHETHER SUCH CASE
OR CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR IN
WHICH THE BANK IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY
RELATIONSHIP BETWEEN THE BORROWER AND THE BANK
f. This Agreement is intended to take effect as a sealed instrument.
If the foregoing correctly sets forth your understanding, please
indicate your consent below.
Very truly yours,
BANKBOSTON, N.A.
By: /s/
------------------
AGREED:
IMC MORTGAGE COMPANY
By: /s/
----------------------
Execution Copy
FORBEARANCE AND INTERCREDITOR AGREEMENT
FORBEARANCE AND INTERCREDITOR AGREEMENT, dated as of October 12, 1998,
between IMC MORTGAGE COMPANY, a Florida corporation (the "Company"), GREENWICH
STREET CAPITAL PARTNERS II, L.P., a Delaware limited partnership, GREENWICH
FUND, L.P., a Delaware limited partnership, GSCP OFFSHORE FUND, L.P., a Cayman
Islands exempted limited partnership (each a "Facility Lender" and collectively,
the "Facility Lenders"), and BANKBOSTON, N.A. (the "Existing Lender").
Capitalized terms used in this Agreement without definition have the meanings
given to them in the Loan Agreement (as hereinafter defined) as such terms are
defined in the Loan Agreement on the date hereof.
RECITALS
A. The Company intends to enter into a Loan Agreement, dated as of
October 12, 1998 (as the same may be modified, supplemented or restated from
time to time, the "Loan Agreement"), between the Company, as borrower, and the
Facility Lenders, pursuant to which the Facility Lenders will agree to extend to
the Company Commitments to loan, in the aggregate, $33,000,000 (the "Loans"),
subject to the terms and conditions set forth in the Loan Agreement, which Loans
are evidenced by the Notes and entitled to the benefit of certain guarantees and
security provided under certain of the other Loan Documents.
B. Pursuant to (i) a Bridge Loan and Security Agreement, dated as of
October 10, 1997, as amended from time to time, by and among the Company,
certain of its Subsidiaries and the Existing Lender (the "Bridge Loan
Agreement"), (ii) a Loan and Security Agreement, dated December 31, 1996, as
amended from time to time, by and among the Company, certain of its Subsidiaries
and the Existing Lender (the "1996 Agreement"), (iii) the Loan and Security
Agreement, dated March 18, 1994, as amended from time to time, by and among the
Company, certain of its Subsidiaries and the Existing Lender (the "Warehouse
Agreement"), (iv) the Loan Agreement, to be dated October 15, 1998, by and among
the Company, certain of its Subsidiaries and the Existing Lender (the "New
Facility"), and together with the Bridge Loan Agreement, the 1996 Agreement, the
Warehouse Agreement (the "Existing Loan Agreements"), and other related
agreements in favor of the Existing Lender (collectively with the Existing Loan
Agreements, the "Existing Loan Documents"), the Existing Lender has agreed to
provide financing to the Company from time to time, to enable the Company to
finance certain
<PAGE>
mortgage loans and for other purposes provided therein; and the Company has
granted the Existing Lender a security interest in the New Cash Collateral to
secure its obligations under the New Facility and the Company and certain of its
Subsidiaries have granted a security interest in the Collateral (as hereinafter
defined) in order to secure their respective obligations under the Existing Loan
Documents (the "Existing Obligations").
C. In order to induce the Facility Lenders to enter into the Loan
Agreement, the Facility Lenders, the Company, and the Existing Lender have
agreed to enter into this Agreement (the "Forbearance Agreement"), whereby the
Existing Lender will agree, subject to the terms and conditions of this
Agreement, (i) to refrain from exercising certain rights and remedies it has
under the Existing Loan Agreements for a period of 45 days and, in certain
events, 90 days, (ii) to acknowledge and consent to the creation of a junior
lien on the Collateral, and (iii) to agree that following payment in full of
their obligations under the Existing Loan Agreements, the Existing Lender will
hold the Collateral for the benefit of the Facility Lenders or, if the
Collateral held is subject to any other prior liens of any other creditor for
the benefit of such other creditor.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Existing Lender
and the Facility Lenders agree as follows:
Section 1. Standstill. (a) Each of the Facility Lenders and the
Existing Lender agrees, subject to the terms of this Agreement, that for the
Standstill Period, it shall not:
(i) file or join in the filing of any involuntary petition in
bankruptcy with respect to the Company or its Subsidiaries, or initiate
or participate in any similar proceedings for the benefit of creditors,
including any proceeding for the appointment of a trustee, receiver,
conservator or liquidator of the Company or its Subsidiaries or any
portion of its assets;
(ii) seek to collect or enforce by litigation or otherwise,
any payment obligations under the Existing Loan Documents or the Loan
Documents; provided that nothing in this Section 1 shall prohibit the
Facility Lenders from exercising their Exchange Option or the Existing
Lender from collecting payments in respect of the Standstill Advances;
(iii) make any Margin Calls or other demands for payment in
respect of, or additional collateral to secure the Existing
Obligations; provided, however, that this clause shall not adversely
affect the right of the Existing Lender to take any
2
<PAGE>
actions to preserve, protect or perfect its liens in the Collateral or
the New Facility Cash Collateral or the Existing Lender from
collecting payments in respect of the Standstill Advances;
(iv) declare a default or event of default under, or exercise
or enforce any right or remedy under, or accelerate the maturity of any
Existing Obligation or Loan under, any Existing Loan Document or Loan
Document; or
(v) seek to attach, sequester or otherwise proceed against any
of the Collateral.
(b) The Standstill Period may be terminated by the Existing
Lender or the Facility Lenders by written notice to the Company and each other
Creditor upon the occurrence of any of the following:
(i) a failure by the Company under any Existing Loan
Agreement to make to the Existing Lender any scheduled payment of
interest, which failure continues unremedied for two days, or any
payment of principal due in respect of the Standstill Advances required
to be repaid in accordance with Section 8 hereof;
(ii) any intentional fraud or misrepresentation by the
Company;
(iii) immediately upon a failure of the Facility
Lenders to make an Advance (as defined in the Loan Agreement) under the
Loan Agreement following a request of the Company thereunder;
(iv) immediately in the event any Other Existing
Lender takes any of the actions described in Section 1(a) of its Other
Intercreditor Agreement, whether or not it shall have given notice of
termination of the Standstill Period;
(v) the conditions to the obligations of the Facility
Lenders to fund the Initial Advance shall not have been satisfied or
waived by the Facility Lenders and the Facility Lenders, if requested
by the Company to fund the Initial Advance, shall not have funded the
Initial Advance at or before 12:00 noon, New York City time, on October
16, 1998;
(vi) the condition contained in clause (y) of the
definition of "Standstill Period" to the extension of the Standstill
Period beyond the date which
3
<PAGE>
is 45 days from and after the date hereof shall not have been
satisfied on or before such date;
(vii) a Change of Control or payment of the Take-Out
Premium; or
(viii) an event shall occur and be continuing for a
period of ten Business Days which permits any holder of indebtedness
for borrowed money of the Company or any Subsidiary outstanding (other
than any Creditor) to accelerate the maturity of such indebtedness or
exercise remedies with respect to property of the Company or any
Subsidiary, without such indebtedness being paid or the rights of such
holder to take such action being waived, stayed or subjected to a
standstill or other agreement of such holder to forbear from exercising
remedies, reasonably satisfactory to the Creditors.
(c) The Standstill Period shall terminate automatically without notice
or other action by any Creditor upon the occurrence of any of the following:
(i) the Company or any Subsidiary shall consent to the
appoint ment of or taking possession by a receiver, assignee, custodian,
sequestrator, trustee or liquidator (or other similar official) of itself or of
a substantial part of its property; or the Company or any Subsidiary shall admit
in writing (to any creditor, governmental authority or judicial court or
tribunal) its inability to pay its debts generally as they come due or shall
fail generally to pay its debts as they become due, or shall make a general
assignment for the benefit of its creditors; or the Company or any Subsidiary
shall file a voluntary petition in bankruptcy or a voluntary petition or answer
seeking liquidation, reorganization or other relief with respect to itself or
its debts under the Federal bankruptcy laws, as now or hereafter constituted or
any other applicable Federal or State bankruptcy, insolvency or other similar
law, or shall consent to the entry of an order for relief in an involuntary case
under any such law; or the Company or any Subsidiary shall file an answer
admitting the material allegations of a petition filed against the Company in
any such proceeding, or otherwise seek relief under the provisions of any
existing or future Federal or State bankruptcy, insolvency or other similar law
providing for the reorganization or winding-up of corporations, or providing for
an arrangement, agree ment, composition, extension or adjustment with its
creditors; or the Company or any Subsidiary shall take or publicly announce its
intention to take corporate action in furtherance of any of the foregoing; or
(ii) an order, judgment or decree shall be entered in
any proceeding by any court of competent jurisdiction appointing, without the
consent of the
4
<PAGE>
Company, a receiver, trustee or liquidator of the Company or any Subsidiary or
of any substantial part of its property, or any substantial part of the property
of the Company or any Subsidiary shall be sequestered, and any such order,
judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed or unvacated for a period of 30 days after the date of
entry thereof; or
(iii) an involuntary petition against the Company or any
Subsidiary in a proceeding under the Federal bankruptcy laws or other insolvency
laws, as now or hereafter in effect, shall be filed and shall not be withdrawn
or dismissed within 30 days thereafter, or a decree or order for relief in
respect of the Company or any Subsidiary shall be entered by a court of
competent jurisdiction in an involuntary case under the Federal bankruptcy laws,
as now or hereafter constituted, or, under the provisions of any law providing
for reorganization or winding-up of corporations which may apply to the Company,
any court of competent jurisdiction shall assume jurisdiction, custody or
control of the Company or any Subsidiary or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 30 days.
Section 2. Grant of Security Interest. (a) In order to secure full and
timely payment of the Obligations under the Loan Agreement, and to secure the
performance of all of the other obligations of the Company under the Loan
Documents, the Company and each Subsidiary hereby mortgages, pledges and assigns
and transfers to the Facility Lenders, and grants to the Facility Lenders, a
continuing perfected security interest in, and a lien in the Collateral (other
than the New Facility Cash Collateral). The Facility Lenders agree to release
their lien in respect of any whole loan mortgage, which is sold by the Company
to the Existing Lender for a purchase price not less than the advance rate in
respect of such mortgage and to the extent necessary to permit payments of
interest under the Existing Loan Documents and/or principal required hereunder
with respect to the Standstill Advances.
(b) The Facility Lenders agree for the benefit of the Existing Lender
that during the continuance of the Standstill Period and thereafter until the
earlier of (i) the satisfaction of the Existing Obligations in full, (ii) the
exercise by the Existing Lender of any right to attach, sequester, foreclose or
otherwise exercise remedies with respect to the Collateral, and (iii) 180 days
after the expiration or earlier termination of the Standstill Period, the
Facility Lenders will not seek to attach, sequester, foreclose or otherwise
exercise remedies with respect to the Collateral or the New Facility Cash
Collateral, provided that nothing herein shall restrict the Facility Lenders
from commencing suit on its Notes or for payment of its Loan or enforcement of
any other obligation owing to it under the Loan Documents.
5
<PAGE>
Section 3. Acknowledgment and Priorities. The Existing Lender hereby
acknowledges and consents to the entrance by the Company into the Loan Documents
and the granting of the lien in the Collateral granted pursuant to Section 2;
provided, however, notwithstanding anything to the contrary contained in the
Loan Agreement, the Notes or any of the Loan Documents, any security interest in
or other rights with respect to any Collateral or the New Facility Cash
Collateral granted to secure the Existing Obligations under the Existing Loan
Agreements or otherwise has and shall have priority, to the extent of the
Existing Obligations, over any security interest in such Collateral granted
pursuant to the Loan Agreement or the other Loan Documents irrespective of:
(i) the time, order or method of attachment or perfection of
the security interest created by this Agreement, any Loan Agreement or
any Loan Document;
(ii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect security
interests in any Collateral;
(iii) anything contained in any filing or agreement to which
the Facility Lenders, the Company, the Collateral Agent under the
Security Documents now or hereafter may be a party, and
(iv) the rules for determining priority under the U.C.C. or
other laws governing the relative priorities of secured creditors.
(b) The Existing Lender hereby agrees that, following payment in full
of all the Existing Obligations hereunder, any Collateral, including any books
and records (including, without limitation, computer files, printouts and other
computer materials and records) relating to the Collateral, as well as all
proceeds and products of such Collateral, held by it shall be held for the
benefit of the Facility Lenders, provided that if such Collateral is then
subject to the prior lien of another creditor, the Existing Lender may hold it
for the benefit of such other creditor and the Facility Lenders as their
interests may appear. If the Existing Lender has elected not to hold such
Collateral following payment in full of the Existing Obligations, it shall
promptly forward any Collateral, including any books and records (including,
without limitation, computer files, printouts and other computer materials and
records) relating to the Collateral, as well as all proceeds and products of
such Collateral, to the Collateral Agent, provided that if such Collateral is
then subject to the prior lien of another creditor, the Existing Lender may
forward such Collateral, proceeds and products thereof to such other creditor
or, in the event of a dispute, to such party as a court of competent
jurisdiction may direct.
6
<PAGE>
Section 4. Reserved Rights. Notwithstanding anything in this Agreement
to the contrary, but subject to Section 8 hereof, the Company and the Facility
Lenders agree that this Agreement (except as expressly provided in Section 8)
shall in no manner impair any right of the Existing Lender or the Facility
Lenders under any Existing Loan Agreement or the Loan Agreement, respectively,
to enforce any condition precedent to any obligation it may have thereunder to
make future Advances or Facility Advances to the Company and its Subsidiaries,
nor shall this Agreement limit the right of the Existing Lender to make Margin
Calls in respect of the hedging transactions with respect to U.S. treasury
securities that the Company may have entered into with the Existing Lender
outside of the Existing Loan Documents. All rights and obligations of the
Existing Lender under the Existing Loan Documents to make Advances or not make
Advances and all rights of the Facility Lenders to make Facility Advances or not
make Facility Advances shall not be affected by this Agreement, except as
otherwise provided in Section 8 hereof.
Section 5. Additional Interest. In consideration of the Existing
Lender's entering into this Agreement, the Company shall pay the Existing Lender
additional interest of $1,000,000 payable in immediately available funds to such
account at such bank as the Existing Lender may direct upon the earlier of (i)
expiration of the Standstill Period or (ii) repayment of the Existing
Obligations in full.
Section 6. Conditions Precedent. The obligations of the parties hereto
under this Agreement to carry out their obligations hereunder shall be subject
to the condition that each of the other existing Lenders listed on Schedule I
(the "Other Existing Lenders") shall have entered into intercreditor agreements
substantially the same as this Agreement (the "Other Intercreditor Agreements"),
and if any Other Existing Lender shall have entered into an intercreditor
agreement which by its terms is, in the reasonable judgment of the Existing
Lender, more favorable to such Other Existing Lender, it shall be a condition to
the performance of the Existing Lender hereunder that the Company and the
Facility Lenders amend this Agreement to provide the Existing Lender with the
benefit of such more favorable terms (other than any fee payable pursuant to
Section 5 hereof or of any Other Intercreditor Agreement or any other economic
consideration payable to any Other Existing Lender under any other agreement).
The Company shall furnish the Existing Lender complete and correct copies of
each such Other Intercreditor Agreement.
Section 7. Certain Definitions.
"Advance" means any advance made by the Existing Lender under the
Existing Loan Agreements.
7
<PAGE>
"Change of Control" means the occurrence of any of the following events
(other than as a consequence of the issuance of the Preferred Stock to the
Facility Lenders upon exercise of the Exchange Option):
(i) any "Person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such Person has
the right to acquire within one year), directly or indirectly,
of more than 50% of the Voting Stock of the Company; or
(ii) the Company consummates any sale, lease,
exchange or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a
whole, in any transaction or series of transactions not in the
ordinary course of business; or
(iii) the Company engages in a merger, consolidation
or similar business combination with any third party.
"Collateral" means (i) all of the Company's or any Subsidiary's rights
to payment of money arising out of, related to, or created in connection with
(whether such rights are classified under the applicable Uniform Commercial Code
as general intangibles, accounts, certificated securities, uncertificated
securities or otherwise): (a) all Securitization Receivables and any other
interest of the Company or any Subsidiary, in the Securitization Transactions
(other than cash paid to or for the account of the Company in respect of the
transfer by the Company or any Subsidiary of mortgage loans to the Trustee in
respect of a Securitization Transaction) and similar rights or interests of the
Company or any Subsidiary, (b) all payments to be paid to the Company or any
Subsidiary pursuant to such Securitization Transactions (other than cash paid to
or for the account of the Company in respect of the transfer by the Company of
mortgage loans to the Trustee in respect of a Securitization Transaction) and
(c) all Servicing Fees, Servicing Rights, Servicing Advances and any similar
rights or interests of the Company or any Subsidiary in respect of any of the
foregoing (a) through (c); (ii) all business records, computer tapes, software,
microfiche, or recorded data of any kind or nature, regardless of the medium,
necessary to identify, locate and collect the foregoing; (iii) all cash from
time to time deposited in any deposit account of any of the Company or any
Subsidiary with the Existing Lender, in connection with this Agreement,
including, without limitation, the Loan Collateral Account; (iv) all other
collateral described in Schedule II hereto, including, without limitation, all
accounts, inventory, equipment, general intangibles, investment property
(including the capital stock of the Subsidiaries),
8
<PAGE>
(v) any other right, interest or property of the Company or any Subsidiary now
or hereafter securing the performance by the Company or any Subsidiary of the
Existing Obligations; and (vi) any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
"Common Stock" means the Company's common stock, par value $0.01 per
share.
"Creditor" means any of the Facility Lenders, the Existing Lender or
any Other Existing Lender.
"Facility Advance" means any advance made by the Facility Lenders under
the Loan Agreement.
"Letter of Intent" means a non-binding letter of intent between the
Company and one or more creditworthy Persons having the financial and other
capacity to consummate the transaction contemplated thereby, providing for (i) a
merger, consolidation, share exchange, business combination or other similar
transaction involving the Company in which the outstanding Common Stock is
converted into the right to receive cash or securities of a Qualifying Issuer;
(ii) a sale, conveyance, lease, exchange, transfer or other disposition of all
or substantially all the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or in a series of transactions outside of the
ordinary course of business in return for cash or securities of a Qualifying
Issuer; or (iii) a tender offer or exchange offer for any and all of the
outstanding shares of Common Stock in return for cash or securities of a
Qualifying Issuer, in each case which, upon consummation of the transactions
contemplated thereby, would result in a Change of Control and which letter of
intent contemplates the repayment of all of the Existing Obligations in full.
"Loan Collateral Account" means the demand deposit account established
by the Company with the Existing Lender pursuant to the Existing Loan Agreements
for collection of the cash flow from the Collateral (other than cash flow from
Servicing Rights) and into which the Company has instructed all relevant parties
to deposit all Cash Flow from Collateral (other than cash flow from Servicing
Rights).
"Margin Call" means the right of the Existing Lender or the Facility
Lender to give notice to require the Company to transfer to the Existing Lender
or the Facility Lender cash or additional Collateral.
9
<PAGE>
"New Facility Cash Collateral" means cash in an amount not less than
110% of the amount of any Standstill Advance outstanding under the New Facility
to be deposited with, and pledged to, the Existing Lender to secure the New
Facility.
"Qualifying Issuer" means an issuer the outstanding common stock or
other common equity securities of which is listed on the New York Stock Exchange
or NASDAQ National Market System.
"Securitization Receivables" means all rights of the Company or any
Subsidiary to receive payments (including, without limitation, assets classified
as residual strips, certificates, or interest only strips on the Company's
financial statements) under a Securitization Transaction but excluding rights to
receive payments in respect of Servicing Fees.
"Securitization Transaction" means any transaction, however named,
between the Company or any Subsidiary and any one or more purchasers and/or
investors which provides for the monetization of a discrete pool of mortgage
loans and/or mortgage notes through debt securities or ownership interests
issued by a special purpose vehicle supported or backed by mortgage loans and/or
mortgage notes that have been transferred to the special purpose vehicle by the
Company or any such Subsidiary.
"Servicing Advances" means all remittances advanced by the Company or
any Subsidiary to a Trustee under the Company's or any such Subsidiary's
servicing agreement, and the right to receive a payment of such advances.
"Servicing Fees" means all payments arising out of, related to, or
created in connection with a Person's duties and obligations as a servicer
pursuant to the terms of a Securitization Transaction.
"Servicing Rights" means all of any Company's and any Subsidiary's
rights to payment arising out of, related to, or created in connection with its
role as servicer under any of the Securitization Transactions or in connection
with its performance of a similar role with respect to any other transaction or
arrangement.
"Standstill Advances" has the meaning given in Section 8.
"Standstill Commitment" has the meaning given in Section 8.
"Standstill Period" means a period ending on the first to occur of (i)
the later of (x) 45 days from and after October 12, 1998 and (y) if the Company
shall have,
10
<PAGE>
on or before the 45th day from and after October 12, 1998, entered into a Letter
of Intent and delivered (by facsimile transmission or otherwise in accordance
with Section 16 hereof) to each Creditor a complete and correct copy thereof,
together with an Updated Business Plan showing the projected working capital
requirements of the Company for the period ending on the expected date of
closing of the transaction contemplated by the Letter of Intent and commitments
from creditworthy parties which, in the aggregate, are sufficient to satisfy the
Company's projected working capital requirements during such period, 90 days
from and after October 12, 1998, or (ii) termination of the Standstill Period in
accordance with Section 1(b) or 1(c) hereof.
"Subsidiary" or "Subsidiaries" means those Subsidiaries which are
signatories hereto and any other entities which hereafter become a subsidiary of
the Company (or of any of the Company's Subsidiaries).
"Trustee" means the trustee under the trust established for the benefit
of the purchasers under a Securitization Transaction.
Section 8. Advances under the Loan Agreement and Standstill Advances
under the Existing Loan Agreements; etc. (a) During the Standstill Period, the
Existing Lender will make Advances ("Standstill Advances") from time to time at
the request of the Company up to the sum of Two Million Five Hundred Thousand
Dollars ($2,500,000) as a bridge loan under the 1996 Loan Agreement and Five
Million Dollars ($5,000,000) under the New Facility (collectively, the
"Standstill Commitment"), subject to compliance with the conditions to such
Standstill Advances under the 1996 Loan Agreement and the New Facility,
respectively, which New Facility shall contain terms and conditions mutually
satisfactory to the parties hereto, provided that during the Standstill Period
the absence of a payment default in respect of the Existing Loan Agreements
(other than in respect of required repayments of Standstill Advances as
hereinafter provided) or any default or event of default thereunder in respect
of the indebtedness owing to any Other Existing Lender or the Facility Lenders
shall not be a condition to the Existing Lender's obligation to make such
Standstill Advances. Notwithstanding the foregoing, the Existing Lender shall
not be obligated to make Standstill Advances in the event of the occurrence of
any of the events described in Section 1(b) or 1(c) hereof (without regard to
any grace period provided therein). Standstill Advances under the New Facility
will be made on a revolving basis and Standstill Advances may be repaid and, in
the case of Standstill Advances under the New Facility, reborrowed from time to
time by the Company, provided that the Existing Lender's obligations to make
Standstill Advances will be conditioned on, and the Company agrees that, such
Standstill Advances will be made, repaid and, in the case of Standstill Advances
under the New Facility, reborrowed only pro rata with the Facility
11
<PAGE>
Advances under the Loan Agreement based on the Existing Lender's and Facility
Lenders' respective Standstill Commitment and Commitments. Interest shall accrue
on such Advances at the rate of 10% per annum except that upon the occurrence
and during the continuance of events described in Section 1(b) or (c) herein,
interest shall accrue at 14%.
(b) The Company shall give prior written notice to the Existing Lender
and the Facility Lenders of each request for a Facility Advance under Section
2.10 of the Loan Agreement and each request for a Standstill Advance
contemporaneously with making such request to the Facility Lenders and the
Existing Lender. The Company shall give written notice to the Existing Lender
and the Facility Lenders immediately upon either the funding of a Facility
Advance or a Standstill Advance, as applicable (together with such evidence
thereof as the Existing Lender, in the case of a Facility Advance, or the
Facility Lenders, in the case of a Standstill Advance, may reasonably request)
or the refusal of Facility Lender to fund such Facility Advance or of the
Existing Lender to fund such Standstill Advance, as the case may be.
(c) Except as provided in Section 8(a), the Company shall not be
entitled to receive, and the Existing Lender shall have no obligation to make
any loans and advances under any of the Existing Loan Documents.
(d) The New Facility shall be secured by the Collateral and the New
Facility Cash Collateral.
(e) The Company shall give each Creditor prompt written notice of any
event which upon notice or lapse of time or both would constitute an event of
default in respect of any of its outstanding Debt.
(f) Notwithstanding the provisions of the Existing Loan Agreement,
during the Standstill Period, the Company shall pay interest on the principal
amount outstanding under the Existing Loan Agreements to the Existing Lender
weekly on Friday of each week or, if Friday is not a Business Day, on the next
Business Day.
(g) During the Standstill Period (without limiting any obligations
under the Existing Loan Documents), the Company shall deliver to the Existing
Lender at the same time it delivers to the Facility Lenders, the Disclosure
Letter, the Three-Month Business Plan, any Updated Business Plan and all other
financial statements and reports required to be provided to the Facility Lenders
pursuant to Section 5.5 of the Loan Agreement. The Company shall cooperate with
the Existing Lender and its financial consultants and provide the Existing
Lender and such consultants with such information
12
<PAGE>
and the opportunity to consult with its executive officers and accountants as
the Existing Lender may reasonably request.
Section 9. Acknowledgment of Obligations. The Company and each
Subsidiary acknowledges that, as of the date hereof, the principal balance of
the obligations under the Existing Loan Agreements are as follows: (a) the
Bridge Loan Agreement: $45,000,000; (b) the 1996 Agreement: $42,500,000; and (c)
the Warehouse Agreement: $0. The Company and each Subsidiary acknowledges that
its obligations under the Existing Loan Documents and the liens on the
Collateral securing the Existing Obligations remain in full force and effect,
that the Existing Obligations under the 1996 Agreement and the Bridge Loan
Agreement matured on October 10, 1998 and have not been paid, and that the
Company and each such Subsidiary have no defenses, counterclaims or offsets to
its obligations under the Existing Loan Documents and that such liens are valid,
perfected and enforceable. The Company and each Subsidiary hereby waives the
application of the automatic stay in any bankruptcy proceeding in respect of the
Existing Obligations and the obligations under the Loan Documents and the
Company, each Subsidiary and each Creditor consents to the modification of the
stay to permit the exercise by the Existing Lender or the Facility Lenders of
their rights in respect of the Collateral, provided that the foregoing shall not
be construed to modify the provisions of Sections 2(b) and 3 hereof. This
document shall not constitute a waiver, amendment or modification of the
Existing Loan Documents, the Existing Obligations, any defaults by the Company
under the Existing Loan Documents or the Loan Documents and shall not be
construed as a waiver or consent to any future action on the part of the Company
or any Subsidiary that would require a waiver or consent of the Existing Lender
or the Facility Lenders. The Company and each Subsidiary hereby releases the
Existing Lender, its officers, directors and participants from any and all
claims in respect of the Existing Loan Documents and in respect of actions taken
or not taken on or prior to the date of execution and delivery hereof.
Section 10. Amendments, Etc. No amendment, modification, supplement,
termination, consent or waiver of this Agreement or any term or provision of
this Agreement shall be effective and binding unless in writing and signed by
the Existing Lender, the Other Existing Lenders and the Facility Lenders. Any
such waiver will be effective only in the specific instance and for the specific
purpose for which it is given.
Section 11. Severability. Any provision of this Agreement which is
illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such illegality, invalidity,
prohibition or unenforceability without invalidating or impairing the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
13
<PAGE>
Section 12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
Section 13. GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND THE
RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS WITHOUT GIVING EFFECT OT CONFLICTS OF LAW PRINCIPLES THEREOF. EACH
OF THE PARTIES HERETO SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF, AND AGREES
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT MAY BE
TRIED AND LITIGATED IN, FEDERAL OR, IN THE ABSENCE OF FEDERAL SUBJECT MATTER
JURISDICTION, STATE COURTS LOCATED IN THE COUNTY OF SUFFOLK, COMMONWEALTH OF
MASSACHUSETTS UNLESS SUCH ACTIONS OR PROCEEDINGS ARE REQUIRED TO BE BROUGHT IN
ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. EACH OF THE PARTIES WAIVES, TO THE FULLEST EXTENT PERMISSIBLE UNDER
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT BY WAY OF MOTION, AS A DEFENSE
OR OTHERWISE THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE IN ANY
PROCEEDING BROUGHT IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE.
SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST
SUCH PARTY MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 16.
Section 14. Expenses. In addition to the foregoing, the Company will
also reimburse the Existing Lender and the Facility Lenders promptly for their
reasonable out-of-pocket costs and expenses incurred by such Persons or their
respective employees, agents or advisors in connection with the performance of
their respective obligations and duties hereunder and, to the extent the
Existing Loan Documents so provide, under the Existing Loan Documents, and for
any reasonable fees and expenses of legal or other professional advisors to the
Existing Lender and the Facility Lenders engaged in connection with the
preparation and negotiation of this Agreement.
14
<PAGE>
Section 15. Agreement May Constitute Financing Statement. The
Company and the Existing Lender consents to the filing of this Agreement or a
photocopy thereof as a financing statement under the UCC as in effect in any
jurisdiction in which the Facility Lenders may determine such filing to be
necessary or desirable.
Section 16. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given to such party by
facsimile transmission or by hand delivery at the following address or facsimile
number, or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other party and each other Creditor.
(a) if to the Lender, Greenwich Street Capital Partners II, L.P., c/o Greenwich
Street Capital Partners, Inc., 388 Greenwich Street, New York, New York 10013,
Attn.: Sanjay Patel; Tel: (212) 826-1149, Fax: (212) 816-0166; with a copy to
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, Attn.: Steven
Ostner, Tel: (212) 909-6000, Fax: (212) 909-6836; (b) if to the Company, IMC
Mortgage Company, 5901 E. Fowler Avenue, Tampa, Florida 33617, Attn.: President,
Tel: (813) 984-2533, Fax: (813) 984-2593; with a copy to Mitchell W. Legler,
300A Wharfside Way, Jacksonville, Florida 32207; and (c) and if to the Existing
Lender: BankBoston, N.A., 100 Federal Street, Boston, Massachusetts 02110
Attn.:Ms. Corrinne Barrett, Tel: (617) 434-0946, Fax: (617) 434-4775; with a
copy to Riemer & Braunstein, Attn.: David S. Berman, Esq., Tel: (617) 523-9000;
Fax: (617) 723-6831; and if to any of the Other Existing Lenders, to such person
and at the address and facsimile number provided in the corresponding section of
the Other Intercreditor Agreement for notice to such Other Existing Lender. Each
such notice, request or other communication shall be effective when sent by
facsimile transmission to the facsimile number or when delivered by hand to the
address specified in this Sec tion 16 or such section of such Other
Intercreditor Agreement, provided that a facsimile transmission shall be deemed
to have been sent only so long as the transmitting machine has provided an
electronic confirmation of such transmission.
Section 17. Binding Effect; Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and permitted assigns and to each of the other Creditors,
each of which is an intended third-party beneficiary hereof. Neither the
Facility Lenders nor the Existing Lender may sell, assign, participate or
otherwise transfer or dispose of all or any portion of the Loan or the Existing
Obligations to any Person unless such Person shall have assumed and agreed to be
bound by the terms hereof by written instrument in form reasonably satisfactory
to the Company and each other Creditor.
Section 18. Counterparts; Section Headings. This Agreement may be
executed in any number of counterparts, each of which is an original, but all of
which
15
<PAGE>
together constitute but one instrument. Except as otherwise indicated,
references herein to any "Section" means a "Section" of this Agreement, and the
section headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof.
16
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IMC MORTGAGE COMPANY
By /s/
-------------------------
Name:
Title:
BANKBOSTON, N.A.
By /s/
-------------------------
Name:
Title:
17
<PAGE>
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
-------------------------
Name:
Title:
18
<PAGE>
This Forbearance and Intercreditor Agreement
is hereby acknowledged and agreed to by:
IMC CORPORATION OF AMERICA
By /s/
----------------------
Name:
Title:
IMC CREDIT CARD, INC.
By /s/
----------------------
Name:
Title:
IMC MORTGAGE COMPANY CANADA, LTD.
By /s/
----------------------
Name:
Title:
19
<PAGE>
AMERICAN HOME EQUITY CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT LIMITED PARTNERSHIP
By /s/
----------------------
Name:
Title:
ACG FINANCIAL SERVICES (IMC), INC.
By /s/
----------------------
Name:
Title:
AMERICAN MORTGAGE REDUCTION, INC.
By /s/
----------------------
Name:
Title:
20
<PAGE>
CENTRAL MONEY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
COREWEST BANC
By /s/
----------------------
Name:
Title:
EQUITY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
IMCC INTERNATIONAL, INC.
By /s/
----------------------
Name:
Title:
MORTGAGE AMERICA (IMC), INC.
By /s/
----------------------
Name:
Title:
21
<PAGE>
NATIONAL LENDING CENTER, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING CENTER TILT, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING GROUP, INC.
By /s/
----------------------
Name:
Title:
RESIDENTIAL MORTGAGE CORPORATION (IMC), INC.
By /s/
----------------------
Name:
Title:
22
<PAGE>
Schedule I to the Forbearance
and Intercreditor Agreement
Other Existing Lenders
Master Repurchase Agreement, dated as of March 29, 1996, as amended from time to
time, by and among Bear Stearns Home Equity Trust and the Company and certain of
the Company's Subsidiaries.
Master Repurchase Agreement, dated as of May 1, 1997 Between Bear, Stearns
International Limited and Industry Mortgage Company, L.P.
Institutional Account Agreement, dated October 23, 1996, between and among
Industry Mortgage Company, L.P. and Bear Stearns.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and German American
Capital Corporation, as lender.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and Aspen Funding
Corp., as lender
Loan and Security Agreement, dated as of February 28, 1997, between IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Industry Mortgage Company, L.P., Corewest
Banc, IMC Investment Corp., and IMC Investment Limited Partnership, as
borrowers, and Paine Webber Real Estate Securities, Inc., as lender.
<PAGE>
Schedule II to the Forbearance and
Intercreditor Agreement
Additional Collateral
[see attached description]
2
Execution Copy
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of October 12, 1998, between IMC
MORTGAGE COMPANY, a Florida corporation (the "Company"), GREENWICH STREET
CAPITAL PARTNERS II, L.P., a Delaware limited partnership, GREENWICH FUND, L.P.,
a Delaware limited partnership, GSCP OFFSHORE FUND, L.P., a Cayman Islands
exempted limited partnership (each a "Facility Lender" and collectively, the
"Facility Lenders"), and BEAR STEARNS HOME EQUITY TRUST ("BSTrust"), BEAR,
STEARNS INTERNATIONAL LIMITED ("BSIL"), and any of their affiliates which are or
become party to the Institutional Account Agreement (as hereinafter defined).
BSTrust, BSIL and any such affiliates are referred to herein collectively as
"Bear Stearns". Capitalized terms used in this Agreement without definition have
the meanings given to them in the Loan Agreement (as hereinafter defined) as
such terms are defined in the Loan Agreement on the date hereof.
RECITALS
A. The Company intends to enter into a Loan Agreement, dated as of
October 12, 1998 (as the same may be modified, supplemented or restated from
time to time, the "Loan Agreement"), between the Company, as borrower, and the
Facility Lenders, pursuant to which the Facility Lenders will agree to extend to
the Company Commitments to loan, in the aggregate, $33,000,000 (the "Loans"),
subject to the terms and conditions set forth in the Loan Agreement, which Loans
are evidenced by the Notes and entitled to the benefit of certain guarantees and
security-y provided under certain of the other Loan Documents.
B. Pursuant to (a) a Master Repurchase Agreement, dated as of March 29,
1996, as amended from time to time, by and among BSTrust, the Company and
certain of the Company's Subsidiaries (the "Whole Loan Repurchase Agreement"),
and other related agreements with BSTrust (collectively with the Whole Loan
Repurchase Agreement, the "Whole Loan Repurchase Documents"); (b) the Master
Repurchase Agreement, dated as of May 1, 1997, as amended from time to time
(together with annexes, confirmations and transactions thereunder, collectively
the "Residuals Repurchase Agreement") between BSIL and Industry Mortgage
Company, L.P., the predecessor to the Company ("IMCLP"); and (c) the
Institutional Account Agreement, dated October 23, 1996, as amended from to
time, between and among IMCLP and Bear Stearns (the "Institutional Account
Agreement"; and together with the Whole Loan Repurchase Agreement, the Whole
Loan Repurchase Documents and the Residuals Repurchase Agreement, collectively,
the "Existing Agreements"), BSTrust and BSIL
<PAGE>
have entered into transactions with the Company from time to time, pursuant to
which the Company has sold mortgage loans to BSTrust and securities to BSIL, in
each case subject to an obligation to repurchase such assets and for other
purposes provided therein; and the Company and certain of its Subsidiaries have
granted to BSTrust and BSIL a security interest in the Collateral (as
hereinafter defined) in order to secure the respective obligations of the
Company and the Subsidiaries under the Existing Agreements (the "Existing
Obligations").
C. In order to induce the Facility Lenders to enter into the Loan
Agreement, the Facility Lenders, the Company, and Bear Stearns have agreed to
enter into this Agreement (the "Intercreditor Agreement"), whereby Bear Stearns
will agree, subject to the terms and conditions of this Agreement, (i) to
refrain from exercising certain rights and remedies it has under the Existing
Agreements for a period of 45 days and, in certain events, 90 days, (ii) to
acknowledge and consent to the creation of a junior lien on the Collateral, and
(iii) to agree that following payment in full of the obligations under the
Existing Agreements, Bear Stearns will hold the Collateral for the benefit of
the Facility Lenders or, if the Collateral held is subject to any other prior
liens of any other creditor, for the benefit of such other creditor.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, Bear Stearns and the
Facility Lenders agree as follows:
Section 1. Standstill. (a) Each of the Facility Lenders and Bear
Stearns agrees, subject to the terms of this Agreement, that for the Standstill
Period, it shall not:
(i) file or join in the filing of any involuntary petition in
bankruptcy with respect to the Company or its Subsidiaries, or initiate
or participate in any similar proceedings for the benefit of creditors,
including any proceeding for the appointment of a trustee, receiver,
conservator or liquidator of the Company or its Subsidiaries or any
portion of its assets;
(ii) seek to collect or enforce by litigation or otherwise,
any repurchase or payment obligations under the Existing Agreements or
the Loan Documents; provided that nothing in this Section 1 shall
prohibit the Facility Lenders from exercising their Exchange Option;
(iii) make any Margin Calls or other demands for payment in
respect of, or additional collateral to secure, the Existing
Obligations; provided, however,
2
<PAGE>
that this clause shall not adversely affect the right of Bear Stearns
to take any actions to preserve, protect or perfect its liens in the
Collateral;
(iv) declare a default or event of default under, or exercise
or enforce any right or remedy under, or accelerate the maturity of any
Existing Obligation or Loan under, any Existing Agreement or Loan
Document; or
(v) seek to attach, sequester or otherwise proceed against any
of the Collateral.
(b) The Standstill Period may be terminated by Bear Stearns or
the Facility Lenders by written notice to the Company and each other Creditor
upon the occurrence of any of the following:
(i) a failure by the Company under the Existing
Agreements to make to Bear Stearns any scheduled payment of interest,
which failure continues unremedied for two days, or any payment of
principal due in respect of payoffs or prepayments of mortgage loans
comprising any portion of the Collateral;
(ii) any intentional fraud or misrepresentation by
the Company;
(iii) immediately upon a failure of the Facility
Lenders to make an Advance (as defined in the Loan Agreement) under the
Loan Agreement following a request of the Company thereunder;
(iv) immediately in the event any Other Existing
Lender takes any of the actions described in Section 1(a) of its Other
Intercreditor Agreement, whether or not it shall have given notice of
termination of the Standstill Period;
(v) the Company shall not have entered into the Loan
Agreement in substantially similar form to the October 13 draft
thereof, at or before 12:00 noon, New York City time, on October 14,
1998;
(vi) the conditions to the obligations of the
Facility Lenders to fund the Initial Advance shall not have been
satisfied or waived by the Facility Lenders and the Facility Lenders,
if requested by the Company to fund the Initial Advance, shall not have
funded the Initial Advance at or before 12:00 noon, New York City time,
on October 14, 1998;
3
<PAGE>
(vii) the Company shall not have delivered (by
facsimile transmission or otherwise in accordance with Section 16
hereof) to each Creditor a forbearance agreement of BankBoston at or
before 12:00 noon, New York City time, on October 14, 1998, which is
satisfactory in substance and form to each Creditor.
(viii) the condition contained in clause (y) of the
definition of "Standstill Period" to the extension of the Standstill
Period beyond the date which is 45 days from and after the date hereof
shall not have been satisfied on or before such date;
(ix) a Change of Control or payment of the Take-Out
Premium and
(x) an event shall occur and be continuing for a
period of ten Business Days which permits any holder of indebtedness
for borrowed money of the Company or any Subsidiary outstanding (other
than any Creditor) to accelerate the maturity of such indebtedness or
exercise remedies with respect to property of the Company or any
Subsidiary, without such indebtedness being paid or the rights of such
holder to take such action being waived, stayed or subjected to a
standstill or other agreement of such holder to forbear from exercising
remedies, reasonably satisfactory to the Creditors;
(c) The Standstill Period shall terminate automatically
without notice or other action by any Creditor upon the occurrence of any of the
following:
(i) the Company or any Subsidiary shall consent to
the appoint ment of or taking possession by a receiver, assignee,
custodian, sequestrator, trustee or liquidator (or other similar
official) of itself or of a substantial part of its property; or the
Company or any Subsidiary shall admit in writing (to any creditor,
governmental authority or judicial court or tribunal) its inability to
pay its debts generally as they come due or shall fail generally to pay
its debts as they become due, or shall make a general assignment for
the benefit of its creditors; or the Company or any Subsidiary shall
file a voluntary petition in bankruptcy or a voluntary petition or
answer seeking liquidation, reorganization or other relief with respect
to itself or its debts under the Federal bankruptcy laws, as now or
hereafter constituted or any other applicable Federal or State
bankruptcy, insolvency or other similar law, or shall consent to the
entry of an order for relief in an involuntary case under any such law;
or the Company or any Subsidiary shall file an answer admitting the
material allegations of a petition filed against
4
<PAGE>
the Company in any such proceeding, or otherwise seek relief under the
provisions of any existing or future Federal or State bankruptcy,
insolvency or other similar law providing for the reorganization or
winding-up of corporations, or providing for an arrangement, agreement,
composition, extension or adjustment with its creditors; or the Company
or any Subsidiary shall take or publicly announce its intention to take
corporate action in furtherance of any of the foregoing; or
(ii) an order, judgment or decree shall be entered in
any proceeding by any court of competent jurisdiction appointing,
without the consent of the Company, a receiver, trustee or liquidator
of the Company or any Subsidiary or of any substantial part of its
property, or any substantial part of the property of the Company or any
Subsidiary shall be sequestered, and any such order, judgment or decree
of appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 30 days after the date of entry
thereof; or
(iii) an involuntary petition against the Company or
any Subsidiary in a proceeding under the Federal bankruptcy laws or
other insolvency laws, as now or hereafter in effect, shall be filed
and shall not be withdrawn or dismissed within 30 days thereafter, or a
decree or order for relief in respect of the Company or any Subsidiary
shall be entered by a court of competent jurisdiction in an involuntary
case under the Federal bankruptcy laws, as now or hereafter
constituted, or, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Company, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Company or any Subsidiary or of any
substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated
for a period of 30 days.
Section 2. Grant of Security Interest. (a) In order to secure full and
timely payment of the Obligations under the Loan Agreement, and to secure the
performance of all of the other obligations of the Company under the Loan
Documents, the Company and each Subsidiary hereby mortgages, pledges and assigns
and transfers to the Facility Lenders, and grants to the Facility Lenders, a
continuing perfected security interest in, and a lien in the Collateral. The
Facility Lenders agree to release their lien in respect of any whole loan
mortgage, which is sold by the Company to either Existing Lender for a purchase
price not less than the advance rate in respect of such mortgage.
5
<PAGE>
(b) The Facility Lenders agree for the benefit of Bear Stearns
that during the continuance of the Standstill Period and thereafter until the
earlier of (i) the satisfaction of the Existing Obligations in full, (ii) the
exercise by Bear Stearns of any right to attach, sequester, foreclose or
otherwise exercise remedies with respect to the Collateral, and (iii) 180 days
after the expiration or earlier termination of the Standstill Period, the
Facility Lenders will not seek to attach, sequester, foreclose or otherwise
exercise remedies with respect to the Collateral, provided that nothing herein
shall restrict the Facility Lenders from commencing suit on its Notes or for
payment of its Loan or enforcement of any other obligation owing to it under the
Loan Documents.
Section 3. Acknowledgment and Priorities. Bear Stearns hereby
acknowledges and consents to the entrance by the Company into the Loan Documents
and the granting of the lien in the Collateral granted pursuant to Section 2;
provided, however, notwithstanding anything to the contrary contained in the
Loan Agreement, the Notes or any of the Loan Documents, any security interest in
or other rights with respect to any Collateral granted to secure the Existing
Obligations under the Existing Agreements or otherwise has and shall have
priority, to the extent of the Existing Obligations, over any security interest
in such Collateral granted pursuant to the Loan Agreement or the other Loan
Documents irrespective of:
(i) the time, order or method of attachment or perfection of
the security interest created by this Agreement, any Loan Agreement or
any Loan Document;
(ii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect security
interests in any Collateral;
(iii) anything contained in any filing or agreement to which
the Facility Lenders, the Company, the Collateral Agent under the
Security Documents now or hereafter may be a party, and
(iv) the rules for determining priority under the U.C.C. or
other laws governing the relative priorities of secured creditors.
(b) Bear Stearns hereby agrees that, following payment in full
of all the Existing Obligations hereunder, any Collateral, including any books
and records (including, without limitation, computer files, printouts and other
computer materials and records) relating to the Collateral, as well as all
proceeds and products of such Collateral, held by it shall be held for the
benefit of the Facility Lenders, provided that if such Collateral is then
subject to the prior lien of another creditor, Bear Stearns may hold it for the
benefit of such other creditor and the Facility Lenders as their interests may
appear. If
6
<PAGE>
Bear Stearns has elected not to hold such Collateral following payment in full
of the Existing Obligations, it shall promptly forward any Collateral, including
any books and records (including, without limitation, computer files, printouts
and other computer materials and records) relating to the Collateral, as well as
all proceeds and products of such Collateral, to the Collateral Agent, provided
that if such Collateral is then subject to the prior lien of another creditor,
Bear Stearns may forward such Collateral, proceeds and products thereof to such
other creditor or, in the event of a dispute, to such party as a court of
competent jurisdiction may direct.
Section 4. Reserved Rights. Notwithstanding anything in this Agreement
to the contrary, the Company and the Facility Lenders agree that this Agreement
shall in no manner impair any right of Bear Stearns under the Existing
Agreements to enforce any condition precedent to any obligation it may have
thereunder to engage in future Repurchase Transactions with the Company and its
Subsidiaries, nor shall this Agreement limit the right of Bear Stearns to make
Margin Calls in respect of the hedging transactions with respect to U.S.
treasury securities that the Company may have entered into with Bear Stearns
outside of the Existing Agreements. All rights and obligations of Bear Stearns
under the Existing Agreements to enter into Repurchase Transactions or not shall
not be affected by this Agreement.
Section 5. Fee. Upon consummation of a Change in Control, the Company
shall pay Bear Stearns a fee of $1,000,000 in the aggregate payable in
immediately available funds to such account at such bank as Bear Stearns may
direct.
Section 6. Conditions Precedent. The obligations of the parties hereto
under this Agreement to carry out their obligations hereunder shall be subject
to the condition that each of the other Existing Lenders listed on Schedule I
(the "Other Existing Lenders") shall have entered into intercreditor agreements
substantially the same as this Agreement (the "Other Intercreditor Agreements"),
and if any Other Existing Lender shall have entered into an intercreditor
agreement which by its terms is, in the reasonable judgment of Bear Stearns,
more favorable to such Other Existing Lender, it shall be a condition to the
performance of Bear Stearns hereunder that the Company and the Facility Lenders
amend this Agreement to provide Bear Stearns with the benefit of such more
favorable terms (other than any fee payable pursuant to Section 5 hereof or of
any Other Intercreditor Agreement or any other economic consideration payable to
any Other Existing Lender under any other agreement).
Section 7. Certain Definitions.
7
<PAGE>
"Change of Control" means the occurrence of any of the following events
(other than as a consequence of the issuance of the Preferred Stock to the
Facility Lenders upon exercise of the Exchange Option):
(i) any "Person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such Person has
the right to acquire within one year), directly or indirectly,
of more than 50% of the Voting Stock of the Company; or
(ii) the Company consummates any sale, lease,
exchange or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a
whole, in any transaction or series of transactions not in the
ordinary course of business; or
(iii) the Company engages in a merger, consolidation
or similar business combination with any third party.
"Collateral" means (i) any rights of the Company in any Eligible Asset
sold by the Company or its Subsidiaries and purchased by Bear Stearns in
connection with either a Repurchase Transaction or in response to a Margin Call;
(ii) the contractual right to receive payments, including the right to payments
of principal and interest and the right to enforce such payments, arising from
or under any of the Eligible Assets; (iii) the Company's contractual right to
service Purchased HELs (as defined in the Whole Loan Repurchase Agreement); (iv)
any other right, interest or property of the Company or any Subsidiary now or
hereafter securing the performance by the Company or any Subsidiary of the
Existing Obligations and (v) any and all proceeds, payments, income, profits and
products thereof, and all files and records relating thereto.
"Common Stock" means the Company's common stock, par value $0.01 per
share.
"Creditor" means any of the Facility Lenders, Bear Stearns or any Other
Existing Lender.
"Eligible Asset" means any Purchased HELs under the Whole Loan
Repurchase Agreement, Purchased MBS under the Residuals Repurchase Agreement, or
asset held on repurchase under the Existing Agreements and any assets
transferred by the Company or its Subsidiaries to Bear Stearns pursuant to a
Margin Call.
8
<PAGE>
"Letter of Intent" means a non-binding letter of intent between the
Company and one or more creditworthy Persons having the financial and other
capacity to consummate the transaction contemplated thereby, providing for (i) a
merger, consolidation, share exchange, business combination or other similar
transaction involving the Company in which the outstanding Common Stock is
converted into the right to receive cash or securities of a Qualifying Issuer;
(ii) a sale, conveyance, lease, exchange, transfer or other disposition of all
or substantially all the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or in a series of transactions outside of the
ordinary course of business in return for cash or securities of a Qualifying
Issuer; or (iii) a tender offer or exchange offer for any and all of the
outstanding shares of Common Stock in return for cash or securities of a
Qualifying Issuer, in each case which, upon consummation of the transactions
contemplated thereby, would result in a Change of Control and which letter of
intent contemplates the repayment of all of the Existing Obligations in full.
"Margin Call" means the right of Bear Stearns to give notice to require
the Company to transfer to Bear Stearns cash or additional collateral.
"Mortgage Loan" means any first-lien or second-lien residential
mortgage loan originated and serviced by the Company or its Subsidiaries in
accordance with the Seller's Guide.
"Purchased Loan" means any Mortgage Loan or Wet Mortgage Loan that is
sold by the Company or its Subsidiaries and purchased by Bear Stearns in
connection with a Repurchase Transaction.
"Purchased MBS" means any residual, subordinated or interest strip
class of asset-backed security (i) issued in connection with a securitization in
which Bear Stearns or its designee acted as lead or co-lead underwriter or
placement agent and (ii) sold by the Company or any Subsidiary and purchased by
Bear Stearns in connection with a Repurchase Transaction.
"Qualifying Issuer" means an issuer the outstanding common stock or
other common equity securities of which is listed on the New York Stock Exchange
or NASDAQ National Market System.
"Repurchase Transaction" means any transaction made by Bear Stearns
under the Existing Agreements.
9
<PAGE>
"Seller's Guide" means the "IMC Mortgage Company Client Operations
Manual", together with the underwriting guidelines of the Company and its
Subsidiaries, a true and correct copy of which was previously provided to Bear
Stearns by the Company and its Subsidiaries.
"Standstill Period" means a period ending on the first to occur of (i)
the later of (x) 45 days from and after the date hereof and (y) if the Company
shall have, on or before the 45th day from and after the date hereof, entered
into a Letter of Intent and delivered (by facsimile transmission or otherwise in
accordance with Section 16 hereof) to each Creditor a complete and correct copy
thereof, together with an Updated Business Plan showing the projected working
capital requirements of the Company for the period ending on the expected date
of closing of the transaction contemplated by the Letter of Intent and
commitments from creditworthy parties which, in the aggregate, are sufficient to
satisfy the Company's projected working capital requirements during such period,
90 days from and after the date hereof, or (ii) termination of the Standstill
Period in accordance with Section 1(b) hereof.
Section 8. Notice of Advances under the Loan Agreement, etc. (a) The
Company shall give prior written notice to Bear Stearns of each request for an
Additional Advance under Section 2.10 of the Loan Agreement contemporaneously
with making such request to the Facility Lenders. The Company shall give written
notice to Bear Stearns immediately upon either the funding of an Additional
Advance (together with such evidence thereof as Bear Stearns may reasonably
request) or the refusal of Facility Lender to fund such Additional Advance, as
the case may be.
(b) The Company shall give each Creditor prompt written notice of any
event which upon notice or lapse of time or both would constitute an event of
default in respect of any of its outstanding Debt.
(c) Notwithstanding the provisions of the Existing Agreements, during
the Standstill Period, the Company shall pay interest on the principal amount
outstanding under the Existing Agreements to Bear Stearns weekly on Friday of
each week or, if Friday is not a Business Day, on the next Business Day.
Section 9. Acknowledgment of Obligations. The Company acknowledges that
its obligations under the Existing Agreements and Bear Stearns' rights under the
Existing Obligations remain in full force and effect, and that the Company has
no defenses, counterclaims or offsets to its obligations under the Existing
Agreements and that to the extent such rights include liens on the Collateral,
such liens are valid, perfected and enforceable. The Company hereby waives the
application of the automatic stay in
10
<PAGE>
any bankruptcy proceeding in respect of the Existing Obligations and the
obligations under the Loan Documents and the Company and each Creditor consents
to the modification of the stay to permit the exercise by Bear Stearns or the
Facility Lenders of their rights in respect of the Collateral, provided that the
foregoing shall not be construed to modify the provisions of Sections 2(b) and 3
hereof. This document shall not constitute a waiver, amendment or modification
of the Existing Agreements, the Existing Obligations or the Loan Documents
except as expressly referred to herein and shall not be construed as a waiver or
consent to any future action on the part of the Company that would require a
waiver or consent of Bear Stearns or the Facility Lenders, respectively, except
to the extent expressly provided herein.
Section 10. Amendments, Etc. No amendment, modification, supplement,
termination, consent or waiver of this Agreement or any term or provision of
this Agreement shall be effective and binding unless in writing and signed by
Bear Stearns, the Other Existing Lenders and the Facility Lenders. Any such
waiver will be effective only in the specific instance and for the specific
purpose for which it is given.
Section 11. Severability. Any provision of this Agreement which is
illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such illegality, invalidity,
prohibition or unenforceability without invalidating or impairing the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
Section 13. GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND THE
RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. EACH OF THE PARTIES HERETO
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF, AND AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT MAY BE TRIED AND LITIGATED
IN, FEDERAL OR, IN THE ABSENCE OF FEDERAL SUBJECT MATTER
11
<PAGE>
JURISDICTION, STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
UNLESS SUCH ACTIONS OR PROCEEDINGS ARE REQUIRED TO BE BROUGHT IN ANOTHER COURT
TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF
THE PARTIES WAIVES, TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE IN ANY PROCEEDING BROUGHT
IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE. SERVICE OF PROCESS,
SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST SUCH PARTY, MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS
INDICATED IN SECTION 16.
Section 14. Expenses. In addition to the foregoing, the Company will
also reimburse Bear Stearns and the Facility Lenders promptly for their
reasonable out-of-pocket costs and expenses incurred by such Persons or their
respective employees, agents or advisors in connection with the performance of
their respective obligations and duties hereunder and to the extent the Existing
Agreements so provide, under the Existing Agreements, and for any reasonable
fees and expenses of legal or other professional advisors to Bear Stearns and
the Facility Lenders engaged in connection with the preparation and negotiation
of this Agreement.
Section 15. Agreement May Constitute Financing Statement. The Company
and Bear Stearns consents to the filing of this Agreement or a photocopy thereof
as a financing statement under the UCC as in effect in any jurisdiction in which
the Facility Lenders may determine such filing to be necessary or desirable.
Section 16. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given to such party by
facsimile transmission or by hand delivery at the following address or facsimile
number, or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other party and each other creditor,
(a) if to the Lender, Greenwich Street Capital Partners II, L.P., c/o Greenwich
Street Capital Partners, Inc., 388 Greenwich Street, New York, New York 10013,
Attn.: Sanjay Patel; Tel: (212) 816-1149, Fax: (212) 816-0166; with a copy to
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, attention:
Steven Ostner, tel: (212) 909-6000, fax: (212) 909-6836; (b) if to the Company,
IMC Mortgage Company, 5901 E. Fowler Avenue, Tampa, Florida 33617, Attn.:
President, Tel: 813-984-2533, Fax: (813) 984-2593; with a copy to Mitchell W.
Legler, 300A Wharfside Way, Jacksonville, Florida 3220; and (c) and if to Bear,
12
<PAGE>
Stearns: Bear Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167,
Attn: Philip M. Cedar, Tel.: (212) 272-6768, Fax: (212) 272-4933 and Paul
Friedman, Tel.: (212) 272-3516, Fax: (212) 272-6550, with a copy to; Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attn. Barry J.
Dichter, Esq., Tel.: (212) 504-6000, Fax: (212) 504-6666; and if to any of the
Other Existing Lenders, to such person and at the address and facsimile number
provided in the corresponding section of the Other Intercreditor Agreement for
notice to such Other Existing Lender. Each such notice, request or other
communication shall be effective when sent by facsimile transmission to the
facsimile number or when delivered by hand to the address specified in this
Section 16 or such section of such Other Intercreditor Agreement, provided that
a facsimile transmission shall be deemed to have been sent only so long as the
transmitting machine has provided an electronic confirmation of such
transmission.
Section 17. Binding Effect; Third Party Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns and to each of the other Creditors, each of
which is an intended third-party beneficiary hereof. Neither the Facility
Lenders nor Bear Stearns may sell, assign, participate or otherwise transfer or
dispose of all or any portion of the Loan or the Existing Obligations to any
Person unless such Person shall have assumed and agreed to be bound by the terms
hereof by written instrument in form reasonably satisfactory to the Company and
each other Creditor.
Section 18. Interpretation; Transaction Intended as Purchases and
Sales. The parties specifically acknowledge and recognize that certain language
and use of words in this Agreement may erroneously suggest that transactions
under the Existing Agreements are intended by them to be characterized as loans
or other secured financing arrangements and not as absolute purchases and sales
of mortgage loans and hereby reaffirm that all such transactions are intended to
constitute absolute purchases and sales.
Section 19. Counterparts; Section Headings. This Agreement may be
executed in any number of counterparts, each of which is an original, but all of
which together constitute but one instrument. Except as otherwise indicated,
references herein to any "Section" means a "Section" of this Agreement, and the
section headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IMC MORTGAGE COMPANY
By /s/
----------------------
Name:
Title:
BEAR STEARNS HOME EQUITY TRUST
By /s/
----------------------
Name:
Title:
BEAR STEARNS INTERNATIONAL
LIMITED
By /s/
----------------------
Name:
Title:
14
<PAGE>
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
----------------------
Name:
Title:
15
<PAGE>
This Intercreditor Agreement is
hereby acknowledged and agreed to by:
IMC CORPORATION OF AMERICA
By /s/
----------------------
Name:
Title:
IMC CREDIT CARD, INC.
By /s/
----------------------
Name:
Title:
IMC MORTGAGE COMPANY CANADA, LTD.
By /s/
----------------------
Name:
Title:
16
<PAGE>
AMERICAN HOME EQUITY CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT LIMITED PARTNERSHIP
By /s/
----------------------
Name:
Title:
ACG FINANCIAL SERVICES (IMC), INC.
By /s/
----------------------
Name:
Title:
AMERICAN MORTGAGE REDUCTION, INC.
By /s/
----------------------
Name:
Title:
17
<PAGE>
CENTRAL MONEY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
COREWEST BANC
By /s/
----------------------
Name:
Title:
EQUITY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
IMCC INTERNATIONAL, INC.
By /s/
----------------------
Name:
Title:
MORTGAGE AMERICA (IMC), INC.
By /s/
----------------------
Name:
Title:
18
<PAGE>
NATIONAL LENDING CENTER, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING CENTER TILT, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING GROUP, INC.
By /s/
----------------------
Name:
Title:
RESIDENTIAL MORTGAGE CORPORATION (IMC), INC.
By /s/
----------------------
Name:
Title:
19
<PAGE>
Schedule I
to the
Intercreditor Agreement
Other Existing Lenders
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and German American
Capital Corporation, as lender.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and Aspen Funding
Corp.
Loan and Security Agreement, dated as of February 28, 1997, between IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Industry Mortgage Company, L.P., Corewest
Banc, IMC Investment Corp., and IMC Investment Limited Partnership, as
borrowers, and Paine Webber Real Estate Securities, Inc., as lender.
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of October 12, 1998, between IMC
MORTGAGE COMPANY, a Florida corporation (the "Company"), GREENWICH STREET
CAPITAL PARTNERS II, L.P., a Delaware limited partnership, GREENWICH FUND, L.P.,
a Delaware limited partnership, GSCP OFFSHORE FUND, L.P., a Cayman Islands
exempted limited partnership (each a "Facility Lender" and collectively, the
"Facility Lenders"), and PAINE WEBBER REAL ESTATE SECURITIES, INC., a Delaware
corporation (the "Existing Lender"). Capitalized terms used in this Agreement
without definition have the meanings given to them in the Loan Agreement (as
hereinafter defined) as such terms are defined in the Loan Agreement on the date
hereof.
RECITALS
A. The Company intends to enter into a Loan Agreement, dated as of
October 12, 1998 (as the same may be modified, supplemented or restated from
time to time, the "Loan Agreement"), between the Company, as borrower, and the
Facility Lenders, pursuant to which the Facility Lenders will agree to extend to
the Company Commitments to loan, in the aggregate, $33,000,000 (the "Loans"),
subject to the terms and conditions set forth in the Loan Agreement, which Loans
are evidenced by the Notes and entitled to the benefit of certain guarantees and
security provided under certain of the other Loan Documents.
B. Pursuant to a Loan and Security Agreement, dated as of February 28,
1998, as amended from time to time, by and among the Company and certain of its
Subsidiaries, (the "Existing Loan Agreement"), and other related agreements in
favor of the Existing Lender (collectively with the Existing Loan Agreement, the
"Existing Loan Documents"), the Existing Lender has agreed to provide financing
to the Company from time to time, to enable the Company to finance certain
mortgage loans and for other purposes provided therein; and the Company and
certain of its Subsidiaries have granted a security interest in the Collateral
(as hereinafter defined) in order to secure their respective obligations under
the Existing Loan Documents (the "Existing Obligations").
C. In order to induce the Facility Lenders to enter into the Loan
Agreement, the Facility Lenders, the Company, and the Existing Lender have
agreed to enter into this Agreement (the "Intercreditor Agreement"), whereby the
Existing Lender
<PAGE>
will agree, subject to the terms and conditions of this Agreement, (i) to
refrain from exercising certain rights and remedies it has under the Existing
Loan Agreement for a period of 45 days and, in certain events, 90 days, (ii) to
acknowledge and consent to the creation of a junior lien on the Collateral, and
(iii) to agree that following payment in full of their obligations under the
Existing Loan Agreement, the Existing Lender will hold the Collateral for the
benefit of the Facility Lenders or, if the Collateral held is subject to any
other prior liens of any other creditor for the benefit of such other creditor.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Existing Lenders
and the Facility Lenders agree as follows:
Section 1. Standstill. (a) Each of the Facility Lenders and the
Existing Lender agrees, subject to the terms of this Agreement, that for the
Standstill Period, it shall not:
(i) file or join in the filing of any involuntary petition in
bankruptcy with respect to the Company or its Subsidiaries, or initiate
or participate in any similar proceedings for the benefit of creditors,
including any proceeding for the appointment of a trustee, receiver,
conservator or liquidator of the Company or its Subsidiaries or any
portion of its assets;
(ii) seek to collect or enforce by litigation or otherwise,
any payment obligations under the Existing Loan Documents or the Loan
Documents; provided that nothing in this Section 1 shall prohibit the
Facility Lenders from exercising their Exchange Option;
(iii) make any Margin Calls or other demands for payment in
respect of, or additional collateral to secure the Existing
Obligations; provided, however, that this clause shall not adversely
affect the right of the Existing Lender to take any actions to
preserve, protect or perfect its liens in the Collateral;
(iv) declare a default or event of default under, or exercise
or enforce any right or remedy under, or accelerate the maturity of any
Existing Obligation or Loan under, any Existing Loan Document or Loan
Document; or
(v) seek to attach, sequester or otherwise proceed against any
of the Collateral.
2
<PAGE>
(b) The Standstill Period may be terminated by the Existing
Lender or the Facility Lenders by written notice to the Company and each other
Creditor upon the occurrence of any of the following:
(i) a failure by the Company under the Existing Loan
Agreement to make to the Existing Lender any scheduled payment of
interest, which failure continues unremedied for two days, or any
payment of principal due in respect of payoffs or prepayments of
mortgage loans comprising any portion of the Collateral];
(ii) any intentional fraud or misrepresentation by
the Company;
(iii) immediately upon a failure of the Facility
Lenders to make an Advance (as defined in the Loan Agreement) under the
Loan Agreement following a request of the Company thereunder;
(iv) immediately in the event any Other Existing
Lender takes any of the actions described in Section 1(a) of its Other
Intercreditor Agreement, whether or not it shall have given notice of
termination of the Standstill Period;
(v) the Company shall not have entered into the Loan
Agreement in substantially similar form to the October 13, 1998 draft
thereof at or before 12:00 noon, New York City Time, on October 14,
1998;
(vi) the conditions to the obligations of the
Facility Lenders to fund the Initial Advance shall not have been
satisfied or waived by the Facility Lenders and the Facility Lenders,
if requested by the Company to fund the Initial Advance, shall not have
funded the Initial Advance at or before 12:00 noon, New York City time,
on October 14, 1998;
(vii) the Company shall not have delivered (by
facsimile transmission or otherwise in accordance with Section 16
hereof) to each Creditor a forbearance agreement of BankBoston at or
before 12:00 noon, New York City time, on October 14, 1998, which is
satisfactory in substance and form to each Creditor;
(viii) the condition contained in clause (y) of the
definition of "Standstill Period" to the extension of the Standstill
Period beyond the date which is 45 days from and after the date hereof
shall not have been satisfied on or before such date;
3
<PAGE>
(ix) a Change of Control or payment of the Take-out
Premium; and
(x) an event shall occur and be continuing for a
period of ten Business Days which permits any holder of indebtedness
for borrowed money of the Company or any Subsidiary outstanding (other
than any Creditor) to accelerate the maturity of such indebtedness or
exercise remedies with respect to property of the Company or any
Subsidiary, without such indebtedness being paid or the rights of such
holder to take such action being waived, stayed or subjected to a
standstill or other agreement of such holder to forbear from exercising
remedies, reasonably satisfactory to the Creditors.
(c) The Standstill Period shall terminate automatically
without notice or other action by any Creditor upon the occurrence of any of the
following:
(i) the Company or any Subsidiary shall consent to the appoint
ment of or taking possession by a receiver, assignee, custodian, sequestrator,
trustee or liquidator (or other similar official) of itself or of a substantial
part of its property; or the Company or any Subsidiary shall admit in writing
(to any creditor, governmental authority or judicial court or tribunal) its
inability to pay its debts generally as they come due or shall fail generally to
pay its debts as they become due, or shall make a general assignment for the
benefit of its creditors; or the Company or any Subsidiary shall file a
voluntary petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization or other relief with respect to itself or its debts
under the Federal bankruptcy laws, as now or hereafter constituted or any other
applicable Federal or State bankruptcy, insolvency or other similar law, or
shall consent to the entry of an order for relief in an involuntary case under
any such law; or the Company or any Subsidiary shall file an answer admitting
the material allegations of a petition filed against the Company in any such
proceeding, or otherwise seek relief under the provisions of any existing or
future Federal or State bankruptcy, insolvency or other similar law providing
for the reorganization or winding-up of corporations, or providing for an
arrangement, agree ment, composition, extension or adjustment with its
creditors; or the Company or any Subsidiary shall take or publicly announce its
intention to take corporate action in furtherance of any of the foregoing; or
(ii) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Company, a receiver, trustee or liquidator of the Company or any
Subsidiary or of any substantial part of its property, or any substantial part
of the property of the Company or any Subsidiary shall be sequestered, and any
such order, judgment or decree of
4
<PAGE>
appointment or sequestration shall remain in force undismissed, unstayed or
unvacated for a period of 30 days after the date of entry thereof; or
(iii) an involuntary petition against the Company or any
Subsidiary in a proceeding under the Federal bankruptcy laws or other insolvency
laws, as now or hereafter in effect, shall be filed and shall not be withdrawn
or dismissed within 30 days thereafter, or a decree or order for relief in
respect of the Company or any Subsidiary shall be entered by a court of
competent jurisdiction in an involuntary case under the Federal bankruptcy laws,
as now or hereafter constituted, or, under the provisions of any law providing
for reorganization or winding-up of corporations which may apply to the Company,
any court of competent jurisdiction shall assume jurisdiction, custody or
control of the Company or any Subsidiary or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 30 days.
Section 2. Grant of Security Interest. (a) In order to secure full and
timely payment of the Obligations under the Loan Agreement, and to secure the
performance of all of the other obligations of the Company under the Loan
Documents, the Company and each Subsidiary hereby mortgages, pledges and assigns
and transfers to the Facility Lenders, and grants to the Facility Lenders, a
continuing perfected security interest in, and a lien in the Collateral. The
Facility Lenders agree to release their lien in respect of any whole loan
mortgage, which is sold by the Company to either Existing Lender for a purchase
price not less than the advance rate in respect of such mortgage.
(b) The Facility Lenders agree for the benefit of the Existing Lender
that during the continuance of the Standstill Period and thereafter until the
earlier of (i) the satisfaction of the Existing Obligations in full, (ii) the
exercise by the Existing Lender of any right to attach, sequester, foreclose or
otherwise exercise remedies with respect to the Collateral, and (iii) 180 days
after the expiration or earlier termination of the Standstill Period, the
Facility Lenders will not seek to attach, sequester, foreclose or otherwise
exercise remedies with respect to the Collateral, provided that nothing herein
shall restrict the Facility Lenders from commencing suit on its Notes or for
payment of its Loan or enforcement of any other obligation owing to it under the
Loan Documents.
Section 3. Acknowledgment and Priorities. The Existing Lender hereby
acknowledges and consents to the entrance by the Company into the Loan Documents
and the granting of the lien in the Collateral granted pursuant to Section 2;
provided, however, notwithstanding anything to the contrary contained in the
Loan Agreement, the Notes or any of the Loan Documents, any security interest in
or other rights with respect to any Collateral granted to secure the Existing
Obligations under the Existing Loan
5
<PAGE>
Agreement or otherwise has and shall have priority, to the extent of the
Existing Obligations, over any security interest in such Collateral granted
pursuant to the Loan Agreement or the other Loan Documents irrespective of:
(i) the time, order or method of attachment or perfection of
the security interest created by this Agreement, any Loan Agreement or
any Loan Document;
(ii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect security
interests in any Collateral;
(iii) anything contained in any filing or agreement to which
the Facility Lenders, the Company, the Collateral Agent under the
Security Documents now or hereafter may be a party, and
(iv) the rules for determining priority under the U.C.C. or
other laws governing the relative priorities of secured creditors.
(b) The Existing Lender hereby agrees that, following payment in full
of all the Existing Obligations hereunder, any Collateral, including any books
and records (including, without limitation, computer files, printouts and other
computer materials and records) relating to the Collateral, as well as all
proceeds and products of such Collateral, held by it shall be held for the
benefit of the Facility Lenders, provided that if such Collateral is then
subject to the prior lien of another creditor, the Existing Lender may hold it
for the benefit of such other creditor and the Facility Lenders as their
interests may appear. If the Existing Lender has elected not to hold such
Collateral following payment in full of the Existing Obligations, it shall
promptly forward any Collateral, including any books and records (including,
without limitation, computer files, printouts and other computer materials and
records) relating to the Collateral, as well as all proceeds and products of
such Collateral, to the Collateral Agent, provided that if such Collateral is
then subject to the prior lien of another creditor, the Existing Lender may
forward such Collateral, proceeds and products thereof to such other creditor
or, in the event of a dispute, to such party as a court of competent
jurisdiction may direct.
Section 4. Reserved Rights. Notwithstanding anything in this Agreement
to the contrary, the Company and the Facility Lenders agree that this Agreement
shall in no manner impair any right of the Existing Lender under the Existing
Loan Agreement to enforce any condition precedent to any obligation it may have
thereunder to make future Advances to the Company and its Subsidiaries, nor
shall this Agreement limit the right of the Existing Lender to make Margin Calls
in respect of the hedging transactions with respect to U.S. treasury securities
that the Company may have entered into with the
6
<PAGE>
Existing Lender outside of the Existing Loan Documents. All rights and
obligations of the Existing Lender under the Existing Loan Documents to make
Advances or not make Advances shall not be affected by this Agreement.
Section 5. Fee. Upon consummation of a Change in Control, the Company
shall pay the Existing Lender a fee of $1,000,000 payable in immediately
available funds to such account at such bank as the Existing Lender may direct.
Section 6. Conditions Precedent. The obligations of the parties hereto
under this Agreement to carry out their obligations hereunder shall be subject
to the conditions that each of the other existing Lenders listed on Schedule I
(the "Other Existing Lenders") shall have entered into intercreditor agreements
substantially the same as this Agreement (the "Other Intercreditor Agreements"),
and if any Other Existing Lender shall have entered into an intercreditor
agreement which by its terms is, in the reasonable judgment of the Existing
Lender, more favorable to such Other Existing Lender, it shall be a condition to
the performance of the Existing Lender hereunder that the Company and the
Facility Lenders amend this Agreement to provide the Existing Lender with the
benefit of such more favorable terms (other than any fee payable pursuant to
Section 5 hereof or of any Other Intercreditor Agreement or any other economic
consideration payable to any Other Existing Lender under any other agreement).
The Company shall furnish the Existing Lender complete and correct copies of
each such Other Intercreditor Agreement.
Section 7. Certain Definitions.
"Advance" means any advance made by the Existing Lender under the
Existing Loan Agreement.
"Advance Rate" means the percentage rate to be applied to the Market
Value of any Eligible Asset, at which rate Lender may make an Advance to the
Borrower or its Subsidiaries.
"Change of Control" means the occurrence of any of the following events
(other than as a consequence of the issuance of the Preferred Stock to the
Facility Lenders upon exercise of the Exchange Option):
(i) any "Person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such
7
<PAGE>
Person has the right to acquire within one year), directly or
indirectly, of more than 50% of the Voting Stock of the
Company; or
(ii) the Company consummates any sale, lease,
exchange or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a
whole, in any transaction or series of transactions not in the
ordinary course of business; or
(iii) the Company engages in a merger, consolidation
or similar business combination with any third party.
"Collateral" means (i) any Eligible Asset pledged by the Borrower or
its Subsidiaries and accepted by the Existing Lender in connection with either
an Advance or in response to a Margin Call; (ii) the contractual right to
receive payments, including the right to payments of principal and interest and
the right to enforce such payments, arising from or under any of the Eligible
Assets; (iii) the contractual right to service each Pledged Loan; (iv) any other
right, interest or property of the Company or any Subsidiary now or hereafter
securing the performance by the Company or any Subsidiary of the Existing
Obligations; and (v) any and all proceeds, payments, income, profits and
products thereof, and all files and records relating thereto.
"Collateral Value" means, with respect to any Eligible Asset pledged by
Borrower and its Subsidiaries to the Existing Lender, the product of the related
Market Value and the related Advance Rate.
"Common Stock" means the Company's common stock, par value $0.01 per
share.
"Creditor" means any of the Facility Lenders, the Existing Lender or
any Other Existing Lender.
"Eligible Asset" means any Pledged MBS or Pledged Loan.
"Letter of Intent" means a non-binding letter of intent between the
Company and one or more creditworthy Persons having the financial and other
capacity to consummate the transaction contemplated thereby, providing for (i) a
merger, consolidation, share exchange, business combination or other similar
transaction involving the Company in which the outstanding Common Stock is
converted into the right to receive cash or securities of a Qualifying Issuer;
(ii) a sale, conveyance, lease, exchange, transfer or other disposition of all
or substantially all the assets of the Borrower
8
<PAGE>
and its Subsidiaries, taken as a whole, in a single transaction or in a series
of transactions outside of the ordinary course of business in return for cash or
securities of a Qualifying Issuer; or (iii) a tender offer or exchange offer for
any and all of the outstanding shares of Common Stock in return for cash or
securities of a Qualifying Issuer, in each case which, upon consummation of the
transactions contemplated thereby, would result in a Change of Control and which
letter of intent contemplates the repayment of all of the Existing Obligations
in full.
"Margin Call" means the right of the Existing Lender to give notice to
require the Company to transfer to the Existing Lender cash or additional
Collateral.
"Market Value" means the value of any Eligible Asset as determined by
the Existing Lender in its sole discretion.
"Mortgage Loan" means any first-lien or second-lien residential
mortgage loan originated and serviced by the Company or its Subsidiaries in
accordance with the Seller's Guide.
"Pledged Loan" means any Mortgage Loan or Wet Mortgage Loan that is
pledged by the Company or its Subsidiaries and accepted by the Existing Lender
in connection with an Advance.
"Pledged MBS" means any residual, subordinated or interest strip class
of asset-backed security (i) issued in connection with a securitization in which
Existing Lender or its designee acted as lead or co-lead underwriter or
placement agent and (ii) pledged by Company and its Subsidiaries and accepted by
Lender in connection with an Advance.
"Qualifying Issuer" means an issuer the outstanding common stock or
other common equity securities of which is listed on the New York Stock Exchange
or NASDAQ National Market System.
"Seller's Guide" means the "IMC Mortgage Company Client Operations
Manual", together with the underwriting guidelines of the Company and its
Subsidiaries, a true and correct copy of which was previously provided to the
Existing Lender by the Company and its Subsidiaries.
"Standstill Period" means a period ending on the first to occur of (i)
the later of (x) 45 days from and after the date hereof and (y) if the Company
shall have, on or before the 45th day from and after the date hereof, entered
into a Letter of Intent and
9
<PAGE>
delivered (by facsimile transmission or otherwise in accordance with Section 16
hereof) to each Creditor a complete and correct copy thereof, together with an
Updated Business Plan showing the projected working capital requirements of the
Company for the period ending on the expected date of closing of the transaction
contemplated by the Letter of Intent and commitments from creditworthy parties
which, in the aggregate, are sufficient to satisfy the Company's projected
working capital requirements during such period, 90 days from and after the date
hereof, or (ii) termination of the Standstill Period in accordance with Section
1(b) or 1(c) hereof.
"Wet Mortgage Loan" means any residential mortgage loan originated by
the Company and its Subsidiaries in accordance with the Seller's Guide, with
respect to which all of the related documents required to be delivered in
connection with any Advance have not been deposited with the custodian on or
prior to the related Advance Date.
Section 8. Notice of Advances under the Loan Agreement; etc. (a) The
Company shall give prior written notice to the Existing Lender of each request
for an Additional Advance under Section 2.10 of the Loan Agreement
contemporaneously with making such request to the Facility Lenders. The Company
shall give written notice to the Existing Lender immediately upon either the
funding of an Additional Advance (together with such evidence thereof as the
Existing Lender may reasonably request) or the refusal of Facility Lender to
fund such Additional Advance, as the case may be.
(b) The Company shall give each Creditor prompt written notice of any
event which upon notice or lapse of time or both would constitute an event of
default in respect of any of its outstanding Debt.
(c) Notwithstanding the provisions of the Existing Loan Agreement,
during the Standstill Period, the Company shall pay interest on the principal
amount outstanding under the Existing Loan Agreement to the Existing Lender
weekly on Friday of each week or, if Friday is not a Business Day, on the next
Business Day.
Section 9. Acknowledgment of Obligations. The Company acknowledges that
its obligations under the Existing Loan Documents and the lien on the Collateral
securing the Existing Obligations remain in full force and effect, and that the
Company has no defenses, counterclaims or offsets to its obligations under the
Existing Loan Documents and that such liens are valid, perfected and
enforceable. The Company hereby waives the application of the automatic stay in
any bankruptcy proceeding in respect of the Existing Obligations and the
obligations under the Loan Documents and the Company and each Creditor consents
to the modification of the stay to permit the
10
<PAGE>
exercise by the Existing Lender or the Facility Lenders of their rights in
respect of the Collateral, provided that the foregoing shall not be construed to
modify the provisions of Sections 2(b) and 3 hereof. This document shall not
constitute a waiver, amendment or modification of the Existing Loan Documents,
the Existing Obligations or the Loan Documents except as expressly referred to
herein and shall not be construed as a waiver or consent to any future action on
the part of the Company that would require a waiver or consent of the Existing
Lender or the Facility Lenders, respectively, except to the extent expressly
provided herein.
Section 10. Amendments, Etc. No amendment, modification, supplement,
termination, consent or waiver of this Agreement or any term or provision of
this Agreement shall be effective and binding unless in writing and signed by
the Existing Lender, the Other Existing Lenders and the Facility Lenders. Any
such waiver will be effective only in the specific instance and for the specific
purpose for which it is given.
Section 11. Severability. Any provision of this Agreement which is
illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such illegality, invalidity,
prohibition or unenforceability without invalidating or impairing the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
Section 13. GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND THE
RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT OT CONFLICTS OF LAW PRINCIPLES THEREOF. EACH OF THE PARTIES HERETO
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF, AND AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT MAY BE TRIED AND LITI
GATED IN, FEDERAL OR, IN THE ABSENCE OF FEDERAL SUBJECT MATTER JURISDICTION,
STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK UNLESS SUCH
ACTIONS OR PROCEEDINGS ARE
11
<PAGE>
REQUIRED TO BE BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION
OVER THE MATTER IN CONTROVERSY. EACH OF THE PARTIES WAIVES, TO THE FULLEST
EXTENT PERMISSIBLE UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THE IMMEDIATELY
PRECEDING SENTENCE. SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN
ANY ACTION AGAINST SUCH PARTY MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 16.
Section 14. Expenses. In addition to the foregoing, the Company will
also reimburse the Existing Lender and the Facility Lenders promptly for their
reasonable out-of-pocket costs and expenses incurred by such Persons or their
respective employees, agents or advisors in connection with the performance of
their respective obligations and duties hereunder and, to the extent the
Existing Loan Documents so provide, under the Existing Loan Documents, and for
any reasonable fees and expenses of legal or other professional advisors to the
Existing Lender and the Facility Lenders engaged in connection with the
preparation and negotiation of this Agreement.
Section 15. Agreement May Constitute Financing Statement. The Company
and the Existing Lender consents to the filing of this Agreement or a photocopy
thereof as a financing statement under the UCC as in effect in any jurisdiction
in which the Facility Lenders may determine such filing to be necessary or
desirable.
Section 16. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given to such party by
facsimile transmission or by hand delivery at the following address or facsimile
number, or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other party and each other Creditor.
(a) if to the Lender, Greenwich Street Capital Partners II, L.P., c/o Greenwich
Street Capital Partners, Inc., 388 Greenwich Street, New York, New York 10013,
Attn.: Sanjay Patel; Tel: (212) 826-1149, Fax: (212) 816-0166; with a copy to
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, Attn.: Steven
Ostner, Tel: (212) 909-6000, Fax: (212) 909-6836; (b) if to the Company, IMC
Mortgage Company, 5901 E. Fowler Avenue, Tampa, Florida 33617, Attn.: President,
Tel: (813) 984-2533, Fax: (813) 984-2593; with a copy to Mitchell W. Legler,
300A Wharfside Way, Jacksonville, Florida 32207; and (c) and if to the Existing
Lender: PaineWebber Real Estate Securities, Inc., 1285 Avenue of the Americas,
New York, New York 10019, Attn.: George Mangiaracina, Tel: (212) 713- 3734,
12
<PAGE>
Fax: (212) 265-3881; with a copy to Cadwalader, Wickersham & Taft, 100 Maiden
Lane, New York, New York 10038, Attn.: David C.L. Frauman, Esq., Tel: (212) 504-
6000; Fax: (212) 504-6666; and if to any of the Other Existing Lenders, to such
person and at the address and facsimile number provided in the corresponding
section of the Other Intercreditor Agreement for notice to such Other Existing
Lender. Each such notice, request or other communication shall be effective when
sent by facsimile transmission to the facsimile number or when delivered by hand
to the address specified in this Section 16 or such section of such Other
Intercreditor Agreement, provided that a facsimile transmission shall be deemed
to have been sent only so long as the transmitting machine has provided an
electronic confirmation of such transmission.
Section 17. Binding Effect; Third Party Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns and to each of the other Creditors, each of
which is an intended third-party beneficiary hereof. Neither the Facility
Lenders nor the Existing Lender may sell, assign, participate or otherwise
transfer or dispose of all or any portion of the Loan or the Existing
Obligations to any Person unless such Person shall have assumed and agreed to be
bound by the terms hereof by written instrument in form reasonably satisfactory
to the Company and each other Creditor.
Section 18. Counterparts; Section Headings. This Agreement may be
executed in any number of counterparts, each of which is an original, but all of
which together constitute but one instrument. Except as otherwise indicated,
references herein to any "Section" means a "Section" of this Agreement, and the
section headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IMC MORTGAGE COMPANY
By /s/
-------------------------
Name:
Title:
PAINE WEBBER REAL ESTATE
SECURITIES INC.
By /s/
-------------------------
Name:
Title:
14
<PAGE>
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
-------------------------
Name:
Title: Managing Member
15
<PAGE>
This Intercreditor Agreement is
hereby acknowledged and agreed to by:
IMC CORPORATION OF AMERICA
By /s/
----------------------
Name:
Title:
IMC CREDIT CARD, INC.
By /s/
----------------------
Name:
Title:
IMC MORTGAGE COMPANY CANADA, LTD.
By /s/
----------------------
Name:
Title:
IMC SECURITIES INC.
By /s/
----------------------
Name:
Title:
16
<PAGE>
AMERICAN HOME EQUITY CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT LIMITED PARTNERSHIP
By /s/
----------------------
Name:
Title:
ACG FINANCIAL SERVICES (IMC), INC.
By /s/
----------------------
Name:
Title:
AMERICAN MORTGAGE REDUCTION, INC.
By /s/
----------------------
Name:
Title:
17
<PAGE>
CENTRAL MONEY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
COREWEST BANC
By /s/
----------------------
Name:
Title:
EQUITY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
IMCC INTERNATIONAL, INC.
By /s/
----------------------
Name:
Title:
MORTGAGE AMERICA (IMC), INC.
By /s/
----------------------
Name:
Title:
18
<PAGE>
NATIONAL LENDING CENTER, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING CENTER TILT, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING GROUP, INC.
By /s/
----------------------
Name:
Title:
RESIDENTIAL MORTGAGE CORPORATION (IMC), INC.
By /s/
----------------------
Name:
Title:
19
<PAGE>
Schedule I
to the
Intercreditor Agreement
Other Existing Lenders
Master Repurchase Agreement, dated as of March 29, 1996, as amended from time to
time, by and among Bear Stearns Home Equity Trust and the Company and certain of
the Company's Subsidiaries.
Master Repurchase Agreement, dated as of May 1, 1997 Between Bear, Stearns
International Limited and Industry Mortgage Company, L.P.
Institutional Account Agreement, dated October 23, 1996, between and among
Industry Mortgage Company, L.P. and Bear Stearns.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and German American
Capital Corporation, as lender.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and Aspen Funding
Corp., as lender
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of October 12, 1998, between IMC
MORTGAGE COMPANY, a Florida corporation (the "Company"), GREENWICH STREET
CAPITAL PARTNERS II, L.P., a Delaware limited partnership, GREENWICH FUND, L.P.,
a Delaware limited partnership, GSCP OFFSHORE FUND, L.P., a Cayman Islands
exempted limited partnership (each a "Facility Lender" and collectively, the
"Facility Lenders"), and GERMAN AMERICAN CAPITAL CORPORATION ("GAC") and ASPEN
FUNDING CORP. ("Aspen", and collectively with GAC, the "Existing Lenders").
Capitalized terms used in this Agreement without definition have the meanings
given to them in the Loan Agreement (as hereinafter defined) as such terms are
defined in the Loan Agreement on the date hereof.
RECITALS
A. The Company intends to enter into a Loan Agreement, dated as of
October 12, 1998 (as the same may be modified, supplemented or restated from
time to time, the "Loan Agreement"), between the Company, as borrower, and the
Facility Lenders, pursuant to which the Facility Lenders will agree to extend to
the Company Commitments to loan, in the aggregate, $33,000,000 (the "Loans"),
subject to the terms and conditions set forth in the Loan Agreement, which Loans
are evidenced by the Notes and entitled to the benefit of certain guarantees and
security provided under certain of the other Loan Documents.
B. Pursuant to (i) the Loan and Security Agreement, dated March 17,
1998, as amended from time to time, by and among the Company, IMC Corporation of
America, ACG Financial Services (IMC), Inc., American Mortgage Reduction, Inc.,
Central Money Mortgage Co. (IMC), Inc., Corewest Banc, Equity Mortgage Co.,
(IMC), Inc., Mortgage America (IMC), Inc., National Lending Center, Inc.,
National Lending Center TILT, Inc, and Residential Mortgage Corporation (IMC),
Inc., as borrowers, and GAC, as lender (the "GAC Agreement", and (ii) the Loan
and Security Agreement, dated March 17, 1998, as amended from time to time, by
and among the Company, IMC Corporation of America, ACG Financial Services (IMC),
Inc., American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and Aspen Funding
Corp., as lender, (the "Aspen Loan Agreement", and collectively with the "GAC
Agreement", the "Existing Loan Agreements"), and other related agreements in
favor of the Existing Lenders (collectively with the Existing Loan Agreements,
the "Existing Loan Documents"), the Existing Lenders have agreed to
<PAGE>
provide financing to the Company from time to time, to enable the Company to
finance certain mortgage loans and for other purposes provided therein; and the
Company and certain of its Subsidiaries have granted a security interest in the
Collateral (as hereinafter defined) in order to secure their respective
obligations under the Existing Loan Documents (the "Existing Obligations").
C. In order to induce the Facility Lenders to enter into the Loan
Agreement, the Facility Lenders, the Company, and the Existing Lenders have
agreed to enter into this Agreement (the "Intercreditor Agreement"), whereby the
Existing Lenders will agree, subject to the terms and conditions of this
Agreement, (i) to refrain from exercising certain rights and remedies they have
under the Existing Loan Agreements for a period of 45 days and, in certain
events, 90 days, (ii) to acknowledge and consent to the creation of a junior
lien on the Collateral, and (iii) to agree that following payment in full of the
obligations under the Existing Loan Agreements, the Existing Lenders will hold
the Collateral for the benefit of the Facility Lenders.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Existing Lenders
and the Facility Lenders agree as follows:
Section 1. Standstill. (a) Each of the Facility Lenders and the
Existing Lender agrees, subject to the terms of this Agreement, that for the
Standstill Period, it shall not:
(i) file or join in the filing of any involuntary petition in
bankruptcy with respect to the Company or its Subsidiaries, or initiate
or participate in any similar proceedings for the benefit of creditors,
including any proceeding for the appointment of a trustee, receiver,
conservator or liquidator of the Company or its Subsidiaries or any
portion of its assets;
(ii) seek to collect or enforce by litigation or otherwise, any
payment obligations under the Existing Loan Documents or the Loan
Documents; provided that nothing in this Section 1 shall prohibit the
Facility Lenders from exercising their Exchange Option;
(iii) make any Margin Calls or other demands for payment in
respect of, or additional collateral to secure the Existing Obligations;
provided, however, that this clause shall not adversely affect the right
of the Existing Lenders to take any actions to preserve, protect or
perfect their liens in the Collateral;
2
<PAGE>
(iv) declare a default or event of default under, or exercise or
enforce any right or remedy under, or accelerate the maturity of any
Existing Obligation or Loan under, any Existing Loan Document or Loan
Document; or
(v) seek to attach, sequester or otherwise proceed against any of
the Collateral.
(b) The Standstill Period may be terminated by the Existing Lenders or
the Facility Lenders by written notice to the Company and each other Creditor
upon the occurrence of any of the following:
(i) a failure by the Company under the Existing Loan
Agreement to make to the Existing Lenders any scheduled payment of
interest, which failure continues unremedied for two days, or any
payment of principal due in respect of payoffs or prepayments of
mortgage loans comprising any portion of the Collateral;
(ii) any intentional fraud or misrepresentation by the
Company;
(iii) immediately upon a failure of the Facility Lenders
to make an Advance (as defined in the Loan Agreement) under the Loan
Agreement following a request of the Company thereunder;
(iv) immediately in the event any Other Existing Lender
takes any of the actions described in Section 1(a) of its Other
Intercreditor Agreement, whether or not it shall have given notice of
termination of the Standstill Period.
(v) the Company shall not have entered into the Loan
Agreement in substantially similar form to the October 13, 1998 draft
thereof at or before 12:00 noon, New York City time, on October 14,
1998;
(vi) the conditions to the obligations of the Facility
Lenders to fund the Initial Advance shall not have been satisfied or
waived by the Facility Lenders and the Facility Lenders, if requested by
the Company to fund the Initial Advance, shall not have funded the
Initial Advance at or before 12:00 noon, New York City time, on October
14, 1998;
(vii) the Company shall not have delivered (by facsimile
transmission or otherwise in accordance with Section 16 hereof) to each
Creditor a forbearance agreement of BankBoston at or before 12:00 noon,
New York City
3
<PAGE>
time, on October 14, 1998, which is satisfactory in substance and form
to each Creditor;
(viii) the condition contained in clause (y) of the
definition of "Standstill Period" to the extension of the Standstill
Period beyond the date which is 45 days from and after the date hereof
shall not have been satisfied on or before such date;
(ix) a Change of Control or payment of the Take-Out
Premium; or
(x) an event shall occur and be continuing for a period of
ten Business Days which permits any holder of indebtedness for borrowed
money of the Company or any Subsidiary outstanding (other than any
Creditor) to accelerate the maturity of such indebtedness or exercise
remedies with respect to property of the Company or any Subsidiary,
without such indebtedness being paid or the rights of such holder to
take such action being waived, stayed or subjected to a standstill or
other agreement of such holder to forbear from exercising remedies,
reasonably satisfactory to the Creditors.
(c) The Standstill Period shall terminate automatically without notice
or other action by any Creditor upon the occurrence of any of the following:
(i) the Company or any Subsidiary shall consent to the
appoint ment of or taking possession by a receiver, assignee, custodian,
sequestrator, trustee or liquidator (or other similar official) of
itself or of a substantial part of its property; or the Company or any
Subsidiary shall admit in writing (to any creditor, governmental
authority or judicial court or tribunal) its inability to pay its debts
generally as they come due or shall fail generally to pay its debts as
they become due, or shall make a general assignment for the benefit of
its creditors; or the Company or any Subsidiary shall file a voluntary
petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization or other relief with respect to itself or
its debts under the Federal bankruptcy laws, as now or hereafter
constituted or any other applicable Federal or State bankruptcy,
insolvency or other similar law, or shall consent to the entry of an
order for relief in an involuntary case under any such law; or the
Company or any Subsidiary shall file an answer admitting the material
allegations of a petition filed against the Company in any such
proceeding, or otherwise seek relief under the provisions of any
existing or future Federal or State bankruptcy, insolvency or other
similar law providing for the reorganization or winding-up of
corporations, or providing for an arrangement, agreement, composition,
extension or adjustment
4
<PAGE>
with its creditors; or the Company or any Subsidiary shall take or
publicly announce its intention to take corporate action in furtherance
of any of the fore going; or
(ii) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without
the consent of the Company, a receiver, trustee or liquidator of the
Company or any Subsidiary or of any substantial part of its property, or
any substantial part of the property of the Company or any Subsidiary
shall be sequestered, and any such order, judgment or decree of
appointment or sequestration shall remain in force undismissed, unstayed
or unvacated for a period of 30 days after the date of entry thereof; or
(iii) an involuntary petition against the Company or any
Subsidiary in a proceeding under the Federal bankruptcy laws or other
insolvency laws, as now or hereafter in effect, shall be filed and shall
not be withdrawn or dismissed within 30 days thereafter, or a decree or
order for relief in respect of the Company or any Subsidiary shall be
entered by a court of competent jurisdiction in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or,
under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Company, any court of
com petent jurisdiction shall assume jurisdiction, custody or control of
the Company or any Subsidiary or of any substantial part of its property
and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 30 days.
Section 2. Grant of Security Interest. (a) In order to secure full and
timely payment of the Obligations under the Loan Agreement, and to secure the
performance of all of the other obligations of the Company under the Loan
Documents, the Company and each Subsidiary hereby mortgages, pledges and assigns
and transfers to the Facility Lenders, and grants to the Facility Lenders, a
continuing perfected security interest in, and a lien in the Collateral. The
Facility Lenders agree to release their lien in respect of any whole loan
mortgage, which is sold by the Company to either Existing Lender for a purchase
price not less than the advance rate in respect of such mortgage.
(b) The Facility Lenders agree for the benefit of the Existing Lenders
that during the continuance of the Standstill Period and thereafter until the
earlier of (i) the satisfaction of the Existing Obligations in full, (ii) the
exercise by the Existing Lenders of any right to attach, sequester, foreclose or
otherwise exercise remedies with respect to the Collateral, and (iii) 180 days
after the expiration or earlier termination of the Standstill
5
<PAGE>
Period, the Facility Lenders will not seek to attach, sequester, foreclose or
otherwise exercise remedies with respect to the Collateral, provided that
nothing herein shall restrict the Facility Lenders from commencing suit on its
Notes or for payment of its Loan or enforcement of any other obligation owing to
it under the Loan Documents.
Section 3. Acknowledgment and Priorities. Each Existing Lender hereby
acknowledges and consents to the entrance by the Company into the Loan Documents
and the granting of the lien in the Collateral granted pursuant to Section 2;
provided, however, notwithstanding anything to the contrary contained in the
Loan Agreement, the Notes or any of the Loan Documents, any security interest in
or other rights with respect to any Collateral granted to secure the Existing
Obligations under the Existing Loan Agreements or otherwise has and shall have
priority, to the extent of the Existing Obligations, over any security interest
in such Collateral granted pursuant to the Loan Agreement or the other Loan
Documents irrespective of:
(i) the time, order or method of attachment or perfection of the
security interest created by this Agreement, any Loan Agreement or any
Loan Document;
(ii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect security
interests in any Collateral;
(iii) anything contained in any filing or agreement to which the
Facility Lenders, the Company, the Collateral Agent under the Security
Documents now or hereafter may be a party, and
(iv) the rules for determining priority under the U.C.C. or other
laws governing the relative priorities of secured creditors.
(b) Each Existing Lender hereby agrees that, following payment in full
of all the Existing Obligations hereunder, any Collateral, including any books
and records (including, without limitation, computer files, printouts and other
computer materials and records) relating to the Collateral, as well as all
proceeds and products of such Collateral, held by it shall be held for the
benefit of the Facility Lenders, provided that if such Collateral is then
subject to the prior lien of another creditor, the Existing Lender may hold it
for the benefit of such other creditor and the Facility Lenders as their
interests may appear. If the Existing Lender has elected not to hold such
Collateral following payment in full of the Existing Obligations, it shall
promptly forward any Collateral, including any books and records (including,
without limitation, computer files, printouts and other computer materials and
records) relating to the Collateral, as well as all proceeds and products of
such Collateral, to the Collateral Agent.
6
<PAGE>
Section 4. Reserved Rights. Notwithstanding anything in this Agreement
to the contrary, the Company and the Facility Lenders agree that this Agreement
shall in no manner impair any right of the Existing Lenders under the Existing
Loan Agreements to enforce any condition precedent to any obligation it may have
thereunder to make future Advances to the Company and its Subsidiaries, nor
shall this Agreement limit the right of the Existing Lenders to make Margin
Calls in respect of the hedging transactions with respect to U.S. treasury
securities that the Company may have entered into with either Existing Lender
outside of the Existing Loan Documents. All rights and obligations of the
Existing Lenders under the Existing Loan Documents to make Advances or not make
Advances shall not be affected by this Agreement.
Section 5. Fee. Upon consummation of a Change in Control, the Company
shall pay the Existing Lenders a fee of $1,000,000 in the aggregate payable in
immediately available funds to such account at such bank as the Existing Lenders
may direct.
Section 6. Conditions Precedent. The obligations of the parties hereto
under this Agreement to carry out their obligations hereunder shall be subject
to the condition that each of the other existing Lenders listed on Schedule I
(the "Other Existing Lenders") shall have entered into intercreditor agreements
substantially the same as this Agreement (the "Other Intercreditor Agreements"),
and if any Other Existing Lender shall have entered into an intercreditor
agreement which by its terms is, in the reasonable judgment of the Existing
Lenders, more favorable to such Other Existing Lender, it shall be a condition
to the performance of the Existing Lenders hereunder that the Company and the
Facility Lenders amend this Agreement to provide the Existing Lender with the
benefit of such more favorable terms (other than any fee payable pursuant to
Section 5 hereof or of any Other Intercreditor Agreement or any other economic
consideration payable to any Other Existing Lender under any other agreement).
Section 7. Certain Definitions.
"Additional Collateral" means cash or additional collateral reasonably
acceptable to the Existing Lenders transferred to either Existing Lender
pursuant to the applicable Existing Loan Agreement.
"Advance" means advances made by either Existing Lender to the Company
or any Borrower, pursuant to the terms and conditions of the applicable Existing
Loan Agreement.
7
<PAGE>
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power (a) to vote 20% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) of such Person, or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Assets" means the collective reference to Mortgage Loans, Lender
Mortgage and Pledged Securities.
"Borrowers" means any of IMC Mortgage Company, IMC Corporation of
America, ACG Financial Services (IMC), Inc., American Mortgage Reduction, Inc.,
Central Money Mortgage Co. (IMC), Inc., CoreWest Banc, Equity Mortgage Co.
(IMC), Inc., American Home Equity Corporation, Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc., National
Lending Group, Inc. and any additional Persons that may become Borrowers under
either Existing Loan Agreement.
"Cash Collateral Account" means a cash collateral account established
and maintained by the Existing Lenders pursuant to the terms and conditions of
the Existing Loan Agreements.
"Change of Control" means the occurrence of any of the following events
(other than as a consequence of the issuance of the Preferred Stock to the
Facility Lenders upon exercise of the Exchange Option):
(i) any "Person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire within one year), directly or indirectly, of more than
50% of the Voting Stock of the Company; or
(ii) the Company consummates any sale, lease, exchange or
other disposition of all or substantially all of the assets of
the Company and its Subsidiaries, taken as a whole, in any
transaction or series of transactions not in the ordinary course
of business; or
8
<PAGE>
(iii) the Company engages in a merger, consolidation or
similar business combination with any third party.
"Collateral" means all of the Company's or any Borrower's right, title
and interest in, to and under each of the following items of property, whether
now owned or hereafter acquired, now existing or hereafter created and wherever
located:
all Assets;
all Collateral Documents, including without limitation all promissory
notes relating to or evidencing the Assets, and all Servicing Records, servicing
agreements and any other collateral pledged or otherwise relating to such
Collateral, together with all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer programs, computer storage
media, accounting records and other books and records relating thereto;
all securities, monies or property representing dividends or interest on
any of the foregoing, or representing a distribution in respect of the
foregoing, or resulting from a split-up, revision, reclassification or other
like change of the foregoing or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or otherwise
in respect of, the foregoing;
all Pooling and Servicing Agreements;
all Collection Accounts and amounts on deposit therein;
all Cash Collateral Accounts and amounts on deposit therein;
all guaranties and insurance (issued by governmental agencies or
otherwise including without limitation, FHA Mortgage Insurance) and any
insurance certificate or other document evidencing such guaranties or insurance
relating to any item of Collateral and all claims and payments thereunder;
all other insurance policies and insurance proceeds relating to any item
of Collateral;
all Interest Rate Protection Agreements;
all Additional Collateral provided to the Existing Lenders;
9
<PAGE>
all of the Company's or any Borrower's rights, but not their
obligations, under any purchase agreements and servicing agreements and all
servicing rights covering or relating to any item of the Collateral to which the
Company or any of the Borrowers are a party;
all "general intangibles" as defined in the Uniform Commercial Code
relating to or constituting any and all of the items listed in the foregoing
items;
any other right, interest or property of the Company or any Subsidiary
now or hereafter securing the performance by the Company or any Subsidiary of
the Existing Obligations; and
any and all replacements, substitutions, distributions on or proceeds of
any and all of the foregoing.
"Collateral Documents" means, with respect to the items of Collateral,
the documents comprising the Collateral File for such Collateral.
"Collateral File" means, with respect to each Mortgage Loan, those
documents that are delivered to the Custodian or which at any time come into the
possession of the Custodian, pursuant to the terms and conditions of either
Custodial Agreement.
"Collection Account" means a collection account established and
maintained by the Existing Lenders pursuant to the terms and conditions of the
Existing Loan Agreements.
"Common Stock" means the Company's common stock, par value $0.01 per
share.
"Creditor" means any of the Facility Lenders, the Existing Lenders or
any Other Existing Lender.
"Custodial Agreements" means separate Custodial Agreements by among the
Company, certain of its Subsidiaries, Custodian and each Existing Lender, as the
same shall be modified and supplemented and in effect from time to time.
"Custodian" means BankBoston, N.A., as custodian under the Custodial
Agreements, and its successors and permitted assigns thereunder.
10
<PAGE>
"FHA" means the Federal Housing Administration, an agency within the
United States Department of Housing and Urban Development, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of
Housing and Urban Development where appropriate under the FHA Regulations.
"FHA Loan" means a Mortgage Loan which is the subject of FHA Mortgage
Insurance.
"FHA Mortgage Insurance" means mortgage insurance authorized under the
National Housing Act, as amended from time to time, and provided by the FHA.
"FHA Regulations" means regulations promulgated by HUD under the
National Housing Act, codified in 24 Code of Federal Regulations, and other HUD
issuances relating to FHA Loans, including the related handbooks, circulars,
notices and mortgagee letters.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"HUD" means the Department of Housing and Urban Development, or any
federal agency or official thereof which may from time to time succeed to the
functions thereof with regard to FHA Mortgage Insurance, including subdivisions
thereof such as the FHA.
"Interest Rate Protection Agreement" means, with respect to any or all
of the Mortgage Loans, any short sale of a US Treasury Security, or futures
contract, or mortgage related security, or Eurodollar futures contract, or
options related contract, or interest rate swap, cap or collar agreement or
similar arrangements providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or under
specific contingencies.
"Lender Mortgage" means, with respect to any REO Property owned or to
be owned by the Borrowers a duly executed and recorded mortgage, deed of trust
or similar instrument in favor of either Existing Lender on such REO Property,
which Lender Mortgage shall (A) name either Existing Lender as the mortgagee
thereon or the beneficiary thereof and (B) be on a FNMA uniform instrument (or
another form acceptable to the Existing Lenders).
"Letter of Intent" means a non-binding letter of intent between the
Company and one or more creditworthy Persons having the financial and other
capacity to consummate the transaction contemplated thereby, providing for (i) a
merger,
11
<PAGE>
consolidation, share exchange, business combination or other similar transaction
involving the Company in which the outstanding Common Stock is converted into
the right to receive cash or securities of a Qualifying Issuer; (ii) a sale,
conveyance, lease, exchange, transfer or other disposition of all or
substantially all the assets of the Borrower and its Subsidiaries, taken as a
whole, in a single transaction or in a series of transactions outside of the
ordinary course of business in return for cash or securities of a Qualifying
Issuer; or (iii) a tender offer or exchange offer for any and all of the
outstanding shares of Common Stock in return for cash or securities of a
Qualifying Issuer, in each case which, upon consummation of the transactions
contemplated thereby, would result in a Change of Control and which letter of
intent contemplates the repayment of all of the Existing Obligations in full.
"Lien" means, as defined in the Uniform Commercial Code in effect in
any jurisdiction, with respect to the mortgages, liens, pledges, charges,
security interests or similar encumbrances created pursuant to the applicable
Existing Loan Agreement.
"Margin Call" means the right of the Existing Lenders to give notice to
require the Company or any Subsidiary to transfer to the Existing Lenders cash
or additional collateral.
"Mortgage" means the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on the fee in real property
securing the Mortgage Note.
"Mortgage Loan" means a mortgage loan which the Custodian has been
instructed to hold for the applicable Existing Lender pursuant to a Custodial
Agreement, and which Mortgage Loan includes, without limitation, (i) a Mortgage
Note and related Mortgage and (ii) all of the Company's or any Borrowers' right,
title and interest in and to the Mortgaged Property covered by such Mortgage.
"Mortgage Note" means the original executed promissory note or other
evidence of the indebtedness of a mortgagor/borrower with respect to a Mortgage
Loan.
"Mortgaged Property" means the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor on a Mortgage Note.
12
<PAGE>
"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Pledged Securities" means the Subordinated Securities pledged to an
Existing Lender from time to time and held by such Existing Lender as Collateral
under the applicable Existing Loan Agreement.
"Pooling and Servicing Agreement" means any pooling and servicing
agreement, sale and servicing agreement, trust agreement or other agreement
pursuant to which the Mortgage Loans ultimately underlying any of the Pledged
Securities are serviced or administered or the Pledged Securities are issued or
exchanged.
"Qualifying Issuer" means an issuer the outstanding common stock or
other common equity securities of which is listed on the New York Stock Exchange
or NASDAQ National Market System.
"REO Property" means a fee in real property acquired by the Borrowers
pursuant to or in connection with a purchase agreement, including a Mortgaged
Property acquired through foreclosure of a Mortgage Loan or by deed in lieu of
such foreclosure.
"Securitization Transaction" means all underwritings or private
placements of (1) securities issued by or sponsored by and (2) backed by
Mortgage Loans or substantially similar assets acquired by or owned by Borrowers
or the Company (or any of their respective Affiliates), including without
limiting the generality of the foregoing, any of either entity's securitization
and other collateralized term financing transactions that involve Mortgage Loans
or substantially similar assets.
"Servicing Records" means any and all servicing agreements, files,
documents, records, data bases, computer tapes, copies of computer tapes, proof
of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Collateral.
"Standstill Period" means a period ending on the first to occur of (i)
the later of (x) 45 days from and after the date hereof and (y) if the Company
shall have, on or before the 45th day from and after the date hereof, entered
into a Letter of Intent and delivered (by facsimile transmission or otherwise in
accordance with Section 16 hereof) to each Creditor a complete and correct copy
thereof, together with an Updated Business
13
<PAGE>
Plan showing the projected working capital requirements of the Company for the
period ending on the expected date of closing of the transaction contemplated by
the Letter of Intent and commitments from creditworthy parties which, in the
aggregate, are sufficient to satisfy the Company's projected working capital
requirements during such period, 90 days from and after the date hereof, or (ii)
termination of the Standstill Period in accordance with Section 1(b) or (c)
hereof.
"Subordinated Securities" means interest-only strips, residual
interests, subordinated interests or reserve certificates issued and transferred
to the Debtor or Borrowers in connection with any Securitization Transaction or
any other collateral as the Secured Party may deem appropriate.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York.
Section 8. Notice of Advances under the Loan Agreement, etc. (a) The
Company shall give prior written notice to the Existing Lenders of each request
for an Additional Advance under Section 2.10 of the Loan Agreement
contemporaneously with making such request to the Facility Lenders. The Company
shall give written notice to the Existing Lenders immediately upon either the
funding of an Additional Advance (together with such evidence thereof as the
Existing Lenders may reasonably request) or the refusal of Facility Lender to
fund such Additional Advance, as the case may be.
(b) The Company shall give each Creditor prompt written notice of any
event which upon notice or lapse of time or both would constitute an event of
default in respect of any of its outstanding Debt.
(c) Notwithstanding the provisions of the Existing Loan Agreement,
during the Standstill Period, the Company shall pay interest on the principal
amount outstanding under the Existing Loan Agreement to the Existing Lenders
weekly on Friday of each week or, if Friday is not a Business Day, on the next
Business Day.
Section 9. Acknowledgment of Obligations. The Company acknowledges that
its obligations under the Existing Loan Documents and the lien on the Collateral
securing the Existing Obligations remain in full force and effect, and that the
Company has no defenses, counterclaims or offsets to its obligations under the
Existing Loan Documents and that such liens are valid, perfected and
enforceable. The Company hereby waives the application of the automatic stay in
any bankruptcy proceeding in respect of the Existing Obligations and the
obligations under the Loan Documents and the Company and each Creditor consents
to the modification of the stay to permit the
14
<PAGE>
exercise by the Existing Lenders or the Facility Lenders of their rights in
respect of the Collateral, provided that the foregoing shall not be construed to
modify the provisions of Sections 2(b) and 3 hereof. This document shall not
constitute a waiver, amendment or modification of the Existing Loan Documents,
the Existing Obligations or the Loan Documents except as expressly referred to
herein and shall not be construed as a waiver or consent to any future action on
the part of the Company that would require a waiver or consent of the Existing
Lenders or the Facility Lenders, respectively, except to the extent expressly
provided herein.
Section 10. Amendments, Etc. No amendment, modification, supplement,
termination, consent or waiver of this Agreement or any term or provision of
this Agreement shall be effective and binding unless in writing and signed by
the Existing Lenders, the Other Existing Lenders and the Facility Lenders. Any
such waiver will be effective only in the specific instance and for the specific
purpose for which it is given.
Section 11. Severability. Any provision of this Agreement which is
illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such illegality, invalidity,
prohibition or unenforceability without invalidating or impairing the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
Section 13. GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND THE
RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. EACH OF THE PARTIES HERETO
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF, AND AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT MAY BE TRIED AND LITI
GATED IN, FEDERAL OR, IN THE ABSENCE OF FEDERAL SUBJECT MATTER JURISDICTION,
STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK UNLESS SUCH
ACTIONS OR PROCEEDINGS ARE
15
<PAGE>
REQUIRED TO BE BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION
OVER THE MATTER IN CONTROVERSY. EACH OF THE PARTIES WAIVES, TO THE FULLEST
EXTENT PERMISSIBLE UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THE IMMEDIATELY
PRECEDING SENTENCE. SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN
ANY ACTION AGAINST SUCH PARTY MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 16.
Section 14. Expenses. In addition to the foregoing, the Company will
also reimburse the Existing Lenders and the Facility Lenders promptly for their
reasonable out-of-pocket costs and expenses incurred by such Persons or their
respective employees, agents or advisors in connection with the performance of
their respective obligations and duties hereunder and, to the extent the
Existing Loan Documents so provide, under the Existing Loan Documents, and for
any reasonable fees and expenses of legal or other professional advisors to the
Existing Lenders and the Facility Lenders engaged in connection with the
preparation and negotiation of this Agreement.
Section 15. Agreement May Constitute Financing Statement. The Company
and the Existing Lenders consent to the filing of this Agreement or a photocopy
thereof as a financing statement under the UCC as in effect in any jurisdiction
in which the Facility Lenders may determine such filing to be necessary or
desirable.
Section 16. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given to such party by
facsimile transmission or by hand delivery at the following address or facsimile
number, or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other party and each other Creditor,
(a) if to the Lender, Greenwich Street Capital Partners II, L.P., c/o Greenwich
Street Capital Partners, Inc., 388 Greenwich Street, New York, New York 10013,
Attn.: Sanjay Patel; Tel: (212) 816-1149, Fax: (212) 816-0166; with a copy to
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, attention:
Steven Ostner, Tel: (212) 909-6000, Fax: (212) 909-6836; (b) if to the Company,
IMC Mortgage Company, 5901 E. Fowler Avenue, Tampa, Florida 33617,Attn.:
President, Tel: (813) 984-2533, Fax: (813) 984-2593; with a copy to Mitchell W.
Legler, 300A Wharfside Way, Jacksonville, Florida 32207.; and (c) and if to the
Existing Lenders: (i) in the case of Aspen, to: Aspen Funding Corp. c/o Amacar
Group, 6707D Fairview Road, Charlotte, North Carolina 28210, Attn.: Douglas
Johnson,
16
<PAGE>
tel.: (704) 375-0569, fax: (704) 365-1362, with a copy to: Deutsche Bank A.G.,
as agent, 31 West 52nd Street, New York, New York 10019, Attn.: Greg Amoroso,
Tel.: (212) 469-3987, Fax: (212) 469-5160 and Richard Uhlig, Tel.: (212)
469-7730, Fax: (212) 469-5103; (ii) in the case of GAC, to: German American
Capital Corporation, 31 West 52nd Street, New York, New York 10019, Attn.: Vijay
Radhakishun, Tel.: (212) 469-8925, Fax: (212) 469-5923, with a copy to: Deutsche
Bank A.G., as agent, 31 West 52nd Street, New York, New York 10019, Attn.: Greg
Amoroso, Tel.: (212) 469-3987, Fax: (212) 469-5160, and Richard Uhlig, Tel.:
(212) 469-7730, Fax: (212) 469-5103; and in either case described in clause (i)
or (ii) above; with a copy to Cadwalader, Wickersham & Taft, 100 Maiden Lane,
New York, New York 10038, Attn.: Karen Gelernt, Esq., Tel: (212) 504-6000, Fax:
(212) 504-6666; and if to any of the Other Existing Lenders, to such person and
at the address and facsimile number provided in the corresponding section of the
Other Intercreditor Agreement for notice to such Other Existing Lender. Each
such notice, request or other communication shall be effective when sent by
facsimile transmission to the facsimile number or when delivered by hand to the
address specified in this Section 16 or such section of such Other Intercreditor
Agreement, provided that a facsimile transmission shall be deemed to have been
sent only so long as the transmitting machine has provided an electronic
confirmation of such transmission.
Section 17. Binding Effect; Third Party Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns and to each of the other Creditors, each of
which is an intended third-party beneficiary hereof. Neither the Facility
Lenders nor the Existing Lenders may sell, assign, participate or otherwise
transfer or dispose of all or any portion of the Loan or the Existing
Obligations to any Person unless such Person shall have assumed and agreed to be
bound by the terms hereof by written instrument in form reasonably satisfactory
to the Company and each other Creditor.
Section 18. Counterparts; Section Headings. This Agreement may be
executed in any number of counterparts, each of which is an original, but all of
which together constitute but one instrument. Except as otherwise indicated,
references herein to any "Section" means a "Section" of this Agreement, and the
section headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof.
17
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IMC MORTGAGE COMPANY
By /s/
----------------------------
Name:
Title:
GERMAN AMERICAN CAPITAL
CORPORATION
By /s/
----------------------------
Name:
Title:
By /s/
----------------------------
Name:
Title:
ASPEN FUNDING CORP.
By /s/
----------------------------
Name:
Title:
18
<PAGE>
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
--------------------------
Name:
Title: Managing Member
19
<PAGE>
This Intercreditor Agreement is
hereby acknowledged and agreed to by:
IMC CORPORATION OF AMERICA
By /s/
----------------------
Name:
Title:
IMC CREDIT CARD, INC.
By /s/
----------------------
Name:
Title:
IMC MORTGAGE COMPANY CANADA, LTD.
By /s/
----------------------
Name:
Title:
IMC SECURITIES INC.
By /s/
----------------------
Name:
Title:
20
<PAGE>
AMERICAN HOME EQUITY CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT CORPORATION
By /s/
----------------------
Name:
Title:
IMC INVESTMENT LIMITED PARTNERSHIP
By /s/
----------------------
Name:
Title:
ACG FINANCIAL SERVICES (IMC), INC.
By /s/
----------------------
Name:
Title:
AMERICAN MORTGAGE REDUCTION, INC.
By /s/
----------------------
Name:
Title:
21
<PAGE>
CENTRAL MONEY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
COREWEST BANC
By /s/
----------------------
Name:
Title:
EQUITY MORTGAGE CO. (IMC), INC.
By /s/
----------------------
Name:
Title:
IMCC INTERNATIONAL, INC.
By /s/
----------------------
Name:
Title:
MORTGAGE AMERICA (IMC), INC.
By /s/
----------------------
Name:
Title:
22
<PAGE>
NATIONAL LENDING CENTER, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING CENTER TILT, INC.
By /s/
----------------------
Name:
Title:
NATIONAL LENDING GROUP, INC.
By /s/
----------------------
Name:
Title:
RESIDENTIAL MORTGAGE CORPORATION (IMC), INC.
By /s/
----------------------
Name:
Title:
23
<PAGE>
Schedule I
to the
Intercreditor Agreement
Other Existing Lenders
Master Repurchase Agreement, dated as of March 29, 1996, as amended from time to
time, by and among Bear Stearns Home Equity Trust and the Company and certain of
the Company's Subsidiaries.
Master Repurchase Agreement, dated as of May 1, 1997 between Bear, Stearns
International Limited and Industry Mortgage Company, L.P.
Institutional Account Agreement, dated October 23, 1996, between and among
Industry Mortgage Company, L.P. and Bear Stearns.
Loan and Security Agreement, dated as of February 28, 1997, between IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Industry Mortgage Company, L.P., Corewest
Banc, IMC Investment Corp., and IMC Investment Limited Partnership, as
borrowers, and Paine Webber Real Estate Securities, Inc., as lender.
- --------------------------------------------------------------------------------
IMC MORTGAGE COMPANY
as Borrower,
and
GREENWICH STREET CAPITAL PARTNERS II, L.P.,
GREENWICH FUND, L.P.,
GSCP OFFSHORE FUND, L.P.
as Lenders
LOAN AGREEMENT
$33,000,000
---------------
Dated as of October 12, 1998
---------------
- --------------------------------------------------------------------------------
<PAGE>
Page
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.....................................................1
SECTION 1.2 Accounting Terms and Determinations.............................9
ARTICLE II
THE LOAN
SECTION 2.1 Loans...........................................................10
SECTION 2.2 The Note; Repayment of Principal................................10
SECTION 2.3 Loan Record.....................................................10
SECTION 2.4 Interest Rate...................................................10
SECTION 2.5 Mandatory Prepayment of the Loans...............................11
SECTION 2.6 Change of Control Prepayment of the Loan........................11
SECTION 2.7 Manner and Time of Payments.....................................12
SECTION 2.8 Use of Proceeds.................................................12
SECTION 2.9 Borrowings......................................................12
SECTION 2.10 Requests for Advances; Payment.................................12
ARTICLE III
CONDITIONS
SECTION 3.1 Conditions Precedent to the Initial Loan........................13
SECTION 3.2 Conditions Precedent to Additional Loans........................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Corporate Organization, Etc.....................................17
SECTION 4.2 Due Authorization...............................................17
SECTION 4.3 Litigation......................................................18
SECTION 4.4 Absence of Undisclosed Liabilities..............................18
<PAGE>
Page
SECTION 4.5 Taxes...........................................................18
SECTION 4.6 Title to Certain Properties.....................................19
SECTION 4.7 No Default......................................................19
SECTION 4.8 Investment Company..............................................19
SECTION 4.9 Legal, Valid and Binding Agreements.............................19
SECTION 4.10 Compliance with ERISA..........................................19
SECTION 4.11 Disclosure; Financial Statements...............................19
SECTION 4.12 Compliance with Law............................................20
SECTION 4.13 Consents.......................................................20
SECTION 4.14 Patents, Copyrights, Permits and Trademarks....................20
SECTION 4.15 Fairness Opinion...............................................20
SECTION 4.16 Capitalization.................................................21
ARTICLE V
COVENANTS
SECTION 5.1 Performance of Obligations......................................22
SECTION 5.2 Compliance with Laws............................................22
SECTION 5.3 Notice of Default and Event of Default..........................22
SECTION 5.4 Report on Proceedings...........................................22
SECTION 5.5 Financial Statements and Other Reports..........................23
SECTION 5.6 Conduct of Business and Preservation of
Corporate Existence, Etc........................................24
SECTION 5.7 Inspection of Property; Books and Records.......................24
SECTION 5.8 Maintenance of Property; Insurance..............................25
SECTION 5.9 Further Assurances; Additional Collateral Security..............25
SECTION 5.10 Indebtedness...................................................25
SECTION 5.11 Limitation on Liens............................................25
SECTION 5.12 No Dividends...................................................26
SECTION 5.13 Limitation on Investments......................................26
SECTION 5.14 Contingent Liabilities.........................................27
SECTION 5.15 Limitation on Leases...........................................27
SECTION 5.16 Prohibition on Sale of Assets..................................27
SECTION 5.17 Limitation on Prepayments of Debt..............................28
SECTION 5.18 Subsidiaries...................................................28
SECTION 5.19 Mergers, Disposition of Assets, Etc............................28
SECTION 5.20 Fiscal Year....................................................28
SECTION 5.21 No Inconsistent Agreements.....................................28
SECTION 5.22 Use of Proceeds................................................28
ii
<PAGE>
Page
SECTION 5.23 Transactions with Affiliates...................................28
SECTION 5.24 Issuance of Preferred Stock....................................29
SECTION 5.25 Ordinary Course................................................29
ARTICLE VI
DEFAULTS
SECTION 6.1 Events of Default...............................................29
ARTICLE VII
EXCHANGE
SECTION 7.1 Exchange Option..................................................33
SECTION 7.2 Reservation and Authorization of Shares.........................39
SECTION 7.3 Stock Transfer Books............................................40
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices..........................................................40
SECTION 8.2 No Waivers; Remedies Cumulative.................................41
SECTION 8.3 Expenses; Documentary Taxes; Indemnification....................41
SECTION 8.4 Amendments and Waivers..........................................43
SECTION 8.5 Successors and Assigns..........................................43
SECTION 8.6 GOVERNING LAW; VENUE AND JURISDICTION...........................43
SECTION 8.7 WAIVER OF JURY TRIAL............................................44
SECTION 8.8 Limitation on Interest..........................................44
SECTION 8.9 Severability....................................................45
SECTION 8.10 Counterparts; Integration; Section Headings....................45
SECTION 8.11 Confidentiality of Information.................................45
iii
<PAGE>
SCHEDULES:
Schedule 1.1(a) - Commitments
Schedule 3.1(h) - Consents from Other Creditors
EXHIBITS:
Exhibit A - Form of Note
Exhibit B - Form of Borrower Security Agreement
Exhibit C - Form of Subsidiary Security Agreement
Exhibit D - Form of Guarantee Agreement
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Intercreditor Agreements
Exhibit G - Form of Registration Rights Agreement
Exhibit H - Form of Articles of Amendment -- Class C Exchangeable
Preferred Stock
Exhibit I - Form of Articles of Amendment -- Class D Preferred Stock
Exhibit J - Form of Articles of Amendment -- Class B Preferred Stock
Exhibit K - Form of Articles of Amendment -- Class A Preferred Stock
iv
<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT, dated as of October 12, 1998, between IMC MORTGAGE
COMPANY, a Florida corporation (the "Borrower"); and GREENWICH STREET CAPITAL
PARTNERS II, L.P., a Delaware limited partnership, GREENWICH FUND, L.P., a
Delaware limited partnership, and GSCP OFFSHORE FUND, L.P., a Cayman Islands
exempted limited partnership, (each, a "Lender", and collectively, the
"Lenders").
Whereas, the Borrower wishes to enter into, and the Lenders are willing
to enter into, this Loan Agreement providing the Commitments;
Whereas, the Class A Articles of Amendment and the Class B Articles of
Amendment have been duly authorized by the Board of Directors of the Borrower,
duly executed on behalf of Borrower and duly filed with the Secretary of State
of Florida and are in full force and effect;
Whereas, in consideration of the Lenders entering into this Loan
Agreement, the Borrower has issued, or will prior to the Initial Advance issue,
to the Lenders, in such denominations as they have specified, an aggregate of
23,760.758 shares of its Class C Preferred Stock, which shares have been duly
authorized and, when issued, will be validly issued , fully paid and
non-assessable.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Additional Advance" means any Advance, other than the Initial Advance,
made by the Lenders in the manner set forth in Sections 2.9 and 2.10.
"Advances" means the Initial Advance and any Additional Advance.
"Affiliate" means, as to any Person, any other Person directly or
indirectly controlling, or controlled by or under common control with such
Person, including without limitation any Person owning 5% or more of any class
of voting securities of such Person
<PAGE>
("control" meaning the power to direct the management of a Person, whether by
the ownership of securities or by contract or otherwise).
"Agreement" means this Agreement, as the same may be amended, modified
or supplemented from time to time.
"Aggregate Commitment Amount" shall mean $33,000,000.
"Applicable Law" means all applicable laws, treaties, judgments,
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority.
"Average Amount Outstanding" shall mean an amount equal to (x) the sum
of aggregate amount of all Loans outstanding on each day beginning on the date
of the Initial Advance and ending on the Prepayment Date, divided by (y) the
number of days beginning on and including the date of the Initial Advance, and
ending on the Prepayment Date.
"BankBoston Forbearance Agreement" means the agreement of BankBoston,
N.A. (i) to forbear from exercising remedies or taking other action to enforce
the payment of the Debt of the Company owing to BankBoston, N.A. for a period of
45 days and in certain events specified therein, for up to 90 days, (ii)
consenting to the entrance by the Borrower and its Subsidiaries into the Loan
Documents and (iii) to advance the additional $7,500,000 of advances authorized
under its facilities, when requested by the Borrower.
"Board" means the Board of Directors of the Borrower or a committee of
directors lawfully exercising relevant powers of the Board.
"Borrower" has the meaning set forth in the first paragraph of this
Agreement.
"Borrower Security Agreement" shall mean the security agreement, dated
as of the Closing Date, made by the Borrower in favor of the Collateral Agent
for the benefit of the Lenders, as the same may from time to time be amended,
modified or supplemented.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Tampa, Florida or New York, New York are authorized by
law to close.
2
<PAGE>
"Change of Control" means the occurrence of any of the following
events (other than as a consequence of the issuance of the Preferred Stock to
the Lenders upon exercise of the Exchange Option):
(i) any "Person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire within one year), directly or indirectly, of more than
50% of the Voting Stock of the Company; or
(ii) individuals who at the date hereof constituted the
Board of Directors of the Borrower cease for any reason to
constitute a majority of the Board of Directors then in office;
or
(iii) Borrower or any of its Subsidiaries consummates any
sale, lease, exchange or other disposition of all or
substantially all of the assets of the Borrower and its
Subsidiaries, taken as a whole, in any transaction or series of
transactions not in the ordinary course of business; or
(iv) Borrower engages in a merger, consolidation or
similar business combination with any third party.
"Class A Articles of Amendment" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
amending and restating the designation of the rights, limitations and
preferences of the Class A Preferred Stock in the form attached hereto as
Exhibit K.
"Class B Articles of Amendment" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
amending and restating the designation of the rights, limitations and
preferences of the Class B Preferred Stock in the form attached hereto as
Exhibit J.
"Class C Certificate of Designations" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
designating the rights, limitations and preferences of the Class C Exchangeable
Preferred Stock in the form attached hereto as Exhibit H.
"Class C Preferred Stock" means the Class C Exchangeable
Preferred Stock, par value $.01 per share, of the Borrower.
3
<PAGE>
"Class D Certificate of Designations" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
designating the rights, limitations and preferences of the Class D Preferred
Stock in the form attached hereto as Exhibit I.
"Class D Preferred Stock" means the Class D Preferred Stock, par
value $.01 per share, of the Borrower.
"Closing Date" shall mean the date on which all of the conditions
set forth in Section 3.1 are satisfied.
"Collateral Agent" means Greenwich Street Capital Partners II,
L.P., acting as Collateral Agent for the Lenders.
"Commitments" means the commitment of each of the Lenders to make
Advances in accordance with its Commitment Percentage.
"Commitment Fee Letter Payment" has the meaning set forth in
Section 2.9.
"Commitment Percentage" shall mean, with respect to each Lender,
the percentage of the Aggregate Commitment Amount set forth beside such Lender's
name on Schedule 1.1(a).
"Commitment Period" shall mean the period beginning on the
Closing Date and ending 90 days from and after the date hereof.
"Common Stock" means the Borrower's common stock, par value $0.01
per share.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all Debt of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person and (vi) all Debt of others Guaranteed
by such Person.
4
<PAGE>
"Default" means any condition or event that constitutes an Event
of Default or that with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Definitive Agreement" means a binding agreement between the
Borrower and one or more creditworthy Persons having the financial and other
capacity to consummate the transaction contemplated thereby, providing for (i) a
merger, consolidation, share exchange, business combination or other similar
transaction involving the Borrower in which the outstanding Common Stock is
converted into the right to receive cash or to receive securities
of a Qualifying Issuer; (ii) a sale, conveyance, lease, exchange, transfer or
other disposition of all or substantially all the assets of the Borrower and its
Subsidiaries, taken as a whole, in a single transaction or in a series of
transactions outside of the ordinary course of business in return for cash or
securities of a Qualifying Issuer; or (iii) a tender offer or exchange offer for
any and all of the outstanding shares of Common Stock in return for cash or
securities of a Qualifying Issuer, in each case which, upon consummation of the
transactions contemplated thereby, would result in a Change of Control and which
agreement shall include only customary closing conditions to the obligation of
Borrower and such other Person(s), but which consummation shall not be
conditioned upon the completion of due diligence, or the obtaining of financing
and shall provide for payment of consideration to the holder of any Class C
Preferred Stock or Class D Preferred Stock in connection with such transaction
equal to the consideration payable to such holder in accordance with the
provisions thereof.
"Disclosure Letter" means the letter from the Borrower to the
Lenders making certain disclosures with respect to the representations and
warranties contained herein.
"Dollars," "United States dollars," "U.S.$" or "$" means United
States of America dollars.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" has the meaning set forth in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Option" has the meaning set forth in Section 7.1.
5
<PAGE>
"Existing Creditors" means each of Bear Stearns Home Equity
Trust, Bear Stearns International Limited, Paine Webber Real Estate Securities,
Inc., German American Capital Corporation and Aspen Funding Corp. and their
respective successors and assigns.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Agreement" shall mean the Guarantee Agreement, dated
as of the Closing Date, made by the Guarantors in favor of the Lenders, as the
same may from time to time be amended, modified or supplemented.
"Guarantors" shall mean each of IMC Corporation of America, IMC
Credit Card, Inc., IMC Mortgage Company, Canada Ltd., IMC Securities Inc.,
American Home Equity Corporation, IMC Investment Corporation, IMC Investment
Limited Partnership, ACG Financial Services (IMC), Inc., American Mortgage
Reduction, Inc., Central Money Mortgage Co. (IMC), Inc., Corewest Banc, Equity
Mortgage Co., (IMC), Inc., IMCC International, Inc., Mortgage America (IMC),
Inc., National Lending Center, Inc., National Lending Center TILT, Inc.,
National Lending Group, Inc., and Residential Mortgage Corporation (IMC), Inc.,
each a wholly owned subsidiary of the Borrower.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term Guaranty shall not include
endorsements for collection or deposit or obligations under repurchase
agreements and mortgage loan sale agreements, relating to representations and
warranties made therein, in each case in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Initial Advance" shall mean the Advance from the Lenders to the
Borrower made on the Closing Date.
6
<PAGE>
"Intercreditor Agreements" shall mean the separate Intercreditor
Agreements substantially in the form attached hereto as Exhibits F-1, F-2 and
F-3, among the Borrower, the Lenders, and each of the Existing Creditors.
"Lender" has the meaning set forth in the first paragraph of this
Agreement.
"Lien" means, with respect to any asset or property, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset or property.
"Loans" shall have the meaning set forth in Section 2.1.
"Loan Documents" means (i) this Agreement, (ii) the Guarantee
Agreement, (iii) the Notes, (iv) the Security Agreements, (v) the Pledge
Agreement, (vi) the Registration Rights Agreement, (vii) the Intercreditor
Agreements, (viii) the BankBoston Forbearance Agreement, and (ix) any other
agreement entered into pursuant to Section 5.9 hereof or Sec tion 4 of the
Security Agreements, in each case as the same may from time to time be amended,
modified or supplemented, and "Loan Document" means any one of them.
"Note" shall mean any promissory note of the Borrower in the form
of Exhib it A hereto, as the same may from time to time be amended, modified or
supplemented.
"Officer's Certificate" means a certificate signed by the
president, a vice president, the secretary or the treasurer of the Borrower.
"Permitted Liens" shall have the meaning set forth in Section
5.11.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the Pledge Agreement, dated as of the
Closing Date, made by the Borrower in favor of the Collateral Agent for the
benefit of the Lenders, as the same may from time to time be amended, modified
or supplemented.
"Preferred Stock" means the Borrower's Preferred Stock, par value
$0.01 per share.
"Prepayment Date" shall have the meaning set forth in Section
2.6.
7
<PAGE>
"Qualifying Issuer" means, as of any date of determination, an
issuer the outstanding common stock or other common equity securities of which
is listed on the New York Stock Exchange or NASDAQ National Market System and
which has a publicly traded float of at least $500,000,000.
"Responsible Officer" means, with respect to any Person, the
president or any vice president of such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"SEC Reports" shall mean the annual report on Form 10-K of
Borrower for its fiscal year ended December 31, 1997 (as amended prior to the
date hereof), the quarterly reports on Form 10-Q of Borrower for its fiscal
quarter ended March 31, 1998 and June 30, 1998, the definitive proxy statement
on Schedule 14A filed by the Borrower with respect to its annual meeting of
shareholders held in 1998 and any other report, registration statement,
proxy statement or other filing with the SEC made after December 31, 1997 and
prior to the date hereof.
"Securitization Transaction" means any transaction, however
named, between the Borrower and any one or more purchasers and/or investors
which provides for the monetization of a discrete pool of mortgage loans and/or
mortgage notes through debt securities or ownership interests issued by a
special purpose vehicle supported or backed by mortgage loans and/or mortgage
notes that have been transferred to the special purpose vehicle by the Borrower.
"Security Agreements" shall mean the Borrower Security Agreement
and the Subsidiary Security Agreement.
"Settlement Date" shall have the meaning specified in Section
7.1(b).
"Signing Date" shall mean the date of execution and delivery
hereof by the parties hereto.
"Subsidiary" means, with respect to any Person, any corporation
or other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
8
<PAGE>
"Subsidiary Security Agreement" shall mean the security
agreement, dated as of the Closing Date made by the Guarantors in favor of the
Collateral Agent for the benefit of the Lenders, as the same may from time to
time be amended, modified or supplemented.
"Take-Out Premium" shall mean, with respect to the number of days
which shall have elapsed from and including the Signing Date to the date of
execution and delivery of a Definitive Agreement (which results in a Change in
Control), an amount equal to (x) the percentage set forth below listed next to
such number of days elapsed (provided, however, if an Event of Default shall
have occurred and be continuing, such percentage will be calculated as if 91
days had elapsed from the Signing Date), multiplied by (y) the Average Amount
Outstanding:
Take-Out
Days Elapsed Premium
------------ -------
0 - 45 20%
45 - 90 100%
Over 90 200%
"Three-Month Business Plan" shall mean the business plan of the
Borrower and its Subsidiaries included in the Disclosure Letter.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest granted hereunder in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Updated Business Plan" shall mean a report, updated weekly, in
form and substance similar to the Three-Month Business Plan.
"Voting Stock" of an entity means all classes of capital stock of
such entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
"Warehouse Facility" means those certain credit and financing
facilities obtained by the Borrower and the Guarantors from various lenders from
time to time to fund the acquisition and origination of mortgage loans, as the
same may be amended from time to time.
9
<PAGE>
SECTION 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a consistent basis.
ARTICLE II
THE LOAN
SECTION 2.1 Loans. Subject to the terms and conditions hereof,
each Lender severally agrees to make Advances in respect of loans (each a "Loan"
and, collectively, the "Loans") to the Borrower on the Closing Date in an amount
equal to such Lender's Commitment Percentage of the Initial Advance, and from
time to time during the Commitment Period in the manner set forth in Sections
2.9 and 2.10 in an aggregate principal amount at any one time outstanding which
does not exceed the amount of such Lenders' Commitment Percentage of the
Aggregate Commitment Amount. During the Commitment Period, the Borrower may use
the Commitments by borrowing such amounts, from time to time in the manner set
forth in and subject to the terms of Sections 2.9 and 2.10, which shall at no
time exceed the Aggregate Commitment Amount. The Borrower may prepay such Loans,
subject to the terms of this Article II, and may reborrow any amounts repaid.
Such Loans will be made available to or at the written direction of the Borrower
in immediately available funds.
SECTION 2.2 The Note; Repayment of Principal. The obligation of
the Borrower to repay the unpaid principal amount of the Loans shall be
evidenced by the Notes in the form of Exhibit A hereto, payable to the Lenders
and their registered assigns, duly executed and delivered by the Borrower to the
Lenders and bearing interest, maturing and subject to optional and mandatory
prepayment as provided herein. The Borrower shall repay the Loans, together with
all accrued interest thereon, on the last day of the Commitment Period, subject
to Section 2.5 and 2.6 hereof.
SECTION 2.3 Loan Record. (a) The Lenders shall maintain a loan
record in which it shall record the date and amount of each Loan and payment or
prepayment of principal of the Loans and the interest paid with respect thereto,
which record may be kept by recordations on the Notes.
10
<PAGE>
(b) The failure of any Lender to make an entry in the loan
register or any error made in any such entry shall not in any way affect the
obligations of the Borrower under this Agreement or any other Loan Document,
including without limitation the Borrower's obliga tion to repay the principal
amount of the Loans and the interest accrued from the actual date on which the
Loans are made. The Borrower shall not be bound by any entry in the loan
register not made in accordance with the terms hereof.
SECTION 2.4 Interest Rate. (a) The Loans shall bear interest on
the outstanding principal amount at a rate of 10% per annum. Interest on the
Loans shall be payable in arrears on the date that principal becomes due,
whether at maturity, by acceleration or by prepayment. Interest shall be
calculated on the basis of a 365 (or 366, as the case may be) day year for the
actual days elapsed.
(b) Any overdue principal of and overdue interest on the Loans or
any other overdue amount payable under this Agreement shall bear interest,
payable on demand, for each day until paid (to the extent permitted by
applicable law after as well as before judgment) at a rate per annum equal to 2%
above the interest rate otherwise payable for such day pursuant to Section
2.4(a).
SECTION 2.5 Mandatory Prepayment of the Loans. Unless the Lenders
shall theretofore have exercised the Exchange Option as provided in Section 7.1,
but subject to Section 2.6, the Borrower shall prepay the Loans in whole,
together with all accrued interest and, in the case of prepayment pursuant to
clause (a) below, Take-Out Premium, if any, thereon, on the first to occur of:
(a) a Prepayment Date upon a Change of Control in accordance with Section 2.6,
and (b) the last day of the Commitment Period. Whether or not the Loan shall
have been paid in full, the Borrower shall, unless the Lenders shall theretofore
have exercised the Exchange Option pursuant to Section 7.1, but subject to
Section 2.6, pay to the Lenders the Takeout Premium, if any, on the Prepayment
Date.
SECTION 2.6 Change of Control Prepayment of the Loan. In the
event the Borrower or any Subsidiary shall have executed and delivered a
definitive agreement for, or any other event giving rise to the Lenders' right
to deliver a Notice of Exercise pursuant to clause (ii) or (iii) of Section
7.1(a) shall occur in respect of, a transaction which would, upon consummation,
constitute an Change of Control, the Borrower shall, within 10 days thereafter,
offer to repay the Loan to the Lenders by giving the Lenders written notice of
such intention to repay the Loans upon such Change of Control. Such notice shall
specify the date (which date shall be not less than twenty (20) days after such
notice) upon which the Change of Control is expected to occur (such date, the
"Prepayment Date"). In the event the date upon which the Change of Control is to
occur is delayed or rescheduled, the Borrower shall give the Lenders prompt
written notice thereof specifying the delayed or rescheduled date on which the
11
<PAGE>
Change of Control is expected to occur. The Lenders shall notify the Borrower,
not less than five (5) Business Days prior to the date then scheduled for the
Change of Control whether such offer is accepted or not. Failure to respond to
such notice within such period by the Lenders shall be deemed an acceptance of
such offer. Upon acceptance of such offer, the Exchange Option will terminate,
unless such Change of Control fails to occur within two (2) days of such
Prepayment Date set forth in the most recent notice given to the Lenders prior
to acceptance of such offer, in which event the Exchange Option shall be
reinstated.
The amount of any such prepayment shall be equal to all principal
amounts outstanding, if any, together with all interest accrued thereon to the
Prepayment Date, plus Take-Out Premium. If such notice is given, the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the Prepayment Date, together with all accrued interest to
such date on the amount prepaid, plus the Take-Out Premium.
SECTION 2.7 Manner and Time of Payments. (a) All payments of
principal, interest, Take-Out Premium and all other amounts payable hereunder
shall be in United States dollars in Federal or other immediately available
funds and shall be made not later than 1:00 p.m. (New York time) on the date due
to the Lenders at such account of such bank or banks as the Lenders may from
time to time designate. Funds received by a Lender after such time shall be
deemed to have been paid by the Borrower on the next succeeding Business Day.
(b) Whenever any payment to be made hereunder shall be stated to
be due on a day which is not a Business Day, the payment shall be made on the
next succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder.
SECTION 2.8 Use of Proceeds. The Borrower shall use the proceeds
of the Loans only for general corporate purposes, and in accordance with the
Three-Month Business Plan.
SECTION 2.9 Borrowings. (a) The Initial Advance shall be made,
subject to Section 3.1, on the Closing Date in the amount requested by the
Borrower pursuant to Section 2.10, which amount shall be sufficient to enable
the Borrower to pay in full the commitment fee and all out-of-pocket costs and
expenses reimbursement of which has then been requested and which are payable to
the Lenders pursuant to their commitment fee letter dated the date hereof (the
"Commitment Fee Letter Payment"). Each Additional Advance may be made, from time
12
<PAGE>
to time, subject to Section 3.2, upon notice to the Lenders in compliance with
Section 2.10.
SECTION 2.10 Requests for Advances; Payment. (i) Subject to the
provisions of Sections 2.9 and 3.1, in the case of the Initial Advance, and
Sections 2.9 and 3.2 in the case of any Additional Advance, a request for an
Advance shall be made, or shall be deemed to be made, in the following manner:
The Borrower may give the Lenders notice of its intention to borrow, in which
notice the Borrower shall specify the amount of the proposed Advance and the
proposed borrowing date, no later than 1:00 P.M. New York time at least one day
prior to the proposed borrowing date. As an accommodation to Borrower, the
Lenders may permit telephonic requests for Advances and electronic transmittal
of instructions, authorizations, agreements or reports to the Lenders by the
Borrower. Unless the Borrower specifically directs the Lenders in writing not to
accept or act upon telephonic or electronic communications from Borrower, no
Lender shall have liability to the Borrower for any loss or damage suffered by
Borrower as a result of such Lender's honoring of any requests, execution of any
instructions, authorizations or agreement or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to such Lender by the Borrower and no Lender shall have any duty to verify
the origin of any such communication or the authority of the person sending it,
provided such Lender does not have reason to believe any such communication is
not authorized. A written notice for any Additional Advance delivered in
accordance with this Section 2.10 shall constitute a representation and warranty
that on the date of such request, the conditions precedent to an Additional
Advance contained in Section 3.2 clauses (a)-(f) have been satisfied as of such
date. As an additional condition to each Advance, the Lenders shall have
received immediately prior to making such Advance written confirmation from
BankBoston that it is making its pro rata advance under its facility as
contemplated by the BankBoston Forbearance Agreement.
(ii) Each borrowing of Advances shall be advanced by each Lender
in accordance with its Commitment Percentage, provided that, if any Lender fails
to advance all or any portion of any requested Advance, any other Lender may,
but shall have no obligation to, advance all or any portion of the amounts to be
advanced by such Lender.
ARTICLE III
CONDITIONS
SECTION 3.1 Conditions Precedent to the Initial Loan. The
obligation of the Lenders to make the Initial Advance to be made by them
13
<PAGE>
hereunder is subject to the satisfaction of the following conditions precedent
(or the waiver thereof in the sole discretion of the Lenders):
(a) Each Lender shall have received its Note, conforming to the
requirements hereof and duly executed and delivered by a duly authorized
Responsible Officer of the Borrower and duly endorsed by each Guarantor;
(b) The representations and warranties of the Borrower contained
in this Agreement and the other Loan Documents and those otherwise made
in writing by or on behalf of the Borrower pursuant to the provisions of
this Agreement shall be correct in all material respects when made and
at and as of the Closing Date, as if made at and as of the Closing Date;
no Event of Default or Default shall have occurred and be continuing;
and the Borrower shall have delivered to the Lenders a certificate of a
Responsible Officer of the Borrower, dated the Closing Date, certify ing
that the conditions specified in this paragraph (b) have been fulfilled;
(c) The Lenders shall have received an opinion of counsel to the
Borrower, which counsel is satisfactory to the Lenders, and which
opinion is in form and substance satisfactory to the Lenders and covers
such matters incident to the transactions contemplated by this Agreement
and the other Loan Documents as the Lenders may request, addressed to
the Lenders and dated the Closing Date;
(d) The Lenders shall have received the Borrower Security
Agreement in the form of Exhibit B hereto, duly executed and delivered
on behalf of the Borrower by a duly authorized Responsible Officer of
the Borrower, and a Subsidiary Security Agreement in the form of Exhibit
C hereto, duly executed and delivered on behalf of each Guarantor by a
duly authorized Responsible Officer of such Guarantor; and such Security
Agreements shall be in full force and effect;
(e) The Lenders shall have received the Guarantee Agreement in
the form of Exhibit D hereto, duly executed and delivered on behalf of
each Guarantor by a duly authorized Responsible Officer of such
Guarantor; and such Guarantee Agreement shall be in full force and
effect;
(f) The Lenders shall have received the Pledge Agreement in the
form of Ex hibit E hereto, duly executed and delivered on behalf of the
Borrower by a duly authorized Responsible Officer of the Borrower; and
such Pledge Agreement shall be in full force and effect;
14
<PAGE>
(g) (i) BankBoston, N.A. shall have entered into the BankBoston
Forbearance Agreement, which is satisfactory in substance and form to
the Lenders, and (ii) each Existing Creditor shall have duly executed
and delivered to the Lenders an Intercreditor Agreement in the form
attached as Exhibit F hereto with respect to such Existing Creditor and
each Existing Creditor shall have waived any existing right to terminate
the Standstill Period thereunder and confirmed its satisfaction with the
BankBoston Forbearance Agreement;
(h) the Borrower shall have obtained all consents to the
Borrower's entering into this Agreement (including, without limitation,
all consents from its other creditors listed on Schedule 3.1(h));
(i) the Lenders shall have received the Registration Rights
Agreement in the form of Exhibit G hereto, duly executed and delivered
on behalf of a duly authorized Responsible Officer of the Borrower, and
such Registration Rights Agreement shall be in full force and effect;
(j) the Borrower shall have (i) delivered to the Lenders
certificates evidencing the issuance to the Lenders of 23,760.758 shares
of Class C Preferred Stock, in such denominations and registered in such
names as the Lenders shall request, which shares shall be duly
authorized, validly issued, fully paid and non-assessable; and (ii) paid
the Lenders the Commitment Fee Letter Payment, which condition contained
in this clause (ii) may be satisfied by giving an irrevocable direction
to the Lenders to apply a portion of the Initial Advance in an amount
sufficient to effect such Payment to payment thereof.
(k) The Lenders shall receive from the Borrower a certificate,
dated the Closing Date, of its Secretary or Assistant Secretary as to
(i) resolutions of its Board then in full force and effect (x)
authorizing the execution, delivery and performance of this Agreement,
the Notes and each of the Loan Documents to be executed by it and (y)
authorizing the Class A Articles of Amendment, Class B Articles of
Amendment, the Class C Certificate of Designations and the Class D
Certificate of Designations; (ii) the incumbency and signatures of those
of its officers authorized to act with respect to this Agreement, the
Notes and each of the Loan Documents executed by it; and (iii) by-laws
and Articles of Incorporation of the Borrower;
(l) the Class A Articles of Amendment, Class B Articles of
Amendment, the Class C Certificate of Designations and the Class D
Certificate of Designations shall have been duly authorized by the Board
of Directors of the Borrower, duly executed on behalf of the Borrower
15
<PAGE>
and duly filed with the Secretary of State of the State of Florida and
shall be in full force and effect;
(m) Borrower shall be in compliance in all material respects with
the Three-Month Business Plan;
(n) the Lenders shall have received all documents it may
reasonably request relating to the existence of the Borrower and its
Subsidiaries, the corporate authority for and the validity of this
Agreement and the other Loan Documents and any other matters relevant
hereto, all in form and substance satisfactory to the Lenders;
(o) the Lenders shall have received the Disclosure Letter, which
shall be satisfactory to the Lenders in substance and form;
(p) the Borrower shall have delivered to the Lenders a
certificate of a Responsible Officer of the Borrower, dated the Closing
Date, certifying that the foregoing conditions specified in paragraphs
(a) through (o), inclusive, have been fulfilled.
SECTION 3.2 Conditions Precedent to Additional Loans. The obligation of
the Lenders to make the Additional Advances to be made by them hereunder is
subject to the satisfaction of the following conditions precedent (or the waiver
in the sole discretion of the Lenders):
(a) the representations and warranties of the Borrower contained
in this Agreement and the other Loan Documents and those otherwise made
in writing by or on behalf of the Borrower in connection with the
transactions contemplated by this Agreement shall be correct in all
material respects when made and at and as of the date of such Additional
Advance, as if made at and as of such date; and no Event of Default or
Default shall have occurred and be continuing;
(b) there shall not have occurred any material adverse change in
the business, properties, condition (financial or otherwise), results of
operations or prospects of the Borrower and its Subsidiaries taken as a
whole;
(c) Borrower shall be in compliance in all material respects with
the Three-Month Business Plan;
(d) no Existing Creditor shall have violated the provisions of
Section 1 of its Intercreditor Agreement;
16
<PAGE>
(e) BankBoston shall be in compliance in all material respects
with the BankBoston Forbearance Agreement;
(f) the Borrower shall have requested, and the Lenders shall have
become obligated to make, the Initial Advance; and
(g) the Borrower shall have delivered to the Lenders a
certificate of a Responsible Officer of the Borrower, dated the date of
such Additional Loan, certify ing that the conditions specified in this
paragraphs (a), (b), (c), (d), (e) and (f) have been fulfilled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 4.1 Corporate Organization, Etc. (a) The Borrower is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Florida, and has the corporate power and authority to own
or hold under lease its properties and to enter into and perform its obligations
under this Agreement and all other Loan Documents.
(b) The Borrower is duly qualified to do business as a foreign
corporation in each state of the United States in which it has an office or in
which failure to so qualify would, individually or in the aggregate, have a
material adverse effect on the business, assets, liabilities, condition
(financial or otherwise), results of operations or prospects of Borrower and its
Subsidiaries taken as a whole or on its ability to perform its obligations under
this Agreement, the Note or any other Loan Document (a "Material Adverse
Effect").
(c) Each Subsidiary of Borrower is a corporation or limited
partnership duly organized and validly existing and in good standing under the
laws of the state of its incorporation, and has the corporate or partnership
power and authority to own or hold under lease its properties and assets and to
enter into and perform its obligations under each of the Loan Documents to which
it is a party. Each such Subsidiary is duly qualified to do business as a
foreign corporation in each state of the United States in which it has an office
or in which the failure to be so qualified would have a Material Adverse Effect.
17
<PAGE>
(d) Set forth on Schedule 4.1 to the Disclosure Letter is a list
of all of the Subsidiaries of the Borrower and a true and correct description of
the authorized, issued and outstanding capital stock of each such Subsidiary.
The Borrower owns all of the outstanding capital stock of each such Subsidiary,
free and clear of any Liens, except as specified in Schedule 4.1 to the
Disclosure Letter.
SECTION 4.2 Due Authorization. The execution, delivery and
performance by the Borrower of this Agreement, and the execution, delivery and
performance by the Borrower and the Guarantors of each of the other Loan
Documents to which any of them is a party:
(a) have been duly authorized by all necessary corporate action
and do not require any stockholder approval or the approval or consent
of or notice to any trustee or holder of any indebtedness or
obligations of the Borrower or any Subsidiary;
(b) do not conflict with or result in any violation of the
certificate of incorporation or by-laws of the Borrower or any
Subsidiary;
(c) do not and will not contravene any Applicable Law or conflict
with or constitute a default under, or result in the creation of any
Lien (other than as permitted under this Agreement or the Security
Agreement) upon the property of the Borrower or any Subsidiary under any
indenture, mortgage, lease, instrument or other agreement to which the
Borrower or any Subsidiary is a party or by which it may be bound or
affected; and
(d) do not require the authorization, consent or approval of, the
giving of notice to, the registration with or the taking of any other
action by or in respect of, any Federal, state or foreign governmental
authority, agency or judicial body, or the taking of any other action
under any Applicable Law, except for those that have been or, on or
before the Closing Date, will have been, duly made, given or
accomplished, including without limitation the filing of Uniform
Commercial Code financing statements referred to in the Security
Agreements.
SECTION 4.3 Litigation. Except as disclosed in its SEC Reports,
complete and correct copies of which have been furnished to the Lenders, there
are no pending or, to the knowledge of the Borrower, threatened actions, suits,
proceedings or investigations before any court or administrative agency or
arbitrator which would, if adversely determined, individually or in the
aggregate, have a Material Adverse Effect.
18
<PAGE>
SECTION 4.4 Absence of Undisclosed Liabilities. Except as
disclosed in the SEC Reports or in Schedule 4.4 to the Disclosure Letter and for
liabilities arising since June 30, 1998 in the ordinary course of business and
consistent with past practice, none of which have had or could reasonably be
expected to have any Material Adverse Effect, neither Borrower nor any of its
Subsidiaries has any liability, obligation, claim or cause of action of any kind
or nature whatsoever, whether absolute, accrued, contingent or other, known or
unknown.
SECTION 4.5 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which are required to be filed by it
and has paid or caused to be paid all taxes which have been shown to be due and
payable by such returns or (except to the extent being contested in good faith
and for the payment of which adequate reserves have been provided) tax
assessments received by the Borrower or such Subsidiary to the extent that such
taxes have become due and payable.
SECTION 4.6 Title to Certain Properties. Each of the Borrower and
the Guarantors has good and marketable title to all of its material properties
and assets free and clear of any Lien, except as disclosed on Schedule 4.6 to
the Disclosure Letter.
SECTION 4.7 No Default. No Event of Default or Default has
occurred and is continuing or has occurred or will occur as a result of the
execution and delivery of this Agreement or the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby, other than
defaults as may result from creating junior liens on assets without the consent
of prior lien holders.
SECTION 4.8 Investment Company. Neither the Borrower nor any
Guarantor is an "investment company" or a company controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.9 Legal, Valid and Binding Agreements. This Agreement,
the Notes and each other Loan Document constitute or, when executed and
delivered by each of the Borrower and the Guarantors which is a party thereto,
will constitute, the legal, valid and binding obligation of each of the Borrower
and the Guarantors which is a party thereto, en forceable against the Borrower
or such Guarantor, as the case may be, in accordance with the respective terms
hereof and thereof, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally and by general principles of equity.
SECTION 4.10 Compliance with ERISA. Neither the Borrower nor any
Subsidiary has breached the fiduciary rules of ERISA or engaged in any
19
<PAGE>
prohibited transaction in connection with which the Borrower or such Subsidiary
could be subjected to (in the case of any such breach) liability for damages or
(in the case of any such prohibited transaction) either a civil penalty assessed
under ERISA or a tax, which liability, penalty or tax, in any case, would
reasonably be expected to have a Material Adverse Effect.
SECTION 4.11 Disclosure; Financial Statements. (a) The SEC
Reports, as of their date of filing, do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in the light of the cir cumstances under which they were made, not
misleading.
(b) The consolidated balance sheets of Borrower and its
consolidated Subsidiaries and the related consolidated statements of operations,
changes in shareholders' equity and cash flows contained in the SEC Reports,
present fairly the financial condition of the Borrower and its Subsidiaries as
at the dates thereof, and the consolidated results of its operations, changes in
shareholders, equity and cash flows for the periods presented therein in
accordance with generally accepted accounting principles consistently applied.
There has been no material adverse change in the business, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole from that reflected on the most recent
consolidated balance sheet of the Borrower and its subsidiaries contained in the
SEC Reports, except as disclosed in Schedule 4.11 to the Disclosure Letter.
SECTION 4.12 Compliance with Law. Each of the Borrower and its
subsidiaries is in compliance with Applicable Law, except to the extent that the
failure to comply therewith would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 4.13 Consents. No consent of any other Person and no
consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the borrowing hereunder or
with the execution, delivery or performance by Borrower or any Guarantor, or the
validity or enforceability of, this Agree ment or any other Loan Document,
except as set forth on Schedule 4.13 to the Disclosure Letter and except for
such consents, authorizations, filings or acts the failure of which to obtain or
to undertake would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 4.14 Patents, Copyrights, Permits and Trademarks. Each of
Borrower and its Subsidiaries owns, or has a valid license or sublicense in, all
domestic and foreign letters patent, patents, patent applications, and know-how,
licenses, inventions, technology, permits, trademark registrations and
20
<PAGE>
applications, trademarks, tradenames, trade secrets, service marks, copyrights,
product designs, applications, formulae, computer software and programs,
processes and industrial property rights (collectively "proprietary rights")
used in the operation of its business in the manner in which it is currently
being conducted and which are material to the business, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole. Neither the Borrower nor any of its
Subsidiaries is aware of any existing or threatened infringement or
misappropriation of any proprietary rights of others by the Borrower or any of
its Subsidiaries or of any proprietary rights of the Borrower or any of its
Subsidiaries by others, except for such as would not, individually or in the
aggregate, have Material Adverse Effect.
SECTION 4.15 Fairness Opinion. The Borrower has received an
opinion from Donaldson, Lufkin & Jenrette Securities Corporation to the effect
that the transactions contemplated hereby are fair to the Borrower and its
shareholders (other than the Lenders) from a financial point of view and such
opinion has not been modified or withdrawn.
SECTION 4.16 Capitalization. The Borrower's authorized capital
stock consists of (a) 50,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock") and (b) 10,000,000 shares of Preferred Stock, par
value $.01 per share (the "Preferred Stock"), of which 500,000 shares have been
designated Class A Preferred Shares, 300,000 shares have been designated Class B
Preferred Shares, 800,000 shares have been designated Class C Preferred Shares
and 800,000 have been designated Class D Preferred Shares. As of the date
hereof, Section 4.16 of the Disclosure Letter sets forth (i) the number of
shares of Common Stock that are issued and outstanding, all of which are validly
issued, fully paid and nonassessable and not subject to preemptive rights; (ii)
the number of shares of Common Stock are held in the treasury of the Borrower as
treasury stock; (iii) the number of options outstanding to purchase shares of
Common Stock (the "Stock Options"); and (iv) the number of shares of each Class
of Preferred Stock issued and outstanding. Except as set forth in Section 4.16
of the Disclosure Letter, there are no stock appreciation rights out standing.
Section 4.16 of the Disclosure Letter sets forth a list, complete and correct as
of the date hereof, the number of shares of Common Stock issuable upon the
exercise of each Stock Option and the exercise prices thereof, in the case of
Stock Options having exercise prices of $10.00 per share or less, and the
approximate number of shares of Common Stock issuable on the exercise of each
Stock Option in the case of Stock Options having exercise prices in excess of
$10.00 per share. There are no bonds, debentures, notes or other indebtedness of
the Borrower having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of Common
Stock of the Borrower may vote. Except as set forth in this Section 4.16 or in
Section 4.16 of the Disclosure Letter, no shares of capital stock or other
voting securities are issued, reserved for issuance or outstanding, nor are
there any outstanding subscriptions, options, warrants, rights, convertible
21
<PAGE>
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of the Borrower or any of
its subsidiaries obligating the Borrower or any of its Subsidiaries to issue,
deliver, sell or purchase, or cause to be issued, delivered, sold or purchased,
any securities of the Borrower or any of its Sub sidiaries. Except as set forth
in Section 4.16 of the Disclosure Letter, there are no voting trusts or other
agreements or understandings to which the Borrower or any of its Subsidiaries is
a party with respect to the voting of capital stock of the Borrower or any of
its Subsidiaries.
ARTICLE V
COVENANTS
The Borrower covenants and agrees that, so long as this Agreement
shall be in effect or any amount payable hereunder shall remain unpaid or any
obligation required to be performed hereunder shall remain unperformed, and
unless the Lenders shall otherwise consent in writing:
SECTION 5.1 Performance of Obligations. (a) The Borrower shall
perform, and shall cause each Guarantor to perform, promptly and faithfully all
of its obligations under this Agreement, the Notes and the other Loan Documents.
(b) The Borrower shall, and shall cause each Subsidiary to, pay
and discharge, at or before maturity, all of its obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and maintain in accordance
with generally accepted accounting principles appropriate reserves for the
accrual of any of the same; provided that the failure of the Borrower and its
Subsidiaries to pay and discharge their obligations or liabilities with respect
to the matters set forth in Schedule 5.1 to the Disclosure Letter or with
respect to any margin call or demand for repayment on existing Securitization
Transactions or Warehouse Facilities of which the Lenders have received notice
under Section 5.3(b) hereof, or to pay and discharge their accounts payable
within 60 days of their presentment to the Borrower or its Subsidiaries shall
not be deemed a breach or nonperformance by the Borrower of its covenants in
this Section 5.1(b).
SECTION 5.2 Compliance with Laws. The Borrower shall, and shall
cause each Subsidiary to, comply with Applicable Law except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings.
22
<PAGE>
SECTION 5.3 Notice of Default and Event of Default. (a) No later
than two Business Days after becoming aware of the existence of any condition or
event which constitutes a Default or an Event of Default hereunder, the Borrower
shall provide the Lenders with an Officer's Certificate specifying the nature
and period of existence thereof and what action the Borrower is taking or
proposes to take with respect thereto.
(b) Immediately upon the receipt of notice from any creditor of a
margin call or demand for repayment in respect of on a Securitization
Transaction or a Warehouse Facility, the Borrower shall immediately notify the
Lenders of the nature and amount of such margin call or demand for repayment,
and the name of the creditor which made such margin call or demand.
SECTION 5.4 Report on Proceedings. No later than two Business
Days after becoming aware of any investigation of the Borrower or any Subsidiary
by any governmental authority or agency or any court or administrative
proceeding or arbitration which, if adversely determined, would reasonably
involve a possibility of an adverse effect on the ability of the Borrower to
perform its obligations under this Agreement, the Note or any other Loan
Document, the Borrower shall provide the Lenders with an Officer's Certificate
specifying the nature of such investigation or proceeding and what action the
Borrower is taking or proposes to take with respect thereto.
SECTION 5.5 Financial Statements and Other Reports. The Borrower
shall furnish to the Lenders the following described financial statements,
reports, notices and information:
(a) Updated Business Plan. Within two Business Days after the end
of each week, an Updated Business Plan for such week, all in reasonable
detail and in form reasonably satisfactory to the Lenders, together with
such other information as is customarily prepared by the Borrower on a
weekly basis.
(b) Monthly Financial Statements. Within 35 days after the end of
the month, consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries at the end of such month and the related
consolidated and consolidating statements of income and cash flows of
the Borrower and its Subsidiaries for such month, and the general ledger
trial balance of the Borrower and its Subsidiaries for such month, all
in reasonable detail and in form reasonably satisfactory to the Lenders,
together with such other information as is customarily prepared by
Borrower as part of its monthly report to management.
23
<PAGE>
(c) Quarterly Financial Statements. Within 45 days after the end
of each fiscal quarter of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries at the end of such
quarter and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow of the Borrower and its
Subsidiaries for such fiscal quarter, setting forth, in the case of the
consolidated statements, in comparative form the figures for the
previous quarter of the Borrower, all in reasonable detail and certified
by a principal financial officer of the Borrower as presenting fairly
the financial position of the Borrower and its Subsidiaries as of the
dates indicated and the results of their operations, changes in
shareholders' equity and cash flows for the periods indicated in
conformity with generally accepted accounting principles applied on a
consistent basis with prior periods (except as otherwise stated
therein); provided that the delivery of the Borrower's Quarterly Report
on Form 10-Q for such fiscal quarter prepared in accordance with the
requirements of the SEC and U.S. securities regulations shall be
sufficient to satisfy the Borrower's obligations under this Section
5.5(c).
(d) Other Reports. Promptly upon their becoming available, copies
of all other financial statements, reports, notices and proxy statements
sent or made avail able by the Borrower to its shareholders or filed
with the SEC.
(e) Officer's Certificate. Together with each delivery of
financial statements or reports required by clauses (a), (b) and (c)
above, a certificate from a Responsible Officer of the Borrower to the
effect that the signer is familiar with or has reviewed the relevant
terms of this Agreement and has made, or caused to be made under his or
her supervision, a review of the transactions and condition of the
Borrower during the period covered by such financial statements, and
that such review has not disclosed the existence during such period, nor
does the signer have knowledge of the existence as at the date of such
certificate, of any condition or event that constitutes an Event of
Default or Default hereunder or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and
what action the Borrower has taken, is taking or proposes to take with
respect thereto.
(f) Other Information. Such other data or information regarding
the business affairs or financial condition of the Borrower as the
Lenders may from time to time reasonably request, promptly upon receipt
of such request.
SECTION 5.6 Conduct of Business and Preservation of Corporate
Existence, Etc. (a) The Borrower shall, and shall cause each Subsidiary to,
maintain and preserve at all times its corporate existence.
24
<PAGE>
(b) The Borrower shall, and shall cause each Subsidiary to,
continue to engage in business of the same general type as now conducted by the
Borrower or such Sub sidiary and will do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence and its rights, powers, privileges and franchises, except for any
corporate right, power, privilege or franchise that it determines is no longer
necessary or desirable in the conduct of its business.
(c) The Borrower shall not, without the prior written consent of
the Lenders, enter into the ownership, active management or operation of any
business other than businesses presently conducted in the geographic locations
presently conducted (and except as otherwise permitted hereby the Borrower shall
not effect or permit a change in its corporate organization existing on the date
hereof).
(d) Except as provided in Section 5.24, the Borrower shall not,
and shall not permit any Subsidiary to, amend or modify its Certificate of
Incorporation or By-laws without the prior written consent of the Lenders.
SECTION 5.7 Inspection of Property; Books and Records. The
Borrower shall, and shall cause each Subsidiary to, keep proper books of record
and account in which full, true and correct entries are made in accordance with
generally accepted accounting principles and Applicable Law; and shall permit
representatives of the Lenders to visit and inspect any of its properties, and
examine and make abstracts from any of its books and records at the Borrower's
expense, at any reasonable time and as often as may reasonably be requested, and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees of
the Borrower and its Subsidiaries.
SECTION 5.8 Maintenance of Property; Insurance. The Borrower
shall, and shall cause each Subsidiary to, keep all property useful and
necessary in its business in good working order and condition, and maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against such risks as are usually insured
against in the same general area by Persons engaged in the same or a similar
business.
SECTION 5.9 Further Assurances; Additional Collateral Security.
The Borrower shall, and shall cause each Subsidiary to, execute and file all
such further documents and instruments, and perform such other acts, as the
Lenders may reasonably determine are necessary or advisable to maintain or
perfect the Liens granted to the Lenders in connection with this Agreement and
the other Loan Documents and to maintain the priority and perfection of such
Liens purported to be granted pursuant to this Agreement and the other Loan
25
<PAGE>
Documents (including any Liens on property rights). With respect to any real
property, fixtures, equipment or securities identified as collateral under any
Security Agreement acquired and held by the Borrower or any Guarantor at any
time after the Closing Date, upon request of the Lenders, the Borrower shall, or
shall cause such Guarantor to, grant the Lenders a Security Interest (as defined
in the Security Agreement) of record on all such real property, fixtures and
equipment and a pledge of all such securities, upon the terms set forth in the
applicable Security Agreement, as appropriate, and satisfactory in form and
substance to the Lenders.
SECTION 5.10 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary to, create, incur, assume, Guarantee or suffer to exist
any Debt except:
(a) Debt under the Loan Documents; and
(b) Debt listed on Schedule 5.10 to the Disclosure Letter, and
any extensions or renewals thereof;
SECTION 5.11 Limitation on Liens. The Borrower shall not and
shall not permit any Subsidiary to, create, incur, assume or suffer to exist any
Lien on any of its property, assets or revenues, whether now owned or hereafter
acquired, except the following (the "Permitted Liens"):
(a) Liens in favor of the Lenders under the Loan Documents;
(b) Liens existing on the date hereof and set forth on Schedule
5.11 to the Disclosure Letter;
(c) Liens for taxes and special assessments not yet due or which
are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of
the Borrower in accordance with generally accepted accounting
principles;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 90 days or
which are being contested in good faith by appropriate proceedings;
(e) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation or to secure the
26
<PAGE>
performance of tenders, statutory obligations, surety and appeal bonds,
performance and return-of-money bonds and similar obligations;
(f) Liens resulting from judgments of any court or governmental
proceeding; provided that such judgments in the aggregate do not
constitute an Event of Default under Section 6.1(j); and
(g) Liens of landlords or of mortgagees of landlords, arising
solely by operation of law, on fixtures located on premises leased in
the ordinary course of business; provided that the rental payments
secured thereby are not more than 30 days over due.
SECTION 5.12 No Dividends. The Borrower shall not, and shall not
permit any Subsidiary to, declare any dividends on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrower, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary.
SECTION 5.13 Limitation on Investments. The Borrower shall not,
and shall not permit any Subsidiary to, make or permit to exist any loans or
cash advances to, or capital investments in, any other Person, including any
Affiliate, except that:
(a) the Borrower and any Subsidiary may make cash advances to, or
investments in, any wholly-owned Subsidiary of the Borrower or, in the
case of advances or investments by any Subsidiary, the Borrower, and may
make advances to Preferred Mortgages, Ltd., a United Kingdom company, as
contemplated by the Three-Month Business Plan;
(b) the Borrower and any Subsidiary may purchase or otherwise
acquire and own (i) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed or insured by the
United States of America or any agency thereof, (ii) commercial paper
issued by domestic issuers rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc. or (iii)
certificates of deposit, Eurodollar time deposits, overnight bank
deposits and bankers acceptances, each with maturities of one year or
less from the date of the ac quisition thereof, of any commercial bank
having capital and surplus in excess of $100,000,000; and
27
<PAGE>
(c) the Borrower and its Subsidiaries may acquire investments in
notes and other securities received in settlement of overdue debts and
accounts payable in the ordinary course of business and mortgage loans,
servicing contracts and rights and certificates evidencing its
participation in securitization of mortgage loans and the servicing of
mortgage loans or securitizations in the ordinary course of business.
SECTION 5.14 Contingent Liabilities. The Borrower shall not, and
shall not permit any Subsidiary to, become liable for any Guaranties, except for
(i) the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, (ii) Guaranties
existing as of the date hereof and listed on Schedule 5.14 to the Disclosure
Letter, (iii) Guaranties in respect of Debt permitted under Section 5.10 or
Liens permitted under Section 5.11 and (iv) Guaranties (other than Guaranties of
Debt) arising in the ordinary course of business of the Borrowers and the
Subsidiaries consistent with past practice.
SECTION 5.15 Limitation on Leases. The Borrower shall not, and
shall not permit any Subsidiary to, enter into any agreement, or become liable
under any agreement, for the lease, hire or use of any real or personal property
for a period in excess of one year and an aggregate rental or other payment in
excess of $500,000, except with the prior written approval of the Lenders, such
approval not to be unreasonably withheld.
SECTION 5.16 Prohibition on Sale of Assets. The Borrower shall
not, and shall not permit any Subsidiary to, except as permitted or contemplated
under this Agreement or any other Loan Document, sell, lease, assign, transfer
or otherwise dispose of any of its assets, including any disposition of its
capital stock (except for issuances of shares if its capital stock required
under the acquisition agreements listed in Schedule 5.16 to the Disclosure
Letter), whether now owned or hereafter acquired, except for dispositions of
assets in the ordinary course of business consistent with past practice that,
taken together, do not constitute any material portion of the assets of the
Borrower and its Subsidiaries.
SECTION 5.17 Limitation on Prepayments of Debt. The Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly
prepay, purchase, redeem, retain or otherwise acquire any of its Debt except for
prepayments of the Notes in accordance with the terms of this Agreement and
except as otherwise expressly provided herein; provided, however, that scheduled
payments of interest and principal and mandatory prepayments of Debt which do
not violate the Intercreditor Agreements shall not be deemed to violate this
Section.
SECTION 5.18 Subsidiaries. The Borrower shall not, and shall not
permit any Subsidiary to, without the prior written consent of the Lenders,
create any Subsidiary.
28
<PAGE>
SECTION 5.19 Mergers, Disposition of Assets, Etc. The Borrower
shall not, and shall not permit any Subsidiary to, merge, combine or consolidate
with or into any Person, or sell, assign, lease or otherwise dispose of (whether
in one transaction or in a series of transactions, whether or not related) all
or any substantial portion of its assets (whether now owned or hereafter
acquired) to any Person, except with the prior written approval of the Lenders,
provided that dispositions of assets in the ordinary course of business that are
not material to the business of the Borrower and its Subsidiaries shall not
violate this Section 5.19.
SECTION 5.20 Fiscal Year. The Borrower shall not, and shall not
permit any Subsidiary to, permit its fiscal year to end on a day other than
December 31 without the prior written consent of the Lenders.
SECTION 5.21 No Inconsistent Agreements. The Borrower shall not,
and shall not permit any Subsidiary to, enter into any agreement containing any
term or provision which will be violated, contravened or breached by (i) the
Borrower's execution or delivery of this Agreement or any Loan Document, (ii)
the Borrower's performance of its obligations hereunder or (iii) the
consummation of the transactions contemplated hereby.
SECTION 5.22 Use of Proceeds. The Borrower agrees to apply the
proceeds of the Loan solely and exclusively for the general corporate purposes
of the Borrower and its Subsidiaries consistent in all material respects with
the Three-Month Business Plan.
SECTION 5.23 Transactions with Affiliates. The Borrower shall
not, and shall not permit any Subsidiary to, directly or indirectly, enter into
or, except for such existing transactions as are disclosed in the SEC Reports or
Schedule 5.23 to the Disclosure Letter, permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Borrower
(other than its wholly-owned Subsidiaries) or any director or executive officer
of the Borrower or its Subsidiaries, on terms that are less favorable to the
Borrower or such Subsidiary than those which might be obtained at the time from
Persons who are not Affil iates, directors or executive officers.
SECTION 5.24 Issuance of Preferred Stock. In consideration of the
Lenders entering into this Loan Agreement, the Borrower shall issue to the
Lenders, as promptly as practicable after the execution and delivery hereof and
in any event prior to requesting the Initial Advance hereunder, in such
denominations as they may specify, an aggregate of 23,760.758 shares of Class C
Preferred Stock, which shares shall be duly authorized, validly issued, fully
paid and non-assessable.
29
<PAGE>
SECTION 5.25 Ordinary Course. Notwithstanding anything herein to
the contrary, the following actions taken in the ordinary course of the
Borrower's business consistent with past practice and the Three-Month Business
Plan will not constitute a breach of any of the covenants in the Agreement: (i)
purchase, repurchase or origination of residential mortgage loans, (ii) whole
loan sales or securitization of residential mortgage loans (including, without
limitation, sales of all or any portion of Borrower's residential mortgage loans
to any Existing Creditor and which will comprise a portion of the Collateral (as
defined in the Intercreditor Agreement with such Existing Creditor)), (iii)
borrowing under warehouse loan facilities to finance the acquisition and
origination of residential mortgage loans and the granting of security interest
in such loans, (iv) the sale or borrowing against the value of residual
certificates and interest only certificates generated by securitization of
residential mortgage loans and the granting of a security interest in such
certificates, (v) borrowing to finance the funding of monthly remittance
advances under the Borrower's servicing agreements and the grant of a security
interest in (or sale of) the right to receive a repayment of such advances, (vi)
sales and purchases of loans and securities under repurchase agreements and
(vii) related Guarantees by the Borrower or its Subsidiaries in respect of the
foregoing.
ARTICLE VI
DEFAULTS
SECTION 6.1 Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to make any payment of any principal
of the Loans required to be made under this Agreement when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise;
(b) the Borrower shall fail to make any payment of any other
amount payable under this Agreement or any Note for more than five
Business Days after the same becomes due and payable;
(c) the Borrower shall fail to perform or comply with any
covenant set forth in Section 5.3 ("Notice of Default or Event of
Default"), 5.6 ("Conduct of Business and Preservation of Corporate
Existence, Etc."), 5.12 ("No Dividends"), 5.17 ("Limitation on
Prepayments of Debt"), 5.19 ("Mergers, Disposition of Assets, Etc."), or
5.22 ("Use of Proceeds");
30
<PAGE>
(d) the Borrower shall fail to perform or comply with any other
covenant or agreement to be performed or observed by it under this
Agreement or any other Loan Document and such failure shall continue
unremedied for a period of two days after written notice thereof shall
have been given by the Lenders to the Borrower provided, that if such
failure shall not be capable of being remedied within such two-day
period, such period shall be extended for such additional reasonable
period of time, not to exceed 30 days, as may be required to effect such
remedy, further provided that Borrower is diligently pursuing such
remedy;
(e) any representation or warranty of the Borrower or any
Guarantor contained in this Agreement or any other Loan Document or in
any document or certificate delivered in connection herewith or
therewith or pursuant hereto or thereto shall at any time prove to have
been incorrect or incomplete in any material respect at the time made or
deemed to have been made, shall remain material at the time in question
and shall either be incapable of being cured or shall not be cured
within 20 days after notice thereof by the Lenders to the Borrower;
(f) the Borrower or any Subsidiary shall consent to the
appointment of or taking possession by a receiver, assignee, custodian,
sequestrator, trustee or liquidator (or other similar official) of
itself or of a substantial part of its property; or the Borrower or any
Subsidiary shall admit in writing (to any creditor, governmental
authority or judicial court or tribunal) its inability to pay its debts
generally as they come due or shall fail generally to pay its debts as
they become due (except to the extent contemplated by the proviso clause
of Section 5.1(b) hereof), or shall make a general assignment for the
benefit of its creditors; or the Borrower or any Subsidiary shall file a
voluntary petition in bankruptcy or a voluntary petition or answer
seeking liquidation, reorganization or other relief with respect to
itself or its debts under the Federal bankruptcy laws, as now or
hereafter constituted or any other applicable Federal or State
bankruptcy, insolvency or other similar law, or shall consent to the
entry of an order for relief in an involuntary case under any such law;
or the Borrower or any Subsidiary shall file an answer admitting the
material allegations of a petition filed against the Borrower in any
such proceeding, or otherwise seek relief under the provisions of any
existing or future Federal or State bankruptcy, insolvency or other
similar law providing for the reorganization or winding-up of
corporations, or providing for an arrangement, agreement, composition,
extension or adjustment with its creditors; or the Borrower or any
Subsidiary shall take or publicly announce its intention to take
corporate action in furtherance of any of the foregoing;
(g) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without
the consent of the Borrower, a
31
<PAGE>
receiver, trustee or liquidator of the Borrower or any Subsidiary or of
any substantial part of its property, or any substantial part of the
property of the Borrower or any Subsidiary shall be sequestered, and any
such order, judgment or decree of appointment or sequestration shall
remain in force undismissed, unstayed or un vacated for a period of 30
days after the date of entry thereof;
(h) a petition against the Borrower or any Subsidiary in a
proceeding under the Federal bankruptcy laws or other insolvency laws,
as now or hereafter in effect, shall be filed and shall not be withdrawn
or dismissed within 30 days thereafter, or a decree or order for relief
in respect of the Borrower or any Subsidiary shall be entered by a court
of competent jurisdiction in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted or, under the
provisions of any law providing for reorganization or winding-up of
corporations which may apply to the Borrower, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the
Borrower or any Subsidiary or of any substantial part of its property
and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 30 days;
(i) the Borrower or any Subsidiary shall fail to pay when due and
payable (after any applicable grace period) the principal of or interest
on any Debt in excess of $100,000 in respect of which it is obligated to
make payment (other than Debt under this Agreement or the Note) or the
maturity of such Debt shall have been accelerated in accordance with the
provisions of the instrument providing for the creation of or concerning
such Debt, or any event shall have occurred or failed to occur and be
continuing which, with the giving of notice or the passage of time or
both, would permit any holder or holders thereof or any agent or trustee
on its or their behalf to accelerate such maturity, provided that the
foregoing shall not constitute an Event of Default or a Default for so
long as the holders of such Debt are prohibited from taking action with
respect to such default under the terms of any Intercreditor Agreement
or the BankBoston Forbearance Agreement;
(j) an uninsured final judgment in the amount, or final judgments
in related proceedings in an aggregate amount, in excess of $100,000
shall be entered against the Borrower or any Subsidiary and such
judgment shall continue unsatisfied and unstayed for a period of ten
days;
(k) the Borrower or any Subsidiary shall fail to pay when due an
amount or amounts aggregating in excess of $100,000 which it shall have
become liable to pay to the Pension Benefit Guaranty Corporation
("PBGC") or to an employee benefit plan under Title IV of ERISA; or
notice of intent to terminate a plan or plans having
32
<PAGE>
aggregate unfunded vested liabilities in excess of $100,000 shall be
filed under Title IV of ERISA by the Borrower or any Subsidiary, any
plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or
cause a trustee to be appointed to administer an employee benefit plan;
or a proceeding shall be instituted by a fiduciary of any employee
benefit plan against the Borrower or any Subsidiary to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any plan must be terminated; or
(l) any Loan Document shall cease for any reason to be in full
force and effect in accordance with its terms or the Borrower or any
Subsidiary shall so assert in writing or the Borrower or any Subsidiary
shall in any way challenge, or any proceedings shall be brought to
challenge, the validity, binding effect or enforceability of such Loan
Document or any of the Liens purported to be granted pursuant to any
Loan Document shall cease for any reason to be legal, valid and
enforceable Liens on the collateral purported to be covered thereby or
to have the priority purported to be granted thereby;
then, and in every such event, any Lender may by notice to the Borrower declare
the Loans to be, and the Loans shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower; provided that in the case of any of the
Events of Default specified in clause (f), (g) or (h) above, without any notice
to the Borrower or any other act by any Lender, the Loans shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower.
ARTICLE VII
EXCHANGE
SECTION 7.1 Exchange Option. Subject to the provisions of Section
2.6 and this Section 7.1, the Borrower hereby grants to the Lenders the option
to exchange their right to receive payment in respect of any principal, interest
and Take-Out Premium payable in respect of the Loans (regardless of whether any
such amounts are outstanding at such time of determination) for fully paid and
non-assessable shares of Class C Preferred Stock or Class D Preferred Stock, as
the Lenders may request (the "Exchange Option"), at any time, in an amount of
shares of such Preferred Stock which would, assuming such Preferred Stock were
convertible into Common Stock at a ratio of 1,000 shares of Common Stock for
each
33
<PAGE>
share of Preferred Stock, equal the percentage set forth below of the
outstanding Common Stock of the Borrower which in each case corresponds to the
date of such exercise, determined based on the number of days that have elapsed
from the Signing Date to and including the date of execution and delivery of a
Definitive Agreement set forth beside such percentage (provided, however, that
if an Event of Default shall have occurred and be continuing, such percentage
shall be calculated as if 91 days had elapsed since the Signing Date), and which
percentages shall represent in each case a percentage of all fully diluted
shares of Common Stock outstanding on the date of such exercise, and which shall
be adjusted pursuant to Section 7.1(d) below:
Days Elapsed Percentage
------------ ----------
0 - 45 0%
45 - 90 20%
Over 90 50%
(a) The Exchange Option may be exercised by the Lenders by giving
a notice of exercise of the Exchange Option, specifying whether Class C
Preferred Stock or Class D Preferred Stock is to be issued, at any time after
the first to occur of (i) the expiration of the Commitment Period, (ii) the
entrance by the Borrower or any Subsidiary into a Definitive Agreement and (iii)
the commencement of any tender offer, exchange offer, solicitation of proxies or
consents, or the entrance by the Borrower or any Subsidiary into any definitive
agreement, in each case referred to in clause (ii) or (iii) in connection with
any transaction which, upon consummation, would result in a Change of Control
(the "Notice of Exercise") to the Borrower.
(b) The Borrower hereby irrevocably agrees that upon receipt of a
Notice of Exercise, the Borrower shall, on the date which is two Business Days
after exercise of the Exchange Option (the "Settlement Date"):
(i) deliver to the Lenders a share certificate or certificates
issued in such denominations and registered in such names as
the Lenders shall specify, evidencing the shares of such
Preferred Stock so issued;
(ii)deliver to the Lenders evidence satisfactory to the Lenders:
(A) that shares of Preferred Stock are free and clear of
liens, charges and encumbrances, and are fully paid,
duly issued, non-assessable and freely transferable;
34
<PAGE>
(B) that all requisite corporate formalities in connection
with their title and delivery have been complied with;
and
(C) that all necessary governmental Authorizations have
been obtained (such evidence to be confirmed by a
legal opinion of the Borrower's counsel at the
Borrower's expense, if the Lenders shall so require in
their sole discretion); and
(c) The shares of Preferred Stock delivered on the Settlement
Date shall carry all economic rights payable on shares of Preferred Stock
generally to shareholders of record.
(d) Prior to the Settlement Date, the number of shares of
Preferred Stock which would, upon an exercise of the Exchange Option and the
issuance of the shares of Preferred Stock on the Settlement Date, be owned by
the Lenders (the "Synthetic Shares") shall be subject to adjustment from time to
time as set forth in this subsection 7.1(d).
(i) In case the Borrower shall (1) pay a dividend or make a
distribution on Common Stock in shares of Common Stock, (2) subdivide its
outstanding shares of Common Stock into a greater number of shares or (3)
combine its outstanding shares of Common Stock into a smaller number of shares,
the number of Synthetic Shares which would be owned upon exercise of the
Exchange Option and issuance of the shares on the Settlement Date immediately
prior to such action shall be adjusted so that a Lender shall be entitled to
receive the number of shares of Preferred Stock representing a right to receive
upon conversion thereof (assuming each such share of Preferred Stock were
convertible into 1,000 shares of Common Stock) the number of shares of Common
Stock which such Lender would have been entitled to receive immediately
following such action had such Lender exercised its Exchange Option immediately
prior thereto and converted subsequent to such exchange its shares of Preferred
Stock issuable thereon into shares of Common Stock. An adjustment made pursuant
to this subsection (i) shall become effective immediately after the record date
in the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(ii) In case the Borrower shall (x) issue, sell or otherwise
distribute any shares of Common Stock or issue (y) rights, options or
warrants entitling the holder thereof to subscribe for or purchase
shares of Common Stock ("Options") or any indebtedness, shares of stock
or other securities which are convertible into or exchangeable for, with
or without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the
happening of a specified event or both ("Convertible Securities") to any
Person, in the case of clause (x) above at a price per share, or in the
case of clause (y) above, at
35
<PAGE>
an exercise or conversion price per share, less than the Current Market
Value per share (as defined in subsection (v) below) of the Common Stock
on the record date mentioned below, then the number of Synthetic Shares
which would be owned upon exercise of the Exchange Option and issuance
of the shares on the Settlement Date immediately prior thereto shall be
adjusted so that a Lender shall be entitled to receive the number of
shares of Preferred Stock representing a right to receive upon
conversion thereof (assuming solely for this purpose the Preferred Stock
were so convertible) the number of shares of Common Stock equal to the
product obtained by multiplying the number of Common Shares issuable
upon conversion of the Synthetic Shares which would be owned immediately
prior to the date of issuance of such Common Stock, Options or
Convertible Securities by a fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance,
sale, transfer or distribution of such Common Stock, Options or
Convertible Securities immediately prior to such issuance, sell,
transfer or distribution plus (B) the number of additional shares
of Common Stock which are so offered for subscription or
purchase, or subject to issuance upon exercise, conversion or
exchange of such Options or Convertible Securities, and
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Common Stock, Options or Convertible Securities
immediately prior to such issuance, sell, transfer or
distribution plus (B) the number of shares of Common Stock which
the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Value (determined
by multiplying such total number of shares offered for
subscription or purchase or subject to issuance upon exercise,
conversion or exchange of such Options or Convertible Securities
by the sum of the exercise price of such Options or Convertible
Securities plus the value of any consideration per share paid to
the Borrower for such Common Stock, Options or Convertible
Securities and dividing the product so obtained by such Current
Market Value), and
Such adjustment shall be made successively whenever any Common
Stock is issued, sold or otherwise distributed or any Options or
Convertible Securities are issued, and shall become effective
immediately after the record date for the determination of Persons
entitled to receive such Options or Convertible Securities, as the case
36
<PAGE>
may be. In determining the value of any consideration received by the
Borrower for such Common Stock, Options or Convertible Securities, as
the case may be, the determination of the Board in good faith shall be
conclusive and shall be described in a Board resolution, provided that
any shares of Common Stock issued or issuable as contingent
consideration or earn-out payments in respect of acquisition agreements
made by the Borrower on or prior to the date hereof shall give rise to
an adjustment hereunder when the number of such shares to be issued
becomes fixed and shall be deemed to have been issued for no
consideration. If such an adjustment is made and such Options or
Convertible Securities are later exchanged, redeemed, invalidated or
terminated or expire by their own terms, then a corresponding reversing
adjustment shall be made to the number of Synthetic Shares which would
be owned, on an equitable basis, to take account if such event occurs on
or prior to the Settlement Date.
(iii) Notwithstanding subsection (ii) above, any adjustments to
the number of Synthetic Shares which would be owned upon exercise of the
Exchange Option to account for the issuance of "Rights" under a
Shareholder Rights Plan or Agreement (a "Rights Agreement") adopted
subsequent to the date hereof shall be made when such Rights are
exercised or exchanged by the Borrower for Common Stock (Common Stock
issued pursuant to the exercise of, or exchange by the Borrower for,
such Rights are referred to as "Rights Stock") pursuant to a Rights
Agreement or like arrangement at a price per share less than the Current
Market Value per share of Common Stock on the date of such exercise or
exchange. The number of Synthetic Shares which would be owned upon
exercise of the Exchange Option immediately prior to such exercise or
exchange shall be adjusted so that it shall equal the price determined
by multiplying the number of Common Shares issuable upon conversion of
the Synthetic Shares (assuming such Shares were so convertible) which
would be owned immediately prior to the date of such exercise or
exchange by a fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance of
such Rights Stock immediately prior to such issuance plus (B) the
number of additional shares of Rights Stock which are so issued.
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Rights Stock immediately prior to such issuance
plus (B) the number of shares of Common Stock which the
aggregate consideration received for the total number of shares
of Rights Stock so issued would purchase at such Current Market
Value (determined by multiplying such total number of shares of
37
<PAGE>
Rights Stock by the consideration received per share of such
Rights Stock and dividing the product so obtained by such
Current Market Value), and
Such adjustment shall be made successively whenever any Rights
Stock is issued, and shall become effective immediately (except as
provided in subsection (vi) below) after the issuance of Rights Stock.
If after the "Distribution Date" or a similar date (as defined in a
Rights Agreement), the Lenders are, for any reason, not entitled to
receive the Rights or similar rights, options or warrants which would
otherwise be attributable (but for the date of conversion) to the shares
of Common Stock received upon such conversion (assuming the Preferred
Stock were so convertible), then an increasing adjustment shall be made
in the number of Synthetic Shares which would be owned to reflect the
fair market value of the Rights or similar rights, options or warrants.
If such an adjustment is made and the Rights or similar rights, options
or warrants are later exchanged, redeemed, invalidated or terminated,
then a corresponding reversing adjustment shall be made to the number of
Synthetic Shares which would be owned, on an equitable basis, to take
account of such event, if such event occurs on or prior to the
Settlement Date.
(iv) In case the Borrower shall distribute to holders of Common Stock
evidences of indebtedness, equity securities (including equity interests
in the Borrower's subsidiaries) other than Common Stock or other assets
(other than cash dividends paid out of earned surplus of the Borrower
or, if there shall be no earned surplus, out of net profits for the
fiscal year in which the dividend is made and/or the preceding fiscal
year), or shall distribute to holders of Common Stock Convertible
Securities or Options (other than any Rights, Convertible Securities or
Options referred to in subsection (ii) or subsection (iii) above), then
in each such case the Borrower shall prior to effecting any such
distribution, set aside for distribution to the Lenders upon exercise of
the Exchange Option (assuming it were exercisable for the maximum number
of shares of Preferred Stock issuable upon exercise thereon based on the
then outstanding Common Stock) for each share of Preferred Stock the
assets, evidence of indebtedness and equity securities so distributed,
or of such subscription rights, warrants or options, applicable to the
shares of Common Stock into which such share of Preferred Stock would be
convertible (assuming solely for such purpose the Preferred Stock were
so convertible), and upon such exercise shall distribute such assets,
evidence of indebtedness, equity securities, rights, warrants or options
to the Lenders.
(v) For the purpose of any computation under subsection (ii) or
subsection (iii) above, the "Current Market Value" per share of stock on
any date shall be deemed to be (i) if shares of Common Stock are then
listed or admitted to trading on
38
<PAGE>
any national securities exchange or traded on any national market
system, the average of the last sale prices of a share of such stock for
the 15 consecutive trading days commencing 20 trading days before the
earliest of the date in question and the date before the "ex date" with
respect to the issuance or distribution requiring such computation, or,
if there shall have been no sales of such stock on any such trading day,
the average of the closing bid and asked prices at the end of such
trading day or (ii) if no shares of Common Stock are then listed or
admitted to trading on any national securities exchange or traded on any
national market system, the Current Market Value of a share of Common
Stock shall be determined in good faith by an independent investment
bank of nationally recognized standing. For purposes of clause (ii) of
the preceding sentence, the determination of "Current Market Value"
shall be made without consideration of (w) the lack of an actively
trading public market for the Common Stock, (x) any restrictions on the
transfer of shares of Common Stock and (y) any discount for holdings of
less than a majority or controlling interest of the outstanding capital
stock of the Borrower. For purposes of this subsection (v), the term "ex
date", when used with respect to any issuance or distribution, means the
first date on which the stock trades regular way on the principal
national securities exchange on which the stock is listed or admitted to
trading (or if not so listed or admitted, on NASDAQ, or a similar
organization if NASDAQ is no longer reporting trading information)
without the right to receive such issuance or distribution.
(vi) If any event occurs as to which the other provisions of this
Section 7.1(d) are not strictly applicable but the failure to make any
adjustment would not fairly protect the exchange rights of the Lenders
in accordance with the essential intent and principles hereof, then, in
each such case, the Borrower shall appoint a firm of independent public
accountants of recognized national standing which shall give their
opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 7.1(d),
necessary to preserve, without dilution, the exchange rights of the
Lenders. Upon receipt of such opinion, the Borrower shall promptly give
written notice to the Lenders and shall make the adjustments described
therein.
(vii) Whenever the number of Synthetic Shares which would be
owned upon exercise of the Exchange Option is adjusted as provided
above, the Borrower shall compute the adjusted number of Synthetic
Shares which would be owned upon exercise of the Exchange Option and
shall promptly forward to the Lenders a certificate signed by a
principal financial officer of the Borrower setting forth the adjusted
number of Synthetic Shares which would be owned upon such exercise and
39
<PAGE>
showing in reasonable detail the facts upon which such adjustment is
based and the computation thereof.
In case:
(A) the Borrower shall take any action which would
require an adjustment to the number of Synthetic Shares deemed
owned pursuant to subsection (iv) above;
(B) the Borrower shall authorize the granting to the
holders of its Common Stock of rights, options or warrants
entitling them to subscribe for or purchase any shares of capital
stock of any class or of any other rights;
(C) of any reorganization or reclassification of the
Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or a
subdivision or combination of its outstanding Common Stock), or
of any consolidation or merger to which the Borrower is a party
and for which approval of any shareholders of the Borrower is
required, or of the sale, lease or transfer of all or
substantially all the assets of the Borrower; or
(D) of the voluntary or involuntary liquidation,
dissolution or winding-up of the Borrower;
then the Borrower shall immediately send a written notice to the Lenders
stating (x) the date as of which the holders of record of Common Stock
to be entitled in such dividend, distribution, rights, options or
warrants are to be determined, or (y) the date on which such
reorganization, reclassification, consolidation, merger, sale, lease,
transfer, liquidation, dissolution or winding-up is expected to become
effective, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such
reorganization, reclassification, consolidation, merger, sale, lease,
transfer, liquidation, dissolution or winding-up.
(e) Subject to Section 2.6 hereof, upon exercise of the Exchange
Option, any principal, interest and Take-Out Premium outstanding at such
time so exchanged shall be deemed paid for all purposes of this
Agreement and the Commitments shall be terminated.
40
<PAGE>
SECTION 7.2 Reservation and Authorization of Shares.
(a) The Borrower shall at all times reserve and keep available
for issuance upon the exercise of the Exercise Option such number of its
authorized but unissued shares of Preferred Stock as will be sufficient to
permit the exercise in full of the Exercise Option. All shares of Preferred
Stock issuable upon exercise of the Exercise Option shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
(b) Before taking any action which would cause an adjustment
increasing the number of Synthetic Shares, the Borrower shall take any corporate
action which may be necessary in order that the Borrower may validly and legally
issue an increased number of fully paid and nonassessable shares of Preferred
Stock, sufficient to exchange the Loans to Preferred Stock, after giving effect
to such adjustment.
SECTION 7.3 Stock Transfer Books. The Borrower will not at any
time, except upon dissolution, liquidation or winding up of the Borrower, close
its stock transfer books so as to result in preventing or delaying the exercise
or transfer of the Exchange Option.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth below:
If to the Lenders:
Greenwich Street Capital Partners II, L.P.
c/o Greenwich Street Capital Partners, Inc.
388 Greenwich Street
38th Floor
New York, NY 10033
Attn: Sanjay Patel
Tel: 212-816-1149
Fax: 212-816-0166
41
<PAGE>
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Steven Ostner
Tel: 212-909-6000
Fax: 212-909-6836
If to the Borrower:
IMC Mortgage Company
5901 E. Fowler Avenue
Tampa, Florida 33617
Attn: President
Tel: 813-984-2533
Fax: 813-984-2593
with a copy to:
Mitchell W. Legler
300 A Wharfside Way
Jacksonville, Florida 32207
Tel: 904-346-3200
Fax: 904-346-3299
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other party. Each such notice, request or other
communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means, when delivered at
the address specified in this Section 7.1.
SECTION 8.2 No Waivers; Remedies Cumulative. No failure or delay
by the Lender in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.3 Expenses; Documentary Taxes; Indemnification. (a) The
Borrower shall be liable to pay on demand (i) all out-of-pocket expenses of the
Lenders,
42
<PAGE>
including the fees and disbursements of counsel to the Lenders, in connection
with the preparation of any waiver or consent under the Loan Documents or any
amendment of any of the Loan Documents, or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Lenders, including fees and dis bursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom. The Borrower shall indemnify
the Lenders from and hold it harmless against any transfer taxes, documentary
taxes, assessments or other similar charges made by any governmental authority
by reason of the execution and delivery of any Loan Document.
(b) (i) The Borrower shall indemnify, defend and hold harmless
the Lenders and their officers, directors, employees and agents (collectively,
the "Indemnitees") from and against, and pay or reimburse the Indemnitees for,
(i) any and all taxes, and all other assessments or charges made by any
governmental authority, relating to the execution and delivery of this Agreement
or the other Loan Documents, and (ii) any and all liabilities, losses, damages,
penalties, judgments, suits, claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of a single counsel) in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitee shall be designated a party
thereto, which may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in connection with
this Agreement or the other Loan Documents (collectively, the "Indemnified
Liabilities"), and to reimburse each Indemnitee, upon its demand as incurred for
any cost or expenses (including, without limitation, the reasonable fees,
expenses and disbursements of a single counsel) incurred in connection with
investigating, defending or preparing to defend or participating (including as a
witness) in any investigative, ad ministrative or judicial proceeding whether or
not such Indemnitee shall be designated a party thereto, whether commenced or
threatened, with respect to any such actual, alleged or threatened liability,
loss, damage, penalty, judgment, suit, claim, cost or expense; provided that no
Indemnitee shall have a right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
(ii) If any investigative, judicial or administrative proceeding
or arbitration arising from any of the foregoing is brought against any
Indemnitee, the Borrower shall assume the defense thereof on behalf of such
Indemnitee, including the employment of counsel reasonably satisfactory to such
Indemnitee and payment of all expenses relating thereto. The Indemnitee shall
have the right to employ separate counsel in any such proceeding or arbitration
and participate in the defense thereof; provided, that the fees and expenses of
such separate counsel shall be at the expense of the Indemnitee, rather than the
Borrower, unless (A) the employment of such separate counsel has been
specifically authorized by the Borrower or (B) the named parties to any such
action (or any impleaded
43
<PAGE>
parties), or the Indemnitee, shall have been advised by its counsel that there
may be one or more legal defenses available to the Indemnitee which are
different from or additional to those available to the Borrower. If the
provisions of clause (B) immediately above are met, the Borrower shall not have
the right to assume the defense of such action on behalf of the Indemnitee. The
Borrower shall not be liable for any settlement of any such proceeding effected
without the written consent of the Borrower, but if settled with the written
consent of the Borrower or if there is a final judgment for the plaintiff in any
such action, the Borrower shall indemnify and hold harmless the Indemnitee from
and against any loss or liability by reason of such settlement or judgment. The
Borrower shall not enter into any settlement of, or consent to the entry of any
judgment with respect to, any actual or alleged Indemnified Liabilities without
the prior written consent of the Indemnitee, unless such settlement or judgement
(x) includes an unconditional release of the Indemnitees from all liabilities
arising out of such actual or alleged Indemnified Liability and (y) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any Indemnitee.
(iii) At any time after the Borrower has assumed the defense of
any proceeding in respect of which indemnity has been sought hereunder against
the Borrower, the Indemnitee may elect, by written notice to the Borrower, to
withdraw its request for indemnity and thereafter the defense of such proceeding
shall be maintained by counsel of the Indemnitee's choosing and at the
Indemnitee's expense.
(iv) To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding provisions may be unenforceable because
it is violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under Applicable Law. All Indemnified
Liabilities shall be payable on demand.
(c) The obligations of the Borrower under this Section 8.3 shall
survive the termination of this Agreement and the discharge of the Borrower's
other obligations hereunder and the other Loan Documents.
SECTION 8.4 Amendments and Waivers. Neither this Agreement nor
any provision hereof may be amended, modified, waived or supplemented except by
an instrument in writing signed by the Borrower and the Lenders.
SECTION 8.5 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of the Lenders.
44
<PAGE>
SECTION 8.6 GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY
OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND
THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. THE BORROWER AGREES THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND EACH
OTHER "LOAN DOCUMENT" SHALL BE TRIED AND LITIGATED IN FEDERAL OR, IN THE ABSENCE
OF FEDERAL SUBJECT MATTER JURISDICTION, STATE COURTS LOCATED IN THE COUNTY OF
NEW YORK, STATE OF NEW YORK, UNLESS SUCH ACTIONS OR PROCEEDINGS ARE REQUIRED TO
BE BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY. EACH OF THE BORROWER AND THE LENDER WAIVES, TO THE
FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT
BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE THE DOCTRINE OF FORUM NON CONVENIENS
OR TO OBJECT TO VENUE IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THE
IMMEDIATELY PRECEDING SENTENCE. SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL
JURISDICTION IN ANY ACTION AGAINST THE BORROWER, MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION
8.1.
SECTION 8.7 WAIVER OF JURY TRIAL. EACH OF THE LENDERS AND THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL OR EQUITABLE ACTION, SUIT OR PRO CEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER "LOAN DOCUMENTS" OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
SECTION 8.8 Limitation on Interest. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, by the
Borrower for the use, forbearance or detention of the proceeds of the Loans
under this Agreement or any other Loan Document or otherwise (including any sums
paid as required by any covenant or obligation contained herein or in any other
Loan Document which are for the use, forbearance or detention of such money),
exceed that amount of money which would cause the effective rate of interest to
exceed the highest lawful rate permitted by applicable law (the "Highest Lawful
Rate"), and all amounts owed under this Agreement and each other Loan Document
shall be held to be
45
<PAGE>
subject to reduction to the effect that such amounts so paid or agreed to be
paid which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Notwithstanding any provision in this Agreement or any other Loan Document
to the contrary, if the maturity of the Loans or the Notes are accelerated for
any reason, or in the event of any prepayment of all or any portion of the Loan
or the Notes by the Borrower or in any other event, earned interest on the Loans
or the Notes may never exceed the Highest Lawful Rate, and any unearned interest
otherwise payable under the Notes that is in excess of the Highest Lawful Rate
shall be canceled automatically as of the date of such acceleration or
prepayment or other such event and, if theretofore paid, shall, at the option of
the holder of the Notes, be either refunded to the Borrower or credited to the
principal of the Notes. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Highest Lawful Rate, the
Borrower and the Lenders shall, to the maximum extent permitted by Applicable
Law, amortize, prorate, allocate and spread, in equal parts during the period of
the actual term of this Agreement, all interest at any time contracted for,
charged, received or reserved in connection with this Agreement.
SECTION 8.9 Severability. Any provision of this Agreement which
is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
SECTION 8.10 Counterparts; Integration; Section Headings. This
Agree ment may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as otherwise indicated, references herein to any "Section" means
a "Section" of this Agreement, and the table of contents and section headings in
this Agreement are for purposes of reference only and shall not limit or define
the meaning hereof.
SECTION 8.11 Confidentiality of Information. The Lenders agree
(for themselves as Lenders hereunder and in their capacity as collateral agent
or pledgee under any other Loan Document and for any assignee of the Lenders'
rights hereunder or under any other Loan Documents) that any information
concerning the Borrower or any of its Subsidiaries furnished to the Lenders
(including the capacity of Greenwich Street Capital Partners II, L.P. as
collateral agent or pledgee under any other Loan Documents) by or on
46
<PAGE>
behalf of the Borrower or any of its Subsidiaries pursuant to the terms of this
Agreement or any other Loan Document will be kept strictly confidential;
provided that the foregoing shall not apply to information which (i) is already
in possession of the Lenders, if such information is not known to the Lenders to
be subject to another confidentiality agreement with or another obligation of
secrecy to the Borrower, any of its Subsidiaries or another Person, (ii) is or
becomes generally available to the public other than as a result of a disclosure
by the Lenders or any of their directors, officers, employees, agents, repre
sentatives or advisers, (iii) becomes available to the Lenders on a
non-confidential basis from a source other than the Borrower or any of its
Subsidiaries or their respective directors, officers, employees, agents,
representatives or advisers, if such source is not known by the Lenders to be
bound by a confidentiality agreement with or other obligation of secrecy to the
Borrower or any of their Subsidiaries, or another Person, or (iv) is disclosed
to a prospective assignee of the Lenders in connection with the transfer or
assignment of the Loans or any rights of the Lenders under the Loan Documents,
provided that such prospective transferee agree in advance to keep such
information strictly confidential in accordance with the provisions of this
Section 8.11. Notwithstanding the foregoing, the Borrower acknowledges that the
Lenders may be required to disclose such information or portions thereof, and if
so required, will disclose such information (A) at the request of governmental
or self-regulatory agencies or other authorities, (B) pursuant to subpoena or
other court process, (C) to its independent auditors or (D) otherwise as
required by law; provided that if the Lenders are requested or required to
disclose any such information to governmental or self-regulatory agencies or
other authorities, pursuant to subpoena or other court process or otherwise as
required by law, the Lenders shall, if and to the extent reasonably practicable,
provide the Borrower with prompt notice of such request or requirement, so that
the Borrower may seek an appropriate protective order or other relief from such
request or requirement.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
IMC MORTGAGE COMPANY
By /s/
------------------------
Name:
Title:
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
------------------------
Name:
Title: Managing Member
48
<PAGE>
Schedule 1.01(a)
Commitment Percentage
Lender Percentage
- ------ ----------
Greenwich Street Capital Partners II, L.P. 92.2678%
Greenwich Fund, L.P. 6.2815%
GSCP Offshore Fund, L.P. 1.4507%
<PAGE>
Schedule 3.1(h)
Consents Required
-----------------
Master Repurchase Agreement, dated as of March 29, 1996, as amended from time to
time, by and among Bear Stearns Home Equity Trust and the Borrower and certain
of the Borrower's Subsidiaries.
Master Repurchase Agreement, dated as of May 1, 1997, between Bear, Stearns
International Limited and Industry Mortgage Company, L.P.
Institutional Account Agreement, dated October 23, 1996, between and among
Industry Mortgage Company, L.P. and Bear Stearns.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and German American
Capital Corporation, as lender.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and Aspen Funding
Corp., as lender
Loan and Security Agreement, dated as of February 28, 1997, between IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Industry Mortgage Company, L.P., Corewest
Banc, IMC Investment Corp., and IMC Investment Limited Partnership, as
borrowers, and Paine Webber Real Estate Securities, Inc., as lender.
Bridge Loan and Security Agreement, dated as of October 10, 1997, as amended
from time to time, between the Borrower, certain of its Subsidiaries and
BankBoston, N.A.
Loan and Security Agreement, dated March 18, 1994, as amended from time to time,
by and among the Borrower, certain of its Subsidiaries and Bank Boston, N.A.
Draft--October 12, 1998
EXHIBIT B
BORROWER SECURITY AGREEMENT
BORROWER SECURITY AGREEMENT, dated as of October 12, 1998, between IMC
MORTGAGE COMPANY, a Florida corporation (the "Company"), GREENWICH STREET
CAPITAL PARTNERS II, L.P., a Delaware limited partnership, GREENWICH FUND, L.P.,
a Delaware limited partnership, GSCP OFFSHORE FUND, L.P., a Cayman Islands
exempted limited partnership (each a "Lender" and collectively, the "Lenders")
and GREENWICH STREET CAPITAL PARTNERS, II, L.P., as collateral agent (the
"Collateral Agent").
RECITALS
A. Pursuant to the Loan Agreement, dated as of October 12, 1998 (as the
same may be modified, supplemented or restated from time to time, the "Loan
Agreement"), between the Company, as borrower, and the Lenders, the Lenders have
extended to the Company Commitments to loan, in the aggregate, $33,000,000 (the
"Loans"), subject to the terms and conditions set forth in the Loan Agreement.
B. In order to induce the Lenders to enter into the Loan Agreement and
to extend the Loans, the Company has agreed to enter into this Agreement to
grant to the Collateral Agent for the benefit of the Lenders a continuing
perfected security interest in the Collateral (as defined in Section 1) to
secure the performance of its obligations under the Loan Agreement, all upon the
terms and conditions set forth in this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby agrees with the
Collateral Agent and the Lenders as follows:
Section 1. Definitions. Capitalized terms used in this Agreement
without definition have the meanings given to them in the Loan Agreement. The
following terms, as used in this Agreement, have the following meanings:
<PAGE>
"Cash Flow from Loan Collateral" means all payments received by the
Company in respect of Servicing Rights and Securitization Receivables.
"Existing Liens" means the Liens existing on the Collateral as of the
date hereof identified in reasonable detail on Schedule 5.11 to the Discosure
Letter, as granted to the Persons and pursuant to the agreements or instruments
listed on such Schedule 5.11.
"Loan Collateral Account" means the demand deposit account established
by the Company with BankBoston, N.A. ("BankBoston") pursuant to the Bridge Loan
and Security Agreement, dated as of October 10, 1997, among the Company,
Industry Mortgage Company, L.P. and BankBoston for collection of the cash flow
from the Loan Collateral (other than cash flow from Servicing Rights) and into
which the Company has instructed all relevant parties to deposit all Cash Flow
from Loan Collateral (other than cash flow from Servicing Rights) and for the
payment to the Lenders, by automatic debit, of interest, fees and any other
amounts payable from time to time hereunder.
"Secured Obligations" means (i) the full and prompt payment of the
principal of and premium (including, without limitation, Take-Out Premium) and
interest on the Loans (including, without limitation, interest accruing after
the date of any filing by the Company of any petition in bankruptcy or the
commencement of any bankruptcy, insolvency or similar proceeding with respect to
the Company), as and when the same becomes due and payable in accordance with
the terms of the Loan Agreement, (ii) the payment of all other indebtedness and
other amounts payable by the Company under the Loan Agreement, the Notes, this
Agreement (including, without limitation, amounts due under Sections 10, 13 and
15 of this Agreement), and the other Loan Documents (including, without
limitation, interest accruing after the date of any filing by the Company of any
petition in bankruptcy or the commencement of any bankruptcy, insolvency or
similar proceeding with respect to the Company), (iii) the due and punctual
performance by the Company of and compliance by the Company with all its
obligations under the Loan Agreement, the Notes, this Agreement and all other
Loan Documents, and (iv) any renewals or extensions of any of the foregoing.
"Secured Parties" means Lenders and each assignee of the Loans, as
obligees of any or all of the Secured Obligations, and their respective
successors, and the Collateral Agent.
"Securitization Receivables" means all rights of the Company to receive
payments (including, without limitation, assets classified as residual strips,
certificates, or
2
<PAGE>
interest only strips on the Company's financial statements) under a
Securitization Transaction but excluding rights to receive payments in respect
of Servicing Fees.
"Securitization Transaction" means any transaction, however named,
between the Company and any one or more purchasers and/or investors which
provides for the monetization of a discrete pool of mortgage loans and/or
mortgage notes through debt securities or ownership interests issued by a
special purpose vehicle supported or backed by mortgage loans and/or mortgage
notes that have been transferred to the special purpose vehicle by the Company.
"Security Interests" means the security interests in the Collateral
granted pursuant to this Agreement securing the Secured Obligations.
"Servicing Advances" means all remittances advanced by the Company to a
Trustee under the Company's servicing agreement, and the right to receive a
payment of such advances.
"Servicing Fees" means all payments arising out of, related to, or
created in connection with a Person's duties and obligations as a servicer
pursuant to the terms of a Securitization Transaction.
"Servicing Rights" means all of any Company's rights to payment arising
out of, related to, or created in connection with its role as servicer under any
of the Securitization Transactions or in connection with its performance of a
similar role with respect to any other transaction or arrangement.
"Supplemental Documentation" means agreements, instruments, documents,
financing statements, warehouse receipts, bills of lading, notices of assignment
of accounts, (including, without limitation, notices given pursuant to Section
3(o)) Schedules of accounts assigned, mortgages, writings, filings, trust
certificates, certificates of interest, REMIC certificates, servicing
agreements, and any other written matter requested (whether or not required) by
the Collateral Agent to perfect and maintain a perfected Lien upon, and (if
applicable) a perfected first priority security interest in, any Collateral, and
to assist the Collateral Agent's realization thereon (including, without
limitation, the right to receive, endorse, and collect all instruments made
payable to the Company representing any dividend, interest payment or other
distribution or proceeds in respect of any Collateral).
"Trustee" means the trustee under the trust established for the benefit
of the purchasers under a Securitization Transaction.
3
<PAGE>
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York; provided, that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
security interest granted hereunder in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
Section 2. Grant of Security Interest. In order to secure full and
timely payment of the Secured Obligations, and to secure the performance of all
of the other obligations of the Company under the Loan Documents, the Company
hereby mortgages, pledges and assigns and transfers to the Collateral Agent and
grants to the Collateral Agent, for the benefit of the Collateral Agent and the
other Secured Parties, a continuing perfected security interest in, and a lien
upon, all of the following property of the Company, in each case whether now
owned or hereafter acquired or arising and regardless of where located
(collectively, the "Collateral"), subject to no Liens other than Permitted
Liens:
(a) All "accounts" (as defined in the UCC), including all
accounts receivable, contract rights (including, without limitation,
Servicing Rights, Servicing Fees and Servicing Advances), book debts,
notes, drafts and other obligations or indebtedness owing to the Company
arising from the sale, lease or exchange of goods or other property by
it and/or the performance of services by it (including, without
limitation, any such obligation that might be characterized as an
account, contract right or general intangible under the Uniform
Commercial Code in effect in any jurisdiction) and all of the Company's
rights in, to and under all purchase orders for goods, services or other
property, and all of the Company's rights to any goods, services or
other property represented by any of the foregoing and all monies due to
or to become due to the Company under all contracts for the sale, lease
or exchange of goods or other property and/or the performance of
services by it (whether or not yet earned by performance on the part of
the Company), including, without limitation, the right to receive the
proceeds of said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with respect to
any of the foregoing (collectively, "Accounts");
(b) All goods, merchandise, and other personal property that may
at any time be held for sale or lease or to be furnished under any
contract of service, be so leased or furnished, or constitute raw
materials, work in process, finished goods, supplies or materials and
all other "inventory" (as defined in the UCC) of
4
<PAGE>
whatsoever kind and nature that are or might be used or consumed in
business or in connection with the manufacture, packing, shipping,
advertising, selling, leasing or finishing of such goods, merchandise
and other personal property, together with all attachments, accessories,
replacements, substitutions, additions and improvements to any of the
foregoing (collectively, "Inventory");
(c) All "general intangibles" (as defined in the UCC) including,
without limitation, (i) all obligations or indebtedness owing to the
Company (other than Accounts and Instruments (as hereinafter defined))
from whatever source arising, (ii) all rights or claims in respect of
refunds for taxes paid, (iii) all rights in business or operating
licenses and permits, to the extent permitted by law, (iv) all rights,
whether by contract or otherwise, to receive or obtain water,
electricity, natural gas or any other resource or utility, (v) all
warranty, indemnification, or contractual rights and claims of any sort
and (vi) all choses or things in action, goodwill, licenses, leases,
computer programs, tapes or discs, and tax refund claims;
(d) All "documents" (as defined in the UCC) or receipts covering,
evidencing or representing goods;
(e) All "instruments", "chattel paper" or "letters of credit"
(each as defined in the UCC) evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting
the payment of, any of the Accounts, including, without limitation,
promissory notes, drafts, bills of exchange and trade acceptances
(collectively, "Instruments");
(f) All "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Company, including, without limitation, all
machinery, equipment, tools, furniture, fixtures, and any other goods
other than Inventory, together with any and all additions, substitutions
and replacements of any of the foregoing, and all attachments,
components, parts (including spare parts), equipment and accessories
installed thereon or affixed thereto;
(g) All patents, copyrights, service marks, trademarks and trade
names, including registrations and applications to register or renew the
registration of any of the foregoing, and inventions, processes,
designs, formulae, trade secrets, know-how, confidential information,
computer software and programs (including source codes), data and
documentation, and all similar intellectual property rights, tangible
embodiments of any of the foregoing (in any medium, including electronic
media), and licenses of any of the foregoing; other
5
<PAGE>
than source codes for computer software and programs designed for
clients or customers of the Company or its Subsidiaries that have been
placed in escrow or similar arrangement for the benefit of such clients
or customers or may be so placed in the ordinary course of business
consistent with past practice;
(h) All rights and claims of the Company in, to or under all
policies of insurance covering any of the Collateral, including, but not
limited to, insurance for fire, damage, loss, and casualty, together
with the proceeds, products, renewals, and replacements thereof,
including prepaid or unearned premiums;
(i) All of the Company's rights to payment of money arising out
of, related to, or created in connection with (whether such rights are
classified under the applicable Uniform Commercial Code as general
intangibles, accounts, certificated securities, uncertificated
securities or otherwise): (a) all Securitization Receivables and any
other interest of the Company, in the Securitization Transactions (other
than cash paid to or for the account of the Company in respect of the
transfer by the Company of mortgage loans to the Lenders in respect of a
Securitization Transaction) and similar rights or interests of Company,
(b) all payments to be paid to the Company pursuant to such
Securitization Transactions (other than cash paid to or for the account
of the Company in respect of the transfer by the Company of mortgage
loans to the Trustee in respect of a Securitization Transaction) and (c)
all Servicing Fees, Servicing Rights, Servicing Advances and any similar
rights or interests of the Company in respect of any of the foregoing
(a) through (c); (2) All business records, computer tapes, software,
microfiche, or recorded data of any kind or nature, regardless of the
medium, necessary to identify, locate and collect the foregoing; and (3)
All cash from time to time deposited in any deposit account of any of
the Company with the Lenders, in connection with this Agreement,
including, without limitation, the Loan Collateral Account
(collectively, "Loan Collateral");
(j) All books and records (including, but not limited to, credit
files, computer programs, printouts and other computer materials and
records) relating to any of the foregoing and all customer lists and
advertising materials relating to the Company's business; and
(k) Without in any way limiting the foregoing and to the extent
not otherwise included in the foregoing, (x) any and all products and
proceeds of any of the foregoing (including, but not limited to, any
claims of the Company against third parties relating to or in connection
with the Collateral), whether derived from voluntary or involuntary
disposition, and all renewals, replacements,
6
<PAGE>
substitutions, additions, accessions, rents, issues, royalties, and
profits of any of the foregoing, and (y) all cash and bank deposit
accounts, wherever located;
provided, however, that Collateral shall not include any collateral granted as
of the date hereof as security for the obligations of the Company under any of
the agreements listed on Schedule II hereto.
The Company acknowledges and agrees that, in applying the law of any
jurisdiction that has now enacted or hereafter enacts all or substantially all
of the uniform revision of Article 8 of the Uniform Commercial Code, with new
provisions added to Article 9 contemplated by such revision, all as approved in
1994 by the American Law Institute and the National Conference of Commissioners
on Uniform State Laws, the foregoing description of Loan Collateral and Accounts
shall be deemed to include "investment property", as applicable, as defined in
such new provisions of Article 9, it being the intention of the Company that
such property be included in the foregoing description of Loan Collateral or
Accounts, as the case may be, whether prior to or after the effectiveness of
such revision in such jurisdiction.
Section 3. Warranties, Covenants and Agreements of the Company. The
Company represents, warrants and covenants that:
(a) Except for the Security Interests and the Existing Liens and
except as permitted by the Loan Agreement, the Company is the owner and
holder of, and has rights in and good title to, the Collateral free from
any Lien of any Person, other than the Collateral Agent, and at all
times the Collateral shall be and remain free of all such Liens.
(b) The Company has requisite corporate power and authority to
execute and deliver this Agreement and to sell, assign and transfer, as
the case may be, the Collateral to the Collateral Agent and to grant to
the Collateral Agent a valid and perfected security interest in the
Collateral as contemplated by this Agreement, subject to no Liens other
than Permitted Liens; the execution and delivery of this Agreement and
the sale, assignment and transfer, as the case may be, of the Collateral
and the grant of a valid and perfected security interest in the
Collateral as contemplated by this Agreement, have been duly authorized
by all necessary corporate action; this Agreement and all related
documents executed by or on behalf of the Company pursuant to this
Agreement have been duly executed and delivered by the Company; and the
Company shall defend the Collateral
7
<PAGE>
against all claims and demands of all Persons at any time claiming the
same or any interest therein.
(c) Except for the financing statements and security agreements
identified on Schedule 5.11 to the Disclosure Letter with respect to the
Existing Liens and other liens in respect of which the Company does not
and will not have any further liability or obligation, the Company has
not heretofore signed any financing statement or security agreement that
covers any of the Collateral, and no such financing statement or
security agreement is now on file in any public office in any
jurisdiction.
(d) As long as any amount remains unpaid on any of the Secured
Obligations, the Company shall not enter into or execute, or permit to
be on file in any public office in any jurisdiction, any security
agreement or financing statement covering the Collateral, other than any
(i) security agreements and financing statements in favor of the Secured
Parties hereunder and (ii) security agreements and financing statements
in respect of Permitted Liens.
(e) The Company authorizes the Collateral Agent to file, in the
Collateral Agent's discretion and at the Company's expense, in
jurisdictions where this authorization will be given effect, financing
statements and continuation statements covering the Collateral signed
only by the Collateral Agent, and hereby appoints the Collateral Agent
as the Company's attorney-in-fact to sign and file any such financing
statements and continuation statements covering the Collateral. The
Company shall, at its expense, execute, deliver, file and record any
such documents, assignments, agreements, or statements (including,
without limitation, financing and continuation statements under the UCC)
and take any other action that from time to time may be necessary or
desirable, or that the Collateral Agent may request, in order to create,
preserve, perfect, confirm or validate the Security Interests granted
hereunder or to enable the Secured Parties to obtain the full benefits
of, or to enforce their rights, powers and remedies under, this
Agreement; and the Collateral Agent may, at any time or times, file as a
financing statement any counterpart, copy or reproduction of this
Agreement.
(f) Except for the Accounts identified on Schedule 5.11 to the
Disclosure Letter as being subject to a Lien, the Company shall not
transfer, sell or hypothecate any Account except upon the prior written
consent of the Collateral Agent or as permitted by Section 5.25 of the
Loan Agreement.
8
<PAGE>
(g) The Company's chief executive office and principal place of
business is in Tampa, Florida and Inventory and all books and records
relating to the Collateral (including, but not limited to, credit files,
computer programs, printouts, other computer materials, and records, and
all customer lists, advertising materials and reservations systems) are
located only at the locations set forth in Schedule I to this Agreement.
The Company shall not change its name, the location of its chief
executive office or principal place of business, or remove Collateral or
such books and records to locations that are not set forth in such
Schedule I, unless the Company shall have given the Collateral Agent
prior written notice thereof and taken all action (or made arrangements
to take such action substantially simultaneously with such change if it
is impracticable to take such action in advance) necessary or reasonably
requested by the Collateral Agent to amend each financing statement or
continuation statement so that it is not seriously misleading, or so as
to cause the Collateral Agent to continue to maintain its lien on, and
security interest in, the Collateral subject only to Permitted Liens.
Notwithstanding the foregoing, if for any reason Inventory is at any
time kept or located at locations other than those specified in Schedule
I to this Agreement or which may hereafter be consented to by the
Collateral Agent, the Collateral Agent shall nevertheless have and
retain a security interest therein.
(h) With respect to products and proceeds included in the
Collateral, any and all material amounts of cash included in the
Collateral shall promptly be deposited only into such accounts at
banking institutions (A) as the Company may from time to time designate
and (B) at all times following the date which is 30 days after receipt
of a written request to that effect from the Collateral Agent, which
request is made after a default or an Event of Default shall have
occurred and be continuing, as shall have a lock-box agreement, in form
reasonably satisfactory to the Collateral Agent (a "Lock-Box
Agreement"), in full force and effect; provided, however, that unless an
Event of Default shall have occurred and be continuing, any such deposit
shall not restrict the Company's use of such proceeds, or (ii) with
respect to Loan Collateral, the Loan Collateral Account. Upon receipt of
such request, the Company shall promptly enter into deposit arrangements
and a Lock-Box Agreement with a banking institution reasonably
acceptable to the Collateral Agent.
(i) Except for Permitted Liens and the asset dispositions
permitted under Section 5.16 or 5.25 of the Loan Agreement (and then
only to the extent permitted under the Loan Agreement), the Company
shall not sell or otherwise transfer or encumber or dispose of the
Collateral or any interest therein without the prior written consent of
the Collateral Agent.
9
<PAGE>
(j) The Company shall not release or surrender any guarantee,
suretyship agreement or security for any Accounts at any time or times
except in the ordinary course of business consistent with historical
collection practices.
(k) If any certificates of title or similar documents are at any
time issued or outstanding with respect to any Inventory, the Company
shall promptly advise the Collateral Agent thereof, and the Company
shall promptly cause the interest of the Collateral Agent to be properly
noted thereon, and if any certificates of title or similar documents are
so issued or outstanding at the time this Agreement is executed by or on
behalf of the Company, then the Company shall have caused the interest
of the Collateral Agent so to have been properly noted at or before the
time of such execution; and the Company shall further promptly deliver
to the Collateral Agent any such certificate of title or similar
document.
(l) The Company shall promptly deliver or cause to be delivered
to the Collateral Agent (or if such property is required to be delivered
to another creditor whose lien is senior to the lien hereof, to such
other creditor), duly endorsed in a manner reasonably satisfactory to
the Collateral Agent (and such other creditor), all Instruments, if any,
at any time representing all or any of the Collateral to be held as
Collateral pursuant to this Agreement.
(m) The Company shall use diligent commercially reasonable
efforts consistent with past practice to cause to be collected from
their respective account debtors, as and when due, any and all amounts
owing under or on account of each Account (including, without
limitation, Accounts that are delinquent, such Accounts to be collected
in accordance with lawful collection procedures) and shall apply
forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Account. Subject to the rights of the
Collateral Agent and the other Secured Parties, if no Event of Default
has occurred and is continuing, the Company may allow, in the ordinary
course of business as adjustments to amounts owing under such Accounts,
(i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Company
finds appropriate in accordance with sound business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise or
inadequately rendered service, all in accordance with the Company's
ordinary course of business consistent with historical collection
practices. The costs and expenses (including, without limitation,
attorneys' fees) of collection, whether incurred by the Company, the
Collateral Agent or the Lenders, shall be borne by the Company.
10
<PAGE>
(n) The Company shall not amend, modify, terminate or waive any
provision of any agreement, contract or other instrument giving rise to
an Account or otherwise constituting Collateral, except for amendments,
modifications, terminations or waivers which would not adversely affect
the Secured Parties and except that the Company may amend, modify,
terminate or waive provisions of agreements, contracts or other
instruments giving rise to Accounts or otherwise constituting collateral
in the ordinary course of business.
(o) The Company shall promptly obtain a written notification and
assignment of security interest, in substantially the form Exhibit A
attached hereto, duly executed and delivered by the Trustee under all
Securitization Transactions.
Section 4. Further Assurances as to the Collateral; Collateral Agent as
Attorney-In-Fact. At the Collateral Agent's request, the Company shall execute
and deliver to the Collateral Agent, at any time or times hereafter, all
Supplemental Documentation, in form and substance reasonably acceptable to the
Collateral Agent, and the Company shall pay the costs of any recording or filing
thereof. The Company hereby irrevocably makes, constitutes, and appoints the
Collateral Agent (and all Persons designated by the Collateral Agent for that
purpose) as the Company's true and lawful attorney (and agent-in-fact) to sign
the name of the Company on any Supplemental Documentation and to deliver any
Supplemental Documentation to such Persons as the Collateral Agent, in its sole
discretion, may elect; provided, that if no Event of Default shall have occurred
and be continuing the Collateral Agent shall not, in the case of Supplemental
Documentation other than financing statements, exercise the power of attorney
granted in this Section 4 to sign and deliver such Supplemental Documentation
unless the Company has failed to sign and deliver such Supplemental
Documentation promptly after the Collateral Agent has reasonably requested it to
do so. The Company agrees that a photocopy or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
Section 5. Assignment of Security Interest. If at any time the Company
shall take and perfect a security interest in any property of an Account debtor
or any other Person to secure payment and performance of an Account, the Company
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account debtor or other Person granting the security interest.
11
<PAGE>
Section 6. Maintenance of Records; Additional Information. (a) The
Company will keep and maintain, at its own cost and expense, satisfactory and
complete records of the Collateral.
(b) The Company shall furnish to the Collateral Agent from time to time
such additional information and copies of such documents relating to this Agree
ment, the Collateral, the Secured Obligations and the Company's financial
condition as the Collateral Agent may reasonably request. The Company will
promptly report to the Collateral Agent any occurrence or condition known to or
which becomes known to the Company having any material adverse effect upon the
fair market value of the Inventory or the Accounts.
Section 7. Inspection and Verification. The Collateral Agent and such
Persons as the Collateral Agent may reasonably designate shall have the right,
in connection with the Loan or the Secured Parties' security interest in the
Collateral, during the Company's usual business hours upon reasonable prior
notice and as often as may be reasonably requested, subject to any
confidentiality agreements existing between the Company and third parties, (i)
to inspect the Collateral, all books and records related thereto (and to make
extracts and copies from such records, subject to reasonable objection by the
Company and the terms of Section 8.11 of the Loan Agreement), and the premises
upon which any of the Collateral is located, (ii) to discuss the Company's
affairs with the executive officers of the Company and, upon notice to the
executive officers, such other officers as the Collateral Agent may reasonably
request, and its independent accountants, and (iii) to verify under reasonable
procedures the validity, amount, quality, quantity, value and condition of or
any other matter relating to the Collateral (including, without limitation,
Collateral in the possession of a third Person and contacting Account debtors or
a third Person possessing such Collateral for the purpose of making such a
verification); provided, that reimbursement of expenses incurred by or on behalf
of the Collateral Agent in connection therewith shall be governed by Section 8.3
of the Loan Agreement; provided, further, that so long as a Default or an Event
of Default has not occurred and is not continuing, the Collateral Agent may
contact the creditors, customers and clients of the Company and its Subsidiaries
only with the prior consent of the Company (which consent will not be
unreasonably withheld). The Collateral Agent shall have the absolute right to
share any information it gains from such inspection or verification with any
other Secured Party, subject to the terms of Section 8.11 of the Loan Agreement.
12
<PAGE>
Section 8. Rights and Remedies Upon Default. If an Event of Default has
occurred and is continuing:
(a) The Collateral Agent shall have and may exercise in respect
of the Collateral and the Secured Obligations any or all of the rights
and remedies of a secured party under the UCC, and as otherwise granted
in this Agreement or under any other Applicable Law or under any other
agreement of the Company now or hereafter in effect, including, without
limitation, the right and power to sell, at public or private sale or
sales, or otherwise dispose of, or otherwise utilize the Collateral and
any part or parts thereof in any manner authorized or permitted under
the UCC after default by a debtor, and to apply the proceeds thereof as
specified in Section 9 of this Agreement. Without limiting the
foregoing, the Collateral Agent shall have the right to take possession
of all or any part of the Collateral (including, without limitation, all
books, records, papers and documents of the Company or in the Company's
possession or control relating to the Collateral which are not already
in the Collateral Agent's possession), and for such purpose may enter
upon any premises upon which any of the foregoing are situated and
remove the same therefrom without any liability for trespass or damages
thereby occasioned. To the extent permitted by Applicable Law, the
Company expressly waives any notice of sale or other disposition of the
Collateral; and to the extent any such notice is required and cannot be
waived, the Company agrees that if such notice is given in the manner
provided in Section 26 hereof at least 15 days before the time of the
sale or disposition, such notice shall be deemed reasonable and shall
fully satisfy any requirement for giving of said notice. The Collateral
Agent may impose any limitations and conditions in connection with any
such sale or disposition as the Collateral Agent deems advisable or
necessary to comply with Applicable Law; and the Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given and may adjourn any public or private sale. The
Collateral Agent reserves the right to reject any and all bids at such
sale that in its commercially reasonable discretion it shall deem
inadequate. The Company shall execute and deliver such documents as the
Collateral Agent deems advisable or necessary in order that any such
sale or disposition be made in compliance with Applicable Law.
(b) The Company hereby waives all rights to marshall the assets
of the Company, including any such right with respect to the Collateral.
(c) All recitals in any instrument of assignment or any other
instrument executed by the Collateral Agent incident to sale, lease,
transfer,
13
<PAGE>
assignment or other disposition, lease or utilization of the Collateral
or any part thereof hereunder shall be sufficient proof of the matters
stated therein and no other proof shall be requisite to establish full
legal propriety of the sale or other action taken by the Collateral
Agent or of any fact, condition or thing incident thereto and all
prerequisites of such sale or other action or of any fact, condition or
thing incident thereto shall be presumed to have been performed or to
have occurred.
(d)(i) The Collateral Agent shall have the right to take control
of all proceeds of the Collateral (whether cash proceeds or non-cash
proceeds) and to notify any and all account debtors, lessees, or other
obligors to make payment on any and all accounts, leases, or obligations
directly to the Collateral Agent; and, in such circumstances, the
Company shall, upon the request of the Collateral Agent, likewise notify
any and all such account debtors, lessees or other obligors to make
payment directly to the Collateral Agent. Upon demand by the Collateral
Agent at any time following the occurrence of an Event of Default, all
proceeds of Accounts, whether such proceeds be cash proceeds or non-cash
proceeds, received by the Company and not otherwise deposited in an
account provided for in Section 3(h)(ii), shall be held in trust by the
Company for the account of the Collateral Agent, shall not be commingled
with any other funds, accounts, monies or property of the Company, and
shall be accounted for, paid over, transmitted and delivered to the
Collateral Agent in the form as received by the Company promptly upon
receipt thereof by the Company.
(ii) At any time after demand as hereinabove provided, and in any
event without demand, after any of the Secured Obligations shall become
due, whether by acceleration or otherwise, the Collateral Agent shall
have the right in its own name or in the name of the Company to demand,
collect, receive, sue for, compound and give acquittance for, any and
all amounts due or to become due on the Accounts and to endorse the name
of the Company on all checks, drafts, commercial paper and other
instruments given in payment or part payment thereof, and in its
discretion to settle, compromise, prosecute or defend any action, claim
or proceeding with respect thereto which the Collateral Agent may deem
necessary or appropriate to protect and preserve and realize upon the
Security Interest and collateral assignment of the Collateral Agent in
the Accounts and the proceeds thereof and security therefor including,
without limitation, the right to sell, assign, pledge, transfer and make
any agreement respecting or otherwise deal with the Accounts and to
exercise all rights of the Company thereunder.
14
<PAGE>
(e) All proceeds of Inventory, whether cash proceeds or non-cash
proceeds, including, without limitation, proceeds that constitute
Accounts or that are included in the Collateral as Accounts, and
proceeds that represent the proceeds of Accounts, received by the
Company and not otherwise deposited in an account provided for in
Section 3(h)(i)(B), shall be held in trust by the Company for the
account of the Collateral Agent, shall not be commingled with any other
funds, accounts, monies or property of the Company, and shall be
accounted for, paid over, transmitted and delivered to the Collateral
Agent in the form as received by the Company promptly upon receipt
thereof by the Company.
Section 9. Application of Proceeds. Any monies or property
actually received by the Collateral Agent pursuant to the exercise of any rights
or remedies referred to in Section 8 of this Agreement (including the sale or
other disposition of any portion of the Collateral) shall be applied in the
following order:
First, to payment of the costs and expenses of such sale or other
realization, including reasonable compensation to agents and counsel for
the Collateral Agent, and all expenses, liabilities and advances
incurred or made by the Collateral Agent in connection therewith, and
any other unreimbursed expenses for which the Collateral Agent or any
Secured Party is to be reimbursed pursuant to the Loan Agreement or
Section 10, 13 or 15 of this Agreement;
Second, to the ratable payment of accrued but unpaid Take-Out
Premium;
Third, to the ratable payment of accrued but unpaid interest on
the Secured Obligations in accordance with the provisions of the Loan
Agreement;
Fourth, to the ratable payment of unpaid principal of the Secured
Obligations;
Fifth, to the ratable payment of all other Secured Obligations,
until all Secured Obligations shall have been paid in full;
Sixth, to the ratable payment of such amounts, if any, as shall
be required to be paid pursuant to Section 9-504(1)(c) of the UCC and
any similar provision of Applicable Law; and
Finally, to payment to Company or its successors or assigns, or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
15
<PAGE>
Section 10. Reimbursement of Collateral Agent. The Company shall
forthwith upon demand pay to the Collateral Agent:
(a) The amount of any taxes that the Collateral Agent may have
been required to pay by reason of the Security Interests or to free any
of the Collateral from any Lien thereon; provided, that so long as no
Event of Default has occurred and is continuing, Company shall not be
obligated to pay or discharge any such tax or Lien so long as the
amount, validity or applicability thereof is contested diligently in
good faith and by appropriate proceedings and so long as any reserves or
other appropriate provisions as may be required by generally accepted
accounting principles shall have been made therefor.
(b) The amount of any and all costs and expenses, including the
reasonable fees and disbursements of counsel and of any other experts,
that the Collateral Agent reasonably may incur in connection with (i)
the administration or enforcement of this Agreement, including such
expenses as are incurred to preserve the value of the Collateral and the
validity, perfection, rank and value of any Security Interest, (ii) the
collection, sale or any other disposition of any of the Collateral,
(iii) the exercise by the Collateral Agent of any of the rights
conferred upon it hereunder or (iv) any default or Event of Default.
Any such amount not paid within five Business Days following written
demand therefor shall bear interest at a rate equal to the rate specified in
Section 2.4(b) of the Loan Agreement. This Section 10 shall survive the
termination of this Agreement.
Section 11. Exculpatory Provisions. (a) Neither the Collateral Agent
nor any of its officers, directors, employees or agents shall be liable to the
Company for any action lawfully taken or omitted to be taken by them under or in
connection with this Agreement. The Collateral Agent shall not be responsible in
any manner to any of the other Secured Parties for the value, validity, due
execution, genuineness, effectiveness, legality, enforceability or sufficiency
of this Agreement, the Loan Agreement or all or any portion of the Collateral,
or any of the certificates, documents or instruments contemplated by the
foregoing, or for the failure of the Company or any other party to perform its
obligations under them or for any recitals, statements, representations or
warranties made by the Company in this Agreement or for the value, sufficiency,
title or condition of all or any portion of the Collateral. The Collateral Agent
shall not be under any obligation to any of the other Secured Parties to
ascertain or to inquire as to the performance or observance on the part of the
Company of any of the terms, covenants or conditions of any agreements or to
inspect the properties, books or records of the Company or to ascertain or to
inquire as to the financial condition of the Company.
16
<PAGE>
(b) The Collateral Agent shall not be responsible to any Person for the
existence, genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the Security Interests in any of the
Collateral, whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder. The Collateral Agent shall have no duty
to any Person to ascertain or inquire as to the performance or observance of any
of the terms of this Agreement by the Company.
(c) The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, it being understood that neither the
Collateral Agent nor any other Secured Party shall have any responsibility for
(i) ascertaining or taking action with respect to exchanges, maturities, tenders
or other matters relative to any Instruments, whether or not the Collateral
Agent has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
portion of the Collateral.
Section 12. Secured Parties' Right of Set-Off and Bankers' Lien. The
Company recognizes and agrees that with respect to any time or other deposit,
certificate of deposit or any other balance of account standing to the credit of
the Company on the books of the Collateral Agent or any other Secured Party, the
Collateral Agent or the Collateral Agent through a Secured Party has a right of
set-off and, to the extent any Secured Party is a banking institution or of a
character otherwise qualified to assert the same, a bankers' lien to the full
extent permitted by law. The Company further agrees that the Secured Parties may
exercise such right of set-off or bankers' lien at any time when an Event of
Default shall have occurred and is continuing, regardless of the stated maturity
of any time deposit or other such credit balance.
Section 13. Other Expenses. (a) In the event the Company fails to pay
or obtain the discharge of any claim or Lien asserted against any material
portion of the Collateral, other than a Permitted Lien, the Company shall so
notify the Collateral Agent in writing and, regardless of whether such notice is
given, the Collateral Agent may, at any time or times, in its discretion and
without waiving any Event of Default or waiving or releasing any obligation or
duty of the Company under this Agreement or any Supplemental Documentation, the
Loan Agreement or any other Loan Document, make such payment or any part thereof
or obtain such discharge or take any other action with respect thereto that the
Collateral Agent deems advisable.
17
<PAGE>
(b) In the event that the Company fails to comply with any provision of
the Loan Agreement, this Agreement or any other Loan Document, such that the
value of any Collateral or the validity, perfection, rank or value of any
security interest granted hereunder is thereby diminished or put at risk, the
Collateral Agent may, but shall not be required to, effect such compliance on
behalf of the Company.
(c) In the event the Company fails to pay promptly all insurance
expenses relating to the Collateral, any and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining and shipping
the Collateral, any and all excise, property, sales and use taxes imposed by any
state, federal or local authority on any of the Collateral other than taxes that
are being contested as permitted by Section 10(a) hereof, or any and all
expenses in respect of the sale or other disposition of the Collateral, the
Collateral Agent may, at its option, but shall not be required to, pay the same.
(d) The Company shall reimburse the Collateral Agent on demand for all
amounts so paid, incurred or advanced by the Collateral Agent pursuant to
subsections (a), (b) and (c) of this Section 13, for any and all other sums for
which the Company may become liable hereunder, and for all costs, fees and
expenses (including reasonable attorneys' fees, legal expenses and court costs)
incurred by the Collateral Agent in enforcing or protecting the Security
Interests granted hereunder or any of the Collateral Agent's rights or remedies
on behalf of the Secured Parties under this Agreement, and all such amounts,
sums, costs, fees and expenses, together with interest thereon at the rate
required by Section 2.4(a) of the Loan Agreement, shall, until paid to the
Collateral Agent, be additional Secured Obligations hereunder.
Section 14. Absolute Interest. (a) All rights of the Collateral Agent
hereunder, and all obligations of the Company hereunder, shall be absolute and
unconditional irrespective of (i) any lack of validity or enforceability of any
provision of the Loan Agreement or any other Loan Document, any agreement with
respect to the Secured Obligations or any other agreement or instrument relating
to any of the foregoing, (ii) any change in the time, manner or place of payment
of or in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan Agreement,
any other Loan Document or any other agreement or instrument or (iii) any
exchange, release or nonperfection of any Collateral, or any release or
amendment or waiver of or any consent to or departure from any guarantee, for
all or any of the Secured Obligations or this Agreement.
18
<PAGE>
(b) This Agreement shall not be construed as relieving the Company from
full liability on the Secured Obligations or any and all future and other
indebtedness secured hereby or for any deficiency thereon.
(c) Following an Event of Default, the Collateral Agent shall be
subrogated to all of the Company's interests, rights and remedies in respect to
the Collateral and all security now or hereafter existing with respect thereto
and all guaranties and endorsements thereof and with respect thereto.
Section 15. Indemnity. (a) In addition to the payments pursuant to
Sections 10 and 13, the Company shall indemnify, defend and hold harmless the
Collateral Agent and the other Secured Parties and the officers, directors,
employees and agents of the Secured Parties (collectively, the "Indemnitees")
from and against, and pay or reimburse the Indemnitees for, (i) any and all
taxes, and all other assessments or charges made by any governmental authority,
relating to the execution and delivery of this Agreement, and (ii) any and all
liabilities, losses, damages, penalties, judgments, suits, claims, costs and
expenses of any kind or nature whatsoever (including, without limitation, the
reasonable fees and disbursements of a single counsel) in connection with (A)
any breach of a representation, warranty or covenant hereunder or (B) any
investiga tive, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto, which may be imposed on,
incurred by or asserted against such Indemnitee, in any manner relating to or
arising out of or in connection with this Agreement (collectively, the
"Indemnified Liabilities"), and to reimburse each Indemnitee, upon its demand as
incurred for any cost or expenses (including, without limitation, the reasonable
fees, expenses and disbursements of a single counsel) incurred in connection
with investigating, defending or preparing to defend or participating (including
as a witness) in any investigative, administrative or judicial proceeding
whether or not such Indemnitee shall be designated a party thereto, whether
commenced or threatened, with respect to any such actual, alleged or threatened
liability, loss, damage, penalty, judgment, suit, claim, cost or expense;
provided that no Indemnitee shall have a right to be indemnified hereunder for
its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction.
(b)(i) The Collateral Agent shall or shall cause each Indemnitee to
notify the Company promptly of each event of which it has knowledge which may
give rise to a claim under the indemnification provisions of this Section 15;
provided, that the failure so to notify the Company shall not impair the
Company's obligations under this Section 15 except to the extent the defense of
such claim is actually prejudiced thereby.
19
<PAGE>
(ii) If any investigative, judicial or administrative proceeding or
arbitration arising from any of the foregoing is brought against any Indemnitee,
the Company shall assume the defense thereof on behalf of such Indemnitee,
including the employment of counsel reasonably satisfactory to such Indemnitee
and payment of all expenses relating thereto. The Indemnitee shall have the
right to employ separate counsel in any such proceeding or arbitration and
participate in the defense thereof; provided, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnitee, rather than the
Company, unless (A) the employment of such separate counsel has been
specifically authorized by the Company or (B) the named parties to any such
action (or any impleaded parties), or the Indemnitee, shall have been advised by
its counsel that there may be one or more legal defenses available to the
Indemnitee which are different from or additional to those available to the
Company. If the provisions of clause (B) immediately above are met, the Company
shall not have the right to assume the defense of such action on behalf of the
Indemnitee. The Company shall not be liable for any settlement of any such
proceeding effected without the written consent of the Company, but if settled
with the written consent of the Company or if there is a final judgment for the
plaintiff in any such action, the Company shall indemnify and hold harmless the
Indemnitee from and against any loss or liability by reason of such settlement
or judgment. The Company shall not enter into any settlement of, or consent to
the entry of any judgment with respect to, any actual or alleged Indemnified
Liabilities without the prior written consent of the Indemnitee, unless such
settlement or judgement (x) includes an unconditional release of the Indemnitees
from all liabilities arising out of such actual or alleged Indemnified Liability
and (y) does not include a statement as to or an admission of fault, culpability
or a failure to act by or on behalf of any Indemnitee.
(iii) At any time after the Company has assumed the defense of any
proceeding in respect of which indemnity has been sought hereunder against the
Company, the Indemnitee may elect, by written notice to the Company, to withdraw
its request for indemnity and thereafter the defense of such proceeding shall be
maintained by counsel of the Indemnitee's choosing and at the Indemnitee's
expense.
(iv) To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding provisions may be unenforceable because it
is violative of any law or public policy, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under Applicable Law. All Indemnified
Liabilities shall be payable on demand.
20
<PAGE>
(c) The obligations of the Company under this Section 15 shall survive
the termination of this Agreement and the discharge of the Company's other
obligations hereunder.
Section 16. No Waiver; Cumulative Remedies. No action or inaction of
the Collateral Agent will be deemed to waive any of the rights, powers or
remedies of the Collateral Agent hereunder except pursuant to a writing, signed
by the Collateral Agent, and then only to the extent expressly set forth
therein. A waiver by the Collateral Agent of any right, power or remedy on any
one occasion will not bar the exercise of any right, power or remedy hereunder
on any future occasion. No failure of the Collateral Agent to exercise nor delay
of the Collateral Agent in exercising any right, power or remedy will preclude
the exercise of any other right, power or remedy. If the Collateral Agent
accepts payment of any amount secured hereby after its due date, it will not
thereby be deemed to have waived its right to require prompt payment when due of
all other amounts payable hereunder. Each right, power and remedy of the
Collateral Agent provided for in this Agreement or now or hereafter existing at
law or equity or by statute or otherwise is cumulative and concurrent and is in
addition to every other such right, power or remedy of the Collateral Agent, and
the exercise of any one or more of any such rights, powers or remedies with
respect to any of the Collateral will not preclude the simultaneous or later
exercise by the Collateral Agent of any other right, power or remedy with
respect to any other Collateral.
Section 17. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Collateral Agent may
appoint a bank or trust company or one or more other Persons, either to act as
co-agent or co-agents, jointly with the Collateral Agent, or to act as separate,
agent or agents on behalf of the Secured Parties with such power and authority
as may be necessary for the effectual operation of the provisions hereof and may
be specified in the instrument of appointment (which may, in the discretion of
the Collateral Agent, include provisions for the protection of such co-agent or
separate agent).
Section 18. Termination of Security Interests; Release of Collateral.
(a) Upon the payment in full of the outstanding principal amount of, and all
premium, if any, and accrued interest on the Loans in accordance with the Loan
Agreement and payment or satisfaction of all other Secured Obligations, the
Security Interests shall terminate and all rights to the Collateral shall revert
to the Company. Upon any such termination of the Security Interests, the
Collateral Agent will, at the expense of the Company, execute and deliver to the
Company such documents, and take such other actions, as the Company shall
reasonably request to effect or evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
21
<PAGE>
(b) If at any time a payment of the Loans or any of the other Secured
Obligations is rescinded or must otherwise be returned upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, the provisions of this
Agreement and the security interest created hereby shall continue to be
effective or be reinstated, as the case may be, all as though such payment had
not been made.
Section 19. Contracts Not Assignable. Any provision in this Agreement
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to assign or grant a security interest in any agreement, if an
attempted assignment thereof or grant of security interest therein, without the
consent of a third party thereto, would constitute a termination or breach
thereof (including, without limitation, any contract for investment advisory
services that would be so terminated or breached). From time to time at the
request of the Collateral Agent, the Company shall use its best efforts to
obtain the consent to the assignment and the Lien granted or purported to be
granted hereunder of the parties to such agreements. If such consent is not
obtained, or if an attempted assignment thereof or grant of security interest
therein would not be effective or would affect the rights of the Company
thereunder so that the Secured Parties would not in fact receive the benefit of
the Lien granted or purported to be granted hereunder, the Company will
cooperate with the Collateral Agent in any arrangement designed to provide such
benefits for the Secured Parties, including enforcement for the benefit of the
Secured Parties of any and all rights of the Company against a third party
thereto arising out of the breach or cancellation by such third party or
otherwise.
Section 20. Amendments, Etc. No amendment, modification, supplement,
termination, consent or waiver of this Agreement or any term or provision of
this Agreement shall be effective and binding unless in writing and signed by
the Collateral Agent. Any such waiver will be effective only in the specific
instance and for the specific purpose for which it is given.
Section 21. Successors and Assigns. This Agreement and the Lien in the
Collateral created hereunder are for the benefit of the Collateral Agent and the
Lenders and their successors, assigns and participants, and in the event of an
assignment of or the granting of a participation in all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the indebtedness
so assigned or participated out, may be transferred with such indebtedness. This
Agreement shall be binding on the Company and its successors and assigns.
Section 22. Severability. Any provision of this Agreement which is
illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such illegality, invalidity,
prohibition or
22
<PAGE>
unenforceability without invalidating or impairing the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
Section 23. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER "LOAN DOCUMENTS" OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE
RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 24. GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND THE
RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. THE COMPANY AGREES THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND EACH
OTHER "LOAN DOCUMENT" SHALL BE TRIED AND LITIGATED IN FEDERAL OR, IN THE ABSENCE
OF FEDERAL SUBJECT MATTER JURISDICTION, STATE COURTS LOCATED IN THE COUNTY OF
NEW YORK, STATE OF NEW YORK UNLESS SUCH ACTIONS OR PROCEEDINGS ARE REQUIRED TO
BE BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY. EACH OF THE PARTIES WAIVES, TO THE FULLEST EXTENT
PERMISSIBLE UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE IN ANY PROCEEDING BROUGHT IN ACCORDANCE
WITH THE IMMEDIATELY PRECEDING SENTENCE. SERVICE OF PROCESS, SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION AGAINST THE COMPANY, MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED
IN SECTION 26.
Section 25. Agreement May Constitute Financing Statement. The Company
consents to the filing of this Agreement or a photocopy thereof as a financing
statement under the UCC as in effect in any jurisdiction in which the Collateral
Agent may determine such filing to be necessary or desirable.
23
<PAGE>
Section 26. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given to such party at the
following address or facsimile number, or such other address or facsimile number
as such party may hereafter specify for the purpose by notice to the other
party. (a) if to the Collateral Agent, Greenwich Street Capital Partners II,
L.P., c/o Greenwich Street Capital Partners, Inc., 388 Greenwich Street, New
York, New York 10013, Attn.: Sanjay Patel; Tel: (212) 816-1149, Fax: (212)
816-0166; with a copy to Debevoise & Plimpton, 875 Third Avenue, New York, New
York 10022, attention: Steven Ostner, tel: (212) 909-6000, fax: (212) 909-6836;
and (b) if to the Company, IMC Mortgage Company, 5901 E. Fowler Avenue, Tampa,
Florida 33617, Attn.: President, Tel: 813-984-2533, Fax: (813) 984-2593; with a
copy to Mitchell W. Legler, 300A Wharfside Way, Jacksonville, Florida 32207.
Each such notice, request or other communication shall be effective (i) if given
by mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (ii) if given by any other
means, when delivered at the address specified in this Section 26.
Section 27. Counterparts; Section Headings. This Agreement may be
executed in any number of counterparts, each of which is an original, but all of
which together constitute but one instrument. Except as otherwise indicated,
references herein to any "Section" means a "Section" of this Agreement, and the
section headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof.
24
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
IMC MORTGAGE COMPANY
By /s/
------------------------
Name:
Title:
GREENWICH STREET CAPITAL
PARTNERS II, L.P.,
as Collateral Agent
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
its General Partner
By /s/
------------------------
Name:
its Managing Member
25
<PAGE>
LENDERS:
GREENWICH STREET CAPITAL
PARTNERS II, L.P.
GREENWICH FUND, L.P.
GSCP OFFSHORE FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
------------------------
Name:
its Managing Member
26
<PAGE>
Schedule I
to the
Borrower Security Agreement
Business Locations
IMC Mortgage Company
5901 E. Fowler Avenue
Tampa, Florida 33617-2362
<PAGE>
Schedule II
to the
Borrower Security Agreement
Exceptions to Collateral
Master Repurchase Agreement Governing Purchase and Sale of Mortgage Loans, dated
as of December 8, 1995, as amended from time to time, between Nomura Asset
Capital Corporation, as Buyer, IMC Mortgage Company (as successor by merger to
Industry Mortgage Company, L.P.) as Seller.
Loan Agreement, dated as of September 30, 1996, as amended from time to time,
between IMC Mortgage Company, IMC Mortgage Company, L.P., and IMC Corporation of
America, as Borrowers, and Nomura Asset Capital Corporation, as Lender.
Warehouse Credit and Security Agreement (Single Family Mortgage Loans), dated as
of March 29, 1996 between Industry Mortgage Company, L.P. and IMC Corporation of
America, as Borrowers, and Residential Funding Corporation, as Lender.
<PAGE>
Exhibit A
to the
Borrower Security Agreement
[Form of Notification and Acknowledgement]
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") entered into and
effective as of October __, 1998 among IMC Mortgage Company (the "Company") and
each of Greenwich Street Capital Partners II, L.P., GSCP Offshore Fund, L.P. and
Greenwich Fund, L.P. (together with their successors and assigns, the
"Holders").
W I T N E S S E T H:
WHEREAS, the Company and each of the Holders have entered into a Loan
Agreement, dated as of the date hereof (the "Loan Agreement"), pursuant to which
the Holders are entitled to receive from the Company shares of the Class C
Exchangeable Preferred Stock, par value $0.01 per share, of the Company (the
"Class C Shares") and shares of the Class D Preferred Stock, par value $0.01 per
share, of the Company (the "Class D Shares"); and
WHEREAS, in order to induce the Holders to enter into the Loan
Agreement, the Company has agreed to provide the registration rights set forth
herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Applicable Number of Registrations" shall be (i) five demand
registrations and (ii) unlimited piggyback registrations.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency then administering the Exchange Act or the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1
<PAGE>
"Initiating Holders" shall mean each Holder and its assignees who in
the aggregate are Holders of more than 2% of the issued and outstanding Class C
Shares and Class D Shares on an aggregate basis.
"Loan Agreement Draw Date" means the date of the first drawdown under
the Loan Agreement.
"Registrable Securities" shall mean (i) the Class C Shares and the
Class D Shares or (ii) Class C Shares or Class D Shares, as the case may be,
issued upon any stock split, stock dividend, recapitalization or similar event.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company
in compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements, not to exceed $25,000, of one counsel for all the selling Holders
and other security holders, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
"Restricted Securities" shall mean the Registrable Securities required
to bear or bearing a restrictive legend.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and transfer taxes applicable to the sale of Registrable Securities,
which shall be paid by the selling Holders.
SECTION 2. Requested Registration.
(a) Request for Registration. If the Company shall receive from
Initiating Holders a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will:
2
<PAGE>
(i) promptly give written notice of the proposed registration to
all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities
laws, appropriate compliance with applicable regulations issued under
the Securities Act and listing on appropriate exchanges) as may be so
requested and as would permit or facilitate the sale and distribution
of all or such portion of such Registrable Securities as are specified
in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a written request given within thirty days after receipt
of such written notice from the Company; provided that the Company
shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section 2(a) (i) in any
jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, or in which the cost of the foregoing is
unreasonable in light of the number of Registrable Securities
requested to be sold in such jurisdiction, unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or regulations
thereunder, and (ii) after the Company has effected the Applicable
Number of Registrations pursuant to this Section 2(a), and such
registrations have been declared or ordered effective and the sales of
such Registrable Securities shall have closed, and provided further
that the Company may defer the filing (but not the preparation) of any
registration otherwise required pursuant to this Section 2(a) if
another registration of equity securities of the Company under the
Securities Act is then pending or has been duly and validly demanded
by any holder of securities of the Company who is entitled, by
contract with the Company, to have securities included in such a
registration (such persons collectively, the "Other Shareholders") and
such contractual arrangement prohibits the Company from effecting such
registration at such time pursuant to this Agreement, or if a period
of less than three months shall have elapsed from the effective date
of the most recent registration previously effected by the Company.
Subject to the foregoing clauses, the Company shall file a
registration statement covering the Registrable Securities so
requested to be registered as soon as practicable, after receipt of
the request or requests of the Initiating Holders.
Notwithstanding the foregoing, if the Company shall at any time furnish
to the Holders a certificate of the Company stating that counsel to the Company,
which
3
<PAGE>
counsel shall be reasonably satisfactory to the Holders, or the Board of
Directors of the Company shall have determined that the Company has pending or
in progress a material transaction or other development, the disclosure of which
would, in the good faith judgment of the Company, materially and adversely
affect the Company, then, the Company may defer the filing (but not the
preparation) of a registration statement, and may withhold efforts to cause the
registration statement to become effective if the registration has been filed,
for up to 120 days, but the Company shall use all reasonable efforts to resolve
the transaction and, in accordance with Section 5, to file the regis tration
statement and cause it to become effective as soon as possible. If the Company
shall so defer the filing of any such registration statement, or so withhold
efforts to cause the registration statement to become effective, the Holders
shall have the right to withdraw the demand for registration by giving written
notice to the Company from the Initiating Holders within 20 days after receipt
of the applicable notice of deferment (and, in the event of such withdrawal,
such demand shall not be counted for purposes of determining the number of
demands for registration to which the holders of Registrable Securities are
entitled pursuant to this Section 2(a)). Notwithstanding anything else to the
contrary in this Agreement, the aggregate number of days during which otherwise
qualifying Holders shall be prohibited from registering and selling Registrable
Securities under this Section 2(a) shall not exceed 180 days during any
consecutive 12-month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 2(b) below, include
other securities of the Company which are held by Other Shareholders, but except
as provided in the last sentence of Section 2(b) below the Company shall have no
right to include any of its securities in any such registration.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2(a) and the Company shall include such information in the written
notice referred to in Sec tion 2(a)(i) above. The right of any Holder to
registration pursuant to Section 2(a) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder with respect to
such participation and inclusion) to the extent provided herein. A Holder may
elect to include in such underwriting all or a part of the Registrable
Securities he holds.
4
<PAGE>
If Other Shareholders request such inclusion, the Initiating Holders
shall, on behalf of all Holders, offer to include the securities of such Other
Shareholders in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Agreement. The Company
shall (together with all Holders and Other Shareholders proposing to distribute
their securities through such under writing) enter into an underwriting
agreement in customary form (including, without limitation, customary
indemnification and contribution provisions on the part of the Company) with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Initiating Holders and reasonably acceptable to
the Company; provided that such underwriting agreement shall not provide for
indemnification or contribution obligations on the part of Holders greater than
the obligations of the Holders pursuant to Section 6. Notwithstanding any other
provision of this Section 2, if such representative advises the Initiating
Holders in writing that marketing factors require a limitation on the number of
shares to be underwritten, the securities of the Company held by Other
Shareholders (other than Registrable Securities) shall be excluded from such
registration to the extent so required by such limitation and if a limitation of
the number of shares is still required, the Initiating Holders shall so advise
all Holders of Registrable Securities whose securities would otherwise be
underwritten pursuant hereto, and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among all such Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which they
held at the time of the request for registration made by the Initiating Holders
pursuant to Sec tion 2(a). No Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. If any Holder of Registrable
Securities or Other Shareholder who has requested inclusion in such registration
as provided above disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the underwriter
and the Initiating Holders no later than ten days prior to the expected
effective date of the relevant registration statement. The securities so
withdrawn shall also be withdrawn from registration. If the underwriter has not
limited the number of Registrable Securities or other securities to be
underwritten, the Company may include its securities for its own account in such
registration if the underwriter so agrees and if the number of Registrable
Securities and other securities which would otherwise have been included in such
registration and underwriting will not thereby be limited.
(c) The Initiating Holders may issue the number of written requests
under this Section 2 which equals the Applicable Number of Registrations.
5
<PAGE>
SECTION 3. Company Registration.
(a) If the Company shall determine to register any of its securities
either for its own account or the account of a security holder or holders
exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Commission Rule 145 transaction or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company:
(i) will promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable
blue sky or other state securities laws);
(ii) will include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any Holder within
fifteen days after receipt of the written notice from the Company
described in clause (i) above, except as set forth in Section 3(b)
below. Such written request may specify all or a part of a Holder's
Registrable Securities; and
(iii) may, at its sole election, withdraw such registration at
any time without penalty or liability.
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to Section
3(a)(i). In such event the right of any Holder to registration pursuant to
Section 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein, including, without limitation, the
agreement to any lock-up agreement required by the underwriter or underwriters
selected for underwriting by the Company. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the Other Shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with such under writer,
provided that such underwriting agreement shall not provide for indemnification
or contribution obligations on the part of Holders greater than the obligations
of the
6
<PAGE>
Holders pursuant to Section 6. Notwithstanding any other provision of this
Section 3, if the underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten, the Company will cause to
be included in such registration to the extent of such limitation on the number
of shares to be underwritten, first, the securities being sold by the Company,
second, all securities proposed to be registered in such offering by the Company
for the accounts of Other Shareholders if such securities must be included prior
to the Registrable Securities to prevent a breach of any applicable registration
rights agreement between the Company and such Other Shareholders, but only in
such amount and to the extent required by such agreement and third, the
Registrable Securities proposed to be registered in such offering by the Holders
of such Registrable Securities and all such other securities proposed to be
registered in such offering by the Company for the accounts of each Other
Shareholder (not included in those securities to be registered pursuant to
clause second above), pro rata among the Holders of such Registrable Securities
and all such Other Shareholders on the basis of the number of securities
requested to be included by such Holders and such Other Shareholders. If any
Holder of Registrable Securities or Other Shareholder disapproves of the terms
of any such underwriting, he may elect to withdraw therefrom by written notice
to the Company and the underwriter no later than ten days prior to the expected
effective date of the relevant registration statement. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
SECTION 4. Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses shall be
borne by the holders of the securities so registered pro rata on the basis of
the number of their shares so registered; provided, however, that the Company
shall not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by Initiating Holders (other than due
to a material adverse change in the business of the Company or any refusal to
proceed based upon the advice of counsel that the regis tration statement, or
any prospectus contained therein, contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing), the registration statement does not become
effective, in which case the Holders and Other Shareholders requesting
registration shall bear such Registration Expenses pro rata on the basis of the
number of their shares so included in the registra tion request, and provided,
further, that such registration shall not be counted as a registration pursuant
to Section 2.
7
<PAGE>
SECTION 5. Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will:
(i) prepare, and as soon as practicable, but in any event within
60 days thereafter file with the Commission, a registration statement
with respect to the Registrable Securities, make all required filings
with the National Association of Securities Dealers, Inc. ("NASD") and
use its reasonable best efforts to cause such registration statement
to become effective;
(ii) prepare and promptly file with the Commission such
amendments and post-effective amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
so long as is required to comply with the provisions of the Securities
Act and to complete the disposition of all securities covered by such
registration statement in accordance with the intended method or
methods of disposition thereof, but in no event for a period of more
than four months after such registration statement becomes effective;
(iii) furnish to counsel selected by the Holders copies of all
documents proposed to be filed with the Commission in connection with
such registration;
(iv) furnish to each seller of Registrable Securities, without
charge, such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case
including all exhibits and documents filed therewith) and such number
of copies of the prospectus in cluded in such registration statement
(including each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to fa
cilitate the disposition of the Registrable Securities owned by such
seller in accordance with the intended method or methods of
disposition thereof;
(v) use its reasonable best efforts to register or qualify such
Registrable Securities covered by such registration statement under
the securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable such seller to
consummate the disposition of such Registrable Securities in such
jurisdictions in accordance with the intended method or methods of
8
<PAGE>
disposition thereof, provided that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified,
subject itself to taxation in any juris diction wherein it is not so
subject, or take any action which would subject it to general service
of process in any jurisdiction wherein it is not so subject;
(vi) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental agencies, authorities or
self-regulatory bodies as may be necessary by virtue of the business
and operations of the Company to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
(vii) furnish to each seller of Registrable Securities a signed
coun terpart, addressed to the sellers, of
(A) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the
registration statement (and, if such registration includes an
underwritten public offering, the date of the closing under the
underwriting agreement); and
(B) a "comfort" letter dated the effective date of such
registration statement (and if such registration includes an
underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have issued an audit report on the Company's
financial statements included in the registration statement,
covering such matters as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(viii) notify each seller of any Registrable Securities covered
by such registration statement at any time when the Company has
knowledge that a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event or
existence of any fact as a result of which the pro spectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing,
and, as promptly as is practicable,
9
<PAGE>
prepare and furnish to such seller a reasonable number of copies of a
sup plement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
(ix) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement of the Company (in form complying with the
provisions of Rule 158 under the Securities Act) covering the period
of at least 12 months, but not more than 18 months, beginning with the
first month after the effective date of the registration statement;
(x) notify each seller of any Registrable Securities covered by
such registration statement (i) when the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by
the Commission for amendments or supplements to such registration
statement or to amend or to supplement such prospectus or for
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of such registration statement
or the initiation of any proceedings for that purpose of which the
Company has knowledge and (iv) of the suspension of the qualification
of such securities for offering or sale in any jurisdiction, or of the
institution of any proceedings for any of such purposes of which the
Company has knowledge;
(xi) use every reasonable effort to obtain the lifting of any
stop order that might be issued suspending the effectiveness of such
registration statement at the earliest possible moment;
(xii) use its reasonable best efforts (i) (A) to list such
Registrable Securities on any securities exchange on which the equity
securities of the Company are then listed or (B) if no such equity
securities are then listed, to secure designation of such securities
as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 under the Exchange Act or, failing that, to secure NASDAQ
authorization for such Registrable Securities, and, without limiting
the foregoing, to arrange for at least two market makers to register
as such with respect to such Registrable Securities with the NASD, and
10
<PAGE>
(ii) to provide a transfer agent and registrar for such Registrable
Securities not later than the effective date of such registration
statement;
(xiii) enter into such agreements and take such other actions as
the sellers of Registrable Securities or the underwriters reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities, including, without limitation, to the extent
that the offering in question is an underwritten offering, preparing
for, and participating in, such number of "road shows" and all such
other customary selling efforts as the underwriters reasonably request
in order to expedite or facilitate such disposition; and
(xiv) use its reasonable best efforts to take all other steps
necessary to effect the registration of such Registrable Securities
contemplated hereby.
The Company may require each seller of any Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller, including, without limitation, its ownership
of Registrable Securities and the disposition of such Registrable Securities, as
the Company may from time to time reasonably request in writing and as shall be
required by law in connection therewith. Each such Holder agrees to furnish
promptly to the Company all infor mation required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the Holder of any Registrable Securities,
without the consent of such seller, such consent not to be unreasonably
withheld, unless such disclosure is required by law.
SECTION 6. Indemnification.
(a) The Company will, and hereby does, indemnify each Holder, each of
its officers, directors and partners, and each person controlling such Holder,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus (including any related
11
<PAGE>
registration statement) incident to any such registration, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of such
prospectus, in light of the circumstances under which made) not misleading, or
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by such Holder
or underwriter and stated to be specifically for use therein or to the extent
such liability arises solely as a result of the failure of the Holder or such
underwriter, if any, to deliver a prospectus.
(b) Each Holder and Other Shareholder will, if Registrable Securities
held by him are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and each underwriter, if any, of the Company's
securities covered by such a regis tration statement, each person who controls
the Company or such underwriter within the meaning of the Securities Act and the
rules and regulations thereunder, each other such Holder and Other Shareholder
and each of their officers, directors and partners, and each person controlling
such Holder or Other Shareholder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement or prospectus, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the case of such prospectus, in
light of the circumstances under which made, not misleading, and will reimburse
the Company and such Holders, Other Shareholders, directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement or
prospectus in reliance upon and in conformity with written information furnished
to the Company by such Holder or Other Shareholder and stated to be specifically
for use therein; provided, however, that the obligations of such Holders and
Other Shareholders
12
<PAGE>
hereunder shall be limited to an amount equal to the proceeds to each such
Holder or Other Shareholder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
failure of any Indemnified Party to give notice shall not relieve the
Indemnifying Party of its obligation under this Section 6, except to the extent
of any actual prejudice resulting from such failure. The Indemnifying Party will
be entitled to participate in, and to the extent that it may elect by written
notice delivered to the Indemnified Party promptly after receiving the aforesaid
notice from such Indemnified Party, at its expense to assume, the defense of any
such claim or any litigation resulting therefrom, with counsel reasonably
satisfactory to such Indemnified Party, provided that the Indemnified Party may
partici pate in such defense at its expense, notwithstanding the assumption of
such defense by the Indemnifying Party, and provided, further, that if the
defendants in any such action shall include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it and/or other Indemnified
Parties which are different from or additional to those available to the
Indemnifying Party, the Indemnified Party or Parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
Parties and the fees and expenses of such counsel shall be paid by the
Indemnifying Party with respect to such different or additional defense. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom. No Indemnified Party shall consent to the entry
of any judgment nor enter into any settlement without the prior written consent
of the Indemnifying Party.
SECTION 7. Information by Holder. Each Holder of Registrable
Securities, and each Other Shareholder holding securities included in any
registration, shall furnish to the Company such information regarding such
Holder or Other Shareholder and the distribution proposed by such Holder or
Other Shareholder as the Company may reasonably request in writing and as shall
be reasonably required in
13
<PAGE>
connection with any registration, qualification or compliance referred to in
this Section 7.
SECTION 8. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Restricted Securities to the public without registration, the
Company agrees to use its reasonable best efforts to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Exchange Act so long as it remains subject to such reporting
requirements; and
(c) so long as the Holders own any Restricted Securities, furnish
to them forthwith upon request a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents so filed as they may reasonably request in availing
themselves of any rule or regulation of the Commission allowing them
to sell any such securities without registration.
SECTION 9. Transfer or Assignment of Registration Rights. The rights to
cause the Company to register the securities granted to the Holders by the
Company under this Agreement may, in the Holders' discretion, be transferred or
assigned by them to a transferee or assignee of any of the Restricted
Securities, provided that the Company is given written notice by the Holders at
the time of or within a reasonable time after such transfer or assignment,
stating the name and address of such transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned, and provided, further, that the transferee or assignee of such
rights assumes the Holders' obligations under this Agreement.
SECTION 10. "Market Stand-off" Agreement. The Holders agree, if
requested by the Company and an underwriter of equity securities of the Company,
not to sell or otherwise transfer or dispose of any such equity securities of
the Company held by them during the ninety-day period following the effective
date of a registration statement of the Company filed under the Securities Act,
provided that, if requested by such underwriter, all Holders, all officers and
directors and all other shareholders of the Company who acquire equity
securities of the Company in a privately negotiated transaction after June 25,
1996 enter into similar agreements. Notwithstanding the
14
<PAGE>
foregoing, shareholders of the Company who acquire such equity securities in
return for the equity securities of an entity acquired by the Company, and who
have no "demand" registration rights in respect thereof, shall not be required
to enter into such agreements.
Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of such ninety-day period.
SECTION 11. Shelf Registrations. If, at any time when a Shelf
Registration is effective with respect to any Registrable Securities, the
Company shall furnish to the Holders a certificate of the Company stating that
counsel to the Company, which counsel shall be reasonably satisfactory to the
Holders, or the Board, shall have determined that the Company has pending or in
progress a material transaction or other development, the disclosure of which
would, in the good faith judgment of the Company, materially and adversely
affect the Company, then such Holders shall thereafter not dispose of any
Registrable Securities under such Shelf Registration until the earlier of (i)
the time when such transaction or development is resolved in a manner that
allows, or renders unnecessary, appropriate disclosure with respect to such
transaction or development and (ii) the 121st day after the delivery of such
certificate, provided the Company shall at all times use all reasonable efforts
to resolve the transaction or other development in question so as to enable the
Holder to recommence selling under such Shelf Registration as promptly as
possible, and provided further that the four month period referred to in Section
5(ii) shall be suspended or "tolled" during any such period when the Holders are
unable to so utilize such Shelf Registration.
SECTION 12. Miscellaneous
12.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York.
12.2 Successors and Assigns. Except as otherwise expressly provided
herein or in any applicable assignment instrument, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto; provided, however, the
Company may not assign its rights hereunder.
15
<PAGE>
12.3 Entire Agreement; Amendment. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject hereof. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated, except by a written instrument signed by the
parties hereto.
12.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered either by hand or by messenger, (a) if to the
initial Holders, addressed to them at c/o GSCP, Inc., 388 Greenwich Street, New
York, New York 10013, or at such other address as such Holder shall have
furnished to the Company in writing, or (b) if to any other holder of any Class
C Shares or Class D Shares, at such address as such holder shall have furnished
the Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder thereof who has so
furnished an address to the Company, or (c) if to the Company, addressed to it
at 5901 East Fowler Avenue, Tampa, Florida 33617, Attention: George Nicholas,
Chairman.
12.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any party of any breach or default under this Agreement, or any
waiver on the part of any party of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
12.6 Rights; Separability. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
12.7 Titles and Subtitles. The titles of the paragraphs and subpara
graphs of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
16
<PAGE>
12.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Confirmation of execution by
electronic transmission of a facsimile signature page shall be binding upon any
party so confirming.
17
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
or caused this Agreement to be executed on its behalf as of the date first
written above.
IMC MORTGAGE COMPANY
By /s/
------------------------------
Name:
Title:
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
------------------------------
Name:
Title: Managing Member
18
