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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
FIRSTCITY LIQUIDATING TRUST
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(Exact name of registrant as specified in its charter)
Texas 06-6414468
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1021 Main, Suite 2600, Houston, Texas 77002
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 651-7841
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Class "B" Beneficial Interests ("Class B Beneficial Interests")
in the Trust Established Under the Liquidating Trust Agreement
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(Title of class)
Class "C" Beneficial Interests ("Class C Beneficial Interests")
in the Trust Established Under the Liquidating Trust Agreement
- --------------------------------------------------------------------------------
(Title of class)
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FIRSTCITY LIQUIDATING TRUST
FORM 10
Registration Statement
(Under the Securities Exchange Act of 1934)
(the "Exchange Act")
* * *
PRELIMINARY NOTE
On July 3, 1995 (the "Effective Date"), the FirstCity Liquidating Trust
(the "Trust") and certain other entities were established pursuant to and upon
consummation of the Joint Plan of Reorganization, dated December 23, 1994, by
First City Bancorporation of Texas, Inc., a Delaware corporation (the
"Debtor"), Official Committee of Equity Security Holders (the "Equity
Committee"), and J-Hawk Corporation ("J-Hawk"), with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of Title 11 of the
U.S. Code (the "Bankruptcy Code"), Case No. 392- 39474-HCA-11 (the "Joint
Plan"), as modified on March 1, 1995 by the First Modification to Joint Plan of
Reorganization, as corrected (the "First Modification"), on February 23, 1995
by the Second Modification to Joint Plan of Reorganization (the "Second
Modification") and on May 5, 1995 by the Third Modification to Joint Plan of
Reorganization (the "Third Modification") (the Joint Plan, the First
Modification, the Second Modification and the Third Modification are
collectively referred to herein as the "Plan"). The Plan was confirmed by
order of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas
Division (the "Bankruptcy Court") entered on May 31, 1995. A copy of the Plan
is filed as Exhibit 2.1 to this Registration Statement which includes a
glossary of terms used in the Plan. Capitalized terms used in this
Registration Statement without other definition are used as defined in that
glossary.
* * *
Item 1. Business.
The Debtor was formed as a multi-bank holding company in 1988 for the
purpose of reorganizing First City Bancorporation of Texas, Inc., a Texas
corporation. Beginning in the summer of 1990, the financial condition of the
Debtor began to deteriorate and worsened progressively throughout 1990 and
1991. On October 30, 1992, regulatory agencies closed the Debtor's banks. On
October 31, 1992, certain of the Debtor's unsecured creditors filed an
involuntary Chapter 11 bankruptcy petition against the Debtor in the Bankruptcy
Court. On November 23, 1992, the Debtor consented to the entry of an order for
relief against it under Chapter 11 of the Bankruptcy Code. Until July 3, 1995,
the Debtor operated its remaining businesses and managed its property as
debtor-in-possession.
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The Plan was confirmed by the Bankruptcy Court by an order entered on
May 31, 1995, and became effective on July 3, 1995. Pursuant to the Plan and
an Agreement and Plan of Merger between the Debtor and J-Hawk, on July 3, 1995,
J-Hawk was merged (the "Merger") with and into the Debtor, with the Debtor as
the surviving entity. Pursuant to the Merger, (i) the former holders of common
stock of J-Hawk received, in the aggregate, approximately 49.9% of the
outstanding common stock of the surviving entity, in exchange for their shares
of J-Hawk common stock, (ii) approximately 50.1% of the outstanding common
stock of the surviving entity was distributed among former security holders of
the Debtor pursuant to the Plan and (iii) the name of the corporation was
changed to FirstCity Financial Corporation ("FirstCity"). As a result of the
implementation of the Plan and the consummation of the Merger, FirstCity also
issued (i) 9% senior subordinated notes (the "Senior Subordinated Notes") in
the aggregate amount of $106.7 million, (ii) warrants to purchase 500,000
shares of its common stock at an exercise price of $25 per share and (iii)
special preferred stock (the "Special Preferred Stock") in the aggregate amount
of $51.7 million to certain former security holders of the Debtor.
The Trust has not and, pursuant to the Liquidating Trust Agreement,
dated as of July 3, 1995, by and between First City Bancorporation of Texas,
Inc. and Fleet National Bank, successor to Shawmut Bank Connecticut, National
Association, as Trustee (the "Trust Agreement"), may not engage in the conduct
of a trade or business apart from the liquidation of the Trust-Owned Affiliate
Assets (as defined herein) and the winding up of the affairs of the Debtor and
its subsidiaries. Pursuant to Article VIII of the Trust Agreement, the Trust
shall terminate upon the date which is three (3) years and six (6) months after
the Effective Date; provided, however, that at least six (6) months prior to
such termination, the Portfolio Committee (as defined herein) may, with the
approval of the Bankruptcy Court, extend the term of the Trust if necessary to
the liquidating purpose thereof. Multiple extensions, if approved by the
Bankruptcy Court, are permissible, although the aggregate of all such
extensions shall not exceed five (5) years so that, in any event, the Trust
shall terminate no later than eight (8) years and six (6) months after the
Effective Date. A copy of the Trust Agreement is filed as Exhibit 3.1 to this
Registration Statement.
Pursuant to the Plan, substantially all of the legal and beneficial
interest in the assets of the Debtor, other than $20 million in cash which was
contributed by the Debtor to FirstCity, were transferred to the Trust or to
subsidiaries of the Trust. Such assets have been and will continue to be
liquidated over the anticipated three-year life of the Trust pursuant to the
terms of the Plan, the Trust Agreement and the Investment Management Agreement
(as defined herein). The non-cash assets of the Trust consist principally of
performing and non-performing loans, income producing real estate and interests
in real estate, and miscellaneous other assets and receivables (principally
from the FDIC) transferred to the Trust upon the consummation of the Plan.
In connection with the sale of the Debtor's banks by the FDIC to certain
other banks (the "Loss-Sharing Banks"), the FDIC entered into certain agreements
(the "Loss-Sharing Agreements") to guarantee certain recoveries on loans
acquired by the Loss-Sharing Banks. On July 12, 1995, in order to reduce the
uncertain effect of the Loss-Sharing Agreements on future distributions to the
Trust by the FDIC, subsidiaries of the Trust purchased assets for approximately
$206 million from the Loss-Sharing Banks (the "Loss-Sharing Settlement"). With
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the purchase of these assets, the Loss-Sharing Banks released the FDIC from its
future obligations under the Loss-Sharing Agreements. The Loss Sharing
Settlement was significant to the Trust because it allowed the FDIC to
eliminate the loss-sharing reserve that it had maintained to cover the FDIC's
obligations under the loss-sharing guarantees, thereby eliminating the
uncertainty of future reductions from the reserve and increasing the initial
distribution to be made by the FDIC to the Trust.
Three Texas limited partnerships were created for the purposes of
holding substantially all of the assets of the Debtor for the Trust. The names
of such partnerships are FCLT Loans, L.P. ("Loans"), FCLT REO One, L.P. ("REO
One") and FCLT REO Two, L.P. ("REO Two"). The Trust has a 98% limited partner
interest in Loans, which has a 98% limited partner interest in each of REO One
and REO Two. The remaining 2% interest is held by the respective corporate
general partner of each of the limited partnerships. FCLT Loans Asset Corp., a
Texas corporation, is the corporate general partner of Loans. Most of the
assets transferred from the Debtor to the Trust on or after the Effective Date
(other than real property) are held by Loans. FCLT REO One Asset Corp., a
Texas corporation, is the corporate general partner of REO One. Certain real
property transferred from the Debtor to the Trust on or after the Effective
Date is held by REO One. FCLT REO Two Asset Corp., a Texas corporation, is the
corporate general partner of REO Two. All of the real property with respect to
which potential or actual environmental liability concerns have been identified
prior to the Effective Date was transferred from the Debtor to the Trust on or
after the Effective Date and is currently held by REO Two.
In connection with the formation of the Trust, three classes of
beneficial interests in the Trust were issued. FirstCity is the sole holder of
a certificate representing the Class A beneficial interests (the "Class A
Beneficial Interests") of the Trust (the "Class A Certificate") and receives
distributions from the Trust in amounts sufficient to pay certain obligations
under the Senior Subordinated Notes and Special Preferred Stock which were
issued by FirstCity upon the implementation of the Plan and the consummation of
the Merger and also to pay certain expenses. Any excess proceeds are paid to
certain former security holders of the Debtor pursuant to the terms of the
certificates representing the Class B and Class C Beneficial Interests in the
Trust (the "Class B Certificates" and the "Class C Certificates",
respectively). Class C Certificate holders receive distributions, if any,
after all required payments to Class B Certificate holders. See Item 11 for a
further discussion of the beneficial interests in the Trust and their
respective distribution rights.
The Trust is administered by a four-person portfolio committee (the
"Portfolio Committee"). Pursuant to that certain Investment Management
Agreement, dated as of July 3, 1995, by and between the Trust, FirstCity and
the Trust-Owned Affiliates signatory thereto (the "Investment Management
Agreement"), the liquidation of the assets transferred to the Trust are managed
by FirstCity, as Investment Manager, for a servicing fee as further described
in Item 7.
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Item 2. Financial Information.
Reference is made to the financial statements (the "Trust Financial
Statements") of the Trust as of and for the period from July 3, 1995 through
December 31, 1995 (hereinafter referred to as "1995"), which are attached to
this Registration Statement as Appendix A, for certain financial information
concerning the Trust and its operations for such period. The following
information concerning the Trust's financial performance and condition should
be read in conjunction with the Trust Financial Statements.
On July 3, 1995, the Debtor contributed approximately $183 million in
net assets to the Trust, of which $135 million was cash and cash equivalents.
As discussed previously, in order to reduce the uncertain effect of the
Loss-Sharing Agreements on future distributions to the Trust by the FDIC,
subsidiaries of the Trust purchased assets for approximately $206 million from
the Loss-Sharing Banks on July 12, 1995. In order to fund this transaction,
the Trust used most of the cash contributed by the Debtor, borrowed $73 million
under a line of credit with two banks and was advanced $4.7 million by
FirstCity. In addition, letters of credit in the aggregate amount of $27
million were issued in favor of the Loss-Sharing Banks.
Collections, net of advances, for 1995 totaled more than $107 million.
As a result, the $4.7 million advance referenced above was repaid to FirstCity
by August 1995, and the $73 million loan was repaid by November 1995. During
1995, the estimated fair value of the Trust's assets increased by $33.5
million. This increase was due in part to an actual increase in the value of
the Trust's assets, although the increase also reflects in part both
accelerated collections and a better understanding of the value of the Trust's
assets. Interest expense on loans and advances was $1.7 million, and
administrative expenses totaled $8.6 million. Included in administrative
expenses is $3.1 million in servicing fees paid to FirstCity and $3.4 million
of administrative claims related to the Debtor and legal fees.
Non-cash trust assets at December 31, 1995, are comprised of the
following (dollars in thousands):
<TABLE>
<CAPTION>
LEGAL
CLAIM OR ESTIMATED
ASSIGNED GROSS
TYPE OF ASSET VALUE CASH FLOW
--------------------------------------------------- ------------- -------------
<S> <C> <C>
Borrowers' obligation on
outstanding balance of:
Performing loans . . . . . . . . . . . . . . . . $139,705 $134,381
Nonperforming loans . . . . . . . . . . . . . . . 225,921 60,454
Receivable from the FDIC . . . . . . . . . . . . . . 33,000 33,000
Real estate and other assets . . . . . . . . . . . . 60,734 33,305
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . 459,360 261,140
----------- -----------
Discount required to reflect
trust assets at estimated fair
value . . . . . . . . . . . . . . . . . . . . . . . . (266,156) (67,936)
----------- -----------
Trust assets, net . . . . . . . . . . . . . . . . . . $ 193,204 $ 193,204
=========== ===========
</TABLE>
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At December 31, 1995, estimated gross cash flow ("EGCF") on 253
performing loans was $134 million, and collections on these assets in the first
quarter of 1996 were $10.7 million. EGCF was $102 million on the 22 loans over
$1 million in the performing loan category. In the first quarter of 1996, $7.8
million was collected on the 180 year-end nonperforming loans with EGCF of
$60.5 million. Sixteen of the nonperforming loans were over $1 million and had
combined year-end EGCF of $38.6 million.
In the first quarter of 1996, $17.7 million of the FDIC receivable was
collected. At year-end, the EGCF on 44 real estate parcels and other assets
totaled $33.3 million, of which seven had an EGCF over $1 million (totaling
$27.6 million). $5.4 million was collected in the first quarter from real
estate and other assets.
At December 31, 1995, the net asset value attributable to the Class A
Certificate (of which the sole holder is FirstCity) was $162 million, of which
$106.7 million is allocated to redemption of the Senior Subordinated Notes (an
obligation of FirstCity), $51.7 million is allocated to the nominal stated
value of FirstCity Special Preferred Stock and $3.9 million is allocated to
accrued, but undeclared, dividends on Special Preferred Stock. The Trust
distributed $4.7 million to FirstCity for payment of interest on the Senior
Subordinated Notes in 1995. The Class B Beneficial Interests were valued at
$39.5 million at year-end. Distributions to Class C Certificate holders are
not ever expected.
The net asset values are derived from estimates of the fair values of
the net assets of the Trust which are the results of discounting, at
appropriate discount rates, the currently estimated cash flows projected to be
realized from the collection, liquidation and disposition of the non-cash
assets held by the Trust. There can be no assurance, however, that such net
asset values will ultimately be realized. See Note A to Consolidated Financial
Statements.
In the first quarter of 1996, the $27 million in letters of credit was
reduced to zero. The Trust also distributed $53.3 million in March 1996 to
FirstCity, as sole holder of the Class A Certificate, which FirstCity used for
the early redemption of outstanding Senior Subordinated Notes. As a result of
such redemption, the net asset value of the Class A Beneficial Interests, as of
March 31, 1996, was reduced to $111 million. As of March 31, 1996, the Class B
Beneficial Interests had increased in value to $47.5 million. Such increase
was due in part to an actual increase in the value of the Trust's assets during
the first quarter of 1996, although the increase also reflects in part both
accelerated collections and a better understanding of the value of the Trust's
assets. At the end of the first quarter, the Class C Beneficial Interests
remained valueless.
Item 3. Properties.
The Trust does not have any material physical properties, except for
such properties that are held for sale.
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Item 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Since the Trust has no outstanding "voting securities" within the
meaning of the Exchange Act and the regulations thereunder, the disclosure
requirements of Form 10 pertaining to 5% holders of voting securities are not
applicable.
(b) The following table sets forth certain information with respect to
the beneficial ownership of the Class B and Class C Beneficial Interests, as of
February 29, 1996, by the sole executive officer of the Trust and the members of
the Portfolio Committee. The Trustee is not the beneficial owner of any Class B
or Class C Beneficial Interests.
<TABLE>
<CAPTION>
NUMBER OF CLASS B BENEFICIAL INTERESTS
AND PERCENTAGE OF OUTSTANDING
CLASS B BENEFICIAL INTERESTS
AS OF FEBRUARY 29, 1996
-----------------------------------------
BENEFICIAL PERCENT
NAME AND ADDRESS OF OWNER OR IDENTITY OF GROUP OWNERSHIP OF CLASS
- ---------------------------------------------- --------- --------
<S> <C> <C>
Robert W. Brown . . . . . . . . . . . . . . . . . . . . . . . . . . -- (1) --
Richard E. Bean . . . . . . . . . . . . . . . . . . . . . . . . . . 98,100(2) 4.0
Rick R. Hagelstein . . . . . . . . . . . . . . . . . . . . . . . . -- (2) --
David Palmer . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,539(2) 5.5
All Portfolio Committee members as a group (4 persons) . . . . . . 232,639 9.5
</TABLE>
(1) Mr. Brown is the President of FCLT Loans Asset Corp., the corporate general
partner of Loans, and a member of the Portfolio Committee. See Item 5 below
for further background information regarding Mr. Brown and his employment
history for the past five years.
(2) Messrs. Bean, Hagelstein and Palmer are members of the Portfolio
Committee. See Item 5 below for further background information regarding
the members of the Portfolio Committee and their respective employment
histories for the past five years.
<TABLE>
<CAPTION>
NUMBER OF CLASS C BENEFICIAL INTERESTS
AND PERCENTAGE OF OUTSTANDING
CLASS C BENEFICIAL INTERESTS
AS OF FEBRUARY 29, 1996
------------------------------------------
BENEFICIAL PERCENT
NAME AND ADDRESS OF OWNER OR IDENTITY OF GROUP OWNERSHIP OF CLASS
- ---------------------------------------------- --------- --------
<S> <C> <C>
Robert W. Brown . . . . . . . . . . . . . . . . . . . . . . . . . . 197 *
Richard E. Bean . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Rick R. Hagelstein . . . . . . . . . . . . . . . . . . . . . . . . 1,487(1) *
David Palmer . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
All Portfolio Committee members as a group (4 persons) . . . . . . 1,684 *
</TABLE>
- ---------------
* Less than 1%
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(1) The 1,487 Class C Beneficial Interests are held of record by ATARA I,
LTD., a Texas limited partnership ("ATARA"). ATARA is principally
engaged in the investment in FirstCity's common stock. The sole
general partner of ATARA is ATARA Corp., a Texas corporation ("ATARA
Corp."), which is also principally engaged in the investment in
FirstCity's common stock. Mr. Hagelstein may be deemed to
beneficially own all such certificates by virtue of being the Chairman
of the Board and President of ATARA Corp., and by reason of the fact
that his wife is the only other officer or director of ATARA Corp. and
owns 33.33% of the outstanding shares of common stock of ATARA Corp.
(c) Because the Trust does not have any "voting securities" within the
meaning of the Exchange Act and the regulations thereunder, changes in ownership
of voting securities will not result in a change of control of the Trust.
Pursuant to the terms of the Trust Agreement, all of the management and
executive authority over the Trust resides in the four-member Portfolio
Committee. The initial members of the Portfolio Committee were designated in
the Trust Agreement and will serve for the duration of the Trust. However, in
the event of any member's earlier death, resignation or removal, such member
shall be replaced pursuant to the terms of the Trust Agreement as set forth in
Item 5 hereof.
The Trust has no knowledge of any arrangements which may result in a
change of control of the Trust. However, in the event that the position on the
Portfolio Committee held by Robert W. Brown is vacated for any reason, the
number of Portfolio Committee members will be permanently reduced to three. In
such instance, all three of the current remaining members of the Portfolio
Committee will be affiliated with FirstCity and, as a result, FirstCity may be
deemed to have exclusive control over Portfolio Committee decisions.
Item 5. Directors and Executive Officers.
The description of the Trust Agreement provided below and as provided in
Items 1, 6 and 12 hereof is only a summary and is qualified in its entirety by
reference to the Trust Agreement, a copy of which is filed as Exhibit 3.1 to
this Registration Statement.
Role of the Portfolio Committee
Pursuant to Article IV of the Trust Agreement, except where expressly
limited by the terms of the Trust Agreement, all of the management and executive
authority over the Trust resides in the four-member Portfolio Committee (subject
to increase and reduction). The Trust Agreement provides that such four members
are initially Rick R. Hagelstein, the Chief Credit Officer of FirstCity (the
"Chief Credit Officer Member Position"), Robert W. Brown (the "Robert W. Brown
Member Position"), and Richard Bean and David Palmer, as the two members
designated by the Equity Committee (the "Equity Committee Member Positions").
All have been members of the Portfolio Committee since the Effective Date.
Background information and the employment histories of Messrs. Bean, Brown,
Hagelstein and Palmer are set forth below.
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Richard E. Bean, 52, has been Executive Vice President and Chief
Financial Officer of Pearce Industries, Inc. since 1976, which company, through
its subsidiaries, markets a variety of oilfield equipment and machinery. Prior
to the Effective Date, Mr. Bean was Chairman of the Equity Committee. Mr. Bean
is currently a director of FirstCity.
Robert W. Brown, 47, has been President of FCLT Loans Asset Corp. since
the Effective Date. As of the Effective Date, Mr. Brown served as Executive
Vice President and Secretary of FirstCity. After the Effective Date, he
resigned from FirstCity to devote substantially all of his time to the Trust.
Mr. Brown was Chief Financial Officer of the Debtor beginning in 1991. He served
as Executive Vice President of the Debtor from 1990 to 1992, became a member of
the Debtor's Board of Directors in 1992 and served as President of the Debtor
from 1993 through the Effective Date. Mr. Brown was a director and officer of
the Debtor when the Debtor filed a plan of reorganization under the Federal
bankruptcy laws in December 1994.
Rick R. Hagelstein, 49, has been Executive Vice President and Chief
Credit Officer of FirstCity since the Effective Date, and was Executive Vice
President and Chief Credit Officer of J-Hawk from 1990 until the Merger. From
1988 to 1990, Mr. Hagelstein was Executive Vice President of ASK Corporation, a
manufacturer of solar energy devices. Mr. Hagelstein is also currently a
director of FirstCity.
David Palmer, 53, has been a private investor for the past 25 years.
Prior to the Effective Date, Mr. Palmer was a member of the Equity Committee.
From 1970 to 1995, Mr. Palmer was a Professor of Philosophy at the State
University of New York--Fredonia, New York. Mr. Palmer is currently a director
of FirstCity.
Pursuant to the terms of the Trust Agreement, each member of the
Portfolio Committee serves as such for the duration of the Trust, subject to
such member's earlier death, resignation or removal; however, any member of the
Portfolio Committee may resign at any time provided that he gives at least ten
days' written notice to the Portfolio Committee, the Trustee, FirstCity and the
Investment Manager. Any member of the Portfolio Committee may be removed at any
time by a vote of a majority of the other members of the Portfolio Committee (a)
for fraud, willful misconduct or breach of fiduciary duty in connection with the
affairs of the Trust or (b) for such mental or physical disability as
substantially prevents such member from performing his duties as such member.
In the event of a vacancy on the Portfolio Committee, the following rules govern
the appointment of a replacement: (a) the Chief Credit Officer Member Position
shall exist for the duration of the Trust, and such position shall automatically
be filled by the successor to the Chief Credit Officer of FirstCity who is
promptly appointed by FirstCity; (b) the Robert W. Brown Member Position shall
be permanently eliminated, and the number of members thereafter constituting the
Portfolio Committee shall be permanently reduced to three; and (c) the two
Equity Committee Member Positions shall exist for the duration of the Trust, and
any vacancy shall be filled by the holder of the largest number of outstanding
Class B Beneficial Interests or, if such holder is a legal entity rather than a
natural person, any designee thereof.
Pursuant to the Trust Agreement, a majority of the total number of
members of the Portfolio Committee constitutes a quorum for purposes of voting
on any transaction of
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business of the Trust. In the event that the members of the Portfolio
Committee are split equally with respect to any vote, and the members holding
the two Equity Committee Member Positions have voted the same way, the votes of
such members prevail and will be the vote of the entire Portfolio Committee.
The Portfolio Committee has sole control and authority over the
management and conduct of the liquidation of the Trust-Owned Affiliate Assets
(as defined herein). Such powers include in large part, but are not limited to,
supervising and directing the Trustee in its management and liquidation of the
Trust-Owned Affiliate Assets in accordance with the terms of the Trust
Agreement; causing the proper person to object, prosecute objections, litigate,
settle and resolve issues with respect to Claims (as defined in the Plan),
causes of action, preferences, fraudulent conveyances and related matters;
retaining counsel and other professionals for the Trust or any Trust-Owned
Affiliate (as defined herein), subject to the Investment Management Agreement
and any other agreements entered into by the Portfolio Committee; and taking or
causing to be taken any and all such other actions as deemed necessary or
desirable to effectuate and carry out the purposes of the Trust Agreement and
the Plan. The Portfolio Committee may use its discretion in delegating, among
other things, the power and authority to the Investment Manager to liquidate the
non-cash Trust-Owned Affiliate Assets.
For purposes of the foregoing paragraph, a "Trust-Owned Affiliate" is
defined as any corporation, partnership or other entity substantially
wholly-owned, directly or indirectly, by the Trust heretofore existing or
hereafter created, including without limitation REO One, REO Two and Loans.
"Trust-Owned Affiliate Assets" means (1) cash and cash equivalents of the
Trust-Owned Affiliates; (2) the Loss-Sharing Assets, except to the extent
otherwise provided in a separate written agreement between the Trustee and the
Debtor approved by the Portfolio Committee; (3) the FDIC Assets (as defined in
the Plan), except to the extent otherwise provided in a separate written
agreement between the Trustee and the Debtor approved by the Portfolio
Committee; (4) the Contingent Asset Claims (as defined in the Plan), except to
the extent otherwise provided in a separate written agreement between the
Trustee and the Debtor approved by the Portfolio Committee; (5) all of the
Debtor's other-owned, non-cash assets (including without limitation the Interim
Trust-Owned Affiliate Assets (as defined in the Plan) and the capital stock of
certain subsidiaries of the Debtor), except to the extent otherwise provided in
a separate written agreement between the Trustee and the Debtor approved by the
Portfolio Committee; and (6) all proceeds of and interest or other amounts
earned on, the Trust-Owned Affiliate Assets set forth above in clauses (1)
through (5), and all proceeds of and interest or other amounts earned on any
Trust-Owned Affiliate Assets, in each case received by or on behalf of the
Trustee in connection with the management, servicing, disposition or investment
of such assets; provided, however, that any and all assets of J-Hawk immediately
prior to the Effective Date which became assets of FirstCity as a result of the
Merger on the Effective Date do not constitute Trust-Owned Affiliate Assets.
Role of the Trustee
Although all of the management and executive authority over the Trust
resides in the Trustee, the Trustee functions as a directed Trustee under the
sole and absolute discretion of the Portfolio Committee and may not exercise
discretion in the management and conduct of the liquidation of the Trust-Owned
Affiliate Assets. The Trustee has no authority or right to
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refuse to act when so ordered or directed to do so by the Portfolio Committee.
The Trustee is Fleet National Bank. There have been no changes in the Trustee
through the date of this Registration Statement.
Legal title to all of the Trust Assets and Trust-Owned Affiliate Assets
are vested in the Trustee, unless otherwise directed by the Portfolio
Committee. The duties as Trustee constitute a principal business endeavor of
the Trustee, which devotes such time as is necessary to fulfilling all of its
duties. Although it does have other business responsibilities, the Trustee is
on call and at the disposal of the Trust at all times.
The Trustee serves for the duration of the Trust, subject to earlier
death, resignation or removal. The Trustee is subject to removal for (i) fraud
or willful misconduct, (ii) if the Trustee is a natural person, such physical or
mental disability as substantially prevents the Trustee from performing his
duties as a Trustee or (iii) by the holder of the Class A Certificate
representing the Class A Beneficial Interests, in its capacity as such.
Role of the Investment Manager
Pursuant to the terms of the Investment Management Agreement, the role
of the Investment Manager is to manage and service collection and liquidation of
the Trust-Owned Affiliate Assets. Such duties include, but are not limited to,
the following: (i) providing customary asset management and loan servicing and
disposition services for the Trust-Owned Affiliate Assets, which includes the
expeditious liquidation of the non-cash Trust-Owned Affiliate Assets in a manner
that maximizes the value of the Trust-Owned Affiliate Assets, taken as a whole,
while minimizing the risks associated therewith; (ii) coordinating the timely
delivery of the quarterly lock-box report; (iii) furnishing a report quarterly
(or more frequently if requested) to the Trust and the Trust-Owned Affiliates
that summarizes the status of collection efforts for the non-cash Trust-Owned
Affiliate Assets, inclusive of a forecast of projected collections; (iv)
maintaining the books and records of the Trust and the Trust-Owned Affiliates
with respect to all servicing and liquidation efforts and activities; (v)
providing a quarterly list of all Trust-Owned Affiliate Assets and any REO
Properties (as defined in the Investment Management Agreement) to the Trust and
the Trust-Owned Affiliates; (vi) preparing monthly financial statements of the
Trust for the Portfolio Committee and the Trustee and (vii) fully performing all
of its obligations under the Plan in a timely manner. In exchange for such
services, the Investment Manager is paid an incentive fee, which is described
more fully in Item 7 below.
The Investment Manager's performance of the foregoing duties is overseen
and directed by the Portfolio Committee pursuant to the terms of the Investment
Management Agreement and the Trust Agreement. The Portfolio Committee also
reviews and approves budgets prepared by the Investment Manager for each
Trust-Owned Affiliate Asset, which reflect projected net collections for each
asset.
The Investment Management Agreement shall terminate upon the occurrence
of any of the following events: (i) termination of the Trust pursuant to the
terms of the Trust Agreement; (ii) full discharge of all of the Investment
Manager's duties under the Investment Management Agreement, or earlier upon the
written agreement of the parties thereto; (iii) removal of the Investment
Manager if, upon petition to the Bankruptcy Court by the Portfolio
10
<PAGE> 12
Committee, and after notice and hearing, the Bankruptcy Court determines that
the Investment Manager has acted or failed to act in a manner constituting
gross negligence or a willful breach of its fiduciary duty or a material breach
of its obligations under the Investment Management Agreement or (iv) among
other things, upon the occurrence of any petition, application or order for
relief by or with respect to the Investment Manager as a debtor under the
Bankruptcy Code, at the option of the Trust and the Trust-Owned Affiliates. In
the event that the Trust and the Trust-Owned Affiliates exercise any right of
termination pursuant to the foregoing terms, such parties may enter into a new
loan servicing and liquidation contract with a replacement investment manager,
at such servicing fee and on such other terms and conditions as are set forth
in the Trust Agreement.
Item 6. Executive Compensation.
Compensation of the Trustee
Section 3.8 of the Trust Agreement provides as follows with respect to
compensation of the Trustee:
As compensation for services as Trustee hereunder and under any other
agreements to which the Trustee is a party as contemplated by the Plan, the
Trustee shall receive such compensation as shall be agreed upon from time to
time by the Portfolio Committee, on behalf of the Trust, and the Trustee.
Any changes to such compensation (whether with respect to amount, method,
timing or otherwise) must first be approved in writing by the Portfolio
Committee.
The compensation paid by the Trust to the Trustee during 1995 consisted
of a one time acceptance fee of $9,000 and payments of administrative and
registrar fees aggregating approximately $26,500. Unless renegotiated, annual
administrative and registrar fees to be paid to the Trustee shall remain
constant. Administrative fees consist of, among other things, fees associated
with: (i) maintenance of all records and files required of the Trustee pursuant
to the Trust's operative documents; (ii) compliance with all Trust Agreement
provisions that require Trustee action; (iii) establishment of cash accounts and
the proper administration of such as described in the Trust Agreement; (iv)
prompt response to inquiries from the certificate holders and other interested
parties and (v) preparation of periodic statements and reports, as required.
Registrar fees consist of, among other things, fees associated with: (i)
maintenance of the name, address and taxpayer identification number of each of
the certificate holders; (ii) distribution of debt service payments; (iii)
reconciliation of paying agent accounts; (iv) issuance of 1099's, 1099B's and
other required tax information and (v) completion and delivery of all necessary
reports with the Securities and Exchange Commission.
Compensation of the Portfolio Committee
Pursuant to the terms of the Trust Agreement, the Portfolio Committee
consists of the following four members: Rick R. Hagelstein in the Chief Credit
Officer Member Position, Robert W. Brown in the Robert W. Brown Member Position,
and two members as designated by the Equity Committee, who at present are
Richard Bean and David Palmer. Messrs. Bean and Palmer, or their respective
successors, each receives compensation for his
11
<PAGE> 13
services as a member of the Portfolio Committee in an amount equal to $12,000
per annum, payable in $3,000 increments on the first day of each calendar
quarter, plus $1,000 for each Portfolio Committee meeting attended. The other
two members are not separately compensated for their services as members of the
Portfolio Committee.
Compensation of Robert W. Brown
As President of FCLT Loans Asset Corp, Mr. Brown received cash and
non-cash compensation from the Effective Date through December 31, 1995 as set
forth in the following table:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(2)
NAME AND -------------------------------- ALL OTHER
PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(3)
- --------------------------- ------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
Robert W. Brown 1995 $ 125,000 $ -- $ 3,412
- President of FCLT
Loans Asset Corp.
</TABLE>
(1) The employment of Mr. Brown as President of FCLT Loans Asset Corp.
commenced on July 3, 1995.
(2) Only reflects salary paid to Mr. Brown from July 3, 1995 through December
31, 1995. If Mr. Brown had received salary from the beginning of the
fiscal year, his salary would have been $250,000.
(3) The total amount indicated under "All Other Compensation" consists of (a)
amounts contributed to match a portion of his contributions under a 401(k)
plan ($ 2,507), (b) excess premiums paid on supplemental life insurance
policies ($539) and (c) premiums paid on long term disability insurance
policies ($366).
Mr. Brown's compensation is determined as set forth in that certain
employment agreement (the "Brown Employment Agreement"), effective as of July 3,
1995, by and between FCLT Loans Asset Corp. and Mr. Brown, a copy of which is
attached hereto as Exhibit 10.2. The Brown Employment Agreement provides for
Mr. Brown's employment with FCLT Loans Asset Corp. and his duties to the Trust
for a term commencing on July 3, 1995 and terminating three years later. Mr.
Brown's duties include his membership on the Portfolio Committee of the Trust,
the management and payment of creditor claims and the liquidation of the assets
of the Trust pursuant to the terms of the Trust Agreement. In compensation for
such services, Mr. Brown is paid an annual salary of $250,000. The Brown
Employment Agreement also provides for several performance-oriented conditional
bonuses and eligibility for enrollment in certain benefit plans. Negotiations
are underway to amend the Brown Employment Agreement to extend Mr. Brown's term
of employment to coincide with the termination of the Trust.
In addition to the bonuses set forth in the Brown Employment Agreement,
pursuant to Section 9.8 of the Plan, Mr. Brown, along with C. Ivan Wilson, Joe
S. Greak and certain other employees of the Trust, is to share in a bonus pool
and executive long-term incentive plan, the provisions of which are set forth in
Exhibit O to the Plan. From the Effective Date through December 31, 1995, no
awards were given under such bonus pool or executive long-term incentive plan.
12
<PAGE> 14
Compensation of the Investment Manager
The liquidation of the assets transferred to the Trust pursuant to the
Plan are managed by FirstCity, in return for which FirstCity receives a
servicing fee as set forth in the Investment Management Agreement. See Item 7
below for a more detailed discussion regarding the compensation arrangement
between the Trust and FirstCity.
Reimbursement Arrangement with FirstCity
The Trust has entered into an oral reimbursement arrangement (the
"Reimbursement Arrangement") with FirstCity. Pursuant to such Reimbursement
Arrangement, FirstCity pays the salaries of and disburses the checks to all of
the employees on the payroll of the Trust. The Trust then reimburses FirstCity
for all sums paid out to the employees of the Trust by FirstCity.
Item 7. Certain Relationships and Related Transactions.
Investment Management Agreement with FirstCity
Pursuant to the Plan, the liquidation of the Debtor's assets transferred
to the Trust is serviced by FirstCity pursuant to an Investment Management
Agreement between the Trust and FirstCity. Under the terms thereof, FirstCity
receives an incentive fee ("Incentive Fee") equal to (1) 3% of all cash proceeds
derived from the assets owned by the Trust and its subsidiaries (including
assets acquired pursuant to the Loss-Sharing Settlement Agreement ("Net Cash
Proceeds") plus (2) 5% of the Net Cash Proceeds (excluding net proceeds realized
from Contingent Assets Claims, as defined in the Plan) realized above
$248,600,000, as adjusted (the "Estimated Threshold Collection Amount") up to an
amount equal to $25 million in excess of the Estimated Threshold Collection
Amount; 10% of the Net Cash Proceeds (excluding net proceeds realized from
Contingent Asset Claims) realized above $25 million in excess of the Estimated
Threshold Collection Amount up to an amount equal to $50 million in excess of
the Estimated Threshold Collection Amount; and 15% of the Net Cash Proceeds
(excluding net proceeds realized from Contingent Asset Claims) realized above
$50 million in excess of the Estimated Threshold Collection Amount. For the
period of July 3, 1995 through December 31, 1995, the Trust paid FirstCity an
Incentive Fee of $3.1 million.
Interest Distributions to FirstCity as Class A Certificate Holder
As the sole holder of the Class A Certificate, FirstCity receives
distributions of interest from the Trust to (i) pay certain expenses, (ii) pay
obligations under its Senior Subordinated Notes, $106.7 million of which were
issued by FirstCity as a result of the implementation of the Plan and the
consummation of the Merger and (iii) redeem and pay dividends on $51.7 million
of Special Preferred Stock which was issued to certain former security holders
of the Debtor as a result of the implementation of the Plan and the consummation
of the Merger.
13
<PAGE> 15
On March 29, 1996, the Trust paid amounts to FirstCity, as sole holder
of the Class A Certificate, sufficient to retire half of the debt represented by
the Senior Subordinated Notes. As a result, as of such date, the value of the
Class A Certificate was reduced by approximately $53.3 million.
Item 8. Legal Proceedings.
The Trust is involved in various legal proceedings in the ordinary
course of business. In the opinion of management of the Trust, the resolution
of such matters should not have a material adverse impact on the financial
condition of the Trust.
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
The Class A Certificate is held by FirstCity. Through December 31,
1995, the Trust had distributed $4.7 million to FirstCity as the sole Class A
Certificate holder.
The Class B Beneficial Interests (traded under the symbol "FCFCL") and
Class C Beneficial Interests (traded under the symbol "FCFCZ") have been trading
over the counter as of July 3, 1995. The high and low prices of Class B
Beneficial Interests through year-end 1995 were $14.00 and $1.00, respectively,
in the third quarter and $15.75 and $12.00, respectively, in the fourth
quarter. The number of Class B Certificate holders of record on December 31,
1995 was 84. As of April 15, 1996, the Class B Beneficial Interests were
trading at a high and a low of $18.00.
The high and low prices of Class C Beneficial Interests through year-end
1995 were $.01 and $.001 in the third quarter and $.01 in the fourth quarter.
As of April 15, 1996, the Class C Beneficial Interests were trading at a high
and a low of $.01. The number of Class C Certificate holders of record on
December 31, 1995 was 463.
No distributions were made to Class B or Class C Certificate holders in
1995. See Item 11 for a description of distribution priorities.
Item 10. Recent Sales of Unregistered Securities.
The Trust's securities were issued pursuant to the Plan, and their
issuance was exempt from the registration requirements of the Securities Act of
1933, as amended, pursuant to Section 1145 of the Bankruptcy Code.
Item 11. Description of Registrant's Securities to be Registered.
The Class A, B and C Certificates represent beneficial interests in the
Trust established pursuant to the Plan. The description herein of such
securities is qualified by
14
<PAGE> 16
reference to the Plan and the Trust Agreement, copies of which are filed with
this Registration Statement as Exhibit 2.1 and Exhibit 3.1, respectively.
The Class A Certificate is held solely by FirstCity. Distributions of
interest from the Trust with respect to the Class A Certificate are used by
FirstCity to pay certain expenses, to retire the Senior Subordinated Notes in
the aggregate amount of $106.7 million and to redeem and pay dividends on the
Special Preferred Stock, which has a nominal stated value of $51.7 million.
Under the terms of the Special Preferred Stock, FirstCity is only required to
redeem such stock and to declare dividends thereon to the extent it receives
sufficient funds from the Trust to make such payments.
The Class B Beneficial Interests were distributed to holders of Existing
Series B Interests (as defined in the Plan) of the Debtor and Existing Series E
Interests (as defined in the Plan) of the Debtor on the Effective Date under the
Trust Agreement and pursuant to the Plan, having such rights as provided for in
the Trust Agreement and as set forth below. As of April 15, 1996, there were
2,460,911 Class B Beneficial Interests. As of the end of the fiscal year, the
Class B Certificates were valued at $39.5 million.
The Class C Beneficial Interests were distributed to holders of Existing
Common Interests (as defined in the Plan) of the Debtor on the Effective Date
under the Trust Agreement and pursuant to the Plan, having such rights as
provided for in the Trust Agreement and as set forth below. As of April 15,
1996, there were 738,273 Beneficial Interests outstanding under the Class C
Certificates.
Pursuant to the Loan Agreement, dated as of July 11, 1995, among Loans,
Fleet National Bank and NationsBank of Texas, N.A. (the "Senior Note Loan
Agreement"), filed herewith as Exhibit 10.3, and the Trust Agreement, the Trust
is required to apply all proceeds from liquidation and disposition of the
Trust's assets first to payment of normal operating expenses, including the
servicing fee to FirstCity, and unpaid administrative claims of the Debtor.
Second, the Trust's proceeds are remitted to the senior lenders for payment of
principal and interest. Third, the Trust's proceeds are distributed to
FirstCity, the sole Class A Certificate holder, for payment of principal, due in
two equal installments on September 30, 1996 and 1997, and interest, at an
annual rate of 9%, on $106.7 million Senior Subordinated Notes payable, an
obligation of FirstCity, and cumulative quarterly cash dividends ($3.9 million
accrued and undeclared at December 31, 1995) at the annual rate of $3.15 per
share (on 2,460,911 shares) and redemption of the nominal stated value of $51.7
million of FirstCity Special Preferred Stock on September 30, 1998. On March
29, 1996, the Trust distributed $53.3 million to FirstCity, as sole holder of
the Class A Certificate, for the early redemption of Senior Subordinated Notes.
The fourth order of distribution is payments pursuant to employment
agreements with certain former employees of the Debtor. Fifth, Class B
Certificate holders (and, pursuant to bonus agreements, certain former employees
of the Debtor) are entitled to distributions up to the Pour-Over Level. The
Pour-Over Level (approximately $122 million at December 31, 1995) is the
liquidation preference on July 3, 1995 of the Debtor's Series B and Series E
preferred stock, less the nominal stated value of FirstCity Special Preferred
Stock and the book value of FirstCity common stock issued to the Series B and
Series E holders, plus interest at an annual
15
<PAGE> 17
rate of 6.5% from July 3, 1995. Lastly, Class C Certificate holders receive
distributions, if any, after all required payments to Class B Certificate
holders. No distributions to Class C Certificate holders are anticipated.
The ultimate amounts to be distributed to the holders of the beneficial
interests will result from the cash flow actually realized from the liquidation
of the non-cash trust assets and contingent asset claims.
Item 12. Indemnification of Directors and Officers.
The Trust Agreement provides that except in the case of (i) acts or
omissions of a Trustee as shall constitute fraud, willful misconduct or gross
negligence or (ii) acts or omissions of an officer, employee or agent of the
Trust where the Trustee acted with gross negligence or willful misconduct in the
selection, retention or supervision of such officer, employee or agent of the
Trust, each Trustee (including former Trustees) is indemnified by the Trust from
losses, claims, damages, liabilities or expenses (including, without limitation,
reasonable attorneys' fees, disbursements and related expenses) in connection
with any action, suit, proceeding or investigation brought or threatened against
such Trustee in his capacity as such or in any other capacity contemplated by
the Trust Agreement or the Plan or in connection with any matter arising out of
or related to the Plan, the Trust Agreement or the affairs of the Trust.
The Trust Agreement also provides that except in the case of acts or
omissions by a person acting in his capacity as a member of the Portfolio
Committee or as an officer or director of a Trust-Owned Affiliate (each such
person an "Indemnified Person") as shall constitute fraud, willful misconduct or
gross negligence, each Indemnified Person is indemnified by the Trust from
losses, claims, damages, liabilities or expenses (including, without limitation,
reasonable attorneys' fees, disbursements and related expenses) in connection
with any action, suit, proceeding or investigation brought or threatened against
such Indemnified Person in his capacity as such or in connection with any matter
arising out of or related to the Trust Agreement or the affairs of the Trust.
The Trust maintains a professional liability, directors and officers
liability and corporate reimbursement policy, insuring the Portfolio Committee
and certain other persons related to the Trust, including Robert W. Brown,
against certain claims.
Item 13. Financial Statements and Supplementary Data.
The financial statements and supplementary information of the Trust
filed with this Registration Statement are included as Appendix A hereto.
16
<PAGE> 18
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On January 24, 1996, the Trust engaged KPMG Peat Marwick LLP ("KPMG") to
serve as its independent accountants, such engagement to be effective as of the
Effective Date through the period ending December 31, 1995 and thereafter. The
engagement of KPMG was recommended and approved by the Portfolio Committee on
January 24, 1996.
During the Debtor's two most recent fiscal years prior to the Merger, no
audited financial statements of the Debtor were prepared, and therefore, no
report on such financial statements were prepared. Prior thereto, Arthur
Andersen & Co. LLP served as the Debtor's independent accountants.
Item 15. Financial Statements and Exhibits.
(a) Financial Statements
The financial statements and supplementary information of the Trust
filed with this Registration Statement are included as Appendix A hereto.
(b) Exhibits
The following financial statements, supplementary information and
exhibits are filed with this Registration Statement:
17
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit
No. Description
------- --------------------------------------------------------------------
<S> <C>
2.1* Joint Plan of Reorganization for First City Bancorporation of
Texas, Inc., as modified, under Chapter 11 of the United States
Bankruptcy Code, as confirmed by the U.S. Bankruptcy Court for
the Northern District of Texas, Dallas division on May 31,
1995.
3.1* The Liquidating Trust Agreement, dated as of July 3, 1995, by
and between First City Bancorporation of Texas, Inc. and
Shawmut Bank Connecticut, National Association (now Fleet
National Bank), as Trustee.
4.1* Form of Class B Certificate.
4.2* Form of Class C Certificate.
10.1* Investment Management Agreement, dated as of July 3, 1995, by
and between FirstCity, as Investment Manager, and the Trust.
10.2* Employment Agreement, effective as of July 3, 1995, by and
between FCLT Loans Asset Corp. and Robert W. Brown.
10.3* Loan Agreement, dated as of July 11, 1995, among Loans, Fleet
National Bank, as Agent and as Lender, and NationsBank of
Texas, N.A., as Lender.
22.1* Subsidiaries of the Trust
</TABLE>
- ---------------
* Filed herewith.
18
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
FLEET NATIONAL BANK, as Trustee
Date: May 1, 1996 /s/ Susan T. Keller
-----------------------------------
Name: Susan T. Keller
------------------------------
Title: Vice President
-----------------------------
19
<PAGE> 21
APPENDIX A
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Consolidated Statement of Net Assets
December 31, 1995 . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statement of Income and Changes in Net Asset Value
Inception to December 31, 1995 . . . . . . . . . . . . . . F-3
Consolidated Statement of Cash Flows
Inception to December 31, 1995 . . . . . . . . . . . . . . F-4
Notes to Consolidated Financial Statements
December 31, 1995 . . . . . . . . . . . . . . . . . . . . F-5
</TABLE>
F-1
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
The Portfolio Committee and Certificate Holders
FirstCity Liquidating Trust:
We have audited the accompanying consolidated statement of net assets of
FirstCity Liquidating Trust and subsidiaries as of December 31, 1995, and the
related consolidated statements of income and changes in net asset value, and
cash flows for the period from July 3, 1995 (effective date of inception)
through December 31, 1995. These consolidated financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As described in Note A to the consolidated financial statements, the
Joint Plan of Reorganization by First City Bancorporation of Texas, Inc.
("Debtor"), Official Committee of Equity Security Holders, and J-Hawk
Corporation, with the participation of Cargill Financial Services Corporation
was confirmed on May 31, 1995 and became effective July 3, 1995. Pursuant to
the Joint Plan, assets of the Debtor transferred to FirstCity Liquidating Trust
will be liquidated in accordance with Joint Plan terms for the benefit of the
holders of the beneficial interest in such assets. Accordingly, the Trust is
using a liquidation basis of accounting.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the net assets of FirstCity
Liquidating Trust and subsidiaries as of December 31, 1995, and the income and
changes in net asset values and cash flows for the period from July 3, 1995
(effective date of inception) to December 31, 1995 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Ft. Worth, Texas
February 13, 1996
F-2
<PAGE> 23
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Assets, at estimated fair value
-------------------------------
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,260
Note receivable from FirstCity Financial Corporation . . . . . . . . . . . . . . 2,000
Trust assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193,204
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,464
-----------
Less liabilities at face or estimated amount
--------------------------------------------
Estimated administrative claims . . . . . . . . . . . . . . . . . . . . . . . . . 3,486
Payables and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . 1,197
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,683
-----------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . --
Trust net asset value attributable to:
-------------------------------------
Class "A" Certificate, held by FirstCity Financial Corporation . . . . . . . . . 162,245
Class "B" Certificate, 2,460,911 units outstanding . . . . . . . . . . . . . . . 39,536
Class "C" Certificate, 738,273 units outstanding . . . . . . . . . . . . . . . . --
-----------
Total net asset value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 201,781
===========
CONSOLIDATED STATEMENT OF INCOME AND CHANGES IN NET ASSET VALUE
INCEPTION TO DECEMBER 31, 1995 (DOLLARS IN THOUSANDS)
Changes in fair value of trust assets . . . . . . . . . . . . . . . . . . . . . . $ 33,548
Interest income on short-term investments . . . . . . . . . . . . . . . . . . . . 375
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,741)
Administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,552)
-----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,630
-----------
Contribution of net assets by First City Bancorporation of Texas, Inc. . . . . . 182,872
Interest distribution on Class "A" Certificate . . . . . . . . . . . . . . . . . (4,721)
-----------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 201,781
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 24
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
INCEPTION TO DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,630
Adjustments to reconcile net income to net cash used
in operating activities:
Changes in fair value of trust assets . . . . . . . . . . . . . . . (33,548)
Collections on trust assets, net of advances . . . . . . . . . . . . 107,371
Purchase of Loss - Sharing assets . . . . . . . . . . . . . . . . . (205,513)
Decrease in other liabilities . . . . . . . . . . . . . . . . . . . (9,319)
-----------
Net cash used in operating activities . . . . . . . . . . . . . . (117,379)
-----------
Cash flows from financing activities:
Borrowings under notes payable to banks . . . . . . . . . . . . . . . . 73,000
Payments of notes payable to banks . . . . . . . . . . . . . . . . . . (73,000)
Advance from FirstCity Financial Corporation . . . . . . . . . . . . . 4,728
Repayment of advance from FirstCity Financial Corporation . . . . . . . (4,728)
Advance to FirstCity Financial Corporation . . . . . . . . . . . . . . (2,000)
Capital contribution of First City Bancorporation of Texas, Inc. . . . 135,360
Interest distribution on Class "A" Certificate . . . . . . . . . . . . (4,721)
-----------
Net cash provided by financing activities . . . . . . . . . . . . 128,639
-----------
Cash, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,260
===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,741
===========
Non-cash financing activities:
Non-cash net assets contributed by First City
Bancorporation of Texas, Inc. . . . . . . . . . . . . . . . . . . . . $ 47,512
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 25
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995
(A) Summary of Significant Accounting Policies
(1) Description of Business
The Joint Plan of Reorganization by First City Bancorporation of Texas,
Inc. (the "Debtor"), Official Committee of Equity Security Holders, and
J-Hawk Corporation ("J-Hawk"), with the Participation of Cargill Financial
Services Corporation, under Chapter 11 of the United States Bankruptcy
Code, Case No. 392-39474-HCA-11 (the "Plan of Reorganization"), was
confirmed by the Bankruptcy Court for the Northern District of Texas,
Dallas Division, by an order entered on May 31, 1995, and became effective
on July 3, 1995. Pursuant to the Plan of Reorganization, and an Agreement
and Plan of Merger between the Debtor and J-Hawk, on July 3, 1995, J-Hawk
was merged (the "Merger") with and into First City Bancorporation of Texas,
Inc., and the name of the corporation was changed to FirstCity Financial
Corporation ("FirstCity").
Pursuant to the Plan, substantially all of the legal and beneficial
interests in the assets of the Debtor, other than $20 million in cash
contributed to FirstCity, were transferred to FirstCity Liquidating Trust
(the "Trust"), or to subsidiaries of the Trust. Such assets will be
liquidated over the life of the Trust pursuant to the terms thereof.
FirstCity, as the sole holder of the Class "A" Certificate under the Trust,
will receive from the Trust amounts sufficient to pay certain expenses and
FirstCity's obligations under its 9% senior subordinated notes and its
special preferred stock. Any amounts in excess of such sums shall be paid
to certain of the former security holders of the Debtor pursuant to the
terms of the Class B and the Class C certificates of beneficial interests
in the Trust. The Trust is administered by a four-person portfolio
committee (the "Portfolio Committee"). The liquidation of the Trust's
assets is managed by FirstCity pursuant to an Investment Management
Agreement between the Trust and FirstCity.
In connection with the sale of the Debtor's banks by the FDIC to
third-party acquirers (the "Loss-Sharing Banks"), the FDIC guaranteed
certain recoveries on loans acquired by the Loss-Sharing Banks. (These
agreements are referred to as "Loss-Sharing Agreements".) On July 12,
1995, in order to reduce the uncertain effect of the Loss-Sharing
Agreements on future distributions to the Trust by the FDIC, subsidiaries
of the Trust purchased assets (the "Loss-Sharing Settlement") for
approximately $206 million from the Loss-Sharing Banks. With the purchase
of these assets, the Loss-Sharing Banks released the FDIC from its future
obligations under the Loss-Sharing Agreements.
(2) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
FirstCity Liquidating Trust and its subsidiaries (collectively referred to
as the "Trust"). All significant intercompany transactions and balances
have been eliminated in consolidation.
F-5
<PAGE> 26
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(continued)
(3) Cash Equivalents
For purposes of the statement of cash flows, the Trust considers all highly
liquid debt instruments with original maturities of three months or less to
be cash equivalents. The Trust, at December 31, 1995, and periodically
throughout the year, has maintained balances in various operating and money
market accounts in excess of federally insured limits.
(4) Trust Assets
The net assets of the Trust are carried at estimated fair values which are
the results of discounting, at appropriate discount rates, the currently
estimated cash flows projected to be realized from the collection,
liquidation and disposition of the non-cash assets held by the Trust. Such
assets consist principally of performing and non-performing loans, income
producing real estate and interests in real estate, and miscellaneous other
assets and receivables (principally from the FDIC) transferred to the Trust
upon the consummation of the Plan. The estimates of the future cash flows
from which the net asset value of the Trust was derived are made under the
direction of the management of the Trust based upon information available
and believed to be reliable. There can be no assurance, however, that the
estimates resulting from such reviews or the net asset values derived from
such estimates will ultimately be realized due to the highly judgmental
assumptions which were made in developing estimates of the amount and
timing of future cash flows to be realized upon the liquidation of the
types of assets such as those held by the Trust.
In addition to the assets described above, the Trust also holds certain
contingent asset claims, such as claims against the former Directors and
Officers of First City Bancorporation of Texas, Inc., claims under fidelity
bonds, and judgments and deficiencies arising from charged off loans to
former borrowers of the Debtor's banks. The estimated future cash flows
from which the net asset value of the Trust was derived include estimated
future collections which might be realized from such claims only when such
amounts are reasonably certain and estimable. As a result, there can be no
assurance that there will ever be any material collections realized from
such contingent asset claims.
Trust assets are periodically revalued and adjustments to estimated fair
values are included in operating results in the period in which they become
known. Loans are considered performing if debt service payments are made in
accordance with the original or restructured terms of the notes. Interest
on loans is recognized as part of the proceeds from disposition of trust
assets.
Foreclosed assets acquired in settlement of notes are recorded at estimated
fair value. Costs relating to the development and improvement of property
and holding costs are considered in the development of estimated fair
values.
F-6
<PAGE> 27
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(continued)
(5) Income Taxes
Under current federal and state laws, the Trust shall be treated as a
grantor trust owned by the beneficiaries holding beneficial interest
therein. For tax purposes, any item of income or loss is allocated among
the certificate holders. Therefore, no provision has been made for income
taxes in the accompanying consolidated financial statements.
(B) Trust Assets
Trust assets at December 31, 1995, are comprised of the following
(dollars in thousands):
<TABLE>
<CAPTION>
LEGAL
CLAIM OR ESTIMATED
ASSIGNED GROSS
TYPE OF ASSET VALUE CASH FLOW
----------------------------------------- ------------- -------------
<S> <C> <C>
Borrowers' obligation on
outstanding balance of:
Performing loans $ 139,705 $ 134,381
Nonperforming loans 225,921 60,454
Receivable from the FDIC 33,000 33,000
Real estate and other assets 60,734 33,305
----------- -----------
Total 459,360 261,140
----------- -----------
Discount required to reflect
trust assets at estimated fair
value (266,156) (67,936)
----------- -----------
Trust assets, net $ 193,204 $ 193,204
=========== ===========
</TABLE>
(C) Senior Notes Payable to Banks
The Trust has a revolving line of credit with two banks for borrowings of
up to $100 million, subject to borrowing base limits. The line matures in
June, 1997. ln connection with the Loss-Sharing Settlement, $73 million
was borrowed by the Trust and $27 million in letters of credit were issued
in favor of the Loss-Sharing Banks (see note G). Payments reduced the
outstanding balance to zero in November, 1995. Based on an election by the
Trust, interest, payable monthly, on a portion of the borrowings is at
prime plus 1%, and interest on the remaining balance is at one-month LIBOR
(as defined) plus 3.25%. Substantially all trust assets were pledged to
secure these borrowings.
F-7
<PAGE> 28
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(continued)
(D) Estimated Claims
Estimated claims represent unpaid bankruptcy administrative claims and
claims for expense reimbursement of professionals providing services to or
for the benefit of the Debtor as of December 31, 1995; all such claims are
subject to approval of the Bankruptcy Court. The December 31, 1995 balance
includes a $2 million claim by FirstCity for reimbursement of expenses. In
November 1995, the Trust advanced FirstCity $2 million under a note,
earning prime plus 2%, which was repaid by FirstCity in February, 1996.
(E) Distribution Priorities
Pursuant to the Senior Note Loan Agreement and the Liquidating Trust
Agreement, the Trust is required to apply all proceeds from liquidation
and disposition of trust assets first to payment of normal operating
expenses, including a 3% servicing fee to FirstCity, and unpaid
administrative claims of the Debtor. Second, trust proceeds are remitted
to the senior lenders for payment of principal and interest (see Note C).
Third, trust proceeds are distributed to FirstCity, the sole Class A
Certificate holder, for payment of principal, due in two equal
installments on September 30, 1996 and 1997, and interest, at an annual
rate of 9%, on $106.7 million senior subordinated notes payable, an
obligation of FirstCity; and cumulative quarterly cash dividends ($3.9
million accrued and undeclared at December 31, 1995) at the annual rate of
$3.15 per share (on 2,460,911 shares) and redemption of the nominal stated
value of $51.7 million of FirstCity special preferred stock on September
30, 1998. On January 24, 1996, the Portfolio Committee approved, subject
to certain conditions met on February 12, 1996, the distribution of $53.3
million to FirstCity for the early redemption of senior subordinated notes
payable in March 1996.
The fourth order of distribution is payments pursuant to employment
agreements with certain former employees of the Debtor. Fifth, Class B
Certificate holders (and, pursuant to bonus agreements, certain former
employees of the Debtor) are entitled to distributions up to the Pour-Over
Level. The Pour-Over Level (approximately $122 million at December 31,
1995) is the liquidation preference on July 3, 1995, of the Debtor's
Series B and Series E preferred stock, less the nominal stated value of
FirstCity special preferred stock and the book value of FirstCity common
stock issued to the Series B and Series E holders, plus interest at an
annual rate of 6.5% from July 3, 1995. Lastly, Class C Certificate
holders receive distributions, if any, after all required payments to
Class B Certificate holders. No distributions to Class C Certificate
holders are anticipated.
The ultimate amounts to be distributed to the holders of the A, B and C
Certificates will result from the cash flow actually realized from the
liquidation of the non-cash trust assets and contingent asset claims. The
determination of the net asset value of the Trust in the accompanying
consolidated statement of net assets is based upon estimates of future
cash flows. The actual cash flows and the timing of such cash flows may
vary significantly from those estimates, thus affecting the final
distributions to the Certificate holders.
F-8
<PAGE> 29
FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(continued)
(F) Investment Management Agreement
Pursuant to an investment management agreement, FirstCity manages the
liquidation of trust assets and the Trust will pay FirstCity a 3%
servicing fee on collections (as defined) up to a specified level of
collections. Thereafter, the servicing fee percentage increases with
additional levels of collections. Administrative expenses for the period
ending December 31, 1995, include servicing fees of $3.1 million.
(G) Contingencies
Letters of credit totaling $27 million were issued to the Loss-Sharing
Banks in connection with the Loss-Sharing Settlement. Any draws (none of
which have occurred through December 31, 1995) on the letters of credit
will be paid by making an advance under the revolving line of credit (Note
C). In early 1996, the letters of credit were reduced to $19.5 million.
Agreements in principle have been reached which, if executed, will reduce
the remaining $19.5 million in letters of credit to zero.
The Trust is involved in various legal proceedings in the ordinary course
of business. In the opinion of management of the Trust, the resolution of
such matters should not have a material adverse impact on the financial
condition of the Trust.
F-9
<PAGE> 30
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ---------------------------------------------------------------------------------------------
<S> <C>
2.1* Joint Plan of Reorganization for First City Bancorporation of Texas, Inc., as modified, under
Chapter 11 of the United States Bankruptcy Code, as confirmed by the U.S. Bankruptcy Court for
the Norther District of Texas, Dallas division on May 31, 1995.
3.1* The Liquidating Trust Agreement, dated as of July 3, 1995, by and between First City
Bancorporation of Texas, Inc. and Shawmut Bank Connecticut, National Association (now Fleet
National Bank), as Trustee.
4.1* Form of Class B Certificate.
4.2* Form of Class C Certificate.
10.1* Investment Management Agreement, dated as of July 3, 1995, by and between FirstCity, as
Investment Manager, and the Trust.
10.2* Employment Agreement, effective as of July 3, 1995, by and between FCLT Loans Asset Corp. and
Robert W. Brown.
10.3* Loan Agreement, dated as of July 11, 1995, among Loans, Fleet National Bank, as Agent and as
Lender, and NationsBank of Texas, N.A., as Lender.
22.1* Subsidiaries of the Trust.
</TABLE>
- ------------------------------
* Filed herewith
<PAGE> 1
EXHIBIT 2.1
Stephen A. Goodwin
Larry T. Bates
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
Attorneys for
First City Bancorporation of Texas, Inc.,
Plan Proponent
H. Rey Stroube, III, P.C.
G. Michael Curran D. J. Baker
S. Margie Venus Rosalie Walker Gray
AKIN, GUMP, STRAUSS, WEIL, GOTSHAL & MANGES
HAUER & FELD, L.L.P. 700 Louisiana, Suite 1600
1700 Pacific Avenue, Suite 4100 Houston, Texas 77002
Dallas, Texas 75201 (713) 546-5000
(214) 969-2800
Attorneys for
Attorneys for J-HAWK Corporation, Plan
Official Committee of Equity Security Holders, Proponent, and
Plan Proponent Cargill Financial Services
Corporation,
Plan Participant
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In re Section
Section
FIRST CITY BANCORPORATION Section Case No. 392-39474-HCA-11
OF TEXAS, INC., Section
Section
DEBTOR. Section
JOINT PLAN OF REORGANIZATION
BY FIRST CITY BANCORPORATION OF TEXAS, INC.,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
AND J-HAWK CORPORATION,
WITH THE PARTICIPATION OF CARGILL FINANCIAL SERVICES CORPORATION,
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
DECEMBER 23, 1994
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C>
DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 1
1.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 1
(a) "ADDITIONAL RECEIVERSHIP DIVIDEND" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 1
(b) "ADJUSTED FDIC INITIAL CASH SETTLEMENT PAYMENT" . . . . . . . . . . . . . . . . . ATT. 1 -- 1
(c) "ADMINISTRATIVE CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 1
(d) "ADMINISTRATIVE CLAIMS BAR DATE" . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 1
(e) "AFFILIATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 1
(f) "AGGREGATE UNSECURED CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 2
(g) "ALLOWED" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 2
(h) "AMENDED AND RESTATED MERGER BY-LAWS" . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 2
(i) "AMENDED AND RESTATED MERGER CHARTER" . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 2
(j) "AMENDED AND RESTATED STANDALONE BY-LAWS" . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(k) "AMENDED AND RESTATED STANDALONE CHARTER" . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(l) "ASSETS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(m) "BANKRUPTCY CODE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(n) "BANKRUPTCY COURT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(o) "BANKRUPTCY RULE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(p) "BONY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(q) "BONY CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(r) "BONY SETTLEMENT AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(s) "BRIDGE BANKS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 3
(t) "BUSINESS DAY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(u) "CARGILL PARTICIPATION AGREEMENTS" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(v) "CASE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(w) "CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(x) "CLASS A CERTIFICATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(y) "CLASS B CERTIFICATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(z) "CLASS 8 DISTRIBUTION DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(aa) "COLLATERAL" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(ab) "COLLECTING BANK" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(ac) "COMMON EQUIVALENTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(ad) "CONFIRMATION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 4
(ae) "CONFIRMATION DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(af) "CONFIRMATION HEARING" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(ag) "CONFIRMATION ORDER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(ah) "CONTINGENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(ai) "CONTINGENT ASSET CLAIMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(aj) "CONTRACT RATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(ak) "CREDITOR COMMITTEE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(al) "DEBTOR" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(am) "DEBT SECURITIES CLAIMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(an) "DEFENDANT INDEMNITY CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 5
(ao) "DEFICIENCY AMOUNT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(ap) "DISCLOSURE STATEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(aq) "DISPUTED" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
</TABLE>
ATT. 1 -- i
<PAGE> 3
<TABLE>
<S> <C> <C>
(ar) "DISTRIBUTION DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(as) "EDS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(at) "EDS CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(au) "EDS SETTLEMENT AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(av) "EFFECTIVE DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 6
(aw) "EQUITY COMMITTEE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(ax) "EQUITY INTEREST" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(ay) "ESTATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(az) "EXISTING COMMON INTEREST" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(ba) "EXISTING EQUITY SECURITIES" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bb) "EXISTING INDENTURE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bc) "EXISTING SECURITIES" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bd) "EXISTING SECURITIES RECORD DATE" . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(be) "EXISTING SERIES A INTEREST" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bf) "EXISTING SERIES B INTEREST" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bg) "EXISTING SERIES B LIQUIDATION PREFERENCE" . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bh) "EXISTING SERIES B PERCENTAGE" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bi) "EXISTING SERIES E INTEREST" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 7
(bj) "EXISTING SERIES E LIQUIDATION PREFERENCE" . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bk) "EXISTING SERIES E PERCENTAGE" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bl) "FDIC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bm) "FDIC ASSETS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bn) "FDIC CLAIMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bo) "FDIC CORPORATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bp) "FDIC INITIAL CASH SETTLEMENT PAYMENT" . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bq) "FDIC LETTER OF CREDIT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(br) "FDIC LITIGATION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bs) "FDIC NOTE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bt) "FDIC RECEIVER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bu) "FDIC RECEIVERSHIP DISTRIBUTIONS" . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 8
(bv) "FDIC SETTLEMENT AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(bw) "FEE APPLICATION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(bx) "FEE CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(by) "FINAL ORDER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(bz) "FINANCIAL INSTITUTION BOND CLAIMS" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(ca) "FIRST CITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(cb) "FIRST CITY BANK RECEIVERSHIPS" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(cc) "FIRST CITY BANKS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(cd) "GCR ASSETS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(ce) "GCR ASSETS VALUE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(cf) "GROUP OF 55" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 9
(cg) "GROUP OF 55 CLAIMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(ch) "GROUP OF 55 RELEASES" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(ci) "INDEMNIFICATION OBLIGATIONS" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(cj) "INDENTURE TRUSTEE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(ck) "INITIAL RECEIVERSHIP DIVIDEND" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(cl) "ISSUED NEW COMMON STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(cm) "ISSUED NEW JUNIOR PREFERRED STOCK" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 10
(cn) "INVESTMENT MANAGEMENT AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(co) "INVESTMENT MANAGER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
</TABLE>
ATT. 1 -- ii
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(cp) "INVOLUNTARY GAP CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cq) "J-HAWK" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cr) "KRIM LAWSUIT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cs) "LIEN" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(ct) "LIQUIDATING TRUST" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cu) "LIQUIDATING TRUSTEE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cv) "LOCK-BOX AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cw) "LOSS-SHARING ASSETS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cx) "LOSS-SHARING BANKS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cy) "LOSS-SHARING SETTLEMENT AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 11
(cz) "MARCH 1992 SETTLEMENT AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(da) "NEW J-HAWK" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(db) "NEW JUNIOR PREFERRED STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(dc) "NEW MERGED FIRSTCITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(dd) "NEW MERGED FIRSTCITY CORPORATE DOCUMENTS" . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(de) "NEW MERGER COMMON STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(df) "NEW SENIOR SECURED NOTES" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(dg) "NEW SENIOR PREFERRED STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(dh) "NEW SENIOR SECURED NOTE INDENTURE" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(di) "NEW SENIOR SUBORDINATED NOTES" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(dj) "NEW SENIOR SUBORDINATED NOTE INDENTURE" . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 12
(dk) "NEW SPECIAL PREFERRED STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dl) "NEW STANDALONE COMMON STOCK" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dm) "NEW STANDALONE FIRSTCITY" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dn) "NEW STANDALONE FIRSTCITY CORPORATE DOCUMENTS" . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(do) "NEW WARRANTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dp) "1988 ASSISTANCE AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dq) "OBJECTION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dr) "OLD J-HAWK" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(ds) "PERSON" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dt) "PETITION DATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(du) "PLAINTIFF DAMAGES CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 13
(dv) "PLAN" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(dw) "PLAN DOCUMENTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(dx) "PLAN PARTICIPANT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(dy) "PLAN PROPONENTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(dz) "PRE-1988 D&O CLAIMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(ea) "PRIMARY MERGER ALTERNATIVE" . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(eb) "PRIORITY CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(ec) "PRIORITY TAX CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(ed) "PRO RATA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(ee) "PROFESSIONAL" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(ef) "RECORD HOLDER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(eg) "REORGANIZED COMPANY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 14
(eh) "RETIREE ADMINISTRATIVE CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(ei) "RETIREE BENEFIT PLANS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(ej) "SCHEDULES" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(ek) "SECONDARY STANDALONE ALTERNATIVE" . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(el) "SECTION 510(B) SECURITIES LITIGATION CLAIM" . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(em) "SECURED CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
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(en) "SECURITIES LITIGATION PROOF OF LOSS" . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(eo) "SENIOR RIGHTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(ep) "SETTLED CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(eq) "SUBORDINATED CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(er) "SUBSIDIARY" OR "SUBSIDIARIES" . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 15
(es) "TAX CODE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
(et) "TOTAL JUNIOR PREFERRED LIQUIDATION PREFERENCE" . . . . . . . . . . . . . . . . . ATT. 1 -- 16
(eu) "TRANSACTIONAL DOCUMENTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
(ev) "TRUST AGREEMENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
(ew) "TRUST ASSETS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
(ex) "UNSECURED CLAIM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
1.2 UNDEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
1.3 INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
1.4 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 16
ARTICLE II
MERGER AND STANDALONE ALTERNATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
2.1 PLAN ALTERNATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
2.2 CONSTRUCTION OF ALTERNATIVE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
2.3 VOTING ON ALTERNATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
2.4 CONFIRMATION OF ALTERNATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
2.5 EFFECTIVENESS OF ALTERNATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
2.6 NOTICE TO PARTIES IN INTEREST OF EFFECTIVE ALTERNATIVE . . . . . . . . . . . . . . . . . . ATT. 1 -- 17
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 18
3.1 ADMINISTRATIVE CLAIMS, RETIREE ADMINISTRATIVE CLAIMS, INVOLUNTARY GAP CLAIMS
AND PRIORITY TAX CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 18
3.2 CLAIMS AND EQUITY INTERESTS CLASSIFIED . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 18
3.3 ELIMINATION OF CLASSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 18
ARTICLE IV
IDENTIFICATION OF IMPAIRED CLASSES
OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 18
4.1 CLASSES OF CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 18
4.2 CLASSES OF EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
4.3 IMPAIRMENT CONTROVERSIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
ARTICLE V
ACCEPTANCE OR REJECTION OF THIS PLAN; EFFECT OF REJECTION BY
ONE OR MORE CLASSES OF CLAIMS OR EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
5.1 CLASSES ENTITLED TO VOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
5.2 DEEMED ACCEPTANCE WITHOUT VOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
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5.3 DEEMED REJECTION WITHOUT VOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
5.4 CLASS ACCEPTANCE REQUIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
5.5 CRAMDOWN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
ARTICLE VI
TREATMENT OF UNCLASSIFIED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
6.1 ADMINISTRATIVE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 19
(a) PROCEDURE AND DEADLINE FOR ASSERTING ADMINISTRATIVE CLAIMS . . . . . . . . . . . ATT. 1 -- 19
(b) PROCEDURE AND TIME FOR FILING FEE CLAIMS . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 20
(c) ALLOWANCE OF ADMINISTRATIVE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 20
(d) PAYMENT OF ALLOWED ADMINISTRATIVE CLAIMS . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 20
6.2 RETIREE ADMINISTRATIVE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 20
6.3 INVOLUNTARY GAP CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 20
6.4 PRIORITY TAX CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 20
6.5 FEES AND EXPENSES OF INDENTURE TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 21
ARTICLE VII
TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 21
7.1 CLASS 1 -- PRIORITY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 21
7.2 CLASS 2 -- SECURED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 21
7.3 CLASS 3 -- SETTLED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 21
7.4 CLASS 4 -- UNSECURED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 22
7.5 CLASS 5 -- SUBORDINATED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 22
7.6 CLASS 6 -- EXISTING SERIES A INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 22
7.7 CLASS 7 -- EXISTING SERIES B INTERESTS AND EXISTING SERIES E INTERESTS . . . . . . . . . . ATT. 1 -- 23
7.8 CLASS 8 -- SECTION 510(B) SECURITIES LITIGATION CLAIMS . . . . . . . . . . . . . . . . . . ATT. 1 -- 24
7.9 CLASS 9 -- EXISTING COMMON INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 26
7.10 CLASS 10 -- COMMON EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 26
ARTICLE VIII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 26
8.1 REJECTED IF NOT ASSUMED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 26
8.2 DISPUTES AS TO EXECUTORY/UNEXPIRED STATUS . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 26
8.3 EXPIRED CONTRACTS OR LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 26
8.4 RESERVATION OF RIGHTS TO SEEK REJECTION OF RETIREE BENEFIT PLANS . . . . . . . . . . . . . ATT. 1 -- 27
8.5 SURVIVAL OF THE DEBTOR'S CORPORATE INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 27
8.6 BAR TO REJECTION DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 27
8.7 CLAIMS ARISING FROM ASSUMPTION OR REJECTION . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 27
ARTICLE IX
SPECIAL IMPLEMENTING PROVISIONS FOR PRIMARY MERGER ALTERNATIVE . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 27
9.1 NEW MERGED FIRSTCITY CORPORATE DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 27
9.2 ISSUANCE OF NEW STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 28
9.3 MERGER WITH J-HAWK CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 28
9.4 PARTICIPATION BY CARGILL FINANCIAL SERVICES CORPORATION . . . . . . . . . . . . . . . . . ATT. 1 -- 28
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9.5 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 28
9.6 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 29
9.7 EMPLOYEE COMPENSATION AND BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 29
9.8 EMPLOYEE BONUS PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 29
9.9 OPERATION OF BUSINESS AND MANAGEMENT OF ASSETS AFTER CONFIRMATION DATE . . . . . . . . . . ATT. 1 -- 29
9.10 ASSUMPTION OF PLAN LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 30
9.11 VESTING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 30
9.12 PRESERVATION OF CLAIMS BELONGING TO THE DEBTOR . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 30
9.13 ESTABLISHMENT AND ADMINISTRATION OF LIQUIDATING TRUST . . . . . . . . . . . . . . . . . . ATT. 1 -- 31
9.14 GOING PRIVATE PROHIBITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 32
ARTICLE X
SPECIAL IMPLEMENTING PROVISIONS FOR SECONDARY STANDALONE ALTERNATIVE . . . . . . . . . . . . . . . . . . . ATT. 1 -- 32
10.1 NEW STANDALONE FIRSTCITY CORPORATE DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 32
10.2 ISSUANCE OF NEW STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 32
10.3 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 33
10.4 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 33
10.5 GENERAL EMPLOYMENT ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 33
10.6 SPECIAL EMPLOYMENT ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 33
10.7 ASSUMPTION OF PLAN LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 33
10.8 VESTING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 34
10.9 PRESERVATION OF CLAIMS BELONGING TO THE DEBTOR . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 34
ARTICLE XI
GENERAL IMPLEMENTING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 34
11.1 OPERATION OF BUSINESS AND MANAGEMENT OF ASSETS AFTER EFFECTIVE DATE . . . . . . . . . . . ATT. 1 -- 34
11.2 D'OENCH, DUHME PROTECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 34
11.3 CORPORATE TRANSACTIONS RELATED TO FCB HOLDINGS, INC. AND REORGANIZED COMPANY . . . . . . . ATT. 1 -- 34
11.4 EFFECTUATING DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 34
11.5 FURTHER AUTHORIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 35
11.6 FDIC SETTLEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 35
11.7 LOSS-SHARING SETTLEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 35
11.8 CONTRIBUTION BAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 35
11.9 EXONERATION AND RELIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 35
11.10 TERM OF INJUNCTIONS OR AUTOMATIC STAYS . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 36
11.11 PROHIBITION AGAINST DISCRIMINATORY TREATMENT OF DEBTOR . . . . . . . . . . . . . . . . . . ATT. 1 -- 36
11.12 DISCHARGE AND RELEASE OF CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 36
11.13 INJUNCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 36
ARTICLE XII
PROVISIONS GOVERNING DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 36
12.1 DATE OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 36
12.2 DISTRIBUTION RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 37
12.3 DISTRIBUTION RECORD DATE FOR HOLDERS OF EXISTING SECURITIES . . . . . . . . . . . . . . . ATT. 1 -- 37
12.4 CONDITION TO DISTRIBUTION TO RECORD HOLDERS OF EXISTING SECURITIES . . . . . . . . . . . . ATT. 1 -- 37
12.5 MEANS OF CASH PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 38
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12.6 DE MINIMIS DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 38
12.7 DELIVERY OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 38
12.8 DISBURSING AGENT EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 38
12.9 TIME BAR TO CASH PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 38
12.10 TRANSFER TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
12.11 DUE AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
12.12 EFFECT OF PRECONFIRMATION DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
12.13 RECOGNITION OF GUARANTEE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
12.14 SATISFACTION OF CONTRACTUAL SUBORDINATION RIGHTS . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
12.15 SETOFFS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
12.16 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 39
ARTICLE XIII
GENERAL PROCEDURES FOR OBJECTING TO CLAIMS AND
EQUITY INTERESTS AND RESOLVING AND TREATING DISPUTED
CLAIMS AND DISPUTED EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.1 OBJECTION DEADLINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.2 PROSECUTION OF OBJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.3 PRESERVATION OF OBJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.4 NO DISTRIBUTIONS PENDING RESOLUTION OF OBJECTIONS . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.5 SAFEKEEPING OF DISTRIBUTABLE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.6 DISTRIBUTION RIGHTS AFTER ALLOWANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 40
13.7 TREATMENT OF CONTINGENT CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 41
13.8 DISALLOWANCE/ALLOWANCE OF DEBT SECURITIES CLAIMS AND EXISTING EQUITY SECURITIES . . . . . ATT. 1 -- 41
13.9 DISALLOWANCE OF SETTLED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 41
ARTICLE XIV
RESTRICTIONS ON TRADING OF NEW STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 41
14.1 CHARTER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 41
14.2 CERTAIN TRANSFERS VOID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 42
14.3 APPROVED TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 42
14.4 RECOVERY OF PROHIBITED TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 42
14.5 TREATMENT OF PROHIBITED TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 42
14.6 PROCEEDS OF SALE OF PROHIBITED SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
14.7 LEGENDED CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
ARTICLE XV
CONDITIONS PRECEDENT TO CONFIRMATION
AND EFFECTIVENESS OF THIS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
15.1 CONDITIONS TO CONFIRMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
(a) DISCLOSURE STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
(b) CONFIRMATION ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
15.2 GENERAL CONDITIONS TO EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
(a) FINAL CONFIRMATION ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
(b) PLAN DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 43
(c) FDIC SETTLEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
</TABLE>
ATT. 1 -- vii
<PAGE> 9
<TABLE>
<S> <C>
(d) LOSS-SHARING SETTLEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
(e) MERGER OF FCB HOLDINGS, INC . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
(f) BANK HOLDING COMPANY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
(g) UNITED STATES TRUSTEE'S FEES . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
(h) NO MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
(i) DISALLOWANCE OF INDEMNITY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
(j) LIMITATION ON ALLOWED SUBORDINATION CLAIMS AND ALLOWED CLAIMS ARISING
FROM THE DEBTOR'S INDEMNIFICATION OBLIGATIONS . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
15.3 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
15.4 ANNULMENT OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 44
15.5 TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 45
ARTICLE XVI
RETENTION OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 45
16.1 JURISDICTION RETAINED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 45
16.2 FAILURE OF THE BANKRUPTCY COURT TO EXERCISE JURISDICTION . . . . . . . . . . . . . . . . . ATT. 1 -- 46
ARTICLE XVII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.1 COMPLIANCE WITH TAX REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.2 COMPLIANCE WITH ALL APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.3 CANCELLATION OF INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.4 PAYMENT OF THE STATUTORY FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.5 TERMINATION OF COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.6 POST-EFFECTIVE DATE FEES AND EXPENSES OF PROFESSIONALS . . . . . . . . . . . . . . . . . . ATT. 1 -- 46
17.7 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 47
17.8 MODIFICATION OF THIS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 47
17.9 REVOCATION OF THIS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 47
17.10 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 47
17.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 47
17.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 48
17.13 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 48
17.14 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- 48
</TABLE>
ATT. 1 -- viii
<PAGE> 10
EXHIBITS
<TABLE>
<S> <C>
Exhibit A, New Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. A-1
Exhibit B, New Senior Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. B-1
Exhibit C, New Special Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. C-1
Exhibit D, New Merger Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. D-1
Exhibit E, New Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. E-1
Exhibit F, New Merger Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. F-1
Exhibit G, New Merger By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. G-1
Exhibit H, Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. H-1
Appendix A, Class A Beneficial Interest . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. H -- APP. A-1
Appendix B, Class B Beneficial Interest . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. H -- APP. B-1
Appendix C, Allocations of Trust Income and Losses . . . . . . . . . . . . . . . . ATT. 1 -- EXH. H -- APP. C-1
Appendix D, Investment Management Agreement . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. H -- APP. D-1
Annex A, Lock-Box Agreement . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. H -- APP. D -- ANN. A-1
Exhibit I, Proposed Representations and Warranties of J-HAWK . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. I-1
Exhibit J, New Senior Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. J-1
Exhibit K, New Junior Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. K-1
Exhibit L, New Standalone Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. L-1
Exhibit M, New Standalone Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. M-1
Exhibit N, New Standalone By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. N-1
Exhibit O, Bonus Pool and Executive Long Term Incentive Plan . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. O-1
Exhibit P, Indenture Trustee Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . ATT. 1 -- EXH. P-1
</TABLE>
ATT. 1 -- ix
<PAGE> 11
JOINT PLAN OF REORGANIZATION
BY FIRST CITY BANCORPORATION OF TEXAS, INC.,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
AND J-HAWK CORPORATION,
WITH THE PARTICIPATION OF CARGILL FINANCIAL SERVICES CORPORATION,
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
First City Bancorporation of Texas, Inc., the Official
Committee of Equity Security Holders, and J-HAWK Corporation hereby propose,
with the participation of Cargill Financial Services Corporation, the following
joint plan of reorganization, pursuant to chapter 11, title 11, of the United
States Code.
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 All capitalized terms used in this Plan and not otherwise
defined have the meanings assigned to them below:
(a) "ADDITIONAL RECEIVERSHIP DIVIDEND" means the
additional surplus dividend payable by FDIC Receiver out of the assets
of the First City Bank Receiverships upon consummation of the
Loss-Sharing Settlement Agreement.
(b) "ADJUSTED FDIC INITIAL CASH SETTLEMENT PAYMENT" means
$200 million less the GCR Asset Value less the adjustments, if any, by
FDIC Receiver pursuant to the provisions of section 3.4 of the FDIC
Settlement Agreement.
(c) "ADMINISTRATIVE CLAIM" means a Claim or any portion
of a Claim which is a cost or expense of the administration of the
Estate allowed under section 503(b) of the Bankruptcy Code that is
entitled to priority under section 507(a)(1) of the Bankruptcy Code,
including, without limitation, any actual and necessary cost and
expense of preserving the Estate or operating the businesses of the
Debtor, all wages, salaries, or commissions for services rendered
after the commencement of the Case, and all fees and expenses of
Professionals entitled to compensation under sections 330 and 503 of
the Bankruptcy Code or otherwise allowed by the Bankruptcy Court, and
all fees and charges assessed against the Estate under chapter 123,
title 28, United States Code.
(d) "ADMINISTRATIVE CLAIMS BAR DATE" means the sixtieth
(60th) day following the Effective Date pursuant to the provisions of
section 6.1 of this Plan, unless the Bankruptcy Court establishes a
different date.
(e) "AFFILIATE" means, with respect to the Debtor, an
affiliate of the Debtor as the term "affiliate" is defined in section
101(2) of the Bankruptcy Code; provided however, that where the
context so requires, the term "debtor," when used in section 101(2) of
the Bankruptcy Code, may mean an entity to which the defined term
"affiliate" refers. "Affiliate" shall also mean and include an
"affiliate" as defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended from time to time, and the
regulations and rulings issued pursuant thereto. The term
specifically includes, without limitation, FCB Real Estate Services,
Inc., First City Asset Servicing Company, and any directly or
indirectly, wholly or partially, owned subsidiary of the Debtor,
including, Broadway Center, Inc., Central Texas Insurance Agency,
Inc., Citizens State Bank - Sealy, FCB Real Estate Services, Inc., FCB
Holdings, Inc., First City Life Insurance
ATT. 1 -- 1
<PAGE> 12
Company, First City Energy Finance Company, First City Financial
Corporation, First City Payroll Management Company, First City
Portfolio, Inc., and New First Security National Corporation.
(f) "AGGREGATE UNSECURED CLAIM" means either (i) for each
holder of an Allowed Unsecured Claim based on a Debt Security Claim,
the sum of such holder's Allowed Unsecured Claim plus interest at the
Contract Rate accruing on the unpaid portion of each Allowed Unsecured
Claim from and after the Petition Date to and including the Effective
Date, which Aggregate Unsecured Claim shall be deemed an Allowed Claim
pursuant to this Plan, and which Allowed Claim shall not be subject to
offset, subordination, reconsideration or avoidance; or (ii) for each
holder of an Allowed Unsecured Claim not based on a Debt Security
Claim, the sum of such holder's Allowed Unsecured Claim plus interest
at the rate equal to the coupon issue yield equivalent (as determined
by the Secretary of the Treasury) of the average accepted auction
price for fifty-two (52) week United States Treasury Bills determined
as of the Petition Date accruing on the unpaid portion of each Allowed
Unsecured Claim from and after the Petition Date to and including the
Effective Date.
(g) "ALLOWED" means, (i) when used with respect to an
Administrative Claim, all or any portion of an Administrative Claim
that has been Allowed by a Final Order, that was incurred by the
Debtor in the ordinary course of business during the Case and as to
which there is no dispute as to the Debtor's liability, or that has
become Allowed by failure to object pursuant to section 6.1(c) of this
Plan; (ii) when used with respect to a Claim (other than an
Administrative Claim), a Claim against the Debtor, proof of which was
filed on or before the date designated by the Bankruptcy Court as the
last date for filing that category of proof of claim, as to which no
Objection has been interposed; or if no proof of claim was timely
filed, a Claim that has been or hereafter is listed by the Debtor as
liquidated in amount and not disputed or contingent, as to which no
Objection has been interposed; or a Claim as to which any Objection
has been interposed, to the extent such Claim has been Allowed in
whole or in part by a Final Order of the Bankruptcy Court; (iii) when
used with respect to a Section 510(b) Securities Litigation Claim, a
Section 510(b) Securities Litigation Claim, proof of which was filed
on or before the date designated by the Bankruptcy Court as the last
date for filing a Securities Litigation Proof of Loss, as to which no
Objection has been interposed; or a Section 510(b) Securities
Liquidation Claim as to which any Objection has been interposed, to
the extent such a Section 510(b) Securities Liquidation Claim has been
Allowed in whole or in part by a Final Order of the Bankruptcy Court;
and (iv) when used with respect to an Existing Equity Security, an
Existing Equity Security that is duly recorded in the stock transfer
records maintained by the Debtor or its stock transfer agent with
respect to the Existing Series A Interests, Existing Series B
Interests, Existing Series E Interests, Existing Common Interests, and
Common Equivalents, as to which the Debtor or its stock transfer agent
has received no written notice of any ownership dispute as of the
Existing Securities Record Date; or an Existing Equity Security as to
which the Debtor or its stock transfer agent has received written
notice of an ownership dispute but the ownership dispute has been
resolved by Final Order of the Bankruptcy Court.
(h) "AMENDED AND RESTATED MERGER BY-LAWS" means the
amended and restated by-laws to be adopted by New Merged FirstCity on
the Effective Date under the Primary Merger Alternative, which amended
and restated by- laws shall be substantially in the form attached
hereto as Exhibit G.
(i) "AMENDED AND RESTATED MERGER CHARTER" means the
amended and restated certificate of incorporation to be filed by New
Merged FirstCity on the Effective Date under the Primary Merger
Alternative, which amended and restated certificate of incorporation
shall be substantially in the form attached hereto as Exhibit F.
ATT. 1 -- 2
<PAGE> 13
(j) "AMENDED AND RESTATED STANDALONE BY-LAWS" means the
amended and restated by-laws to be adopted by New Standalone FirstCity
on the Effective Date under the Secondary Standalone Alternative,
which amended and restated by-laws shall be substantially in the form
attached hereto as Exhibit N.
(k) "AMENDED AND RESTATED STANDALONE CHARTER" means the
amended and restated certificate of incorporation to be filed by New
Standalone FirstCity on the Effective Date under the Secondary
Standalone Alternative, which amended and restated certificate of
incorporation shall be substantially in the form attached hereto as
Exhibit M.
(l) "ASSETS" means all of the right, title, and interest
in and to property of whatsoever type or nature of the Debtor as of
the Petition Date, together with property subsequently acquired by the
Debtor, and including, but not limited to, property as defined in
section 541 of the Bankruptcy Code (each identified item of property
being herein sometimes referred to as an Asset).
(m) "BANKRUPTCY CODE" means the Bankruptcy Reform Act of
1978, as now in effect or as hereafter amended and codified in title
11, United States Code.
(n) "BANKRUPTCY COURT" means the United States Bankruptcy
Court for the Northern District of Texas, Dallas Division, or such
other court as may hereafter exercise original jurisdiction over all
or any part of the Case.
(o) "BANKRUPTCY RULE" means a rule of the Federal Rules
of Bankruptcy Procedure promulgated by the United States Supreme Court
pursuant to 28 U.S.C. Section 2075, and where appropriate, the Local
Bankruptcy Rules for the United States Bankruptcy Court for the
Northern District of Texas as the same may from time to time be in
effect and applicable to proceedings under this Plan.
(p) "BONY" means The Bank of New York (Delaware).
(q) "BONY CLAIM" means the Claim evidenced by the proof
of claim docketed as No. 441 on the claims register of the Bankruptcy
Court, asserted by BONY, alleging damages against First City under a
covenant not to compete arising in connection with a Purchase and Sale
Agreement dated as of November 9, 1989, among First City, First City
Bank - Sioux Falls, N.A., First City Credit Services, Inc., BONY, and
BNY Information Services, Inc., and an Agent Bank Agreement dated as
of November 9, 1989, among First City, the First City Banks and BONY.
(r) "BONY SETTLEMENT AGREEMENT" means the settlement
agreement and related documents executed or to be executed by BONY,
the Debtor, and the FDIC pursuant to which the parties have agreed to
settle the BONY Claim.
(s) "BRIDGE BANKS" means New First City, Texas - Dallas,
N.A.; New First City, Texas - Houston, N.A.; New First City, Texas -
Austin, N.A.; New First City, Texas - Beaumont, N.A.; New First City,
Texas - Corpus Christi, N.A.; New First City, Texas - El Paso, N.A.;
New First City, Texas - Midland, N.A.; New First City, Texas -
Bryan/College Station, N.A.; New First City, Texas - Tyler, N.A.; New
First City, Texas - Alice, N.A.; New First City, Texas - San Angelo,
N.A.; New First City, Texas - Lufkin, N.A.; New First City, Texas -
Orange, N.A.; New First City, Texas - Madisonville, N.A.; New First
City, Texas - Graham, N.A.; New First City, Texas - Lake Jackson,
N.A.; New First City, Texas - Aransas Pass, N.A.; New First City,
Texas - San Antonio, N.A.; New First City, Texas - Sour Lake, N.A.;
and New First City, Texas - Kountze, N.A.
ATT. 1 -- 3
<PAGE> 14
(t) "BUSINESS DAY" means any day except Saturday, Sunday,
or a "legal holiday," as that term is defined in Bankruptcy Rule
9006(a).
(u) "CARGILL PARTICIPATION AGREEMENTS" means the
agreements to be entered into between New Merged FirstCity and the
Plan Participant (or any affiliate of Cargill Financial Services
Corporation), substantially conforming with the existing agreements
between J-HAWK and the Plan Participant, (i) providing that New Merged
FirstCity shall first offer exclusively to the Plan Participant the
right to participate as an equity investor in any potential
organization of partnerships and acquisition of loans, real estate,
and other non-performing assets for such partnerships, (ii) adopting
the existing expense sharing arrangement, and (iii) incorporating the
provisions of the existing residual share allocation agreement, which
agreements shall be substantially in the form thereof filed with the
Plan Documents.
(v) "CASE" means the captioned chapter 11 bankruptcy case
now pending before the Bankruptcy Court and styled In re First City
Bancorporation of Texas, Inc., Case No. 392-39474-HCA-11, filed in the
United States Bankruptcy Court for the Northern District of Texas,
Dallas Division.
(w) "CLAIM" means (i) any right to payment from the
Debtor, whether or not such right is reduced to judgment, liquidated,
fixed, contingent, matured, unmatured (including potential and
unmatured tort and contract claims), disputed, undisputed, legal,
equitable, secured or unsecured or (ii) any right to an equitable
remedy for breach of performance if such breach gives rise to a right
of payment from the Debtor, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured
(including potential and matured tort and contract claims), disputed,
undisputed, secured or unsecured.
(x) "CLASS A CERTIFICATE" means the certificate
representing the beneficial interest in the Liquidating Trust to be
distributed to New Merged FirstCity under the Trust Agreement, which
shall have such rights as are provided in the Trust Agreement.
(y) "CLASS B CERTIFICATE" means one of 2,460,911
certificates representing the beneficial interest in the Liquidating
Trust to be distributed to holders of Existing Series B Interests and
Existing Series E Interests under the Trust Agreement and pursuant to
section 7.7 of this Plan, which shall have such rights as are provided
in the Trust Agreement.
(z) "CLASS 8 DISTRIBUTION DATE" means the tenth (10th)
Business Day following the later to occur of (i) the Effective Date;
or (ii) the date on which the order of the Bankruptcy Court
determining the fees and expenses to be awarded to the Law Firm of
Harvey Greenfield, pursuant to section 503 of the Bankruptcy Code,
becomes a Final Order.
(aa) "COLLATERAL" means any property of the Debtor subject
to a valid and enforceable Lien to secure the payment of a Claim.
(ab) "COLLECTING BANK" means Collecting Bank, N.A.
(ac) "COMMON EQUIVALENTS" means warrants, options, calls
or other rights for the purchase of Existing Common Stock held by any
present or former officer or director and outstanding as of the
Petition Date.
(ad) "CONFIRMATION" means the entry of the Confirmation Order.
ATT. 1 -- 4
<PAGE> 15
(ae) "CONFIRMATION DATE" means the date of the entry of
the Confirmation Order on the docket by the Clerk of the Bankruptcy
Court.
(af) "CONFIRMATION HEARING" means the hearing(s) to be
held before the Bankruptcy Court confirming this Plan pursuant to
section 1129 of the Bankruptcy Code.
(ag) "CONFIRMATION ORDER" means the order of the
Bankruptcy Court confirming this Plan pursuant to Bankruptcy Rule
3020.
(ah) "CONTINGENT" means, when used with respect to a
Claim, a Claim that has not accrued or which is dependent upon a
future event that has not occurred or may never occur.
(ai) "CONTINGENT ASSET CLAIMS" means (i) the cash
distributed from the FDIC Receiverships after the Effective Date but
excluding the Loss-Sharing Assets received upon the termination of the
Loss-Sharing Settlement Agreement, and (ii) any proceeds from the
resolution of the Financial Bond Claims.
(aj) "CONTRACT RATE" means the non-default rate of
interest First City contractually agreed to pay with respect to each
of the respective Debt Securities Claims.
(ak) "CREDITOR COMMITTEE" means the Official Committee of
Unsecured Creditors appointed by the United States Trustee in the
Case, as reconstituted from time to time.
(al) "DEBTOR" means First City Bancorporation of Texas,
Inc., a Delaware corporation.
(am) "DEBT SECURITIES CLAIMS" means (i) the Claim
(inclusive of prepetition interest) filed by The Bank of New York as
Trustee, with respect to the 13 1/4% Notes due September 15, 1992,
issued pursuant to that certain Indenture dated as of July 15, 1982 by
and between First City and Manufacturers Hanover Trust Company, as
Trustee (as amended by a First Supplemental Indenture dated as of
April 19, 1988 by and between First City and Manufacturers Hanover
Trust Company, as Trustee, and a Second Supplemental Indenture dated
as of September 15, 1992 by and between First City and The Bank of New
York, as Trustee), which Claim shall be deemed an Allowed Unsecured
Claim pursuant to this Plan, and which Allowed Claim shall not be
subject to offset, subordination, reconsideration or avoidance; (ii)
the Claim (inclusive of prepetition interest) filed by State Street
Bank and Trust as Trustee, with respect to the Floating Rate Notes due
January 1995, issued pursuant to that certain Indenture dated as of
December 20, 1984, by and between First City and Manufacturers Hanover
Trust Company, as Trustee (as amended by a First Supplemental
Indenture dated as of April 19, 1988 by and between First City and
State Street Bank and Trust, as Trustee), which Claim shall be deemed
an Allowed Unsecured Claim pursuant to this Plan, and which Allowed
Claim shall not be subject to offset, subordination, reconsideration
or avoidance; and (iii) the Claim (inclusive of prepetition interest)
Chemical Bank (Delaware) as Trustee, with respect to the Subordinated
Floating Rate Notes due April 1996, issued pursuant to that certain
Indenture dated as of April 15, 1984, by and between First City and
Chemical Bank, as Trustee (as amended by a First Supplemental
Indenture dated as of April 19, 1988 by and between First City and
Chemical Bank (Delaware), as Trustee), which Claim shall be deemed an
Allowed Unsecured Claim pursuant to this Plan, and which Allowed Claim
shall not be subject to offset, subordination, reconsideration or
avoidance.
(an) "DEFENDANT INDEMNITY CLAIM" means a Claim arising
from Indemnification Obligations, allowed under section 502 of the
Bankruptcy Code, on account of damages or rescission arising out of a
purchase or sale of a security of the Debtor or an Affiliate of the
Debtor; provided, however, that the Bankruptcy Court may determine
that a Claim that would otherwise constitute a Defendant Indemnity
Claim
ATT. 1 -- 5
<PAGE> 16
should instead be classified and treated as a Subordinated Claim. The
term specifically includes Claims premised upon or arising from the
Krim Lawsuit.
(ao) "DEFICIENCY AMOUNT" means the amount that a Secured
Claim exceeds the sum of (i) any set-off rights of the holder of such
Claim against the Debtor under sections 506 and 553 of the Bankruptcy
Code plus (ii) the net proceeds realized from the disposition of the
Collateral securing such Claim or, if such Collateral is not
liquidated to cash prior to Confirmation, the value of the interest of
the holder of the Claim in the Estate's interest in the Collateral
securing such Claim, as determined under section 506 of the Bankruptcy
Code; provided, however, if the holder of such Claim makes the
election provided in section 1111(b)(2) of the Bankruptcy Code, or if
the Claim is nonrecourse and the Collateral is sold during the Case
under section 363 of the Bankruptcy Code or is to be sold under this
Plan, there is no Deficiency Amount in respect of such Claim.
(ap) "DISCLOSURE STATEMENT" means the omnibus disclosure
statement filed by the Debtor, together with the supplemental
disclosure statement filed by the Plan Proponents in connection with
this Plan, approved by the Bankruptcy Court pursuant to section 1125
of the Bankruptcy Code.
(aq) "DISPUTED" means, (i) when used with respect to a
Claim, a Claim that is listed in the Schedules as disputed, contingent
or unliquidated; a Claim as to which an Objection has been filed with
the Bankruptcy Court but not determined by Final Order; or a Claim as
to which there is a dispute as to the classification of the Claim;
(ii) when used with respect to a Section 510(b) Securities Litigation
Claim, a Section 510(b) Securities Litigation Claim that is listed in
the Schedules as disputed, contingent or unliquidated; a Section
510(b) Securities Litigation Claim as to which an Objection has been
filed with the Bankruptcy Court but not determined by Final Order; or
a Section 510(b) Securities Litigation Claim as to which there is a
dispute as to the classification of the Section 510(b) Securities
Litigation Claim; or (iii) when used with respect to an Existing
Equity Security, an Existing Equity Security as to which the Debtor
has received notice of an ownership dispute prior to the Existing
Securities Record Date.
(ar) "DISTRIBUTION DATE" means, as to each Claim or Equity
Interest entitled to a distribution under this Plan, the later to
occur of (i) the Effective Date or (ii) fifteen (15) calendar days
after the date upon which the Claim or Equity Interest becomes an
Allowed Claim or Allowed Equity Interest, subject to the provisions of
section 12.1 of this Plan.
(as) "EDS" means Electronic Data Systems Corporation.
(at) "EDS CLAIM" means the Claim evidenced by the proof of
claim docketed as No. 357 on the claims register of the Bankruptcy
Court, asserted by EDS, alleging damages arising in connection with
the Facilities Management Agreement dated as of April 1, 1988 by and
between First City and EDS, and the Voice Communications Facilities
Management Agreement, dated as of April 1, 1989, between First City
and EDS, as such Claim was amended on or about June 24, 1993.
(au) "EDS SETTLEMENT AGREEMENT" means the Compromise and
Settlement Agreement, dated as of March 31, 1994, among EDS, the
Debtor, and the FDIC, as modified by the Order Granting Joint Motion
to Compromise and Settle Controversy Regarding Claim of Electronic
Data Systems Corporation entered by the Bankruptcy Court on April 22,
1994, pursuant to which EDS, the Debtor, and the FDIC settled the EDS
Claim.
(av) "EFFECTIVE DATE" means the first Business Day on
which the Confirmation Order is a Final Order and all conditions
precedent to the occurrence of the Effective Date contained in section
15.2 of this Plan have been satisfied or waived as provided for in
section 15.3 of this Plan.
ATT. 1 -- 6
<PAGE> 17
(aw) "EQUITY COMMITTEE" means the Official Committee of
Equity Security Holders appointed by the United States Trustee in the
Case, as reconstituted from time to time.
(ax) "EQUITY INTEREST" means one or more shares evidencing
an ownership interest in the Debtor, whether or not transferable or
denominated "stock," or represented by any similar security, and any
warrant or right (other than a right to convert) to purchase, sell, or
subscribe to a share, security, or interest in the Debtor, which
specifically includes the Existing Equity Securities.
(ay) "ESTATE" means the estate created in this Case
pursuant to section 541 of the Bankruptcy Code.
(az) "EXISTING COMMON INTEREST" means a share of the
common stock issued by First City and outstanding on the Petition
Date.
(ba) "EXISTING EQUITY SECURITIES" means, collectively, the
Existing Series A Interests, the Existing Series B Interests, the
Existing Series E Interests, the Existing Common Interests, and the
Common Equivalents.
(bb) "EXISTING INDENTURE" means any one or more of the
trust indentures, as supplemented and amended, pursuant to which the
Debt Securities Claims arose.
(bc) "EXISTING SECURITIES" means, collectively, the Debt
Securities Claims and the Existing Equity Securities.
(bd) "EXISTING SECURITIES RECORD DATE" means for purposes
of distributions to be made under this Plan, the date established by
the Bankruptcy Court in the Confirmation Order as the date for
determining the holders of Allowed Debt Securities Claims and Allowed
Existing Equity Securities that are entitled to receive distributions
provided under this Plan.
(be) "EXISTING SERIES A INTEREST" means a share of "Senior
Increasing Rate Preferred Stock, Series A," par value $.01 per share,
issued by First City and outstanding on the Petition Date, having a
fixed liquidation preference equivalent to $100 per share plus all
accrued and unpaid dividends owing on each share as of the Effective
Date.
(bf) "EXISTING SERIES B INTEREST" means a share of "$5.50
Cumulative Convertible Preferred Stock, Series B," par value $.01 per
share, issued by First City and outstanding on the Petition Date,
having a fixed liquidation preference equivalent to $50 per share plus
all accrued and unpaid dividends owing on each share as of the
Effective Date.
(bg) "EXISTING SERIES B LIQUIDATION PREFERENCE" means the
aggregate liquidation preference attributable to Existing Series B
Interests as of the Effective Date.
(bh) "EXISTING SERIES B PERCENTAGE" means the Existing
Series B Liquidation Preference divided by the Total Junior Preferred
Liquidation Preference.
(bi) "EXISTING SERIES E INTEREST" means a share of
"Adjustable Rate Preferred Stock, Series E," par value $.01 per share,
issued by First City and outstanding on the Petition Date, having a
fixed liquidation preference equivalent to $50 per share plus all
accrued and unpaid dividends owing on each share as of the Effective
Date.
ATT. 1 -- 7
<PAGE> 18
(bj) "EXISTING SERIES E LIQUIDATION PREFERENCE" means the
aggregate liquidation preference attributable to Existing Series E
Interests as of the Effective Date.
(bk) "EXISTING SERIES E PERCENTAGE" means the Existing
Series E Liquidation Preference divided by the Total Junior Preferred
Liquidation Preference.
(bl) "FDIC" means the Federal Deposit Insurance
Corporation in all its capacities.
(bm) "FDIC ASSETS" means the non-cash Assets received by
the Debtor pursuant to the FDIC Settlement Agreement.
(bn) "FDIC CLAIMS" means (i) the secured and unsecured
Claims filed in the Case by FDIC Corporate, and (ii) the secured and
unsecured Claims filed in the Case by FDIC Receiver.
(bo) "FDIC CORPORATE" means the FDIC acting in its
Corporate capacity.
(bp) "FDIC INITIAL CASH SETTLEMENT PAYMENT" means the cash
component of the Initial Receivership Dividend distribution by the
FDIC, determined in accordance with the terms of the FDIC Settlement
Agreement.
(bq) "FDIC LETTER OF CREDIT" means the letter of credit in
the approximate amount of $25 million to be issued on behalf of the
Reorganized Company in favor of the FDIC, with respect to the
Reorganized Company's contingent obligation to pay FDIC Receiver under
the Loss-Sharing Settlement Agreement.
(br) "FDIC LITIGATION" means (i) all pending legal actions
or proceedings to which the FDIC and the Debtor (or one or more of its
Subsidiaries or Affiliates) are parties (directly or derivatively),
including, without limitation, First City Bancorporation of Texas,
Inc., et al. v. FDIC in its corporate capacity and as receiver for the
First City Bank and the Comptroller of the Currency of the United
States; the United States of America; and the Texas Bank Commissioner,
Cause No. 3-93-CV-1959-R (consolidating Cause No. 3-93-CV-2253-D,
Cause No. 3-93-CV-2250-T, Cause No. 3-93-CV-2251-D, Cause No.
3-93-CV-2369-R, Cause No. 3-93-CV-2286-T, and Cause No.
3-93-CV-2416-P) in the District Court for the Northern District of
Texas, Dallas Division; (ii) First City Bancorporation of Texas, Inc.
v. Federal Deposit Insurance Corporation, in its corporate capacity
and as receiver for the Bridge Banks, Cause No. 94-0218, in the
District Court for the District of Columbia; (iii) any and all legal
actions or proceedings related to the Claims of the FDIC asserted
against the Estate, now or hereafter commenced, including any
Objections, defenses and counterclaims thereto; and (iv) any and all
legal actions or proceedings hereafter commenced related to the Estate
(or any of the Debtor's Subsidiaries or Affiliates), to which the FDIC
is a party.
(bs) "FDIC NOTE" means the promissory note proposed to be
executed by the Reorganized Company in connection with the FDIC
Settlement Agreement, in the original principal amount of $57 million,
representing the Reorganized Company's contingent obligation to pay
FDIC Receiver as provided for in the FDIC Settlement Agreement, the
requirement for which promissory note would be eliminated by the
Loss-Sharing Settlement Agreement.
(bt) "FDIC RECEIVER" means the FDIC acting in its capacity
as receiver for any one or more, or all, of the First City Banks,
Collecting Bank, and the Bridge Banks.
(bu) "FDIC RECEIVERSHIP DISTRIBUTIONS" means the
distribution or distributions, if any, made from time to time by FDIC
Receiver on account of one or more of the First City Bank
Receiverships
ATT. 1 -- 8
<PAGE> 19
pursuant to the provisions of the FDIC Settlement Agreement, 12 U.S.C.
Section 1821(d)(11)(A)(ii) and (B), or otherwise.
(bv) "FDIC SETTLEMENT AGREEMENT" means the settlement
agreement dated June 22, 1994, between FDIC Corporate, FDIC Receiver,
the Debtor and certain Affiliates of the Debtor; together with related
documents incorporating, evidencing and implementing such settlement;
as it may be modified or amended from time to time, including
modifications or amendments necessitated by the Loss-Sharing
Settlement Agreement.
(bw) "FEE APPLICATION" means an application of a
Professional under section 330 or 503 of the Bankruptcy Code for
allowance of compensation and reimbursement of expenses in the Case.
(bx) "FEE CLAIM" means a Claim under section 330 or 503 of
the Bankruptcy Code for allowance of compensation and reimbursement of
expenses in the Case.
(by) "FINAL ORDER" means an order or judgment of the
Bankruptcy Court which shall not have been reversed, stayed, modified
or amended and as to which (a) the time to appeal from or to seek
review, rehearing or certiorari shall have expired and (b) no appeal
or petition for review, rehearing or certiorari is pending or if
appealed from, shall have been affirmed, or the appeal dismissed by
the highest court to which such order was appealed, or certiorari has
been denied, or from which reargument or rehearing was sought, and no
further hearing, appeal or petition for certiorari can be taken or
granted or as to which any right to appeal or to seek certiorari,
review, or rehearing has been waived.
(bz) "FINANCIAL INSTITUTION BOND CLAIMS" means the proofs
of loss submitted by the Debtor as to Financial Institution Bond No.
81260367 and Financial Institution Bond bearing Nos. 501/JCF920015,
920016, 920017, 920018 and 920019.
(ca) "FIRST CITY" means First City Bancorporation of
Texas, Inc., a Delaware corporation.
(cb) "FIRST CITY BANK RECEIVERSHIPS" means the
receiverships established by the FDIC pursuant to title 12, United
States Code, with respect to the First City Banks, Collecting Bank,
and the Bridge Banks.
(cc) "FIRST CITY BANKS" means First City, Texas - Dallas;
First City, Texas - Houston, N.A.; First City, Texas - Austin, N.A.;
First City, Texas - Beaumont, N.A.; First City, Texas - Corpus
Christi; First City, Texas - El Paso, N.A.; First City, Texas -
Midland, N.A.; First City, Texas - Bryan/College Station, N.A.; First
City, Texas - Tyler, N.A.; First City, Texas - Alice; First City,
Texas - San Angelo, N.A.; First City, Texas - Lufkin, N.A.; First
City, Texas - Orange, N.A.; First City, Texas - Madisonville, N.A.;
First City, Texas - Graham, N.A.; First City, Texas - Lake Jackson;
First City, Texas - Aransas Pass; First City, Texas - San Antonio,
N.A.; First City, Texas - Sour Lake; and First City, Texas - Kountze.
(cd) "GCR ASSETS" means the assets of the First City Bank
Receiverships to be transferred as part of the Initial Receivership
Dividend pursuant to the FDIC Settlement Agreement.
(ce) "GCR ASSETS VALUE" means the value assigned to the
GCR Assets by the FDIC pursuant to the FDIC Settlement Agreement.
(cf) "GROUP OF 55" means F. C. Ackman, Robert H. Allen,
John W. Anderson, Daniel C. Arnold, Jasper H. Arnold, III, Morris
Atlas, John F. Baugh, Frederick L. Bollerer, Robert G. Brooks, John O.
Bullington, Ruben R. Cardenas, David M. Carmichael, Robert E.
Chambers, Jr., Dorothy V. Clark as Executor of the Estate of Charles
D. Clark, Orson C. Clay, Ernest Deal, Joseph W. Disque, B. R.
ATT. 1 -- 9
<PAGE> 20
Dorsey, J. A. Elkins, Jr., Grover Ellis, Fredrick Erck, Jim Ezell,
Rafael Garza, M.D., Jon H. Gillespie, Alfred C. Glassell, Jr., G.
Gueymard, Fred D. Herring, Terrance W. Imes, Jr., Belton K. Johnson,
Joe M. Kilgore, William F. King, James M. Kipp, Melvin E. Kurth, Jr.,
Kenneth L. Lay, Jonathan D. Levy, Richard G. Merrill, Randall Meyer,
Randall E. Meyer, Al J. Newman, Ralph S. O'Connor, Richard L.
O'Shields, Wilhelmina Cullen Robertson as Independent Executor of the
Estate of Corbin J. Robertson, Nat S. Rogers, G. E. Roney, Thomas G.
Stevens, Theodore H. Strauss, James G. Thompson, Paul G. Veale, Robert
D. Wagner, Jr., E. F. Wallace, Frank T. Webster, Jack A. Whetsel,
Ernest R. Williams, Wallace S. Wilson, and M. A. Wright; who were the
officers and/or directors of the former First City Banks who signed
tolling agreements after the FDIC threatened to file suit against them
for Pre-1988 D&O Claims, which Pre-1988 D&O Claims were settled by
First City in the March 1992 Settlement Agreement.
(cg) "GROUP OF 55 CLAIMS" means, collectively or
individually, the Claims for indemnification filed by the Group of 55,
but only to the extent such Claims are Pre-1988 D&O Claims that were
settled or to be settled pursuant to the March 1992 Settlement
Agreement or the FDIC Settlement Agreement.
(ch) "GROUP OF 55 RELEASES" means the releases by the FDIC
of the Group of 55 in connection with Pre-1988 D&O Claims, to be
delivered to the Group of 55 pursuant to the March 1992 Settlement
Agreement and the FDIC Settlement Agreement.
(ci) "INDEMNIFICATION OBLIGATIONS" means the
indemnification, contribution, or reimbursement obligations, if any,
of the Debtor (i) to any Person, or their respective subrogees,
including, but not limited to, its present and former directors,
officers and employees and the present and former directors, officers
and employees of its Affiliates and Subsidiaries, and Donaldson,
Lufkin and Jenrette, pursuant to and in accordance with any separate
indemnification agreements, the 1988 Assistance Agreement, the
Debtor's articles of incorporation, the Debtor's by-laws, and/or
applicable state law and (ii) pursuant to and in accordance with any
separate agreements, if any, with respect to directors and officers
liability insurance entered into between the Debtor and/or any of its
directors and officers and/or the directors and officers of its
Affiliates or Subsidiaries to whom the Debtor owes an indemnification,
contribution, or reimbursement obligation.
(cj) "INDENTURE TRUSTEE" means, collectively or
individually, (i) The Bank of New York as Indenture Trustee for the 13
1/4% Notes, which are Debt Securities Claims, as successor to
Manufacturers Hanover Trust Company, as Indenture Trustee for the 13
1/4% Notes; (ii) State Street Bank and Trust as Indenture Trustee for
the Floating Rate Notes, which are Debt Securities Claims, as
successor to Manufacturers Hanover Trust Company, as Indenture Trustee
for the Floating Rate Notes; and (iii) Chemical Bank (Delaware) as
Indenture Trustee for the Floating Rate Subordinated Notes, which are
Debt Securities Claims, as successor to Chemical Bank, as Indenture
Trustee for the Floating Rate Subordinated Notes, and each of their
successors or assigns by merger or otherwise.
(ck) "INITIAL RECEIVERSHIP DIVIDEND" means, collectively,
the FDIC Initial Cash Settlement Payment and the GCR Assets.
(cl) "ISSUED NEW COMMON STOCK" means (i) the total number
of shares of New Merger Common Stock to be issued under the Primary
Merger Alternative of this Plan; or (ii) the total number of shares of
New Standalone Common Stock to be issued under the Secondary
Standalone Alternative of this Plan.
(cm) "ISSUED NEW JUNIOR PREFERRED STOCK" means the total
numbers of shares of New Junior Preferred Stock to be issued under
this Plan.
ATT. 1 -- 10
<PAGE> 21
(cn) "INVESTMENT MANAGEMENT AGREEMENT" means an agreement
substantially similar to the agreement attached to the Trust Agreement
as Appendix D, relating to the management of the Trust Assets under
the Trust Agreement.
(co) "INVESTMENT MANAGER" means New Merged FirstCity and
any successor thereto appointed by the Liquidating Trustee in
accordance with the applicable provisions of the Trust Agreement and
the Investment Management Agreement
(cp) "INVOLUNTARY GAP CLAIM" means a Claim accorded
priority in right of payment under section 507(a)(2) of the Bankruptcy
Code.
(cq) "J-HAWK" means J-HAWK Corporation.
(cr) "KRIM LAWSUIT" means the lawsuit styled and numbered
Jerry Krim and Harold L. Harris, Individually and as Trustee of Mazel,
Inc. Profit Sharing Plan, on behalf of themselves and all others
similarly situated v. First City Bancorporation of Texas, Inc., A.
Robert Abboud, Frank C. Cihak, Robert D. Richley, Robert Rice,
William M. Arnold and Donaldson, Lufkin & Jenrette Securities
Corporation; pending as Civil Action No. H-90-2269; in the United
States District Court for the Southern District of Texas, Houston
Division.
(cs) "LIEN" means a charge against or interest in property
to secure payment of a debt or performance of an obligation.
(ct) "LIQUIDATING TRUST" means the trust established by
the Trust Agreement.
(cu) "LIQUIDATING TRUSTEE" means the trustee selected by
the Plan Proponents to serve pursuant to the Trust Agreement.
(cv) "LOCK-BOX AGREEMENT" means an agreement substantially
similar to the agreement attached to the Investment Management
Agreement as Annex A, relating to the management of cash derived from
the conversion of Trust Assets under the Trust Agreement.
(cw) "LOSS-SHARING ASSETS" means certain assets purchased
by the Loss-Sharing Banks from FDIC Receiver, which assets were
subject to certain minimal recoveries guaranteed by the FDIC and which
guarantee obligations are funded out of the assets of the First City
Bank Receiverships.
(cx) "LOSS-SHARING BANKS" means Texas Commerce Bank,
National Association (as purchaser of New FirstCity, Texas - Houston
and New FirstCity, Texas - Dallas) and Frost National Bank of San
Antonio (as purchaser of New FirstCity, Texas - Austin).
(cy) "LOSS-SHARING SETTLEMENT AGREEMENT" means the
definitive agreements and related documents among FDIC Corporate, FDIC
Receiver, the Loss-Sharing Banks, the Debtor and certain Affiliates of
the Debtor, as they may be modified and amended, under which, among
other things, (i) the Reorganized Company would purchase certain
Loss-Sharing Assets from the Loss-Sharing Banks; (ii) the Loss-Sharing
Banks would release their claims under the FDIC's guarantee against
the funds of the First City Bank Receiverships; (iii) the Reorganized
Company would receive an Additional Receivership Dividend; and (iv)
the FDIC would waive the requirement for the FDIC Note and require the
FDIC Letter of Credit in place thereof.
ATT. 1 -- 11
<PAGE> 22
(cz) "MARCH 1992 SETTLEMENT AGREEMENT" means the
Settlement Agreement dated March 18, 1992 between First City and the
FDIC pursuant to which the FDIC, among other things, agreed, subject
to certain conditions, to settle the Pre-1988 D&O Claims and to
execute and deliver the Group of 55 Releases.
(da) "NEW J-HAWK" means the corporation remaining after
J-HAWK transfers to Old J-HAWK certain assets that are not to become
part of the business of New Merged FirstCity, subject to the
Transactional Documents.
(db) "NEW JUNIOR PREFERRED STOCK" means, under the
Secondary Standalone Alternative, the 5,000,000 shares of new
preferred stock to be authorized pursuant to the Amended and Restated
Standalone Charter, as described in Exhibit K to this Plan, of which
approximately 2,449,800 shares shall be issued by New Standalone
FirstCity in accordance with section 7.7(b) of this Plan.
(dc) "NEW MERGED FIRSTCITY" means the reorganized entity
resulting from the Primary Merger Alternative on and after the
Effective Date.
(dd) "NEW MERGED FIRSTCITY CORPORATE DOCUMENTS" means,
under the Primary Merger Alternative, the Amended and Restated Merger
Charter, the Amended and Restated Merger By-Laws, the New Senior
Secured Note Indenture, and the New Senior Subordinated Note
Indenture.
(de) "NEW MERGER COMMON STOCK" means, under the Primary
Merger Alternative, the 100,000,000 shares of new common stock to be
authorized pursuant to the Amended and Restated Merger Charter, as
described in Exhibit D to this Plan, of which 2,460,911 new common
stock shares shall be issued by New Merged FirstCity in accordance
with sections 7.7(a) and/or 7.9(a) of this Plan; of which
approximately but not more than 2,460,511 shares shall be issued to
J-HAWK pursuant to section 9.3 of this Plan; and of which 230,000
shares shall be reserved for issuance pursuant to a stock option plan
to be implemented by New Merged FirstCity.
(df) "NEW SENIOR SECURED NOTES" means, under either the
Primary Merger Alternative or the Secondary Standalone Alternative,
the secured notes of the Reorganized Company, as described in Exhibit
A to this Plan, which notes shall be issued by the Reorganized Company
on the Distribution Date in accordance with section 7.4 of this Plan.
(dg) "NEW SENIOR PREFERRED STOCK" means, under the
Secondary Standalone Alternative, the 10,000,000 shares of new senior
preferred stock to be authorized pursuant to the Amended and Restated
Standalone Charter, as described in Exhibit J to this Plan, of which
635,560 shares shall be issued by New Standalone FirstCity in
accordance with section 7.6(b) of this Plan.
(dh) "NEW SENIOR SECURED NOTE INDENTURE" means a trust
indenture between the Reorganized Company and the Person (or such
Person's successor) selected by the Plan Proponents on or before the
Confirmation Hearing to serve as trustee, to be dated as of the
Effective Date, containing the terms and conditions that are necessary
or appropriate to effect the issuance and governance of the New Senior
Secured Notes, which trust indenture shall be substantially in the
form thereof filed with the Plan Documents.
(di) "NEW SENIOR SUBORDINATED NOTES" means, under the
Primary Merger Alternative, the unsecured notes of New Merged
FirstCity, as described in Exhibit B to this Plan, which shall be
issued by New Merged FirstCity in accordance with section 7.6 (a) of
this Plan.
(dj) "NEW SENIOR SUBORDINATED NOTE INDENTURE" means, under
the Primary Merger Alternative, a trust indenture between New Merged
FirstCity and the Person (or such Person's successor) selected by the
ATT. 1 -- 12
<PAGE> 23
Plan Proponents on or before the Confirmation Date to serve as
trustee, to be dated as of the Effective Date, containing the terms
and conditions that are necessary or appropriate to effect the
issuance and governance of the New Senior Subordinated Notes, which
trust indenture shall be substantially in the form thereof filed with
the Plan Documents.
(dk) "NEW SPECIAL PREFERRED STOCK" means, under the
Primary Merger Alternative, the 2,500,000 shares new preferred stock
to be authorized pursuant to the Amended and Restated Merger Charter,
as described in Exhibit C to this Plan, of which 2,460,911 shares
shall be issued by New Merged FirstCity in accordance with section
7.7(a) of this Plan.
(dl) "NEW STANDALONE COMMON STOCK" means, under the
Secondary Standalone Alternative, the 100,000,000 shares of new common
stock to be authorized pursuant to the Amended and Restated Standalone
Charter, as described in Exhibit L to this Plan, of which 10,000,000
new common shares shall be issued by New Standalone FirstCity in
accordance with sections 7.7(b) and/or 7.9(b) of this Plan.
(dm) "NEW STANDALONE FIRSTCITY" means the reorganized
entity resulting from the Secondary Standalone Alternative on and
after the Effective Date.
(dn) "NEW STANDALONE FIRSTCITY CORPORATE DOCUMENTS" means,
under the Secondary Standalone Alternative, the Amended and Restated
Standalone Charter, the Amended and Restated Standalone By-Laws, and
the New Senior Secured Note Indenture.
(do) "NEW WARRANTS" means those rights to purchase 500,000
shares of New Merger Common Stock, represented by certificates having
terms as described in Exhibit E to this Plan, which shall be issued
pursuant to sections 7.7(a) and/or 7.9(a) of this Plan.
(dp) "1988 ASSISTANCE AGREEMENT" means that certain
Assistance Agreement among the FDIC, First City, and others dated
April 19, 1988.
(dq) "OBJECTION" means an objection to the allowance of a
Claim or an Equity Interest.
(dr) "OLD J-HAWK" means a new corporation to be formed by
J-HAWK and owned by the current shareholders and managers of J-HAWK
for the purpose of holding certain assets of J-HAWK that are not to
become part of the business of New Merged FirstCity, and assuming the
liabilities of J-HAWK that are not to pass to New Merged FirstCity
upon its merger with New J-HAWK, subject to the Transactional
Documents.
(ds) "PERSON" means an individual, corporation,
partnership, association, joint stock company, joint venture, estate,
trust, unincorporated association, unincorporated organization,
government entity or unit or political subdivision thereof, or any
other entity.
(dt) "PETITION DATE" means October 31, 1992, the date on
which certain of First City's creditors filed an involuntary petition
against First City.
(du) "PLAINTIFF DAMAGES CLAIM" means a Claim arising from
rescission of a purchase or sale of security of the Debtor or of an
Affiliate of the Debtor, for damages arising from the purchase or sale
of such a security, on account of which Claim a Securities Litigation
Proof of Loss has been filed on or before the bar date established by
order of the Bankruptcy Court. The term specifically includes Claims
premised upon or arising from the Krim Lawsuit.
ATT. 1 -- 13
<PAGE> 24
(dv) "PLAN" means this "Joint Plan of Reorganization by
First City Bancorporation of Texas, Inc., Official Committee of Equity
Security Holders, and J-HAWK Corporation, with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of the United
States Bankruptcy Code," either in its present form or as it may be
altered, amended, or modified from time to time.
(dw) "PLAN DOCUMENTS" means all documents and exhibits
that aid in effectuating this Plan, including, without limitation, but
only to the extent applicable to either the Primary Merger Alternative
or the Secondary Standalone Alternative, the Transactional Documents,
the Amended and Restated Merger By-Laws, the Amended and Restated
Merger Charter, the Amended and Restated Standalone By-Laws, the
Amended and Restated Standalone Charter, the FDIC Settlement
Agreement, the FDIC Letter of Credit, the Loss-Sharing Settlement
Agreement, the New Senior Secured Note Indenture, the New Senior
Subordinated Note Indenture, the Cargill Participation Agreements, the
Trust Agreement, the Investment Management Agreement, and the Lock-Box
Agreement, as such documents and exhibits may be amended, modified,
supplemented, or restated from time to time.
(dx) "PLAN PARTICIPANT" means Cargill Financial Services
Corporation, but only with respect to the Primary Merger Alternative.
(dy) "PLAN PROPONENTS" means (i) J-HAWK, the Debtor, and
the Equity Committee in the case of the Primary Merger Alternative or
(ii) only the Debtor and the Equity Committee in the case of the
Secondary Standalone Alternative.
(dz) "PRE-1988 D&O CLAIMS" means the acts and omissions
occurring on or before the April 19, 1988 recapitalization of the
First City Banks alleged by the FDIC against the Group of 55.
(ea) "PRIMARY MERGER ALTERNATIVE" means this Plan without
the provisions applying to the Secondary Standalone Alternative, but
only if the conditions precedent to the Effective Date of this Plan,
as set forth in section 15.2, are satisfied or waived, as set forth in
section 15.3, within six (6) months after the Confirmation Date.
(eb) "PRIORITY CLAIM" means any Claim entitled to priority
in payment under sections 507(a)(3), 507(a)(4), 507(a)(5), 507(a)(6)
and 507(a)(8) of the Bankruptcy Code.
(ec) "PRIORITY TAX CLAIM" means any Claim entitled to
priority in payment under section 507(a)(7) of the Bankruptcy Code.
(ed) "PRO RATA" means the ratio that a respective Allowed
Claim or Allowed Equity Interest in a particular class bears to the
aggregate amount of all Allowed Claims or Allowed Equity Interests in
such class.
(ee) "PROFESSIONAL" means a Person retained or to be
compensated pursuant to section 327, 328, 330, 503(b) or 1103 of the
Bankruptcy Code; and for purposes of sections 6.1 and 7.8, includes
the Law Firm of Harvey Greenfield.
(ef) "RECORD HOLDER" means the holder of a Debt Securities
Claim or an Existing Equity Security on the Existing Securities Record
Date.
(eg) "REORGANIZED COMPANY" means (i) New Merged FirstCity
in the case of the Primary Merger Alternative or (ii) New Standalone
FirstCity in the case of the Secondary Standalone Alternative.
ATT. 1 -- 14
<PAGE> 25
(eh) "RETIREE ADMINISTRATIVE CLAIM" means a Claim under
the Retiree Benefit Plans, to the extent such claim is entitled to
treatment as an Administrative Claim pursuant to sections 1114(e)(2)
and 1129(a)(13) of the Bankruptcy Code.
(ei) "RETIREE BENEFIT PLANS" means any plan or policy of
the Debtor in full force and effect for its employees (but excluding
employees of any Affiliate) as of the Petition Date, as any such plan
or policy may have been modified during the pendency of the Case,
pursuant to which "retiree benefits" as defined in section 1114(a) of
the Bankruptcy Code are provided.
(ej) "SCHEDULES" means the schedules of assets and
liabilities and statements of financial affairs filed by the Debtor as
required by section 521 of the Bankruptcy Code and Bankruptcy Rule
1007, as such schedules and statements have been or may be
supplemented or amended.
(ek) "SECONDARY STANDALONE ALTERNATIVE" means this Plan
without the provisions applying to the Primary Merger Alternative, but
only if the conditions precedent to the Effective Date of this Plan,
as set forth in section 15.2, are not satisfied or waived, as set
forth in section 15.3, within six (6) months after the Confirmation
Date.
(el) "SECTION 510(B) SECURITIES LITIGATION CLAIM" means a
Plaintiff Damages Claim or a Defendant Indemnity Claim.
(em) "SECURED CLAIM" means a Claim secured by a Lien on or
against property of the Debtor, which Lien is valid, perfected and
enforceable under applicable law and is not subject to avoidance under
the Bankruptcy Code or applicable non-bankruptcy law, but only to the
extent of the value of the Collateral securing such Claim. The term
does not include any Deficiency Amount.
(en) "SECURITIES LITIGATION PROOF OF LOSS" means the proof
of loss form required to be filed by holders of section 510(b)
Securities Litigation Claims that are Plaintiff Damages Claims
pursuant to order of the Bankruptcy Court.
(eo) "SENIOR RIGHTS" means any claimed contractual
subordination rights pursuant to any provision of the Bankruptcy Code
or other applicable law including, without limitation, the contractual
subordination rights and remedies created by one or more of the
Existing Indentures, including, without limitation, the right to
recover post-petition interest, where and if applicable, from any
distributions made to junior creditors under this Plan which are for
the benefit of the holders of "senior debt" or "senior indebtedness"
(as those terms are defined in the Existing Indentures), as such
rights and remedies may be interpreted and enforced by the Bankruptcy
Court.
(ep) "SETTLED CLAIM" means a Claim that is settled and
whose treatment under this Plan has been determined by a
court-approved settlement agreement. The term specifically includes
the BONY Claim (unless the BONY Settlement Agreement is not approved
by the Bankruptcy Court), the EDS Claim, the Group of 55 Claims, and
the FDIC Claims.
(eq) "SUBORDINATED CLAIM" means a Claim that is
subordinated pursuant to section 510(c) of the Bankruptcy Code by
Final Order of the Bankruptcy Court below one or more classes of
Claims and/or below one or more classes of Equity Interests. The term
shall not include any Section 510(b) Securities Litigation Claims.
(er) "SUBSIDIARY" OR "SUBSIDIARIES" means any one or more
of those subsidiary corporations of the Debtor identified in the
Disclosure Statement.
ATT. 1 -- 15
<PAGE> 26
(es) "TAX CODE" means the Internal Revenue Code of 1986,
as amended.
(et) "TOTAL JUNIOR PREFERRED LIQUIDATION PREFERENCE" means
the sum of (a) the Existing Series B Liquidation Preference and (b)
the Existing Series E Liquidation Preference.
(eu) "TRANSACTIONAL DOCUMENTS" mean such documents as may
be necessary (i) to effect the creation of Old J-HAWK and New J-HAWK
and the transfer of assets and liabilities from New J-Hawk to Old
J-Hawk; and (ii) to effect the merger of New J-HAWK into New Merged
First City; which documents, to the extent appropriate, shall include
the terms set forth on Exhibit I hereto.
(ev) "TRUST AGREEMENT" means the liquidating trust
agreement to be entered into on the Effective Date, between the Debtor
and the Liquidating Trustee, which agreement shall be substantially in
the form attached hereto as Exhibit H.
(ew) "TRUST ASSETS" means, after payment of all sums due
to be paid under this Plan on the Effective Date, (i) cash and cash
equivalents owned by the Debtor on the Effective Date in excess of
$20,000,000, but only to the extent that such cash and cash
equivalents are necessary to meet Claims and contingent liabilities or
to maintain the value of the Trust Assets during liquidation, (ii) the
Loss-Sharing Assets, (iii) the FDIC Assets, (iv) the Contingent Asset
Claims, and (v) all of the Debtor's owned, non-cash assets; provided,
however, that any and all assets of the Debtor acquired in connection
with the merger of New J-HAWK into the Debtor on the Effective Date
shall not constitute Trust Assets.
(ex) "UNSECURED CLAIM" means a Claim that is not (i) an
Administrative Claim; (ii) a Retiree Administrative Claim; (iii) an
Involuntary Gap Claim; (iv) a Priority Tax Claim; (v) a Priority
Claim; (vi) a Secured Claim; (vii) a Settled Claim; (viii) a
Subordinated Claim; or (ix) a Section 510(b) Securities Litigation
Claim. The term specifically includes, without limitation, Debt
Securities Claims and Deficiency Amounts.
1.2 UNDEFINED TERMS. Any term used in this Plan that is not
defined herein but that is used in the Bankruptcy Code or the Bankruptcy Rules
has the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy
Rules.
1.3 INTERPRETATION. Unless otherwise specified, all section,
article, and exhibit references in this Plan are to the respective section in,
article of, or exhibit to, this Plan, as the same may be amended, waived or
modified from time to time. The headings in this Plan are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Plan. Any reference in this Plan to an existing document or instrument means
such document or instrument as it may have been amended, modified, or
supplemented from time to time. As contextually appropriate, each term stated
in either the singular or plural shall include both the singular and the
plural. The words herein, hereof, hereto, hereunder, and others of similar
import refer to this Plan as a whole and not to any particular section,
subsection, or clause contained in this Plan.
1.4 RULES OF CONSTRUCTION. The rules of construction set forth in
section 102 of the Bankruptcy Code shall apply to this Plan. In computing any
period of time prescribed or allowed by this Plan, the provisions of Bankruptcy
Rule 9006(a) shall apply.
ATT. 1 -- 16
<PAGE> 27
ARTICLE II
MERGER AND STANDALONE ALTERNATIVES
2.1 PLAN ALTERNATIVES. This Plan consists of two alternative
chapter 11 plans. The first is referred to herein as the "Primary Merger
Alternative" and is a reorganization plan based upon the going concern business
plan of J-HAWK, as described in the Disclosure Statement. The second is
referred to herein as the "Secondary Standalone Alternative" and is a
reorganization plan based upon the continued operations plan of the Debtor, as
described in the Disclosure Statement. The second alternative shall only be
implemented if the preferred first alternative cannot be implemented, as set
forth in section 2.5 of this Plan.
2.2 CONSTRUCTION OF ALTERNATIVE PROVISIONS. The majority of the
provisions of this Plan are applicable to both the Primary Merger Alternative
and the Secondary Standalone Alternative. Provisions of this Plan that apply
only to the Primary Merger Alternative or to the Secondary Standalone
Alternative are clearly indicated by use of the term "Primary Merger
Alternative" or the term "Secondary Standalone Alternative" within such
provisions.
2.3 VOTING ON ALTERNATIVES. A vote accepting this Plan shall
constitute a vote accepting both the Primary Merger Alternative and the
Secondary Standalone Alternative. Likewise, a vote rejecting this Plan shall
constitute a vote rejecting both the Primary Merger Alternative and the
Secondary Standalone Alternative. The Plan Proponents believe that this Plan
is in the best interests of holders of Claims and Equity Interests, and they
recommend a vote accepting this Plan.
2.4 CONFIRMATION OF ALTERNATIVES. This Plan satisfies the
requirements for Confirmation specified in section 1129 of the Bankruptcy Code
as to both the Primary Merger Alternative and the Secondary Standalone
Alternative; nevertheless, the Bankruptcy Court may determine to confirm this
Plan only as to the Primary Merger Alternative or only as to the Secondary
Standalone Alternative. If this Plan is confirmed by the Bankruptcy Court as
to both the Primary Merger Alternative and the Secondary Standalone
Alternative, either the Primary Merger Alternative or the Secondary Standalone
Alternative may become operative on the Effective Date subject to section 2.5
below. If this Plan is confirmed by the Bankruptcy Court as to only one of the
two alternative plans, only the alternative plan that is confirmed may become
operative on the Effective Date, and the Confirmation Order shall provide that
all provisions of this Plan relating to the alternative plan that is not
confirmed shall be deemed to be deleted from this Plan.
2.5 EFFECTIVENESS OF ALTERNATIVES. If the Bankruptcy Court
confirms both of the two alternative chapter 11 plans, only one of such
alternative plans shall become effective. It is the intent of the Plan
Proponents that the Primary Merger Alternative shall be the operative chapter
11 plan in the Case, in which event the Secondary Standalone Alternative shall
become null and void. If, however, within six (6) months after the
Confirmation Date, the conditions precedent to the Effective Date of this Plan,
as set forth in section 15.2, are not satisfied or waived, as set forth in
section 15.3, then the Primary Merger Alternative shall become null and void,
and the Secondary Standalone Alternative shall become the operative chapter 11
plan.
2.6 NOTICE TO PARTIES IN INTEREST OF EFFECTIVE ALTERNATIVE. As
soon as practical after the Effective Date of this Plan, the Plan Proponents
shall provide notice to holders of Claims and Equity Interests, in conjunction
with notice of the Effective Date and other matters, that either the Primary
Merger Alternative or the Secondary Standalone Alternative, as the case may be,
has become effective and constitutes the operative chapter 11 plan.
ATT. 1 -- 17
<PAGE> 28
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
3.1 ADMINISTRATIVE CLAIMS, RETIREE ADMINISTRATIVE CLAIMS,
INVOLUNTARY GAP CLAIMS AND PRIORITY TAX CLAIMS. As provided in section
1123(a)(1) of the Bankruptcy Code, Administrative Claims, Retiree
Administrative Claims, Involuntary Gap Claims and Priority Tax Claims shall not
be classified for purposes of voting or receiving distributions under this
Plan. Rather, all such Claims shall be treated separately as unclassified
Claims on the terms set forth in Article VI of this Plan.
3.2 CLAIMS AND EQUITY INTERESTS CLASSIFIED. For purposes of
organization, voting, and all confirmation matters, except as otherwise
provided herein, all Claims (except for Administrative Claims, Retiree
Administrative Claims, Involuntary Gap Claims and Priority Tax Claims) and all
Equity Interests shall be classified as follows:
(a) CLASS 1: Priority Claims;
(b) CLASS 2: Secured Claims;
(c) CLASS 3: Settled Claims;
(d) CLASS 4: Unsecured Claims;
(e) CLASS 5: Subordinated Claims;
(f) CLASS 6: Existing Series A Interests;
(g) CLASS 7: Existing Series B Interests and Existing
Series E Interests;
(h) CLASS 8: Section 510(b) Securities Litigation
Claims;
(i) CLASS 9: Existing Common Stock Interests; and
(j) CLASS 10: Common Equivalents;
3.3 ELIMINATION OF CLASSES. Any impaired class that is not
occupied as of the date of the hearing on confirmation of this Plan by an
Allowed Claim or Allowed Equity Interest or by a Claim or Equity Interest
temporarily allowed pursuant to Bankruptcy Rule 3018 shall be deemed deleted
from this Plan for purposes of voting on acceptance or rejection of this Plan
and determining whether this Plan has been accepted by such class pursuant to
section 1129 of the Bankruptcy Code.
ARTICLE IV
IDENTIFICATION OF IMPAIRED CLASSES
OF CLAIMS AND EQUITY INTERESTS
4.1 CLASSES OF CLAIMS. The classes containing Unsecured Claims,
Subordinated Claims, and Section 510(b) Securities Litigation Claims are
impaired under this Plan. All other classes of Claims are unimpaired under
this Plan.
ATT. 1 -- 18
<PAGE> 29
4.2 CLASSES OF EQUITY INTERESTS. The classes containing Existing
Series A Interests, Existing Series B Interests and Existing Series E
Interests, Existing Common Interests, and Common Equivalents are impaired under
this Plan.
4.3 IMPAIRMENT CONTROVERSIES. If a controversy arises as to
whether any class of Claims or class of Equity Interests is impaired under this
Plan, such class shall be treated as specified in this Plan unless the
Bankruptcy Court shall determine such controversy upon motion of the party
challenging the characterization of a particular class under this Plan.
ARTICLE V
ACCEPTANCE OR REJECTION OF THIS PLAN; EFFECT OF REJECTION BY
ONE OR MORE CLASSES OF CLAIMS OR EQUITY INTERESTS
5.1 CLASSES ENTITLED TO VOTE. Except as provided in section 5.3
below, each impaired class of Claims and Equity Interests shall be entitled to
vote separately to accept or reject this Plan as provided in the order entered
by the Bankruptcy Court governing the voting and balloting procedures
applicable to this Plan.
5.2 DEEMED ACCEPTANCE WITHOUT VOTE. Any unimpaired class of
Claims or Equity Interests shall be deemed to have accepted this Plan and shall
not be entitled to vote to accept or reject this Plan.
5.3 DEEMED REJECTION WITHOUT VOTE. Any impaired class of Claims
or Equity Interests that will not receive or retain any property on account of
such Claims or Equity Interests shall be deemed to have rejected this Plan and
shall not be entitled to vote to accept or reject this Plan.
5.4 CLASS ACCEPTANCE REQUIREMENT. An impaired class of Claims
shall have accepted this Plan if it is accepted by at least two-thirds (2/3) in
amount and more than one-half (1/2) in number of the Allowed Claims in such
class that have voted on this Plan. An impaired class of Equity Interests
shall have accepted this Plan if it is accepted by at least two-thirds (2/3) in
amount of the Allowed Equity Interests in such class that have voted on this
Plan.
5.5 CRAMDOWN. Notwithstanding the rejection or deemed rejection
of this Plan by any class of Claims or Equity Interests, the Plan Proponents
hereby request that the Bankruptcy Court confirm this Plan in accordance with
section 1129(b) of the Bankruptcy Code.
ARTICLE VI
TREATMENT OF UNCLASSIFIED CLAIMS
6.1 ADMINISTRATIVE CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, all Administrative Claims
shall be treated as follows:
(a) PROCEDURE AND DEADLINE FOR ASSERTING ADMINISTRATIVE
CLAIMS. The holder of an Administrative Claim, other than (i) a Fee
Claim, (ii) a liability incurred and paid in the ordinary course of
business by the Debtor (including Retiree Administrative Claims), or
(iii) an Allowed Administrative Claim, must file with the Bankruptcy
Court, and serve on the Reorganized Company and its counsel, notice of
such Administrative Claim on or before the Administrative Claims Bar
Date. Such notice must include, at a minimum, the name of the holder
of the Claim, the amount of the Claim, the date on which the Claim
arose,
ATT. 1 -- 19
<PAGE> 30
and a detailed explanation of the basis of the Claim with all
pertinent documents attached. Failure to file this notice timely and
properly shall result in the Administrative Claim being forever barred
and discharged.
(b) PROCEDURE AND TIME FOR FILING FEE CLAIMS. Each
Professional, Indenture Trustee or other entity that holds or asserts
an Administrative Claim that is a Fee Claim incurred before the
Effective Date shall be required to file with the Bankruptcy Court,
and serve on all parties required to receive notice, a Fee Application
on or before the Administrative Claims Bar Date. The failure to file
the Fee Application timely shall result in the Fee Claim being forever
barred and discharged. To the extent necessary, entry of the
Confirmation Order shall amend and supersede any previously entered
order of the Bankruptcy Court regarding procedures for the payment of
Fee Claims.
(c) ALLOWANCE OF ADMINISTRATIVE CLAIMS. An
Administrative Claim with respect to which notice has been properly
filed pursuant to section 6.1(a) of this Plan shall become an Allowed
Administrative Claim if no objection is filed within sixty (60) days
after the filing and service of such notice. If an objection is filed
within such sixty (60) day period, the Administrative Claim shall
become an Allowed Administrative Claim only to the extent allowed by
Final Order. An Administrative Claim that is a Fee Claim, and with
respect to which a Fee Application has been properly filed pursuant to
section 6.1(b) of this Plan, shall become an Allowed Administrative
Claim only to the extent allowed by Final Order.
(d) PAYMENT OF ALLOWED ADMINISTRATIVE CLAIMS. Each
holder of an Allowed Administrative Claim shall receive in full
satisfaction of such holder's Allowed Administrative Claim (i) the
amount of such holder's Allowed Claim in one cash payment on the
Distribution Date, or (ii) such other treatment as may be agreed upon
in writing by the Plan Proponents; provided, however, that (x) an
Administrative Claim representing a liability incurred in the ordinary
course of business of the Debtor may be paid in the ordinary course of
business by the Debtor, and (y) the payment of an Allowed
Administrative Claim representing a right to payment under section
365(b)(1)(A), 365(b)(1)(B) or 365(d)(3) of the Bankruptcy Code may be
paid in one or more cash payments over a period of time as agreed by
the holder of the Claim and the Plan Proponents (or the Reorganized
Company if after the Effective Date) or as determined by the
Bankruptcy Court.
6.2 RETIREE ADMINISTRATIVE CLAIMS. Under either the Primary
Merger Alternative or the Secondary Standalone Alternative, holders of Allowed
Retiree Administrative Claims shall continue to receive benefits provided for
by the terms and conditions of the Retiree Benefit Plans to the extent required
by section 1129(a)(13) of the Bankruptcy Code, subject to any exercise of the
rights reserved by section 8.4 of this Plan.
6.3 INVOLUNTARY GAP CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an Allowed
Involuntary Gap Claim shall receive in full satisfaction of such holder's
Allowed Claim (a) the amount of such holder's Allowed Claim in one cash payment
on the Distribution Date, or (b) such other treatment as may be agreed upon in
writing by such holder.
6.4 PRIORITY TAX CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an Allowed
Priority Tax Claim shall receive the amount of such holder's Allowed Claim in
one cash payment in full satisfaction of such holder's Allowed Claim upon the
latest to occur of (a) the Distribution Date, (b) as soon as practicable after
the tenth (10th) Business Day after such Claim becomes an Allowed Claim, (c)
the date the Allowed Claim becomes due and payable pursuant to the terms of the
agreement upon which such Allowed Claim is based or becomes due and payable
under applicable law, or (d) upon such other terms as may be agreed to by the
holder of such Allowed Claim and the Plan Proponents (or the Reorganized
Company if after the Effective Date). The Reorganized Company reserves the
right under section 1129(a)(9)(C) of the Bankruptcy Code to extend the payment
of Allowed Priority Tax Claims; provided, however, in such event, that the
holder of such Allowed Priority Tax Claim shall receive on account of such
Claim deferred cash payments, over
ATT. 1 -- 20
<PAGE> 31
a period not exceeding six (6) years after the date of assessment of the tax,
of a value, as of the Effective Date of this Plan, equal to the Allowed amount
of such Claim.
6.5 FEES AND EXPENSES OF INDENTURE TRUSTEES. The reasonable fees,
costs and out-of-pocket expenses, including attorneys' fees, of the Indenture
Trustees, including without limitation such fees, costs and expenses incurred
prior to the Petition Date, are Administrative Claims in the Case. Set forth
on Exhibit P are the fees incurred by each of the Indenture Trustees as of the
most recent available date. Any dispute regarding the reasonableness of any of
such fees and expenses shall be determined by the Bankruptcy Court at or prior
to the Confirmation Hearing. The treatment of the Indenture Trustees' fees and
expenses as provided in this section 6.5 shall be in lieu of and in
consideration of the respective Indenture Trustee's lien rights (if any) under
the applicable Existing Indenture.
ARTICLE VII
TREATMENT OF CLASSIFIED CLAIMS AND EQUITY INTERESTS
7.1 CLASS 1 -- PRIORITY CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an Allowed
Priority Claim shall receive the amount of such holder's Allowed Claim in one
cash payment, in full satisfaction of such holder's Allowed Claim, upon the
latest to occur of (a) the Distribution Date, (b) as soon as practicable after
the tenth (10th) Business Day after such Claim becomes an Allowed Claim, (c)
the date the Allowed Claim becomes due and payable pursuant to the terms of the
agreement upon which such Allowed Claim is based, or becomes due and payable
under applicable law, or (d) upon such other terms as may be agreed to by the
holder of such Allowed Claim and the Plan Proponents (or the Reorganized
Company if after the Effective Date).
7.2 CLASS 2 -- SECURED CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an Allowed
Secured Claim shall receive on the Distribution Date, in full satisfaction of
such holder's Allowed Claim, at the sole option of the Reorganized Company,
either:
(a) conveyance of the Collateral securing such Allowed
Claim;
(b) payment of such Allowed Claim in accordance with the
terms and provisions of the documents pertaining
thereto;
(c) one cash payment in the amount of such Allowed Claim;
or
(d) such other treatment as may be agreed to by such
holder and the Plan Proponents (or the Reorganized
Company if after the Effective Date).
Any controversy as to the value of the Collateral securing any Secured Claim
shall be determined by the Bankruptcy Court after notice and hearing. Each
Allowed Secured Claim shall be deemed to be separately classified in a subclass
of this class 2 and shall have all rights associated with separate
classification under the Bankruptcy Code.
7.3 CLASS 3 -- SETTLED CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an Allowed
Settled Claim shall be treated in accordance with the court-approved settlement
agreement pertaining to such Claim, and specifically:
(a) EDS Claim - The EDS Claim shall be satisfied,
discharged and released on the Effective Date pursuant to the EDS
Settlement Agreement;
ATT. 1 -- 21
<PAGE> 32
(b) BONY Claim - The BONY Claim shall be satisfied,
discharged and released on the Effective Date pursuant to the BONY
Settlement Agreement; provided, however, that if the Bankruptcy Court
does not approve the BONY Settlement Agreement, the BONY Claim shall
be treated, to the extent Allowed, as an Unsecured Claim;
(c) Group of 55 Claims - The Group of 55 Claims shall be
satisfied, discharged and released on the Effective Date by the FDIC's
delivery of the Group of 55 Releases pursuant to the provisions of the
FDIC Settlement Agreement; and the pending preference and fraudulent
conveyance action against the Group of 55 shall be dismissed on or as
soon as practicable after the Effective Date; and
(d) FDIC Claims - The FDIC Claims shall be satisfied,
discharged and released on the Effective Date in accordance with the
provisions of the FDIC Settlement Agreement.
If determined necessary, each Allowed Settled Claim shall be deemed to be
separately classified in a subclass of this class 3 and shall have all rights
associated with separate classification under the Bankruptcy Code.
7.4 CLASS 4 -- UNSECURED CLAIMS. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an Allowed
Unsecured Claim shall receive, in full satisfaction of such holder's Allowed
Aggregate Unsecured Claim, on the Distribution Date (a) a cash payment equal to
ninety percent (90%) of the amount of such holder's Allowed Unsecured Claim
existing as of the Petition Date (excluding unmatured interest and interest
accruing after the Petition Date); and (b) one or more New Senior Secured
Notes, to be governed by the New Senior Secured Note Indenture, in principal
amounts equal to the remaining balance of such holder's Aggregate Unsecured
Claim; provided, however, that the New Senior Secured Notes shall be issued
only in denominations of $1,000, and if any remaining Aggregate Unsecured Claim
is less than $1,000, or if any portion thereof exceeds a multiple of $1,000,
the holder thereof shall receive cash on the Effective Date in the amount of
such remaining Claim or excessive portion, and no New Senior Secured Note shall
be issued with respect to such remaining Claim or excessive portion.
7.5 CLASS 5 -- SUBORDINATED CLAIMS. Under either the Primary
Merger Alternative or the Secondary Standalone Alternative, all Subordinated
Claims shall be subordinated to Claims and/or Equity Interests as determined by
Final Order of the Bankruptcy Court and shall be treated under this Plan only
as permitted by and in accordance with the Final Order of the Bankruptcy Court.
7.6 CLASS 6 -- EXISTING SERIES A INTERESTS. All Existing Series A
Interests shall be cancelled, annulled and extinguished on the Effective Date,
and
(a) Primary Merger Alternative - Under the Primary Merger
Alternative, (i) if class 6 accepts this Plan in accordance with
section 5.4 hereof, each Record Holder of Allowed Existing Series A
Interests shall receive, on the Distribution Date, on account of such
Interests, one (1) New Senior Subordinated Note, to be governed by the
New Senior Subordinated Note Indenture, in a principal amount equal to
the number of Existing Series A Interests owned by such Record Holder
multiplied by the sum of $100 plus the amount of accrued and unpaid
dividends owing on such Interest as of the Effective Date; provided,
however, that the New Senior Subordinated Notes shall be issued only
in denominations of $100, and if the principal amount of any New
Senior Subordinated Note would otherwise be less than $100 or more
than any multiple of $100, the holder thereof shall receive cash on
the Effective Date in the amount that is less than $100 or more than
any multiple of $100; but (ii) if class 6 does not accept this Plan in
accordance with section 5.4 hereof, the Bankruptcy Court shall
determine at the Confirmation Hearing that the requirements of section
1129(b) of the Bankruptcy Code are satisfied by the distribution to
such Record Holder of a New Senior Subordinated Note on the basis set
forth in clause (a)(i) above, or shall modify the terms of such New
Senior Subordinated Note as necessary to satisfy section 1129(b) of
the Bankruptcy Code; or
ATT. 1 -- 22
<PAGE> 33
(b) Secondary Standalone Alternative - Under the
Secondary Standalone Alternative, (i) if class 6 accepts this Plan in
accordance with section 5.4 hereof, each Record Holder of Allowed
Existing Series A Interests shall receive on the Distribution Date,
shares of New Senior Preferred Stock with a stated value equal to the
amount of each such holder's Existing Series A Interests; or (ii) if
class 6 does not accept this Plan in accordance with section 5.4
hereof, the Bankruptcy Court shall determine at the Confirmation
Hearing that the requirements of section 1129(b) of the Bankruptcy
Code are satisfied by the distribution to such Record Holder of New
Senior Preferred Stock on the basis set forth in clause (b)(i) above,
or shall modify the terms of the New Senior Preferred Stock by
specifying the higher or lower dividend that will provide each Record
Holder of an Allowed Existing Series A Interest with the value, as of
the Effective Date, equal to the Allowed amount of any fixed
liquidation preference to which such holder is entitled.
7.7 CLASS 7 -- EXISTING SERIES B INTERESTS AND EXISTING SERIES E
INTERESTS. All Existing Series B Interests and Existing Series E Interests
shall be cancelled, annulled and extinguished on the Effective Date, and
(a) Primary Merger Alternative - Under the Primary Merger
Alternative, (i) if class 7 and class 9 accept this Plan in accordance
with section 5.4 hereof, each Record Holder of an Allowed Existing
Series B Interest shall, consistent with section 9.13(c) hereof,
receive, on the Distribution Date, on account of each such Interest,
one share of New Special Preferred Stock, one Class B Certificate,
7/10ths of one share of New Merger Common Stock, and .101588 New
Warrants; and each Record Holder of an Allowed Existing Series E
Interest shall receive, on the Distribution Date, 1.1085 shares of New
Special Preferred Stock, 1.1085 Class B Certificates, 1.1085 times
7/10ths of one share of New Merger Common Stock, and .1126 New
Warrants; or (ii) if class 7 accepts but class 9 does not accept this
Plan in accordance with section 5.4 hereof, each Record Holder of an
Allowed Existing Series B Interest shall receive one share of New
Special Preferred Stock, one Class B Certificate, one share of New
Merger Common Stock, and .203176 New Warrants; and each Record Holder
of an Allowed Existing Series E Interest shall receive 1.1085 shares
of New Special Preferred Stock, 1.1085 Class B Certificates, 1.1085
shares of New Merger Common Stock, and .2252 New Warrants; but (iii)
if class 7 does not accept this Plan in accordance with section 5.4
hereof, this Plan shall be automatically amended to delete the
provisions with respect to the New Special Preferred Stock, the Class
B Certificates and the New Warrants, and to provide that each Record
Holder of an Allowed Existing Series B Interest shall receive, on the
Distribution Date, on account of each Interest, the number of shares
of New Merger Common Stock that equals the product of the Existing
Series B Percentage times fifty and one-tenth percent (50.1%) of the
Issued New Common Stock; and each Record Holder of Allowed Existing
Series E Interests shall receive, on the Distribution Date, on account
of such Interests, that number of shares of New Merger Common Stock
that equals the product of the Existing Series E Percentage times
fifty and one-tenth percent (50.1%) of the Issued New Common Stock;
and holders of Allowed Section 510(b) Securities Litigation Claims and
Allowed Existing Common Interests shall receive no distribution under
this Plan.
(b) Secondary Standalone Alternative - Under the
Secondary Standalone Alternative, (i) if class 7 and class 9 accept
this Plan in accordance with section 5.4 hereof, each Record Holder of
Allowed Existing Series B Interests shall receive, on the Distribution
Date, on account of such Interests, that number of shares of New
Junior Preferred Stock that equals the product of the Existing Series
B Percentage times the Issued New Junior Preferred Stock, and that
number of shares of New Standalone Common Stock that equals the
product of the Existing Series B Percentage times fifty percent (50%)
of the Issued New Standalone Common Stock; and each Record Holder of
Allowed Existing Series E Interests shall receive, on the Distribution
Date, on account of such Interests, that number of shares of New
Junior Preferred Stock that equals the product of the Existing Series
E Percentage times the Issued New Junior Preferred Stock, and that
number of shares of New Standalone Common Stock that equals the
product of the Existing Series E Percentage times fifty percent (50%)
of the Issued New Standalone Common Stock; or (ii) if class 7 accepts
but class 9 does not accept this Plan in accordance with section 5.4
hereof, each Record Holder of Allowed
ATT. 1 -- 23
<PAGE> 34
Existing Series B Interests shall receive, on the Distribution Date,
on account of such Interests, that number of shares of New Junior
Preferred Stock that equals the product of the Existing Series B
Percentage times the Issued New Junior Preferred Stock, and that
number of shares of New Standalone Common Stock that equals the
product of the Existing Series B Percentage times one hundred percent
(100%) of the Issued New Common Stock; and each Record Holder of
Allowed Existing Series E Interests shall receive, on the Distribution
Date, on account of such Interests, that number of shares of New
Junior Preferred Stock that equals the product of the Existing Series
E Percentage times the Issued New Junior Preferred Stock, and that
number of shares of New Standalone Common Stock that equals the
product of the Existing Series E Percentage times one hundred percent
(100%) of the Issued New Common Stock; but (iii) if class 7 does not
accept this Plan in accordance with section 5.4 hereof, this Plan
shall be automatically amended to delete the provisions with respect
to the New Junior Preferred Stock, and to provide that each Record
Holder of Allowed Existing Series B Interests shall receive, on the
Distribution Date, on account of such Interests, the number of shares
of New Standalone Common Stock that equals the product of the Existing
Series B Percentage times one hundred percent (100%) of the Issued New
Standalone Common Stock; and each Record Holder of Allowed Existing
Series E Interests shall receive, on the Distribution Date, on account
of such Interests, that number of shares of New Standalone Common
Stock that equals the product of the Existing Series E Percentage
times one hundred percent (100%) of the Issued New Standalone Common
Stock; and holders of Allowed Section 510(b) Securities Litigation
Claims and Allowed Existing Common Interests shall receive no
distributions under this Plan.
7.8 CLASS 8 -- SECTION 510(B) SECURITIES LITIGATION CLAIMS. Under
either the Primary Merger Alternative or the Secondary Standalone Alternative,
all Section 510(b) Securities Litigation Claims shall be subordinated as
required by section 510(b) of the Bankruptcy Code, and
(a) Plaintiff Damages Claims - If class 7 and class 8
accept this Plan in accordance with section 5.4 hereof, but subject to
the execution of a definitive settlement agreement between the Plan
Proponents and Harvey Greenfield on behalf of the holders of Allowed
Plaintiff Damages Claims prior to the commencement of the Confirmation
Hearing, (i) each holder of an Allowed Plaintiff Damages Claim shall
receive, on the Class 8 Distribution Date, a portion of the settlement
amount offered by the Debtor; which settlement amount shall equal the
sum of (x) $7 million plus interest at the rate of nine percent (9%)
per annum accruing from November 16, 1994 to the Class 8 Distribution
Date; plus (y) the net proceeds of sale of the common stock of
Citizens State Bank of Sealy, Texas held and owned by the Debtor, if
such stock is sold on or before the Effective Date, and any special or
extraordinary dividends from and after November 16, 1994, which
special or extraordinary dividends shall include any stock dividends
and any cash dividends in excess of net income in any fiscal year as
reported to regulatory agencies; provided, however, that such stock
shall not be sold for less than book value without the prior written
consent of Harvey Greenfield; and provided further, however, that if
such stock is not sold by the Effective Date, then such stock shall be
transferred to Harvey Greenfield, as trustee for all holders of
Allowed Plaintiff Damages Claims, subject to subsection 7.8(c) below;
minus (z) the amount of fees and expenses awarded to counsel for the
holders of Section 510(b) Securities Litigation Claims by the
Bankruptcy Court pursuant to section 503 of the Bankruptcy Code. The
foregoing net settlement amount shall be allocated Pro Rata to holders
of Allowed Plaintiff Damages Claims pursuant to a Final Order of the
Bankruptcy Court approving such distribution; provided, however, that
if the foregoing distribution scheme shall be disapproved for any
reason, then the Bankruptcy Court shall approve such allocations of
the foregoing net settlement amount to holders of Allowed Plaintiff
Damages Claims as it may determine to be fair and equitable. If a
definitive settlement agreement between the Plan Proponents and Harvey
Greenfield on behalf of the holders of Allowed Plaintiff Damages
Claims is not executed prior to the commencement of the Confirmation
Hearing, then this Plan shall be automatically amended to delete the
provisions with respect to Citizens State Bank of Sealy, Texas, and
the holders of Allowed Plaintiff Damages Claims shall have no rights
therein pursuant to this Plan. In consideration of the receipt of the
net settlement amount hereunder, but subject to use of reasonable good
faith efforts by the Debtor or the Reorganized
ATT. 1 -- 24
<PAGE> 35
Company to defend against the allowance or reallowance of any
Defendant Indemnity Claims, all holders of Allowed Plaintiff Damages
Claims hereby agree to reduce, dollar for dollar, any judgment or
award they (or any of them) may obtain against any Person other than
the Debtor arising from or related to the purchase or sale of Existing
Equity Securities, including but not limited to the former or current
defendants in the Krim Lawsuit, but only in the event that (x) a Final
Order is entered against the Debtor (or the Reorganized Company if
after the Effective Date) which produces an Allowed Defendant
Indemnity Claim as a consequence of a Claim by the holders of the
Plaintiff Damage Claims and, (y) with respect to Allowed Defendant
Indemnity Claims by present or former officers or directors of the
Debtor, the insurance carriers which issued officer and director and
company reimbursement insurance policies purchased by First City to
provide insurance coverage for the Debtor and/or its officers and
directors obtain a Final Order denying coverage for all or any part of
the Allowed Defendant Indemnity Claims and/or otherwise refuse (or are
unable) to pay all or any part of the Allowed Defendant Indemnity
Claims; but if either class 7 or class 8 does not accept this Plan in
accordance with section 5.4 hereof, this Plan shall be automatically
amended to delete the above provisions and to provide that no holder
of an Allowed Plaintiff Damages Claim shall receive or retain under
this Plan on account of such Claim any property whatsoever.
(b) Defendant Indemnity Claims - If class 7 and class 8
accept this Plan in accordance with section 5.4 hereof, in the event
the judgment or award referred to under subsection 7.8(a) hereof
produces an Allowed Defendant Indemnity Claim, each holder of an
Allowed Defendant Indemnity Claim shall proceed first against any
available insurance policies for satisfaction of such Allowed Claims,
and any Allowed Defendant Indemnity Claims not satisfied by insurance
proceeds shall, as such holder's sole remedy, be satisfied in full
through the reduction, dollar for dollar, of the judgment or award
obtained against them by the holder or holders of a Plaintiff Damages
Claim as set forth in subsection 7.8(a) hereof; but if either class 7
or class 8 does not accept this Plan in accordance with section 5.4
hereof, this Plan shall be automatically amended to delete the above
provisions and to provide that no holder of an Allowed Defendant
Indemnity Claim shall receive or retain under this Plan on account of
such Claim any property whatsoever.
(c) Transfer of Stock - Subject to the execution of a
definitive settlement agreement as provided in subsection 7.8(a)
above, any transfer of the above-described stock of Citizens State
Bank of Sealy, Texas to Harvey Greenfield, as trustee for holders of
Allowed Plaintiff Damages Claims, is subject to regulatory approvals.
The Plan Proponents shall use their best efforts to obtain all
required regulatory approvals for such transfer, if such stock has not
been sold by the Effective Date. If the Plan Proponents determine in
good faith that required regulatory approvals cannot be obtained, then
they may substitute payment of an amount equal to the estimated net
proceeds from the sale of the stock. Any disputes over calculation of
such estimated net proceeds of sale shall be resolved by the
Bankruptcy Court. In the event that the stock is transferred to
Harvey Greenfield, as trustee, any subsequent disposition of such
stock shall be approved by the Bankruptcy Court.
(d) Expression of Intent as to the Operation of Section
7.8 - It is the intention of the Plan Proponents and the holders of
Section 510(b) Securities Litigation Claims that such reduction in the
judgments and awards referenced in subsection 7.8(a) above obtained by
holders of the Plaintiff Damages Claims against any holder of a
Defendant Indemnity Claim shall have the effect of satisfying in full
any Final Order based upon an Indemnification Obligation against the
Debtor (or Reorganized Company if after the Effective Date) which
produces an Allowed Defendant Indemnity Claim. Accordingly, any such
reduction shall be in such amount as shall be necessary to hold the
Debtor (or the Reorganized Company if after the Effective Date)
harmless from any Allowed Defendant Indemnity Claim. As consideration
for the foregoing, the Debtor (or Reorganized Company if after the
Effective Date) shall (except as foreclosed or prohibited by court or
regulatory order) in good faith defend against any Defendant Indemnity
Claim which the Debtor (or Reorganized Company if after the Effective
Date) reasonably believes to be outside the scope of its
Indemnification Obligations.
ATT. 1 -- 25
<PAGE> 36
7.9 CLASS 9 -- EXISTING COMMON INTERESTS. All Existing Common
Interests shall be cancelled, annulled and extinguished on the Effective Date,
and
(a) Primary Merger Alternative - Under the Primary Merger
Alternative, (i) if class 7 and class 9 accept this Plan in accordance
with section 5.4 hereof, each Record Holder of an Allowed Existing
Common Interest shall receive, on the Distribution Date, a Pro Rata
share of 738,273 shares of New Merger Common Stock and of 250,000 New
Warrants; but (ii) if class 7 or class 9 does not accept this Plan in
accordance with section 5.4 hereof, this Plan shall be automatically
amended to delete the above provisions and to provide that no holder
of Existing Common Interests shall receive or retain under this Plan
on account of such Interests any property whatsoever;
(b) Secondary Standalone Alternative - Under the
Secondary Standalone Alternative, (i) if class 7 and class 9 accept
this Plan in accordance with section 5.4 hereof, each Record Holder of
an Allowed Existing Common Interest shall receive, on the Distribution
Date, a Pro Rata share of fifty percent (50%) of the New Standalone
Common Stock; but (ii) if class 7 or class 9 does not accept this Plan
in accordance with section 5.4 hereof, this Plan shall be
automatically amended to delete the above provisions and to provide
that no holder of Existing Common Interests shall receive or retain
under this Plan on account of such Interests any property whatsoever.
7.10 CLASS 10 -- COMMON EQUIVALENTS. Under either the Primary
Merger Alternative or the Secondary Standalone Alternative, any Common
Equivalents not exercised by the Existing Securities Record Date shall be
canceled, annulled and extinguished on the Effective Date, and holders of
Common Equivalents shall not receive or retain under this Plan on account of
such Common Equivalents any property whatsoever.
ARTICLE VIII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
8.1 REJECTED IF NOT ASSUMED. All contracts and leases of the
Debtor that constituted executory contracts or unexpired leases as of the
Petition Date shall be rejected as of the Effective Date, except for such
contracts and leases that (a) have been assumed or rejected pursuant to order
of the Bankruptcy Court entered prior to the Effective Date, (b) have been
renegotiated and either assumed or rejected on renegotiated terms pursuant to
order of the Bankruptcy Court entered prior to the Effective Date, (c) are the
subject of a motion to assume that is pending before the Bankruptcy Court on
the Effective Date, (d) are the subject of a motion to approve renegotiated
terms and assumption or rejection on renegotiated terms that is pending before
the Bankruptcy Court on the Effective Date, or (e) are specifically treated
otherwise in this Plan or in the Confirmation Order.
8.2 DISPUTES AS TO EXECUTORY/UNEXPIRED STATUS. Notwithstanding
section 8.1 of this Plan, if on the Effective Date there is a pending dispute
as to whether a contract is executory or a lease is unexpired, the Reorganized
Company's right to assume or reject such contract or lease shall be extended
until the date that is thirty (30) days after entry of a Final Order by the
Bankruptcy Court determining that the contract is executory or the lease is
unexpired.
8.3 EXPIRED CONTRACTS OR LEASES. Any contract or lease that
expired pursuant to its terms prior to the Effective Date, and that has not
been assumed or rejected by Final Order prior to the Effective Date, is hereby
specifically rejected.
ATT. 1 -- 26
<PAGE> 37
8.4 RESERVATION OF RIGHTS TO SEEK REJECTION OF RETIREE BENEFIT
PLANS. The Plan Proponents reserve the right to seek rejection or modification
of the Retiree Benefit Plans in accordance with section 1114 of the Bankruptcy
Code.
8.5 SURVIVAL OF THE DEBTOR'S CORPORATE INDEMNITIES.
Notwithstanding any other provision of this Plan, any obligation of the Debtor
to indemnify its directors, officers, or employees, pursuant to its existing
charter and by- laws and/or any separate indemnification agreements, with
respect to all present and future actions, suits, and proceedings against the
Debtor or any of such directors, officers, employees, based upon or arising
from any act or omission occurring after the Petition Date and related to
service with, for, or on behalf of, the Debtor after the Petition Date, shall
not be discharged or impaired by Confirmation or consummation of this Plan, but
shall be deemed and treated as executory contracts that are assumed by the
Debtor pursuant to this Plan and section 365 of the Bankruptcy Code as of the
Effective Date; provided, however, that the above-described indemnity
obligations shall be assumed only as to those directors, officers or employees
of the Debtor who have served in such capacities on or at any time since the
Petition Date. Any Indemnification Obligations of the Debtor that are not
assumed pursuant to this section shall be treated as otherwise provided in this
Plan.
8.6 BAR TO REJECTION DAMAGES. If the rejection of an executory
contract or unexpired lease results in damages to the other party or parties to
such contract or lease, a Claim for such damages, if not heretofore evidenced
by a filed proof of claim, shall be forever barred and shall not be enforceable
unless a proof of claim is filed with the Bankruptcy Court and served upon the
Reorganized Company as follows: (a) if the Claim arises from the rejection of
an executory contract or unexpired lease by operation of any provision of this
Plan, thirty (30) days after the date of service of notice of the Effective
Date; or (b) if the Claim arises from the rejection of an executory contract or
unexpired lease pursuant to a Final Order of the Bankruptcy Court (other than
the Confirmation Order) authorizing rejection of such contract or lease, thirty
(30) days after service of notice of the entry of such Final Order. The
foregoing applies only to Claims arising from the rejection of an executory
contract or unexpired lease; any other Claims held by a party to a previously
rejected contract or lease shall have been evidenced by a proof of claim filed
by earlier applicable bar dates or shall be barred and unenforceable.
8.7 CLAIMS ARISING FROM ASSUMPTION OR REJECTION. All Allowed
Claims arising from the assumption of an executory contract or unexpired lease
shall be treated as Administrative Claims pursuant to section 6.1 of this Plan
to the extent determined by Final Order of the Bankruptcy Court; all Allowed
Claims arising from the rejection of an executory contract or unexpired lease
shall be treated as Unsecured Claims pursuant to section 7.4 of this Plan
unless otherwise ordered by Final Order of the Bankruptcy Court; and all other
Allowed Claims relating to an executory contract or unexpired lease shall have
such status as they may be entitled to under the Bankruptcy Code as determined
by Final Order of the Bankruptcy Court.
ARTICLE IX
SPECIAL IMPLEMENTING PROVISIONS FOR PRIMARY MERGER ALTERNATIVE
9.1 NEW MERGED FIRSTCITY CORPORATE DOCUMENTS. On or before the
Effective Date, the charter and by-laws of the Debtor shall be amended and
restated as necessary to satisfy and effectuate this Plan, consistent with
state law, and the resulting Amended and Restated Merger Charter and the
Amended and Restated Merger By-Laws shall become operative on the Effective
Date. The Amended and Restated Merger Charter and the Amended and Restated
Merger By-Laws shall contain provisions (a) to the extent required by section
1123(a)(6) of the Bankruptcy Code, prohibiting the issuance of nonvoting equity
securities (other than any warrants), subject to further amendment of the
certificate of incorporation and bylaws as permitted by applicable law, and (b)
indemnifying officers, directors and employees of New Merged FirstCity and its
subsidiaries to the extent permitted by applicable law.
ATT. 1 -- 27
<PAGE> 38
9.2 ISSUANCE OF NEW STOCK. On the Effective Date, all Existing
Equity Securities shall be cancelled, annulled and extinguished and any
certificates representing such Existing Equity Securities shall become void.
In their place, New Merged FirstCity shall authorize the issuance, pursuant to
the Amended and Restated Merger Charter, of New Special Preferred Stock and New
Common Stock.
9.3 MERGER WITH J-HAWK CORPORATION. In anticipation of the
Effective Date, pursuant to the Transactional Documents, J-HAWK shall establish
New J-HAWK by forming Old J-HAWK, by transferring certain of its assets that
are not to become part of New Merged FirstCity to Old J-HAWK, and by assigning
certain of its indebtedness to Old J-HAWK. On the Effective Date, further
pursuant to the Transactional Documents, J-HAWK shall merge New J-HAWK into and
with New Merged FirstCity, in exchange for approximately, but not more than,
2,460,511 shares of the New Merger Common Stock. The surviving corporation
shall be New Merged FirstCity and shall be known as "FirstCity Financial
Corporation". As a result of the merger, (a) New Merged FirstCity shall
possess all of the rights, privileges, immunities, licenses and franchises,
whether of a public or private nature, of New J-HAWK; and all property, real,
personal, and mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and every
other interest of or belonging to or due to New J-HAWK shall be taken and
deemed to be transferred to and vested in New Merged FirstCity without further
act or deed; and (b) New Merged FirstCity shall thenceforth be responsible and
liable for all liabilities and obligations of New J-HAWK; and, with respect to
any claim existing or action or proceeding pending by or against New J-HAWK,
New Merged FirstCity shall be deemed substituted for New J-HAWK for all
purposes. All requirements of applicable state law relating to mergers,
including the requirements of approval by the board of directors and by the
shareholders shall be deemed satisfied; and this Plan and the Confirmation
Order entered hereon shall be deemed to constitute articles of merger which
shall be filed with the appropriate governmental units, and which shall entitle
New Merged FirstCity to receive a certificate of merger; provided, however,
that in no event may the issuance of a certificate of merger be conditioned on
the payment of any prepetition fees and franchise taxes on terms other than
those specifically set forth in this Plan, and such issuance shall not be
delayed pending satisfaction of the obligations of New Merged FirstCity under
this Plan.
9.4 PARTICIPATION BY CARGILL FINANCIAL SERVICES CORPORATION. The
Plan Participant (or any affiliate of Cargill Financial Services Corporation)
intends to participate with J-HAWK as an equity investor in New Merged
FirstCity and in such capacity will provide, for a period of up to two (2)
years after the Effective Date, up to $100,000,000 in subordinated debt and/or
equity to acquisition partnerships to be organized by New Merged FirstCity for
the purpose of acquiring loans, real estate, and other non-performing assets,
pursuant to the terms of the Cargill Participation Agreements, but subject to
(a) a case-by-case review of the pools of assets to be purchased in such
partnerships, the proposed purchase price of such pools of assets, and the
legal and financial structure of such partnerships, and (b) the other terms and
conditions stated in the letter dated September 23, 1994, from the Plan
Participant to the board of directors of the Debtor. In consideration of its
participation with J-HAWK as an equity investor in New Merged FirstCity, the
Plan Participant (or any affiliate of Cargill Financial Services Corporation)
shall receive two percent (2%) of the New Merger Common Stock obtained by
J-HAWK pursuant to section 9.3 of this Plan.
9.5 BOARD OF DIRECTORS. On the Effective Date, the initial board
of directors of New Merged FirstCity shall consist of not more than twelve (12)
members, which shall include James R. Hawkins, C. Ivan Wilson, James T.
Sartain, Rick R. Hagelstein, Matt A. Landry, Jr., Donald Douglas, David Palmer,
and Richard E. Bean; one (1) director designated by the Plan Participant; and
three (3) additional directors selected by a nominating committee consisting of
James R. Hawkins and Donald Douglas, of which at least two (2) shall be
non-management directors. Such initial board of directors shall be appointed
pursuant to the Confirmation Order, with such appointment deemed ratified by
the initial holders of New Merger Common Stock. With the exception of Donald
Douglas, David Palmer, Richard E. Bean, and one (1) of the three (3) additional
directors selected by the nominating committee referred to above, all of the
directors shall serve for a term of one (1) year, subject to annual voting by
the holders of New Merger Common Stock, and subject to the terms and provisions
of the New Merged FirstCity
ATT. 1 -- 28
<PAGE> 39
Corporate Documents. Donald Douglas, David Palmer, Richard E. Bean, and one
(1) of the three (3) additional directors selected by the nominating committee
shall serve until the date on which the New Special Preferred Stock is redeemed
in accordance with its terms, at which time the board of directors shall
decrease in size to eight (8) members. The board of directors shall create a
compensation committee, consisting of the Chief Executive Officer and
non-management directors; an audit committee consisting of non-management
directors; and a portfolio committee of four (4) members, consisting of the
Chief Credit Officer and not less than two (2) other members of the board, of
which no more than two (2) members may be Donald Douglas, David Palmer, or
Richard E. Bean. The portfolio committee shall oversee the disposition of
Trust Assets in accordance with the terms and conditions of the Trust
Agreement, and shall terminate on the date on which the New Special Preferred
Stock is redeemed in accordance with its terms. The board of directors shall
be compensated under a plan providing for the payment to non-employee directors
of annual director fees and meeting fees and the reimbursement to all directors
for expenses incurred in attending meetings of the board of directors, as
authorized by the New Merged FirstCity Corporate Documents.
9.6 OFFICERS. On the Effective Date, the initial executive
officers of New Merged FirstCity shall include James R. Hawkins, Chairman and
Chief Executive Officer; C. Ivan Wilson, Vice Chairman; James T. Sartain,
President and Chief Operating Officer; Rick R. Hagelstein, Executive Vice
President and Chief Credit Officer; Robert W. Brown, Executive Vice President
and Secretary; and Matt A. Landry, Jr., Executive Vice President and Chief
Financial Officer. In addition, at the discretion of J-HAWK, certain other
current officers of the Debtor may be re-engaged in positions appropriate for
the continuing business of New Merged FirstCity. New Merged FirstCity shall
also be entitled, pursuant to the New Merged FirstCity Corporate Documents, to
appoint such other corporate officers as it may deem necessary or appropriate
from time to time and to employ such officers on such terms and conditions as
the board of directors of New Merged FirstCity may approve. Except as set
forth in Exhibit O to this Plan, the executive officers of New Merged FirstCity
shall receive compensation and benefits in amount and kind that is determined
by the compensation committee of the board of directors of New Merged FirstCity
to be competitive within the industry and which are not inconsistent with
compensation and benefits provided by J-HAWK for similar positions prior to the
Effective Date.
9.7 EMPLOYEE COMPENSATION AND BENEFITS. Subject to approval by
the compensation committee of the board of directors, the employees of New
Merged FirstCity shall receive compensation and benefits in amount and kind
consistent with the compensation and benefits provided by J-HAWK to its own
employees prior to the Effective Date; provided, however, that any employees of
the Debtor that may continue in the employ of New Merged FirstCity shall
participate in the benefit programs of New Merged FirstCity without any loss of
years of service earned during their employment by the Debtor or First City.
9.8 EMPLOYEE BONUS PROGRAMS. Bonus and incentive programs for
employees, including senior management, of New Merged FirstCity shall be
determined by the compensation committee of the board of directors of New
Merged FirstCity. Such programs may include, at the discretion of the
compensation committee, a stock option program, for which 230,000 shares of New
Merger Common Stock shall be reserved for distribution to participants in any
such program. In connection with their employment by New Merged FirstCity, C.
Ivan Wilson, Robert W. Brown and Joe S. Greak, unless otherwise ordered by the
Bankruptcy Court, shall share in a bonus pool and executive long term incentive
plan, the provisions of which are outlined in Exhibit O to this Plan.
9.9 OPERATION OF BUSINESS AND MANAGEMENT OF ASSETS AFTER
CONFIRMATION DATE. If, during the period between the Confirmation Date and the
Effective Date, the Debtor has acquired or will acquire assets pursuant to the
FDIC Settlement Agreement, the Loss-Sharing Settlement Agreement or otherwise
that require management, the Debtor and J-HAWK shall enter into a servicing
agreement, on arms-length terms comparable to existing servicing agreements to
which J-HAWK is a party, permitting J-HAWK to provide the necessary management
of such assets consistent with the business plan of J-HAWK for New Merged
FirstCity. Any such servicing agreement shall terminate on the Effective Date;
or if the Primary Merger Alternative does not become effective and is annulled
ATT. 1 -- 29
<PAGE> 40
pursuant to section 15.4, any such servicing agreement shall terminate at such
time as the Primary Merger Alternative is so annulled, unless the Debtor and
J-HAWK agree to extend the servicing agreement. In addition, and whether or
not a servicing agreement is entered into with J-HAWK, during the period
between the Confirmation Date and the Effective Date, the Debtor shall be
required (a) to provide J-HAWK with unfettered access to the Debtor's business
premises and to all books and records and other information or sources of
information (including the Debtor's directors, officers, employees, agents and
professionals) concerning the business and financial condition of the Debtor or
concerning any matter bearing upon J-HAWK's ability to effectuate and implement
the Primary Merger Alternative; (b) to consult, cooperate and coordinate with
J-HAWK on all matters affecting the business and the financial condition of the
Debtor to insure that such business and financial condition are safeguarded and
that no actions or inactions of the Debtor before the Effective Date result in
a material adverse change in such business or financial condition or otherwise
deprive J-HAWK of the benefit of its bargain under this Plan; and (c) to
assist, under the direction of J-HAWK with all matters required by the Primary
Merger Alternative to be completed on or before the Effective Date, including
without limitation assuming or rejecting executory contracts and unexpired
leases, filing objections to Claims and Equity Interests, finalizing and
executing the Plan Documents, implementing the FDIC Settlement Agreement and
the Loss-Sharing Settlement Agreement, and generally removing any impediments
to the effectiveness of the Primary Merger Alternative that are within the
control or influence of the Debtor.
9.10 ASSUMPTION OF PLAN LIABILITIES. The obligation to consummate
this Plan shall be assumed by New Merged FirstCity, subject to the terms of the
Trust Agreement, including the liability for and the obligation to make
distributions of cash, New Senior Secured Notes, New Senior Subordinated Notes,
New Special Preferred Stock, New Merger Common Stock, New Warrants, or other
instruments to be issued by New Merged FirstCity in accordance with Articles VI
and VII of this Plan. New Merged FirstCity shall also assume all liability and
obligation to pay any expenses of the Plan Proponents or the Plan Participant
in consummating this Plan.
9.11 VESTING OF ASSETS. Pursuant to the provisions of sections
1141(b) and 1141(c) of the Bankruptcy Code, and consistent with subsection
9.13(c) hereof, all of the Assets and effects of the Debtor including, without
limitation, the FDIC Initial Cash Settlement Payment (or if applicable, the
Adjusted FDIC Initial Cash Settlement Payment), the FDIC Receivership
Distributions, the GCR Assets, the Loss-Sharing Assets and any other assets,
interests, property or rights transferred or assigned to the Debtor and/or the
Liquidating Trust or New Merged FirstCity upon the consummation of the FDIC
Settlement Agreement, shall vest in the Liquidating Trust or New Merged
FirstCity on the Effective Date free and clear of all Claims, Liens,
encumbrances, charges and other interests of the holders of Claims and Equity
Interests, except as otherwise provided in this Plan or by the FDIC Settlement
Agreement.
9.12 PRESERVATION OF CLAIMS BELONGING TO THE DEBTOR. Unless
otherwise provided in this Plan, on the Effective Date, all rights and causes
of action pursuant to (a) sections 502, 542, 544, 545, 546, 549, 550 and 553 of
the Bankruptcy Code; (b) preference claims pursuant to section 547 of the
Bankruptcy Code; (c) fraudulent transfer claims pursuant to section 548 of the
Bankruptcy Code; (d) the FDIC Litigation; and (e) all other claims and causes
of action of the Debtor's Estate against any Person as of the Confirmation Date
shall be preserved, transferred and assigned to, and vested in, the Liquidating
Trust. On the Effective Date, the Liquidating Trustee, on behalf of the
Liquidating Trust, shall be appointed representative of the Estate under
section 1123(b) of the Bankruptcy Code and shall be authorized and shall have
the power to bring and prosecute any and all such causes of action. The
Liquidating Trustee, in its sole discretion, may pursue such causes of action,
and without further order of the Bankruptcy Court take all actions in
connection with the prosecution, defense, compromise or settlement thereof, and
in such connection, may retain such counsel, accountants or other Persons
deemed necessary in connection therewith. All recoveries, if any, received
from or in respect of the causes of action (whether by settlement, judgment, or
otherwise) shall become and be property of the Liquidating Trust.
ATT. 1 -- 30
<PAGE> 41
9.13 ESTABLISHMENT AND ADMINISTRATION OF LIQUIDATING TRUST. On the
Effective Date, but only if class 7 accepts this Plan as provided in section
7.7 hereof, the Debtor and the Liquidating Trustee shall enter into the Trust
Agreement; the Debtor shall contribute the Trust Assets to the Liquidating
Trust for disposition in accordance with the Trust Agreement; the Liquidating
Trustee shall retain New Merged FirstCity to serve as Investment Manager of the
Trust Assets, subject to the direction of the portfolio committee of the board
of directors of New Merged FirstCity; and the Liquidating Trustee shall issue
the Class A Certificate to New Merged FirstCity and Class B Certificates to
holders of Existing Series B Interests and Existing Series E Interests as the
owners and grantors of the Trust Assets. If class 7 has accepted this Plan,
from and after the Effective Date, the Liquidating Trust shall be administered
in accordance with the following:
(a) Purpose - The Liquidating Trust shall be established
for the primary purpose of liquidating the Trust Assets with no
objective to continue or engage in the conduct of a trade or business,
except to the extent reasonably necessary to, and consistent with, the
purpose of the Liquidating Trust. The Trust Agreement shall contain
provisions customary to trust agreements utilized in comparable
circumstances, including, but not limited to, any and all provisions
necessary to ensure the continued treatment of the Liquidating Trust
as a grantor trust for federal income tax purposes.
(b) Implementation of Liquidating Trust - The Debtor, the
holders of Existing Series B Interests and Existing Series E Interests
and any other party in interest shall be required to execute any
documents or other instruments as may be necessary to cause title to
the Trust Assets to be transferred to the Liquidating Trust in
accordance with the terms of this Plan.
(c) Transfer of Assets - For all federal income tax
purposes, the transfer of the Trust Assets to the Liquidating Trust
shall, with respect to the portion of the assets transferred by the
Debtor in exchange for a portion of the Existing Series B Interests
and Existing Series E Interests, be made at the direction and for the
benefit of the holders of such Equity Interests. In this regard, the
Debtor shall transfer a portion of the Trust Assets to the holders of
such Equity Interests, to be held by the Debtor on their behalf, in
exchange for a portion of such Equity Interests. Immediately
thereafter, the Debtor shall transfer to the Liquidating Trust (a) at
the direction and on behalf of the holders of Existing Series B
Interests and Existing Series E Interests, the Trust Assets
transferred in exchange for a portion of such Equity Interests, and
(b) the remaining portion of the Trust Assets. With respect to any
transfer of assets directly to the Liquidating Trust by a third party,
such as the FDIC, such transfer shall be treated as a transfer of the
assets directly to the Debtor followed by a transfer of the assets to
the holders of Existing Series B Interests and Existing Series E
Interests and the Liquidating Trust in accordance with the terms
hereof. Thus, the holders of beneficial interests in the Liquidating
Trust shall be treated as the grantors and owners thereof.
(d) Valuation of Assets - As soon as possible after the
Effective Date, but in no event later than ninety (90) days
thereafter, the Investment Manager, on behalf of the Liquidating
Trustee, shall obtain a valuation of the Trust Assets. Immediately
after such a valuation is obtained by the Investment Manager, the
Investment Manager shall inform in writing the Liquidating Trustee,
the Debtor and the holders of beneficial interests in the Liquidating
Trust of such valuation. The valuation shall be used consistently by
the Investment Manager, the Liquidating Trustee, the Debtor and the
holders of beneficial interests in the Liquidating Trust for all
federal income tax purposes.
(e) Payment of Tax in Connection with Transfer - If the
Debtor incurs any federal income tax liability in connection with the
transfer of Trust Assets, New Merged FirstCity shall pay such federal
income tax liability.
(f) Expeditious Liquidation - The Investment Manager, on
behalf of the Liquidating Trustee, shall, in an expeditious manner,
liquidate or otherwise convert into cash all Trust Assets; provided,
however,
ATT. 1 -- 31
<PAGE> 42
that the Liquidating Trust shall not receive or retain cash or cash
equivalents (other than pending the periodic distribution of such cash
or cash equivalents in accordance with the terms of the Liquidating
Trust) in excess of a reasonable amount to satisfy claims or to
maintain the value of the Trust Assets during liquidation.
(g) Investment of Assets - Subject to the other
provisions of the Trust Agreement and this Plan, the right and power
of the Investment Manager, on behalf of the Liquidating Trustee, to
invest Trust Assets, the proceeds thereof, or any income earned by the
Liquidating Trust shall be limited to the right and power to invest in
demand and time deposits (such as short-term certificates of deposit)
in banks or savings institutions or other temporary liquid investments
(such as Treasury bills).
(h) Federal Income Tax Filings - The Investment Manager,
on behalf of the Liquidating Trustee, shall file returns for the
Liquidating Trust as a grantor trust pursuant to Treasury regulation
section 1.671- 4(a). The Investment Manager, on behalf of the
Liquidating Trustee, shall also send to each holder of a beneficial
interest in the Liquidating Trust a separate statement setting forth
the holder's share of items of income, gain, loss, deduction or credit
and will instruct the holder to report such items on his federal
income tax returns.
(i) Termination - The Liquidating Trust shall terminate
upon the date that is three (3) years and six (6) months after the
Effective Date; provided, however, that at least six (6) months prior
to such termination the Bankruptcy Court, upon motion by a party in
interest, may extend the term of the Liquidating Trust if it is
necessary to the liquidating purpose thereof. Multiple extensions can
be obtained so long as Bankruptcy Court approval is obtained at least
six (6) months prior to the expiration of each extended term. The
aggregate of all such extensions shall not exceed five (5) years.
9.14 GOING PRIVATE PROHIBITION. J-HAWK shall not, within five (5)
years following the Effective Date, initiate or undertake any "Rule 13e-3
transaction" (as such term is defined in Rule 13e-3 promulgated under the
Securities Exchange Act of 1934, as amended) unless J-HAWK and/or New Merged
FirstCity has received a "fairness opinion" from a nationally recognized
investment banking firm with respect to such transaction.
ARTICLE X
SPECIAL IMPLEMENTING PROVISIONS FOR SECONDARY STANDALONE ALTERNATIVE
10.1 NEW STANDALONE FIRSTCITY CORPORATE DOCUMENTS. On or before
the Effective Date, the charter and by-laws of the Debtor shall be amended and
restated as necessary to satisfy and effectuate this Plan, consistent with
state law, and the resulting Amended and Restated Standalone Charter and the
Amended and Restated Standalone By-Laws shall become operative on the Effective
Date. The Amended and Restated Standalone Charter and the Amended and Restated
Standalone By-Laws shall contain provisions (a) to the extent required by
section 1123(a)(6) of the Bankruptcy Code, prohibiting the issuance of
nonvoting equity securities (other than any warrants), subject to further
amendment of the certificate of incorporation and bylaws as permitted by
applicable law, and (b) indemnifying officers, directors and employees of New
Standalone FirstCity and its subsidiaries to the extent permitted by applicable
law.
10.2 ISSUANCE OF NEW STOCK. On the Effective Date, all Existing
Equity Securities shall be cancelled, annulled and extinguished and any
certificates representing such Existing Equity Securities shall become void.
In their place, New Standalone FirstCity shall authorize the issuance, pursuant
to the Amended and Restated Standalone Charter, of New Senior Preferred Stock,
New Junior Preferred Stock and New Standalone Common Stock.
ATT. 1 -- 32
<PAGE> 43
10.3 BOARD OF DIRECTORS. On the Effective Date, as provided for in
the New Standalone FirstCity Corporate Documents, the initial board of
directors of New Standalone FirstCity shall consist of seven (7) voting members
and three (3) non-voting advisory members. Each voting and advisory member
shall serve for a one (1) year term and shall be initially appointed pursuant
to this Plan. The voting members shall consist of C. Ivan Wilson, Chairman and
Chief Executive Officer; one (1) director acceptable to New Standalone
FirstCity who is selected by holders of Existing Series A Interests appointed
to the Equity Committee; three (3) directors acceptable to New Standalone
FirstCity who are selected by holders of Existing Series B Interests and
Existing Series E Interests appointed to the Equity Committee, provided that in
the event the holders of Existing Series A Interests appointed to the Equity
Committee decline to select one (1) director as set forth above, then the
holders of Existing Series B Interests and Existing Series E Interests
appointed to the Equity Committee shall be entitled to select four (4)
directors; and two (2) directors acceptable to New Standalone FirstCity who are
selected by the holders of Existing Common Interests appointed to the Equity
Committee. The advisory members shall consist of J. Evans Attwell; James
Elkins, Jr.; and one (1) director acceptable to the Debtor who is selected by
the Creditor Committee. Such initial board of directors shall be appointed
pursuant to the Confirmation Order, and such appointment shall be deemed
ratified by the initial holders of New Standalone Common Stock. After the
Effective Date, New Standalone FirstCity shall be authorized, pursuant to the
New Standalone FirstCity Corporate Documents, to compensate the directors under
a plan which shall provide for the payment of annual directors' fees and
meeting fees to non-employee directors and reimbursement to all directors for
their expenses incurred in attending the meetings of the board of directors of
New Standalone FirstCity.
10.4 OFFICERS. On the Effective Date, the initial executive
officers of New Standalone FirstCity and their respective offices shall be as
follows: C. Ivan Wilson, Chairman and Chief Executive Officer; Robert W.
Brown, President, Chief Operating Officer and Chief Financial Officer; and Joe
S. Greak, Vice President. Additionally, pursuant to the New Standalone
FirstCity Corporate Documents, New Standalone FirstCity shall be entitled to
appoint such other corporate officers as it may deem necessary or appropriate
from time to time and to employ such officers on such terms and conditions as
the board of directors of New Standalone FirstCity may approve. The officers
described above shall continue to receive the same compensation and benefits,
including routine salary increases, as they have received during the Case,
except as otherwise provided herein.
10.5 GENERAL EMPLOYMENT ARRANGEMENTS. The New Standalone FirstCity
Corporate Documents shall authorize New Standalone FirstCity, acting through
its initial board of directors, to enter into such employment, retirement,
prospective indemnification, and other arrangements with the key executive
officers and initial board of directors of New Standalone FirstCity as the
initial board of directors of New Standalone FirstCity, in the exercise of its
corporate duties and in accordance with applicable state law, deems
appropriate, and to adopt such bonus and other key executive incentive plans as
are appropriate for key executives of companies similar to New Standalone
FirstCity.
10.6 SPECIAL EMPLOYMENT ARRANGEMENTS. New Standalone FirstCity
shall enter into three-year employment contracts with C. Ivan Wilson, Robert W.
Brown and Joe S. Greak on terms and conditions described in the Disclosure
Statement. As part of such employment contracts C. Ivan Wilson, Robert W.
Brown and Joe Greak, unless otherwise ordered by the Court, shall share in a
bonus pool and executive long term incentive plan, the provisions of which are
outlined in Exhibit O to this Plan.
10.7 ASSUMPTION OF PLAN LIABILITIES. The obligation to consummate
this Plan shall be assumed by New Standalone FirstCity, including the liability
for and the obligation to make distributions of cash, New Senior Secured Notes,
New Senior Preferred Stock, New Junior Preferred Stock, New Standalone Common
Stock, or other instruments to be issued by New Standalone FirstCity in
accordance with Articles VI and VII of this Plan. New Standalone FirstCity
shall also assume all liability and obligation to pay any expenses of the
Debtor in consummating this Plan.
ATT. 1 -- 33
<PAGE> 44
10.8 VESTING OF ASSETS. Pursuant to the provisions of sections
1141(b) and 1141(c) of the Bankruptcy Code, all of the Assets and effects of
the Debtor including, without limitation, the FDIC Initial Cash Settlement
Payment (or if applicable, the Adjusted FDIC Initial Cash Settlement Payment),
the FDIC Receivership Distributions, the GCR Assets, the Loss-Sharing Assets
and any other assets, interests, property or rights transferred or assigned to
the Debtor and/or New Standalone FirstCity upon the consummation of the FDIC
Settlement Agreement, shall vest in New Standalone FirstCity on the Effective
Date free and clear of all Claims, Liens, encumbrances, charges and other
interests of the holders of Claims and Equity Interests, except as otherwise
provided in this Plan or by the FDIC Settlement Agreement.
10.9 PRESERVATION OF CLAIMS BELONGING TO THE DEBTOR. Unless
otherwise provided in this Plan, on the Effective Date, all rights and causes
of action pursuant to (a) sections 502, 542, 544, 545, 546, 549, 550 and 553 of
the Bankruptcy Code; (b) preference claims pursuant to section 547 of the
Bankruptcy Code; (c) fraudulent transfer claims pursuant to section 548 of the
Bankruptcy Code; (d) the FDIC Litigation; and (e) all other claims and causes
of action of the Debtor's Estate against any Person as of the Confirmation Date
shall be preserved, transferred and assigned to, and vested in, New Standalone
FirstCity. On the Effective Date, New Standalone FirstCity shall be appointed
representative of the Estate under section 1123(b) of the Bankruptcy Code and
shall be authorized and shall have the power to bring and prosecute any and all
such causes of action. New Standalone FirstCity, in its sole discretion, may
pursue such causes of action, and without further order of the Bankruptcy Court
take all actions in connection with the prosecution, defense, compromise or
settlement thereof, and in such connection, may retain such counsel,
accountants or other Persons deemed necessary in connection therewith. All
recoveries, if any, received from or in respect of the causes of action
(whether by settlement, judgment, or otherwise) shall become and be property of
New Standalone FirstCity.
ARTICLE XI
GENERAL IMPLEMENTING PROVISIONS
11.1 OPERATION OF BUSINESS AND MANAGEMENT OF ASSETS AFTER EFFECTIVE
DATE. As of the Effective Date, the Reorganized Company may operate the
business of the Debtor and may use, acquire, and dispose of any property,
assets or rights free of any restrictions imposed by the Bankruptcy Code.
11.2 D'OENCH, DUHME PROTECTIONS. With respect to assets acquired
by the Reorganized Company by or through the FDIC, including any assets
acquired by the Reorganized Company from the Loss-Sharing Banks, the
Reorganized Company shall be protected from claims and defenses asserted by
borrowers arising from secret or side agreements between the borrower and First
City, any First City Bank, the Collecting Bank, any Bridge Bank, and/or any
other Affiliate of First City, if such secret or side agreements (a) were not
approved contemporaneously by the board or loan committee of First City, any
First City Bank, the Collecting Bank, any Bridge Bank, and/or other Affiliates
of First City, and (b) are not reflected in the loan documents filed at First
City, any First City Bank, the Collecting Bank, any Bridge Bank and/or other
Affiliate of First City; and any such claims or defenses asserted by borrowers
against the Reorganized Company shall be barred.
11.3 CORPORATE TRANSACTIONS RELATED TO FCB HOLDINGS, INC. AND
REORGANIZED COMPANY. On the Effective Date, FCB Holdings, Inc., a wholly-owned
subsidiary of First City, shall be merged with and into the Reorganized Company
as provided in the FDIC Settlement Agreement, or an alternative arrangement
agreeable to the FDIC, the Plan Proponents, and FCB Holdings, Inc. shall be
entered into.
11.4 EFFECTUATING DOCUMENTS. The Plan Documents shall be filed by
the Plan Proponents with the Bankruptcy Court on or before (a) a date, as
determined by the Plan Proponents, that is as soon as practicable, but in no
event later than twenty (20) calendar days before the commencement of the
Confirmation Hearing or (b) such
ATT. 1 -- 34
<PAGE> 45
other date (or dates) determined by the Bankruptcy Court. On or before the
Effective Date, the Plan Documents shall be executed, and where appropriate,
filed with the appropriate governmental authorities.
11.5 FURTHER AUTHORIZATIONS. The Plan Proponents, if and to the
extent necessary, shall seek such orders, judgments, injunctions, regulatory
approvals, and rulings as may be required to carry out and further the
intentions and purposes, and give full effect to the provisions, of this Plan.
11.6 FDIC SETTLEMENT AGREEMENT. On or before the Effective Date,
the Plan Proponents shall perform all acts necessary to consummate the FDIC
Settlement Agreement and implement the transactions required thereunder.
11.7 LOSS-SHARING SETTLEMENT AGREEMENT. On or before the Effective
Date, the Plan Proponents shall perform all acts necessary to consummate the
Loss-Sharing Settlement Agreement, if any. In connection with the Loss-Sharing
Settlement Agreement, the Reorganized Company may, at its option, enter into a
credit and standby letter of credit facility, secured by the Loss-Sharing
Assets, to provide for additional working capital to consummate such agreement.
In such event, the Reorganized Company shall execute and deliver a loan
agreement and such other loan standby letter of credit, and collateral
documents as are necessary and appropriate.
11.8 CONTRIBUTION BAR. The Confirmation Order shall constitute an
order forever barring Claims for contribution, reimbursement, subrogation or
indemnity against the Debtor and its Affiliates, Subsidiaries, predecessors,
and successors by any holder of a Defendant Indemnity Claim or any Person or
entity who was named as a defendant, who could have been named as a defendant,
or who otherwise may claim contribution, reimbursement, subrogation and
indemnity rights in the future against the Debtor in connection with the facts
and Claims asserted, or that could have been asserted within the scope of res
judicata, in the Krim Lawsuit or any other lawsuit that was pending or could
have been pending on the Effective Date.
11.9 EXONERATION AND RELIANCE. To the extent permitted by
applicable law, if the respective affiliates, officers, directors,
shareholders, members, representatives, attorneys, accountants, financial
advisors, and agents of the Plan Proponents, the Plan Participant, the
Reorganized Company, and the Creditor Committee act in good faith, they shall
not be liable to any holder of a Claim or Equity Interest, or any other party
with respect to any action, forbearance from action, decision, or exercise of
discretion taken during the period from the Petition Date to the Effective Date
in connection with (a) the operation of the Debtor or the Reorganized Company;
(b) the proposal or implementation of any of the transactions provided for, or
contemplated in, this Plan or the Plan Documents; or (c) the administration of
this Plan or the Assets and property to be distributed pursuant to this Plan
and the Plan Documents; other than for willful misconduct or gross negligence;
provided, however, that the foregoing shall not supersede the "safe harbor"
from liability provided by section 1125(e) of the Bankruptcy Code for violation
of applicable laws governing the solicitation of votes on this Plan or the
offer, issuance, sale or purchase of securities in connection with this Plan.
The Plan Proponents, the Plan Participant, the Reorganized Company, the
Creditor Committee, and their respective affiliates, officers, directors,
shareholders, members, representatives, attorneys, financial advisors, and
agents may rely upon the opinions of counsel, certified public accountants, and
other experts or professionals employed by the Plan Proponents, the Plan
Participant, the Reorganized Company, and the Creditor Committee respectively,
and such reliance shall conclusively establish good faith. In any action, suit
or proceeding by any holder of a Claim or Equity Interest or other party in
interest contesting any action by, or non-action of, the Plan Proponents, the
Plan Participant, the Reorganized Company, the Creditor Committee, or their
respective affiliates, officers, directors, shareholders, members,
representatives, attorneys, financial advisors, and agents as not being in good
faith, the reasonable attorneys' fees and costs of the prevailing party shall
be paid by the losing party and as a condition to going forward with such
action, suit, or proceeding at the outset thereof, all parties thereto shall be
required to provide appropriate proof and assurances of their capacity to make
such payments of reasonable attorneys' fees and costs in the event they fail to
prevail. Any objection to this section 11.9 by any holder of a Claim or Equity
Interest shall be filed by the deadline established by the Bankruptcy Court for
objecting to confirmation of this Plan or shall be waived.
ATT. 1 -- 35
<PAGE> 46
11.10 TERM OF INJUNCTIONS OR AUTOMATIC STAYS. Unless otherwise
provided in this Plan or by order of the Bankruptcy Court, all injunctions or
automatic stays provided for in the Case pursuant to section 105, if any, or
section 362 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date shall remain in full force and effect until the Effective
Date.
11.11 PROHIBITION AGAINST DISCRIMINATORY TREATMENT OF DEBTOR. A
governmental unit may not deny, revoke, suspend, or refuse to renew a license,
permit, charter, franchise, or other similar grant to, condition such a grant
to, or discriminate with respect to such a grant against, the Debtor, the
Reorganized Company, or another Person with whom the Debtor has been
associated, solely because of the commencement, continuation, or termination of
the Case or because of any provision of this Plan or the legal effect of this
Plan, and the Confirmation Order shall constitute an express injunction against
any such discriminatory treatment by a governmental unit.
11.12 DISCHARGE AND RELEASE OF CLAIMS. Except as otherwise provided
in this Plan, the entry of the Confirmation Order shall act, as of the
Effective Date, as a full and complete discharge of all Claims against or
Equity Interests in the Debtor of any nature whatsoever, including, without
limitation, any liability of a kind specified in section 502(g), 502(h) or
502(i) of the Bankruptcy Code, that arose or has been asserted against the
Debtor at any time before the Effective Date, or that arises from any
pre-confirmation conduct of the Debtor, whether or not the Claim is known to or
knowable by a current or former holder of the Claim or Equity Interest. The
discharge of the Debtor shall become effective as to each Claim and Equity
Interest, whether or not the Claim or Equity Interest constituted an Allowed
Claim or Allowed Equity Interest and whether or not the holder of the Claim or
Equity Interest voted to accept this Plan. In addition, the Confirmation Order
shall operate, as of the Effective Date, as a general resolution with prejudice
of all pending legal proceedings, if any, against the Debtor and its Assets and
properties as well as any proceedings not yet instituted against the Debtor or
its respective Assets and properties, except as otherwise provided in this
Plan.
11.13 INJUNCTION. Except as otherwise expressly provided in this
Plan or the Confirmation Order, all Persons who have held, hold, or may hold
Claims against the Debtor and who have held, hold, or may hold Equity Interests
in the Debtor are permanently enjoined on and after the Effective Date (a) from
commencing or continuing in any manner any action or other proceeding of any
kind against the Plan Proponents, the Plan Participant, the Reorganized
Company, and their property with respect to any such Claim or Equity Interest,
(b) from the enforcement, attachment, collection or recovery by any manner or
means of any judgment, award, decree or order against the Plan Proponents, the
Plan Participant, the Reorganized Company and their property with respect to
any such Claim or Equity Interest, (c) from creating, perfecting, or enforcing
any encumbrance of any kind against the Plan Proponents, the Plan Participant,
the Reorganized Company, or their property with respect to any such Claim or
Equity Interest, and (d) from asserting any right of subrogation of any kind
against any obligation due the Plan Proponents, the Plan Participant, the
Reorganized Company, or the property of the Plan Proponents, the Plan
Participant, or the Reorganized Company with respect to any such Claim or
Equity Interest. This provision is not intended to enjoin, and shall not
enjoin, actions against parties who are not the Debtor herein, except for
actions against such non-Debtor parties relating to Claims against or Equity
Interests in the Debtor.
ARTICLE XII
PROVISIONS GOVERNING DISTRIBUTIONS
12.1 DATE OF DISTRIBUTIONS. Any distributions to be made under
this Plan shall be made on the Distribution Date, on such other date provided
for in this Plan, or as the Bankruptcy Court may otherwise order.
Notwithstanding the foregoing, distributions to be made by the Indenture
Trustees to holders of Debt Securities Claims, and distributions to be made by
the Reorganized Company or by a disbursing agent or stock transfer agent acting
for the Reorganized Company to holders of Existing Equity Securities, shall be
made as soon as practicable
ATT. 1 -- 36
<PAGE> 47
after the Distribution Date, but in no event later than thirty (30) days after
the Distribution Date, unless the holder of a Debt Securities Claim or an
Existing Equity Security fails within such period to surrender the evidencing
instrument as required by section 12.4 of this Plan, in which event the
distribution to such holder shall be made only after the evidencing instrument
has been surrendered. Whenever any distribution to be made under this Plan
shall be due on a day other than a Business Day, such distribution shall
instead be made, without interest, on the next Business Day, except as provided
otherwise in any negotiable instrument issued under this Plan.
12.2 DISTRIBUTION RESPONSIBILITY. The Reorganized Company, either
on its own or through a disbursing agent, including a stock transfer agent in
the case of distributions to Existing Equity Securities, shall make all
distributions required under this Plan; provided, however, that distributions
to holders of Allowed Debt Securities Claims shall be made by the Reorganized
Company to the Indenture Trustees, who shall in turn make such distributions to
the Record Holders of the respective Allowed Debt Securities Claims in
accordance with the provisions of this Plan and, where applicable, the
governing Existing Indentures.
12.3 DISTRIBUTION RECORD DATE FOR HOLDERS OF EXISTING SECURITIES.
Only the holders of Allowed Debt Securities Claims and Allowed Existing Equity
Securities of record on the Existing Securities Record Date shall receive the
distributions provided under this Plan. As of the close of business on the
Existing Securities Record Date, the respective transfer ledgers in respect of
the Existing Securities shall be closed; and the Reorganized Company, a
disbursing agent or stock transfer agent acting for the Reorganized Company, or
the respective Indenture Trustees shall have no obligation to recognize a
transfer of Existing Securities occurring after the Existing Securities Record
Date. The Reorganized Company, a disbursing agent or stock transfer agent
acting for the Reorganized Company, or the respective Indenture Trustees shall
be entitled instead to recognize and deal for all purposes herein with only
those holders of record stated on the transfer ledgers maintained, as of the
close of business on the Existing Securities Record Date, by the Reorganized
Company or its stock transfer agent in the case of the Existing Equity
Securities and by the respective Indenture Trustees in the case of the Debt
Securities Claims.
12.4 CONDITION TO DISTRIBUTION TO RECORD HOLDERS OF EXISTING
SECURITIES. As a condition to receiving distributions provided for by this
Plan in respect of Existing Securities, any Record Holder of an Allowed Debt
Securities Claim shall be required to surrender to the appropriate Indenture
Trustee, and any Record Holder of an Allowed Existing Equity Security shall be
required to surrender to the Reorganized Company or the disbursing agent or
stock transfer agent acting for the Reorganized Company, the bonds,
certificates or other instruments evidencing such holder's ownership of an
Allowed Debt Securities Claim or Allowed Existing Equity Security. All such
instruments surrendered shall be marked "compromised and settled only as
provided in the Joint Plan of Reorganization by First City Bancorporation of
Texas, Inc., Official Committee of Equity Security Holders, and J-HAWK
Corporation, with the Participation of Cargill Financial Services Corporation,
Under Chapter 11 of the United States Bankruptcy Code" and delivered to the
Reorganized Company accompanied by completed letters of transmittal, or
otherwise in proper form for transfer. Unless waived by the appropriate
Indenture Trustee with respect to Allowed Debt Securities Claims or by the
Reorganized Company or the disbursing agent or stock transfer agent acting for
the Reorganized Company with respect to Allowed Existing Equity Securities, any
Person seeking the benefits of being a Record Holder of an Allowed Debt
Securities Claim or an Existing Equity Security who is unable to surrender the
necessary instrument shall supply, if required by the appropriate Indenture
Trustee or the Reorganized Company or the disbursing agent or stock transfer
agent acting for the Reorganized Company, an indemnity bond acceptable to the
appropriate Indenture Trustee or to the Reorganized Company or the disbursing
agent or stock transfer agent acting for the Reorganized Company, which
indemnity bond shall hold harmless the Plan Proponents, the Plan Participant,
the appropriate Indenture Trustee, the Reorganized Company, and the disbursing
agent or stock transfer agent acting for the Reorganized Company from any
damages, liabilities, or costs incurred in treating such Person as a Record
Holder of such Allowed Debt Securities Claim or Existing Equity Security,
together with appropriate evidence satisfactory to the appropriate Indenture
Trustee or to the Reorganized Company or the disbursing agent or stock transfer
agent acting for the Reorganized Company of the destruction, loss, or theft of
such instrument. Thereafter, such Person shall be treated as the Record Holder
of an Allowed Debt
ATT. 1 -- 37
<PAGE> 48
Securities Claim or an Allowed Equity Interest as the case may be for purposes
of this Plan. On the Effective Date, all outstanding Existing Securities shall
be cancelled on the books of the Debtor and become settled and compromised
solely as provided herein and with respect to the Debtor or the Reorganized
Company, in consideration for the right to participate in distributions
provided by this Plan.
12.5 MEANS OF CASH PAYMENT. Cash payments made pursuant to this
Plan shall be in U.S. funds, by check drawn on a domestic bank, or, at the
Reorganized Company's option, by wire transfer from a domestic bank.
12.6 DE MINIMIS DISTRIBUTIONS. No distribution of less than
twenty-five dollars ($25.00) or fewer than five (5) shares of New Merger Common
Stock or New Standalone Common Stock shall be made to any holder of an Allowed
Claim or an Allowed Equity Interest. The Allowed Claim or Allowed Equity
Interest producing the de minimis distribution shall be cancelled and
discharged, and the de minimis distribution shall be retained by the
Reorganized Company in the case of cash distributions, and shall be
redistributed on a Pro Rata basis among other recipients of New Merger Common
Stock or New Standalone Common Stock in the case of distributions of New Merger
Common Stock or New Standalone Common Stock.
12.7 DELIVERY OF DISTRIBUTIONS. Subject to Bankruptcy Rule 9010,
distributions to holders of Allowed Claims shall be made at the address of each
such holder as set forth on the proofs of claim filed by such holders (or at
the last known address of such holder if no proof of claim is filed or if the
Debtor has been notified in writing of a change of address), or in the case of
Record Holders of Allowed Debt Securities Claims, shall be made at the
addresses contained in the records of the respective Indenture Trustee, except
as provided below. Distributions, if any, to holders of Allowed Existing
Equity Securities shall be made at the addresses contained in the records
maintained by the Debtor or by the stock transfer agent employed by the Debtor.
If any holder's distribution is returned as undeliverable, no further
distributions to such holder shall be made unless and until the Reorganized
Company, the disbursing agent or stock transfer agent acting for the
Reorganized Company, or the appropriate Indenture Trustee is notified of such
holder's then current address, at which time all missed distributions shall be
made to such holder without interest. Amounts in respect of undeliverable
distributions made through a disbursing agent or stock transfer agent or
through the Indenture Trustees shall be retained by the disbursing agent or
stock transfer agent or by the Indenture Trustee making such distributions
until such distributions are claimed. All claims for undeliverable
distributions shall be made on or before the later of the second anniversary of
the Effective Date and the date ninety (90) days after such Claim or Equity
Interest is Allowed. After such date, all unclaimed distributions shall revert
to the Reorganized Company or its successor, and the Claim or Equity Interest
of any holder with respect to such distributions shall be discharged and
forever barred; provided, however, with respect to distributions of New Merger
Common Stock, that any unclaimed distributions of New Merger Common Stock shall
not revert to the Reorganized Company but shall be redistributed among holders
of Allowed Existing Series B Interests and Allowed Existing Common Stock
Interests in proportions consistent with their original distributions of New
Merger Common Stock under this Plan.
12.8 DISBURSING AGENT EXPENSES. Except as otherwise ordered by the
Bankruptcy Court, the amount of any reasonable fees and expenses incurred by a
disbursing agent or stock transfer agent or by the Indenture Trustees on or
after the Effective Date (including, but not limited to, taxes and reasonable
fees and expenses of counsel) shall be paid by the Reorganized Company in
accordance with any applicable agreement, including the Existing Indentures,
without further order of the Bankruptcy Court; provided, however, that the
Bankruptcy Court shall hear and determine any disputes in respect of such fees
and expenses.
12.9 TIME BAR TO CASH PAYMENTS. Checks issued in respect of
Allowed Claims or Allowed Equity Interests shall be null and void if not
negotiated within six (6) months after the date of issuance thereof. Any
amounts paid to a disbursing agent or stock transfer agent or to the Indenture
Trustees in respect of such a check shall be promptly returned to the
Reorganized Company. Request for reissuance of any check shall be made
directly to the Reorganized Company by the holder of the Allowed Claim or
Allowed Equity Interest with respect to which
ATT. 1 -- 38
<PAGE> 49
such check originally was issued. Any claim in respect of such a voided check
shall be made on or before the later of the second anniversary of the Effective
Date or the date ninety (90) days after such check becomes null and void
pursuant hereto. After such date, all claims in respect of void checks shall
be discharged and forever barred.
12.10 TRANSFER TAXES. The issuance, transfer or exchange of any new
note or stock instrument issued under, or the transfer of any other assets or
property pursuant to this Plan or the Plan Documents, or the making or delivery
of an instrument of transfer under this Plan or the Plan Documents, shall not
(and the Confirmation Order shall so order), under section 1146 of the
Bankruptcy Code, be taxed under any law imposing a stamp tax, transfer tax or
other similar tax.
12.11 DUE AUTHORIZATION. Each and every holder of a Claim or Equity
Interest who elects to participate in the distributions provided for in this
Plan warrants that such holder is authorized to accept, in consideration of its
Claim against or Equity Interest in the Debtor, the distributions provided for
in this Plan, and that there are no outstanding commitments, agreements, or
understandings, express or implied, that may or can in any way defeat or modify
the rights conveyed, or obligations undertaken, by such holder of a Claim or
Equity Interest under this Plan.
12.12 EFFECT OF PRECONFIRMATION DISTRIBUTIONS. Nothing in this Plan
shall be deemed to entitle the holder of a Claim or Equity Interest that
received, prior to the Effective Date, full or partial payment of such holder's
Claim or Equity Interest, by way of settlement or otherwise, pursuant to an
order of the Bankruptcy Court, provision of the Bankruptcy Code, or other
means, to receive a duplicate payment in full or in part pursuant to this Plan;
and all such full or partial payments shall be deemed to be payments made under
this Plan for purposes of satisfying the obligations of the Reorganized Company
hereunder.
12.13 RECOGNITION OF GUARANTEE RIGHTS. The distributions made under
this Plan take into consideration the existence of guarantees by the Debtor of
obligations of other Persons including Affiliates of the Debtor, and the fact
that the Debtor may be a joint obligor with another Person or Persons with
respect to the same obligation. All Claims against the Debtor based upon any
such guarantees or joint obligations shall be discharged in the manner provided
in this Plan.
12.14 SATISFACTION OF CONTRACTUAL SUBORDINATION RIGHTS. Except as
otherwise provided in this Plan, all Claims asserting or based upon any Senior
Rights shall be deemed satisfied by the distributions under this Plan to
holders of Allowed Claims having any such Senior Rights. The distributions to
the various classes of Claims and Equity Interests hereunder shall not be
subject to levy, garnishment, attachment, or like legal process by any holder
of a Claim or Equity Interest by reason of any claimed Senior Rights or
otherwise of the holder of a Claim or Equity Interest against the holder of
another Claim or Equity Interest, except as otherwise provided herein. On the
Effective Date, all holders of Claims shall be deemed to have waived any and
all Senior Rights that they may have with respect to such distributions, and
the Bankruptcy Court shall permanently enjoin, as of the Effective Date, all
such holders from enforcing or attempting to enforce any such Senior Rights
with respect to such distributions.
12.15 SETOFFS. Except as specifically provided otherwise in this
Plan, the Reorganized Company may, but shall not be required to, set off
against any Claim and the payments or other distributions to be made pursuant
to this Plan in respect of such Claim, claims of any nature whatsoever that can
be asserted against the holder of such Claim, but neither the failure to do so
nor the allowance of any Claim hereunder shall constitute a waiver or release
by the Reorganized Company of any such claim that can be asserted against such
holder.
12.16 PREPAYMENT. Unless this Plan otherwise provides, the
Reorganized Company shall have the right to prepay, without penalty, all or any
portion of an Allowed Claim at any time.
ATT. 1 -- 39
<PAGE> 50
ARTICLE XIII
GENERAL PROCEDURES FOR OBJECTING TO CLAIMS AND EQUITY INTERESTS
AND RESOLVING AND TREATING DISPUTED CLAIMS AND DISPUTED EQUITY INTERESTS
13.1 OBJECTION DEADLINE. Unless another date is established by the
Bankruptcy Court, all Objections to Claims and Equity Interests shall be filed
with the Bankruptcy Court and served on the holders of such Claims and Equity
Interests by the later of (a) the Effective Date or (b) the date that is sixty
(60) days after (i) a particular proof of claim (or Securities Litigation Proof
of Loss in the case of Section 510(b) Securities Litigation Claims) has been
filed or a particular proof of interest has been filed or notice of an
ownership dispute with respect to any Existing Equity Security has been
received by the Debtor. If an Objection has not been filed to a Claim or
Equity Interest by the deadlines established herein, the Claim or Equity
Interest shall be treated as an Allowed Claim or Allowed Equity Interest;
provided, however, that no Objection shall be required with respect to a Claim
or Equity Interest that is otherwise a Disputed Claim or Disputed Equity
Interest. The Objection deadlines established herein shall not apply to claims
and causes of action held by the Debtor that must be asserted through an
adversary proceeding rather than an Objection.
13.2 PROSECUTION OF OBJECTIONS. The Reorganized Company shall
litigate to judgment, settle, or withdraw Objections to Claims and Equity
Interests. The Reorganized Company shall succeed to and be substituted as a
party for the Creditor Committee or the Equity Committee with respect to any
Objections to Claims and Equity Interests filed by the Creditor Committee or
Equity Committee prior to their termination that have not been resolved by
Final Order prior to the Effective Date. Notice of any proceedings with
respect to an Objection, including a settlement or withdrawal, shall be
sufficient if served by the Reorganized Company on the holder of the Claim or
Equity Interest to which Objection has been made and upon counsel for the U.S.
Trustee. Rule 9019 of the Bankruptcy Rules shall not apply to the settlement
or withdrawal of any Objection.
13.3 PRESERVATION OF OBJECTIONS. Except as otherwise provided in
this Plan or in the Confirmation Order or other Final Order, no compromise,
waiver or release of claims, demands or causes of action held by the Debtor
that may be provided for in this Plan or in any Final Order shall in any way
limit or impair the right of the Reorganized Company to prosecute Objections to
Claims and Equity Interests, and the Reorganized Company hereby retains all
Objections to the allowability of a Claim or Equity Interest and all
affirmative and negative defenses associated with such Objections.
13.4 NO DISTRIBUTIONS PENDING RESOLUTION OF OBJECTIONS.
Notwithstanding any other provision of this Plan, no distributions shall be
made with respect to a Disputed Claim or Disputed Equity Interest (or any
Disputed portion of a Claim or Equity Interest if such Claim or Equity Interest
is not severable) by the Reorganized Company unless and until all Objections to
such Disputed Claim or Disputed Equity Interest have been determined by Final
Order.
13.5 SAFEKEEPING OF DISTRIBUTABLE PROPERTY. Pending entry of a
Final Order determining the Objection to any Disputed Claim or Disputed Equity
Interest, the Reorganized Company shall take appropriate steps to safeguard the
cash, notes, certificates or other instruments that would be distributed on
account of such Claim or Equity Interest if Allowed, but the Reorganized
Company shall not be required to establish any formal escrow or reserve for
such distributable property unless it determines, or the Bankruptcy Court
orders, that an escrow or reserve is necessary to insure that such property is
available if and when such Claim or Equity Interest is Allowed.
13.6 DISTRIBUTION RIGHTS AFTER ALLOWANCE. If a Disputed Claim or
Disputed Equity Interest is determined to be an Allowed Claim or Allowed Equity
Interest by Final Order, the holder of such Claim or Equity Interest shall
receive the distributions intended for such Claim or Equity Interest under this
Plan. In addition, the holder of such Allowed Claim or Allowed Equity Interest
shall receive any interest, dividends, payments or other property that such
ATT. 1 -- 40
<PAGE> 51
holder would have received under this Plan had such Claim or Equity Interest
been an Allowed Claim or Allowed Equity Interest on the Effective Date;
provided, however, that if this Plan requires the holder of an Allowed Claim or
Allowed Equity Interest to be paid interest with respect to such holder's
Allowed Claim or Equity Interest, such holder shall receive only the interest
provided for in this Plan and shall not receive any interest earned with
respect to the distribution.
13.7 TREATMENT OF CONTINGENT CLAIMS. Until such time as a
Contingent Claim or a Contingent portion of an Allowed Claim becomes fixed and
absolute or is disallowed, such Claim shall be treated as a Disputed Claim for
all purposes related to distributions under this Plan; provided, however, that
distribution entitlements shall arise only from the date on which a Contingent
Claim becomes fixed and absolute or is otherwise Allowed.
13.8 DISALLOWANCE/ALLOWANCE OF DEBT SECURITIES CLAIMS AND EXISTING
EQUITY SECURITIES. All proofs of claim filed by individual holders of Debt
Securities Claims shall be deemed disallowed as duplicates of the proofs of
claim filed by the Indenture Trustees on behalf of all holders of Debt
Securities Claims; and the Debt Securities Claims of individual holders shall
be deemed Allowed as reflected in the records of the Indenture Trustees and as
evidenced by the proofs of claim filed by the Indenture Trustees. All proofs
of interest (other than any Securities Litigation Proof of Loss) filed by
holders of Existing Equity Securities shall be deemed disallowed, and the stock
transfer records maintained with respect thereto shall be deemed to constitute
good and sufficient evidence of the existence, amount, and holders of Existing
Equity Securities, and all Existing Equity Securities reflected in the stock
transfer records shall be deemed to be Allowed Existing Equity Securities,
unless the Debtor has received written notice of an ownership dispute prior to
the Existing Securities Record Date, in which case the Bankruptcy Court shall
determine the extent to which an Existing Equity Security shall be treated as
an Allowed Existing Equity Security. To the extent that any proof of claim or
proof of interest filed by the holder of a Debt Securities Claim or an Existing
Equity Security alleges a Section 510(b) Securities Litigation Claim, such
proof of claim or proof of interest shall not be disallowed pursuant hereto
with respect to the portion thereof alleging a Section 510(b) Securities
Litigation Claim, but shall be subject to possible Objection pursuant to
section 13.1.
13.9 DISALLOWANCE OF SETTLED CLAIMS. All Claims alleged in proofs
of claim that have been settled and satisfied pursuant to any specific Final
Order addressing such Claims shall be deemed disallowed, except to the extent
of the settled amounts thereof which shall be deemed to be Allowed but
previously satisfied for purposes of section 12.12 of this Plan; and it shall
be unnecessary for the Reorganized Company to file and prosecute Objections to
such Claims for purposes of disallowing alleged amounts exceeding the settled
amounts or other rights contrary to the terms of the settlement.
ARTICLE XIV
RESTRICTIONS ON TRADING OF NEW STOCK
14.1 CHARTER RESTRICTIONS. After the Effective Date, (a) in the
case of the Primary Merger Alternative, the Amended and Restated Merger Charter
shall contain restrictions on the transfer of shares of New Merger Common
Stock, New Warrants and other rights or options to purchase stock of New Merged
FirstCity, and any other interests that would be treated as "stock" of New
Merged FirstCity under section 382 of the Tax Code ("Corporate Securities") and
(b) in the case of the Secondary Standalone Alternative, the Amended and
Restated Standalone Charter shall contain restrictions on the transfer of
shares of New Junior Preferred Stock, shares of New Standalone Common Stock,
and other warrants, rights or options to purchase stock of New Standalone
FirstCity, and any other interests that would be treated as "stock" of New
Standalone FirstCity under section 382 of the Tax Code ("Corporate
Securities"). The restrictions are being implemented to permit the continued
utilization of the net operating loss carryovers, capital loss carryovers,
general business credit carryovers, alternative minimum tax carryovers, foreign
tax credit carryovers and any net unrealized built-in losses ("Tax Benefits")
to which the
ATT. 1 -- 41
<PAGE> 52
Reorganized Company, or any other member of the consolidated group of which the
Reorganized Company is the common parent, is or may be entitled.
14.2 CERTAIN TRANSFERS VOID. The Amended and Restated Merger
Charter or the Amended and Restated Standalone Charter shall provide that, at
any time during the period beginning on the Effective Date and ending on the
earlier of (a) the expiration of fifteen (15) years after the Effective Date,
or (b) the date which is the first day of the beginning of the taxable year of
the Reorganized Company (or any successor thereof) to which no Tax Benefits may
be carried forward, any attempted sale, purchase, transfer, assignment,
conveyance, pledge or other disposition of any share or shares of Corporate
Securities ("Transfer") to any person or entity or group of persons or entities
acting in concert ("Transferee") who directly or indirectly owns or is treated
as owning (within the meaning of the attribution rules applicable under section
382 of the Tax Code) ("Own") four and three-fourths percent (4.75%) or more of
any class of Corporate Securities or, after giving effect to the Transfer,
would directly or indirectly Own more than four and three-fourths percent
(4.75%) of the outstanding shares of any class of Corporate Securities, shall
be void ab initio and shall not be effective to Transfer any of such shares to
the extent the Transfer increases the Transferee's direct or indirect Ownership
of the Corporate Securities above four and three-fourths percent (4.75%) of the
total outstanding shares of such class of Corporate Securities. Similarly,
any Transfer by a transferor who directly or indirectly Owns five percent (5%)
or more of the outstanding shares of any class of Corporate Securities shall be
void ab initio and shall not be effective to Transfer any of such shares to the
purported Transferee.
14.3 APPROVED TRANSFERS. The foregoing stock transfer restrictions
shall not apply to (a) the transfer of New Merger Common Stock in accordance
with section 9.4 hereof and (b) any attempted Transfer if the transferor or the
Transferee obtains the approval of the board of directors of the Reorganized
Company, or a designated committee thereof. As a condition to granting its
approval, the board may, in its discretion, require that the transferor or the
Transferee, as the case may be, deliver an opinion of counsel selected by the
board to the effect that the Transfer shall not result in the application of
any limitation on the use of Tax Benefits under sections 382 and 269 of the Tax
Code. If the board requires and receives such an opinion of counsel, the
decision to approve a Transfer (whether or not that decision is contrary to the
opinion so delivered) still remains in the sole discretion of the board.
14.4 RECOVERY OF PROHIBITED TRANSFERS. If the board of directors
of the Reorganized Company determines that a Transfer of Corporate Securities
constitutes a Transfer prohibited by the foregoing rules ("Prohibited
Transfer") then, upon written demand by the Reorganized Company, the purported
Transferee shall transfer or cause to be transferred any certificate or other
evidence of ownership of Corporate Securities which are the subject of the
Prohibited Transfer ("Prohibited Securities"), together with any dividends or
other distributions that were received by the Transferee from the Reorganized
Company with respect to such Prohibited Securities ("Prohibited
Distributions"), to an agent designated by the board ("Agent"). The Agent
shall thereupon sell to a buyer or buyers the Prohibited Securities transferred
to it. If the purported Transferee has resold the Prohibited Securities before
receiving the Reorganized Company's demand to surrender the Prohibited
Securities to the Agent, the purported Transferee shall be deemed to have sold
the Prohibited Securities for the Agent and shall be required to transfer to
the Agent any Prohibited Distributions and the proceeds of such sale. If the
purported Transferee fails to surrender the Prohibited Securities, or the
proceeds of a sale thereof, and any Prohibited Distributions to the Agent
within thirty (30) business days from the date on which the Reorganized Company
makes a demand for such surrender, then the Reorganized Company shall institute
legal proceedings to compel surrender.
14.5 TREATMENT OF PROHIBITED TRANSFERS. No employee or agent of
the Reorganized Company shall record any Prohibited Transfer, and the purported
Transferee shall not be recognized as a shareholder of the Reorganized Company
for any purpose whatsoever in respect of the Prohibited Securities. Until the
Prohibited Securities are acquired by another person in a Transfer that is not
a Prohibited Transfer, the purported Transferee shall not be entitled with
respect to such Prohibited Securities to any rights of shareholders of the
Reorganized Company, including, without limitation, the right to vote such
Prohibited Securities and to receive dividend distributions,
ATT. 1 -- 42
<PAGE> 53
whether liquidating or otherwise, in respect thereof, if any. Once the
Prohibited Securities have been acquired in a Transfer that is not a Prohibited
Transfer, the Corporate Securities shall cease to be Prohibited Securities.
14.6 PROCEEDS OF SALE OF PROHIBITED SECURITIES. The Agent shall
apply any proceeds of a sale by it of Prohibited Securities and, if the
purported Transferee had previously resold the Prohibited Securities, any
amounts received by it from a purported Transferee, as follows: (a) first,
such amount shall be paid to the Agent to the extent necessary to cover its
costs and expenses incurred in connection with its duties hereunder; (b)
second, any remaining amounts shall be paid to the purported Transferee, up to
the amount paid by the purported Transferee for the Prohibited Securities,
which amount shall be determined in the discretion of the board; and (c) third,
any remaining amounts shall be paid to one or more organizations selected by
the board qualifying under section 501(c)(3) of the Tax Code.
14.7 LEGENDED CERTIFICATES. All certificates reflecting Corporate
Securities issued by the Reorganized Company on or after the Effective Date
shall bear a conspicuous legend in substantially the following form:
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO
RESTRICTION PURSUANT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF THE REORGANIZED COMPANY REPRINTED IN ITS ENTIRETY ON
THE BACK OF THIS CERTIFICATE.
ARTICLE XV
CONDITIONS PRECEDENT TO CONFIRMATION
AND EFFECTIVENESS OF THIS PLAN
15.1 CONDITIONS TO CONFIRMATION. Confirmation of this Plan shall
not occur unless each of the following conditions precedent has occurred:
(a) DISCLOSURE STATEMENT. The Bankruptcy Court shall
have approved the Disclosure Statement by a Final Order; and
(b) CONFIRMATION ORDER. The Confirmation Order, in form
and substance acceptable to the Plan Proponents, shall have been
entered by the Bankruptcy Court on or before June 30, 1995.
15.2 GENERAL CONDITIONS TO EFFECTIVENESS. Notwithstanding any
other provision of this Plan or the Confirmation Order, the Effective Date of
this Plan (subject to the waiver provisions provided for in section 15.3
below), shall not occur unless and until each of the following conditions
precedent have been satisfied:
(a) FINAL CONFIRMATION ORDER. The Confirmation Order (i)
in the case of the Primary Merger Alternative, shall have become a
Final Order on or before six (6) months following the Confirmation
Date; and (ii) in the case of the Secondary Standalone Alternative,
shall have become a Final Order before December 31, 1997 or such
earlier date as may be negotiated and agreed to by and between the
Debtor and the FDIC.
(b) PLAN DOCUMENTS. All Plan Documents and other
applicable corporate documents necessary or appropriate to the
implementation of this Plan shall have been executed, delivered, and
where applicable, filed with the appropriate governmental authorities;
ATT. 1 -- 43
<PAGE> 54
(c) FDIC SETTLEMENT AGREEMENT. All conditions precedent
to the implementation of the FDIC Settlement Agreement shall have
occurred or been waived and all acts to be taken to implement the FDIC
Settlement Agreement according to its terms have occurred;
(d) LOSS-SHARING SETTLEMENT AGREEMENT. In the case of
the Primary Merger Alternative, the Loss- Sharing Agreement shall have
been executed, and all conditions precedent to the implementation of
the Loss- Sharing Settlement Agreement shall have occurred or have
been waived and all acts to be taken to implement the Loss-Sharing
Settlement Agreement according to its terms have occurred;
(e) MERGER OF FCB HOLDINGS, INC. All acts necessary to
be taken to effect the merger of FCB Holdings, Inc. and the
Reorganized Company shall have been taken, or an alternative
arrangement shall have been agreed to by the Plan Proponents, the FDIC
and FCB Holdings, Inc.
(f) BANK HOLDING COMPANY STATUS. The Reorganized Company
shall not have been determined to be, and the Plan Proponents are
satisfied that the Reorganized Company shall not be determined to be,
a bank holding company.
(g) UNITED STATES TRUSTEE'S FEES. The fees of the United
States Trustee then owing by the Debtor shall have been paid in full;
(h) NO MATERIAL ADVERSE CHANGES. Under the Primary
Merger Alternative, there shall have been, in the determination of
J-HAWK made in its sole discretion, no material adverse change in the
business or financial condition of the Debtor due to any modification
of the FDIC Settlement Agreement; and in the determination of the
Debtor made in its sole discretion, no material adverse change in the
business or financial condition of J-HAWK;
(i) DISALLOWANCE OF INDEMNITY CLAIMS. All Claims
premised upon or arising from the Debtor's Indemnification Obligations
shall have been disallowed by Final Order of the Bankruptcy Court; no
such disallowed Claim shall have become an Allowed Claim pursuant to
reconsideration pursuant to section 502(j) of the Bankruptcy Code; and
no motion seeking reconsideration of any such disallowed Claim under
section 502(j) of the Bankruptcy Code shall be pending; and
(j) LIMITATION ON ALLOWED SUBORDINATION CLAIMS AND
ALLOWED CLAIMS ARISING FROM THE DEBTOR'S INDEMNIFICATION OBLIGATIONS.
All Subordinated Claims and all Claims premised upon or arising from
the Debtor's Indemnification Obligations, but only if such Claims are
determined by Final Order of the Bankruptcy Court not to be Defendant
Indemnity Claims, shall be estimated and capped by Final Order of the
Bankruptcy Court in the aggregate amount of no more than $1 million.
15.3 WAIVER. Notwithstanding any other provision of this Plan or
the Confirmation Order, this Plan shall not be binding on any party in interest
unless and until each of the foregoing conditions precedent to confirmation and
effectiveness of this Plan has occurred or, in the case of conditions precedent
to effectiveness, has been waived in a writing executed by the Plan Proponents;
provided, however, that the condition precedent contained in subsection
15.2(a)(i) may be waived by J-HAWK in its sole discretion.
15.4 ANNULMENT OF PLAN. The Confirmation Order shall be deemed
annulled and the Plan Proponents and all parties in interest shall be returned
to the status quo ante immediately before the Confirmation Date at such time as
any condition precedent to the Effective Date, that has not been waived in
accordance with section 15.3 has not occurred on or before December 31, 1997,
or can no longer occur.
ATT. 1 -- 44
<PAGE> 55
15.5 TIME OF THE ESSENCE. It is the intention of the Plan
Proponents that the Effective Date of this Plan shall occur immediately upon
the satisfaction or waiver of all conditions precedent set forth in section
15.2 hereof, and that there shall be no delay by the Plan Proponents in
determining that any of such conditions precedent have been satisfied or
waived. If the condition precedent contained in subsection 15.2(c) has been
satisfied or waived as provided in section 15.3, the Plan Proponents shall
waive any other conditions precedent that remain unsatisfied after thirty (30)
days following the date on which the condition precedent contained in
subsection 15.2(c) is satisfied or waived and the Effective Date shall occur,
unless the Plan Proponents, upon notice to the Creditor Committee, obtain an
order from the Bankruptcy Court extending such thirty (30) day period.
ARTICLE XVI
RETENTION OF JURISDICTION
16.1 JURISDICTION RETAINED. After the Effective Date, the
Bankruptcy Court shall have jurisdiction of all matters arising under, arising
out of or relating to this Case including, but not limited to, the following:
(a) To insure that the purpose and intent of this Plan
are carried out;
(b) To consider any modification of this Plan under
section 1127 of the Bankruptcy Code before substantial consummation as
defined in section 1101(2) of the Bankruptcy Code;
(c) To hear and determine all Claims, controversies,
suits, and disputes against the Debtor;
(d) To hear and determine all Objections to Claims and
Equity Interests, controversies, suits and disputes that may be
pending at or initiated after the Effective Date;
(e) To classify the Claims of any creditor and to
re-examine Claims which have been allowed for purposes of voting, and
to determine Objections which may be filed to Claims;
(f) To hear, determine, and enforce all claims and causes
of action which may exist on behalf of the Debtor or the Estate,
including, but not limited to, any right of the Debtor or the Estate
to recover such claims, causes, or rights as enumerated in section
9.12 or 10.9 of this Plan;
(g) To consider and act on the compromise and settlement
of any Claim against or cause of action on behalf of the Debtor or the
Estate;
(h) To hear and determine all controversies, suits, and
disputes that may arise in connection with the interpretation,
execution, or enforcement of this Plan;
(i) To hear and determine all requests for compensation
and/or reimbursement of expenses for services rendered or expenses
incurred prior to the Effective Date which may be made after the
Effective Date of this Plan;
(j) To enforce and interpret by injunction or otherwise
the terms and conditions of this Plan;
(k) To enter an order concluding and terminating this
Case;
(l) To correct any defect, cure any omission, or
reconcile any inconsistency in this Plan or Confirmation Order which
may be necessary or helpful to carry out the purposes and intent of
this Plan;
ATT. 1 -- 45
<PAGE> 56
(m) To determine all questions and disputes regarding
title to the Assets of the Debtor or the Estate; and
(n) To consider and act on such other matters consistent
with this Plan as may be provided in the Confirmation Order.
16.2 FAILURE OF THE BANKRUPTCY COURT TO EXERCISE JURISDICTION. If
the Bankruptcy Court abstains from exercising, or declines to exercise,
jurisdiction or is otherwise without jurisdiction over any matter arising in,
arising under, or related to the Case, including the matters set forth in
section 16.1 of this Plan, the provisions of this Article XVI shall have no
effect upon and shall not control, prohibit, or limit the exercise of
jurisdiction by any other court having jurisdiction with respect to such
matter.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 COMPLIANCE WITH TAX REQUIREMENTS. In connection with this
Plan, the Debtor and its Subsidiaries, as the case may be, the Reorganized
Company, the Indenture Trustees or their agents shall comply with all
withholding and reporting requirements imposed by federal, state and local
taxing authorities and all distributions hereunder shall be subject to such
withholding and reporting requirements.
17.2 COMPLIANCE WITH ALL APPLICABLE LAWS. If notified by any
governmental authority that it is in violation of any applicable law, rule,
regulation, or order of such governmental authority relating to its business,
the Reorganized Company shall comply with such law, rule, regulation or order;
provided, however, that nothing contained herein shall require such compliance
by the Reorganized Company where the legality or applicability of such
requirement is being contested in good faith in an appropriate proceeding by
the Reorganized Company and, if appropriate, for which an adequate reserve has
been set aside on the books of the Reorganized Company.
17.3 CANCELLATION OF INDENTURES. On the Effective Date, the
Existing Indentures shall, except as provided in this Plan, be deemed
cancelled, terminated, and of no further force or effect. The cancellation of
the respective Existing Indentures and surrender of instruments pursuant to
section 12.4 of this Plan shall extinguish the right of any holder of a Debt
Securities Claim to commence any cause of action against any Person for
principal and interest. The Debt Securities Claim shall not be cancelled other
than pursuant to section 12.4 of this Plan and, until such cancellation, such
Debt Securities Claim shall be evidence of entitlement of the holder thereof to
receive distributions pursuant to this Plan.
17.4 PAYMENT OF THE STATUTORY FEES. All fees payable pursuant to
section 1930 of title 28 of the United States Code, as determined by the
Bankruptcy Court at the Confirmation Hearing, shall be paid on or before the
Effective Date.
17.5 TERMINATION OF COMMITTEES. The Creditor Committee and the
Equity Committee shall terminate on the Effective Date. No Professional
retained by the Creditor Committee or the Equity Committee during the Case
shall be entitled to seek compensation for services rendered or reimbursement
for expenses incurred after the Effective Date.
17.6 POST-EFFECTIVE DATE FEES AND EXPENSES OF PROFESSIONALS. The
Reorganized Company shall, in the ordinary course of business and without the
necessity for any approval by the Bankruptcy Court, pay the reasonable fees and
expenses of its Professionals incurred from and after the Effective Date
whether or not related to implementation and consummation of this Plan.
ATT. 1 -- 46
<PAGE> 57
17.7 BINDING EFFECT. As of the Effective Date, this Plan shall be
binding upon and inure to the benefit of the Reorganized Company, the Plan
Proponents, the Plan Participant, the holders of Claims, the holders of Equity
Interests, and their respective successors and assigns.
17.8 MODIFICATION OF THIS PLAN. Modifications of this Plan may be
proposed in writing by the Plan Proponents at any time before confirmation,
provided that this Plan, as modified, meets the requirements of sections 1122
and 1123 of the Bankruptcy Code, and the Plan Proponents shall have complied
with section 1125 of the Bankruptcy Code. This Plan may be modified at any
time after Confirmation and before its substantial consummation, provided that
this Plan, as modified, meets the requirements of sections 1122 and 1123 of the
Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms
this Plan, as modified, under section 1129 of the Bankruptcy Code, and the
circumstances warrant such modification.
17.9 REVOCATION OF THIS PLAN. The Plan Proponents reserve the
right to revoke and/or withdraw this Plan prior to entry of the Confirmation
Order. If the Plan Proponents revoke and/or withdraw this Plan, or if
confirmation of this Plan does not occur, then this Plan shall be deemed null
and void and nothing contained herein shall be deemed (a) to constitute a
waiver or release of any Claims by the Plan Proponents, the Plan Participant,
the Creditor Committee, or any other Person, (b) to prejudice in any manner the
rights of the Plan Proponents, the Plan Participant, the Creditor Committee, or
any other Person, or (c) to constitute any omission by the Plan Proponents, the
Plan Participant, the Creditor Committee, or any other Person.
17.10 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS. The Chairman of
the Board, President, or any Executive Vice President of the Reorganized
Company shall be authorized to execute, deliver, file, or record such
contracts, instruments, releases, indentures, and other agreements or documents
and take such actions as may be necessary or appropriate to effectuate and
further evidence the terms and conditions of this Plan. The Secretary or any
Assistant Secretary of the Reorganized Company shall be authorized to certify
or attest to any of the foregoing actions.
17.11 NOTICES. All notices, requests, elections or demands in
connection with this Plan shall be in writing and shall be deemed to have been
given when received or, if mailed, five (5) days after the date of mailing
provided such writing shall have been sent by registered or certified mail,
postage prepaid, return receipt requested, and sent to the following parties,
addressed to:
Primary Merger Alternative
J-HAWK Corporation
6400 Imperial Drive
P.O. Box 8216
Waco, Texas 76714
Attn: Matt A. Landry, Jr.
with a copy to:
D. J. Baker
Weil, Gotshal & Manges
700 Louisiana, Suite 1600
Houston, Texas 77002
ATT. 1 -- 47
<PAGE> 58
Cargill Financial Services Corporation
6000 Clearwater Drive
Minnetonka, Minnesota 55343-9497
Attn: David W. MacLennan
with a copy to:
James D. Dingel
Law Department
Cargill Financial Services Corporation
6000 Clearwater Drive
Minnetonka, Minnesota 55343-9497
Secondary Standalone Alternative
First City Bancorporation of Texas, Inc.
P.O. Box 105
Houston, Texas 77001
Attn: Robert W. Brown
with a copy to:
Stephen A Goodwin
CARRINGTON, COLEMAN, SLOMAN &
BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
All notices and requests to holders of Claims and Equity Interests
shall be sent to them at their last known addresses. The Reorganized Company
and any holder of a Claim or Equity Interest may designate in writing any other
address for purposes of this section 17.11, which designation shall be
effective upon receipt.
17.12 GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE BANKRUPTCY CODE
IS APPLICABLE, THE RIGHTS AND OBLIGATIONS ARISING UNDER THIS PLAN SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF TEXAS, EXCEPT THAT ISSUES OF CORPORATE LAW SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF DELAWARE.
17.13 SUCCESSORS AND ASSIGNS. The rights and obligations of any
Person named or referred to in this Plan shall be binding upon, and shall inure
to the benefit of, the successors and assigns of such Person.
17.14 SEVERABILITY. Wherever possible, each provision of this Plan
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Plan shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Plan. Furthermore, if the
Bankruptcy Court will not confirm this Plan because one or more provisions
hereof are determined to be prohibited or invalid under applicable law, the
Plan Proponents may seek permission of the Bankruptcy Court to amend this Plan
by deleting the offending provision.
ATT. 1 -- 48
<PAGE> 59
Dated: December 23, 1994.
Respectfully submitted,
FIRST CITY BANCORPORATION OF TEXAS, INC.,
Plan Proponent
By: /s/ C. Ivan Wilson
------------------------------------
C. Ivan Wilson
Chairman and Chief Executive Officer
By: /s/ Robert W. Brown
------------------------------------
Robert W. Brown
President
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
By: /s/ Richard E. Bean
------------------------------------
Richard E. Bean
Chairman
J-HAWK CORPORATION, Plan Proponent
By: /s/ Matt A. Landry, Jr.
------------------------------------
Matt A. Landry, Jr.
Executive Vice President
CARGILL FINANCIAL SERVICES CORPORATION,
Plan Participant
By: /s/ David W. MacLennan
------------------------------------
David W. MacLennan
Vice President
ATT. 1 -- 49
<PAGE> 60
OF COUNSEL:
CARRINGTON, COLEMAN, SLOMAN &
BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
By: /s/ S. A. Goodwin
-----------------------------------
Stephen A. Goodwin
State Bar No. 08186500
Larry T. Bates
State Bar No. 01906990
Attorneys for
First City Bancorporation of Texas, Inc.
Plan Proponent
AKIN, GUMP, STRAUSS, HAUER & FELD
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
(214) 969-2800
By: /s/ G. Michael Curran
-------------------------------------
H. Rey Stroube
State Bar No. 19422000
G. Michael Curran
State Bar No. 05259600
S. Margie Venus
State Bar No. 20545900
Attorneys for
Official Committee of Equity Security Holders,
Plan Proponent
ATT. 1 -- 50
<PAGE> 61
WEIL, GOTSHAL & MANGES
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5000
By: /s/ D. J. Baker
-------------------------------------
D. J. Baker
State Bar No. 01566500
Rosalie Walker Gray
State Bar No. 20729020
Attorneys for
J-HAWK Corporation, Plan Proponent, and
Cargill Financial Services Corporation, Plan Participant
ATT. 1 -- 51
<PAGE> 62
EXHIBIT A
NEW SENIOR SECURED NOTES
(Applicable to Primary Merger Alternative
and Secondary Standalone Alternative)
<PAGE> 63
EXHIBIT A
SUMMARY OF TERMS
NEW SENIOR SECURED NOTES
Issuer: Reorganized Company
Facility: New Senior Secured Notes
Denomination: $1,000
Maturity: Six (6) months from the Effective Date of the Plan.
Interest Rate: The Notes shall be for a six (6) month term. The
initial interest rate shall be 7.0% per annum. Upon
default, interest shall accrue at a default rate of the
lesser of 15% per annum or the maximum rate permitted
by applicable law. Interest shall be due and payable
on the earliest of the last day of each March, June,
September and December following the Effective Date of
the Plan.
Collateral: Under the Primary Merger Alternative, the New Senior
Secured Notes shall be secured by an irrevocable
standby letter of credit upon customary terms in favor
of the Indenture Trustee (and which, among other
things, shall provide subrogation rights to the bank,
or a second lien position in the collateral granted to
the bank to secure the standby letter of credit, in the
event of non-payment of the letter of credit) from a
national bank of recognized standing, reasonably
satisfactory to the Creditor Committee, in an amount
equal to the principal amount of the New Senior Secured
Notes and all interest due thereon until maturity ("New
Senior Secured Note Letter of Credit"). Counsel
reasonably acceptable to the Creditor Committee shall
deliver an opinion reasonably acceptable to the
Creditor Committee with respect to the legal, valid and
binding nature of the New Senior Secured Note Letter of
Credit and related matters.
Under the Secondary Standalone Alternative, the New
Senior Secured Notes shall be secured by a first
priority lien on real estate or other assets (which
shall have a fair market value, as determined by the
Creditor Committee in its sole discretion of at least
150% of the face amount of the Notes and shall
otherwise be acceptable to the Creditor Committee in
its sole discretion), subject to the approval of the
Creditor Committee and New Standalone FirstCity after
the Creditor Committee has had a reasonable opportunity
to conduct the necessary due diligence, and subject to
the Creditor Committee's and New Standalone FirstCity's
approval of any security agreement or deed of trust
necessary to create or evidence a first lien security
interest or deed of trust lien on the proposed
collateral; provided, however, that, until the Creditor
Committee approves the aforementioned security
arrangements, the New Senior Secured Notes shall be
secured (a) by cash or cash equivalent investments in
an amount equal to 150% of the face amount of the Notes
outstanding from time to time which shall be (i) held
in a segregated collateral account in which the holders
of such Notes shall be granted a first priority
perfected security interest under Article 9 of the
Uniform Commercial Code (or to the extent
ATT. 1 -- EXH. A-1
<PAGE> 64
Article 9 is not applicable to such funds, New
Standalone FirstCity shall enter into an equivalent
arrangement to provide equivalent collateral
satisfactory to the Creditor Committee and New
Standalone FirstCity) and (ii) invested in accordance
with the Creditor Committee's instructions (any
earnings on such account to be held as additional
security for the Notes), or (b) pursuant to an
equivalent arrangement satisfactory to the Creditor
Committee and New Standalone FirstCity; provided
further, however, that in lieu of any security
agreement, deed of trust, or other security
arrangements described above, New Standalone FirstCity
may obtain a New Senior Secured Note Letter of Credit.
Prepayment: The New Senior Secured Notes may be paid at any time
after the Effective Date of the Plan by paying the
outstanding principal balance of the New Senior Secured
Notes plus all accrued interest through the date of the
prepayment with no premium or penalty. The New Senior
Secured Notes shall be payable in full upon a sale of
the Reorganized Company or a change in control of the
Reorganized Company occurring after the Effective Date.
Covenants: Under the Primary Merger Alternative, the applicable
covenants shall be those on the Primary Merger
Alternative Schedule of Covenants.
Under the Secondary Standalone Alternative, the New
Senior Secured Note Indenture shall contain covenants
typical of indentures securing publicly traded debt,
including but not limited to covenants substantially
similar to those shown on the Secondary Standalone
Alternative Schedule of Covenants; provided, however,
that if New Standalone FirstCity acquires the New
Senior Secured Note Letter of Credit, the applicable
covenants shall be Sections 1.1 through 1.6 of the
Secondary Standalone Alternative Schedule of Covenants
and Section 1.5 under the Primary Merger Alternative
Schedule of Covenants.
Events of Default: Under the Primary Merger Alternative, an Event of
Default shall occur if
(i) New Merged FirstCity fails to pay (whether at
stated maturity or otherwise) any amount of
principal or interest payable on any of the
New Senior Secured Notes.
(ii) New Merged FirstCity fails to comply with any
other covenant, and such failure remains
unremedied 30 days after the giving of notice
thereof from the New Senior Secured Note
Indenture Trustee;
(iii) New Merged FirstCity breaches the
subordination provisions under the New Senior
Subordinated Notes;
(iv) the New Senior Secured Note Letter of Credit
ceases to be in full force and effect;
(v) an adjudication by a court of competent
jurisdiction that New Merged FirstCity is
insolvent or the filing of a voluntary or
involuntary petition for relief under the
Bankruptcy Code against New Merged FirstCity;
and
ATT. 1 -- EXH. A-2
<PAGE> 65
(vi) An event of default in any material amount of
indebtedness of New Merged FirstCity
(including the New Senior Subordinated
Notes).
Under the Secondary Standalone Alternative, if any one
or more of the following events shall have occurred or
be continuing, they shall constitute Events of Default:
(i) New Standalone FirstCity fails to pay
(whether at stated maturity or otherwise) any
amount of principal or interest payable on
any of the New Senior Secured Notes.
(ii) New Standalone FirstCity fails to perform or
observe any of the covenants, and such
failure continues for 10 days after the
giving of notice thereof to New Standalone
FirstCity by the New Senior Secured Note
Indenture Trustee.
(iii) An adjudication by a court of competent
jurisdiction that New Standalone FirstCity is
insolvent or the filing of a voluntary or
involuntary petition for relief under the
Bankruptcy Code against New Standalone
FirstCity.
(iv) An event of default in any material amount of
indebtedness of New Standalone FirstCity
(including the New Senior Subordinated
Notes).
Noteholders' Remedies: Under the Primary Merger Alternative, upon the
occurrence of an Event of Default, draw on the New
Senior Secured Note Letter of Credit. In the event of
non-payment of the New Senior Secured Note Letter of
Credit, the Noteholders shall have the subrogation
rights, or the rights attendant to the second lien
referred to above.
Under the Secondary Standalone Alternative, upon the
occurrence of an Event of Default, if a Senior Secured
Note Letter of Credit has been obtained, holders of New
Senior Secured Notes may draw on it; if not, a majority
of the holders of the New Senior Secured Notes may
instruct the New Senior Secured Note Indenture Trustee
to demand payment of all outstanding principal and
accrued interest; and if so directed by a majority of
such holders, the New Senior Secured Note Indenture
Trustee may take such actions as are provided in the
New Senior Secured Notes and the New Senior Secured
Note Indenture or are available under applicable law,
including, without limitation, foreclosure of the lien
and security interest of such Indenture upon and in the
Collateral subject thereto, and/or exercise of other
remedies against such Collateral or New Standalone
FirstCity.
If the New Senior Secured Note Letter of Credit shall
have been obtained and be in effect under the Secondary
Standalone Alternative, then, notwithstanding the
foregoing, the Noteholders' remedies shall be the same
as the Primary Merger Alternative.
Registration/Listing: The New Senior Secured Notes shall be tradeable (except
as restricted under section 1145 of the Bankruptcy Code
and applicable securities laws). The Reorganized
Company does not intend to cause the New Senior Secured
Notes to be listed on a stock exchange or quoted on an
interdealer quotation system.
ATT. 1 -- EXH. A-3
<PAGE> 66
PRIMARY MERGER ALTERNATIVE SCHEDULE OF COVENANTS
NEW SENIOR SECURED NOTES
While any Note is outstanding, New Merged FirstCity ("Company") and
its Subsidiaries will perform all covenants in this section.
Section 1.1 Financial Data. The Company will furnish to the
Trustee, as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Company and within
90 days after the end of each such fiscal year a consolidated balance sheet of
the Company and its Subsidiaries as of the end of such quarter or fiscal year
and the related consolidated statements of income, shareholders' equity and
cash flows for such quarter or fiscal year, all in reasonable detail and
stating in comparative form the respective consolidated figures as of the end
of and for the previous corresponding period and (a) in the case of a fiscal
year, all certified by independent public accountants of recognized national
standing selected by the Company ("Accountants") to present fairly, in
accordance with GAAP, the information contained therein, or (b) in the case of
any such quarter, all certified by the principal financial officer of the
Company to be the quarterly financial statements filed with the Securities and
Exchange Commission.
Section 1.2 Books of Record and Account; Reserves. The Company
will, and will cause each Subsidiary to, keep proper books of record and
account and set aside appropriate reserves, all in accordance with GAAP.
Section 1.3 Corporate Existence. The Company will maintain its
corporate existence except as otherwise permitted by holders of the Notes.
Section 1.4 Copies of Indentures, etc. The Company will keep
copies of this Indenture (as at the time in effect) available for inspection at
its principal executive office during normal business hours by any holder of a
Note or any prospective purchaser of a Note designated by a holder thereof.
Section 1.5 Restricted Payments. The Company will not make any
payments, in cash, securities, or other assets, in respect of its capital stock
(including any purchase, redemption, exchange, or retirement thereof, or any
dividend or distribution thereon) until the Notes have been paid in full.
ATT. 1 -- EXH. A-4
<PAGE> 67
SECONDARY STANDALONE ALTERNATIVE SCHEDULE OF COVENANTS
NEW SENIOR SECURED NOTES
While any Note is outstanding, New Standalone FirstCity ("Company")
and its Subsidiaries will perform all covenants in this section.
Section 1.1 Financial Data. The Company will furnish to the
Trustee:
(A) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of the Company and within 90 days after the end of each such fiscal
year
(1) a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such quarter or fiscal
year and the related consolidated statements of income,
shareholders' equity and cash flows for such quarter or fiscal
year, all in reasonable detail and stating in comparative form
the respective consolidated figures as of the end of and for
the previous corresponding period and, in the case of a fiscal
year, all with a report thereon, not qualified as to going
concern, by independent public accountants of recognized
national standing selected by the Company (the "Accountants")
or, in the case of any such quarter, all certified by the
principal financial officer of the Company, to present fairly,
in accordance with GAAP, the information contained therein,
(2) a written statement of the principal
financial officer of the Company setting forth computations in
reasonable detail showing, as at the end of such quarter or
fiscal year, whether or not there was compliance with all the
covenants herein,
(3) an Officers' Certificate, dated as of the
date of its delivery stating that, based upon such examination
or investigation as the officers signing such certificate
shall have deemed necessary to enable them to render an
informed opinion in respect thereof, in their opinion, no
Event of Default or Potential Event of Default existed at any
time during such quarter or fiscal year and to the date of
such certificate except for those, if any, described in such
certificate in reasonable detail, with a statement of the
Company' s action taken or proposed with respect to any Event
of Default or Potential Event of Default.
(B) as soon as available and in any event within 90 days
after the end of each fiscal year of the Company a written statement
of the Accountants stating that, in making the examination necessary
for their report on the Company's financial statements for that year,
they obtained no knowledge of any Event of Default or Potential Event
of Default in the observance of any of the covenants contained in this
Indenture or, if the Accountants shall have obtained knowledge of any
such event, specifying the same and the nature and status thereof.
(C) promptly after receipt, copies of any report as to
material inadequacies in accounting controls (including reports as to
the absence of any such inadequacies) submitted by the Accountants or
other independent accountants in connection with any audit of the
Company or any Subsidiary,
(D) as soon as available, copies of any proxy statement,
financial statement or report that the Company or any Subsidiary sends
or makes available generally to any regulatory authority (on a
non-confidential basis), or any of its security holders other than the
Company or another Subsidiary, and of all regular and periodic reports
and registration statements (other than on Form S-8 or a similar form)
which the Company or any Subsidiary files with the SEC or with any
securities exchange,
ATT. 1 -- EXH. A-5
<PAGE> 68
(E) promptly after any officer of the Company obtains
knowledge of any Event of Default or Potential Event of Default, an
Officers' Certificate describing the same in reasonable detail, with a
statement of the Company's action with respect thereto taken or
proposed,
(F) promptly after request by the Trustee, or any
institutional holder of any of the Notes, or by any prospective
purchaser of any of the Notes from any such holder, a list identifying
all employee benefit plans with respect to which the Company or any
guarantor or other party obligated to pay the Notes is a party in
interest within the meaning of the Employee Retirement Income Security
Act of 1974, as amended, or any rule or regulation issued thereunder,
and
(G) any other information, including financial statements
and computations, relating to the performance of this Indenture and
the affairs of the Company or any of its Subsidiaries that the
Trustee, or any holder of any of the Notes, may from time to time
reasonably request.
Section 1.2 Books of Record and Account; Reserves. The Company
will, and will cause each Subsidiary to, keep proper books of record and
account and set aside appropriate reserves, all in accordance with GAAP.
Section 1.3 Corporate Existence; Taxes; Governmental Regulations.
The Company will maintain its corporate existence except as otherwise permitted
by holders of the Notes. The Company will, and will cause each Subsidiary to,
promptly pay all applicable taxes and other governmental charges and use its
best efforts to comply with all applicable statutes, regulations and orders of
governmental bodies relating to environmental and occupational safety and
health standards, except to the extent that any such payment or compliance is
at the time subject to Good Faith Contest.
Section 1.4 Insurance. The Company will, and will cause each
Subsidiary to, carry and maintain in full force and effect at all times in
financially sound and reputable insurers (or, as to workers compensation and
similar insurance, in an insurance fund or by self-insurance authorized by the
jurisdiction in which its operations are carried on): (A) all workers'
compensation or similar insurance as may be required under the laws of any
jurisdiction, (B) public liability insurance against claims for personal
injury, death or property damage suffered upon, in or about any premises
occupied by it or occurring as a result of the ownership, maintenance or
operation by it of any automobile, truck or other vehicle or as a result of the
use of products manufactured, constructed or sold by it, or services rendered
by it, and (C) insurance against such other risks as are usually insured
against by corporations of established reputation engaged in the same or
similar businesses and similarly situated. Insurance specified in Subsections
(B) and (C) shall be maintained in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated.
Section 1.5 Inspections. The Trustee or, after a Potential
Event of Default or an Event of Default or a material adverse change in the
financial condition of the Company or its Subsidiaries, any institutional
holder of any of the Notes, may, at the expense of the Company, and any
institutional holder of any of the Notes may, at its own expense at any time,
visit and inspect the properties of the Company and each Subsidiary, examine
and copy their books of record and account, and discuss their affairs, finances
and accounts with their officers, employees and independent public accountants,
all at such reasonable times as the Trustee or any such holder may desire, and
by this provision the Company authorizes such independent public accountants to
engage in such discussions.
Section 1.6 Copies of Indentures, etc. The Company will keep
copies of this Indenture (as at the time in effect) available for inspection at
its principal executive office during normal business hours by any holder of a
Note or any prospective purchaser of a Note designated by a holder thereof.
Section 1.7 Debt. The Company will not, and will not permit any
Subsidiary to, have any Debt, except
ATT. 1 -- EXH. A-6
<PAGE> 69
(A) Debt represented by the Notes,
(B) Other Debt of the Company, existing as of the date of
confirmation of, and contemplated in, the Company's Chapter 11 Plan
and listed on Exhibit [__], which may not be extended, renewed or
refunded,
(C) Short Term Debt of the Company not exceeding $500,000
at any time except that there shall be a period of at least twenty
(20) consecutive days during every 12 consecutive calendar months'
period after the Closing Date when there shall not be any such Short
Term Debt,
(D) Debt, existing as of the date of confirmation of the
Company's Chapter 11 Plan, of a Subsidiary owing to the Company or to
a Wholly-owned Subsidiary.
(E) Debt of the Company not exceeding $500,000 in the
aggregate at any time incurred in connection with the purchase of
assets, but only to the extent secured solely by such assets and only
if the value of such assets at all times exceeds the outstanding
amount of such debt,
(F) Debt of the Company not exceeding $100,000,000
secured solely by the portfolios of assets to be acquired from Texas
Commerce Bancshares, Inc. and Cullen/Frost Banks and only if the value
of such assets and the terms of the documents creating such Debt, in
the sole discretion of the Trustee under the Note Indenture, at all
times exceeds the outstanding amount of such Debt by a ratio of [1.5 =
1], and
(G) Debt of FCB Real Estate Services, Inc. or Financial
Center, Inc. approved by order of the Bankruptcy Court dated December
7, 1994 (the "Aetna Debt").
For purposes of this Section, any Debt (1) which was extended,
renewed or refunded shall be deemed to have been incurred when extended,
renewed or refunded or (2) of a corporation when it became a Subsidiary shall
be deemed to have been incurred at that time. The Company shall not incur any
Debt owing to any Subsidiary unless the same shall be for cash advances from
such Subsidiary and shall be subordinated and subject in right to the prior
payment in full of the Notes.
Section 1.8 Encumbrances. The Company will not, and will not
permit any Subsidiary to, create or otherwise allow any Encumbrance to be on or
otherwise to affect any of its property, except for the liens and security
interests granted by this Indenture securing the Notes, and except
(A) Encumbrances securing Debt of a Subsidiary to the
Company or to a Wholly-owned Subsidiary permitted by Section 1.7(D),
(B) Encumbrances for taxes or other governmental charges
either not yet delinquent or nonpayment of which is permitted by
express agreement,
(C) Encumbrances created by or relating to any legal
proceeding which at the time is the subject of a Good Faith Contest,
(D) Encumbrances existing as of the date of confirmation
of, and contemplated in, the Company's Chapter 11 Plan and listed on
Exhibit [__], which may not be extended, refunded or renewed, or
spread to secure other Debt or obligations, or used to secure any
increase in the principal or face amount of any Debt or obligations
originally secured thereby,
ATT. 1 -- EXH. A-7
<PAGE> 70
(E) Pledges or deposits made in the ordinary course of
business to secure payment of workers' compensation, or to participate
in any fund in connection with workers' compensation, unemployment
insurance, old age pensions or other social security programs,
(F) Mechanics', materialmen's, landlords',
warehousemen's, carriers' and other like liens, securing obligations
incurred in the ordinary course of business that are not yet due and
payable or which at the time are subject to Good Faith Contest, so
long as foreclosure with respect to any such lien is not imminent and
the use of the property to which the lien attaches is not impaired
during the pendency of such Good Faith Contest,
(G) Encumbrances consisting of zoning restrictions,
easements, covenants or other restrictions on the use of real property
or title defects with respect thereto, none of which materially
impairs the use or marketability of such property and none of which
has been or would be violated in any material respect by existing or
proposed structures or land use, and
(H) Encumbrances securing purchase money Debt permitted
by Section 1.7(E) hereof.
Section 1.9 Restrictions on Subsidiaries. Without limiting the
generality of the foregoing, the Company will not cause, suffer or permit any
Subsidiary to incur or become subject (and no such Subsidiary is subject on the
date hereof) to any charter, contractual or other binding legal restriction
(other than general principles of corporate law relating to the payment of
dividends or the making of other distributions in respect of its stock, or
pertaining to fraudulent conveyances or transfers) that would in any way
inhibit its ability to repay Debt or other obligations owing to the Company, or
to pay to the Company dividends or other distributions on its stock, except for
any such restrictions existing in the documents memorializing the Aetna Debt.
Section 1.10 Sales and Lease-Backs. The Company will not sell to
any Person, and will not permit any Subsidiary to sell to any Person, any
facilities if, as part of the same transaction or series of transactions, the
Company or any Subsidiary shall lease as lessee the same or other facilities
which it intends to use for substantially the same purposes.
Section 1.11 Restricted Payments, Investments and Guarantees;
Capital Expenditures. The Company will not, directly or indirectly, make any
Restricted Payment and will not, and will not permit any Subsidiary to, make
any Restricted Investment or Restricted Guarantee or Capital Expenditure.
Section 1.12 Maintenance of Financial Conditions. The Company
will not at any time permit
(A) Consolidated Tangible Net Worth to be less than
$70,000,000, or
(B) Consolidated Cash and Cash Equivalents to be less
than $26,000,000.
Section 1.13 Sale or Discount of Receivables. The Company will
not, and will not permit any Subsidiary to, sell any of its notes or accounts
receivable with recourse, at a discount or otherwise for less than the face
value thereof.
Section 1.14 Disposition of Shares and Debt of Subsidiaries. The
Company will not, and will not permit any Subsidiary to, sell or otherwise
dispose of any shares or any Debt of any Subsidiary, other than to the Company
or to a Wholly-owned Subsidiary, except as expressly provided for in the
Company's Chapter 11 Plan.
Section 1.15 Issuance of Shares by Subsidiaries. The Company
will not permit any Subsidiary to (A) issue, sell or otherwise dispose of any
of its shares except to the Company or to a Wholly-owned Subsidiary or (B) have
ATT. 1 -- EXH. A-8
<PAGE> 71
outstanding any preferred shares, except in either such case as expressly
provided for in the Company's Chapter 11 Plan.
Section 1.16 Consolidation, Merger or Disposition of Assets. The
Company will not, and will not permit any Subsidiary to, directly or
indirectly, consolidate or merge with, or sell, lease or otherwise dispose of
any of its assets to, any Person, except that
(A) subject to the last paragraph of this Section, a
Subsidiary may consolidate with or merge into or sell, lease or
otherwise dispose of its assets as an entirety or substantially as an
entirety to the Company or a Wholly-owned Subsidiary,
(B) the Company or any Subsidiary may sell or otherwise
dispose of any of its assets for cash in the ordinary course of its
business; provided, however, that Net Cash Proceeds of such sales and
dispositions shall be applied to the redemption of Notes as required
by "Redemption: Time of Redemption -(C) Redemption from Specified
Proceeds" in Exhibit J.
Section 1.17 Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, engage in any transaction with an
Affiliate (other than the Company or a Subsidiary) on terms more favorable to
the Affiliate than would have been obtainable in arm's length dealing.
ATT. 1 -- EXH. A-9
<PAGE> 72
DEFINITIONS APPLICABLE TO SCHEDULE OF COVENANTS
NEW SENIOR SECURED NOTES
Accounting. All financial statements provided for in this Indenture
shall be prepared, all financial computations hereunder shall be made, and all
accounting terms shall have the meanings given to them, in accordance with
GAAP, except as otherwise provided in this Indenture. Any consolidated
financial statement or financial computation with respect to the Company and
its Subsidiaries required by this Agreement shall be done in accordance with
GAAP and if at the time that any such statement or computation is required to
be made the Company shall not have any Subsidiary such terms shall mean a
financial statement or a financial computation, as the case may be, with
respect to the Company only.
Subject to the foregoing, the following defined terms have the
indicated meanings in this Indenture, unless the context otherwise requires:
Affiliateof any designated Person means any Person that has a
relationship with the designated Person whereby either of such Persons directly
or indirectly controls or is controlled by or is under common control with the
other, or holds or beneficially owns 5% or more of the equity interest in the
other or 5% or more of any class of voting securities of the other. For this
purpose "control" means the power, direct or indirect, of one Person to direct
or cause direction of the management and policies of another, whether by
contract, through voting securities or otherwise.
Capital Asset means any asset which, in accordance with GAAP, would be
so classified upon a balance sheet of the Company or any Subsidiary.
Capital Expenditure means any expenditure made to acquire (through
purchase, lease or otherwise) any Capital Asset.
Capital Lease means any lease of property which, in accordance with
GAAP, should be capitalized on the lessee's balance sheet; and Capital Lease
Obligation means the amount of the liability which should be so capitalized.
Consolidated Cash and Cash Equivalentsmeans, at any date (a) all cash,
and (b) all Investments of the character described in Subsection (A) of the
definition of Restricted Investment, as would appear on a consolidated balance
sheet of the Company and its Subsidiaries as at such date.
Consolidated Tangible Net Worthmeans the consolidated total
shareholders' equity in the Company and its Subsidiaries, determined in
accordance with GAAP, less the aggregate net amount of the following items to
the extent, if any, that they were included in consolidated assets or deducted
from consolidated liabilities in computing shareholders' equity:
(A) all licenses, patents, copyrights, trade names, trade
marks, goodwill, experimental or organizational expense, unamortized
debt discount and expense, and all other assets which under GAAP are
deemed intangible,
(B) all Investments other than those described in
Subsection (A) of the definition of Restricted Investment,
(C) any write-up of assets (other than current assets)
made after the date of confirmation of the Company's Chapter 11 Plan.
ATT. 1 -- EXH. A-10
<PAGE> 73
(D) all assets located outside the United States of
America and Canada and all Debt from a Person most of whose assets or
business operations are located outside the United States of America
and Canada, and
(E) the book value of net tangible assets of each
Subsidiary acquired in transactions subject to so-called "pooling of
interests" accounting treatment, to the extent such book value at the
time of such acquisition exceeds the fair value of the consideration
paid for such acquisition.
Debtmeans any obligation for borrowed money, but in any event shall
include (A) any obligation owed for all or any part of the purchase price of
property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business, (B) any obligation secured by any Encumbrance in
respect of property even though the Person owning the property has not assumed
or become liable for the payment of such obligation, (C) any Capital Lease
Obligation, and (D) any Guarantee with respect to Debt (of the kind otherwise
described in this definition) of another Person.
Encumbrancemeans, as to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, or any
interest or title of any vendor, lessor, lender or other secured party to or of
the Person under any conditional sale or other title retention agreement or
Capital Lease with respect to, any property or asset of the Person, or the
signing or filing of a financing statement which names the Person as debtor, or
the signing of any security agreement authorizing any other Person as the
secured party thereunder to file any financing statement.
GAAPmeans generally accepted accounting principles as in effect at the
time of application to the provisions hereof.
Good Faith Contestmeans the contesting in good faith (and with
creation of appropriate reserves) by the Company or any Subsidiary by
appropriate means of the amount, applicability or validity of any tax or other
governmental charge, any statute, regulation or governmental order, any alleged
Debt (other than the Notes) or other obligation or any deposit or lien relating
to litigation.
Guaranteemeans any guarantee or other contingent liability (other than
any endorsement for collection or deposit in the ordinary course of business),
direct or indirect, with respect to any obligation of another Person, through
an agreement or otherwise, including, without limitation, (A) any other
endorsement or discount with recourse or undertaking substantially equivalent
to or having economic effect similar to a guarantee in respect of any such
obligation and (B) any agreement (1) to purchase, or to advance or supply funds
for the payment or purchase of, any such obligation, (2) to purchase, sell or
lease property, products, materials or supplies, or transportation or services,
for the purpose of enabling such other Person to pay any such obligation or to
assure the owner thereof against loss regardless of the delivery or nondelivery
of the property, products, materials or supplies or transportation or services
or (3) to make any loan, advance or capital contribution to or other investment
in, or to otherwise provide funds to or for, such other Person for the purpose
of enabling such Person to satisfy any obligation (including any liability for
a dividend, stock liquidation payment or expense) or to assure a minimum
equity, working capital or other balance sheet condition in respect of any such
obligation. The amount of any Guarantee shall be equal to the outstanding
amount of the obligation directly or indirectly guaranteed.
Investment means any investment so classified under GAAP, made by
stock purchase, capital contribution, loan or advance or by Guarantee or
otherwise, but in any event shall include as an investment in any Person the
amount of all Debt owed by such Person and all accounts receivable from such
Person which are not current assets or did not arise from sales to such Person
in the ordinary course of business.
ATT. 1 -- EXH. A-11
<PAGE> 74
Long Term Debtmeans all Debt which would, in accordance with GAAP,
constitute long term debt, but in any event shall include (A) any portion
thereof included in current liabilities, (B) any Debt outstanding under a
revolving credit or similar agreement providing for borrowings (and renewals
and extensions thereof) over a period of more than one year notwithstanding
that any such Debt may be payable on demand or not more than one year after the
creation thereof, (C) any Capital Lease Obligation and (D) any Guarantee with
respect to Long Term Debt (of the kind otherwise described in this definition)
of another Person.
Notes means all notes originally issued pursuant to this Indenture and
all Notes subsequently delivered in (direct or indirect) substitution or
exchange therefor and, where applicable, shall include the singular number as
well as the plural.
Notemeans one of the Notes.
Officers' Certificate means a certificate signed by the Chairman of
the Board of the Company (if an executive officer) or its President or one of
its Vice-Presidents and by its Treasurer or one of its Assistant Treasurers.
Person means an individual, a corporation, a partnership, a trust, a
limited liability company, an unincorporated organization or a government or
any agency or political subdivision thereof.
Potential Event of Default means an event, occurrence or condition
which with notice or lapse of time or both would become an Event of Default.
Restricted Guarantee means any Guarantee of the Company or a
Subsidiary in respect of any obligation of another Person other than any
Guarantee that existed as of the date of confirmation of the Company's Chapter
11 Plan.
Restricted Investment means any Investment, including, without
limitation, any Investment in a Subsidiary, other than
(A) any Investment in (1) a marketable obligation,
maturing within one year after acquisition thereof, issued or
guaranteed by the United States of America or an instrumentality or
agency thereof, (2) a certificate of deposit or other obligation,
maturing within one year after acquisition thereof, issued by a United
States national or state bank or trust company having capital, surplus
and undivided profits of at least $100,000,000, and (3) open market
commercial paper, maturing within 270 days after acquisition thereof,
which has the highest credit rating of both Standard & Poor's
Corporation and Moody's Investors Service, Inc.,
(B) any Investment in a Wholly-owned Subsidiary,
(C) any Investment set forth in Exhibit [__], and
(D) any Investment hereinafter acquired in exchange for,
or out of the net cash proceeds from the substantially concurrent sale
of, common stock of the Company.
Restricted Payment means
(A) the declaration of any dividend on, or the occurrence
of any liability to make any other payment or distribution in respect
of, any shares of the Company (other than one payable solely in its
common shares),
ATT. 1 -- EXH. A-12
<PAGE> 75
(B) any payment or distribution on account of the
purchase, redemption or other retirement of any stock of the Company,
or of any warrant, option or other right to acquire such stock, or any
other payment or distribution (other than pursuant to a dividend
theretofore declared or liability theretofore incurred as specified in
Subsection (A)), made in respect thereof, either directly or
indirectly, or
(C) any optional payment or distribution on account of
the principal of and prepayment charge, if any, with respect to the
subordinated Debt of the Company set forth in Exhibit [__].
Short Term Debt means all Debt which would, in accordance with GAAP,
be included in current liabilities, excluding any portion of Long Term Debt
included in current liabilities, but in any event shall include any Guarantee
with respect to Short Term Debt (of the kind otherwise described in this
definition) of another Person.
Subsidiary of any designated Person means any other Person a majority
of whose outstanding Voting Stock of every class having the power to elect at
least a majority of the board of directors or other governing body of such
other Person is owned by such designated person, and/or one or more of its
Subsidiaries.
"Trustee" means [name of trustee selected], and its successors as the
trustee under this Indenture.
Voting Stockmeans shares of capital stock, or other equity interests,
issued by a designated Person and having the power (not dependent on the
occurrence of a contingency) to vote for members of the board of directors or
other governing body of such designated Person.
Wholly-OwnedSubsidiary of any designated Person means a Subsidiary of
such designated Person all of whose outstanding shares of capital stock or
other equity interests are owned by such designated Person, and/or one or more
of its Wholly-owned Subsidiaries.
ATT. 1 -- EXH. A-13
<PAGE> 76
EXHIBIT B
NEW SENIOR SUBORDINATED NOTES
(Applicable to Primary Merger Alternative)
<PAGE> 77
EXHIBIT B
SUMMARY OF TERMS
NEW SENIOR SUBORDINATED NOTES
Issuer: New Merged FirstCity
Facility: New Senior Subordinated Notes
Principal Amount: $103,968,500
Denomination: $100
Maturity: The New Senior Subordinated Notes shall
mature on the first Interest Payment Date (as
hereinafter defined) after the second
anniversary of the Effective Date, subject to
the provisions set forth below under
"Subordination."
Interest Rate: 8.0% per annum, payable on the earliest of
the last day of June, September, December and
March ("Interest Payment Date") following the
Effective Date; provided, however, that if
the New Senior Secured Notes remain
outstanding on such Interest Payment Date,
the interest payment due on such Interest
Payment Date shall not be paid on such date
but shall be paid on the first Interest
Payment Date after the New Senior Secured
Notes are paid in full. After maturity,
interest shall accrue at a default rate of
the lesser of 15% per annum or the maximum
rate permitted by applicable law.
Collateral: None; the New Senior Subordinated Notes shall
be unsecured obligations of New Merged
FirstCity.
Prepayment: Mandatory. $51,984,250 of the principal
amount of the New Senior Subordinated Notes
plus all accrued interest through the date of
the prepayment shall be prepaid on the first
Interest Payment Date after the first
anniversary of the Effective Date, subject to
the provisions set forth below under
"Subordination."
Optional. Notes can be paid at any time by
paying the outstanding principal balance of
the New Senior Subordinated Notes plus all
accrued interest through the date of the
prepayment with no premium or penalty;
provided, however, that the New Senior
Subordinated Notes may not be prepaid while
the New Senior Secured Notes remain
outstanding; provided further, however, that
any optional prepayments shall be applied to
the next succeeding mandatory prepayment.
Covenants: The New Senior Subordinated Note Indenture
shall contain covenants typical of indentures
securing publicly traded senior subordinated
debt, including but not limited to covenants
substantially similar to the following
schedule of covenants.
Subordination: The New Senior Subordinated Notes shall be
subordinated and subject, in right of
payment, to (i) prior payment in full of all
amounts theretofore or thereafter due
(whether interest, principal or otherwise)
under the New Senior Secured Notes and
ATT. 1 -- EXH. B-1
<PAGE> 78
(ii) prior payment theretofore due (whether
interest, principal or otherwise) of any
other Debt (as defined in the following
schedule of covenants) of New Merged
FirstCity except such Debt which, by its
express terms, is junior to, or pari passu
with, the New Senior Subordinated Notes.
Events of Default: If any one or more of the following events
shall have occurred or be continuing, they
shall constitute Events of Default:
(i) New Merged FirstCity fails to pay
(whether at stated maturity or
otherwise) any amount of principal
or interest payable on any of the
New Senior Subordinated Notes (which
default, in the case of interest,
continues for 30 days after the date
on which such payment is due).
(ii) New Merged FirstCity fails to
perform or observe any of the
covenants, and such failure
continues for sixty (60) days after
the giving of notice thereof to New
Merged FirstCity by the New Senior
Subordinated Notes Indenture
Trustee.
(iii) There is an adjudication by a court
of competent jurisdiction that New
Merged FirstCity is insolvent or the
filing of a voluntary or involuntary
petition for relief under the
Bankruptcy Code against New Merged
FirstCity.
(iv) A default shall have occurred with
respect to any indebtedness for
borrowed money of New Merged
FirstCity, having an outstanding
principal amount of $5,000,000 or
more in the aggregate, if the effect
of such default is to cause
acceleration of the maturity of such
indebtedness and such default is not
cured or waived within ten (10) days
after such acceleration.
Remedies: Upon the occurrence of an Event of Default, a
majority of the holders of the New Senior
Subordinated Notes may instruct the New
Senior Subordinated Note Indenture Trustee to
demand payment of all outstanding principal
and accrued interest, subject to the
provisions set forth above under
"Subordination."
Registration/Listing: The New Senior Subordinated Notes shall be
tradeable (except as restricted under section
1145 of the Bankruptcy Code and applicable
securities laws). New Merged FirstCity shall
use reasonable efforts to cause the New
Senior Subordinated Notes to be listed for
quotation on an interdealer quotation system
by the National Association of Securities
Dealers, Inc.
ATT. 1 -- EXH. B-2
<PAGE> 79
SCHEDULE OF COVENANTS
NEW SENIOR SUBORDINATED NOTES
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of the Indenture and any indenture supplemental thereto shall
have the respective meanings specified in this Section 1.1. All other terms
used in the Indenture which are defined in the Trust Indenture Act of 1939
(except as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in the Trust
Indenture Act as in force at the date of the Indenture. All financial
statements provided for in the Indenture shall be prepared, all financial
computations thereunder shall be made, and all accounting terms used in the
Indenture and not expressly defined therein shall have the meanings given to
them, in accordance with GAAP. Any consolidated or consolidating financial
statement or financial computation with respect to the Issuer and its
Subsidiaries required by the Indenture shall be done in accordance with GAAP,
and if, at the time that any such statement or computation is required to be
made, the Issuer shall not have any Subsidiary, such terms shall mean a
financial statement or a financial computation with respect to the Issuer only.
The words "therein," "thereof" and "thereunder" and other words of similar
import refer to the Indenture as a whole and not to any particular Article,
Section or other subdivision. The terms defined in this Article I include the
plural as well as the singular.
"Affiliate" of any designated Person means any Person that has
a relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common control
with the other, or holds or beneficially owns 5% or more of the equity interest
in the other or 5% or more of any class of voting securities of the other;
provided that, under no circumstances, shall an Acquisition Partnership or any
corporate general partner thereof be deemed to be an Affiliate. For purposes
of this definition, "control" means the power, direct or indirect, of one
Person to direct or cause the direction of the management and policies of
another, whether by contract, through voting securities or otherwise.
"Acquisition Partnership" means a limited partnership formed
by the Issuer, a Subsidiary of the Issuer or an Affiliate of the Issuer for the
purpose of acquiring a portfolio or portfolios of assets in its ordinary course
of business.
"Attributable Debt" in respect of a sale-leaseback transaction
entered into by the Issuer or any Subsidiary means, at the time of
determination, the present value (discounted at the interest rate implicit in
the lease, compounded semi-annually) of the obligation of the lessee of the
property subject to such sale-leaseback transaction for rental payments during
the remaining term of the lease included in such transaction, or such earlier
date on which the lessee may terminate such lease without penalty or upon
payment of penalty (in which case the rental payments shall include such
penalty), after excluding all amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water, utilities and
similar charges.
"Capital Stock" means, with respect to any Person, any and all
shares, interests (including partnership interests), participations or other
equivalents (however designated) of such Person's capital stock, whether now
outstanding or issued after the date of the Indenture, including, without
limitation, all Common Stock and all Preferred Stock and all equity rights with
respect thereto.
ATT. 1 -- EXH. B-3
<PAGE> 80
"Capitalized Lease Obligations" means the discounted present
value of the rental obligations of any Person under any lease of any Property
which, in accordance with GAAP, is required to be capitalized on the balance
sheet of such Person.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations and other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of the Indenture, and includes, without
limitation, all series and classes of such common stock.
"Confirmation Date" means the date of confirmation of the
Issuer's Chapter 11 Plan.
"Consolidated Tangible Net Worth" means the consolidated total
shareholders' equity in the Issuer and its Subsidiaries, determined in
accordance with GAAP, less the aggregate net amount of the following items to
the extent, if any, that they were included in consolidated assets or deducted
from consolidated liabilities in computing shareholders' equity:
(a) all licenses, patents, copyrights, trade names, trade
marks, goodwill, experimental or organizational expense, unamortized
debt discount and expense, and all other assets that under GAAP are
deemed intangible;
(b) all Investments other than Restricted Investments;
(c) any write-up of assets (other than current assets)
made after the Effective Date;
(d) all assets located outside the United States of
America and Canada and all Debt from a Person the majority of whose
assets or business operations are located outside the United States of
America and Canada; and
(e) the book value of net tangible assets of each
Subsidiary acquired in transactions subject to so-called "pooling of
interests" accounting treatment, to the extent such book value at the
time of such acquisition exceeds the fair value of the consideration
paid for such acquisition.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money (including net overdrafts
in any bank), (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 required to
be accrued on the balance sheet of such Person, except accounts payable arising
in the ordinary course of business, (iv) all Capitalized Lease Obligations of
such Person, (v) all Debt of others secured by an Lien on any asset of such
Person, whether or not such Debt is assumed by such Person (the amount of such
obligation being deemed to be the lesser of the value of the property or assets
or the amount of the obligation so secured), (vi) all Debt of others Guaranteed
by such Person, (vii) all obligations of such Person to reimburse the issuer of
any letter of credit, and (viii) Attributable Debt of such Person.
"Effective Date" means the date of effectiveness of the
Issuer's Chapter 11 Plan.
"FDIC Letter of Credit" means the $25 million letter of credit
to be issued on behalf of the Issuer in favor of the FDIC, representing the
Issuer's contingent obligation to pay FDIC Receiver under the Loss-Sharing
Settlement Agreement.
"FDIC Note" means the promissory note proposed to be executed
by the Issuer in connection with the FDIC Settlement Agreement, in the original
principal amount of $57 million, representing the Issuer's
ATT. 1 -- EXH. B-4
<PAGE> 81
contingent obligation to pay FDIC Receiver as provided for in the FDIC
Settlement Agreement, the requirement for which promissory note is to be
eliminated by the Loss-Sharing Settlement Agreement.
"First City Portfolios" means the portfolios of assets owned
by the Issuer prior to the Effective Date, the portfolios of assets received by
the Issuer from the FDIC on the Effective Date and the portfolios of assets to
be acquired from the Loss Sharing Banks.
"GAAP" means such accounting principles that are generally
accepted as of the date or time of any computation.
"Good Faith Contest" means the contesting in good faith (and
with creation of appropriate reserves) by the Issuer or any Subsidiary by
appropriate means of the amount, applicability or validity of any tax or other
governmental charge, any statute, regulation or governmental order, any alleged
Debt (other than the Notes) or other obligation or any deposit or lien relating
to litigation.
"Guarantee" means any guarantee or other contingent liability
(other than any endorsement for collection or deposit in the ordinary course of
business), direct or indirect with respect to any obligation of another Person,
through an agreement or otherwise, including, without limitation, (a) any other
endorsement or discount with recourse or undertaking substantially equivalent
to or having an economic effect similar to a guarantee in respect of any such
obligation, and (b) any agreement (i) to purchase, or to advance or supply
funds for the payment or purchase of, any such obligation, (ii) to purchase,
sell or lease Property, products, materials, supplies, transportation, or
services for the purpose of enabling such other Person to pay any such
obligation or to assure the owner thereof against loss regardless of the
delivery or nondelivery of the Property, products, materials, supplies,
transportation, or services, or (iii) to make any loan, advance or capital
contribution to or other investment in, or to otherwise provide funds to or
for, such other Person for the purpose of enabling such Person to satisfy any
obligation (including any liability for a dividend, stock liquidation payment
or expense) or to assure a minimum equity, working capital or other balance
sheet condition in respect of any such obligation. The amount of any Guarantee
shall be equal to the outstanding amount of the obligation directly or
indirectly guaranteed.
"Holder," "Noteholder" or any other similar term means the
registered holder of any Note.
"Investment" means any investment so classified under GAAP,
made by stock purchase, capital contribution, loan or advance or by purchase of
Property, Guarantee or otherwise, but in any event shall include as an
investment in any Person the amount of all Debt owed by such Person and all
accounts receivable from such Person which are not current assets or did not
arise from sales to such Person in the ordinary course of business.
"Issuer" means the New Merged FirstCity.
"Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such Property. For purposes of the Indenture, the Issuer or any of its
Subsidiaries shall be deemed to own subject to Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such Property.
"Loss Sharing Banks" mean Texas Commerce Bancshares, Inc. and
Cullen/Frost Banks.
"Note" or "Notes" means any of the New Senior Subordinated
Notes authenticated and delivered under the Indenture.
ATT. 1 -- EXH. B-5
<PAGE> 82
"Nonrecourse Debt" means any Debt as to which the Issuer has
no obligation or liability (including Debt of Subsidiaries) or which is
recourse only to specified property of the Issuer which secures such Debt.
"Officers' Certificate" means a certificate signed, in the
case of the Issuer, by its Chairman, President or Chief Financial Officer and
by its Treasurer or any assistant Treasurer or its Secretary or any assistant
Secretary and delivered to the Trustee.
"Person" means any 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.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock whether now outstanding or
issued after the date of the Indenture, including, without limitation, all
classes and series of preferred or preference stock.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included on the most recent consolidated balance sheet of such Person in
accordance with GAAP.
"Restricted Guarantee" means any Guarantee of the Issuer or a
Subsidiary in respect of any obligation of another Person other than any
Guarantee that existed as of the Effective Date of the Issuer's Chapter 11
plan.
"Restricted Investment" means
(a) any Investment in (i) a marketable obligation,
maturing within one (1) year after acquisition thereof, issued or
guaranteed by the United States of America or an instrumentality or
agency thereof, (ii) a certificate of deposit or other obligation,
maturing within one (1) year after acquisition thereof, issued by a
United States national or state bank or trust company having capital,
surplus and undivided profits of at least $100,000,000, and (iii) open
market commercial paper, maturing within 270 days after acquisition
thereof, which has the highest credit rating of both Standard & Poor's
Corporation and Moody's Investors Service, Inc.;
(b) any Investment in a Subsidiary;
(c) any Investment in an Acquisition Partnership or the
corporate general partner thereof;
(d) any Investment to purchase portfolios of assets which
will be held for sale in the normal and ordinary course of business;
and
(e) any Investment hereinafter acquired in exchange for,
or out of the net cash proceeds from the substantially concurrent sale
of, Capital Stock of the Issuer.
In computing the amount of any Restricted Investment in any
Person, unrealized increases or decreases in value, or write-ups, write-downs
or write-offs of Restricted Investments in the Person shall be disregarded
(except to the extent included in the determination of net income of the Issuer
or a Subsidiary).
"Restricted Payment" means
ATT. 1 -- EXH. B-6
<PAGE> 83
(a) any payment or distribution on account of the
purchase, redemption or other retirement of any Capital Stock of the
Issuer, or any warrant, option or other right to acquire Capital
Stock, or any other payment or distribution made in respect thereof,
either directly or indirectly; or
(b) any defeasance, redemption, repurchase or other
acquisition or retirement for value prior to final maturity of any
Debt that ranks pari passu with or subordinate in right of payment to
the Notes and having a scheduled maturity date subsequent to the
maturity of the Notes.
"Senior Indebtedness" means all Debt of the Issuer which its
express terms is neither pari passu with nor subordinate in right of payment to
the Notes.
"Senior Secured Notes" means the Senior Secured Notes of the
Issuer issued on the Effective Date.
"Subsidiary" means, with respect to any Person, (i) any
corporation or other entity of which a majority of the Capital Stock 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 owned by such Person, or one or more Subsidiaries of that Person or a
combination thereof, or (ii) any partnership or joint venture at least a
majority of the equity ownership of which is directly or indirectly owned by
such Person, whether in the form of membership, general, special or limited
partnership interests or otherwise; provided that under no circumstances shall
either (i) an Acquisition Partnership or any corporate general partner thereof
or (ii) any subsidiary formed for the purpose of acquiring, owning, managing or
disposing of real estate or other assets which were acquired in the normal and
ordinary course of business, be deemed to be a Subsidiary.
"Wholly-Owned Subsidiary" of any Person means a Subsidiary of
such Person all of whose outstanding shares of capital stock or other equity
interests are owned by such Person and/or one or more of its Wholly-Owned
Subsidiaries; provided that under no circumstances shall either (i) an
Acquisition Partnership or any corporate general partner thereof or (ii) any
subsidiary formed for the purpose of acquiring, owning, managing or disposing
of real estate or other assets which were acquired in the normal and ordinary
course of business, be deemed to be a Wholly-Owned Subsidiary.
ARTICLE II
COVENANTS OF THE ISSUER
While any Note is outstanding, the Issuer and its Subsidiaries will perform the
covenants described in this Article of the Indenture.
Section 2.1 Payment of Principal and Interest. The Issuer covenants and
agrees that it will duly and punctually pay or cause to be paid the principal
of, and interest on, each of the Notes at the place or places, at the
respective times and in the manner provided in the Notes. Each installment of
interest on the Notes may, at the option of the Issuer, be paid by mailing
checks for such interest payable to or upon the written order of the Holders
entitled thereto, to such address and in such name as they shall appear on the
Note register.
Section 2.2 Offices for Payments, etc. So long as any of the Notes remain
outstanding, the Issuer will maintain in Houston, Texas and at such other
place, if any, as may be designated by the Issuer, the following: (a) an
office or agency where the Notes may be presented for payment; (b) an office or
agency where the Notes may be presented for registration of transfer and for
exchange as in the Indenture provided; and (c) an office or agency
ATT. 1 -- EXH. B-7
<PAGE> 84
where notices and demands to or upon the Issuer in respect of the Notes or the
Indenture may be served. The Issuer will give the Trustee written notice of
the location of any such office or agency and of any change of location
thereof. The Issuer initially designates [SPECIFY OFFICE AND ADDRESS OF
INITIAL OFFICE AND AGENCY] as the office and agency for such purpose. In case
the Issuer shall fail to maintain any such office or agency or shall fail to
give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the [SPECIFY
NAME AND ADDRESS OF CORPORATE TRUST OFFICE OF TRUSTEE].
Section 2.3 Appointment to Fill a Vacancy in Office of Trustee. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in [THE SECTION OF THE INDENTURE DEALING
WITH THE TRUSTEE'S RESIGNATION AND REMOVAL AND APPOINTMENT OF A SUCCESSOR
TRUSTEE], a Trustee, so that there shall at all times be a Trustee under the
Indenture.
Section 2.4 Paying Agents. For purposes of the Indenture, the Trustee
will act as and is hereby designated a paying agent. Whenever the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provisions of this Section 2.4,
(a) that it will hold all sums received by it as such
agent for the payment of the principal of or interest on the Notes
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Notes) in trust for the benefit of the Holders or of
the Trustee, and
(b) that it will give the Trustee notice of any failure
by the Issuer (or by any other obligor on the Notes) to make any
payment of the principal of or interest on the Notes when the same
shall be due and payable.
The Issuer will, prior to each due date of the principal of or
interest on the Notes, deposit with the paying agent a sum which is in
immediately available funds on the due date sufficient to pay such principal or
interest, and (unless such paying agent is the Trustee) the Issuer will
promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent, it will, on
or before each due date of the principal of or interest on the Notes, set
aside, segregate and hold in trust for the benefit of the Holders a sum
sufficient to pay such principal or interest so becoming due. The Issuer will
promptly notify the Trustee of any failure to take such action.
Notwithstanding anything to the contrary contained in the
Indenture, the Issuer may at any time, for the purpose of obtaining a
satisfaction and discharge of the Indenture or for any other reason, pay or
cause to be paid to the Trustee all sums held in trust by the Issuer or any
paying agent under the Indenture, as required by this Section 2.4, such sums to
be held by the Trustee upon the trusts contained in the Indenture.
Notwithstanding anything in this Section 2.4 to the contrary,
the agreement to hold sums in trust as provided in this Section 2.4 is subject
to the provisions of [THE SECTIONS OF THE INDENTURE DEALING WITH REPAYMENT TO
THE ISSUER AND REINSTATEMENT OF THE INDENTURE].
Section 2.5 Financial Data. The Issuer will furnish to the Trustee
(a) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of the Issuer and within 90 days after the end of each such fiscal
year
ATT. 1 -- EXH. B-8
<PAGE> 85
(1) a consolidated balance sheet of the Issuer
and its Subsidiaries as of the end of such quarter or fiscal
year and the related consolidated statements of income,
shareholders' equity and cash flows for such quarter or fiscal
year, all in reasonable detail and stating in comparative form
the respective consolidated figures as of the end of and for
the previous corresponding period and, (a) in the case of a
fiscal year, all certified by independent public accountants
of recognized national standing selected by the Issuer (the
"Accountants") to present fairly, in accordance with GAAP, the
information contained therein, or (b) in the case of any such
quarter, all certified by the principal financial officer of
the Issuer to be the quarterly financial statements filed with
the Securities and Exchange Commission;
(2) an Officers' Certificate, dated as of the
date of its delivery to the Trustee, stating that, based upon
such examination or investigation as the officers signing such
certificate shall have deemed necessary to enable them to
render an informed opinion in respect thereof, in their
opinion, no Event of Default and no event, occurrence or
condition which, with notice or lapse of time or both, would
become an Event of Default existed at any time during such
quarter or fiscal year and to the date of such certificate
except for those, if any, described in such certificate in
reasonable detail, with a statement of the Issuer's action
with respect thereto taken or proposed;
(b) as soon as available, and in any event within 100
days after the end of each fiscal year of the Issuer, a written
statement of the Accountants stating that, in making the examination
necessary for their report on the Issuer's financial statements for
that year, they obtained no knowledge of any Event of Default or any
event, occurrence or condition which, with notice or lapse of time or
both, would become an Event of Default or, if the Accountants shall
have obtained knowledge of such event, occurrence or condition,
specifying the same and the nature and status thereof;
(c) promptly after receipt, copies of any report as to
material inadequacies in accounting controls (including reports as to
the absence of any such inadequacies) submitted by the Accountants or
other independent accountants in connection with any audit of the
Issuer or any Subsidiary;
(d) as soon as available, copies of any proxy statement,
financial statement or report that the Issuer or any Subsidiary sends
or makes available generally to any of its security holders other than
the Issuer or another Subsidiary, and of all regular and periodic
reports and registration statements (other than on Form S-8 or a
similar form) which the Issuer or any Subsidiary files with the
Securities and Exchange Commission or with any securities exchange;
(e) promptly after any officer of the Issuer obtains
knowledge of any Event of Default or any event of default under the
terms or conditions of any other note, agreement, or indenture
pursuant to which the Issuer borrowed more than $5,000,000, an
Officers' Certificate describing the same in reasonable detail, with a
statement of the Issuer's action with respect thereto taken or
proposed; and
(f) any other information, including financial statements
and computations, relating to the performance of the Indenture that
the Trustee may from time to time reasonably request in writing.
Section 2.6 Books of Record and Account; Reserves. The Issuer will, and
will cause each Subsidiary to, keep proper books of record and account and set
aside appropriate reserves, all in accordance with GAAP.
Section 2.7 Corporate Existence; Taxes; Government Regulations. The
Issuer will maintain its corporate existence, and all its rights and franchises
necessary to conduct its business, except as otherwise permitted by the
Trustee. The Issuer will, and will cause each Subsidiary to, promptly pay all
applicable taxes and other governmental charges and use its best efforts to
comply with all applicable statutes, regulations and orders of
ATT. 1 -- EXH. B-9
<PAGE> 86
governmental bodies, including those relating to environmental and occupational
safety and health standards, except to the extent that any such payment or
compliance is at the time subject to Good Faith Contest.
Section 2.8 Insurance. The Issuer will, and will cause each Subsidiary
to, carry and maintain in full force and effect at all times with financially
sound and reputable insurers (or, as to workers' compensation or similar
insurance, in an insurance fund or by self-insurance authorized by the
jurisdiction in which its operations are carried on): (a) all workers'
compensation or similar insurance as may be required under the laws of any
jurisdiction, (b) public liability insurance against claims for personal
injury, death or property damage suffered upon, in or about any premises
occupied by it or occurring as a result of the ownership, maintenance or
operation by it of any automobile, truck or other vehicle or as a result of the
use of products manufactured, constructed or sold by it, or services rendered
by it, and (c) insurance against such other risks as are usually insured
against by corporations of established reputation engaged in the same or
similar businesses and similarly situated. Insurance specified in subsections
(b), and (c) shall be maintained in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated.
Section 2.9 Inspections. The Issuer will keep a copy of the Indenture (as
at the time in effect) available for inspection at its principal executive
office during normal business hours by any Noteholder or any prospective
purchaser of a Note designated by a Holder thereof.
Section 2.10 Debt. The Issuer will not create, incur, assume, Guarantee or
otherwise become liable with respect to, and will not permit any of its
Subsidiaries to create, incur, assume, Guarantee or otherwise become liable
with respect to, any Debt, except:
(a) Debt of the Issuer evidenced by the Notes;
(b) Debt existing as of the Effective Date and Debt
evidenced by the New Senior Secured Notes, the FDIC Note and the FDIC
Letter of Credit;
(c) Debt secured by either the Class A Certificate or the
First City Portfolios not to exceed $75 million;
(d) Debt existing as of the Effective Date of a
Subsidiary owing to the Issuer or to another Subsidiary;
(e) Debt incurred in connection with the purchase of
assets, but only to the extent that the value of the assets acquired
equals or exceeds the debt incurred in connection with their
acquisition;
(f) Nonrecourse Debt, if it is secured only by assets
acquired after the Confirmation Date;
(g) Deferred taxes and other deferred obligations
incurred in the ordinary course of business;
(h) Debt evidenced by letters of credit which are issued
in the ordinary course of business of the Issuer and its Subsidiaries
to secure workers' compensation and other insurance coverages;
(i) other Debt of the Issuer or any Subsidiary
representing a refinancing, replacement or refunding of Debt permitted
by clauses (d) or (e) above; provided, however, that the aggregate
principal amount of such Debt outstanding or available will not be
increased (except for issuance costs) at the time of such refinancing,
replacement or refunding or the maturity shortened;
ATT. 1 -- EXH. B-10
<PAGE> 87
(j) any Debt which by its express terms is subordinate to
the Notes and matures after the Notes; and
(k) any other Debt not permitted above, the principal
amount of which when added to the principal amount of all the other
Debt permitted solely pursuant to this clause (m) does not exceed the
difference between (A) the Consolidated Tangible Net Worth of the
Issuer at the time of such Debt's incurrence and (B) $20,000,000.
For purposes of this Section 2.10, any Debt (i) which was
extended, renewed or refunded shall be deemed to have been incurred when
extended, renewed or refunded, or (ii) of a corporation when it became a
Subsidiary shall be deemed to have been incurred at that time. The Issuer
shall not incur any Debt owing to any Subsidiary unless the same shall be for
cash advances from such Subsidiary and shall be subordinated and subject in
right to the prior payment in full of the Notes.
Section 2.11 Limitations on Liens. The Issuer will not, and will not
permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien upon or with respect to any of the Property
of the Issuer or any Subsidiary, whether owned at the date of the Indenture or
thereafter acquired, or on any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits thereon, to secure any
indebtedness that is pari passu with or subordinate in right of payment to the
Notes unless the Notes are secured equally and ratably simultaneously with or
prior to the creation, incurrence or assumption of such Lien. Notwithstanding
the foregoing sentence, however, the Issuer and any of its Subsidiaries shall
be able, directly or indirectly, to create, incur, assume or permit to exist
(a) Liens for taxes or other governmental charges either
not yet delinquent or nonpayment of which is permitted by express
agreement with the applicable taxing authority;
(b) Liens created by or relating to any legal proceeding
which at the time is the subject of a Good Faith Contest;
(c) Liens on either the First City Portfolios or the
Class A Certificate, not to exceed $75,000,000 in the aggregate;
(d) Liens on portfolios of assets which will be held for
sale in the normal and ordinary course of business;
(e) Liens in existence on the Effective Date;
(f) Liens securing the New Senior Secured Notes;
(g) purchase money Liens or security interests securing
Debt permitted pursuant hereto incurred in the normal and ordinary
course of business;
(h) carriers', warehouseman's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and not overdue for a period of more than sixty (60) days or
which are subject to a Good Faith Contest;
(i) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
ATT. 1 -- EXH. B-11
<PAGE> 88
(j) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the normal and ordinary
course of business;
(k) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the normal and ordinary course of
business which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary
course of business of the Issuer or its Subsidiaries, as the case may
be, and any exceptions to title set forth in any title insurance
policies;
(l) any attachment or judgment Lien, unless the judgment
it secures shall not, within sixty (60) days after the entry thereof,
have been discharged;
(m) any other Liens imposed by operation of law which do
not materially affect the Issuer's ability to perform its obligations
under the Notes and the Indenture;
(n) rights of banks to set off deposits against Debts
owed to such banks;
(o) Liens in respect of Debt incurred in connection with
the sale by the Issuer or any of its Subsidiaries of receivables;
(p) Liens on the assets of any entity existing at the
time such assets are acquired by the Issuer or any of its
Subsidiaries, whether by merger, consolidation, purchase of assets or
otherwise; provided, however, that such Liens are not created,
incurred or assumed in contemplation of such assets being acquired by
the Issuer or any of its Subsidiaries and do not extend to any other
Property of the Issuer or any of its Subsidiaries; and
(q) to the extent not included in any of the foregoing,
Liens securing any Senior Indebtedness of the Issuer or its
Subsidiaries permitted under Section 2.10.
Section 2.12 Sales and Lease-Backs. The Issuer will not sell to any
Person, and will not permit any Subsidiary to, sell to any Person, any plant or
facilities if, as part of the same transaction or series of transactions, the
Issuer or any Subsidiary shall lease as lessee the same or other plant or
facilities which it intends to use for substantially the same purposes.
Section 2.13 Restricted Payments and Guarantees. The Issuer will not,
directly or indirectly, make any Restricted Payment or Restricted Guarantee and
will not, and will not permit any Subsidiary to, make any Restricted Guarantee;
provided that the Issuer can make cash payments on the New Special Preferred
Stock at any time so long as the Issuer is in compliance with all the covenants
set forth in this Indenture; and provided further that the Issuer can pay cash
dividends, purchase, redeem or otherwise retire the New Merger Common Stock of
the Issuer so long as the Issuer is in compliance with all the covenants set
forth in this Indenture and that after giving effect thereto, Consolidated
Tangible Net Worth is no less than $50,000,000.
Section 2.14 Sale or Discount of Receivables. The Issuer will not, and
will not permit any Subsidiary to, sell any of its notes or accounts receivable
with recourse, at a discount or otherwise for less than the face value thereof;
provided that the Issuer may at any time sell, settle or otherwise dispose of
assets in the First City Portfolios, or other portfolios of assets acquired
after the Effective Date in the normal and ordinary course of business, at
discounts to their legal principal amounts or net book values and the
Acquisition Partnerships may at any time sell, settle or otherwise dispose of
assets in the Acquisition Partnerships at discounts to their legal principal
amount or net book value.
ATT. 1 -- EXH. B-12
<PAGE> 89
Section 2.15 Disposition of Capital Stock and Debt of Subsidiaries. The
Issuer will not, and will not permit any Subsidiary to, sell or otherwise
dispose of any Capital Stock or any Debt of any Subsidiary, other than to the
Issuer or to a Wholly-Owned Subsidiary; provided that the Issuer, or any
Subsidiary of the Issuer, may sell or otherwise dispose of any Capital Stock of
a Subsidiary which was owned by the Issuer or such Subsidiary on the Effective
Date and does not carry on or transact a material business in the normal and
ordinary course.
Section 2.16 Issuance of Capital Stock by Subsidiaries. The Issuer will
not permit any Subsidiary to issue any of its Capital Stock except to the
Issuer or to a Wholly-Owned Subsidiary.
Section 2.17 Transactions with Affiliates. The Issuer will not, and will
not permit any Subsidiary to, engage in any transaction with an Affiliate
(other than the Issuer or a Subsidiary) on terms more favorable to the
Affiliate than would have been obtainable in arm's length dealing.
Section 2.18 Consolidation, Merger or Disposition of Assets. The Issuer
will not, and will not permit any Subsidiary to, directly or indirectly,
consolidate or merge with, or sell, lease or otherwise dispose of all or
substantially all of its assets to, any Person, except
(a) a Subsidiary may consolidate with or merge into or
sell, lease or otherwise dispose of its assets as an entirety or
substantially as an entirety to the Issuer or a Wholly-Owned
Subsidiary; and
(b) the Issuer or any Subsidiary may sell, lease or
otherwise dispose of any of its assets for cash in the ordinary course
of its business, including assets constituting the First City
Portfolios and assets in the Acquisition Partnerships.
ATT. 1 -- EXH. B-13
<PAGE> 90
EXHIBIT C
NEW SPECIAL PREFERRED STOCK
(Applicable to Primary Merger Alternative)
<PAGE> 91
EXHIBIT C
SUMMARY OF TERMS
NEW SPECIAL PREFERRED STOCK
Issuer: New Merged FirstCity
Issue: To be determined on the Effective Date, based
on estimated distributions in respect of the
Class A Certificates issued by the
Liquidating Trust (as defined in the Plan),
and dividend and interest rates generally
available on similar securities at the
Effective Date; currently expected to be
approximately 2,460,911 shares of New Special
Preferred Stock shall be issued assuming an
Effective Date of April 1, 1995. No
fractional shares shall be issued.
Shares Authorized: 2,500,000
Par Value: $.01 per share.
Nominal Stated Value: To be determined on the Effective Date, based
on estimated distributions in respect of the
Class A Certificates issued by the
Liquidating Trust, and dividend and interest
rates generally available on similar
securities at the Effective Date; currently
expected to be $14.22 per share
Dividend Rate: Holders of New Special Preferred Stock are
entitled to receive, when, as, and if
declared by the board of directors of New
Merged FirstCity cumulative dividends, to be
determined on the Effective Date, based on
estimated distributions in respect of the
Class A Certificates issued by the
Liquidating Trust, and dividend and interest
rates generally available on similar
securities at the Effective Date, currently
expected to be 15% of the nominal stated
value per share per annum, until the first
Dividend Payment Date (as hereinafter
defined) after the third anniversary of the
Effective Date ("Determination Date");
provided, however, that if New Merged
FirstCity is required to disburse any funds
to the FDIC pursuant to the FDIC Note or to
the provider of the FDIC Letter of Credit,
New Merged FirstCity shall suspend the
declaration of all such dividends until the
Determination Date; provided further,
however, that if at any time, in the judgment
of the board of directors, there would be
after the payment of a dividend to the New
Special Preferred Stock insufficient cash
available from the Liquidating Trust to
satisfy the then outstanding or estimated
Claims to be payable from the Liquidating
Trust, New Merged FirstCity shall suspend the
declaration of any further dividends on the
New Special Preferred Stock until there is
sufficient cash available to pay such
outstanding or estimated Claims; and provided
further, however, that if the New Senior
Secured Notes remain outstanding on such
Dividend Payment Date, the dividend payment
due on such Dividend Payment Date shall not
be paid on such Date but shall be paid on the
first Dividend Payment Date after the New
Senior Secured Notes are paid in full.
Subject to legal availability of funds and
the provisos in the preceding sentence, such
dividends shall be payable, in cash,
quarterly, commencing on the earliest of
ATT. 1 -- EXH. C-1
<PAGE> 92
the last day of March, June, September, and
December ("Dividend Payment Date") following
the Effective Date of the Plan.
Dividends accumulate without interest.
Liquidation Preference: The nominal stated value of the New Special
Preferred Stock determined on the Effective
Date plus all accrued and unpaid dividends;
provided, however, that the liquidation
preference shall not exceed the net
distribution available, if any, in respect of
the New Special Preferred Stock in accordance
with Section 7.2(vi) of the Trust Agreement
(the "Determination Value").
Redemption: Mandatory. On the Determination Date, New
Merged FirstCity shall redeem the New Special
Preferred Stock for the Determination Value.
Optional. There shall be no optional
redemption.
Voting Rights: Except as indicated below, the holders of the
New Special Preferred Stock shall have no
voting rights. If six consecutive quarterly
dividends which have been declared by the
board of directors and are payable on the New
Special Preferred Stock are in arrears, the
number of directors of the Company shall be
increased by two directors ("Preferred
Directors") whose election shall be
determined by the holders of New Special
Preferred Stock on the basis of one vote for
each share held. When all dividends in
arrears have been paid or declared and set
apart for payment, the terms of the two
Preferred Directors shall automatically
expire and the number of directors shall be
reduced by two.
Registration/Listing: The shares of New Special Preferred Stock
shall be freely tradeable (except as
restricted under section 1145 of the
Bankruptcy Code and applicable securities
laws). New Merged FirstCity shall use
reasonable efforts to cause the shares of New
Special Preferred Stock to be listed for
quotation on an interdealer quotation system
by the National Association of Securities
Dealers, Inc.
ATT. 1 -- EXH. C-2
<PAGE> 93
EXHIBIT D
NEW MERGER COMMON STOCK
(Applicable to Primary Merger Alternative)
<PAGE> 94
EXHIBIT D
SUMMARY OF TERMS
NEW MERGER COMMON STOCK
Issuer: New Merged FirstCity
Issue: Approximately 5,000,000 shares of New Merger
Common Stock shall be issued.
Shares Authorized: 100,000,000
Par Value: $.01 per share
Dividend Rights: Subject to the prior rights of holders of any
outstanding shares of preferred stock, the
holders of New Merger Common Stock are
entitled to dividends as may from time to
time be declared by the board of directors
out of legally available funds.
Voting Rights: Holders of the New Merger Common Stock are
entitled to one vote per share on all matters
on which the holders of New Merger Common
Stock are entitled to vote (under the laws of
the State of Delaware).
Liquidation Rights: In the event of the liquidation, dissolution,
or winding up of the affairs of New Merged
FirstCity, after the payment of the
Determination Value on the New Special
Preferred Stock, holders of New Merger Common
Stock would be entitled to share ratably in
all assets of New Merged FirstCity available
for distribution to the holders of New Merger
Common Stock.
Restrictions: Individual transfers of New Merger Common
Stock shall be subject to the restrictions
set forth in Article XIV of the Plan.
Registration/Listing: The shares of New Merger Common Stock shall
be freely tradeable (except as restricted
under section 1145 of the Bankruptcy Code,
applicable securities laws and pursuant to
Article XIV of the Plan). New Merged
FirstCity shall use reasonable efforts to
cause the shares of New Merger Common Stock
to be listed for quotation on a major
domestic stock exchange or on an interdealer
quotation system by the National Association
of Securities Dealers, Inc.
ATT. 1 -- EXH. D-1
<PAGE> 95
EXHIBIT E
NEW WARRANTS
(Applicable to Primary Merger Alternative)
<PAGE> 96
EXHIBIT E
SUMMARY OF TERMS
NEW WARRANTS
Issuer: New Merged FirstCity
Issue: 500,000 Warrants
Term: The New Warrants shall be exercisable for a
period of four (4) years beginning on the
Effective Date, unless the expiration of the
New Warrants is accelerated in accordance
with their terms, pursuant to notice given by
New Merged FirstCity at least sixty (60) days
prior to the accelerated expiration date.
Exercise Price: The exercise price of the New Warrants shall
be set at $30.
Restriction: Individual transfers of New Warrants shall be
subject to the restrictions set forth in
Article XIV of the Plan.
Redemption: If the quoted closing price (or the average
of the bid and asked prices thereof) for the
New Merger Common Stock exceeds 110% of the
exercise price of the Warrants for 15
consecutive trading days (the "Pricing
Period"), New Merged FirstCity will have the
right to redeem any theretofore unexercised
Warrants at a price of $1 per Warrant on the
30th day following the Pricing Period.
ATT. 1 -- EXH. E-1
<PAGE> 97
EXHIBIT F
NEW MERGER CHARTER
(Applicable to Primary Merger Alternative)
<PAGE> 98
EXHIBIT F
Primary Merger Alternative
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FIRST CITY BANCORPORATION OF TEXAS, INC.
FIRST CITY BANCORPORATION OF TEXAS, INC. ("Old Corporation"),
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY THAT:
1. The name of the Corporation is FIRST CITY
BANCORPORATION OF TEXAS, INC.
2. The original Certificate of Incorporation was filed
with the Secretary of State of the State of Delaware on January 6, 1988, under
the name First City Acquisition Corporation, and was restated on April 22,
1988, under the name First City Bancorporation of Texas, Inc.
3. Article FIRST of Old Corporation's Restated
Certificate of Incorporation is hereby amended as follows:
FIRST: The name of the Corporation is FirstCity Financial
Corporation (hereinafter the "Corporation").
4. This Amended and Restated Certificate of
Incorporation is adopted pursuant to the authority granted to Old Corporation
under Section 303 of the General Corporation Law of the State of Delaware to
put into effect and carry out the Joint Plan of Reorganization First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation Under Chapter 11 of the United States Bankruptcy Code ("Plan"), as
confirmed on __________ __, 199_, by order ("Confirmation Order") of the United
States Bankruptcy Court for the Northern District of Texas, Dallas Division.
5. Old Corporation's Restated Certificate of
Incorporation, as previously and hereby amended, is hereby restated to read in
its entirety as follows:
FIRST: The name of the corporation is FIRSTCITY
FINANCIAL CORPORATION ("Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 229 South State Street, City of Dover,
County of Kent, State of Delaware. The name of the registered agent of the
Corporation in the State of Delaware at such address is Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware, as from time to time amended.
ATT. 1 -- EXH. F-1
<PAGE> 99
FOURTH: The total number of shares of capital stock
("Capital Stock") which the Corporation shall have authority to issue is
202,500,000 shares divided into three classes as follows: (i) 2,500,000 shares
of New Special Preferred Stock, par value $.01 per share ("Special Preferred
Stock"); (ii) 100,000,000 shares of Optional Preferred Stock, par value $.01
per share ("Optional Preferred Stock"); and (iii) 100,000,000 shares of New
Common Stock, par value $.01 per share ("Common Stock"). To the extent
required by 11 U.S.C. Section 1123(a)(6), the Corporation shall be prohibited
from issuing any shares of nonvoting capital stock other than warrants.
The designations, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions of the shares of Capital Stock of the Corporation are as follows:
A. THE SPECIAL PREFERRED STOCK
1. Dividends. Prior to the third anniversary of the
Effective Date ("Determination Date"), the holders of shares of Special
Preferred Stock shall be entitled to receive, when, as and if declared by the
board of directors, out of funds legally available for the payment of
dividends, cumulative quarterly cash dividends at the annual rate of $____ per
share [to be determined as specified in Exhibit C to the Plan] on each Dividend
Payment Date (as hereinafter defined); provided, however, that if the
Corporation is required to disburse any funds to the FDIC (as defined in the
Plan) pursuant to the FDIC Note (as defined in the Plan) or to the provider of
the FDIC Letter of Credit (as defined in the Plan), no such dividends shall be
declared by the board of directors until the Determination Date; provided,
further, however, that if at any time, in the judgment of the board of
directors, there would be after the payment of a dividend on the Special
Preferred Stock insufficient Determination Value (as defined in the Plan)
estimated to be available on the Determination Date attributable to the
Liquidating Trust (as defined in the Plan) to satisfy the then outstanding or
estimated claims to be payable from the Liquidating Trust (other than in
respect of the Special Preferred Stock), the board of directors shall suspend
the declaration of any further dividends on the Special Preferred Stock until
there is sufficient cash available to pay such outstanding or estimated claims;
and provided, further, that if the New Senior Secured Notes (as defined in the
Plan) remain outstanding on such Dividend Payment Date, the dividend payment
due on such Dividend Payment Date shall not be paid on such date but will be
paid on the first Dividend Payment Date after the maturity date of the New
Senior Secured Notes. Subject to the legal availability of funds and the
provisos in the foregoing sentence, dividends in respect of Special Preferred
Stock shall be payable in arrears in equal quarterly payments commencing on the
earliest of the last day of March, June, September, and December ("Dividend
Payment Date") following the Effective Date. Such dividends shall be paid to
the holders of record at the close of business on the date specified by the
board of directors of the Corporation at the time such dividend is declared;
provided, however, that such date shall not be more than sixty (60) days nor
less than ten (10) days prior to the respective Dividend Payment Date. Each of
such quarterly dividends shall be fully cumulative and shall accrue (whether or
not declared), without interest, from the first day of the quarter in which
such dividend may be payable as herein provided, except that with respect to
the first Dividend Payment Date, dividends shall accrue from the Effective
Date.
2. Liquidation. The holders of shares of Special
Preferred Stock shall be entitled to receive the nominal stated value of the
New Special Preferred Stock determined on the Effective Date plus accrued and
unpaid dividends upon any voluntary or involuntary liquidation, dissolution, or
winding up of the affairs of the Corporation; provided, however, that the
holders of shares of Special Preferred Stock shall not receive, upon any such
liquidation, dissolution or winding up, an amount per share of Special
Preferred Stock in excess of the aggregate sums, if any, distributed pursuant
to Section 7.2(vi) of the Liquidating Trust Agreement (as defined in the Plan),
divided by the aggregate number of shares of Special Preferred Stock, but only
to the extent distributions are received by New Merged FirstCity pursuant to
Section 7.2(vi) of the Liquidating Trust Agreement.
3. Redemption. Neither the Corporation nor the holders
of the shares of Special Preferred Stock shall have the option to redeem such
shares. The Corporation shall redeem each outstanding shares of
ATT. 1 -- EXH. F-2
<PAGE> 100
Special Preferred Stock for the Determination Value on the Determination Date,
and the Special Preferred Stock shall not be exchangeable prior to such date
into any other Capital Stock that is senior to Common Stock as to payment of
dividends, liquidation preferences, voting rights, or terms of redemption.
4. Voting Rights.
(a) The holders of record of shares of Special Preferred
Stock shall not be entitled to any voting rights except as hereinafter provided
in this paragraph B.4 or as otherwise provided by law.
(b) (i) If at any time or times dividends, which have
been declared by the board of directors and which are payable on the Special
Preferred Stock, shall be in arrears and unpaid on an amount equal to six (6)
consecutive full quarterly dividend periods, then the number of directors
constituting the board of directors, without further action, shall be increased
by two (2) and the holders of shares of Special Preferred Stock shall have the
exclusive right, voting separately as a class, to elect the directors of the
Corporation to fill such newly-created directorships, the remaining directors
to be elected by the other class or classes of stock entitled to vote therefor,
at a meeting of stockholders held for the purpose of electing directors.
(ii) Whenever such voting right shall have vested,
such right may be exercised initially either at a special meeting of the
holders of Special Preferred Stock, called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings or by the written consent of the holders of
Special Preferred Stock. Such voting right shall continue until such time as
all accrued dividends accumulated on the Special Preferred Stock shall have
been paid in full or declared and set apart for payment, at which time such
voting right of the holders of Special Preferred Stock shall terminate, subject
to revesting in the event of each and every subsequent failure of the
Corporation of the character described above.
(iii) At any time when such voting right shall have
vested in the holders of Special Preferred Stock and if such right shall not
already have been initially exercised, a proper officer of the Corporation
shall, upon the written request of any holder of record of Special Preferred
Stock then outstanding, addressed to the Secretary of the Corporation, call a
special meeting of holders of Special Preferred Stock. Such meeting shall be
held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation. If such meeting shall not be called by the
proper officer of the Corporation within thirty (30) days after the personal
service of such written request upon the Secretary of the Corporation, or
within thirty (30) days after mailing the same within the United States, by
registered mail, addressed to the Secretary of the Corporation at its principal
office (such mailing to be evidenced by the registry receipt issued by the
postal authorities), then the holders of record of ten-percent (10%) of the
shares of Special Preferred Stock then outstanding may designate in writing a
holder of Special Preferred Stock to call such meeting at the expense of the
Corporation, and such meeting may be called by such person so designated upon
the notice required for annual meetings of stockholders and shall be held at
the same place as for holding annual meetings of stockholders of the
Corporation. Any holder of Special Preferred Stock which would be entitled to
vote at such meeting shall have access to the stock books of the Corporation
for the purpose of causing a meeting of holders of Special Preferred Stock to
be called pursuant to the provisions of this paragraph B.4. Notwithstanding
the provisions of this paragraph B.4, however, no such special meeting shall be
called during a period within ninety (90) days immediately preceding the date
fixed for the next annual meeting of stockholders.
(iv) At any meeting held for the purpose of
electing directors at which the holders of Special Preferred Stock shall have
the right to elect directors as provided herein, the presence in person or by
proxy of the holders of at least a majority of the then outstanding shares of
Special Preferred Stock shall be required and be sufficient to constitute a
quorum of such class for the election of directors by such class. At any such
meeting or adjournment thereof (a) the absence of a quorum of the holders of
Special Preferred Stock shall not prevent the election of directors other than
those to be elected by the holders of stock of such class and the absence of a
ATT. 1 -- EXH. F-3
<PAGE> 101
quorum or quorums of the holders of capital stock entitled to elect such other
directors shall not prevent the election of directors to be elected by the
holders of Special Preferred Stock, and (b) in the absence of a quorum of the
holders of any class of stock entitled to vote for the election of directors, a
majority of the holders present in person or by proxy of such class shall have
the power to adjourn the meeting for the election of directors which the
holders of such class are entitled to elect, from time to time, without notice
(except as required by law) other than announcement at the meeting, until a
quorum shall be present.
(v) The term of office of all directors elected
by the holders of Special Preferred Stock pursuant to paragraph B.4(b)(i) in
office at any time when the aforesaid voting rights are vested in the holders
of Special Preferred Stock shall terminate upon the election of their
successors at any meeting of holders of Special Preferred Stock for the purpose
of electing directors. Upon any termination of the aforesaid voting rights in
accordance with paragraph B.4(b)(ii), the term of office of all directors
elected by the holders of Special Preferred Stock pursuant to paragraph
B.4(b)(i) then in office shall thereupon terminate and upon such termination
the number of directors constituting the board of directors shall, without
further action, be reduced by two (2), subject always to the increase of the
number of directors pursuant to paragraph B.4(b)(i) in case of the future right
of the holders of Special Preferred Stock to elect directors as provided
herein.
(vi) In case of any vacancy occurring among the
directors so elected, the remaining director who shall have been so elected may
appoint a successor to hold office for the unexpired term of the director whose
place shall be vacant. If both directors so elected by the holders of Special
Preferred Stock shall cease to serve as directors before their terms shall
expire, the holders of Special Preferred Stock then outstanding may, at a
special meeting of the holders thereof called as provided above, elect
successors to hold office for the unexpired terms of such directors whose
places shall be vacant.
(c) So long as any shares of Special Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Special Preferred
Stock, voting as a class, change by amendment to this Amended and Restated
Certificate of Incorporation or otherwise, the terms and provisions of the
Special Preferred Stock so as to affect materially and adversely the rights and
preferences of the holders thereof or authorize the issuance of any equity
securities of the Corporation to which the Special Preferred Stock would rank
junior, whether with respect to dividends or upon liquidation, dissolution,
winding up, or otherwise ("Senior Securities") or any securities exchangeable
or convertible into any Senior Securities.
(d) In exercising the voting rights set forth in this
paragraph B.4, each share of Special Preferred Stock shall have one vote per
share.
B. THE OPTIONAL PREFERRED STOCK
1. Issuance. The Optional Preferred Stock may be issued
from time to time in one or more classes or series, the shares of each class or
series to have such designations and powers, preferences, and rights, and
qualifications, limitations, and restrictions thereof, as are stated and
expressed herein and in the resolution or resolutions providing for the issue
of such class or series adopted by the board of directors of the Corporation as
hereafter prescribed.
2. Designations. Authority is hereby expressly granted
to and vested in the board of directors of the Corporation to authorize the
issuance of the Optional Preferred Stock from time to time in one or more
classes or series, and with respect to each class or series of the Optional
Preferred Stock, to fix and state by the resolution or resolutions from time to
time adopted providing for the issuance thereof the following:
ATT. 1 -- EXH. F-4
<PAGE> 102
(i) whether or not the class or series is to have
voting rights, full, special, or limited, and whether or not such class or
series is to be entitled to vote as a separate class either alone or together
with the holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class
or series and the designations thereof;
(iii) the preferences, and relative, participating,
optional, or other special rights, if any, and the qualifications, limitations,
or restrictions thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or
series shall be redeemable at the option of the Corporation or the holders
thereof or upon the happening of any specified event, and, if redeemable, the
redemption price or prices (which may be payable in the form of cash, notes,
securities, or other property), and the time or times at which, and the terms
and conditions upon which, such shares shall be redeemable and the manner of
redemption;
(v) whether or not the shares of a class or
series shall be subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares for retirement, and, if
such retirement or sinking fund or funds are to be established, the annual
amount thereof, and the terms and provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are
payable in cash, stock of the Corporation, or other property, the conditions
upon which and the times when such dividends are payable, the preference to or
the relation to the payment of dividends payable on any other class or classes
or series of stock, whether or not such dividends shall be cumulative or
noncumulative, and if cumulative, the date or dates from which such dividends
shall accumulate;
(vii) the preferences, if any, and the amounts
thereof which the holders of any class or series thereof shall be entitled to
receive upon the voluntary or involuntary dissolution of, or upon any
distribution of the assets of, the Corporation;
(viii) whether or not the shares of any class or
series, at the option of the Corporation or the holder thereof or upon the
happening of any specified event, shall be convertible into or exchangeable
for, the shares of any other class or classes or of any other series of the
same or any other class or classes of stock, securities, or other property of
the Corporation and the conversion price or prices or ratio or ratios or the
rate or rates at which such exchange may be made, with such adjustments, if
any, as shall be stated and expressed or provided for in such resolution or
resolutions; and
(ix) such other special rights and protective
provisions with respect to any class or series as may to the board of directors
of the Corporation seem advisable.
3. Board Authority. The shares of each class or series
of the Optional Preferred Stock may vary from the shares of any other class or
series thereof in any or all of the foregoing respects. The board of directors
of the Corporation may increase the number of shares of the Optional Preferred
Stock designated for any existing class or series by a resolution adding to
such class or series authorized and unissued shares of the Optional Preferred
Stock not designated for any other class or series. The board of directors of
the Corporation may decrease the number of shares of the Optional Preferred
Stock designated for any existing class or series by a resolution subtracting
from such class or series authorized and unissued shares of the Optional
Preferred Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued, and undesignated shares of the
Optional Preferred Stock.
ATT. 1 -- EXH. F-5
<PAGE> 103
C. THE COMMON STOCK
1. Dividends. Shares of Common Stock shall be junior
with respect to any declaration or payment of any dividend on any Preferred
Stock of the Corporation. The holders of shares of Common Stock shall be
entitled to receive dividends when, as and if declared by the board of
directors, out of funds legally available for the payment of dividends. No
dividend shall be paid or declared on any share of Common Stock unless an equal
dividend is simultaneously paid or declared on each share of Common Stock.
2. Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation, after
payment or provision for payment of the debts and other liabilities of the
Corporation and after payment of the Determination Value to holders of all
outstanding shares of Special Preferred Stock and any liquidation preference
afforded by the board of directors to the holders of any outstanding shares of
Optional Preferred Stock, the holders of shares of Common Stock shall be
entitled to share ratably, share and share alike, in the remaining net assets
of the Corporation.
3. Voting. Subject to the provisions of applicable law
or of the by-laws with respect to the closing of the transfer books or the
fixing of a record date for the determination of stockholders entitled to vote,
and except as otherwise provided by law or by this Amended and Restated
Certificate of Incorporation, the holders of outstanding shares of Common Stock
shall exclusively possess the voting power for the election of eight (8)
directors and for all other purposes, each holder of record of shares of Common
Stock being entitled to one (1) vote for each share of Common Stock standing in
his name on the books of the Corporation.
D. TRANSFER RESTRICTIONS APPLICABLE TO SHARES OF COMMON STOCK
1. At any time during the period beginning on the first
business day on which the Confirmation Order is a Final Order (as defined in
the Plan) and all conditions precedent to the occurrence of the Effective Date
contained in section 12.2 of the Plan have been satisfied or waived as provided
for in section 12.3 of the Plan ("Effective Date") and ending on the earlier of
(a) the expiration of fifteen (15) years after the Effective Date, or (b) the
date which is the first day of the beginning of the taxable year of the
Corporation (or any successor thereto) to which no Tax Benefits (as defined in
the Plan) may be carried forward, any attempted sale, purchase, transfer,
assignment, conveyance, pledge or other disposition ("Transfer") of any share
of Common Stock, any warrants, rights or options to purchase Common Stock, or
any other interests that would be treated as "stock" of the Corporation under
Section 382 of the Internal Revenue Code of 1986, as amended ("Tax Code")
(collectively, "Corporate Securities") to any person or entity or group of
persons or entities acting in concert ("Transferee") who directly or indirectly
owns or is treated as owning (within the meaning of the attribution rules
applicable under section 382 of the Tax Code) ("Own") 4.75% of the outstanding
shares of any class of Corporate Securities or, after giving effect to the
Transfer, would directly or indirectly Own more than 4.75% of the outstanding
shares of any class of Corporate Securities shall be void ab initio and shall
not be effective to Transfer any of such shares of Corporate Securities to the
extent the Transfer increases the Transferee's direct or indirect Ownership of
the Corporate Securities above 4.75% of the total outstanding shares of such
class of Corporate Securities. Similarly, any Transfer by a transferor who
directly or indirectly Owns five percent (5%) or more of the outstanding shares
of any class of Corporate Securities shall be void ab initio and shall not be
effective to Transfer any of such shares to the purported Transferee.
2. The foregoing restriction on transfer of Corporate
Securities shall not apply to (a) the transfer of Common Stock in accordance
with section 9.4 of the Plan, and (b) any attempted Transfer if the transferor
or the Transferee obtains the approval of the board of directors of the
Corporation, or a designated committee thereof. As a condition to granting
such approval, the board of directors may, in its discretion, require that the
transferor or the Transferee, as the case may be, deliver an opinion of counsel
selected by the board to the effect that the Transfer shall not result in the
application of any limitation on the use of Tax Benefits under sections
ATT. 1 -- EXH. F-6
<PAGE> 104
382 and 269 of the Tax Code. If the board requires and receives such an
opinion of counsel, the decision to approve a Transfer (whether or not that
decision is contrary to the opinion so delivered) shall still remain in the
sole discretion of the board of directors.
3. If the board of directors determines that a Transfer
of Corporate Securities constitutes a Transfer prohibited by paragraph D.1
("Prohibited Transfer"), then, upon written demand by the Corporation, the
purported Transferee shall transfer or cause to be transferred any certificate
or other evidence of ownership of Corporate Securities that are the subject of
the Prohibited Transfer ("Prohibited Securities"), together with any dividends
or other distributions that were received by the Transferee from the
Corporation with respect to such Prohibited Securities ("Prohibited
Distributions"), to an agent designated by the board of directors ("Agent").
The Agent shall thereupon sell to a buyer or buyers the Prohibited Securities
transferred to it. If the purported Transferee has resold the Prohibited
Securities before receiving the Corporation's demand to surrender the
Prohibited Securities to the Agent, the purported Transferee shall be deemed to
have sold the Prohibited Securities for the Agent and shall be required to
transfer to the Agent any Prohibited Distributions and the proceeds of such
sale. If the purported Transferee fails to surrender the Prohibited
Securities, or the proceeds of a sale thereof, and any Prohibited Distributions
to the Agent within thirty (30) business days from the date on which the
Corporation makes a demand for such surrender, then the Corporation shall
institute legal proceedings to compel surrender.
4. No employee or agent of the Corporation shall record
any Prohibited Transfer, and the purported Transferee shall not be recognized
as a stockholder of the Corporation for any purpose whatsoever in respect of
the Prohibited Securities. Until the Prohibited Securities are acquired by
another person in a Transfer that is not a Prohibited Transfer, the purported
Transferee shall not be entitled with respect to such Prohibited Securities to
any rights of stockholders of the Corporation, including, without limitation,
the right to vote such Prohibited Securities and to receive dividend
distributions, whether liquidating or otherwise, in respect thereof, if any.
Once the Prohibited Securities have been acquired in a Transfer that is not a
Prohibited Transfer, the Corporate Securities shall cease to be Prohibited
Securities.
5. The Agent shall apply any proceeds of a sale by it of
Prohibited Securities and, if the purported Transferee has previously resold
the Prohibited Securities, any amounts received by it from a purported
Transferee, as follows: (a) first, such amount shall be paid to the Agent to
the extent necessary to cover its costs and expenses incurred in connection
with its duties hereunder; (b) second, any remaining amounts shall be paid to
the purported Transferee, up to the amount paid by the purported Transferee for
the Prohibited Securities, which amount shall be determined in the discretion
of the board of directors; and (c) third, any remaining amounts shall be paid
to one or more organizations selected by the board of directors qualifying
under section 501(c)(3) of the Tax Code.
6. All certificates reflecting Corporate Securities
issued by the Corporation on or after the Effective Date shall bear a
conspicuous legend in substantially the following form:
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO
RESTRICTION PURSUANT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF THE CORPORATION REPRINTED IN ITS ENTIRETY ON THE BACK
OF THIS CERTIFICATE.
7. If any portion of this Article 4.D shall be
determined judicially to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the rest of this or any other Article, which
shall thereafter be interpreted as if the invalid or unenforceable part were
not contained therein.
FIFTH: No stockholder of the Corporation shall have any
preemptive or preferential right of subscription to any shares of any stock of
the Corporation, or to any securities or obligations convertible into stock
ATT. 1 -- EXH. F-7
<PAGE> 105
of the Corporation, issued or sold, nor any right of subscription to any
thereof other than such, if any, as the board of directors of the Corporation
in its discretion from time to time may determine, and at such price as the
board of directors from time to time may fix, pursuant to the authority hereby
conferred by this Amended and Restated Certificate of Incorporation of the
Corporation, and the board of directors may issue stock of the Corporation, or
securities or obligations convertible into stock, without offering such issue
of stock, either in whole or in part, to the stockholders of the Corporation.
The acceptance of stock in the Corporation shall be a waiver of any such
preemptive or preferential right which in the absence of this provision might
otherwise be asserted by stockholders of the Corporation or any of them.
SIXTH: The name and mailing address of the incorporator are
________________________, c/o Weil, Gotshal & Manges, 700 Louisiana Street,
Suite 1600, Houston, Texas 77002.
SEVENTH: Upon filing this Amended and Restated Certificate of
Incorporation, the names and mailing addresses of the persons who are to serve
as directors shall be as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
James R. Hawkins
James T. Sartain
Rick R. Hagelstein
Matt A. Landry, Jr.
C. Ivan Wilson
David Palmer
Donald Douglas
Richard E. Bean
[One director designated by Cargill Financial Services Corporation]
[Three directors to be selected by a nominating committee, comprised
of James R. Hawkins and Donald Douglas, at least two of which
directors shall be independent, non-management directors and one of
which shall serve until the Determination Date]
</TABLE>
EIGHTH: In furtherance and not in limitation of the powers
conferred by law, subject to any limitations contained elsewhere in this
Amended and Restated Certificate of incorporation, by-laws of the Corporation
may be adopted, amended or repealed by a majority of the board of directors of
the Corporation, but any by-laws adopted by the board of directors may be
amended or repealed by the stockholders entitled to vote thereon. Election of
directors need not be by written ballot.
NINTH: (a) A director of the Corporation shall not be
personally liable either to the Corporation or to any stockholder for monetary
damages for breach of fiduciary duty as a director, except (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders; (ii)
for acts or omissions which are not in good faith or which involve intentional
misconduct or knowing violation of the law; (iii) for any matter in respect of
which such director shall be liable under Section 174 of Title 8 of the General
Corporation Law of the State of
ATT. 1 -- EXH. F-8
<PAGE> 106
Delaware or any amendment thereto or successor provision thereto; or (iv) for
any transaction from which the director shall have derived an improper personal
benefit. Neither amendment nor repeal of this paragraph (a) nor the adoption
of any provision of this Amended and Restated Certificate of Incorporation
inconsistent with this paragraph (a) shall eliminate or reduce the effect of
this paragraph (a) in respect of any matter occurring, or any cause of action,
suit or claim that, but for this paragraph (a) of this Article, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
(b) The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to, or testifies in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, by reason of the fact that
such person is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, employee benefit plan, trust, or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding to the full extent permitted by law, and the Corporation may
adopt by-laws or enter into agreements with any such person for the purpose of
providing for such indemnification.
(c) To the extent that a director, officer, employee, or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in paragraph (b) of this
Article, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Expenses incurred by an officer, director, employee, or
agent in defending or testifying in a civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director, officer, employee,
or agent to repay such amount if it shall ultimately be determined that such
director, officer, employee, or agent is not entitled to be indemnified by the
Corporation against such expenses as authorized by this Article, and the
Corporation may adopt by-laws or enter into agreements with such persons for
the purpose of providing for such advances.
(e) The indemnification permitted by this Article shall not
be deemed exclusive of any other rights to which any person may be entitled
under section 8.5 of the Plan, or any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding an office,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
(f) Notwithstanding any provision in this Article to the
contrary, the Corporation shall not indemnify or advance expenses to any person
who was or is a party or is threatened to be made a party to, or testifies in,
any threatened, pending or completed action, suit or proceeding if such action,
suit or proceeding is based upon or arises out of or is in connection with an
event, act or omission occurring prior to October 31, 1992.
(g) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, employee benefit plan trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability under the provisions of this Article or otherwise.
ATT. 1 -- EXH. F-9
<PAGE> 107
IN WITNESS WHEREOF, the undersigned has duly executed this Amended and
Restated Certificate of Incorporation on this ________ day of ________, 19__.
----------------------------------------
James R. Hawkins
Chairman of the Board
ATT. 1 -- EXH. F-10
<PAGE> 108
EXHIBIT G
Primary Merger Alternative
BYLAWS
OF
FIRSTCITY FINANCIAL CORPORATION
A Delaware Corporation
<PAGE> 109
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Stockholder List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 New Business and Nominations of Directors . . . . . . . . . . . . . . . . . . . . . 3
2.10 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE THREE: DIRECTORS
3.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Number; Qualification; Election; Term . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Change in Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Election of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Portfolio Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Number; Qualification; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Committee Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
ATT. 1 -- EXH. G-i
<PAGE> 110
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.6 Alternate Members of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.10 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.12 Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE FIVE: NOTICE
5.1 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.7 Vice Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.8 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.9 Executive Vice Presidents, Senior Vice Presidents and Vice Presidents . . . . . . . 11
6.10 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.11 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.12 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.13 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . . . . . . . . . . . . 12
7.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.5 Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.5 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.6 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.7 Securities of Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.8 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
ATT. 1 -- EXH. G-ii
<PAGE> 111
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
8.9 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.10 Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.11 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.12 Bank Accounts and Drafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.13 Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.14 Mortgages, Contracts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.16 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.17 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ATT. 1 -- EXH. G-iii
<PAGE> 112
BYLAWS
OF
FIRSTCITY FINANCIAL CORPORATION
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law") and the Amended and Restated Certificate of Incorporation ("Certificate
of Incorporation") of FirstCity Financial Corporation, a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the provisions
of these bylaws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the Certificate of Incorporation, such
provisions of the Delaware General Corporation Law or the Certificate of
Incorporation, as the case may be, shall control.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office
and registered agent of the Corporation shall be as designated from time to
time by the appropriate filing by the Corporation in the office of the
Secretary of State of the State of Delaware.
1.2 Other Offices. The Corporation may also have offices
at such other places, both within and without the State of Delaware, as the
board of directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of
the Corporation shall be held each calendar year on such date and at such time
as shall be designated from time to time by the board of directors and stated
in the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders entitled by the Certificate of
Incorporation to elect directors shall elect such directors and transact such
other business as may properly be brought before the meeting.
2.2 Special Meeting. A special meeting of the
stockholders may be called at any time by the Chairman of the Board, the
President, the board of directors, and shall be called by the President or the
Secretary at the request in writing of the stockholders of record of not less
than ten percent of all shares entitled to vote at such meeting or as otherwise
provided by the Certificate of Incorporation. A special meeting shall be held
on such date and at such time as shall be designated by the person(s) calling
the meeting and stated in the notice of the meeting or in a duly executed
waiver of notice of such meeting. Only such business shall be transacted at a
special meeting as may be stated or indicated in the notice of such meeting or
in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders
may be held at any place within or without the State of Delaware designated by
the board of directors. A special meeting of stockholders may be held
ATT. 1 -- EXH. G-1
<PAGE> 113
at any place within or without the State of Delaware designated in the notice
of the meeting or a duly executed waiver of notice of such meeting. Meetings
of stockholders shall be held at the principal office of the Corporation unless
another place is designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place,
day, and time of each meeting of the stockholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the officer or person(s) calling the meeting, to
each stockholder of record entitled to vote at such meeting. If such notice is
to be sent by mail, it shall be directed to such stockholder at his address as
it appears on the records of the Corporation, unless he shall have filed with
the Secretary of the Corporation a written request that notices to him be
mailed to some other address, in which case it shall be directed to him at such
other address. Notice of any meeting of stockholders shall not be required to
be given to any stockholder who attends such meeting in person or by proxy and
does not, at the beginning of such meeting, object to the transaction of any
business because the meeting is not lawfully called or convened, or who
submits, either before or after the meeting, a signed waiver of notice, in
person or by proxy.
2.5 Stockholder List. At least ten (10) days before each
meeting of stockholders, the Secretary or other officer of the Corporation who
has charge of the Corporation's stock ledger, either directly or through
another officer appointed by him or through a transfer agent appointed by the
board of directors, shall prepare a complete list of stockholders entitled to
vote thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten (10) days prior to such meeting, such list shall be kept on
file at a place within the city where the meeting is to be held, which place
shall be specified in the notice of meeting or a duly executed waiver of notice
of such meeting or, if not so specified, at the place where the meeting is to
be held and shall be open to examination by any stockholder during ordinary
business hours. Such list shall be produced at such meeting and kept at the
meeting at all times during such meeting and may be inspected by any
stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the Corporation, or to vote in person or by proxy at
any meeting of stockholders.
Stockholders shall have those rights afforded under the
Delaware General Corporation Law to inspect for any proper purpose the
Corporation's stock ledger, list of stockholders and other books and records,
and make copies or extracts therefrom. Such request shall be in writing in
compliance with Section 220 of the Delaware General Corporation Law.
Information so requested shall be made available for inspecting, copying, or
extracting during usual business hours at the principal executive offices of
the Corporation. Each stockholder desiring photostatic or other duplicate
copies of any such information requested shall make arrangements to provide the
duplicating or other equipment necessary in the city where the Corporation's
principal executive offices are located. Alternative arrangements with respect
to this paragraph may be permitted in the discretion of the President of the
Corporation or by vote of the board of directors.
2.6 Quorum. The holders of a majority of the outstanding
shares entitled to vote on a matter, present in person or by proxy, shall
constitute a quorum at any meeting of stockholders, except as otherwise
provided by law, the Certificate of Incorporation, or these bylaws. If a
quorum is not present, in person or by proxy, at any meeting of stockholders,
the stockholders entitled to vote thereat who are present, in person or by
proxy, or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other
than announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the
ATT. 1 -- EXH. G-2
<PAGE> 114
adjournment is for more than thirty (30) days or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum
is present at any meeting, the vote of the holders of at least a majority of
the outstanding shares entitled to vote who are present, in person or by proxy,
shall decide any question brought before such meeting, unless the question is
one on which, by express provision of statute, the Certificate of
Incorporation, or these bylaws, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
The stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise
provided in the Certificate of Incorporation or by law, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to
a vote at a meeting of stockholders. Elections of directors need not be by
written ballot. At any meeting of stockholders, every stockholder having the
right to vote may vote either in person or by a proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Each such proxy
shall be filed with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid after three (3) years from the date of
its execution, unless otherwise provided in the proxy. If no date is stated in
a proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
2.9 New Business and Nominations of Directors.
(a) Notice of New Business. At any meeting of
stockholders, only such new business shall be conducted, and only such
proposals shall be acted upon, as shall have been properly brought
before such meeting. For any new business proposed by the board of
directors to be properly brought before any meeting of stockholders,
such new business shall be approved by the board and shall be stated
in writing and filed with the Secretary of the Corporation at least
five (5) days before the date of the meeting, and all business so
approved, stated, and filed shall be considered at the meeting. Any
stockholder entitled to vote thereon may make any other proposal at a
meeting of stockholders, but unless properly brought before any
meeting, such proposal shall not be acted upon thereat. For a
proposal to be properly brought before any meeting by a stockholder
entitled to vote thereon, the stockholder must have provided written
notice thereof to the Secretary of the Corporation. Such stockholder
notice must be delivered to or mailed and received at the principal
executive offices of the Corporation (i) in the case of an annual
meeting, not later than the date that corresponds to one hundred
twenty (120) days prior to the date the Corporation's proxy statement
was released to stockholders in connection with the previous year's
annual meeting of stockholders, or (ii) in the case of a special
meeting, no earlier than ninety (90) days prior to such special
meeting and not later than the close of business on the later of (1)
sixty (60) days prior to such special meeting, or (2) ten (10) days
following the day on which public announcement is first made of the
date of the special meeting and of any business proposed by the board
of directors to be conducted at such meeting. A stockholder's notice
to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the meeting (a) a description of the proposal
desired to be brought before the meeting and the reasons for
conducting such business thereat; (b) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such
business and any other stockholders known by such stockholder to be
supporting such proposal; (c) the class or series and number of shares
of stock of the Corporation that are held of record, beneficially
owned, and represented by proxy on the date of such stockholder notice
and on the record date of the meeting (if such date shall have been
publicly announced) by the stockholder and any other stockholders
known by such stockholder to be supporting such proposal on such
dates; (d) any financial
ATT. 1 -- EXH. G-3
<PAGE> 115
interest of the stockholder or stockholders in such proposal; and (e)
all other information that would be required to be filed with the
Securities and Exchange Commission if, with respect to any such item
of business, such stockholder or stockholders were a participant in a
solicitation subject to Section 14 of the Securities Exchange Act of
1934, as amended ("Exchange Act"), or any successor regulation
thereto.
For purposes of this section 2.9, "publicly announced" or
"public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.
The board of directors may reject any stockholder proposal not
made strictly in accordance with the terms of this Section 2.9(a).
Alternatively, if the board of directors fails to consider the
validity of any stockholder proposal, the Chairman or other presiding
officer at any meeting of stockholders, shall, if the facts warrant,
determine and declare at such meeting that the stockholder proposal
was not made in accordance with the provisions of this Section 2.9(a),
and, if he should so determine, he shall so declare at the meeting,
and any such business or proposal not properly brought before the
meeting shall not be acted upon thereat. The provisions of this
Section 2.9(a) shall not prevent the consideration and approval or
disapproval at any meeting of stockholders of reports of officers,
directors and committees of the board of directors, but, in connection
with such reports, no new business shall be acted upon at such meeting
unless stated, filed, and received as provided in this section.
(b) Notice of Director Nominations. Notwithstanding
anything in these bylaws to the contrary, only persons who are
nominated in accordance with the procedures hereinafter set forth in
this Section 2.9(b) shall be eligible for election as directors of the
Corporation in accordance with Section 3.2 of these bylaws.
Nominations of persons for election to the board of directors
of the Corporation may be made at a meeting of stockholders only (a)
by or at the direction of the board of directors, or (b) by any
stockholder of the Corporation entitled to vote for the election of
such directors at the meeting who complies with the notice procedures
set forth in this Section 2.9. Such nominations, other than those
made by or at the direction of the board of directors, shall be made
pursuant to timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered
to or mailed and received at the principal executive offices of the
Corporation (i) in the case of an annual meeting, not less than thirty
(30) days nor more than sixty (60) days prior to the meeting, or (ii)
in the case of a special meeting, no earlier than ninety (90) days
prior to such special meeting and not later than the close of business
on the later of (1) sixty (60) days prior to such special meeting, or
(2) ten (10) days following the day on which public announcement is
first made of the date of the special meeting and of any nominations
to the board of directors proposed by the board to be elected at such
meeting; provided, however, that in the event that less than forty
(40) days' notice or prior public announcement of the date of the
meeting is given or made to stockholders, notice by the stockholder to
be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which such notice of the
date of the meeting was mailed or such public announcement was made.
Any adjournment(s) or postponement(s) of the original meeting whereby
the meeting will reconvene within thirty (30) days from the original
date shall be deemed for purposes of notice to be a continuation of
the original meeting, and no nominations by a stockholder of persons
to be elected directors of the Corporation may be made at any such
reconvened meeting other than pursuant to a notice that was timely for
the meeting on the date originally scheduled. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, all
information relating to such person that is required to be disclosed
in solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Exchange
Act or any successor regulation thereto (including such person's
written consent to being
ATT. 1 -- EXH. G-4
<PAGE> 116
named in the proxy statement as a nominee and to serving as a director
if elected); and (b) as to the stockholder giving the notice (1) the
name and address, as they appear on the Corporation's books, of such
stockholder, and (2) the class or series and number of shares of stock
of the Corporation that are held of record, beneficially owned, and
represented by proxy on the date of such stockholder nomination and on
the record date of the meeting (if such date shall have been publicly
announced) by such stockholder on such dates. At the request of the
board of directors, any person nominated by the board for election as
a director shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee.
The Chairman or other presiding officer at any meeting of
stockholders shall, if the facts warrant, determine and declare at
such meeting that a stockholder nomination was not made in accordance
with the provisions of this Section 2.9(b), and, if he should so
determine, he shall so declare at the meeting, and any such nomination
not properly brought before the meeting shall be disregarded.
2.10 Record Date. (a) For the purpose of determining
stockholders entitled to notice of, or to vote at, any meeting of stockholders,
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion, or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the board of directors, for any such
determination of stockholders, such date in any case to be not more than sixty
(60) days and not less than ten (10) days prior to such meeting nor more than
sixty (60) days prior to any other action. If no record date is fixed:
(i) The record date for determining stockholders entitled
to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled to
notice of, or to vote at, a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) For the Corporation to determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which date shall not be more than ten (10) days after the
date upon which the resolution fixing the record date is adopted by the board
of directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law or these bylaws, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office in the State of Delaware, principal place of business, or such officer
or agent shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and
prior action by the board of directors is required by law or these bylaws, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
day on which the board of directors adopts the resolution taking such prior
action.
ATT. 1 -- EXH. G-5
<PAGE> 117
2.11 Conduct of Meeting. The Chairman of the Board, or if
the Chairman of the Board is absent or otherwise unable to act, the President
shall preside at all meetings of stockholders. The Secretary shall keep the
records of each meeting of stockholders. In the absence or inability to act of
any such officer, such officer's duties shall be performed by the officer given
the authority to act for such absent or non-acting officer under these bylaws
or by some person appointed by the meeting.
2.12 Inspectors. The board of directors may, in advance
of any meeting of stockholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If any of the inspectors so appointed
shall fail to appear or act, the chairman of the meeting shall, or if
inspectors shall not have been appointed, the chairman of the meeting may,
appoint one or more inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall (i) determine the number of
shares of capital stock of the Corporation outstanding, the voting power of
each, the number of shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies; (ii) receive votes, ballots, or
consents; (iii) hear and determine all challenges and questions arising in
connection with the right to vote; (iv) count and tabulate all votes, ballots,
or consents; (v) determine the results; and (vi) do such other acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
ARTICLE THREE: DIRECTORS
3.1 Management. The business, property and affairs of
the Corporation shall be managed by, or under the direction of, the board of
directors. Subject to the restrictions imposed by law, the Certificate of
Incorporation, or these bylaws, the board of directors may exercise all the
powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of
directors which shall constitute the entire board of directors shall be not
less than one (1) nor more than twelve (12). The initial board of directors
shall consist of the number of directors named in the Certificate of
Incorporation. After the New Special Preferred Stock has been redeemed in
accordance with its terms, the number of directors constituting the entire
board of directors shall be not less than one (1) nor more than eight (8) as
determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the Certificate
of Incorporation, or these bylaws, the directors shall be elected at an annual
meeting of stockholders at which a quorum is present. Directors shall be
elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote on the election of such directors.
Each director so chosen shall hold office until the first annual meeting of
stockholders held after his election and until his successor is elected and
qualified or, if earlier, until his death, resignation, or removal from office.
None of the directors need be a stockholder of the Corporation or a resident of
the State of Delaware. Each director must have attained the age of majority.
3.3 Change in Number. No decrease in the number of
directors constituting the entire board of directors shall have the effect of
shortening the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the
Certificate of Incorporation or these bylaws, at any meeting of stockholders
called expressly for that purpose, any director or the entire board of
directors may be removed, with or without cause, by a vote of the holders of a
majority of the shares then entitled to vote on the election of such director
or directors; provided, however, that so long as stockholders have the right to
cumulate votes in the election of directors pursuant to the Certificate of
Incorporation, if less than the entire board of
ATT. 1 -- EXH. G-6
<PAGE> 118
directors is to be removed, no one of the directors may be removed if the votes
cast against his removal would be sufficient to elect him if then cumulatively
voted at an election of the entire board of directors.
3.5 Vacancies. Unless otherwise specified in the
Certificate of Incorporation, vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
the sole remaining director, and each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and
until his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. If there are no directors in office, an
election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly-created directorship, the
directors then in office shall constitute less than a majority of the whole
board of directors (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent (10%) of the total number of the shares at the
time outstanding having the right to vote for such remaining directors,
summarily order an election to be held to fill any such vacancies or
newly-created directorships or to replace the directors chosen by the directors
then in office. Except as otherwise provided in the Certificate of
Incorporation or these bylaws, when one or more directors shall resign from the
board of directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in these bylaws with respect to the filling of
other vacancies.
3.6 Meetings of Directors. The directors may hold their
meetings and may have an office and keep the books of the Corporation, except
as otherwise provided by statute, in such place or places within or without the
State of Delaware as the board of directors may from time to time determine or
as shall be specified in the notice of such meeting or duly executed waiver of
notice of such meeting.
3.7 First Meeting. Each newly elected board of directors
may hold its first meeting for the purpose of organization and the transaction
of business, if a quorum is present, immediately after and at the same place as
the annual meeting of stockholders, and no notice of such meeting shall be
necessary.
3.8 Election of Officers. At the first meeting of the
board of directors after each annual meeting of stockholders at which a quorum
shall be present, the board of directors shall elect the officers of the
Corporation.
3.9 Regular Meetings. Regular meetings of the board of
directors shall be held at such times and places as shall be designated from
time to time by resolution of the board of directors. Notice of such regular
meetings shall not be required.
3.10 Special Meetings. Special meetings of the board of
directors shall be held whenever called by the Chairman of the Board, the
President, or any director.
3.11 Notice. The Secretary shall give notice of each
special meeting to each director at least twenty-four (24) hours before the
meeting. Notice of any such meeting need not be given to any director who
shall, either before or after the meeting, submit a signed waiver of notice or
who shall attend such meeting without protesting, prior to or at its
commencement, the lack of notice to him. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board
of directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If at any
meeting of the board of directors there be less than a quorum present, a
majority of those present or any
ATT. 1 -- EXH. G-7
<PAGE> 119
director solely present may adjourn the meeting from time to time without
further notice. Unless the act of a greater number is required by law, the
Certificate of Incorporation, or these bylaws, the act of a majority of the
directors present at a meeting at which a quorum is in attendance shall be the
act of the board of directors. At any time that the Certificate of
Incorporation provides that directors elected by the holders of a class or
series of stock shall have more or less than one vote per director on any
matter, every reference in these bylaws to a majority or other proportion of
directors shall refer to a majority or other proportion of the votes of such
directors.
3.13 Procedure. At meetings of the board of directors,
business shall be transacted in such order as from time to time the board of
directors may determine. The Chairman of the Board, or if the Chairman of the
Board is absent or otherwise unable to act, the Vice Chairman of the Board
shall preside at all meetings of the board of directors. In the absence or
inability to act of either such officer, a chairman shall be chosen by the
board of directors from among the directors present. The Secretary of the
Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation
who is present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by certified or registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
3.15 Compensation. The board of directors shall have the
authority to fix the compensation, including fees and reimbursement of
expenses, paid to directors for attendance at regular or special meetings of
the board of directors or any committee thereof; provided, however, that
nothing contained herein shall be construed to preclude any director from
serving the Corporation in any other capacity or receiving compensation
therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by
resolution adopted by a majority of the entire board of directors, designate
one or more committees.
4.2 Portfolio Committee. Until the New Special Preferred
Stock is redeemed in accordance with its terms, in addition to other committees
that may be designated from time to time by the board of directors, there shall
be a portfolio committee ("Portfolio Committee") which shall consist of four
(4) members, which shall include Rick R. Hagelstein and no more than two (2)
shall be chosen from the group of Messrs. Palmer, Douglas, and Bean. The
Portfolio Committee will have the power and authority to make decisions and to
take all action necessary and appropriate to administer the servicing of the
non-cash Trust Assets under the Trust Agreement as provided in the Investment
Management Agreement by and between the Corporation and the FirstCity
Liquidating Trust. The Portfolio Committee shall dissolve when all of the New
Special Preferred Stock has been redeemed in accordance with its terms. In the
event the vote of the members of the Portfolio Committee is equally divided
with respect to any matter, if the two (2) members chosen from the group of
Messrs. Palmer, Douglas and Bean have voted the same way with respect thereto,
the vote of such members shall control and shall be the vote of the Portfolio
Committee. [To be supplied: tie-break mechanism if Palmer/Douglas/Bean
designees are not unanimous.] [To be supplied: mechanism for appointment of Mr.
Brown to Portfolio Committee if he is not a director.]
4.3 Number; Qualification; Term. Each committee shall
consist of one or more directors appointed by resolution adopted by a majority
of the entire board of directors. Except for the Portfolio Committee,
ATT. 1 -- EXH. G-8
<PAGE> 120
the number of committee members may be increased or decreased from time to time
by resolution adopted by a majority of the entire board of directors. Each
committee member shall serve as such until the earliest of (i) the expiration
of his term as director, (ii) his resignation as a committee member or as a
director, or (iii) his removal as a committee member or as a director.
4.4 Authority. Each committee, to the extent expressly
provided in the resolution establishing such committee, shall have and may
exercise all of the authority of the board of directors in the management of
the business and property of the Corporation except to the extent expressly
restricted by law, the Certificate of Incorporation, or these bylaws.
4.5 Committee Changes. The board of directors shall have
the power at any time to fill vacancies in, to change the membership of, and to
discharge any committee; provided, however, that the remaining members of the
Portfolio Committee shall fill any vacancies thereon, and the term of such
committee shall be as designated in Section 4.2 hereof.
4.6 Alternate Members of Committees. The board of
directors may designate one (1) or more directors as alternate members of any
committee except the Portfolio Committee. Any such alternate member may
replace any absent or disqualified member at any meeting of the committee. If
no alternate committee members have been so appointed to a committee or each
such alternate committee member is absent or disqualified, the member or
members of such committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
4.7 Regular Meetings. Regular meetings of any committee
may be held without notice at such time and place as may be designated from
time to time by the committee and communicated to all members thereof.
4.8 Special Meetings. Special meetings of any committee
may be held whenever called by any committee member. The committee member
calling any special meeting shall cause notice of such special meeting,
including therein the time and place of such special meeting, to be given to
each committee member at least two (2) days before such special meeting.
Neither the business to be transacted at, nor the purpose of, any special
meeting of any committee need be specified in the notice or waiver of notice of
any special meeting.
4.9 Quorum; Majority Vote. At meetings of any committee,
a majority of the number of members designated by the board of directors shall
constitute a quorum for the transaction of business. If a quorum is not
present at a meeting of any committee, a majority of the members present may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present. The act of a majority
of the members present at any meeting at which a quorum is in attendance shall
be the act of a committee, unless the act of a greater number is required by
law, the Certificate of Incorporation, or these bylaws.
4.10 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the board of directors
upon the request of the board of directors. The minutes of the proceedings of
each committee shall be delivered to the Secretary of the Corporation for
placement in the minute books of the Corporation.
4.11 Compensation. Committee members may, by resolution
of the board of directors, be allowed a fixed sum and expenses of attendance,
if any, for attending any committee meetings or a stated salary.
4.12 Responsibility. The designation of any committee and
the delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
ATT. 1 -- EXH. G-9
<PAGE> 121
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the Certificate of
Incorporation, or these bylaws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall not be required and any such notice may
be given (a) in writing, by mail, postage prepaid, addressed to such committee
member, director, or stockholder at his address as it appears on the books or
(in the case of a stockholder) the stock transfer records of the Corporation,
or (b) by any other method permitted by law (including but not limited to
overnight courier service, telegram, telex, or telefax). Any notice required
or permitted to be given by mail shall be deemed to be delivered and given at
the time when the same is deposited in the United States mail as aforesaid.
Any notice required or permitted to be given by overnight courier service shall
be deemed to be delivered and given at the time delivered to such service with
all charges prepaid and addressed as aforesaid. Any notice required or
permitted to be given by telegram, telex, or telefax shall be deemed to be
delivered and given at the time transmitted with all charges prepaid and
addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given
to any stockholder, director, or committee member of the Corporation by
statute, the Certificate of Incorporation, or these bylaws, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be equivalent to the giving of such
notice. Attendance of a stockholder, director, or committee member at a
meeting shall constitute a waiver of notice of such meeting, except where such
person attends for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the
Corporation shall be a President, a Secretary, and such other officers as the
board of directors may from time to time elect or appoint, including a Chairman
of the Board, one or more Vice Presidents (with each Vice President to have
such descriptive title, if any, as the board of directors shall determine), and
a Treasurer. Each officer shall hold office until his successor shall have
been duly elected and shall have qualified, until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided. Any two
or more offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Delaware.
6.2 Removal. Any officer or agent elected or appointed
by the board of directors may be removed by the board of directors whenever in
its judgment the best interest of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of
the Corporation (by death, resignation, removal, or otherwise) may be filled by
the board of directors.
6.4 Authority. Officers shall have such authority and
perform such duties in the management of the Corporation as are provided in
these bylaws or as may be determined by resolution of the board of directors
not inconsistent with these bylaws.
6.5 Compensation. The compensation, if any, of officers
and agents shall be fixed from time to time by the board of directors;
provided, however, that the board of directors may delegate the power to
determine the compensation of any officer and agent (other than the officer to
whom such power is delegated) to the Chairman of the Board or the President.
ATT. 1 -- EXH. G-10
<PAGE> 122
6.6 Chairman of the Board. The Chairman of the Board
shall be the chief executive officer of the Corporation and shall have such
powers and duties as may be prescribed by the board of directors. Such officer
shall preside at all meetings of the stockholders and of the board of
directors. Such officer may sign all certificates for shares of stock of the
Corporation.
6.7 Vice Chairman of the Board. The board may appoint
one of its members to be Vice Chairman of the Board. In the absence of the
Chairman of the Board, the Vice Chairman of the Board shall perform all the
duties of the Chairman of the Board, and such officer shall also have and may
exercise such other and further powers and duties as from time to time may be
conferred upon, or assigned to, such officer by the board.
6.8 President. The President shall be the chief
operating officer of the Corporation and shall have general executive charge,
management, and control of the properties and operations of the Corporation in
the ordinary course of its business, with all such powers with respect to such
properties and operations as may be reasonably incident to such
responsibilities. In the absence or inability to act of the Chairman of the
Board and the Vice Chairman of the Board, the President shall exercise all of
the powers and discharge all of the duties of the Chairman of the Board and the
Vice Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board or the Vice Chairman of the Board shall be conclusive evidence
that the Chairman of the Board or the Vice Chairman of the Board is absent or
unable to act.
6.9 Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents. Each such officer shall have such powers and duties as may be
assigned to him by the board of directors, the Chairman of the Board, or the
President, and (in order of their seniority as determined by the board of
directors or, in the absence of such determination, as determined by the length
of time they have held office) shall exercise the powers of the President
during that officer's absence or inability to act. As between the Corporation
and third parties, any action taken by an Executive Vice President, a Senior
Vice President or a Vice President in the performance of the duties of the
President shall be conclusive evidence of the absence or inability to act of
the President at the time such action was taken.
6.10 Treasurer. The Treasurer shall have custody of the
Corporation's funds and securities, shall keep full and accurate account of
receipts and disbursements, shall deposit all monies and valuable effects in
the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the Chairman
of the Board, the Vice Chairman of the Board, or the President.
6.11 Assistant Treasurers. Each Assistant Treasurer, if
any, shall have such powers and duties as may be assigned to him by the board
of directors, the Chairman of the Board, the Vice Chairman of the Board, or the
President. The Assistant Treasurers (in the order of their seniority as
determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.12 Secretary. Except as otherwise provided in these
bylaws, the Secretary shall keep the minutes of all meetings of the board of
directors and of the stockholders in books provided for that purpose, and he
shall attend to the giving and service of all notices. He may sign with the
Chairman of the Board, the Vice Chairman of the Board, or the President, in the
name of the Corporation, all contracts of the Corporation and affix the seal of
the Corporation thereto. He may sign with the Chairman of the Board, the Vice
Chairman of the Board, or the President all certificates for shares of stock of
the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which
shall at all reasonable times be open to inspection by any director upon
application at the office of the Corporation during business hours.
ATT. 1 -- EXH. G-11
<PAGE> 123
He shall in general perform all duties incident to the office of the Secretary,
subject to the control of the board of directors, the Chairman of the Board,
the Vice Chairman of the Board, and the President.
6.13 Assistant Secretaries. Each Assistant Secretary, if
any, shall have such powers and duties as may be assigned to him by the board
of directors, the Chairman of the Board, the Vice Chairman of the Board, or the
President. The Assistant Secretaries (in the order of their seniority as
determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Secretary) shall exercise the powers of the Secretary during that
officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of
stock of the Corporation shall be in such form as shall be approved by the
board of directors; provided, however, that the board of directors may provide
by resolution that some or all of any or all classes or series of its stock
shall be uncertificated shares. The certificates shall be signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, or a Vice
President and also by the Secretary or an Assistant Secretary or by the
Treasurer or an Assistant Treasurer. Any and all signatures on the certificate
may be a facsimile and may be sealed with the seal of the Corporation or a
facsimile thereof. If any officer, transfer agent, or registrar who has
signed, or whose facsimile signature has been placed upon, a certificate has
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, such certificate may be issued by the Corporation with the same
effect as if he were such officer, transfer agent, or registrar at the date of
issue. The certificates shall be consecutively numbered and shall be entered
in the books of the Corporation as they are issued and shall exhibit the
holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The
board of directors may direct a new certificate or certificates to be issued in
place of a certificate or certificates theretofore issued by the Corporation
and alleged to have been lost or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate or certificates representing
shares to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the board of directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
Corporation a bond with a surety or sureties satisfactory to the Corporation in
such sum as it may direct as indemnity against any claim, or expense resulting
from a claim, that may be made against the Corporation with respect to the
certificate or certificates alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the
Corporation shall be transferable only on the books of the Corporation by the
holders thereof in person or by their duly authorized attorneys or legal
representatives. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, the Corporation or its transfer agent shall issue a new certificate
to the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
7.4 Fractional Shares. The Corporation may, but shall
not be required to, issue certificates for fractions of a share where necessary
to effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive
such fractions are determined, or it may issue scrip in registered or bearer
form over the manual or facsimile signature of an officer of the Corporation or
of its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
ATT. 1 -- EXH. G-12
<PAGE> 124
7.5 Registered Stockholders. The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
7.6 Regulations. The board of directors shall have the
power and authority to make all such rules and regulations as they may deem
expedient concerning the issue, transfer, registration, or replacement of
certificates for shares of stock of the Corporation.
7.7 Legends. The board of directors shall have the power
and authority to provide that certificates representing shares of stock of the
Corporation bear such legends as the board of directors deems appropriate to
assure that the Corporation does not become liable for violations of federal or
state securities laws or other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the
Certificate of Incorporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of
directors out of funds of the Corporation legally available therefor such
reserve or reserves as the directors from time to time, in their discretion,
consider proper to provide for contingencies, to equalize dividends, or to
repair or maintain any property of the Corporation, or for such other purpose
as the board of directors shall consider beneficial to the Corporation, and the
board of directors may modify or abolish any such reserve in the manner in
which it was created.
8.3 Books and Records. The Corporation shall keep
correct and complete books and records of account, shall keep minutes of the
proceedings of its stockholders and board of directors and shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders, giving the names and
addresses of all stockholders and the number and class of the shares held by
each.
8.4 Fiscal Year. The fiscal year of the Corporation
shall be fixed by the board of directors; provided, however, that if such
fiscal year is not fixed by the board of directors and the selection of the
fiscal year is not expressly deferred by the board of directors, the fiscal
year shall be the calendar year.
8.5 Seal. The corporate seal shall have inscribed
thereon the name of the Corporation and the year of its incorporation, and
shall be in such form and contain such other words and/or figures as the board
of directors shall determine. The corporate seal may be used by printing,
engraving, lithographing, stamping or otherwise making, placing or affixing, or
causing to be printed, engraved, lithographed, stamped or otherwise made,
placed or affixed, upon any paper or document, by any process whatsoever, an
impression, facsimile or other reproduction of said corporate seal.
8.6 Resignations. Any director, committee member, or
officer may resign by so stating at any meeting of the board of directors or by
giving written notice to the board of directors, the Chairman of the Board, the
Vice Chairman of the Board, the President, or the Secretary. Such resignation
shall take effect at the time specified therein or, if no time is specified
therein, immediately upon its receipt. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
ATT. 1 -- EXH. G-13
<PAGE> 125
8.7 Securities of Other Corporations. The Chairman of
the Board, the Vice Chairman of the Board, the President, or any Vice President
of the Corporation shall have the power and authority to transfer, endorse for
transfer, vote, consent, or take any other action with respect to any
securities of another issuer which may be held or owned by the Corporation and
to make, execute, and deliver any waiver, proxy, or consent with respect to any
such securities.
8.8 Telephone Meetings. Members of the board of
directors or of any committee thereof may participate in and hold a meeting of
such board of directors or committee by means of a conference telephone or
similar communications equipment by means of which persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise
provided in the Certificate of Incorporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be (i) signed by the holders (acting for themselves
or through a proxy) of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which the holders of all shares entitled to vote thereon were
present and voted, and (ii) delivered to the Corporation's registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Every written consent of stockholders shall bear
the date of signature of each stockholder who signs the consent, and no written
consent shall be effective to take the corporate action referred to therein
unless, within sixty (60) days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation's registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporation's registered office, principal place of business, or
such officer or agent shall be by hand or by certified or registered mail,
return receipt requested. The Secretary shall provide prompt written notice of
the taking of action without a meeting to the stockholders that did not consent
in writing, or did not provide an effective written consent, to such action.
(b) Unless otherwise restricted by the Certificate of
Incorporation or by these bylaws, any action required or permitted to be taken
at a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect
as a vote of such directors or committee members, as the case may be, and may
be stated as such in any certificate or document filed with the Secretary of
State of the State of Delaware or in any certificate delivered to any person.
Such consent or consents shall be filed with the minutes of proceedings of the
board or committee, as the case may be.
8.10 Ratification. Any transaction, questioned in any law
suit on the ground of lack of authority, defective or irregular execution,
adverse interest of director, officer or stockholder, non-disclosure,
miscomputation, or the application of improper principles or practices of
accounting, may be ratified before or after judgment, by the board of directors
or by the stockholders, and if so ratified shall have the same force and effect
as if the questioned transaction had been originally duly authorized. Such
ratification shall be binding upon the Corporation and its stockholders and
shall constitute a bar to any claim or execution of any judgment in respect of
such questioned transaction.
ATT. 1 -- EXH. G-14
<PAGE> 126
8.11 Invalid Provisions. If any part of these bylaws
shall be held invalid or inoperative for any reason, the remaining parts, so
far as it is possible and reasonable, shall remain valid and operative.
8.12 Bank Accounts and Drafts. In addition to such bank
accounts as may be authorized by the board of directors, the primary financial
officer or any person designated by said primary financial officer, whether or
not an employee of the Corporation, may authorize such bank accounts to be
opened or maintained in the name and on behalf of the Corporation as he may
deem necessary or appropriate, payments from such bank accounts to be made upon
and according to the check of the Corporation in accordance with the written
instructions of said primary financial officer, or other person so designated
by the Treasurer.
8.13 Financial Reports. The board of directors may
appoint the primary financial officer or other fiscal officer or the Secretary
to cause to be prepared and furnished to stockholders entitled thereto any
special financial notice or financial statement, as the case may be, which may
be required by any provision of law.
8.14 Mortgages, Contracts, etc. The board of directors
may authorize any person or persons, in the name and on behalf of the
Corporation, to enter into or execute and deliver any and all deeds, deeds of
trust, bonds, mortgages, contracts, and other obligations or instruments, and
such authority may be general or confined to specific instances. Attestation
by the Secretary of the Corporation to the execution of any deed, deed of
trust, bond, mortgage, contract, or other obligation or instrument by any duly
authorized officer or officers shall not be necessary to constitute such deed,
deed of trust, bond, mortgage, contract, or other obligation or instrument a
valid and binding obligation against the Corporation unless the resolutions, if
any, of the board of directors authorizing such execution expressly state that
such attestation is necessary.
8.15 Headings. The headings used in these bylaws have
been inserted for administrative convenience only and do not constitute matter
to be construed in their interpretation.
8.16 References. Whenever herein the singular number is
used, the same shall include the plural where appropriate, and words of any
gender should include each other gender where appropriate.
8.17 Amendments. These bylaws may be altered, amended, or
repealed or new bylaws may be adopted by the stockholders or by the board of
directors at any regular meeting of the stockholders entitled to vote thereon
or the board of directors or at any special meeting of the stockholders
entitled to vote thereon or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws is contained in the
notice of such special meeting; provided, however, that until the New Special
Preferred Stock has been redeemed in accordance with its terms, no alteration
or amendment of these bylaws, nor the enactment of any new bylaws, may alter,
amend, or delete the provisions of section 3.2 relating to the number of
directors that shall constitute the entire board of directors.
The undersigned, the Secretary of the Corporation, hereby
certifies that the foregoing bylaws were adopted by the board of directors of
the Corporation as of __________________.
----------------------------------------
[Name], Secretary
ATT. 1 -- EXH. G-15
<PAGE> 127
EXHIBIT H
TRUST AGREEMENT
(Applicable to Primary Merger Alternative)
<PAGE> 128
LIQUIDATING TRUST AGREEMENT
Dated as of ________________, 199_
by and between
FIRST CITY BANCORPORATION OF TEXAS, INC., Debtor,
for the benefit of the
respective Beneficiaries entitled to the Trust Assets,
and
____________ as Trustee
ATT. 1 -- EXH. H
<PAGE> 129
LIQUIDATING TRUST AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------
Section 1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
ARTICLE II
THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------
Section 2.1 Creation and Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------
Section 2.2 Objective and Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------------
Section 2.3 Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------
Section 2.4 Further Assurances of Debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------------------
Section 2.5 Ownership by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
ARTICLE III
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
Section 3.1 Number and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------------
Section 3.2 Action By Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
Section 3.3 Term of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------------
Section 3.4 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
Section 3.5 Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------
Section 3.6 Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------------------
Section 3.7 Trust Continuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
Section 3.8 Compensation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------------
Section 3.9 Indemnification; Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------------------
Section 3.10 Reliance by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------------
Section 3.11 Prior Lien of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------------
Section 3.12 Reliance by Persons Dealing With the Trust . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------------------------------
Section 3.13 Judicial Accounting and Discharge of Trustee . . . . . . . . . . . . . . . . . . . . . . . 6
--------------------------------------------
Section 3.14 Compensation of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------------------
Section 3.15 Removal and Replacement of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------------------------------
ARTICLE IV
POWERS OF THE TRUSTEE AND INVESTMENT MANAGER . . . . . . . . . . . . . . . . . 6
--------------------------------------------
Section 4.1 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----
Section 4.2 Management Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------
Section 4.3 Commingling of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------------
ARTICLE V
OBLIGATIONS OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . 7
--------------------------
Section 5.1 Reports and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------------------
</TABLE>
ATT. 1 -- EXH. H-i
<PAGE> 130
<TABLE>
<S> <C>
5.1.1 Quarterly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------
5.1.2 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------
Section 5.2 Investment Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------
ARTICLE VI
CERTIFICATES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . . . . . . 8
-----------------------------------
Section 6.1 Nature of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------
Section 6.2 Securities Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------------
Section 6.3 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------
6.3.1 Appointment of Registrar and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------------------------
6.3.2 Registration and Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------------------------------
6.3.3 Access to Register by Certificate Holders . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------------------------------
Section 6.4 Absolute Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------
Section 6.5 Issuance of Certificates Upon Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------------------------
Section 6.6 Mutilated, Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . 9
-------------------------------------------------
Section 6.7 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------
ARTICLE VII
ADMINISTRATION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . 10
---------------------------
Section 7.1 Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------
Section 7.2 Distribution of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------
Section 7.3 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------
7.3.1 Income Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------
7.3.2 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------
7.3.3 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------
7.3.4 Allocation of Income and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------------
7.3.5 Valuation of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
Section 7.4 Unclaimed Cash or Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------------
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------
Section 9.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
Section 9.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------
Section 9.4 Governing Law; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------------
Section 9.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------
Section 9.6 Relationship to Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------
Section 9.7 Retention of Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------
</TABLE>
ATT. 1 -- EXH. H-ii
<PAGE> 131
LIQUIDATING TRUST AGREEMENT
THIS LIQUIDATING TRUST AGREEMENT (this "Trust Agreement") is
made as of this ____ day of ________ 199_, by and between First City
Bancorporation of Texas, Inc., a Delaware corporation ("Debtor"), for the
benefit of the respective Beneficiaries entitled to the Trust Assets, and
________________________, as Trustee ("Trustee").
RECITALS
Reference is made to Article I of this Trust Agreement and the
defined terms used in the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code, filed with
the Court in Case No. 392-39474-HCA-11, as the same may be amended from time to
time ("Plan"), for the definition of any terms used but not defined herein.
On October 31, 1992, certain of Debtor's creditors filed an
involuntary petition against Debtor for relief under Chapter 11 of the
Bankruptcy Code. On ________________, 199__, the Court entered an order
confirming the Plan. This Trust Agreement is being executed to facilitate
implementation of the Plan.
Under the terms of the Plan, the Trust Assets will be
contributed to the Trust evidenced hereby on the Effective Date so that the
Trust Assets can be liquidated or otherwise disposed of in an expeditious but
orderly manner, and, in connection therewith, (i) the Trust Assets can be held
in trust for the benefit of the Beneficiaries entitled thereto as a liquidating
trust in accordance with Treasury Regulation Section 301.7701-4(d) and Revenue
Procedure 94-45, 1994-28 I.R.B. 124, for the objectives and purposes set forth
herein and in the Plan, (ii) distributions may be made in accordance with the
Plan, and (iii) administrative services relating to the activities of the Trust
and other entities (if any) created pursuant to the Plan and relating to the
implementation of the Plan can be performed by the Trustee. With respect to
the Trust Assets, the Trust will be a successor to Debtor for purposes of
Section 1145 of the Bankruptcy Code.
DECLARATION OF TRUST
NOW, THEREFORE, pursuant to the confirmation of the Plan in
accordance with the Bankruptcy Code and in consideration of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and affirmed, Debtor hereby executes this Trust Agreement for the
benefit of the respective Beneficiaries entitled to the Trust Assets, and, at
the direction of such Beneficiaries (because the transfer of title to or
interests in each of the Trust Assets to such Beneficiaries, and the transfer
of such interests by such Beneficiaries to the Trust, would be impractical),
hereby absolutely and irrevocably assigns to the Trustee, and to his successors
and assigns, all right, title and interest of Debtor in and to the Trust
Assets, in the manner provided for in the Plan;
TO HAVE AND TO HOLD unto the Trustee and his successors and
assigns;
IN TRUST NEVERTHELESS, under and subject to the terms and
conditions set forth herein and for the benefit of the Beneficiaries of the
Trust (as their respective interests may appear from time to time in accordance
with the Plan and the terms hereof), and for the performance of and compliance
with the terms hereof and of the Plan;
PROVIDED, HOWEVER, that upon termination of the Trust in
accordance with Article VIII hereof, this Trust Agreement shall cease, be fully
and finally terminated and be of no further force and effect.
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IT IS HEREBY FURTHER COVENANTED AND DECLARED, that the Trust
Assets are to be held and applied by the Trustee subject to the further
covenants, conditions and terms hereinafter set forth.
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Trust Agreement,
the following terms shall have the respective meanings specified below:
"Bankruptcy Code" shall mean 11 U.S.C. Sections 101-1330, as
such sections may be amended from time to time.
"Beneficiaries" shall mean New Merged FirstCity and holders of
the Existing Series B Interests and the Existing Series E Interests.
"Class A Interest" shall mean the beneficial interests in the
Trust distributed to New Merged FirstCity pursuant to the Plan.
"Class B Interests" shall mean the beneficial interests in the
Trust distributed to the holders of the Existing Series B Interests and
Existing Series E Interests pursuant to the Plan.
"Court" shall mean the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division, presiding over Debtor, or, if
necessary, the United States District Court for the district having original
jurisdiction over Debtor's Chapter 11 case.
"Investment Manager" shall mean New Merged FirstCity and any
successor thereto appointed by the Trustee in accordance with the applicable
provisions of this Trust Agreement and the Investment Management Agreement of
even date herewith between the Trust and New Merged FirstCity, attached hereto
as Exhibit D and incorporated herein by reference; provided, however, that if
the Investment Manager is removed as permitted hereunder and the Trustee shall
fail to appoint a successor Investment Manager, then all references herein to
the Investment Manager shall be deemed to be references to the Trustee.
"IRS" shall mean the Internal Revenue Service.
"Person" shall mean any individual, corporation, partnership,
joint venture, trust, estate, unincorporated organization, or a government or
any agency or political subdivision thereof.
"Registrar and Transfer Agent" shall mean, initially, the
Trustee and thereafter any Registrar and Transfer Agent appointed by the
Trustee pursuant to Section 6.3.1 hereof.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any corresponding provision or provisions of any
succeeding federal revenue law and any and all Treasury Regulations issued
pursuant to the section to which reference is made.
"Treasury Regulations" shall mean the regulations promulgated
under the Tax Code by the Department of the Treasury of the United States.
"Trust Register" shall mean the books kept by the Registrar
and Transfer Agent for the registration and transfer of Certificates and in
which shall be recorded the names and addresses of holders of the Certificates.
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"Trustee" shall mean _________________ in his capacity as
trustee under this Trust Agreement, or any successor thereto that is appointed
by the Court in accordance with Section 3.6 hereof.
Section 1.2 Other Defined Terms. As used in this Trust
Agreement, terms defined in the Plan shall have the meanings attributed to them
in the Plan.
ARTICLE II
THE TRUST
Section 2.1 Creation and Name. There is hereby created the
Trust, which shall be known as the "FirstCity Liquidating Trust."
Section 2.2 Objective and Purposes. The objective of the
Trust is the liquidation of the Trust Assets in accordance with Treasury
Regulation Section 301.7701-4(d) and Revenue Procedure 94-45, 1994-28 I.R.B.
124, with no objective to continue or engage in the conduct of a trade or
business. In furtherance of this objective, the Trustee shall appoint the
Investment Manager through execution of the Investment Management Agreement as
his agent to liquidate the non-cash Trust Assets, and the Trustee shall make
timely distributions and not unduly prolong the duration of the Trust, in
accordance with this Trust Agreement. The purposes of the Trust are (a) to
marshall, liquidate and distribute the Trust Assets in an expeditious manner,
and (b) to perform the functions and take the actions provided for or permitted
in this Trust Agreement and in any other agreement executed by the Trustee for
the Trust pursuant to the Plan.
Section 2.3 Acceptance. The Trustee accepts the trust
imposed upon him by this Trust Agreement and agrees to observe and perform that
trust, upon and subject to the terms and conditions set forth herein and in the
Plan.
Section 2.4 Further Assurances of Debtor. Debtor (and any
successor entity thereto) and the Beneficiaries will, upon reasonable request
of the Trustee, execute, acknowledge and deliver such further instruments and
do such further acts as may be necessary or proper to transfer to the Trustee
any portion of the Trust Assets intended to be conveyed hereby in the form and
manner provided for in the Plan and to vest in the Trustee the powers,
instruments or funds in trust hereunder. Except in its capacity as the holder
of the Class A Interest, Debtor, for itself and any predecessor or successor
entity, hereby disclaims and waives any and all right to any reversionary
interest in any of the Trust Assets.
Section 2.5 Ownership by Trustee. The Trustee shall promptly
record or register in his name, as Trustee, or in the name or names of any
nominee or Person in accordance with Section 4.1 hereof, ownership of and title
to all Trust Assets received by him as Trustee and comply with all provisions
of law which may bear upon the evidencing of ownership of and title to any
portion of the Trust Assets as are necessary and appropriate and which the
Trustee determines are in the best interests of the Trust.
ARTICLE III
THE TRUSTEE
Section 3.1 Number and Qualifications. There shall be one
(1) Trustee of the Trust. Any Trustee appointed as a successor Trustee
pursuant to Section 3.6 hereof shall be a Person independent of Debtor, who was
not at any time an officer, director or employee of Debtor and whose
experience, background and capabilities are appropriate for the
responsibilities of a Trustee hereunder. The Trustee shall not be obligated to
give any bond or surety or other security for the performance of any Trust
duties, except as otherwise provided in the Plan or ordered by the Court; if so
otherwise provided or ordered, all costs and expenses of procuring any such
bond, surety or other security shall be paid as a cost of the Trust. The
Trustee shall be entitled to engage in such other
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activities as he deems appropriate which are not in conflict with the interests
of the Trust, provided his duties as Trustee will constitute a principal
business endeavor for him and he shall devote such time as is necessary to
fulfill all of his duties as Trustee.
Section 3.2 Action By Trustee. The Trust shall be managed by
the Trustee as he shall determine in his sole and absolute discretion, subject
to the limitations set forth herein and in the Plan; provided, however, that
the Investment Manager, on behalf of the Trustee, shall be charged with the
liquidation of the non-cash Trust Assets and with the performance of the duties
set forth in Section 7.3 hereof that are expressly delegated to the Investment
Manager. All actions taken and determinations made by the Trustee hereunder in
accordance with the provisions of the Plan or this Trust Agreement shall be
final and binding upon any and all Persons holding beneficial interests in the
Trust.
Section 3.3 Term of Service. The Trustee shall serve as a
trustee for the duration of the Trust, subject to the earlier of his death,
resignation or removal.
Section 3.4 Resignation. The Trustee may resign his trust by
an instrument in writing executed by him and filed with the Court at least
ninety (90) days prior to the proposed effective date of such resignation;
provided, however, that the Trustee shall continue to serve in such capacity
after the filing of his resignation until its proposed effective date unless
the Court shall otherwise order, or the Trustee consents, to an earlier
effective date, which shall be the date that appointment of a successor Trustee
in accordance with Section 3.6 hereof shall become effective; provided,
further, that nothing in this Section 3.4 shall restrict the right of the
removal of the Trustee as provided in Section 3.5 hereof.
Section 3.5 Removal of Trustee. The Trustee may be removed
from office (a) for fraud or willful misconduct in connection with the affairs
of the Trust upon a finding by the Court of fraud or willful misconduct by such
Trustee after a hearing before the Court upon not less than thirty (30) days'
notice, (b) for such physical or mental disability as substantially prevents
the Trustee from performing his duties as a Trustee hereunder upon a finding by
the Court of such physical or mental disability after a hearing before the
Court on not less than thirty (30) days' notice, or (c) for cause, which shall
include a breach of fiduciary duty or an unresolved conflict of interest (other
than as specified in the foregoing clauses (a) and (b)), upon a finding by the
Court that cause for such removal has been shown after a hearing before the
Court on not less than thirty (30) days' notice.
Section 3.6 Appointment of Successor Trustee. In the event
of a vacancy by reason of the death or removal of the Trustee or prospective
vacancy by reason of resignation, the Court, after notice and a hearing, shall
appoint a successor Trustee. Every successor Trustee appointed hereunder shall
execute, acknowledge, and deliver to the Trust, the Court, and the retiring
Trustee, if any, an instrument accepting such appointment subject to the terms
and provisions hereof. The successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee, except that the successor Trustee shall not be liable
for the acts or omissions of the retiring Trustee.
Section 3.7 Trust Continuance. The death, resignation, or
removal of the Trustee shall not operate to terminate the Trust created by this
Trust Agreement or to revoke any existing agency (other than any agency of such
Trustee as a Trustee) created pursuant to the terms of this Trust Agreement or
invalidate any action theretofore taken by the Trustee, and the Trustee agrees
that the provisions of this Trust Agreement shall be binding upon and inure to
the benefit of the Trustee and his heirs, legal and personal representatives,
successors or assigns, as the case may be. In the event of the resignation or
removal of the Trustee, such Trustee shall promptly (i) execute and deliver by
the effective date of resignation or removal such documents, instruments and
other writings as may be reasonably requested by the Court to effect the
termination of the Trustee's capacity under this Trust Agreement and the
conveyance of the Trust Assets then held by him to his successor; (ii) deliver
to the Court all documents, instruments, records and other writings relating to
the Trust as may be in the possession or under the control of the
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Trustee; and (iii) otherwise assist and cooperate in effecting the assumption
of his obligations and functions by the successor Trustee.
Section 3.8 Compensation of Trustee. As compensation for
services as Trustee hereunder and under any other agreements to which the
Trustee is a party as contemplated by the Plan, the Trustee shall receive the
sum of $_____ per ____________.
Section 3.9 Indemnification; Exculpation. The Trustee,
acting in the capacity as such or in any other capacity contemplated by this
Trust Agreement or the Plan, shall not be personally liable in connection with
the affairs of the Trust to the Trust or to any Person except for such of the
Trustee's acts or omissions as shall constitute fraud, willful misconduct or
gross negligence. The Trustee shall not be personally liable to the Trust for
acts or omissions of an officer, employee or agent of the Trust unless such
Trustee acted with gross negligence or willful misconduct in the selection,
retention or supervision of such officer, employee or agent of the Trust.
Except in those situations in which the Trustee is not exonerated of personal
liability as aforesaid, the Trustee (including each former Trustee) shall be
indemnified by the Trust against, and held harmless by the Trust from, any
losses, claims, damages, liabilities or expenses (including, without
limitation, reasonable attorneys' fees, disbursements and related expenses) to
which such Trustee may become subject in connection with any action, suit,
proceeding or investigation brought or threatened against such Trustee in his
capacity as Trustee or in any other capacity contemplated by this Trust
Agreement, the Plan or in connection with any matter arising out of or related
to the Plan, this Trust Agreement or the affairs of the Trust.
If the Trustee becomes involved in any action, proceeding or
investigation in connection with any matter arising out of or in connection
with the Plan, this Trust Agreement or the affairs of the Trust, the Trust
shall periodically advance or otherwise reimburse on demand the Trustee his
reasonable expenses (including, without limitation, attorneys' fees,
disbursements and related expenses) incurred in connection therewith; provided,
however, that the Trustee shall be required promptly to repay to the Trust the
amount of any such advanced or reimbursed expenses paid to him to the extent
that it shall be ultimately determined by final order of the Court that the
Trustee engaged in fraud, willful misconduct or gross negligence in connection
with the affairs of the Trust. The Trust may indemnify and hold harmless the
employees and agents of the Trust to the same extent as is provided in this
Section 3.9 for the Trustee. The provisions of this Section 3.9 shall remain
available to and be binding upon any former Trustee or the estate of any
deceased Trustee.
Section 3.10 Reliance by the Trustee. The Trustee may rely,
and shall be fully protected in acting or refraining from acting, upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other instrument or document which he has no reason
to believe to be other than genuine and to have been signed or presented by the
proper party or parties or, in the case of cables, telecopies and telexes, to
have been sent by the proper party or parties, and the Trustee may conclusively
rely as to the truth of the statements and correctness of the opinions
expressed therein. The Trustee may consult with counsel, and any opinion of
counsel shall be full and complete authorization and protection in respect of
any action taken or suffered by him in accordance therewith. The Trustee shall
have the right at any time to seek instructions from the Court concerning the
Trust Assets, this Trust Agreement, the Plan or any other document executed in
connection therewith, and any such instructions given shall be full and
complete authorization in respect of any action taken or suffered by him in
accordance therewith.
Section 3.11 Prior Lien of Trustee. The Trustee shall have a
prior lien upon the Trust Assets to secure payment of any amounts payable to
him or employees or agents of the Trust as compensation for services to the
Trust or for indemnification pursuant to Section 3.9 hereof.
Section 3.12 Reliance by Persons Dealing With the Trust. In
the absence of actual knowledge to the contrary, any Person dealing with the
Trust shall be entitled to rely on the authority of the Trustee or any of his
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agents to act in connection with the acquisition, management or disposition of
Trust Assets and shall have no obligation to inquire into the existence of such
authority. Upon the sale by the Investment Manager of any portion of the
non-cash Trust Assets, such Trust Assets shall be delivered to the purchaser
thereof free and clear of any lien or other encumbrance, claim or interest of
the Trustee, including the lien of the Trustee pursuant to Section 3.11 hereof,
or the Beneficiaries of the Trust, except as may otherwise be agreed in writing
by the purchaser.
Section 3.13 Judicial Accounting and Discharge of Trustee.
The Trustee shall, within thirty (30) days after termination of the Trust or
his resignation, removal or death (in which case his estate shall), render a
statement of charge and discharge containing the following information: (a) all
assets and funds of the Trust, (b) a summarized accounting, in sufficient
detail, of all purchases, sales, gains, losses and income in connection with
the Trust during such Trustee's term of service, and (c) the ending balance of
all assets and funds of the Trust as of the date of discharge. Such statement
shall be audited by the Trust's independent nationally recognized accountants
in accordance with generally accepted auditing standards. Upon the completion
of such audit, the statement of charge and discharge shall be presented to the
Court for approval after notice to all parties in interest and a hearing. Upon
such approval, the withdrawing Trustee shall be discharged from all liability
to the Trust or any Persons who have had or may then or thereafter have an
interest in the Trust for acts or omissions in his capacity as the Trustee or
in any other capacity contemplated by this Trust Agreement or the Plan. The
expenses of any accounting hereunder shall be paid by the Trust. Each
Beneficiary of the Trust, for himself and his heirs, successors, assigns and
transferees, hereby waives any right such Beneficiary may have, whether under
common, statutory or other law, to apply to any court for a judicial accounting
of the Trustee except where such judicial accounting is in connection with a
motion to remove such Trustee pursuant to Section 3.5 hereof.
Section 3.14 Compensation of Investment Manager. The
compensation of the Investment Manager shall be as determined pursuant to the
Investment Management Agreement.
Section 3.15 Removal and Replacement of Investment Manager.
The Trustee may remove the Investment Manager if, upon petition to the Court by
any Beneficiary or the Trustee, and after notice and hearing, the Court
determines that the Investment Manager has acted or failed to act in a manner
constituting gross negligence or a willful breach of its fiduciary duty
hereunder. The Trustee may thereafter appoint a successor Investment Manager
to perform the duties of the Investment Manager hereunder or, failing to do so,
may itself perform the duties of Investment Manager hereunder.
ARTICLE IV
POWERS OF THE TRUSTEE AND INVESTMENT MANAGER
Section 4.1 Title. Legal title to all Trust Assets shall,
consistent with Section 9.13(c) of the Plan, be vested in the Trustee, except
that the Trustee shall have the power to cause legal title (or evidence of
title) to any of the Trust Assets to be held by any nominee or Person, on such
terms, in such manner, and with such powers as the Trustee hereunder may
determine.
Section 4.2 Management Power. Except as otherwise expressly
limited in this Trust Agreement or the Plan, the Trustee shall have, without
prior or further authorization, control and authority over the management and
conduct of the liquidation of the Trust Assets. The Trustee is hereby
authorized to delegate, and the Trustee hereby does so delegate, to the
Investment Manager such power and authority as may be necessary or appropriate
to liquidate the non-cash Trust Assets (including, without limitation, those
powers set forth in item (iii) through (xii) of the next succeeding paragraph)
and perform those duties set forth in Section 7.3 hereof that are expressly
delegated to the Investment Manager pursuant to the Investment Management
Agreement.
In connection with the management and conduct of the
liquidation of the Trust Assets, the powers of the Trustee, except as otherwise
expressly limited in this Trust Agreement or the Plan, shall include, but shall
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<PAGE> 137
not be limited to, the following: (i) to accept the Trust Assets transferred
from Debtor at the direction of the Beneficiaries entitled thereto, to assume
liabilities of Debtor in connection therewith and to preserve and protect the
Trust Assets; (ii) to enter into that certain Assignment, Bill of Sale and
Assumption Agreement dated as of ____________, 199_, by and between Debtor and
________________, as Trustee of the Trust; (iii) to make or cause to be made
distributions in accordance with the terms of this Trust Agreement, the
Investment Management Agreement, and the Plan; (iv) to distribute the proceeds
of the Trust Assets according to the terms hereof; (v) to engage in all acts
that would constitute ordinary performance of the obligations of a trustee
under a liquidating trust, subject to the authority of the Investment Manager
to liquidate the non-cash Trust Assets; (vi) to purchase insurance as a cost of
the Trust with such coverage and limits as deemed desirable including, without
limitation, insurance covering liabilities of the Trustee (and for the Trustee
such insurance coverage may extend beyond the term of the Trust for a
reasonable period) or employees or agents of the Trust incurred in connection
with their services to the Trust; (vii) to appoint, engage, employ, supervise
and compensate, as a cost of the Trust, officers, employees and other Persons
as may be necessary or desirable, including managers, consultants, accountants,
technical, financial, real estate or investment advisors or managers,
attorneys, agents or brokers, and corporate fiduciaries or depositaries; (viii)
subject to Section 5.2 hereof, to invest and reinvest cash available to the
Trust, pending distribution, and to liquidate such investments; (xi) to hold
cash or Certificates on behalf of Beneficiaries who cannot be located in
accordance with Section 7.4 hereof; and (xii) to take or cause to be taken any
and all such other actions as deemed necessary or desirable to effectuate and
carry out the purposes of this Trust Agreement as contemplated herein and in
the Plan.
Section 4.3 Commingling of Trust Assets. The Trustee shall
not commingle any of the Trust Assets with his own property or the property of
any other Person.
ARTICLE V
OBLIGATIONS OF THE TRUSTEE
Section 5.1 Reports and Records.
5.1.1 Quarterly Reports. Within thirty (30) days
after the end of each calendar quarter during which the Trust is in existence,
the Investment Manager, on behalf of the Trustee shall file with the Court a
written report and accounting showing (i) the assets and liabilities of the
Trust at the end of each such quarter, (ii) any changes in the Trust Assets
which have not been previously reported, and (iii) any material action taken by
the Trustee in the performance of his duties under the Trust and the Plan which
have not previously been reported.
5.1.2 Records. The Investment Manager, on behalf of
the Trustee, shall maintain, or cause to be maintained by the Investment
Manager, records and books of account relating to the Trust Assets, the
management thereof, all transactions undertaken by the Trustee and all expenses
incurred by or on behalf of the Trust at the direction of the Trustee. The
Trustee shall also maintain records and books of account relating to all
distributions either contemplated or effectuated under the Plan.
Section 5.2 Investment Guidelines. Cash held pending
distribution shall, to the extent permitted by applicable law, be invested by
the Investment Manager, on behalf of the Trustee, in (a) direct, short-term
obligations of, or obligations guaranteed by, the United States of America
(including without limitation United States Treasury Bills); (b) short-term
obligations of any agency or corporation which is or may hereafter be created
by or pursuant to an Act of the Congress of the United States or an agency or
instrumentality thereof; or (c) demand deposits or short- term certificates of
deposit at any bank, trust company or other financial institution which has, at
the time of the acquisition by the Trustee of such investments, capital stock
and surplus aggregating at least $100,000,000 and whose short-term debt
obligations are rated by at least two nationally recognized rating agencies in
one of the two highest categories therefor; provided, however, that the scope
of any such permissible investments
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<PAGE> 138
shall be limited to include only those investments, or shall be expanded to
include any additional investments, as the case may be, that a liquidating
trust may be permitted to hold pursuant to Treasury Regulation Section
301.7701-4(d), any amendment or addition to the Tax Code or to the Treasury
Regulations, or any modification in IRS guidelines whether set forth in IRS
rulings, other IRS pronouncements (such as Revenue Procedure 94-45, 1994-28
I.R.B. 124) or otherwise. Such investments shall mature in such amounts and at
such times as, in the judgment of the Trustee at the times such investments are
made, are necessary or desirable with a view to providing funds when needed to
make payments from the Trust Assets.
Any investment purchased with the Trust Assets shall be deemed
a part of the Trust Assets. All interest, distributions and dividends received
by the Trustee in respect of such investments shall be a part of the Trust
Assets.
ARTICLE VI
CERTIFICATES OF BENEFICIAL INTEREST
Section 6.1 Nature of Certificates. Beneficial interests in
the Trust shall be issued pursuant to Section 9.13 of the Plan and shall be
represented by two classes of Certificates. The Class A Interest shall be
represented by the Class A Certificates, and the Class B Interests shall be
represented by the Class B Certificates (collectively, "Certificates"). The
Class A Certificates shall be substantially in the form attached hereto as
Exhibit A and the Class B Certificates shall be substantially in the form
attached hereto as Exhibit B; provided, however, that the form thereof may be
altered as necessary or desirable, in the discretion of the Trustee, to conform
to the provisions of this Trust Agreement, the Plan and any applicable laws or
regulations. The Trustee may cause to be placed on any Certificate such
legends as he deems necessary or appropriate under tax laws or regulations in
connection with tax withholding pursuant to Section 7.3.3 or otherwise. Any
Person to whom a Certificate is issued or transferred, by virtue of the
acceptance thereof, shall assent to and be bound by the terms and conditions of
this Trust Agreement and the Plan. No fractional Certificates shall be issued.
All Certificates shall be executed by the manual or facsimile signature of the
Trustee.
Section 6.2 Securities Registration. As soon as practicable
after the creation of the Trust, the Trustee shall take such steps as may be
reasonable and appropriate to the extent required by law to register the
Certificates with the Securities and Exchange Commission pursuant to Section 12
of the Exchange Act, to comply with the Investment Company Act and to comply
with the reporting requirements of Section 13 or 15(d) of the Exchange Act.
Section 6.3 Transfer and Exchange.
6.3.1 Appointment of Registrar and Transfer Agent.
The Trustee shall, to the extent deemed necessary by the Trustee, appoint a
Registrar and Transfer Agent for the purpose of registering and transferring
Certificates. The Registrar and Transfer Agent may be a duly qualified
institution or the Trustee himself. For its services hereunder, the Registrar
and Transfer Agent, unless it is the Trustee, shall be entitled to receive
reasonable compensation from the Trust.
6.3.2 Registration and Transfer of Certificates.
The Trustee shall cause to be kept at the office of the Registrar and Transfer
Agent, or at such other place or places as shall be designated by them from
time to time, the Trust Register and shall permit to be transferred or
registered thereon, subject to the terms of the Plan and applicable law, any
Certificates issued under this Trust Agreement entitled to such registration or
transfer. Any holder of a registered Certificate may, subject to the terms of
the Plan and applicable law, transfer his Certificates in person or by his duly
authorized attorney, upon presentation of the Certificate to the Registrar and
Transfer Agent for cancellation, accompanied by delivery of a duly executed
written instrument of transfer in the form approved by the Registrar and
Transfer Agent and such other documents as the Registrar and Transfer Agent
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<PAGE> 139
may reasonably require. Any such transfer shall be registered in the Trust
Register. The transferor of a Certificate shall pay reasonable transfer
charges established by the Registrar and Transfer Agent for the purpose of
reimbursing the Trust and the Registrar and Transfer Agent for the expenses
incident thereto, including any tax or other governmental charge.
6.3.3 Access to Register by Certificate Holders.
Certificate holders and their duly authorized representatives shall have the
right, upon reasonable prior written notice to the Registrar and Transfer
Agent, to inspect and, at the expense of the Certificate holder, make copies of
the Trust Register, in each case for a purpose reasonably related to such
Certificate holder's beneficial interest in the Trust.
Section 6.4 Absolute Owners. The Trustee may deem and treat
each Certificate holder of record as the absolute owner of the underlying
beneficial interest for the purpose of receiving distributions and payment
thereon or on account thereof and for all other purposes whatsoever.
Section 6.5 Issuance of Certificates Upon Transfer. Whenever
any Certificate shall be presented for transfer or exchange as permitted by the
provisions of Sections 6.1 and 6.3 hereof, the Trustee shall cause the
Registrar and Transfer Agent to issue, authenticate and deliver in exchange
therefor, the Certificate for the beneficial interest which the person
presenting such Certificate shall be entitled to receive.
Section 6.6 Mutilated, Lost, Stolen or Destroyed
Certificates. If a Certificate holder claims that his Certificate has been
mutilated, defaced, lost, stolen or destroyed, the Trustee shall issue and the
Registrar and Transfer Agent shall authenticate a replacement Certificate if
the requirements of the Trustee, which may be established from time to time,
are met. Such Certificate holder shall pay reasonable charges established by
the Trustee and the Registrar and Transfer Agent for the purpose of reimbursing
the Trust and the Registrar and Transfer Agent for the expenses incident
thereto, including any tax or other governmental charges. In the case of lost,
stolen or destroyed certificates, such Certificate holder will indemnify, and
if required by the Trustee or the Registrar and Transfer Agent, provide a bond
or other security sufficient in the judgment of the Trustee or the Registrar
and Transfer Agent to protect the Trust, the Trustee, the Registrar and
Transfer Agent or any authenticating agent from any loss which any of them may
suffer if a Certificate is replaced. The Trustee and the Registrar and
Transfer Agent shall incur no liability to anyone by reason of anything done or
omitted to be done by either of them in good faith under the provisions of this
Section 6.6.
All Certificates shall be held and owned upon the express
condition that the provisions of this Section 6.6 are exclusive in respect of
the replacement or payment of mutilated, defaced, lost, stolen or destroyed
Certificates and shall, to the extent permitted by law, preclude any and all
other rights or remedies respecting such replacement or the payment in respect
thereto. Any duplicate Certificate issued pursuant to this Section 6.6 shall
constitute an original interest in the Trust and shall be entitled to equal and
proportionate benefits with all other Certificates of the same class issued
hereunder in the Trust Assets. After issuance of a duplicate Certificate, the
Trustee and the Registrar and Transfer Agent shall not treat the original
Certificate as outstanding.
Section 6.7 Record Date. A date of record for determining
the entitlement to any payments to Certificate holders shall be adopted by the
Trustee. The Trustee shall notify the Certificate holders of the record date
adopted promptly after such adoption.
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ARTICLE VII
ADMINISTRATION OF THE TRUST
Section 7.1 Issuance of Certificates. On the Effective Date,
the Trust shall issue Certificate(s) to each holder of a beneficial interest
therein. As provided in the Plan, (a) all of the Class A Interest represented
by the Class A Certificates shall be issued to New Merged FirstCity, and (b)
all of the Class B Interests represented by the Class B Certificates shall be
issued to the holders of the Existing Series B Interests and the Existing
Series E Interests. Each holder of an Existing Series B Interest and Existing
Series E Interest shall receive a Class B Certificate representing the number
of Class B Interests determined pursuant to the Plan.
Section 7.2 Distribution of Trust Assets. The Trustee shall
make quarterly distributions of the Trust's net income plus all net proceeds
from the sale of Trust Assets (except for such amounts of net proceeds or net
income reasonably necessary to maintain the value of Trust Assets or to meet
claims and contingent liabilities) exclusively to the holder of the Class A
Certificates in the following amounts in the following order of priority: (i)
all sums required to satisfy Class 1 through Class 6 Claims or Equity Interests
(including, without limitation, all payments of principal and interest required
to be made on the New Senior Secured Notes and the New Senior Subordinated
Notes until both such notes have been fully redeemed); (ii) the difference, if
any, between $20,000,000 and the amount of cash retained by New Merged
FirstCity on the Effective Date in accordance with the Plan; (iii) any
obligations to the FDIC under the FDIC Letter of Credit; (iv) all other
obligations and expenses incurred by New Merged FirstCity in implementing the
Plan (including interest on any funds borrowed by New Merged FirstCity in
connection therewith); (v) all dividends accruing, regardless of declaration by
the board of directors of New Merged FirstCity, on the New Special Preferred
Stock; and (vi) the remaining Trust Assets, up to the nominal stated value of
the New Special Preferred Stock determined on the Effective Date plus all
accrued and unpaid dividends on the New Special Preferred Stock, to redeem all
shares thereof.
After the foregoing sum has been distributed to the holder of
the Class A Certificates, the Trustee shall distribute all remaining Trust
Assets to the holders of record of the Class B Certificates as of the date of
the distribution (and to each such record holder in proportion to the ratio
that the number of Class B Interests represented by his Class B Certificate
bears to the total number of outstanding Class B Interests held by all record
holders of Class B Certificates as of the date of the distribution); provided,
however, that before any distributions are made in respect of the Class B
Certificates, the Trust shall retain an amount of Trust Assets sufficient to
maintain the value of the Trust Assets or to meet claims or contingent
liabilities (including disputed claims).
Section 7.3 Tax Matters.
7.3.1 Income Tax Status. Consistent with Revenue
Procedure 94-45, 1994-28 I.R.B. 124, and unless otherwise required by a
determination within the meaning of section 1313(a) of the Tax Code, the Trust
shall be treated as a liquidating trust pursuant to Treasury Regulation Section
301.7701-4(d) and as a grantor trust owned by the Beneficiaries holding
beneficial interests therein. Any items of income, deduction, credit or loss
of the Trust shall be allocated, for federal income tax purposes, among the
Certificate holders. The Investment Manager, on behalf of the Trustee, is
authorized to take any action as may be necessary or appropriate to minimize
any potential tax liability of the Class B Certificate holders arising out of
the operation of the Trust.
7.3.2 Tax Returns. In accordance with Treasury
Regulation Section 1.671-4(a), the Investment Manager, on behalf of the
Trustee, shall file with the IRS annual information tax returns (Form 1041).
In addition, the Investment Manager, on behalf of the Trustee, shall file in a
timely manner such other tax returns as required by applicable law by virtue of
the existence and operation of the Trust and pay any taxes shown as due
thereon.
ATT. 1 -- EXH. H-10
<PAGE> 141
7.3.3 Withholding. The Trustee may withhold from
the amount distributable from the Trust at any time to any Person such sum or
sums as may be sufficient to pay any tax or taxes or other charge or charges
which have been or may be imposed on such Person or upon the Trust with respect
to the amount distributable or to be distributed under the income tax laws of
the United States or of any state or political subdivision or entity by reason
of any distribution provided for in Article VII hereof, whenever such
withholding is determined by the Trustee in his reasonable sole discretion to
be required by any law, regulation, rule, ruling, directive or other
governmental requirement. In the exercise of his discretion and judgment, the
Trustee may enter into agreements with taxing or other authorities for the
payment of such amounts as may be withheld in accordance with the provisions of
this Section 7.3.3.
7.3.4 Allocation of Income and Losses. Allocations
between Certificate holders of taxable income and loss of the Trust for each of
its tax years shall, except as otherwise permitted by Exhibit C attached hereto
and incorporated herein by reference, be determined in accordance with the
convention set forth in Exhibit C. The principal purpose of such convention is
to approximate the same federal, state and local income tax consequences as
would have resulted if undivided interests in the Trust Assets, reflecting the
Beneficiaries' respective beneficial interests in the Trust, had been directly
owned, managed and disposed of by such Beneficiaries, and Exhibit C shall be
construed in accordance with such intent. If the Investment Manager shall
adopt a convention different from that set forth in Exhibit C, the Investment
Manager shall notify the Certificate holders of the convention adopted promptly
after such adoption.
7.3.5 Valuation of Trust Assets. As soon as
possible after the Effective Date, but in no event later than ninety (90) days
thereafter, the Investment Manager, on behalf of the Trustee, shall obtain or
complete a valuation of the Trust Assets transferred to the Trust, and such
valuation shall be used consistently by the Investment Manager, the Trustee,
Debtor and the holders of beneficial interests in the Trust for all federal
income tax purposes and for purposes of making the determinations required
pursuant to Exhibit C. If subsequent valuations of Trust Assets are deemed
necessary by the Investment Manager, the Investment Manager shall obtain the
valuations and such valuations shall be used consistently by the Investment
Manager, the Trustee, Debtor and the holders of beneficial interests in the
Trust for all federal income tax purposes and for purposes of making the
determinations required pursuant to Exhibit C.
Section 7.4 Unclaimed Cash or Distributions. If any Person
entitled to a Certificate from the Trust cannot be located on the Effective
Date or any time thereafter, then, subject to the provisions of this Section
7.4, such Certificate shall be set aside and maintained by the Trustee on
behalf of such Person. Any taxes allocable to any Certificates held by the
Trustee as provided in this Section 7.4 shall be funded from any cash held by
the Trust in respect of such Certificate. If such Person is located within two
(2) years of the Effective Date or within two (2) years of such Person's first
unclaimed distribution, such Certificate and cash allocated thereto, together
with any interest actually earned thereon and proceeds thereof (less the
allocable portion of taxes paid by the Trust on account of such Person), shall
be paid or distributed to such Person. If such Person cannot be located within
two (2) years of the Effective Date or within two (2) years of such Person's
first unclaimed distribution, (a) any such Certificate shall be cancelled and
(b) any such cash, interest and proceeds thereon net of the allocable portion
of taxes paid by the Trust, shall be retained by the Trust free and clear of
and from any claim to such property by or on behalf of such Person who shall be
deemed to have released such claim; provided, however, that nothing contained
in this Trust Agreement or the Plan shall require the Trustee to attempt to
locate such Person.
ATT. 1 -- EXH. H-11
<PAGE> 142
ARTICLE VIII
TERMINATION
This Trust shall terminate upon the date which is three (3)
years and six (6) months after the Effective Date; provided, however, that at
least six (6) months prior to such termination the Court, upon motion by a
party in interest, may extend the term of the Trust if it is necessary to the
liquidating purpose thereof. Multiple extensions can be obtained so long as
Court approval is obtained at least six (6) months prior to the expiration of
each extended term. The aggregate of all such extensions shall not exceed five
(5) years. [Prior to termination of the Trust, the Trustee shall determine in
his reasonable discretion which remaining Trust Assets shall be sold and which
of such Trust Assets shall be retained for distribution in kind to Certificate
holders. Trust Assets to be distributed in kind shall be valued by the Trustee
in his reasonable discretion.]
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. Any notice required to be given under
this Trust Agreement shall be in writing and shall be sent by first class mail,
or in the case of mailing to a non-United States address, air mail, postage
prepaid:
(a) If to the Trustee, at:
[address]
Attention: Trustee
(b) If to any Certificate holder in his capacity as such,
at his address as listed in the Trust Register.
Notice mailed shall be effective on the date mailed. All other
notices shall be effective on the date of delivery. Any Person may change the
address at which it is to receive notices under this Trust Agreement by
furnishing written notice of such change to the Trustee.
Section 9.2 Amendment. Subject to the provisions of Section
5.2 hereof, this Trust Agreement may be amended by the proposal by the Trustee
of such amendment and approval by the Court after notice to all Certificate
holders and a hearing. This Trust Agreement may be amended by the Trustee
without the approval of the Court to correct typographical errors or if such
amendment is not material, and in either case if such amendment does not
adversely affect the interests of any Certificate holder; provided, however,
that such amendment shall not be effective until sixty (60) days after the
Certificate holders shall have been given notice of such amendment.
Section 9.3 Counterparts. This Trust Agreement may be
executed in one or more counterparts, all of which shall be taken together to
constitute one and the same instrument.
Section 9.4 Governing Law; Severability. This Trust
Agreement shall be governed by, construed under and interpreted in accordance
with, the laws of the State of Texas. If it shall be determined by a court of
competent jurisdiction that any provision or wording of this Trust Agreement
shall be invalid or unenforceable under such applicable law, such invalidity or
unenforceability shall not invalidate the entire Trust Agreement. In that
case, this Trust Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
applicable law, and, in the event such term or provision cannot be so limited,
ATT. 1 -- EXH. H-12
<PAGE> 143
this Trust Agreement shall be construed to omit such invalid or unenforceable
provisions; provided, however, that such construction, to the maximum extent
possible, shall give effect to the purposes of the Plan.
Section 9.5 Headings. Sections, subheadings and other
headings used in this Trust Agreement are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 9.6 Relationship to Plan. The principal purpose of
this Trust Agreement is to aid in the implementation of the Plan and,
therefore, this Trust Agreement incorporates and is subject to the provisions
of the Plan. To that end, the Trustee shall have full power and authority to
take any action consistent with the purpose and provisions of the Plan. In the
event that any provisions of this Trust Agreement are found to be inconsistent
with the provisions of the Plan, the provisions of the Plan shall control;
provided, however, that provisions of this Trust Agreement adopted by amendment
following substantial consummation (as such term is used in Section 1127(b) of
the Bankruptcy Code) shall control over provisions of the Plan.
Section 9.7 Retention of Jurisdiction. The Court shall
retain jurisdiction of the proceedings referred to in the Plan for the purposes
set forth in the Plan, including the determination of all controversies and
disputes arising under or in connection with the Trust, for the purposes of
interpreting the provisions of this Trust Agreement and for all other purposes
contemplated in the Plan.
ANY AND ALL RIGHT TO TRIAL BY JURY IS HEREBY WAIVED, AND THERE SHALL BE NO
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS TRUST AGREEMENT OR THE TRANSACTIONS SPECIFIED HEREIN.
IN WITNESS WHEREOF, the parties hereto have executed this
Trust Agreement or caused this Trust Agreement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first
above written.
FIRST CITY BANCORPORATION OF TEXAS, INC., Debtor,
for the benefit of the respective Beneficiaries
entitled to the Trust Assets
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
[TRUSTEE]
as Trustee
ATT. 1 -- EXH. H-13
<PAGE> 144
APPENDIX A
[FORM OF FACE OF CLASS A CERTIFICATE]
CLASS A BENEFICIAL INTEREST ("CLASS A INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS A INTERESTS
A-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class A Interest
This Certifies that __________ is the registered holder of
__________ Class A Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and ___________ as
Trustee, pursuant to the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code, filed with
the United States Bankruptcy Court for the Northern District of Texas, Dallas
Division, in Case No. 392-39474-HCA-11, as the same may be amended from time to
time ("Plan"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement and the Plan, to which Trust
Agreement and Plan the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. All terms not specifically
defined herein shall have the meanings set forth in the Plan. Subject to the
Trust Agreement and the limitations set forth therein, including the payment of
all fees related to transfers, the transfer of Class A Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class A Interests will be issued to the designated transferee or transferees;
provided, however, that no Certificates evidencing fractional Class A Interests
shall be issued.
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
-----------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
ATT. 1 -- EXH. H -- APP. A-1
<PAGE> 145
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class A Beneficial Interest ("Class A Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class A Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on ____________________.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class A Interest holders listed in
the Trust Register shall be __ business days prior to any distribution.
At the office or agency of the Trustee referred to on the face
hereof and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class A Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class A
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement.
The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
The obligations and responsibilities of the Trustee with
respect to the Class A Interests under the Trust Agreement shall terminate upon
the payment to holders of Class A Interests of all amounts held in the Trust
and required to be paid to them pursuant to the Trust Agreement and, in any
event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
ATT. 1 -- EXH. H -- APP. A-2
<PAGE> 146
--------------------
THE CLASS A INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
ATT. 1 -- EXH. H -- APP. A-3
<PAGE> 147
APPENDIX B
[FORM OF FACE OF CLASS B CERTIFICATE]
CLASS B BENEFICIAL INTEREST ("CLASS B INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS B INTERESTS
B-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class B Interest
This Certifies that __________ is the registered holder of
__________ Class B Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and ___________ as
Trustee, pursuant to the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code, filed with
the United States Bankruptcy Court for the Northern District of Texas, Dallas
Division, in Case No. 392-39474-HCA-11, as the same may be amended from time to
time ("Plan"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement and the Plan, to which Trust
Agreement and Plan the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. All terms not specifically
defined herein shall have the meanings set forth in the Plan. Subject to the
Trust Agreement and the limitations set forth therein, including the payment of
all fees related to transfers, the transfer of Class B Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class B Interests will be issued to the designated transferee or transferees;
provided, however, that no Certificates evidencing fractional Class B Interests
shall be issued.
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
-----------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
ATT. 1 -- EXH. H -- APP. B-1
<PAGE> 148
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class B Beneficial Interest ("Class B Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class B Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on ____________________.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class B Interest holders listed in
the Trust Register shall be __ business days prior to any distribution.
At the office or agency of the Trustee referred to on the face
hereof and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class B Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class B
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement.
The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
The obligations and responsibilities of the Trustee with
respect to the Class B Interests under the Trust Agreement shall terminate upon
the payment to holders of Class B Interests of all amounts held in the Trust
and required to be paid to them pursuant to the Trust Agreement and, in any
event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
ATT. 1 -- EXH. H -- APP. B-2
<PAGE> 149
--------------------
THE CLASS B INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
ATT. 1 -- EXH. H -- APP. B-3
<PAGE> 150
APPENDIX C
ALLOCATIONS OF TRUST INCOME AND LOSSES
For each calendar year or other period of the Liquidating Trust,
unless the Investment Manager, in the exercise of its reasonable judgment,
determines that the foregoing convention for allocating the income or loss of
the Liquidating Trust does not appropriately reflect a Beneficiary's interest
in such income or loss or the purpose set forth in section 7.34 of the Trust
Agreement, the Investment Manager shall allocate the income and loss of the
Liquidating Trust among the Beneficiaries in accordance with the following
provisions:
I. Definitions
Whenever used herein, (a) any capitalized terms not expressly defined
in this Exhibit C shall have the meanings assigned thereto by the liquidating
trust agreement of even date herewith executed by First City Bancorporation of
Texas, Inc., a Delaware corporation, and ________________ as Trustee (the
"Trust Agreement"); (b) unless otherwise expressly indicated herein, any
reference to a Section shall be a reference to a Section of this Exhibit C; and
(c) the following terms shall have the following meanings:
A. Adjusted Tax Basis of a Trust Asset shall mean the asset's
adjusted tax basis, as determined for federal income tax purposes. The initial
Adjusted Tax Basis of each Trust Asset shall be an amount equal to the sum of
(i) the fair market value on the Effective Date of the Class B Certificate
holders' interest in such Trust Asset that is deemed to have been distributed
to the holders of the Existing Series B Interests and Existing Series E
Interests pursuant to Revenue Procedure 94-45, 1994-28 I.R.B. 124, plus (ii)
the adjusted basis (as determined for federal income tax purposes) of the Class
A Certificate holders' interest in such Trust Asset in the hands of Debtor
immediately before the Effective Date. For purposes of determining the
Adjusted Tax Basis of a Trust Asset, unless otherwise determined by the
Investment Manager in the exercise of its reasonable judgment, (a) the fair
market value on the Effective Date of the Class B Certificate holders' interest
in such Trust Asset shall be presumed to equal the total fair market value on
the Effective Date of such Trust Asset multiplied by a fraction, the numerator
of which is the Class B Value and the denominator of which is the aggregate
Class A Value and Class B Value; and (b) the adjusted basis (as determined for
federal income tax purposes) of the Class A Certificate holders' interest in
such Trust Asset in the hands of Debtor immediately before the Effective Date
shall be presumed to equal the total adjusted basis (as determined for federal
income tax purposes) of such Trust Asset in the hands of Debtor immediately
before the Effective Date multiplied by a fraction, the numerator of which is
the Class A Value and the denominator of which is the aggregate Class A Value
and Class B Value.
B. Book Basis of a Trust Asset shall mean the asset's adjusted
tax basis for book purposes, determined in accordance with the following
provision:
1. The initial Book Basis of a noncash Trust Asset shall
be equal to its fair market value on the Effective Date, as reasonably
determined by the Investment Manager; provided, however, that the initial Book
Basis of such Trust Asset shall not be less than the sum of the Class A Value
and Class B Value multiplied by a fraction, the numerator of which is the fair
market value of such Trust Asset on the Effective Date, as reasonably
determined by the Investment Manager, and the denominator of which is the
aggregate fair market value of all noncash Trust Assets on the Effective Date,
as reasonably determined by the Investment Manager plus the total amount of
cash that constitutes a Trust Asset.
2. The Book Basis of a Trust Asset shall be adjusted as
provided in the Tax Code (including, without limitation, adjustments for
depreciation and amortization deductions), except that the amount of such
ATT. 1 -- EXH. H -- APP. C-1
<PAGE> 151
adjustments shall be determined as if the initial Adjusted Tax Basis of such
Trust Asset equalled its initial Book Basis.
C. Class A Value shall mean the excess of (i) the sum of the
amount of cash that constitutes a Trust Asset plus the fair market value on the
Effective Date (as reasonably determined by the Investment Manager) of all
noncash Trust Assets, over (ii) the Class B Value.
D. Class B Value shall mean the aggregate fair market value on
the Effective Date of all of the Class B Interests distributed by Debtor to the
holders of the Existing Series B Interests and Existing Series E Interests, as
reasonably determined by the Investment Manager. If the Class B Interests are
actively traded on one or more "established securities markets" (as that term
is defined in Temporary Treasury Regulation Section 15A.453-1(e)(4)(iv)) for
at least 10 trading days during the period beginning 30 days before and ending
30 days after the Effective Date (such period being hereinafter referred to as
the "trading period") and at volumes that, in the reasonable judgment of the
Investment Manager, are sufficient to provide an accurate measurement of the
initial fair market value of such interests, then the aggregate fair market
value on the Effective Date of all of the Class B Interests distributed by
Debtor shall be presumed to equal the product of (i) the total number of such
Class B Interests distributed on the Effective Date times (ii) the average
quoted price paid for one Class B Interest on each such established securities
market during the trading period.
E. Net Income or Net Loss for each taxable year or other period
shall mean the Liquidating Trust's taxable income or loss for such period,
determined in accordance with federal income tax principles, subject to the
following adjustments:
1. any income of the Liquidating Trust that is exempt
from federal income tax and not otherwise taken into account as an item of
income pursuant to this definition shall be added to such taxable income or
loss;
2. any noncapital, nondeductible expenses of the
Liquidating Trust described in Treasury Regulation Section
1.1502-32(b)(3)(iii) (as in effect for taxable years beginning on or after
January 1, 1995) and not otherwise taken into account as an item of expense
pursuant to this definition, shall be subtracted from such taxable income or
loss;
3. gain or loss resulting from any disposition of Trust
Assets with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Book Basis of the property
disposed of, notwithstanding that the Adjusted Tax Basis of such property
differs from its Book Basis;
4. in lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account depreciation, amortization, and other
cost recovery deductions for such period computed as if the initial Adjusted
Tax Basis of each Trust Asset equalled its initial Book Basis; and
5. any items specially allocated to the Class A
Certificate holders pursuant to Section II.B. hereof shall not be taken into
account in computing Net Income or Net Loss.
F. Partially Adjusted Trust Book Account means, with respect to
each class of Certificate holders for which a Trust Book Account is maintained
and with respect to each taxable year or other taxable period of the
Liquidating Trust, the Trust Book Account balance of such class of Certificate
holders at the beginning of such period, reduced as provided in Section
I.I.(iii) hereof for all distributions during such period that are made to the
class of Certificate holders for which such Trust Book Account is maintained.
ATT. 1 -- EXH. H -- APP. C-2
<PAGE> 152
G. Target Trust Book Account means, with respect to each class of
Certificate holders for which a Trust Book Account is maintained and with
respect to each taxable year or other taxable period of the Liquidating Trust,
an amount equal to the hypothetical distribution (if any) such class of
Certificate holders would receive if all Trust Assets (including cash) were
sold for cash equal to their Book Basis on the last day of such period (taking
into account any adjustments to Book Basis for such period), all Liquidating
Trust liabilities were satisfied in cash according to their terms, and the net
proceeds of the Liquidating Trust (after satisfaction of said liabilities) were
distributed in full pursuant to Section 7.2 of the Trust Agreement on the last
day of such period.
H. Liquidating Trust shall mean liquidating trust created
pursuant to the Trust Agreement and the Plan.
I. Trust Book Account shall mean a single account maintained for
the Class A Certificate holders, as a class, and a single account maintained
for the Class B Certificate holders, as a class. The Trust Book Account
maintained for each class of Certificate holders shall have an initial balance
equal to the Class A Value, in the case of the Class A Certificate holders, and
the Class B Value, in the case of the Class B Certificate holders, and shall
thereafter be adjusted as follows: (i) each Trust Book Account shall be
increased by the amount of any Net Income allocated thereto pursuant to Section
II.A hereof; (ii) each Trust Book Account shall be decreased by the amount of
any Net Loss allocated thereto pursuant to Section II.A. hereof; and (iii) each
Trust Book Account shall be decreased by the sum of the amount of cash and the
fair market value (determined as of the date of distribution without regard to
section 7701(g) of the Tax Code) of any other property distributed by the
Liquidating Trust to the class of Certificate holders for which such account is
maintained, net of any liabilities assumed by the distributee in connection
with the distribution or to which the cash or other distributed property is
subject.
II. Allocations of Liquidating Trust Income, Gain, Loss, Deduction and
Credit
A. Allocations of Net Income and Net Loss. For each taxable year
or part thereof, Net Income or Net Loss of the Liquidating Trust shall be
allocated between the Class A Certificate holders, as a group, and the Class B
Certificate holders, as a group, so as to eliminate the difference between the
Partially Adjusted Trust Book Account and Target Trust Book Account of each
class of Certificate holders for the period under consideration. If the
Liquidating Trust has insufficient Net Income or Net Loss for such period to
satisfy the previous sentence with respect to each class of Certificate
holders, the available Net Income or Net Loss shall be divided between each
class of Certificate holders in proportion to such difference. Net Income or
Net Loss allocated to a class of Certificate holders pursuant to this Section
II.A. shall be allocated among the members of such class in proportion to their
respective interests. Thus, for example, Net Income or Net Loss allocated to
the Class B Certificate holders shall be allocated to each Class B Certificate
holder in proportion to his percentage of the total Class B Interests.
B. Certain Book/Tax Differences. Taxable income, gain, loss,
deduction and depreciation (as determined for federal income tax purposes) with
respect to any Trust Asset which has a Book Basis different from its Adjusted
Tax Basis shall, solely for federal, state and local income tax purposes, be
allocated exclusively to the Class A Certificate holders (and among the Class A
Certificate holders in proportion to their respective ownership of Class A
Interests) so as to take into account any variation between the Adjusted Tax
Basis and the Book Basis of such Trust Asset, in accordance with the principles
of section 704(c) of the Tax Code and the Treasury Regulations issued
thereunder. Thus, for example, if a Trust Asset is disposed of for an amount
realized (as determined for federal income tax purposes) less than or equal to
its Book Basis, but in excess of its Adjusted Tax Basis, on the date of
disposition, then the taxable gain resulting from such disposition shall be
allocated entirely to the Class A Certificate holders.
C. Allocation of Credits. Any allowable credits against federal,
state or local income, excise or franchise taxes attributable to any
Liquidating Trust expenditure, property, gross receipt or income shall, unless
otherwise required by law, be allocated among the Beneficiaries in proportion
to the manner in which such
ATT. 1 -- EXH. H -- APP. C-3
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expenditure, gross receipts or income (or any gains, losses or basis
attributable to such property) is allocated or required to be allocated among
the Beneficiaries pursuant to the preceding provisions of this Section II.
D. Allocation of Income and Loss in Respect of Transferred
Interests. If any beneficial interest in the Liquidating Trust is transferred
during any calendar year, the income or loss attributable to such interest in
the Liquidating Trust for such calendar year shall be divided and allocated
ratably between the Beneficiaries on a daily basis.
E. Federal, State and Local Tax Items. All federal, state and
local income and franchise tax returns and information returns of the
Liquidating Trust shall be prepared by the Investment Manager in a manner
consistent in all material respects with the allocations set forth in the
preceding provisions of this Section II. and in accordance with the provisions
of Section 7.3 of the Trust Agreement. Except as otherwise required by Section
II.B. hereof, each allocation of Net Income and Net Loss pursuant to the
preceding provisions of this Section II. shall be composed of a proportionate
share of the total amount of all federal, state and local income and franchise
tax items that make up the total amount of Net Income and Net Loss.
ATT. 1 -- EXH. H -- APP. C-4
<PAGE> 154
APPENDIX D
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") is made
and entered into as of the ___th day of _____________, 1995, by and among
FIRSTCITY FINANCIAL CORPORATION, a Delaware corporation (the "Investment
Manager"), and THE FIRSTCITY LIQUIDATING TRUST, a Texas Business Trust
organized under the laws of Texas (the "Trust").
W I T N E S S E T H:
WHEREAS, the Trust has acquired a pool of loans and other
assets (herein the "Purchased Assets") from FirstCity Financial Corporation
pursuant to a Plan of Reorganization of FirstCity Bancorporation of Texas, Inc.
dated _____________, 199__ (the "Joint Plan");
WHEREAS, the parties agree that the Investment Manager shall
manage and service collection and liquidation of the Purchased Assets pursuant
to this agreement for its services.
NOW THEREFORE, in consideration of the premises and agreements
herein contained, the Investment Manager and the Trust hereby agree as follows:
DEFINITIONS.
For purposes of this Agreement, the terms defined in the Joint
Plan, including the Exhibits, unless the context otherwise requires, will have
the meanings applied to them therein and will include the plural as well as the
singular. Additional definitions may be found throughout this Agreement. In
addition, capitalized terms used in this Agreement and not otherwise defined in
this Agreement shall have the meaning set forth in the Joint Plan and Exhibits
thereto.
SECTION 1. LOAN SERVICING AND ASSET MANAGEMENT.
1.1 The Investment Manager. The Investment Manager shall perform
the services described in this Agreement relating to the Purchased Assets in
accordance with the terms and conditions set forth herein. The Investment
Manager may subcontract its servicing obligations hereunder to RIVA FINANCIAL
SERVICES, INC., a Texas corporation ("RIVA"), which at all times shall be fully
owned by and under the control of the Investment Manager, provided, however,
that the Investment Manager and RIVA shall remain jointly and severally liable
for the timely and full performance of all obligations of Investment Manager
hereunder, and further provided, that any subservicing agreement entered into
between RIVA and the Investment Manager shall be subject to the prior written
consent of the Trust and shall expressly bind RIVA to all terms and conditions
of this Agreement.
1.2 Incentive Fee. The Investment Manager shall be paid a fee
("Incentive Fee") equal to (i) three percent (3%) of all net cash proceeds
derived from the Purchased Assets (exclusive of tax and insurance escrow
amounts) ("Net Cash Proceeds"); and (ii) an additional five percent (5%) of the
Net Cash Proceeds realized above the Estimated Threshold Collection Amount up
to $225,000,000; ten percent (10%) of the Net Cash Proceeds realized above
$225,000,000 but less than $250,000,000; and fifteen percent (15%) of Net Cash
Proceeds realized
ATT. 1 -- EXH. H -- APP. D-1
<PAGE> 155
above $250,000,000 actually collected during the term of this Agreement and
deposited in the Lock-Box Account. Net Cash Proceeds shall include any and all
amounts so received in respect of (i) principal and interest (excluding any
escrow payments or amounts received by, but not for the account of, the
Investment Manager); (ii) all Net Operating Income of REO Properties; (iii) all
Net Sales Proceeds from the Sales of REO Properties and Purchased Assets; (iv)
all insurance and condemnation proceeds paid to the Investment Manager with
respect to the Purchased Assets; (v) settlements, compromises, liquidations or
dispositions (excluding any third party disposition costs); (vi) other cash
receipts; and (vii) all net cash proceeds realized from Contingent Asset Claims
("Purchased Asset Proceeds"). The Incentive Fee shall be payable solely from
the Purchased Asset Proceeds.
"Estimated Threshold Collection Amount" means the aggregate
amount of cash collections (including interest, principal payments, recoveries
from charge offs, settlements, and any other sources of cash including sale of
remaining FirstCity Portfolios on the Determination Date) estimated by J-HAWK
on the Effective Date to be recoverable on the FirstCity Portfolios from the
Effective Date through the Determination Date. Such collections are not
intended to include net proceeds realized from Contingent Asset Claims. The
Estimated Threshold Collection Amount shall be subject to the joint approval of
the Debtor and J-HAWK on the Effective Date.
The Estimated Threshold Collection Amount on the Effective
Date shall be the total of
the sum of
(i) $197,000,000 and
(ii) estimated recoveries on those assets which have been
added or substituted by the Loss- Sharing Banks to
the Loss-Sharing Assets from November 30, 1994 to the
Effective Date, as such recoveries are jointly agreed
to by the Debtor and J-HAWK,
reduced by
(x) the total of J-HAWK's estimated collections on the
FirstCity Portfolios and other First City assets
which have been sold, disposed of or otherwise
liquidated between September 1, 1994 (the initial due
diligence date) and the Effective Date.
1.3 Replacement of Investment Manager. If the Trust, prior to the
Determination Date, shall exercise any right of termination of the Investment
Manager, the Trust (if exercised prior to the Determination Date) may enter
into a new loan servicing contract with a replacement investment manager, at
such servicing fee and on such other terms and conditions as the Trust in its
discretion may determine.
1.4 Duties of the Investment Manager. Subject to and in
accordance with the Plan Documents, the Investment Manager agrees to service
the Purchased Assets by performing the following services:
(a) Provide customary asset management and loan servicing
and disposition services for the Purchased Assets, and manage, dispose and
collect such Purchased Assets in accordance with provisions of this Agreement
and the Plan Documents. The Investment Manager shall seek to achieve the
expeditious collection and disposition of the Purchased Assets in a manner
which maximizes the net present value of the Purchased Assets, taken as a
whole, while minimizing the risks associated therewith. The Investment Manager
shall at all times act in good faith and in the best interest of the Trust with
respect to the Purchased Assets, and shall use its best efforts to carry out
its obligations hereunder in accordance with prudent and normal standards and
practices of the distressed asset management and disposition industry and in
accordance with applicable laws and regulations. Upon the occurrence of an
Event of Default, the Investment Manager will manage, collect and dispose of
the Purchased
ATT. 1 -- EXH. H -- APP. D-2
<PAGE> 156
Assets in a manner consistent with such workout/settlement policies that may be
prescribed from time to time by the Trust.
(b) Coordinate the timely delivery of the quarterly
lock-box report prepared by the Lock-Box Bank (as defined below);
(c) Furnish to the Trust on a quarterly basis, or more
frequently as may be required by the Trust, a report summarizing the status of
collection efforts for the Purchased Assets, containing a forecast of projected
collections with respect to such Purchased Assets;
(d) Maintain files as property of the Investment Manager,
containing complete notes, correspondence and documentation of all servicing
efforts and activities ("Books and Records");
(e) Provide to the Trust, on a quarterly basis and in
such form and detail as the Trust may reasonably request, lists of all
Purchased Assets and any REO Properties, specifying the location of such assets
and the records pertaining thereto; and
(f) Perform fully and in a timely manner its obligations
under the Plan Documents to which it is a party.
The Trustee and the Investment Manager hereby acknowledge that the
Investment Manager's performance of the aforementioned duties shall be overseen
and directed by the portfolio committee of the board of directors of the
Investment Manager ("Portfolio Committee").
1.5 Servicing of REO Properties. The Investment Manager shall
have full power and authority, subject only to the terms of this Agreement, to
do any and all things in connection with any REO Property as are consistent
with the servicing standard set forth in Section 1.4(a). The Investment
Manager may employ Property Managers to manage any REO Property, the reasonable
fees to be paid to such Property Managers to be an Operating Expense payable
out of the Gross Income of the REO Property. Each agreement with a Property
Manager shall contain reasonable and customary terms, conditions and
provisions. A Property Manager may establish and maintain with respect to the
REO Properties a property account or property accounts and will account
separately for funds received or expended with respect to each REO Property.
The Investment Manager shall, upon reasonable request, notify the Trust in
writing of the location and account number of each property account. In
connection therewith, the Investment Manager shall cause the Property Manager
to deposit on a daily basis in the property account, all revenues received by
it with respect to any REO Property and the Property Manager shall be permitted
to withdraw therefrom funds necessary for the proper operation, management and
maintenance of any REO Property, including all Operating Expenses and Permitted
Lease-Up Expenses. No later than fifteen (15) days after the end of each
month, the Investment Manager shall require the Property Manager to withdraw
from the property account and deposit into the Lock-Box Account the Net
Operating Income received or collected during the previous calendar month with
respect to such REO Property.
1.6 Expenses of Investment Manager. The Trust shall be
responsible for, and shall reimburse the Investment Manager for, all direct
costs and expenses incurred by the Investment Manager in performing services
under this Agreement. To the extent the Investment Manager contracts for
services of third parties as permitted by this Agreement, it shall do so in its
own name. The Trust shall reimburse the Investment Manager, among other
things, for all expenses incurred by the Investment Manager for property
improvement expenses, property protection expenses, insurance (including as
required under Section 3.15), other third party expenses, direct servicing
expenses incurred by the Investment Manager in providing the services
contemplated by this Agreement and other direct third party expenses or costs
attributable to the Debtor for actions or liabilities incurred prior to the
Effective Date or estimated in the determination of the Determination Value
(collectively "Servicing Expenses").
ATT. 1 -- EXH. H -- APP. D-3
<PAGE> 157
Payments under this priority of distribution will be made to the
Investment Manager or to a reserve account, as appropriate, established
pursuant to this Agreement which will be maintained in an amount sufficient to
cover anticipated Servicing Expenses for each succeeding quarterly period with
such payment to be considered a reimbursement of the reserve account to levels
considered appropriate for the anticipated level of expenditures to be incurred
in the next succeeding quarter or to reimburse the Investment Manager for
Investment Manager Advances, if any, made during the preceding quarter to cover
such expenses not provided for in the establishment of the reserve at the
beginning of the preceding quarter.
1.7 Investment Manager Advances. The Investment Manager shall be
reimbursed by the Trust for any payments (including, without limitation,
reimbursing the Investment Manager for any and all interest costs incurred in
connection with borrowings made by the Investment Manager to make such
advances) made for any advance which is made for the purpose of preserving the
value of any Purchased Asset or collateral or security therefor, e.g., payments
for taxes due but not paid, to purchase interests senior to the Investment
Manager's interest in collateral being sold in any foreclosure proceeding, to
purchase superior participation interests in a Purchased Asset, or to pay legal
expenses, if such actions and/or payments will enhance or preserve the value of
the Investment Manager's interest in the Purchased Assets (collectively
"Investment Manager Advances").
1.8 Lock-Box Account. The Investment Manager shall deposit or
cause to be deposited in the Lock-Box Account to be established pursuant to the
Lock-Box Agreement all Net Cash Proceeds as and when received and otherwise
shall comply with the requirements with respect to such deposits and the
Lock-Box Account as set forth in the Lock-Box Agreement annexed hereto as Annex
A.
1.9 Legal Compliance. The Investment Manager shall perform its
obligations hereunder in full compliance with all applicable laws and
regulations, including but not limited to laws, rules and regulations governing
debt collection. The Investment Manager warrants and represents to the Trust
that it is knowledgeable about and experienced in complying with all applicable
legal requirements with respect to such laws and regulations.
1.10 Cash Flow Distributions. The Investment Manager shall
instruct the Lock-Box Bank to distribute the Purchased Asset Proceeds, on a
calendar quarterly basis, in the following priority:
(a) First, to the reserve account as contemplated by
Section 1.6 of this Agreement;
(b) Second, to the Investment Manager, in an amount equal
to Investment Manager Advances incurred during the preceding quarter.
(c) Third, to the Investment Manager, in an amount equal
to the Incentive Fee earned in respect of the preceding quarter; and
(d) Fourth, as required pursuant to the Trust Agreement.
Prior to the Determination Date, the Investment Manager shall,
if approved by the Trust, provide for a sealed bid sale of the remaining assets
of the Purchased Asset portfolio. Such sale shall be conducted by the
Investment Manager on behalf of the Trust with the Investment Manager permitted
to submit its bid to the Trust to be considered with other bids obtained on the
remaining assets. If the Investment Manager is determined to be the winning
bidder, the Investment Manager shall, at the closing date called for in the
bidding instructions provided to all bidders, close and remit proceeds to the
lock box as provided for in the closing instructions. Such proceeds shall be
treated as Purchased Asset Proceeds for the purpose of the cash flow
distributions described in Sections (a) through (c) of this Subsection.
ATT. 1 -- EXH. H -- APP. D-4
<PAGE> 158
1.11 INDEMNITY. THE INVESTMENT MANAGER AGREES TO INDEMNIFY, DEFEND
AND HOLD THE TRUST HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES,
COSTS, CLAIMS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT
OF OR RESULTING FROM ANY ACT OR OMISSION OF THE INVESTMENT MANAGER, OR OF ITS
DIRECTORS, OFFICERS, AGENTS, REPRESENTATIVES OR EMPLOYEES, IN CONNECTION WITH
THIS AGREEMENT OR, THE PERFORMANCE OR NON-PERFORMANCE OF DUTIES PURSUANT
HERETO, (IRRESPECTIVE OF WHETHER SUCH ACTION OR INACTION CONSTITUTED NEGLIGENCE
OR INVOLVED ANY WILLFUL OR OTHER MISCONDUCT), INCLUDING BUT NOT LIMITED TO (i)
ITS OR ITS DIRECTOR'S, OFFICER'S, AGENT'S, REPRESENTATIVE'S, SUBCONTRACTOR'S OR
EMPLOYEE'S FAILURE TO COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS, (ii) ITS
OR ANY OF ITS DIRECTORS, OFFICERS, AGENTS, REPRESENTATIVES, OR EMPLOYEES
IMPROPER COLLECTION EFFORTS WITH RESPECT TO THE PURCHASED ASSETS, OR (iii) THE
MISAPPLICATION, MISAPPROPRIATION, CONVERSION OR THEFT OF ALL OR ANY PORTION OF
THE PURCHASED ASSETS OR ANY PROCEEDS THEREFROM OR COLLECTIONS THEREOF BY THE
INVESTMENT MANAGER OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, SUBCONTRACTOR OR
REPRESENTATIVE OF THE INVESTMENT MANAGER. THE TRUST SHALL BE ENTITLED TO
PARTICIPATE IN THE DEFENSE OF ANY CLAIM RELATED TO THIS AGREEMENT OR THE
SERVICING OF THE ASSETS WITH COUNSEL OF ITS CHOOSING.
1.12 Termination of the Investment Manager. This Agreement shall
terminate upon the occurrence of any of the following events (each an "Event of
Termination"):
(a) Full discharge and performance of all of Investment
Manager's obligations hereunder or earlier upon the written agreement of the
parties hereto;
(b) Prior to the Determination Date, at the option of the
Trust, upon the occurrence of a breach by the Investment Manager of this
Agreement or any of the Plan Documents to which the Investment Manager is a
party;
(c) Prior to the Determination Date, at the option of the
Trust, upon the occurrence of any petition, application or order for relief by
or with respect to the Investment Manager as a debtor under the United States
Bankruptcy Code, any assignment for the benefit of the creditors made by the
Investment Manager or the appointment of a receiver for all or substantially
all of the assets or business of the Investment Manager, the attachment of all
or execution on any material part of the assets of the Investment Manager which
shall not have been dismissed, released or bonded to the reasonable
satisfaction of the Trust, as the case may be, within thirty (30) days.
Upon notice from the Trust of an Event of Termination, the
Investment Manager shall (a) immediately deliver to the party exercising the
right of termination, or such other person as such exercising party may
designate, all of the documents relating to the Purchased Assets in its
possession, Books and Records and all of the Investment Manager's files and
records pertaining to the Purchased Assets, including all data tapes or disks
containing information on the Purchased Assets (together with such conversions
and other information as is necessary to make beneficial use of same), (b)
provide full assistance and cooperation to such exercising party in the
transfer of the servicing of the remaining Purchased Assets and as is necessary
for such party to obtain useful possession of the foregoing, (c) provide full
assistance and cooperation in pursuing the prosecution of actions and defense
of claims which arose during the term of this Agreement, including providing
employees, agents and representatives of the Investment Manager at depositions,
trials and litigation strategy meetings relating to the Purchased Assets they
previously managed. Except as to those obligations and duties of the
Investment Manager which shall survive termination of this Agreement and such
liabilities of the Investment Manager accruing prior to
ATT. 1 -- EXH. H -- APP. D-5
<PAGE> 159
or as a result of such termination, the Investment Manager's rights and
obligations as servicer under this Agreement shall terminate upon performance
of the foregoing obligations.
1.13 Settlements of Purchased Assets. The Investment
Manager shall make no sale, disposition, compromise or settlement of any of the
Purchased Assets with a total estimated net present value of over $250,000
prior to the Determination Date, without the prior written consent of the
Portfolio Committee if the payment to be received by the Investment Manager in
connection therewith is less than 90% of the net present value of estimated
remaining collections established, on an asset by asset basis, as components of
the Estimated Threshold Collection Amount.
SECTION 2. COVENANTS OF THE INVESTMENT MANAGER.
The Investment Manager hereby covenants and agrees that from
the date hereof and until termination of this Agreement, unless the Trust
shall otherwise consent in writing, the Investment Manager will:
2.1 Business and Existence. Perform all things necessary to
preserve and keep in full force and effect its existence and use its best
efforts to comply with all laws applicable to it.
2.2 Records. Allow the Trust, acting through the Portfolio
Committee, to review the Books and Records of the Investment Manager with
respect to the Purchased Assets and the collections thereof.
2.3 Right of Inspection. Permit any person designated by the
Trust (prior to the Determination Date), at the Trust's expense, to visit,
inspect and review all records relating to the Purchased Assets or any REO
Property and any of the properties, books and financial reports of the
Investment Manager pertaining to the Purchased Assets or any REO Property and
to discuss its affairs, finances and accounts all at such reasonable times and
as often as the Trust (prior to the Determination Date), may reasonably request
for the purpose of determining compliance with this Agreement.
2.4 Notification of Attachment. Promptly notify the Trust (prior
to the Determination Date) of any attachment or other legal process levied
against any of the Purchased Assets or collateral therefore, or any REO
Property, and any information received by the Investment Manager relative to
the Purchased Assets or collateral therefore or any REO Property, which may
materially or adversely affect the value thereof or the rights and remedies of
the Trust with respect thereto.
2.5 Personnel of the Investment Manager. The Investment Manager
agrees to give due priority to the performance of its obligations under this
Agreement and to assign sufficient personnel to service the Purchased Assets
and REO Properties in accordance with its obligations under this Agreement.
The Investment Manager agrees that persons of requisite skill and experience
will devote such portion of his or her time to the performance of the services
described in this Agreement as is necessary and appropriate to fulfill the
obligations of the Investment Manager hereunder. The Investment Manager will
have a knowledgeable contact person available daily to respond to inquiries
from the Trust.
2.6 Complete Information. Ensure that all information provided by
the Investment Manager hereunder shall, to the best of the Investment Manager's
knowledge, be true and correct and complete so as not to be misleading to the
recipient thereof.
2.7 Notices. Furnish to Trust:
(a) Promptly after the commencement thereof, notice of
all actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
ATT. 1 -- EXH. H -- APP. D-6
<PAGE> 160
foreign, affecting the Investment Manager which, if determined adversely to the
Investment Manager, could have a material adverse affect on the financial
condition, properties or operations of the Investment Manager;
(b) Promptly after the filing or receiving thereof,
copies of all reports and notices which pertaining to a reportable event under
Section 4030(b) of ERISA;
(c) As soon as possible and in any event within five (5)
Business Days after the occurrence of each breach under this Agreement, a
written notice setting forth the details of such breach and the action which is
proposed to be taken by the Investment Manager with respect thereto;
(d) Within thirty (30) Business Days after the filing
thereof, copies of all federal and state tax returns, together with all
schedules thereto, filed by or on behalf of the Investment Manager; and
(e) Promptly upon request by the Trust, such other
information respecting the condition or operations, financial or otherwise, of
the Investment Manager as the Trust may reasonably from time to time request
including, without limitation, all such information that the Trust may
reasonably request, with respect to asset compromise/sale experience, specific
cash flow information, information concerning capital expenditures, etc.
2.8 Loan Documents. The Investment Manager has received copies of
the Plan Documents and agrees to perform its duties and obligations hereunder
in all respects so as not to cause the Investment Manager to be in material
breach of any of the provisions of the Plan Documents or to otherwise create an
Event of Default thereunder.
SECTION 3. MISCELLANEOUS.
3.1 Effective Date and Termination. This Agreement shall be
effective as of the date hereof and shall continue in full force and effect
until terminated pursuant to Section 1.12.
3.2 Amendments. The provisions of this Agreement may from time to
time be amended, modified or waived only with the consent of the Investment
Manager and the Trust (prior to the Determination Date) if such amendment or
modification is in writing and signed by the Investment Manager and a
representative of the Trust (prior to the Determination Date), except that the
consent and signature of the Investment Manager shall not be required from and
after the occurrence of an Event of Default.
3.3 Transferability of Agreement; Loan Participations. This
Agreement shall be binding upon the Investment Manager and the Trust, and their
respective successors and assigns, except that the Investment Manager may not
transfer, assign or delegate any or all of its rights or obligations hereunder
without the prior written consent of the Trust, except as otherwise
specifically permitted under Section 1.1 hereof. In connection with any such
transfer or assignment the Trust may furnish any information concerning this
Agreement as is in the possession of the Investment Manager or the Trust from
time to time to such actual or potential assignees or transferees provided that
the actual or potential assignee or transferee agrees to keep all such
information confidential. Any assignment or delegation in contravention of the
foregoing shall be null and void.
3.4 Governing Law. This Agreement will be governed by the
internal laws of the State of Texas.
3.5 Enforceability of Agreement. Should any one or more of the
provisions of this Agreement be determined to be illegal or unenforceable, all
other provisions, nevertheless, shall remain effective and binding on the
parties hereto.
ATT. 1 -- EXH. H -- APP. D-7
<PAGE> 161
3.6 Titles. Titles of the Sections of this Agreement are merely
for convenience in reading and shall not be construed to alter, modify or
interpret the meaning of the provisions under said titles.
3.7 Definitions. All accounting terms used in this Agreement
shall have the meanings ascribed to them by generally accepted accounting
principles or as used within the Plan Documents. Capitalized terms used herein
and not otherwise defined herein shall have the meaning set forth in the Plan
Documents.
3.8 Notice. Any notice, request or demand to or upon the parties
hereto must be given in writing. Notices shall be sent certified, postage
prepaid, shall be addressed to the party to receive the same as follows or to
such other addressee as may be hereafter designated in writing by the
respective parties hereto and shall be deemed given five (5) days after
deposited in the United States mail:
To the Investment Manager: FirstCity Financial Corporation
P. O. Box 8216
Waco, Texas 76714-8216
ATTN: James T. Sartain
To the Trust: FirstCity Liquidating Trust
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3.9 Business Day. "Business Day" for the purposes of this
Agreement shall mean any day other than a Saturday or Sunday, or a date on
which the Investment Manager or national banking associations generally in
Texas are closed for regular business.
3.10 Entire Agreement. This Agreement (including all Exhibits
hereto), the Lock-Box Agreement, and the Plan Documents shall constitute the
full and entire understanding and agreement of the parties hereto and there are
no further or other agreements or undertakings, written or oral, in effect
between the parties relating to the subject matter hereof unless expressly
referred to herein. All prior negotiations, agreements, representations,
warranties, statements and undertakings concerning the subject matter hereof
between the parties hereto are superseded by the foregoing.
3.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same instrument.
3.12 Controlling Provision. Notwithstanding anything in this
Agreement to the contrary, the Investment Manager shall not receive any payment
or reimbursement under this Agreement at any time there exists under this
Agreement an Event of Default (as such term is defined therein), and, in such
case, the Investment Manager agrees to continue to provide its services
hereunder for the benefit of the Trust for no compensation or reimbursement
until an Event of Default is cured.
3.13 Effect of Determination Date. From and after the
Determination Date the provisions hereof requiring the consent of or notice to
the Trust shall no longer be applicable.
3.14 Status. The Trust is a party to this Agreement solely for
purposes of evidencing its rights hereunder, which rights shall include without
limitation the right to enforce any rights or remedies of a party
ATT. 1 -- EXH. H -- APP. D-8
<PAGE> 162
hereunder. Under no circumstances shall the Trust have any duties or
obligations hereunder, and shall not be liable hereunder in any manner
whatsoever. Except as to the parties to this Agreement, no other party is an
intended beneficiary of this Agreement.
3.15 Insurance. The Investment Manager shall obtain and maintain
at all times during the term of this Agreement the following coverages:
(a) Worker's compensation or approved self-insurance and
employer's liability insurance which shall fully comply with the statutory
requirements of all applicable state and federal laws.
(b) Commercial general liability insurance with a minimum
combined single limit of liability of $1,000,000 per occurrence and $2,000,000
aggregate for injury and/or death and/or property damage, including Broad Form
Contractual Liability insurance specifically covering this Agreement.
(c) Business automobile liability insurance covering all
owned, hired and non-owned vehicles and equipment used by the Investment
Manager's employees with a minimum combined single- limit of liability of
$1,000,000 for injury and/or death and/or property damage.
(d) Excess coverage with respect to (b) and (c) above
with a minimum combined single limit of $5,000,000.
The Investment Manager shall deliver promptly to the Trust
certificates of insurance made out by the applicable insurer(s) or their
authorized agents, the insurance required under this section (the "Required
Insurance") and for any material policy amendments thereto. Each policy shall
provide for thirty (30) days prior written notice to be given by the insurer to
the Trust in the event of any termination, non-renewal or cancellation, or of
any material change in coverage or deductibles. All Required Insurance shall
insure the interests of the Investment Manager regardless of any breach or
violation by Investment Manager of warranties, declarations or conditions
contained in such policies or any action or inaction of Investment Manager or
any other person. All Required Insurance shall be carried with responsible
insurance companies of recognized standing which are authorized to do business
in the states in which any of the Purchased Assets or REO Properties are
located and are rated A-XII or better by A.M. Best. If Investment Manager
fails to procure or maintain the Required Insurance, the Investment Manager
shall have the right, but not the obligation, to effect such insurance at
Investment Manager's expense.
3.16 Legal Fees. Each prevailing party shall be entitled to be
reimbursed jointly and severally by the non- prevailing parties of all
reasonable costs and expenses (including reasonable attorney's fees and
disbursements) in its successful prosecution or defense of any provision of
this Agreement.
3.17 Survival. The provisions of Sections 1.8, 1.9, 1.10,
1.11, 2.2, 2.7 and 3.14 shall survive the termination of this Agreement.
3.18 Location. The performance of the services hereunder shall be
conducted, and the Books and Records shall be kept, at the Investment Manager's
locations as set forth in the attached Exhibit "A" hereto, and such additional
locations as the Trust shall approve in writing.
The Investment Manager shall have no authority to store the Books and
Records at the foregoing locations or any other location approved as set forth
above that are not owned by the Investment Manager until it shall have
delivered to the Trust a landlord's consent in form and substance reasonably
acceptable to the Trust.
ATT. 1 -- EXH. H -- APP. D-9
<PAGE> 163
IN WITNESS, the undersigned have executed this Agreement.
FIRSTCITY FINANCIAL CORPORATION
By:
---------------------------------------
FIRSTCITY LIQUIDATING TRUST
------------------------------------------
, Trustee
---------------------
ATT. 1 -- EXH. H -- APP. D-10
<PAGE> 164
ANNEX A
[DRAFT AGREEMENT; SUBJECT TO REVIEW AND APPROVAL BY NATIONSBANK OF TEXAS, N.A.]
LOCK-BOX AGREEMENT
This LOCK-BOX AGREEMENT is entered into as of the ___th day of
_____________, 1995, by and among (i) FIRSTCITY FINANCIAL CORPORATION, a
Delaware corporation ("Investment Manager"), and (ii) NATIONSBANK OF TEXAS,
N.A., a national banking association organized under the laws of the United
States, acting in its capacity as Lock-Box Agent ("Lock-Box Agent").
Capitalized terms used herein and not otherwise defined
herein shall have the same meaning as in the Investment Management Agreement
and Plan Documents.
WHEREAS, Investment Manager and FirstCity Liquidating Trust
(the "Trust") have entered into that certain Investment Management Agreement of
even date herewith (as amended and supplemented from time to time, the
"Investment Management Agreement").
WHEREAS, the Trust and Investment Manager desire to expedite
the collection and distribution of the Proceeds (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements hereinafter contained, the parties agree as follows:
1. Establishment of Lock-Box and Lock-Box Account(s).
1.1 From time to time during the term of this Agreement, Lock-Box
Agent shall open one or more post office boxes with the United States Postal
Service for receipt of Items (as hereinafter defined) (the "Lock-Box" or "Lock-
Boxes", as the case may be). The address of the initial Lock-Box shall be:
FIRSTCITY LIQUIDATING TRUST
--------------------------
--------------------------
--------------------------
NATIONSBANK OF TEXAS, N.A. Account Number: 9364958069
1.2 Promptly after execution of this Agreement, Lock-Box Agent
shall establish a non-interest bearing depository checking account titled
"FIRSTCITY LIQUIDATING TRUST Lock-Box Account: NATIONSBANK OF TEXAS, N.A.,
Lock-Box Agent" (under which Lock-Box Agent is acting as agent for (i)
Investment Manager and (ii) the Trust at the main office of NationsBank of
Texas, N.A. at ______________________________ (the "Lock-Box Account") for the
purpose of receiving and holding all proceeds of and payments on and with
respect to all Trust Assets, including without limitation, proceeds of Trust
Assets ("Proceeds"). Lock-Box Agent may open additional Lock-Box accounts with
the Investment Manager's consent (all of such accounts, including the Lock-Box
Account, may sometimes be referred to herein individually as a "Lock-Box
Account" or collectively as "Lock-Box Accounts") at such times as Lock-Box
Agent shall deem appropriate. Any and all Lock-Box Accounts shall be
maintained in the name of Investment Manager, as agent for the Trust, and shall
be accounts of the Investment
ATT. 1 -- EXH. H -- APP. D -- ANN. A-1
<PAGE> 165
Manager and the Trust for purposes of perfecting the interest of Investment
Manager and the Trust, respectively, therein, and no person other than the
Investment Manager and the Trust shall have any right thereto or interest
therein. The title of the Lock-Box Account is solely for purposes of
evidencing and perfecting the respective interests of Investment Manager and
the Trust therein. Notwithstanding anything to the contrary, Investment
Manager shall assume full responsibility for all taxes, assessments and similar
charges arising from or levied on account of the payment of funds to the
Lock-Box Accounts, and the Lock-Box Accounts shall bear Investment Manager's
tax identification number.
1.3 The Lock-Box Account and all operations thereunder shall be
subject to all rules and regulations of banks and all clearinghouse rules,
operating letters and all other rules, regulations and administrative
requirements established by Lock-Box Agent and/or its governing regulatory
authorities from time to time, applicable generally to deposit accounts and
such operations.
2. Deposit of Proceeds.
2.1 Investment Manager shall within ten (10) days after the
execution of this Agreement advise and instruct in writing all currently
existing Account Debtors under the Trust Assets to deliver all Proceeds, by
check, to such of the Lock-Boxes as the Lock-Box Agent may designate and in
conformity with the Lock-Box Agent's instruction. Investment Manager shall
also advise and instruct in writing all Account Debtors who have money or other
proceeds due or becoming due in respect of the Proceeds ("Accounts") which
arise after the date of this Agreement to deliver all Proceeds to such of the
Lock-Boxes as the Lock-Box Agent may designate in conformity with the Lock-Box
Agent's instructions and, in connection therewith, the Investment Manager shall
promptly make appropriate revisions to its forms. In addition to the
foregoing, Investment Manager shall otherwise use their best efforts to assure
that all sums due from Account Debtors of Investment Manager are sent by such
Account Debtors, by check, or wire-transfer to such of the Lock-Boxes as
Lock-Box Agent may designate.
2.2 Investment Manager shall remit to the Lock-Box, by United
States mail, promptly upon receipt and identification, any Proceeds received by
them, in the form in which such Proceeds are received; provided, however, if
such Proceeds are received by Investment Manager in the form of cash, the
Investment Manager shall remit such Proceeds to the Lock-Box by check or to the
Lock-Box Account by wire-transfer. All checks and other instruments which are
received by Investment Manager, shall be endorsed for deposit into the Lock-Box
Account by the payee thereof, in form and substance legally sufficient to make
Lock-Box Agent a holder in due course thereof. Investment Manager agrees not
to intentionally commingle any Proceeds with any of their other funds or
property and agrees to hold the same subject to an express trust for the
benefit of the Trust until so remitted to the Lock-Box or the Lock-Box Account.
2.3 All Proceeds remitted to the Lock-Box Account by wire transfer
shall be sent as follows:
------------------------
------------------------
------------------------
------------------------
------------------------
3. Deliver Contents of Lock-Box to Operations Center.
3.1 Each Business Day, Lock-Box Agent or its authorized designees
shall remove the contents of the Lock- Box. Lock-Box Agent may, at its option,
perform the services set forth in this Agreement on a day other than a Business
Day.
ATT. 1 -- EXH. H -- APP. D -- ANN. A-2
<PAGE> 166
3.2 Investment Manager hereby authorizes the Lock-Box Agent to
open all mail delivered to the Lock-Boxes. Investment Manager also hereby
authorizes the Lock-Box Agent to receive, on behalf of Investment Manager,
checks, drafts, money orders and other negotiable instruments payable to
Investment Manager; and Investment Manager authorizes the Lock-Box Agent,
promptly upon receipt of any such instrument, to endorse the same (on behalf of
and as agent for Investment Manager and for any other party having an interest
therein) for deposit into the Lock-Box Account; and thereafter, to deposit such
instrument into the Lock-Box Account. The Lock-Box Agent shall have no
obligation to review any correspondence or other documents accompanying any
payments received by it, but the Lock-Box Agent shall forward all such
correspondence or documents by United States mail to the Investment Manager in
accordance with Section 4.1.3 hereof.
4. Processing of Contents of Lock-Box
4.1 Lock-Box Agent will process the mail removed from the Lock-Box
(the "Items") in accordance with Lock- Box Agent's standard practices and
procedures, which will generally include the following:
4.1.1 All Items will be opened and inspected.
4.1.2 (i) Each check will be examined for
date, payee, signature, consistency
of written and numerical amounts on
the face of the check and legends.
(ii) Any check that is undated will be
dated by Lock-Box Agent with the
date shown on the envelope in which
it was received, and will be
processed as if correctly dated.
(iii) All checks postdated within a
three-day period of receipt will be
processed. Checks postdated three
or more days from the date of
receipt should be delivered
according to Section 4.1.3.
(iv) Any check whose written and
numerical amounts disagree will be
compared with the invoice or other
materials with which it is received.
If the correct amounts can be
determined from the invoice or other
material, such check will be
deposited in the Lock-Box Account
which will be credited for what
appears to be the correct amount;
otherwise, the check will be
delivered according to Section
4.1.3.
(v) A request to obtain proper signature
or authority to pay will be stamped
on any unsigned check, and such
check will be deposited to the
Lock-Box Account.
(vi) Lock-Box Agent will deposit all
checks, without regard to
instructions accompanying said
checks or appearing on the face or
back of said checks or any
accompanying Items and without
liability for any consequences of
depositing said checks.
(vii) Lock-Box Agent will process checks
in accordance with the Agreement
wherein any of the following terms
alone or in combination with any
other terms appear as payee: WAMCO,
NATIONSBANK, or FIRSTCITY FINANCIAL
CORPORATION. Investment Manager
agrees that all such checks may be
processed by the Lock-Box Agent in
the same manner as instruments which
correctly identify the Investment
Manager as payee.
ATT. 1 -- EXH. H -- APP. D -- ANN. A-3
<PAGE> 167
4.1.3 Mail that does not contain any checks will be
retained in their respective envelopes and
mailed to:
FIRSTCITY LIQUIDATING TRUST
P.O. Box 8216
6400 Imperial Drive
Waco, Texas 76714
ATTENTION: Kathy McNair, Senior
Vice President
4.1.4 If a check is received without an
accompanying invoice, any related
correspondence and other material received
with such check will be stapled to the
envelope in which it is received, such
materials will be mailed to Investment
Manager at the address in Section 4.1.3, and
the check will be processed in accordance
with Section 4.1.2 of this Agreement.
4.1.5 Each business day, copies of all deposit
tickets, all tape listings, all rejected
checks, and all other instruments and papers
referred to in this Section 4 will be mailed
to Investment Manager at the address in
Section 4.1.3 above.
5. Deposit Checks to the Lock-Box Account.
5.1 All processed checks will be endorsed "credited to the account
of the within named payee, absence of payee's endorsement guaranteed" or the
like, and will be deposited to the Lock-Box Account on the Business Day of
receipt; provided, however, that for this purpose checks received by Lock-Box
Agent after 5:00 p.m. on any Business Day should be processed that day but
credited to the Lock-Box Account with the next Business Day's deposit.
5.2 Each check, draft or other instrument deposited into any
Lock-Box Account shall be deemed to have been endorsed by the payee thereof to
the order of Lock-Box Agent, whether or not such an endorsement is actually
placed on such instrument; and Lock-Box Agent shall have the rights of a holder
in due course of such instrument against Investment Manager.
5.3 If any person shall make any claim on or against Lock-Box
Agent or any account with respect to any Proceeds or any other money or thing
of value, Lock-Box Agent may hold the funds or property which is the subject of
the claim or dispute until ownership thereof is established to the satisfaction
of Lock-Box Agent or by final order, decree, or judgment of a court of
competent jurisdiction or until Lock-Box Agent is provided good and sufficient
undertaking satisfactory to it adequate to fully protect Lock-Box Agent against
all liability, loss, cost and expense arising out of such claim or dispute,
whichever first occurs.
5.4 Lock-Box Agent will further:
5.4.1 Microfilm each check.
5.4.2 Prepare a photocopy of each check (front and
back). Attach original detachable vouchers,
remittance advices or any correspondence and
the envelope to the photocopy of the check.
5.4.3 Mail the photocopies (front and back of
check) with the originals and adding machines
tapes and a daily credit advice to:
ATT. 1 -- EXH. H -- APP. D -- ANN. A-4
<PAGE> 168
FIRSTCITY LIQUIDATING TRUST
6400 Imperial Drive
P.O. Box 8216
Waco, Texas 76714.8218
Attn: Credit Administration
5.4.4 Report daily the total amount of the daily
Lock-Box receipts, including the invoice
name, account number, check amount and
invoice amount, via telecopy as follows:
Investment Manager (817) 751-1757.
5.4.5 If an item is deposited into the Lock-Box
Account in error, Lock-Box Agent will notify
Investment Manager by phone at (817) 751-1750
before debiting the Lock-Box Account for the
funds.
6. Return Items. Lock-Box Agent will automatically resubmit for payment
checks returned once for insufficient funds. Upon notice of the first
dishonor, Lock-Box Agent will notify Investment Manager by phone at (817)
751-1750, giving the payor's name and check amount. In the event a check is
dishonored a second time, Lock-Box Agent will: (a) notify Investment Manager by
phone at (817) 751-1750; (b) mail the check to:
FIRSTCITY LIQUIDATING TRUST
6400 Imperial Drive
P.O. Box 8216
Waco, Texas 76714.8218
Attn: Credit Administration
(c) charge the Lock-Box Account for the amount of the returned check plus
interest at a rate per annum equal to Effective Prime (as published in the Wall
Street Journal) on said amount accruing from the date funds were made available
for transfer pursuant to Section 8 below until the date of credit of said
remittance to the Lock-Box Account; and (d) mail an advice of the charge to
Investment Manager at the above address. To the extent that there are
insufficient funds in the Lock-Box Account to cover the charges referenced in
subsection (c) above, within two Business Days after notice from Lock-Box
Agent, Investment Manager will remit to the Lock-Box Account, from its own
funds, immediately available funds in an amount equal to such insufficiency.
7. Credit for Checks. Lock-Box Agent will give the Lock-Box Account
credit for each deposited check in accordance with Lock-Box Agent's then
current availability schedule applicable to such account. Available balances
will be used in computing earnings allowances, if applicable.
8. Withdrawals. No person other than NationsBank of Texas, N.A., acting
in its capacity as Agent pursuant to this Agreement, shall have any right or
power to withdraw or transfer any funds from any Lock-Box Account for any
purpose whatsoever, except as expressly provided for in this Section 8.
8.1 The Investment Manager shall periodically instruct the
Lock-Box Agent to invest available funds for the benefit of the Trust, with
earnings dedicated to its benefit.
8.2 On a periodic basis, the Investment Manager shall instruct the
Lock-Box Agent to disburse funds by wire in accordance with written
instructions initiated and authorized by the Investment Manager and approved by
the Trust or an authorized representative thereof.
9. Limitation of Liability. Lock-Box Agent's liability in connection
with the performance of the transactions covered by this Agreement shall be
strictly limited as follows:
ATT. 1 -- EXH. H -- APP. D -- ANN. A-5
<PAGE> 169
9.1 Lock-Box Agent shall exercise ordinary care in selecting
agents and independent contractors to pick up and deliver the contents of the
Lock-Box ("Designees"), but shall not be liable in the event of loss caused by
Designee's negligence or misconduct. In the event of such loss, Lock-Box Agent
will exercise its best efforts to assist the parties hereto in obtaining
redress from the responsibility party.
9.2 In performing its duties hereunder, Lock-Box Agent will
exercise ordinary care and will act in good faith. Failure to exercise such
ordinary care shall not be inferable by reason of the loss of an Item without
an additional showing of negligence on the part of Lock-Box Agent. Substantial
compliance with the procedures set forth and referenced herein shall be deemed
to constitute the exercise of ordinary care. Occasional unintentional
deviations by Lock-Box Agent from the procedures set forth and referenced
herein shall not be deemed a failure to exercise ordinary care in respect to
the transaction in which deviations occur. Lock-Box Agent will not be
accountable or liable whatsoever for any claims, demands, losses or damages in
connection with or in any way related to its failure to perform any of its
obligations hereunder, except in the event of its gross negligence or willful
misconduct, or that of its employees, officers, or agents. If, as a result of
such negligence or misconduct, Lock-Box Agent is liable for mishandling any
item, such liability shall be limited to the greater of the face amount of any
check involved or the amount of the Investment Manager's direct loss as a
result of such mishandling, and IN NO EVENT SHALL LOCK-BOX AGENT BE RESPONSIBLE
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. The Lock-Box Account will be
back-valued as necessary in the event any check is deposited late.
9.3 Investment Manager shall hold harmless and indemnify Lock-Box
Agent, its directors, officers, employees and agents from and against any and
all liabilities, claims, demands, losses, damages, costs, and expenses
(including, without limitation, reasonable attorneys' fees and litigation
expenses), actions, or causes of action, arising out of or relating in any way
to this Agreement or any document delivered to Lock-Box Agent by Investment
Manager in connection with this Agreement or the performance of Lock-Box
Agent's services hereunder or thereunder; provided, however, that the foregoing
obligation of Investment Manager shall not apply to the extent arising from the
gross negligence or wilful misconduct of Lock-Box Agent. The foregoing
indemnities shall survive the termination of this Agreement.
9.4 Lock-Box Agent shall not be liable to Investment Manager or
any other party because of a failure or delay in performance of its obligations
under this Agreement where such failure or delay is caused by any event beyond
the control of Lock-Box Agent, including, but not limited to: any act or
failure by Investment Manager, fire, flood, or other catastrophe, legal acts of
public authorities, strikes or lockouts, riots, failure of transportation,
failure of communications, failure of power supply or mechanical difficulties
with Lock-Box Agent's equipment.
10. Fees. Investment Manager shall promptly pay upon demand all post
office box rental charges and all of Lock-Box Agent's fees and expenses in
connection with the establishment and administration of the Lock-Box Accounts,
all in accordance with the Lock-Box Agent's then current fee schedule as
amended by Lock-Box Agent from time to time. At Lock- Box Agents option, all
such fees and expenses may be (i) billed to the Investment Manager, or (ii)
debited to the Investment Manager's account(s) or the Lock-Box Accounts (except
to the extent of funds in the Lock-Box Accounts constituting Tax Escrow
Payments of which Lock-Box Agent has notice).
11. Term and Termination. This Agreement shall be effective on the date
first above written and continue thereafter until terminated by (a) Lock-Box
Agent, (b) Investment Manager and Trust, prior to the Determination Date, or
(c) Investment Manager after the Determination Date.
12. Modification. This Agreement and the procedures described herein may
be modified from time to time only in writing and in an instrument executed by
(a) Lock-Box Agent, and Investment Manager, prior to the Determination Date, or
(b) Lock-Box Agent and Investment Manager after the Determination Date.
ATT. 1 -- EXH. H -- APP. D -- ANN. A-6
<PAGE> 170
13. Negation of Partnership. The relationship between the Investment
Manager and Trust, is that of contracting parties. Nothing contained in this
Agreement will be deemed to create a partnership or joint venture between any
of the parties hereto or between Lock-Box Agent and any other party, or to
cause Lock-Box Agent to be liable or responsible in any way for the actions,
liabilities, debts, or obligations of the Investment Manager or any other
party.
14. Conflicts. Solely in the event that any term or condition contained
in this Agreement conflicts or is inconsistent with a provision in any of the
Plan Documents, the terms and conditions of this Agreement shall supersede and
control. In all other respects, the provisions of the Plan Documents shall
remain in full force and effect, including, without limitation, any and all
additional terms or conditions therein which are not in conflict with the
provisions of this Agreement.
15. Headings. Paragraphs or other headings contained in this Agreement
are for reference purposes only and are not intended to affect in any way the
meaning or interpretation of this Agreement.
16. Counterpart Execution. This Agreement may be executed in
counterparts, each of which will be deemed an original document, but all of
which will constitute a single document.
17. Cumulative Remedies. This Agreement and each of the documents to be
executed in connection herewith and the obligations of the Investment Manager
hereunder and thereunder are in addition to and not in substitution for any
other obligations and shall not operate as a merger of any contract or debt or
suspend the fulfillment of or affect the rights, remedies, powers, or
privileges of Lock-Box Bank in respect of any obligation or other security
interest held by it for the fulfillment thereof.
18. Cooperation. The Investment Manager agrees to execute and deliver, or
to cause to be executed and delivered, those documents and to do, or cause to
be done, such other acts and things as might reasonably be requested by
Lock-Box Agent to assure that the benefits of this Agreement are realized by
the Trust.
19. Attorney's Fees and Expenses. Each prevailing party shall be entitled
to be reimbursed jointly and severally by the non-prevailing parties for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) in its successful prosecution or defense of any provision of
this Agreement.
20. Severability. In the event that any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to
any extent, be held invalid or unenforceable, the remainder of this Agreement
or the application of such term or provision to persons or circumstances other
than those to which it is held invalid or unenforceable, shall be valid and
enforceable to the fullest extent permitted by law.
21. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Texas, without resort to that State's
conflict of laws rules.
22. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding on the successors and assigns of Investment Manager, Trust and
Lock-Box Agent. Any assignment or delegation shall be void. Lock-Box Agent
may from time to time delegate all or portion of its duties hereunder to one or
more of its affiliates.
23. Survival. The provisions of Sections 9, 20, 22 shall survive the
termination of this Agreement.
ATT. 1 -- EXH. H -- APP. D -- ANN. A-7
<PAGE> 171
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
WITNESS:
FIRSTCITY FINANCIAL CORPORATION
6400 Imperial Drive
P.O. Box 8216
Waco, Texas 76714.8218
Telecopy No. (817) 751-1757
By:
- --------------------------------- -------------------------------------
James T. Sartain, President
NATIONSBANK OF TEXAS, N.A.
as Lock-Box Agent
-------------------------
-------------------------
-------------------------
By:
- --------------------------------- -------------------------------------
FIRSTCITY LIQUIDATING TRUST
-------------------------
-------------------------
-------------------------
By:
- --------------------------------- -------------------------------------
ATT. 1 -- EXH. H -- APP. D -- ANN. A-8
<PAGE> 172
EXHIBIT I
PROPOSED REPRESENTATIONS AND WARRANTIES OF J-HAWK
(APPLICABLE TO PRIMARY MERGER ALTERNATIVE)
<PAGE> 173
EXHIBIT I
PROPOSED REPRESENTATIONS AND WARRANTIES OF J-HAWK
1. With respect to the J-HAWK entities; due corporate organization, good
standing and necessary corporate power; capitalization; and the
authorization and validity of all documents to be executed by the
J-HAWK entities.
2. Certain effects of entering into and performing the Plan, including no
breach of other contracts, leases, loan documents and constituent
corporate documents and no conflict with laws, rules and regulations
which would have a material adverse effect.
3. All necessary governmental consents and approvals required to enter
into and effect the transactions contemplated by the Plan have ben
obtained.
4. No material inaccuracy in financial statements of J-HAWK or financial
information provided by J-HAWK the Disclosure Statement.
5. Absence of material litigation not otherwise disclosed.
6. Title to real and personal property and accuracy of disclosure
concerning encumbrances thereon.
7. Validity and enforceability of existing material contracts and leases.
8. Timely and full payment of taxes and filing of tax returns.
9. No material undisclosed transactions with affiliates or related parts
of J-HAWK.
10. Absence of undisclosed liabilities.
11. No material undisclosed violation of environmental laws with respect
to properties or businesses owned or controlled by J-HAWK.
ATT. 1 -- EXH. I-1
<PAGE> 174
EXHIBIT J
NEW SENIOR PREFERRED STOCK
(Applicable to Secondary Standalone Alternative)
<PAGE> 175
EXHIBIT J
SUMMARY OF TERMS
NEW SENIOR PREFERRED STOCK
Issuer: New Standalone FirstCity
Issue: Approximately 635,650 shares of New Senior Preferred
Stock shall be issued. No fractional shares shall
be issued.
Shares Authorized: 700,000
Par Value: $.01 per share
Stated Value: $163.56 per share, assuming an Effective Date of
April 1, 1995. This Stated Value shall be adjusted
to reflect the actual Effective Date.
Dividend: Holders of New Senior Preferred Stock are entitled
to receive, when, as, and if declared by the board
of directors of New Standalone FirstCity cumulative
dividends of 8% per share per annum, subject to the
provisions set forth under "Subordination" below.
Subject to legal availability of funds, such
dividends shall be payable, in cash, quarterly
commencing on the earlier of the last day of March,
June, September and December following the
retirement of the New Senior Secured Notes and on
the last day of each March, June, September and
December thereafter. No New Senior Preferred Stock
dividends may be declared, unless immediately after
payment of such dividends New Standalone FirstCity's
net worth is (i) at least $70 million if the $57
million FDIC Note has not previously been discharged
or (ii) at least $20 million if the FDIC Note has
previously been discharged.
Dividends accumulate without interest.
Until full cumulative dividends have been paid on
the New Senior Preferred Stock, (i) no dividends may
be paid or declared upon the New Standalone Junior
Preferred Stock, New Standalone Common Stock, or any
other capital stock of New Standalone FirstCity
ranking on a parity with or junior to the New Senior
Preferred Stock, and (ii) no New Standalone Junior
Preferred Stock, New Standalone Common Stock, or any
other capital stock of New Standalone FirstCity
ranking junior to the New Senior Preferred Stock
shall be redeemed, purchased, or otherwise acquired
for any consideration by New Standalone FirstCity.
Subordination: The New Senior Preferred Stock shall be subordinated
and subject to prior payment theretofore due
(whether interest, principal or otherwise) of any
Debt of the Issuer.
Liquidation Preference: $163.56 per share plus an amount equal to the amount
of accumulated and unpaid dividends, whether or not
declared by the board of directors; subject to legal
availability of funds; paid in preference to New
Standalone Junior Preferred Stock
ATT. 1 -- EXH. J-1
<PAGE> 176
and New Standalone Common Stock and any other
capital stock of New Standalone FirstCity ranking
junior to the New Senior Preferred Stock; if funds
are insufficient to liquidate fully all New Senior
Preferred holders, then New Senior Preferred holders
share ratably.
Redemption: General Terms
The redemption price shall be $163.56 plus an amount
equal to accumulated but unpaid dividends.
Redemption shall be made only out of legally
available funds.
No New Senior Preferred Stock may be redeemed unless
New Standalone FirstCity's net worth immediately
after the redemption is (i) at least $70 million if
the $57 million FDIC Note has not previously been
discharged or (ii) at least $20 million if the $57
million FDIC Note has previously been discharged.
No New Senior Preferred Stock shall be redeemed
until the New Senior Secured Notes are paid in full.
The New Senior Preferred Stock shall be redeemed
before any dividends, distribution or other payments
are made to holders of New Standalone Junior
Preferred Stock, New Standalone Common Stock or any
other capital stock of New Standalone FirstCity
ranking junior to the New Senior Preferred Stock.
Time of Redemption
A. Optional Redemption. Subject to the
foregoing, New Standalone FirstCity may redeem New
Senior Preferred Stock in part or whole, at any
time, at the sole discretion of the board.
B. $40 Million Redemption. Subject to the
foregoing restrictions, within three calendar months
after the date the New Senior Secured Notes are paid
in full, New Standalone FirstCity shall redeem $40
million of the outstanding New Senior Preferred
Stock. This redemption shall be in addition to any
redemption required on account of the receipt of
Identified Net Proceeds as described below or
otherwise made.
C. Redemption from Specified Proceeds. Within
sixty (60) days after the end of each quarterly
period, beginning with the first quarterly period
ending after the Effective Date of the Plan and
continuing thereafter, New Standalone FirstCity
shall redeem New Senior Preferred Stock in an amount
equal to the amount of unrestricted, unencumbered
"Identified Net Proceeds" that are actually received
by New Standalone FirstCity during the prior
semi-annual period, provided that the amount thereof
is at least $5 million; if the amount thereof is
less than $5 million, such amount shall be added to
and deemed to be received in the next semi-annual
period. "Identified Net Proceeds" means eighty
percent (80%) of the cash proceeds received by New
Standalone FirstCity from the following sources net
of all costs and expenses incurred by New Standalone
FirstCity in obtaining such proceeds including,
without limitation, attorneys' fees and court costs:
(i) FDIC Receivership Distributions made after
the Effective Date of the Plan, but excluding
the Initial Receivership Dividend;
ATT. 1 -- EXH. J-2
<PAGE> 177
(ii) All director and officer liability insurance
or reimbursement policies and all financial
institution bonds in which New Standalone
FirstCity has an interest as of the Effective
Date of the Plan, and all proofs of loss and
claims related thereto;
(iii) the Professional Liability Claims, if any,
held or owned by the First City Banks as of
October 30, 1992 to the extent actually
assigned to New Standalone FirstCity pursuant
to the FDIC Settlement Agreement;
(iv) the shareholder derivative action styled
Shulman, Plaintiff, v. Abboud et al.
Defendants, and First City Bancorporation of
Texas, Inc., Nominal Defendant, Civil Action
No. H-91-0933 filed on April 9, 1991 in the
United States District Court for the Southern
District of Texas, Houston Division;
(v) proceeds from the sale, merger, or
consolidation with an unaffiliated third
party of: (a) First City Asset Servicing
Company, (b) FCB Real Estate Services, Inc.,
(c) Central Texas Insurance Agency, Inc., (d)
Citizens State Bank of Sealy, and (e) First
City Life Insurance Company; and/or
(vi) from the sale, for cash, of (a) GCR Assets
and other non-cash tangible assets received
in connection with the Initial Receivership
Dividend, and (b) the Loss-Sharing Assets in
the event that the Loss-Sharing Agreement, if
any, has been consummated, except that no
proceeds produced pursuant to this clause
(vi) shall be included as Identified Net
Proceeds for payment to or for calculation
for payment to holders of the New Senior
Preferred Stock unless the third-party lender
used to finance the purchase of the
Loss-Sharing Assets shall have first been
paid in full.
D. Mandatory Redemption Date. Notwithstanding
the foregoing restrictions, on, or before, the
fourth anniversary of the Effective Date of the
Plan, New Standalone FirstCity shall be obligated to
have fully redeemed the New Senior Preferred Stock.
Voting rights: Except as indicated below, the holders of the New
Senior Preferred Stock shall have no voting rights.
If six consecutive quarterly dividends payable on
the New Senior Preferred Stock are in arrears, the
number of directors of New Standalone FirstCity
shall be increased by two directors (the "Preferred
Directors") whose election shall be determined by
the holders of the New Senior Preferred Stock on the
basis of one vote for each share held. When all
dividends in arrears have been paid or declared and
set apart for payment, the terms of the Preferred
Directors shall automatically expire and the number
of directors reduced by two.
So long as any shares of New Senior Preferred Stock
are outstanding, New Standalone FirstCity shall not,
without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of New
Senior Preferred Stock, voting as a class, change by
amendments to the Amended and Restated Standalone
Charter or otherwise, the terms and provisions of
the New
ATT. 1 -- EXH. J-3
<PAGE> 178
Senior Preferred Stock so as to affect materially
and adversely the rights and preferences of the
holders thereof or authorize the issuance of any
equity securities of the Issuer to which the New
Senior Preferred Stock would rank junior, whether
with respect to dividends or upon liquidation,
dissolution, winding up, or otherwise ("Senior
Securities") or any securities exchangeable or
convertible into any Senior Securities.
Additionally, holders of New Senior Preferred Stock
shall be entitled to vote on (i) any merger of the
Issuer with or into any other corporation,
partnership, or other entity; (ii) any consolidation
of the Issuer with any other corporation,
partnership, or other entity; (iii) any dissolution,
liquidation, or winding up of the affairs of the
Issuer; or (iv) to the extent required by applicable
law.
Registration/Listing: The shares of New Senior Preferred shares shall be
freely tradeable (except as restricted under Section
1145 of the Bankruptcy Code and applicable
securities laws) and, if eligible, New Standalone
FirstCity shall use reasonable efforts to cause the
shares of New Senior Preferred Stock to be listed
for quotation on an interdealer quotation system by
the National Association of Securities Dealers, Inc.
ATT. 1 -- EXH. J-4
<PAGE> 179
EXHIBIT K
NEW JUNIOR PREFERRED STOCK
(Applicable to Secondary Standalone Alternative)
<PAGE> 180
EXHIBIT K
SUMMARY OF TERMS
NEW JUNIOR PREFERRED STOCK
Issuer: New Standalone FirstCity
Issue: Approximately 2,449,800 New Standalone Junior
Preferred Stock shares shall be issued assuming an
Effective Date of April 1, 1995. Amount of shares
issued shall be adjusted to reflect actual Effective
Date. No fractional shares shall be issued.
Shares Authorized: 5,000,000
Par Value: $.01 per share
Stated Value: $55 per share
Dividend Rate: Holders of New Standalone Junior Preferred Stock are
entitled to receive, when, as, and if declared by
the board of directors of New Standalone FirstCity
cumulative dividends of 10% per share per annum,
subject to the provisions under "Subordination" set
forth below.
Subject to legal availability of funds, such
dividends shall be payable semi-annually commencing
on the earlier of the last day of March or September
following the Effective Date and on the last day of
each March and September thereafter.
Dividends accumulate without interest.
Until full cumulative dividends have been paid on
the New Standalone Junior Preferred Stock, (i) no
dividends may be paid or declared upon New
Standalone Common Stock, or any other capital stock
of New Standalone FirstCity ranking junior to the
New Standalone Junior Preferred Stock, and (ii) no
New Standalone Common Stock, or any other capital
stock of New Standalone FirstCity ranking junior to
the New Standalone Junior Preferred Stock shall be
redeemed, purchased, or otherwise acquired for any
consideration by New Standalone FirstCity.
Subordination: The New Junior Preferred Stock shall be subordinated
and subject to prior payment theretofore due
(whether interest, principal, dividend
liquidation/redemption preference, or otherwise) of
any Debt or preferred stock of the Issuer except
such preferred stock which, by its express terms, is
junior to, or pari passu with, the New Junior
Preferred Stock.
Liquidation Preference: $55.00 per share plus an amount equal to the amount
of accrued and unpaid dividends, whether or not
declared by the board of directors; subject to legal
availability of funds; paid in preference to New
Standalone Common Stock and any other capital stock
of New Standalone FirstCity ranking junior to the
New Standalone Junior Preferred Stock; if funds are
insufficient to liquidate fully all
ATT. 1 -- EXH. K-1
<PAGE> 181
New Standalone Junior Preferred holders, then New
Standalone Junior Preferred holders share ratably.
Redemption: General Terms
The redemption price shall be $55.00 plus an amount
equal to accumulated but unpaid dividends.
Redemption shall be made only out of legally
available funds.
No New Standalone Junior Preferred Stock shall be
redeemed until the New Senior Preferred Stock is
redeemed.
Time of Redemption
A. Optional Redemption. Subject to the
foregoing, New Standalone FirstCity may redeem New
Standalone Junior Preferred Shares in part or in
whole at any time, at the sole discretion of the
board.
B. Mandatory Redemption. New Standalone
FirstCity shall be obligated to have fully redeemed
the New Standalone Junior Preferred Stock on, or
before, the tenth anniversary of the Effective Date
of the Plan.
Voting rights: Holders of New Standalone Junior Preferred Stock are
entitled to four votes per share on all matters on
which the holders of New Standalone Common Stock are
entitled to vote under the laws of the State of
Delaware.
Additionally, holders of New Standalone Junior
Preferred Stock shall be entitled to vote on (i) any
merger of the Issuer with or into any other
corporation, partnership, or other entity; (ii) any
consolidation of the Issuer with any other
corporation, partnership, or other entity; (iii) any
dissolution, liquidation, or winding up of the
affairs of the Issuer; or (iv) to the extent
required by applicable law.
Restrictions: Individual transfers of New Standalone Junior
Preferred Stock resulting in a 4.75% change of
ownership of New Standalone Junior Preferred Stock
or a transfer by an owner of 5.0% or more of the New
Standalone Junior Preferred Stock shall be subject
to the restrictions set forth in Article XIV. of the
Plan.
Registration/Listing: The shares of New Standalone Junior Preferred Stock
shall be freely tradeable (except as restricted
under Section 1145 of the Bankruptcy Code and
applicable securities laws and pursuant to Article
XIV of the Plan) and, if eligible, New Standalone
FirstCity shall use reasonable efforts to cause the
shares of New Standalone Junior Preferred Stock to
be listed for quotation on an interdealer quotation
system by the National Association of Securities
Dealers, Inc.
ATT. 1 -- EXH. K-2
<PAGE> 182
EXHIBIT L
NEW STANDALONE FIRSTCITY COMMON STOCK
(Applicable to Secondary Standalone Alternative)
<PAGE> 183
EXHIBIT L
SUMMARY OF TERMS
NEW STANDALONE FIRSTCITY COMMON STOCK
Issuer: New Standalone FirstCity
Authorized Shares: 100,000,000 authorized New Standalone Common Stock
Shares
Issued Shares: 10,000,000 New Standalone Common Stock Shares
Par Value: $.01 per share
Dividend Rights: Subject to the prior rights of holders of any
outstanding shares of preferred stock, the holders
of New Standalone Common Stock are entitled to
dividends as may from time to time be declared by
the board of directors out of legally available
funds.
Voting rights: Holders of New Standalone Common Stock are entitled
to one vote per share on all matters on which the
holders of New Standalone Common Stock are entitled
to vote.
Liquidation Rights: In the event of the liquidation, dissolution, or
winding up of New Standalone FirstCity, after the
payment of the liquidation preferences on all of the
New Senior Preferred Stock and New Standalone Junior
Preferred Stock, holders of New Standalone Common
Stock would be entitled to share ratably in all
assets of New Standalone FirstCity available for
distribution to the holders of New Standalone Common
Stock.
Restrictions: Individual transfers of stock resulting in a 4.75%
change of ownership of New Standalone Common Stock
or a transfer by an owner of 5.0% or more of the New
Standalone Common Stock shall be subject to the
restrictions set forth in Article XIV. of the Plan.
Registration/Listing: The shares of New Standalone Common Stock shall be
freely tradeable (except as restricted under Section
1145 of the Bankruptcy Code, applicable securities
laws and pursuant to Article XIV. of the Plan) and
if eligible, New Standalone FirstCity shall use
reasonable efforts to cause the shares of New
Standalone Common Stock to be listed for quotation
on an interdealer quotation system by the National
Association of Securities Dealers, Inc.
ATT. 1 -- EXH. L-1
<PAGE> 184
EXHIBIT M
NEW STANDALONE CHARTER
(Applicable to Secondary Standalone Alternative)
<PAGE> 185
EXHIBIT M
Secondary Standalone Alternative
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FIRST CITY BANCORPORATION OF TEXAS, INC.
FIRST CITY BANCORPORATION OF TEXAS, INC. ("Old Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY THAT:
1. The name of the Corporation is FIRST CITY BANCORPORATION OF
TEXAS, INC.
2. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on January 6, 1988, under the name
First City Acquisition Corporation, and was restated on April 22, 1988, under
the name First City Bancorporation of Texas, Inc.
3. Article FIRST of Old Corporation's Restated Certificate of
Incorporation is hereby amended as follows:
FIRST: The name of the Corporation is _________________________
(hereinafter the "Corporation").
4. This Amended and Restated Certificate of Incorporation is
adopted pursuant to the authority granted to Old Corporation under Section 303
of the General Corporation Law of the State of Delaware to put into effect and
carry out the Joint Plan of Reorganization by First City Bancorporation of
Texas, Inc., Official Committee of Equity Security Holders, and J-Hawk
Corporation, with the Participation of Cargill Financial Services Corporation,
Under Chapter 11 of the United States Bankruptcy Code] ("Plan"), as confirmed
on __________ __, 199_, by order ("Confirmation Order") of the United States
Bankruptcy Court for the Northern District of Texas, Dallas Division.
5. Old Corporation's Restated Certificate of Incorporation, as
previously and hereby amended, is hereby restated to read in its entirety as
follows:
FIRST: The name of the corporation is _______________("Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 229 South State Street, City of Dover, County of Kent,
State of Delaware. The name of the registered agent of the Corporation in the
State of Delaware at such address is Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware, as from time to time amended.
ATT. 1 -- EXH. M-1
<PAGE> 186
FOURTH: The total number of shares of capital stock ("Capital Stock")
which the Corporation shall have authority to issue is 115,000,000 shares
divided into three classes as follows: (i) 700,000 shares of New Senior
Preferred Stock, par value $.01 per share ("Senior Preferred Stock"); (ii)
5,000,000 shares of New Junior Preferred Stock, par value $.01 per share
("Junior Preferred Stock"); and (ii) 100,000,000 shares of New Common Stock,
par value $.01 per share ("Common Stock"). To the extent required by 11 U.S.C.
Section 1123(a)(6), the Corporation shall be prohibited from issuing any
shares of nonvoting capital stock other than warrants.
The designations, preferences and relative participating, optional or
other special rights, and qualifications, limitations or restrictions of the
shares of Capital Stock of the Corporation are as follows:
A. TRANSFER RESTRICTIONS APPLICABLE TO ALL SHARES OF CAPITAL STOCK
1. At any time during the period beginning on the first
business day on which the Confirmation Order is a Final Order (as defined in
the Plan) and all conditions precedent to the occurrence of the Effective Date
contained in section 12.2 of the Plan have been satisfied or waived as provided
for in section 12.3 of the Plan ("Effective Date") and ending on the earlier of
(a) the expiration of fifteen (15) years after the Effective Date, or (b) the
date which is the first day of the beginning of the taxable year of the
Corporation (or any successor thereto) to which no Tax Benefits (as defined in
the Plan) may be carried forward, any attempted sale, purchase, transfer,
assignment, conveyance, pledge or other disposition ("Transfer") of any share
of Capital Stock, any warrants, rights or options to purchase Capital Stock, or
any other interests that would be treated as "stock" of the Corporation under
Section 382 of the Internal Revenue Code of 1986, as amended ("Tax Code")
(collectively, "Corporate Securities") to any person or entity or group of
persons or entities acting in concert ("Transferee") who directly or indirectly
owns or is treated as owning (within the meaning of the attribution rules
applicable under section 382 of the Tax Code) ("Own") 4.75% of the outstanding
shares of any class of Corporate Securities or, after giving effect to the
Transfer, would directly or indirectly Own more than 4.75% of the outstanding
shares of any class of Corporate Securities shall be void ab initio and shall
not be effective to Transfer any of such shares of Corporate Securities to the
extent the Transfer increases the Transferee's direct or indirect Ownership of
the Corporate Securities above 4.75% of the total outstanding shares of such
class of Corporate Securities. Similarly, any Transfer by a Transferee who
directly or indirectly Owns five percent (5%) or more of the outstanding shares
of any class of Corporate Securities shall be void ab initio and shall not be
effective to Transfer any of such shares to the purported Transferee.
2. The foregoing restriction on transfer of Corporate
Securities shall not apply to an attempted Transfer if the transferor or the
Transferee obtains the approval of the board of directors of the Corporation,
or a designated committee thereof. As a condition to granting such approval,
the board of directors may, in its discretion, require that the transferor or
the Transferee, as the case may be, deliver an opinion of counsel selected by
the board to the effect that the Transfer shall not result in the application
of any limitation on the use of Tax Benefits under sections 382 and 269 of the
Tax Code. If the board requires and receives such an opinion of counsel, the
decision to approve a Transfer (whether or not that decision is contrary to the
opinion so delivered) shall still remain in the sole discretion of the board of
directors.
3. If the board of directors determines that a Transfer of
Corporate Securities constitutes a Transfer prohibited by paragraph A.1
("Prohibited Transfer"), then, upon written demand by the Corporation, the
purported Transferee shall transfer or cause to be transferred any certificate
or other evidence of ownership of Corporate Securities that are the subject of
the Prohibited Transfer ("Prohibited Securities"), together with any dividends
or other distributions that were received by the Transferee from the
Corporation with respect to such Prohibited Securities ("Prohibited
Distributions"), to an agent designated by the board of directors ("Agent").
The Agent shall thereupon sell to a buyer or buyers the Prohibited Securities
transferred to it. If the purported Transferee has resold the Prohibited
Securities before receiving the Corporation's demand to surrender the
Prohibited Securities to the Agent, the purported Transferee shall be deemed to
have sold the Prohibited Securities
ATT. 1 -- EXH. M-2
<PAGE> 187
for the Agent and shall be required to transfer to the Agent any Prohibited
Distributions and the proceeds of such sale. If the purported Transferee fails
to surrender the Prohibited Securities, or the proceeds of a sale thereof, and
any Prohibited Distributions to the Agent within thirty (30) business days from
the date on which the Corporation makes a demand for such surrender, then the
Corporation shall institute legal proceedings to compel surrender.
4. No employee or agent of the Corporation shall record any
Prohibited Transfer, and the purported Transferee shall not be recognized as a
stockholder of the Corporation for any purpose whatsoever in respect of the
Prohibited Securities. Until the Prohibited Securities are acquired by another
person in a Transfer that is not a Prohibited Transfer, the purported
Transferee shall not be entitled with respect to such Prohibited Securities to
any rights of stockholders of the Corporation, including, without limitation,
the right to vote such Prohibited Securities and to receive dividend
distributions, whether liquidating or otherwise, in respect thereof, if any.
Once the Prohibited Securities have been acquired in a Transfer that is not a
Prohibited Transfer, the Corporate Securities shall cease to be Prohibited
Securities.
5. The Agent shall apply any proceeds of a sale by it of
Prohibited Securities and, if the purported Transferee has previously resold
the Prohibited Securities, any amounts received by it from a purported
Transferee, as follows: (a) first, such amount shall be paid to the Agent to
the extent necessary to cover its costs and expenses incurred in connection
with its duties hereunder; (b) second, any remaining amounts shall be paid to
the purported Transferee, up to the amount paid by the purported Transferee for
the Prohibited Securities, which amount shall be determined in the discretion
of the board of directors; and (c) third, any remaining amounts shall be paid
to one or more organizations selected by the board of directors qualifying
under section 501(c)(3) of the Tax Code.
6. All certificates reflecting Corporate Securities issued
by the Corporation on or after the Effective Date shall bear a conspicuous
legend in substantially the following form:
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO
RESTRICTION PURSUANT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF THE CORPORATION REPRINTED IN ITS ENTIRETY ON THE
BACK OF THIS CERTIFICATE.
7. If any portion of this Article 4.A shall be determined
judicially to be invalid or unenforceable, such invalidity or unenforceability
shall not affect the rest of this or any other Article, which shall thereafter
be interpreted as if the invalid or unenforceable part were not contained
therein.
B. THE SENIOR PREFERRED STOCK
1. Dividends. The holders of shares of Senior Preferred
Stock shall be entitled to receive, when, as and if declared by the board of
directors, out of funds legally available for the payment of dividends,
cumulative quarterly cash dividends at the annual rate of eight percent (8%)
per annum per share. Dividends in respect of Senior Preferred Stock shall be
payable in arrears in equal quarterly payments commencing on the earliest of
the last day of March, June, September, and December following retirement of
the Corporation's Senior Secured Notes (as defined in the Plan) and on the last
day of each March, June, September, and December thereafter ("Dividend Payment
Date"). Such dividends shall be paid to the holders of record at the close of
business on the date specified by the board of directors of the Corporation at
the time such dividend is declared; provided, however, that such date shall not
be more than sixty (60) days nor less than ten (10) days prior to the
respective Dividend Payment Date. Each of such quarterly dividends shall be
fully cumulative and shall accrue (whether or not declared), without interest,
from the first day of the quarter in which such dividend may be payable as
herein provided, except that with respect to the first Dividend Payment Date,
dividends shall accrue from the date of retirement of the Senior Secured Notes.
ATT. 1 -- EXH. M-3
<PAGE> 188
So long as any Senior Preferred Stock shall remain outstanding, no
dividend whatsoever shall be declared or paid upon or set apart for any class
of Capital Stock or series thereof ranking on a parity with or junior to the
Senior Preferred Stock in payment of dividends, nor shall any shares of any
class of Capital Stock or series thereof ranking junior to Senior Preferred
Stock in payment of dividends be redeemed, purchased, or otherwise acquired for
any consideration by the Corporation or any subsidiary thereof, nor shall any
moneys be paid to or made available for a sinking fund for redemption,
purchase, or other acquisition of any shares of any class of Capital Stock or
series thereof ranking junior to Senior Preferred Stock in payment of
dividends; unless, in each such instance, full dividends on all outstanding
shares of Senior Preferred Stock for all past dividend periods shall have been
paid at the rate fixed therefor, and the dividends on all outstanding shares of
Senior Preferred Stock for the then current dividend period shall have been
paid or declared and sufficient funds set aside for payment thereof.
2. Liquidation. The holders of shares of Senior Preferred Stock
shall be entitled to a distribution of $163.56 per share plus an amount equal
to the amount of accumulated and unpaid dividends, whether or not declared by
the board of directors (subject to the legal availability therefor) in
preference to the holders of shares of the Corporation's other Capital Stock
ranking junior to the Senior Preferred Stock in the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation. If funds are insufficient to provide the foregoing preferential
distribution to holders of Senior Preferred Stock, the holders of such stock
shall share ratably.
3. Redemption. All shares of Senior Preferred Stock outstanding
at any time may be redeemed, in whole or in part, at the Corporation's option
upon affirmative resolution of the board of directors ("Optional Redemption").
The Corporation shall, however, have the obligation to redeem $40 million of
the outstanding shares of Senior Preferred Stock within three (3) months after
the date the Corporation's Senior Secured Notes are paid in full ("Mandatory
Redemption"). In addition to the foregoing Mandatory Redemption provision,
within sixty (60) days after the end of each quarterly period, beginning with
the first quarterly period ending after the Effective Date and continuing
thereafter, the Corporation shall redeem Senior Preferred Stock in an amount
equal to the amount of unrestricted, unencumbered Identified Net Proceeds (as
hereinafter defined) that are actually received by the Corporation during the
prior six-month period ("Additional Redemption Obligation"); provided, however,
that the amount of such Identified Net Proceeds is at least $5 million. If the
amount of Identified Net Proceeds actually received by the Corporation during
any six-month period is less than $5 million, the Identified Net Proceeds
received during such period shall be added to and deemed to be received in the
next six-month period.
For purposes of the foregoing Additional Redemption Obligation,
"Identified Net Proceeds" shall mean eighty percent (80%) of the cash proceeds
received by the Corporation from the following sources, net of all costs and
expenses (including, without limitation, attorneys' fees and court costs)
incurred by the Corporation in obtaining such proceeds:
(a) FDIC Receivership Distributions made after the Effective Date, but
excluding the Initial Receivership Dividend (as defined in the Plan);
(b) All director and officer liability insurance or reimbursement policies
and all financial institution bonds in which the Corporation has an
interest as of the Effective Date, and all proofs of loss and claims
related thereto;
(c) the Professional Liability Claims (as defined in the Plan), if any,
held or owned by the First City Banks (as defined in the Plan) as of
October 30, 1992, to the extent actually assigned to the Corporation
pursuant to the FDIC Settlement Agreement (as defined in the Plan);
ATT. 1 -- EXH. M-4
<PAGE> 189
(d) the shareholder derivative action styled Shulman, Plaintiff, v. Abboud
et al. Defendants, and First City Bancorporation of Texas, Inc.,
Nominal Defendant, Civil Action No. H-91-0933 filed on April 9, 1991
in the United States District Court for the Southern District of
Texas, Houston Division;
(e) proceeds from the sale, merger, or consolidation with an unaffiliated
third party of: (a) First City Asset Servicing Company, (b) FCB Real
Estate Services, Inc., (c) Central Texas Insurance Agency, Inc., (d)
Citizens State Bank of Sealy, and (e) First City Life Insurance
Company; and/or
(f) from the sale, for cash, of (a) GCR Assets (as defined in the Plan)
and other non-cash tangible assets received in connection with the
Initial Receivership Dividend, and (b) the Loss-Sharing Assets (as
defined in the Plan) in the event that the Loss-Sharing Agreement (as
defined in the Plan), if any, has been consummated, except that no
proceeds produced pursuant to this clause (f) shall be included as
Identified Net Proceeds for payment to or for calculation for payment
to holders of the Senior Preferred Stock unless the third-party lender
used to finance the purchase of the Loss-Sharing Assets shall have
first been paid in full.
Notwithstanding anything to the contrary in the foregoing, the
Corporation must redeem all shares of Senior Preferred Stock on or before the
fifth anniversary of the Effective Date. All redemptions under this Article
4.B.3 shall be effected at the redemption price of $163.56 per share of Senior
Preferred Stock plus an amount equal to accumulated but unpaid dividends, and
all redemptions shall be made only out of legally available funds.
No redemption may be effected under this Article 4.B.3 unless the
Corporation's net worth immediately after the redemption is (i) at least $70
million if the $57 million FDIC Note (as defined in the Plan) has not
previously been discharged, or (ii) at least $20 million if the $57 million
FDIC Note has previously been discharged. In addition, no shares of Senior
Preferred Stock shall be redeemed until the Corporation's Senior Secured Notes
have been paid in full. The Senior Preferred Stock shall be redeemed before
any dividends, distribution or other payments are made to holders of the
Corporation's Junior Preferred Stock, Common Stock or any other Capital Stock
ranking junior to the Senior Preferred Stock.
4. Voting Rights.
(a) The holders of record of shares of Senior Preferred Stock
shall not be entitled to any voting rights except as hereinafter provided in
this paragraph B.4 or as otherwise provided by law.
(b) (i) If at any time or times dividends payable on Senior
Preferred Stock shall be in arrears and unpaid on an amount equal to six (6)
consecutive full quarterly dividend periods, then the number of directors
constituting the board of directors, without further action, shall be increased
by two (2) and the holders of shares of Senior Preferred Stock shall have the
exclusive right, voting separately as a class, to elect the directors of the
Corporation to fill such newly-created directorships, the remaining directors
to be elected by the other class or classes of stock entitled to vote therefor,
at a meeting of stockholders held for the purpose of electing directors.
(ii) Whenever such voting right shall have vested, such
right may be exercised initially either at a special meeting of the holders of
Senior Preferred Stock, called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings or by the written consent of the holders of
Senior Preferred Stock. Such voting right shall continue until such time as
all accrued dividends accumulated on the Senior Preferred Stock shall have been
paid in full or declared and set apart for payment, at which time such voting
right of the holders of Senior Preferred Stock shall terminate, subject to
revesting in the event of each and every subsequent failure of the Corporation
of the character described above.
ATT. 1 -- EXH. M-5
<PAGE> 190
(iii) At any time when such voting right shall have vested
in the holders of Senior Preferred Stock and if such right shall not already
have been initially exercised, a proper officer of the Corporation shall, upon
the written request of any holder of record of Senior Preferred Stock then
outstanding, addressed to the Secretary of the Corporation, call a special
meeting of holders of Senior Preferred Stock. Such meeting shall be held at
the earliest practicable date upon the notice required for annual meetings of
stockholders at the place for holding annual meetings of stockholders of the
Corporation. If such meeting shall not be called by the proper officer of the
Corporation within thirty (30) days after the personal service of such written
request upon the Secretary of the Corporation, or within thirty (30) days after
mailing the same within the United States, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of record of ten-percent (10%) of the shares of Senior Preferred Stock
then outstanding may designate in writing a holder of Senior Preferred Stock to
call such meeting at the expense of the Corporation, and such meeting may be
called by such person so designated upon the notice required for annual
meetings of stockholders and shall be held at the same place as for holding
annual meetings of stockholders of the Corporation. Any holder of Senior
Preferred Stock which would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of holders of Senior Preferred Stock to be called pursuant to the
provisions of this paragraph B.4. Notwithstanding the provisions of this
paragraph B.4, however, no such special meeting shall be called during a period
within ninety (90) days immediately preceding the date fixed for the next
annual meeting of stockholders.
(iv) At any meeting held for the purpose of electing
directors at which the holders of Senior Preferred Stock shall have the right
to elect directors as provided herein, the presence in person or by proxy of
the holders of at least a majority of the then outstanding shares of Senior
Preferred Stock shall be required and be sufficient to constitute a quorum of
such class for the election of directors by such class. At any such meeting or
adjournment thereof (a) the absence of a quorum of the holders of Senior
Preferred Stock shall not prevent the election of directors other than those to
be elected by the holders of stock of such class and the absence of a quorum or
quorums of the holders of capital stock entitled to elect such other directors
shall not prevent the election of directors to be elected by the holders of
Senior Preferred Stock, and (b) in the absence of a quorum of the holders of
any class of stock entitled to vote for the election of directors, a majority
of the holders present in person or by proxy of such class shall have the power
to adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice (except as
required by law) other than announcement at the meeting, until a quorum shall
be present.
(v) The term of office of all directors elected by the
holders of Senior Preferred Stock pursuant to paragraph B.4(b)(i) in office at
any time when the aforesaid voting rights are vested in the holders of Senior
Preferred Stock shall terminate upon the election of their successors at any
meeting of holders of Senior Preferred Stock for the purpose of electing
directors. Upon any termination of the aforesaid voting rights in accordance
with paragraph B.4(b)(ii), the term of office of all directors elected by the
holders of Senior Preferred Stock pursuant to paragraph B.4(b)(i) then in
office shall thereupon terminate and upon such termination the number of
directors constituting the Board of Directors shall, without further action, be
reduced by two (2), subject always to the increase of the number of directors
pursuant to paragraph B.4(b)(i) in case of the future right of the holders of
Senior Preferred Stock to elect directors as provided herein.
(vi) In case of any vacancy occurring among the directors so
elected, the remaining director who shall have been so elected may appoint a
successor to hold office for the unexpired term of the director whose place
shall be vacant. If both directors so elected by the holders of Senior
Preferred Stock shall cease to serve as directors before their terms shall
expire, the holders of Senior Preferred Stock then outstanding may, at a
special meeting of the holders thereof called as provided above, elect
successors to hold office for the unexpired terms of such directors whose
places shall be vacant.
ATT. 1 -- EXH. M-6
<PAGE> 191
(c) So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Senior Preferred
Stock, voting as a class, change by amendment to this Amended and Restated
Certificate of Incorporation or otherwise, the terms and provisions of the
Senior Preferred Stock so as to affect materially and adversely the rights and
preferences of the holders thereof or authorize the issuance of any equity
securities of the Corporation to which the Senior Preferred Stock would rank
junior, whether with respect to dividends or upon liquidation, dissolution,
winding up, or otherwise ("Senior Securities") or any securities exchangeable
or convertible into any Senior Securities.
(d) In addition to the voting rights set forth in paragraph
B.4(b) above, the affirmative vote or written consent of the holders of a
majority of the then outstanding shares of Senior Preferred Stock shall be
required (i) for any merger of the Corporation with or into any other
corporation, partnership, or other entity; (ii) for any consolidation of the
Corporation with any other corporation, partnership, or other entity; (iii) for
any transaction or series of related transaction in which the Corporation shall
sell, lease, exchange or otherwise transfer all or substantially all of its
assets; (iv) for any dissolution, liquidation, reorganization, or
recapitalization of the Corporation; or (v) to the extent required by
applicable law.
(e) In exercising the voting rights set forth in this
paragraph B.4, each share of Senior Preferred Stock shall have one vote per
share.
C. THE JUNIOR PREFERRED STOCK
1. Dividends. The holders of shares of Junior Preferred
Stock shall be entitled to receive, when, as and if declared by the board of
directors, out of funds legally available for the payment of dividends,
cumulative semi-annual cash dividends at the annual rate of ten percent (10%)
per annum per share. Dividends in respect of Junior Preferred Stock shall be
payable in arrears in equal semi-annual payments commencing on the earlier of
the last day of March or September following the Effective Date and on the last
day of each March and September thereafter ("Dividend Payment Date"). Such
dividends shall be paid to the holders of record at the close of business on
the date specified by the board of directors of the Corporation at the time
such dividend is declared; provided, however, that such date shall not be more
than sixty (60) days nor less than ten (10) days prior to the respective
Dividend Payment Date. Each of such semi-annual dividends shall be fully
cumulative and shall accrue (whether or not declared), without interest, from
the first day of the semi-annual period in which such dividend may be payable
as herein provided, except that with respect to the first Dividend Payment
Date, dividends shall accrue from the Effective Date.
So long as any Junior Preferred Stock shall remain outstanding, no
dividend whatsoever shall be declared or paid upon or set apart for any class
of Capital Stock or series thereof ranking junior to the Junior Preferred Stock
in payment of dividends, nor shall any shares of any class of Capital Stock or
series thereof ranking junior to Junior Preferred Stock in payment of dividends
be redeemed, purchased, or otherwise acquired for any consideration by the
Corporation or any subsidiary thereof, nor shall any moneys be paid to or made
available for a sinking fund for redemption, purchase, or other acquisition of
any shares of any class of Capital Stock or series thereof ranking junior to
Junior Preferred Stock in payment of dividends; unless, in each such instance,
full dividends on all outstanding shares of Junior Preferred Stock for all past
dividend periods shall have been paid at the rate fixed therefor, and the
dividends on all outstanding shares of Junior Preferred Stock for the then
current dividend period shall have been paid or declared and sufficient funds
set aside for payment thereof.
2. Liquidation. The holders of shares of Junior Preferred
Stock shall be entitled to a distribution of $55.00 per share plus an amount
equal to the amount of accumulated and unpaid dividends, whether or not
declared by the board of directors (subject to the legal availability therefor)
in preference to the holders of shares of the Corporation's other Capital Stock
ranking junior to the Junior Preferred Stock in the event of any
ATT. 1 -- EXH. M-7
<PAGE> 192
voluntary or involuntary liquidation, dissolution, or winding up of the affairs
of the Corporation. If funds are insufficient to provide the foregoing
preferential distribution to holders of Junior Preferred Stock, the holders of
such stock shall share ratably.
3. Redemption. All shares of Junior Preferred Stock
outstanding at any time may be redeemed, in whole or in part, at the
Corporation's option upon affirmative resolution of the board of directors.
The Corporation shall have the obligation to redeem all shares of Junior
Preferred Stock on or before the tenth anniversary of the Effective Date. All
redemptions of Junior Preferred Stock shall be effected at the redemption price
of $55.00 per share plus an amount equal to accumulated but unpaid dividends,
and all redemptions shall be made only out of legally available funds. No
Junior Preferred Stock may be redeemed, however, until all shares of Senior
Preferred Stock have been redeemed.
4. Voting Rights. The holders of shares of Junior Preferred
Stock shall be entitled to four (4) votes per share on all matters on which the
holders of the Corporation's Common Stock are entitled to vote under the
General Corporation Law of the State of Delaware. In addition, the affirmative
vote or written consent of the holders of a majority of the then outstanding
shares of Junior Preferred Stock shall be required (i) for any merger of the
Corporation with or into any other corporation, partnership, or other entity;
(ii) for any consolidation of the Corporation with any other corporation,
partnership, or other entity; (iii) for any dissolution, liquidation, or
winding up of the affairs of the Corporation; or (iv) to the extent required by
applicable law.
D. THE COMMON STOCK
1. Dividends. Shares of Common Stock shall be junior with
respect to any declaration or payment of any dividend on any Preferred Stock of
the Corporation. The holders of shares of Common Stock shall be entitled to
receive dividends when, as and if declared by the board of directors, out of
funds legally available for the payment of dividends. No dividend shall be
paid or declared on any share of Common Stock unless an equal dividend is
simultaneously paid or declared on each share of Common Stock.
2. Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, after payment or
provision for payment of the debts and other liabilities of the Corporation and
after payment of the liquidation preferences on all of the Senior Preferred
Stock and the Junior Preferred Stock, the holders of shares of Common Stock
shall be entitled to share ratably, share and share alike, in the remaining net
assets of the Corporation.
3. Voting. Subject to the provisions of applicable law or of
the by-laws with respect to the closing of the transfer books or the fixing of
a record date for the determination of stockholders entitled to vote, holders
of record of outstanding shares of Common Stock shall be entitled to one (1)
vote for each share of Common Stock standing in his name on the books of the
Corporation.
FIFTH: The name and mailing address of the incorporator are
________________________________, c/o Carrington, Coleman, Sloman & Blumenthal,
L.L.P, 200 Crescent Court, Suite 1500, Dallas, Texas 75201.
SIXTH: Upon filing this Amended and Restated Certificate of
Incorporation, the names and mailing addresses of the persons who are to serve
as voting members of the board of directors until the first annual meeting of
stockholders or until their successors are elected and qualify shall be as
follows:
Name Address
---- -------
C. Ivan Wilson
ATT. 1 -- EXH. M-8
<PAGE> 193
One director acceptable to the Corporation who is selected by holders
of Existing Series A Interests appointed to the Equity Committee.
Three directors acceptable to the Corporation who are selected by
holders of Existing Series B Interests and Existing Series E Interests
appointed to the Equity Committee, provided that in the event the
holders of Existing Series A Interests appointed to the Equity
Committee decline to select one (1) director as set forth above, then
the holders of Existing Series B Interests and Existing Series E
Interests appointed to the Equity Committee shall be entitled to
select four (4) directors.
Two directors acceptable to the Corporation who are selected by
holders of New Standalone Common Stock appointed to the Equity
Committee.
In addition, the names and mailing addresses of the persons
who are to serve as non- voting, advisory members of the board of directors
until the first annual meeting of stockholders or until their successors are
elected and qualify shall be as follows:
Name Address
---- -------
J. Evans Attwell
James Elkins, Jr.
[One director acceptable to the Corporation who is selected by the
Creditor Committee]
SEVENTH: In furtherance and not in limitation of the powers
conferred by law, subject to any limitations contained elsewhere in this
Amended and Restated Certificate of Incorporation, by-laws of the Corporation
may be adopted, amended or repealed by a majority of the voting members of the
board of directors of the Corporation, but any by-laws adopted by such
directors may be amended or repealed by the stockholders entitled to vote
thereon. Election of directors need not be by written ballot.
EIGHTH: (a) A director of the Corporation shall not be
personally liable either to the Corporation or to any stockholder for monetary
damages for breach of fiduciary duty as a director, except (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders; (ii)
for acts or omissions which are not in good faith or which involve intentional
misconduct or knowing violation of the law; (iii) for any matter in respect of
which such director shall be liable under Section 174 of Title 8 of the General
Corporation Law of the State of Delaware or any amendment thereto or successor
provision thereto; or (iv) for any transaction from which the director shall
have derived an improper personal benefit. Neither amendment nor repeal of this
paragraph (a) nor the adoption of any provision of this Amended and Restated
Certificate of Incorporation inconsistent with this paragraph (a) shall
eliminate or reduce the effect of this paragraph (a) in respect of any matter
occurring, or any cause of action, suit or claim that, but for this paragraph
(a) of this Article, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to, or testifies in, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in nature, by reason of the fact that such
person is or was a director, officer, employee, or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, employee
benefit plan, trust, or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding to the full extent permitted
ATT. 1 -- EXH. M-9
<PAGE> 194
by law, and the Corporation may adopt by-laws or enter into agreements with any
such person for the purpose of providing for such indemnification.
(c) To the extent that a director, officer, employee, or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraph (b) of this Article, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Expenses incurred by an officer, director, employee, or
agent in defending or testifying in a civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director, officer, employee,
or agent to repay such amount if it shall ultimately be determined that such
director, officer, employee, or agent is not entitled to be indemnified by the
Corporation against such expenses as authorized by this Article, and the
Corporation may adopt by-laws or enter into agreements with such persons for
the purpose of providing for such advances.
(e) The indemnification permitted by this Article shall not be
deemed exclusive of any other rights to which any person may be entitled under
section 8.5 of the Plan, or any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding an office,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
(f) Notwithstanding any provision in this Article to the
contrary, the Corporation shall not indemnify or advance expenses to any person
who was or is a party or is threatened to be made a party to, or testifies in,
any threatened, pending or completed action, suit or proceeding if such action,
suit or proceeding is based upon or arises out of or is in connection with an
event, act or omission occurring prior to October 31, 1992.
(g) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, employee benefit plan trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability under the provisions of this Article or otherwise.
IN WITNESS WHEREOF, the undersigned has duly executed this Amended and
Restated Certificate of Incorporation on this ______ day of ___________________,
19__.
__________________________________________
[Name]
Chairman of the Board
ATT. 1 -- EXH. M-10
<PAGE> 195
EXHIBIT N
Secondary Standalone Alternative
BYLAWS
OF
__________________________________________
A Delaware Corporation
ATT. 1 -- EXH. N
<PAGE> 196
TABLE OF CONTENTS
ARTICLE ONE: OFFICES
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1.1 Registered Office and Agent . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Stockholder List . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . . . . . . 2
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . . . 3
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE THREE: DIRECTORS
3.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Number; Qualification; Election; Term . . . . . . . . . . . . . 4
3.3 Change in Number . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . . . 5
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.8 Election of Officers . . . . . . . . . . . . . . . . . . . . . 5
3.9 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 5
3.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . 6
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . 6
3.15 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Number; Qualification; Term . . . . . . . . . . . . . . . . . . 6
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Committee Changes . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Alternate Members of Committees . . . . . . . . . . . . . . . . 7
4.6 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
ATT. 1 -- EXH. N-i
<PAGE> 197
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.7 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . 7
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.11 Responsibility . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE FIVE: NOTICE
5.1 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office . . . . . . . . . . . . . . . . 8
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . 8
6.7 President . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.8 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . 9
6.9 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.10 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . 9
6.11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.12 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . . 9
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . . 10
7.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Registered Stockholders . . . . . . . . . . . . . . . . . . . . 10
7.6 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.7 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.5 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.7 Securities of Other Corporations . . . . . . . . . . . . . . . 11
8.8 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . 11
8.9 Action Without a Meeting . . . . . . . . . . . . . . . . . . . 11
8.10 Ratification . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.11 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
ATT. 1 -- EXH. N-ii
<PAGE> 198
<TABLE>
<S> <C> <C>
8.12 Bank Accounts and Drafts . . . . . . . . . . . . . . . . . . . 12
8.13 Financial Reports . . . . . . . . . . . . . . . . . . . . . . . 12
8.14 Mortgages, Contracts, etc. . . . . . . . . . . . . . . . . . . 12
8.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.16 References . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.17 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ATT. 1 -- EXH. N-iii
<PAGE> 199
BYLAWS
OF
____________________________________________
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law") and the certificate of incorporation of FirstCity Financial Corporation,
a Delaware corporation (the "Corporation"). In the event of a direct conflict
between the provisions of these bylaws and the mandatory provisions of the
Delaware General Corporation Law or the provisions of the certificate of
incorporation of the Corporation, such provisions of the Delaware General
Corporation Law or the certificate of incorporation of the Corporation, as the
case may be, shall control.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and
registered agent of the Corporation shall be as designated from time to time by
the appropriate filing by the Corporation in the office of the Secretary of
State of the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
2.2 Special Meeting. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be
held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be
held at any place within or without the State of Delaware designated by the
board of directors. A special meeting of stockholders may be held at any place
within or without the State of Delaware designated in the notice of the meeting
or a duly executed waiver of notice of such meeting. Meetings of stockholders
shall be held at the principal office of the Corporation unless another place
is designated for meetings in the manner provided herein.
ATT. 1 -- EXH. N-1
<PAGE> 200
2.4 Notice. Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary, or the officer or person(s) calling the meeting, to each stockholder
of record entitled to vote at such meeting. If such notice is to be sent by
mail, it shall be directed to such stockholder at his address as it appears on
the records of the Corporation, unless he shall have filed with the Secretary
of the Corporation a written request that notices to him be mailed to some
other address, in which case it shall be directed to him at such other address.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who attends such meeting in person or by proxy and does not, at the
beginning of such meeting, object to the transaction of any business because
the meeting is not lawfully called or convened, or who submits, either before
or after the meeting, a signed waiver of notice, in person or by proxy.
2.5 Stockholder List. At least ten (10) days before each meeting
of stockholders, the Secretary or other officer of the Corporation who has
charge of the Corporation's stock ledger, either directly or through another
officer appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten (10) days prior to such meeting, such list shall be kept on
file at a place within the city where the meeting is to be held, which place
shall be specified in the notice of meeting or a duly executed waiver of notice
of such meeting or, if not so specified, at the place where the meeting is to
be held and shall be open to examination by any stockholder during ordinary
business hours. Such list shall be produced at such meeting and kept at the
meeting at all times during such meeting and may be inspected by any
stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
2.6 Quorum. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these bylaws. If a quorum
is not present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other
than announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than thirty (30) days or
if after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present
at any meeting, the vote of the holders of at least a majority of the
outstanding shares entitled to vote who are present, in person or by proxy,
shall decide any question brought before such meeting, unless the question is
one on which, by express provision of statute, the certificate of incorporation
of the Corporation, or these bylaws, a different vote is required, in which
case such express provision shall govern and control the decision of such
question. The stockholders present at a duly constituted meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
ATT. 1 -- EXH. N-2
<PAGE> 201
2.8 Method of Voting; Proxies. Except as otherwise provided in
the certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
such proxy shall be filed with the Secretary of the Corporation before or at
the time of the meeting. No proxy shall be valid after three years from the
date of its execution, unless otherwise provided in the proxy. If no date is
stated in a proxy, such proxy shall be presumed to have been executed on the
date of the meeting at which it is to be voted. Each proxy shall be revocable
unless expressly provided therein to be irrevocable and coupled with an
interest sufficient in law to support an irrevocable power or unless otherwise
made irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
entitled to notice of, or to vote at, any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the voting members of the board of directors, for any
such determination of stockholders, such date in any case to be not more than
sixty (60) days and not less than ten (10) days prior to such meeting nor more
than sixty (60) days prior to any other action. If no record date is fixed:
(i) The record date for determining stockholders entitled to
notice of, or to vote at, a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held.
(ii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled to notice
of, or to vote at, a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors
may fix a new record date for the adjourned meeting.
(b) For the Corporation to determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the voting
members of the board of directors, and which date shall not be more than ten
(10) days after the date upon which the resolution fixing the record date is
adopted by the voting members of the board of directors. If no record date has
been fixed by the board of directors, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required by law or
these bylaws, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office in the State of Delaware,
principal place of business, or such officer or agent shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by law or these bylaws, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.
ATT. 1 -- EXH. N-3
<PAGE> 202
(b) For the Corporation to determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the voting
members of the board of directors, and which date shall not be more than ten
(10) days after the date upon which the resolution fixing the record date is
adopted by the voting members of the board of directors. If no record date has
been fixed by the board of directors, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors is required by law or
these bylaws, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office in the State of Delaware,
principal place of business, or such officer or agent shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by law or these bylaws, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.
ATT. 1 -- EXH. N-vii
<PAGE> 203
2.10 Conduct of Meeting. The Chairman of the Board, or if the
Chairman of the Board is absent or otherwise unable to act, the President shall
preside at all meetings of stockholders. The Secretary shall keep the records
of each meeting of stockholders. In the absence or inability to act of any
such officer, such officer's duties shall be performed by the officer given the
authority to act for such absent or non-acting officer under these bylaws or by
some person appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail
to appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall (i) determine the number of shares of capital stock of the
Corporation outstanding, the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies; (ii) receive votes, ballots, or consents; (iii) hear and
determine all challenges and questions arising in connection with the right to
vote; (iv) count and tabulate all votes, ballots, or consents; (v) determine
the results; and (vi) do such other acts as are proper to conduct the election
or vote with fairness to all stockholders. On request of the chairman of the
meeting, the inspectors shall make a report in writing of any challenge,
request, or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as an inspector of an election of directors. Inspectors need not be
stockholders.
ARTICLE THREE: DIRECTORS
3.1 Management. The business, property and affairs of the
Corporation shall be managed by, or under the direction of, the board of
directors. Subject to the restrictions imposed by law, the certificate of
incorporation of the Corporation, or these bylaws, the board of directors may
exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of
directors which shall constitute the entire board of directors shall be not
less than one (1) nor more than ten (10), of which seven (7) shall have the
authority to vote on matters presented to the board and three (3) shall serve
in a non-voting, advisory capacity. The initial board of directors shall
consist of the number of directors named in the certificate of incorporation of
the Corporation. Thereafter, within the limits above specified, the number of
directors which shall constitute the entire board of directors shall be
determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate
of incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Each director so chosen shall hold office until the first annual
meeting of stockholders held after his election and until his successor is
elected and qualified or, if earlier, until his death, resignation, or removal
from office. None of the directors need be a stockholder of the Corporation or
a resident of the State of Delaware. Each director must have attained the age
of majority.
3.3 Change in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
incorporation of the Corporation or these bylaws, at any meeting of
stockholders called expressly for that purpose, any director or the entire
board of directors may be removed, with or without cause, by a vote of the
holders of a majority of the
ATT. 1 -- EXH. N-viii
<PAGE> 204
shares then entitled to vote on the election of directors; provided, however,
that so long as stockholders have the right to cumulate votes in the election
of directors pursuant to the certificate of incorporation of the Corporation,
if less than the entire board of directors is to be removed, no one of the
directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board of directors.
3.5 Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
the sole remaining director, and each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and
until his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. If there are no directors in office, an
election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly-created directorship, the
directors then in office shall constitute less than a majority of the whole
board of directors (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent (10%) of the total number of the shares at the
time outstanding having the right to vote for such directors, summarily order
an election to be held to fill any such vacancies or newly-created
directorships or to replace the directors chosen by the directors then in
office. Except as otherwise provided in these bylaws, when one or more
directors shall resign from the board of directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
bylaws with respect to the filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings
and may have an office and keep the books of the Corporation, except as
otherwise provided by statute, in such place or places within or without the
State of Delaware as the board of directors may from time to time determine or
as shall be specified in the notice of such meeting or duly executed waiver of
notice of such meeting.
3.7 First Meeting. Each newly elected board of directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of stockholders, and no notice of such meeting shall be
necessary.
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors
shall be held at such times and places as shall be designated from time to time
by resolution of the board of directors. Notice of such regular meetings shall
not be required.
3.10 Special Meetings. Special meetings of the board of directors
shall be held whenever called by the Chairman of the Board, the President, or
any director.
3.11 Notice. The Secretary shall give notice of each special
meeting to each director at least twenty-four (24) hours before the meeting.
Notice of any such meeting need not be given to any director who shall, either
before or after the meeting, submit a signed waiver of notice or who shall
attend such meeting without protesting, prior to or at its commencement, the
lack of notice to him. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
ATT. 1 -- EXH. N-ix
<PAGE> 205
3.12 Quorum; Majority Vote. At all meetings of the board of
directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If at any
meeting of the board of directors there be less than a quorum present, a
majority of those present or any director solely present may adjourn the
meeting from time to time without further notice. Unless the act of a greater
number is required by law, the certificate of incorporation of the Corporation,
or these bylaws, the act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors. At
any time that the certificate of incorporation of the Corporation provides that
directors elected by the holders of a class or series of stock shall have more
or less than one vote per director on any matter, every reference in these
bylaws to a majority or other proportion of directors shall refer to a majority
or other proportion of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business
shall be transacted in such order as from time to time the board of directors
may determine. The Chairman of the Board, or if the Chairman of the Board is
absent or otherwise unable to act, the President shall preside at all meetings
of the board of directors. In the absence or inability to act of either such
officer, a chairman shall be chosen by the board of directors from among the
directors present. The Secretary of the Corporation shall act as the secretary
of each meeting of the board of directors unless the board of directors
appoints another person to act as secretary of the meeting. The board of
directors shall keep regular minutes of its proceedings which shall be placed
in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by certified or registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority
to fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, however, that nothing contained
herein shall be construed to preclude any director from serving the Corporation
in any other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution
adopted by a majority of the voting members of the board of directors,
designate one or more committees.
4.2 Number; Qualification; Term. Each committee shall consist of
one or more directors appointed by resolution adopted by a majority of the
voting members of the board of directors. The number of committee members may
be increased or decreased from time to time by resolution adopted by a majority
of the voting members of the board of directors. Each committee member shall
serve as such until the earliest of (i) the expiration of his term as director,
(ii) his resignation as a committee member or as a director, or (iii) his
removal as a committee member or as a director.
4.3 Authority. Each committee, to the extent expressly provided
in the resolution establishing such committee, shall have and may exercise all
of the authority of the board of directors in the management of the business
and property of the Corporation except to the extent expressly restricted by
law, the certificate of incorporation of the Corporation, or these bylaws.
ATT. 1 -- EXH. N-x
<PAGE> 206
4.4 Committee Changes. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee.
4.5 Alternate Members of Committees. The board of directors may
designate one (1) or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. If no alternate committee members have been so
appointed to a committee or each such alternate committee member is absent or
disqualified, the member or members of such committee present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be
held without notice at such time and place as may be designated from time to
time by the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be
held whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee
member at least two (2) days before such special meeting. Neither the business
to be transacted at, nor the purpose of, any special meeting of any committee
need be specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a
majority of the number of members designated by the board of directors shall
constitute a quorum for the transaction of business. If a quorum is not
present at a meeting of any committee, a majority of the members present may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present. The act of a majority
of the members present at any meeting at which a quorum is in attendance shall
be the act of a committee, unless the act of a greater number is required by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the board of directors
upon the request of the board of directors. The minutes of the proceedings of
each committee shall be delivered to the Secretary of the Corporation for
placement in the minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the
board of directors, be allowed a fixed sum and expenses of attendance, if any,
for attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation
of the Corporation, or these bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex, or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice
required or permitted to be given by
ATT. 1 -- EXH. N-xi
<PAGE> 207
telegram, telex, or telefax shall be deemed to be delivered and given at the
time transmitted with all charges prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the
Corporation shall be a President, a Secretary, and such other officers as the
board of directors may from time to time elect or appoint, including a Chairman
of the Board, one or more Vice Presidents (with each Vice President to have
such descriptive title, if any, as the board of directors shall determine), and
a Treasurer. Each officer shall hold office until his successor shall have
been duly elected and shall have qualified, until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided. Any two
or more offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Delaware.
6.2 Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors whenever in its
judgment the best interest of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal, or otherwise) may be filled by the
board of directors.
6.4 Authority. Officers shall have such authority and perform
such duties in the management of the Corporation as are provided in these
bylaws or as may be determined by resolution of the board of directors not
inconsistent with these bylaws.
6.5 Compensation. The compensation, if any, of officers and
agents shall be fixed from time to time by the board of directors; provided,
however, that the board of directors may delegate the power to determine the
compensation of any officer and agent (other than the officer to whom such
power is delegated) to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation and shall have such powers and
duties as may be prescribed by the board of directors. Such officer shall
preside at all meetings of the stockholders and of the board of directors.
Such officer may sign all certificates for shares of stock of the Corporation.
6.7 President. The President shall be the chief operating officer
of the Corporation and shall have general executive charge, management, and
control of the properties and operations of the Corporation in the ordinary
course of its business, with all such powers with respect to such properties
and operations as may be reasonably incident to such responsibilities. In the
absence or inability to act of the Chairman of the Board, the
ATT. 1 -- EXH. N-xii
<PAGE> 208
President shall exercise all of the powers and discharge all of the duties of
the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board shall be conclusive evidence that the Chairman of the Board is
absent or unable to act.
6.8 Vice Presidents. Each Vice President shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President, and (in order of their seniority as determined by
the board of directors or, in the absence of such determination, as determined
by the length of time they have held the office of Vice President) shall
exercise the powers of the President during that officer's absence or inability
to act. As between the Corporation and third parties, any action taken by a
Vice President in the performance of the duties of the President shall be
conclusive evidence of the absence or inability to act of the President at the
time such action was taken.
6.9 Treasurer. The Treasurer shall have custody of the
Corporation's funds and securities, shall keep full and accurate account of
receipts and disbursements, shall deposit all monies and valuable effects in
the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the Chairman
of the Board, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer, if any, shall
have such powers and duties as may be assigned to him by the board of
directors, the Chairman of the Board, or the President. The Assistant
Treasurers (in the order of their seniority as determined by the board of
directors or, in the absence of such a determination, as determined by the
length of time they have held the office of Assistant Treasurer) shall exercise
the powers of the Treasurer during that officer's absence or inability to act.
6.11 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with
the Chairman of the Board or the President all certificates for shares of stock
of the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which
shall at all reasonable times be open to inspection by any director upon
application at the office of the Corporation during business hours. He shall
in general perform all duties incident to the office of the Secretary, subject
to the control of the board of directors, the Chairman of the Board, and the
President.
6.12 Assistant Secretaries. Each Assistant Secretary, if any,
shall have such powers and duties as may be assigned to him by the board of
directors, the Chairman of the Board, or the President. The Assistant
Secretaries (in the order of their seniority as determined by the board of
directors or, in the absence of such a determination, as determined by the
length of time they have held the office of Assistant Secretary) shall exercise
the powers of the Secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of
the Corporation shall be in such form as shall be approved by the board of
directors; provided, however, that the board of directors may provide by
resolution that some or all of any or all classes or series of its stock shall
be uncertificated shares. The certificates shall be signed by the Chairman of
the Board, the President, or a Vice President and also by the Secretary or an
Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any and all
signatures on the certificate may be a facsimile and may be sealed with the
seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such
ATT. 1 -- EXH. N-xiii
<PAGE> 209
officer, transfer agent, or registrar before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue. The
certificates shall be consecutively numbered and shall be entered in the books
of the Corporation as they are issued and shall exhibit the holder's name and
the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall
be transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Fractional Shares. The Corporation may, but shall not be
required to, issue certificates for fractions of a share where necessary to
effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive
such fractions are determined, or it may issue scrip in registered or bearer
form over the manual or facsimile signature of an officer of the Corporation or
of its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
7.5 Registered Stockholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.6 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, registration, or replacement of certificates
for shares of stock of the Corporation.
7.7 Legends. The board of directors shall have the power and
authority to provide that certificates representing shares of stock of the
Corporation bear such legends as the board of directors deems appropriate to
assure that the Corporation does not become liable for violations of federal or
state securities laws or other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate
of incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid
ATT. 1 -- EXH. N-xiv
<PAGE> 210
in cash, in property, or in shares of stock of the Corporation. Such
declaration and payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out
of funds of the Corporation legally available therefor such reserve or reserves
as the directors from time to time, in their discretion, consider proper to
provide for contingencies, to equalize dividends, or to repair or maintain any
property of the Corporation, or for such other purpose as the board of
directors shall consider beneficial to the Corporation, and the board of
directors may modify or abolish any such reserve in the manner in which it was
created.
8.3 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its stockholders and board of directors and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors; provided, however, that if such fiscal year is
not fixed by the board of directors and the selection of the fiscal year is not
expressly deferred by the board of directors, the fiscal year shall be the
calendar year.
8.5 Seal. The corporate seal shall have inscribed thereon the
name of the Corporation and the year of its incorporation, and shall be in such
form and contain such other words and/or figures as the board of directors
shall determine. The corporate seal may be used by printing, engraving,
lithographing, stamping or otherwise making, placing or affixing, or causing to
be printed, engraved, lithographed, stamped or otherwise made, placed or
affixed, upon any paper or document, by any process whatsoever, an impression,
facsimile or other reproduction of said corporate seal.
8.6 Resignations. Any director, committee member, or officer may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the Chairman of the Board, the
President, or the Secretary. Such resignation shall take effect at the time
specified therein or, if no time is specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board,
the President, or any Vice President of the Corporation shall have the power
and authority to transfer, endorse for transfer, vote, consent, or take any
other action with respect to any securities of another issuer which may be held
or owned by the Corporation and to make, execute, and deliver any waiver,
proxy, or consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or
through a proxy), members of the board of directors, and members of a committee
of the board of directors may participate in and hold a meeting of such
stockholders, board of directors, or committee by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in
the certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be (i) signed by the holders (acting for themselves
or through a
ATT. 1 -- EXH. N-xv
<PAGE> 211
proxy) of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
the holders of all shares entitled to vote thereon were present and voted, and
(ii) delivered to the Corporation's registered office in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Every written consent of stockholders shall bear the date of
signature of each stockholder who signs the consent, and no written consent
shall be effective to take the corporate action referred to therein unless,
within sixty (60) days of the earliest dated consent delivered in the manner
required by this Section 8.9(a) to the Corporation, written consents signed by
a sufficient number of holders to take action are delivered to the
Corporation's registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporation's registered office, principal place of business, or
such officer or agent shall be by hand or by certified or registered mail,
return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation
of the Corporation or by these bylaws, any action required or permitted to be
taken at a meeting of the board of directors, or of any committee of the board
of directors, may be taken without a meeting if a consent or consents in
writing, setting forth the action so taken, shall be signed by all the
directors or all the committee members, as the case may be, entitled to vote
with respect to the subject matter thereof, and such consent shall have the
same force and effect as a vote of such directors or committee members, as the
case may be, and may be stated as such in any certificate or document filed
with the Secretary of State of the State of Delaware or in any certificate
delivered to any person. Such consent or consents shall be filed with the
minutes of proceedings of the board or committee, as the case may be.
8.10 Ratification. Any transaction, questioned in any law suit on
the ground of lack of authority, defective or irregular execution, adverse
interest of director, officer or stockholder, non-disclosure, miscomputation,
or the application of improper principles or practices of accounting, may be
ratified before or after judgment, by the board of directors or by the
stockholders, and if so ratified shall have the same force and effect as if the
questioned transaction had been originally duly authorized. Such ratification
shall be binding upon the Corporation and its stockholders and shall constitute
a bar to any claim or execution of any judgment in respect of such questioned
transaction.
8.11 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.12 Bank Accounts and Drafts. In addition to such bank accounts
as may be authorized by the board of directors, the primary financial officer
or any person designated by said primary financial officer, whether or not an
employee of the Corporation, may authorize such bank accounts to be opened or
maintained in the name and on behalf of the Corporation as he may deem
necessary or appropriate, payments from such bank accounts to be made upon and
according to the check of the Corporation in accordance with the written
instructions of said primary financial officer, or other person so designated
by the Treasurer.
8.13 Financial Reports. The board of directors may appoint the
primary financial officer or other fiscal officer or the Secretary to cause to
be prepared and furnished to stockholders entitled thereto any special
financial notice or financial statement, as the case may be, which may be
required by any provision of law.
8.14 Mortgages, Contracts, etc. The board of directors may
authorize any person or persons, in the name and on behalf of the Corporation,
to enter into or execute and deliver any and all deeds, deeds of trust, bonds,
mortgages, contracts, and other obligations or instruments, and such authority
may be general or confined to specific instances. Attestation by the Secretary
of the Corporation to the execution of any deed, deed of trust, bond, mortgage,
contract, or other obligation or instrument by any duly authorized officer or
officers shall not be necessary to constitute such deed, deed of trust, bond,
mortgage, contract, or other obligation or instrument a valid
ATT. 1 -- EXH. N-xvi
<PAGE> 212
and binding obligation against the Corporation unless the resolutions, if any,
of the board of directors authorizing such execution expressly state that such
attestation is necessary.
8.15 Headings. The headings used in these bylaws have been
inserted for administrative convenience only and do not constitute matter to be
construed in their interpretation.
8.16 References. Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.17 Amendments. These bylaws may be altered, amended, or repealed
or new bylaws may be adopted by the stockholders or by the board of directors
at any regular meeting of the stockholders or the board of directors or at any
special meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws is contained in the
notice of such special meeting.
The undersigned, the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by the voting members of the board of
directors of the Corporation as of __________________.
______________________________________________
[Name], Secretary
ATT. 1 -- EXH. N-xvii
<PAGE> 213
EXHIBIT O
BONUS POOL AND EXECUTIVE LONG TERM INCENTIVE PLAN
<PAGE> 214
EXHIBIT O
BONUS POOL AND EXECUTIVE LONG-TERM INCENTIVE PLAN
During the course of the chapter 11 bankruptcy proceeding, First City
has been managed by C. Ivan Wilson and Robert W. Brown, Chairman of the Board
of Directors and President, respectively.
During the bankruptcy proceedings, approximately $1.3 billion in claims
against the bankruptcy estate have been settled or are in the process of being
settled, and a definitive settlement agreement has been signed between the FDIC
and First City, which should net First City creditors and equity holders over
$300 million.
The First City/J-Hawk Plan calls for payment of all three classes of
bondholders in full including postpetition interest; payment in full of
Preferred A shareholders including postpetition dividends; significant returns
to Preferred B & E shareholders; and a significant stake in the ongoing company
for current Common shareholders.
In recognition of the results obtained, the Equity Committee negotiated
with First City management a bonus pool and executive long-term incentive plan.
At the effective date, there will be a $1.5 million (.5% of the expected
recovery) cash bonus awarded and distributed in the following amounts:
<TABLE>
<S> <C>
C. Ivan Wilson $ 500,000
Robert W. Brown 500,000
Joe S. Greak 250,000
Other First City Staff 250,000
----------
Total $1,500,000
</TABLE>
Additional bonuses are available after Unsecured Creditors and Preferred
A shareholders are paid in full and after $100 million of value is achieved for
Preferred B & E shareholders through the New Special Preferred Stock and Class
B Certificates (approximately $275 million of net collections). The additional
bonus earned at this level of collections is $750,000. If total collections
reach $305 million, a second $750,000 bonus is earned. A 5% bonus is earned on
any collections above $305 million.
Any bonuses related to recoveries from New Special Preferred Stock and
Class B Certificates will be paid 34% to Mr. Wilson, 34% to Mr. Brown, 16% to
Mr. Greak and 16% to the remaining staff.
It is expected that Mr. Wilson, Mr. Brown and Mr. Greak will be provided
three-year contracts which will reflect this bonus schedule, provide for
maintenance of current compensation levels and one-year of severance pay should
their employment be terminated for anything other than cause during the
three-year period. Should such a termination occur prior to the end of the
three year period, unpaid bonuses will be forfeited.
The proposed form of the employment contracts will be negotiated with
the Equity Committee, subject to approval by New Merged FirstCity, and will
become part of the Plan Documents. All significant economic elements of the
contracts are reflected above.
ATT. 1 -- EXH. O-1
<PAGE> 215
EXHIBIT P
INDENTURE TRUSTEE FEES AND EXPENSES
<PAGE> 216
EXHIBIT P
INDENTURE TRUSTEES FEES & EXPENSES(1)
1. State Street Bank and Trust Company as a successor Indenture Trustee for
the Existing 1995 Floating Rate Notes.
$103,113.01 through November 15, 1994.
2. Chemical Bank (Delaware) as successor Indenture Trustee for the Existing
1996 Floating Rate Subordinated Notes.
$146,021.26 through October 31, 1994.
3. The Bank of New York as successor Indenture Trustee for the Existing
1992 13 1/4% Notes.
$53,270.88 through October 31, 1994.
- ---------------
(1) Does not include attorneys fees for September 1994 or outstanding Paying
Agent or Registrar Fees.
ATT. 1 -- EXH. P-1
<PAGE> 217
FIRST MODIFICATION TO
JOINT PLAN OF REORGANIZATION
<PAGE> 218
<TABLE>
<S> <C>
Stephen A. Goodwin
Larry T. Bates
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
Attorneys for
First City Bancorporation of Texas, Inc.
Plan Proponent
H. Rey Stroube, III, P.C.
G. Michael Curran
S. Margie Venus
AKIN, GUMP, STRAUSS, D. J. Baker
HAUER & FELD, L.L.P. Rosalie Walker Gray
1700 Pacific Avenue, Suite 4100 WEIL, GOTSHAL & MANGES
Dallas, Texas 75201 700 Louisiana, Suite 1600
(214) 969-2800 Houston, Texas 77002
(713) 546-5000
Attorneys for
Official Committee of Equity Security Holders, Attorneys for
Plan Proponent J-HAWK Corporation, Plan Proponent
</TABLE>
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In Re Section
Section
FIRST CITY BANCORPORATION Section Case No. 392-39474-HCA-11
OF TEXAS, INC. Section
Section
DEBTOR. Section
(CORRECTED) FIRST MODIFICATION TO JOINT PLAN OF REORGANIZATION
BY FIRST CITY BANCORPORATION OF TEXAS, INC.,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
AND J-HAWK CORPORATION, WITH THE PARTICIPATION OF
CARGILL FINANCIAL SERVICES CORPORATION,
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
MARCH 1, 1995
<PAGE> 219
(CORRECTED) FIRST MODIFICATION TO JOINT PLAN OF REORGANIZATION
BY FIRST CITY BANCORPORATION OF TEXAS, INC.,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
AND J-HAWK CORPORATION,
WITH THE PARTICIPATION OF CARGILL FINANCIAL SERVICES CORPORATION,
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
First City Bancorporation of Texas, Inc., the Official Committee of
Equity Security Holders, and J-HAWK Corporation ("Plan Proponents"), in
accordance with section 1127, title 11, of the United States Code ("Bankruptcy
Code") and section 17.8 of the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code ("Joint
Plan"), hereby modify the Plan as set forth below.
The modifications will not cause the Plan to fail to meet the
requirements of sections 1122 and 1123 of the Bankruptcy Code. Furthermore,
the modifications are not material and will not adversely impact the rights of
any parties in interest; therefore, compliance with section 1125 of the
Bankruptcy Code is not required with respect to the modifications.
Capitalized terms used herein but not defined have the meanings
ascribed to such terms in the Joint Plan.
Modifications that reflect additions to the Joint Plan are identified
by underlining, and modifications that reflect deletions from the Joint Plan
are identified by "carat symbol".
EXPLANATION OF FIRST MODIFICATION
Michael W. Ward, William L. Eddleman, Jr., Joe Ferrante, Bruce Mates
and other similarly situated holders of Equity Interests in First City
Bancorporation of Texas, Inc. ("Non-Committee Equity Security Holders") have
been engaged over the last few months in negotiations with the Plan Proponents
in an effort to resolve their objections to the Joint Plan. Such objections
centered upon whether the treatment provided to Existing Equity Interests in
classes 6, 7 and 9 of the Joint Plan complied with the requirements of section
1129 of the Bankruptcy Code, with the primary concern being that the holders of
Existing Common Interests were being deprived of potential value that could
increase their recovery under the Joint Plan.
The Plan Proponents have agreed to resolve the objections of the
Non-Committee Equity Security Holders by providing a mechanism that will insure
that Existing Series B Interests and Existing Series E Interests do not receive
more than they are entitled to under section 1129 of the Bankruptcy Code, and
that holders of Existing Common Interests have an opportunity to participate in
any remaining estate value after the holders of Existing Series B Interests and
Existing Series E Interests are satisfied in full. In addition, the Plan
Proponents have agreed to modify the terms and thereby increase the value of
the New Warrants being distributed to holders of Existing Series B Interests,
Existing Series E Interests, and Existing Common Interests.
The modifications to be made to the Joint Plan to reflect the
agreements between the Plan Proponents and the Non-Committee Equity Security
Holders will benefit the holders of Existing Series B Interests, Existing
Series E Interests, and Existing Common Interests without any adverse impact on
any other holders of Claims or Equity Interests.
<PAGE> 220
MODIFICATIONS TO SECTION 1.1 OF JOINT PLAN
Section 1.1 of the Joint Plan, which contains definitions, is modified
to add language to subsection (y) that reflects the cap on the value of the
Class B Certificates; to add a new subsection (ey) that defines the Class C
Certificates to be given to holders of Existing Common Interests; and to add a
new subsection (ez) that defines the Pour-Over Level and provides the mechanism
for capping the value of the Class B Certificates:
(y) "Class B Certificate" means one of 2,460,911
certificates representing the beneficial interest in the Liquidating
Trust up to but not exceeding the Pour-Over Level, to be distributed
to holders of Existing Series B Interests and Existing Series E
Interests under the Trust Agreement and pursuant to section 7.7 of
this Plan, which shall have such rights as are provided in the Trust
Agreement.
(ey) "Class C Certificate" means one of 738,273
certificates representing the beneficial interest in the Liquidating
Trust over and above the Pour-Over Level, to be distributed to holders
of Existing Common Interests under the Trust Agreement and pursuant to
section 7.9 of this Plan, which shall have such rights as are provided
in the Trust Agreement.
(ez) "Pour-Over Level" means the amount of the beneficial
interest in the Liquidating Trust that equals the entitlement of
holders of Existing Series B Interests and Existing Series E Interests
therein, which entitlement shall be in the amount of the fixed
liquidation preference of the Existing Series B Interests and Existing
Series E Interests as of the Effective Date, minus the nominal stated
value of the New Special Preferred Stock and the book value of the New
Common Stock being distributed on account of Existing Series B
Interests and Existing Series E Interests, plus interest at the rate
of 6.5% per annum from and after the Effective Date.
MODIFICATIONS TO SECTION 7.9 OF JOINT PLAN
Section 7.9 of the Joint Plan, which contains the treatment for
Existing Common Interests, is modified to reflect the addition of Class C
Certificates:
CLASS 9 -- EXISTING COMMON INTERESTS. All Existing Common
Interests shall be cancelled, annulled and extinguished on the
Effective Date, and
(a) Primary Merger Alternative -- Under the
Primary Merger Alternative, (i) if class 7 and class 9 accept
this Plan in accordance with section 5.4 hereof, each Record
Holder of an Allowed Existing Common Interest shall receive,
on the Distribution Date, a Pro Rata share of 738,273 shares
of New Merger Common Stock, "carat symbol" 250,000 New
Warrants, and of 738,273 Class C Certificates; but (ii) if
class 7 or class 9 does not accept this Plan in accordance
with section 5.4 hereof, this Plan shall be automatically
amended to delete the above provisions and to provide that no
holder of Existing Common Interests shall receive or retain
under this Plan on account of such Interests any property
whatsoever;
(b) Secondary Standalone Alternative -- Under the
Secondary Standalone Alternative, (i) if class 7 and class 9
accept this Plan in accordance with section 5.4 hereof, each
Record Holder of an Allowed Existing Common Interest shall
receive, on the Distribution Date, a Pro Rata share of fifty
percent (50%) of the New Standalone Common Stock; but (ii) if
class 7 or class 9 does not accept this Plan in accordance
with section 5.4 hereof, this Plan shall be automatically
amended to delete the above provisions and to provide that no
holder of Existing Common Interests shall receive or retain
under this Plan on account of such Interests any property
whatsoever.
2
<PAGE> 221
MODIFICATIONS TO SECTION 9.13 OF JOINT PLAN
Section 9.13 of the Joint Plan, relating to the Liquidating Trust, is
modified to reflect the addition of Class C Certificates:
9.13 ESTABLISHMENT AND ADMINISTRATION OF LIQUIDATING TRUST.
On the Effective Date, but only if class 7 accepts this Plan as
provided in section 7.7 hereof, the Debtor and the Liquidating Trustee
shall enter into the Trust Agreement; the Debtor shall contribute the
Trust Assets to the Liquidating Trust for disposition in accordance
with the Trust Agreement; the Liquidating Trustee shall retain New
Merged FirstCity to serve as Investment Manager of the Trust Assets,
subject to the direction of the portfolio committee of the board of
directors of New Merged FirstCity; and the Liquidating Trustee shall
issue the Class A Certificate to New Merged First City, "carat symbol"
Class B Certificates to holders of Existing Series B Interests and
Existing Series E Interests, and Class C Certificates to holders of
Existing Common Interests as the owners and grantors of the Trust
Assets. If class 7 has accepted this Plan, from and after the
Effective Date, the Liquidating Trust shall be administered in
accordance with the following:
MODIFICATIONS TO EXHIBIT E OF JOINT PLAN
Exhibit E, which contains the Summary of Terms for the New Warrants,
is modified only with respect to the Exercise Price and Redemption provisions:
Exercise Price: The exercise price of the New Warrants shall be set
at (carat symbol) $25.
Redemption: If the quoted closing price (or the average
of the bid and asked prices thereof) for the
New Merger Common Stock exceeds "carat
symbol" 125% of the exercise price of the
Warrants for any 10 out of 15 consecutive
trading days (the "Pricing Period"), New
Merged FirstCity will have the right to
redeem any theretofore unexercised Warrants
at a price of $1 per Warrant on the (carat
symbol) 45th day following the Pricing
Period.
CORRESPONDING REVISIONS TO PLAN DOCUMENTS
The Plan Documents relating to the Class B Certificates, Class C
Certificates and New Warrants will be revised to reflect the foregoing
modifications to sections 1.1, 7.9, 9.13 and Exhibit E of the Joint Plan.
Dated: March 1, 1995.
3
<PAGE> 222
Respectfully submitted,
FIRST CITY BANCORPORATION OF TEXAS, INC.
Plan Proponent
By: /s/ S. A. Goodwin
-------------------------------------------------------
Stephen A. Goodwin
State Bar No. 08186500
Larry T. Bates
State Bar No. 01906990
CARRINGTON, COLEMAN, SLOMAN &
BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
Attorneys for First City Bancorporation of Texas, Inc.
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
Plan Proponent
By: /s/ G. Michael Curran
-------------------------------------------------------
G. Michael Curran
State Bar No. 05259600
S. Margie Venus
State Bar No. 20545900
AKIN, GUMP, STRAUSS, HAUER & FELD
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
(214) 969-2800
Attorneys for Official Committee of Equity Security Holders
4
<PAGE> 223
J-HAWK CORPORATION, Plan Proponent
By: /s/ D.J. Baker
-----------------------------------------
D. J. Baker
State Bar No. 01566500
Rosalie Walker Gray
State Bar No. 20729020
WEIL, GOTSHAL & MANGES
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5000
Attorneys for J-Hawk Corporation
5
<PAGE> 224
CERTIFICATE OF SERVICE
This is to certify that on the 7th day of March, 1995, a true and
correct copy of the foregoing (Corrected) First Modification to Joint Plan of
Reorganization was served via facsimile upon the parties listed below and via
United States first class mail, postage prepaid upon the parties listed on the
attached Short Service List.
/s/ G. Michael Curran
-----------------------------------------
G. Michael Curran
Stephen A. Goodwin, Esq. David W. Elmquist
Carrington, Coleman, Sloman Winstead, Sechrest & Minick P.C.
& Blumenthal, L.L.P. 5400 Renaissance Tower
200 Crescent Court, Ste. 1500 1201 Elm Street
Dallas, Texas 75201 Dallas, Texas 75270
VIA FAX (214) 855-1333 VIA FAX (214) 745-5390
James Donnell, Esq. Matthew Hoffman
Andrews & Kurth, L.L.P. Hoffman & Associates
4200 Texas Commerce Tower 4660 First City Tower
Houston, TX 77002 1001 Fannin
VIA FAX (713) 220-4285 Houston, Texas 77002
VIA FAX (214) 652-9051
D.J. Baker, Esq.
Weil, Gotshal & Manges
700 Louisiana, Ste. 1600
Houston, TX 77002
VIA FAX (713) 224-9511
Harvey Greenfield, Esq.
Law Firm of Harvey Greenfield
300 Park Ave., 19th Fl.
New York, NY 10022-7402
VIA FAX (212) 758-6748
George McElreath, Esq.
Office of the United States Trustee
Room 9C60, 1100 Commerce St.
Dallas, TX 75242
VIA FAX (214) 767-7871
6
<PAGE> 225
SECOND MODIFICATION TO
JOINT PLAN OF REORGANIZATION
<PAGE> 226
SECOND MODIFICATION TO JOINT PLAN OF REORGANIZATION
BY FIRST CITY BANCORPORATION OF TEXAS, INC.,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
AND J-HAWK CORPORATION,
WITH THE PARTICIPATION OF CARGILL FINANCIAL SERVICES CORPORATION,
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
First City Bancorporation of Texas, Inc., the Official Committee of
Equity Security Holders, and J-HAWK Corporation ("Plan Proponents"), in
accordance with section 1127, title 11, of the United States Code ("Bankruptcy
Code") and section 17.8 of the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code ("Joint
Plan"), hereby modify the Plan as set forth below.
The modifications will not cause the Plan to fail to meet the
requirements of sections 1122 and 1123 of the Bankruptcy Code. Furthermore, the
modifications are not material and will not adversely impact the rights of any
parties in interest, therefore, compliance with section 1125 of the Bankruptcy
Code is not required with respect to the modifications.
Capitalized terms used herein but not defined have the meanings
ascribed to such terms in the Joint Plan.
Modifications that reflect additions to the Joint Plan are identified
by underlining, and modifications that reflect deletions from the Joint Plan
are identified by a carat mark.
EXPLANATION OF SECOND MODIFICATION
The Plan Proponents have been engaged in negotiations with Yamaichi
International (America), Inc. in its capacity as a holder of Existing Series A
Interests and certain other holders of Existing Series A Interests who together
own a large majority of the Existing Series A Interests ("Majority Series A
Holders") concerning the interest rate applicable to the New Senior
Subordinated Notes to be distributed to holders of Existing Series A Interests
under the Joint Plan. The Joint Plan currently provides for an 8% interest
rate, which the Plan Proponents believed was the proper rate of interest at the
commencement of the plan process. Over the last few months, however, interest
rates have increased, and the Majority Series A Holders now believe that an 8%
interest rate will not provide them with the present value of their Existing
Series A Interests as of the Effective Date as required by section 1129(b) of
the Bankruptcy Code.
The Joint Plan contemplates that this Court may have to adjust the
interest rate for the New Senior Subordinated Notes to be distributed to
Existing Series A Holders. In section 7.6(a), the Joint Plan provides that if
the class containing Existing Series A Interests rejects the Joint Plan, this
Court will either determine that the prescribed treatment complies with the
requirements of section 1129(b) of the Bankruptcy Code or will modify the terms
of the New Senior Subordinated Notes as necessary to satisfy section 1129(b).
Pursuant to that provision, a review of the interest rate will be triggered
only if holders of Existing Series A Interests vote as a class to reject the
Joint Plan. The Plan Proponents have been advised that the Majority Series A
Holders would accept the Joint Plan but for the interest rate issue, and that
in the absence of a consensual modification to the Joint Plan to increase the
increase rate to 9%, the Majority Series A Holders will be forced to reject the
Joint Plan simply to obtain a determination of the proper interest rate.
The Plan Proponents have agreed with the holders of Existing Series A
Interests to propose a modification to the Joint Plan that will increase the
interest rate on the New Senior Subordinated Notes from 8% per annum to 9%
1
<PAGE> 227
per annum. If this Court permits the modification, the holders of Existing
Series A Interests will vote to accept the Joint Plan. If, however, this Court
declines to permit the modification, the Plan Proponents will withdraw the
modification, and the holders of Existing Series A Interests will vote to
reject the Joint Plan, with a limited objection directed to the interest rate
issue. Confirmation hearings with respect to the Joint Plan will then proceed
on a cramdown basis against the holders of Existing Series A Interests.
The Plan Proponents acknowledge that the interest rate modification
may be viewed as adverse to the junior classes of Existing Equity Interests.
The Plan Proponents submit, however, that the adverse effect of the
modification is de minimis and immaterial. Moreover, because the Joint Plan
contemplates that this Court may adjust the interest rate in response to a
negative vote by the class containing Existing Series A Interests, holders of
Existing Equity Interests in the junior classes are already on notice that
their recoveries may be diminished in the event this Court determines that a
higher interest rate is necessary. With the potential for interest rate
increase in a cramdown scenario, the Plan Proponents believe that the junior
classes are best served by a consensual modification that caps the interest
rate increase to 9% and does not expose them to the risk that this Court will
find the proper interest rate to be even higher than 9%.
MODIFICATIONS TO EXHIBIT B OF JOINT PLAN
Exhibit B, containing the Summary of Terms for the New Senior
Subordinated Notes, is modified only with respect to the Interest Rate
provision:
Interest Rate: Carat mark 9.0% per annum, payable on the
earliest of the last day of June, September,
December and March ("Interest Payment Date")
following the Effective Date; provided,
however, that if the New Senior Secured Notes
remain outstanding on such Interest Payment
Date, the interest payment due on such
Interest Payment Date shall not be paid on
such date but shall be paid on the first
Interest Payment Date after the New Senior
Secured Notes are paid in full. After maturity,
interest shall accrue at a default rate of the
lesser of 15% per annum or the maximum rate
permitted by applicable law.
CORRESPONDING REVISIONS TO PLAN DOCUMENTS
The Plan Documents relating to the New Senior Subordinated Notes will
be revised to reflect the foregoing modification to Exhibit B of the Joint
Plan.
Dated: February 23, 1995
2
<PAGE> 228
Respectfully submitted,
FIRST CITY BANCORPORATION OF TEXAS, INC.
Plan Proponent
By:
--------------------------------------------------
Stephen A. Goodwin
State Bar No. 08186500
Larry T. Bates
State Bar No. 01906990
CARRINGTON, COLEMAN, SLOMAN &
BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
Attorneys for First City Bancorporation of Texas, Inc.
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
Plan Proponent
By:
--------------------------------------------------
G. Michael Curran
State Bar No. 05259600
S. Margie Venus
State Bar No. 20545900
AKIN, GUMP, STRAUSS, HAUER & FELD
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
(214) 969-2800
Attorneys for Official Committee of Equity Security Holders
3
<PAGE> 229
J-HAWK CORPORATION, Plan Proponent
By:
-------------------------------------------------------
D. J. Baker
State Bar No. 01566500
Rosalie Walker Gray
State Bar No. 20729020
WEIL, GOTSHAL & MANGES
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5000
Attorneys for J-Hawk Corporation
4
<PAGE> 230
THIRD MODIFICATION TO
JOINT PLAN OF REORGANIZATION
<PAGE> 231
THIRD MODIFICATION TO JOINT PLAN OF REORGANIZATION
BY FIRST CITY BANCORPORATION OF TEXAS, INC.,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS,
AND J-HAWK CORPORATION,
WITH THE PARTICIPATION OF CARGILL FINANCIAL SERVICES
CORPORATION,
UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
First City Bancorporation of Texas, Inc., the Official Committee of
Equity Security Holders, and J-HAWK Corporation ("Plan Proponents"), in
accordance with section 1127, title 11, of the United States Code ("Bankruptcy
Code") and section 17.8 of the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code ("Joint
Plan"), hereby modify the Plan as set forth below.
The modifications will not cause the Plan to fail to meet the
requirements of sections 1122 and 1123 of the Bankruptcy Code. Furthermore,
the modifications are not material and will not adversely impact the rights of
any parties in interest; therefore, compliance with section 1125 of the
Bankruptcy Code is not required with respect to the modifications.
Capitalized terms used herein but not defined have the meanings
ascribed to such terms in the Joint Plan.
Modifications that reflect additions to the Joint Plan are identified
by underlining, and modifications that reflect deletions from the Joint Plan
are identified by a "carat symbol".
EXPLANATION OF THIRD MODIFICATION
The modifications set forth herein include (a) technical modifications
intended to correct minor drafting errors in the Joint Plan, (b) updating
modifications intended to conform to the Plan Documents, which have been
further developed and refined to insure that they are structurally and
technically correct within the transactional parameters of the Joint Plan, (c)
complying modifications intended to insure conformance with the requirements of
Delaware corporate law, and (d) negotiated modifications required by the
Stipulation Resolving Objections of Official Committee of Unsecured Creditors
and Indenture Trustees to Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the
1
<PAGE> 232
Participation of Cargill Financial Services Corporation, Under Chapter 11 of
the United States Bankruptcy Code.
MODIFICATIONS TO SECTION 1.1 OF JOINT PLAN
Section 1.1 of the Joint Plan, which contains definitions, is modified
to correct the inconsistency between section 1.1(av) of the Joint Plan and
sections 15.2(a) and 15.3 of the Joint Plan, and section 1.1(av) as modified
shall provide as follows:
(av) "EFFECTIVE DATE" means the first Business Date "carat
symbol" after entry of the Confirmation Order "carat symbol" on which
all conditions precedent to the occurrence of the Effective Date
contained in section 15.2 of this Plan have been satisfied or waived
as provided for in section 15.3 of this Plan."
Section 1.1 of the Joint Plan is further modified to conform section
1.1(ew) to the refined definition of Trust Assets contained in the updated
Trust Agreement, and section 1.1(ew) as modified shall provide as follows:
(ew) "TRUST ASSETS" means, after payment of all sums due
to be paid under this Plan on the Effective Date, (i) cash and cash
equivalents owned by the Debtor on the Effective Date in excess of
$20,000,000, "carat symbol" (ii) the Loss-Sharing Assets, (iii) the
FDIC Assets, (iv) the Contingent Asset Claims, "carat symbol" (v) all
of the Debtor's other owned, non-cash assets "carat symbol" (including
without limitation the "Interim Trust Assets" as defined in the Trust
Agreement and the capital stock of certain subsidiaries of the
Debtor), except to the extent otherwise provided in a separate written
agreement between the Trustee and the Debtor approved by the Portfolio
Committee, and (vi) all proceeds of and interest or other amounts
earned on the Trust Assets set forth above in clauses (i) through (v),
and all proceeds of and interest or other amounts earned on any Trust
Assets which are proceeds of or interest or other amounts earned on
any other Trust Assets, in each case received by or on behalf of the
Liquidating Trustee in connection with the management, servicing,
disposition or investment of such assets; provided, however, that any
and all assets of New J-HAWK immediately prior to the Effective Date
which become assets of New Merged FirstCity as a result of the merger
of New J-Hawk into the Debtor on the Effective Date shall not
constitute Trust Assets.
2
<PAGE> 233
MODIFICATIONS TO SECTION 6.4 OF JOINT PLAN
Section 6.4 of the Joint Plan is modified to correct an inconsistency
between subpart (b) and the definition of Distribution Date in section 1.1(ar),
and section 6.4 as modified shall provide as follows:
6.4 Priority Tax Claims. Under either the Primary Merger
Alternative or the Secondary Standalone Alternative, each holder of an
Allowed Priority Tax Claim shall receive the amount of such holder's
Allowed Claim in one cash payment in full satisfaction of such
holder's Allowed Claim upon the latest to occur of (a) the
Distribution Date, (b) "carat symbol" the date the Allowed Claim
becomes due and payable pursuant to the terms of the agreement upon
which such Allowed Claim is based or becomes due and payable under
applicable law, or "carat symbol" (c) upon such other terms as may be
agreed to by the holder of such Allowed Claim and the Plan Proponents
(or the Recognized Company if after the Effective Date). The
Reorganized Company reserves the right under section 1129(a)(9)(C) of
the Bankruptcy Code to extend the payment of Allowed Priority Tax
Claims; provided, however, in such event, that the holder of such
Allowed Priority Tax Claim shall receive on account of such Claim
deferred cash payments, over a period not exceeding six (6) years
after the date of assessment of the tax, of a value, as of the
Effective Date of this Plan, equal to the Allowed amount of such
Claim.
MODIFICATIONS TO SECTION 6.5 OF JOINT PLAN
Section 6.5 of the Joint Plan is modified to delete and replace the
last sentence, and section 6.5 as modified shall read as follows:
6.5 Fees and Expenses of Indenture Trustees. The
reasonable fees, costs and out-of-pocket expenses, including
attorneys' fees, of the Indenture Trustees, including without
limitation such fees, costs and expenses incurred prior to the
Petition Date, are Administrative Claims in the Case. Set forth on
Exhibit P are the fees incurred by each of the Indenture Trustees as
of the most recent available date. Any dispute regarding the
reasonableness of any of such fees and expenses shall be determined by
the Bankruptcy Court at or prior to the Confirmation Hearing. "carat
symbol" The Indenture Trustees have agreed to notify the Plan
Proponents and the Securities and Exchange Commission prior to
exercising any lien rights under the Existing Indentures.
3
<PAGE> 234
MODIFICATIONS TO SECTION 7.1 OF JOINT PLAN
Section 7.1 of the Joint Plan is modified to correct an inconsistency
between subpart (b) and the definition of Distribution Date in section 1.1(ar),
and section 7.1 as modified shall provide as follows:
7.1 Class 1 -- Priority Claims. Under either the Primary
Merger Alternative or the Secondary Standalone Alternative, each
holder of an Allowed Priority Claim shall receive the amount of such
holder's Allowed Claim in one cash payment, in full satisfaction of
such holder's Allowed Claim, upon thelatest to occur or (a) the
Distribution Date, (b) "carat symbol" the date the Allowed Claim
becomes due and payable pursuant to the terms of the agreement upon
which such Allowed Claim is based, or becomes due and payable under
applicable law, or "carat symbol" (c) upon such other terms as may be
agreed to by the holder of such Allowed Claim and the Plan Proponents
(or the Reorganized Company if after the Effective Date).
MODIFICATIONS TO SECTION 9.5 OF JOINT PLAN
Section 9.5 of the Joint Plan is modified to conform to the
requirements of Delaware corporate law and the updated Trust Agreement, and
section 9.5 as modified shall provide as follows:
9.5 Board of Directors. On the Effective Date, the initial
board of directors of New Merged FirstCity shall consist of not more
than twelve (12) members, which shall include James R. Hawkins, C.
Ivan Wilson, James T. Sartain, Rick R. Hagelstein, Matt A. Landry,
Jr., Donald Douglas, David Palmer, and Richard E. Bean; one (1)
director designated by the Plan Participant; and three (3) additional
directors selected by a nominating committee consisting ofJames R.
Hawkins and Donald Douglas, of which at least two (2) shall be
non-management directors. Such initial board of directors shall be
appointed pursuant to the Confirmation Order, with such appointment
deemed ratified by the initial holders of New Merger Common Stock.
"carat symbol" The directors shall serve for a term of one (1) year,
subject to annual voting by the holders of New Merger Common Stock,
and subject to the terms and provisions of the New Merged FirstCity
Corporation Documents. "carat symbol" The board positions initially
occupied by Donald Douglas, David Palmer, Richard E. Bean, and one (1)
of the three (3) additional directors selected by the nominating
committee shall continue until the date on which the New Special
Preferred Stock is redeemed in accordance with its terms, at which
time the board of directors shall decrease in size to eight (8)
members. The board of directors shall create a compensation
committee, consisting of the Chief Executive Officer and
non-management directors; and an audit committee consisting of
non-management
4
<PAGE> 235
directors "carat symbol" . "carat symbol" The board of directors
shall be compensated under a plan providing for the payment to non-
employee directors of annual director fees and meeting fees and the
reimbursement to all directors for expenses incurred in attending
meetings of the board of directors, as authorized by the New Merged
FirstCity Corporate Documents.
MODIFICATIONS TO SECTION 9.13 OF JOINT PLAN
Section 9.13 of the Joint Plan is modified to incorporate the
portfolio committee concept into a new subsection (j), and to conform to the
updated Trust Agreement, and section 9.13(j) as modified as provide as follows:
(j) Portfolio Committee -- There shall be established a
portfolio committee of the Liquidating Trust, consisting of four (4)
members (subject to reduction as provided in the Trust Agreement),
including Rick R. Hagelstein, Robert W. Brown, David Palmer and
Richard E. Bean (and their successors to the extent provided in the
Trust Agreement), which shall oversee the disposition of Trust Assets
and serve for the duration of the Liquidating Trust on the terms and
conditions set forth in the Trust Agreement.
MODIFICATIONS TO SECTION 17.3 OF JOINT PLAN
Section 17.3 of the Joint Plan is modified to delete and replace the
entire paragraph, and section 17.3 as modified shall provide as follows:
17.3 Cancellation of Indentures. "carat symbol" On the
Effective Date, except as provided in section 6.5 of this Plan, the
Existing Indentures shall be deemed cancelled, terminated, and of no
further force or effect. The Existing Securities giving rise to the
Debt Securities Claims shall not be cancelled other than pursuant to
section 12.4 of this Plan and, until cancellation, such Existing
Securities shall be evidence of entitlement of the holder thereof to
receive distributions on account of their Debt Securities Claims
pursuant to this Plan. In the event the Estate fails to reimburse any
Indenture Trustee for its fees and expenses, subject to section 6.5 of
this Plan, such Indenture Trustee may be entitled under its respective
indenture to assert a lien against the distributions to holders of
Debt Securities Claims arising under such indenture.
5
<PAGE> 236
Dated: May 5, 1995.
Respectfully submitted,
FIRST CITY BANCORPORATION OF TEXAS, INC.
Plan Proponent
By: /s/ Larry T. Bates
---------------------------------------------------
Stephen A. Goodwin
State Bar No. 08186500
Larry T. Bates
State Bar No. 01906990
CARRINGTON, COLEMAN, SLOMAN &
BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
Attorneys for First City Bancorporation of Texas, Inc.
OFFICIAL COMMITTEE OF EQUITY SECURITY
HOLDERS,
Plan Proponent
By: /s/ G. Michael Curran by permission LTB
---------------------------------------------------
G. Michael Curran
State Bar No. 05259600
S. Margie Venus
State Bar No. 20545900
AKIN, GUMP, STRAUSS, HAUER & FELD
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
(214) 969-2800
Attorneys for Official Committee
of Equity Security Holders
6
<PAGE> 237
J-HAWK CORPORATION, Plan Proponent
By: /s/ D.J. Baker by permission
-----------------------------------
D. J. Baker
State Bar No. 01566500
Rosalie Walker Gray
State Bar No. 20729020
WEIL, GOTSHAL & MANGES
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5000
Attorneys for J-Hawk Corporation
7
<PAGE> 1
EXHIBIT 3.1
LIQUIDATING TRUST AGREEMENT
Dated as of July 3, 1995
by and between
FIRST CITY BANCORPORATION OF TEXAS, INC., Debtor,
for the benefit of the
respective Beneficiaries entitled to the Trust Assets,
and
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, as Trustee
<PAGE> 2
LIQUIDATING TRUST AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.1 Creation and Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Objective and Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.4 Further Assurances of Debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.5 Ownership by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1 Number and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Action By Portfolio Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3 Term of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.4 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5 Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6 Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.7 Trust Continuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.8 Compensation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.9 Indemnification; Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.10 Reliance by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.11 Lien of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.12 Reliance by Persons Dealing With the Trust . . . . . . . . . . . . . . . . . . . . 17
Section 3.13 Accounting and Discharge of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.14 Compensation of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.15 Removal and Replacement of Investment Manager . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV POWERS OF THE TRUSTEE, INVESTMENT MANAGER AND THE PORTFOLIO COMMITTEE . . . . . . . . . . . . 18
Section 4.1 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.2 Management Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3 Commingling of Trust Assets and Trust-Owned Affiliate Assets . . . . . . . . . . . 20
Section 4.4 Liquidation of Non-cash Trust-Owned Affiliate Assets . . . . . . . . . . . . . . . 21
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V OBLIGATIONS OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Reports and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1.1 Monthly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1.2 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.2 Investment Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 Letters of Credit; FDIC Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.4 Borrowings to Meet Obligations Under Class A Certificate . . . . . . . . . . . . . 22
Section 5.5 Borrowings to Acquire Loss-Sharing Assets . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI CERTIFICATES OF BENEFICIAL INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Nature of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.2 Securities Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.3 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.3.1 Appointment of Registrar and Transfer Agent . . . . . . . . . . . . . . 24
Section 6.3.2 Registration and Transfer of Certificates . . . . . . . . . . . . . . . 24
Section 6.3.3 Access to Register by Certificateholders . . . . . . . . . . . . . . . . 25
Section 6.4 Absolute Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.5 Issuance of Certificates Upon Transfer . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.6 Mutilated, Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . 25
Section 6.7 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII ADMINISTRATION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.1 Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.2 Use, Payment and Distribution of Trust Assets . . . . . . . . . . . . . . . . . . . 27
Section 7.3 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.3.1 Income Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.3.2 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.3.3 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.3.4 Allocation of Income and Losses . . . . . . . . . . . . . . . . . . . . 30
Section 7.3.5 Valuation of Trust Assets . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.4 Unclaimed Cash or Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.4 Governing Law; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
ii
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<TABLE>
<S> <C> <C>
Section 9.6 [Intentionally deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.7 Retention of Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.8 Observance and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE X PORTFOLIO COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.1 Portfolio Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.1.1 Establishment and Constitution of Portfolio Committee . . . . . . . . . 34
Section 10.1.2 Term of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.1.3 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.1.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.1.5 Vacancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.1.6 Meetings; Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.1.7 Retention of Professionals . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.2 Indemnification; Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.3 Increase in Portfolio Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.4 Actions of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
Exhibits
Exhibit A Class A Certificate
Exhibit B Class B Certificate
Exhibit C Class C Certificate
Exhibit D Investment Management Agreement
Exhibit E Successor Equity Committee
Member Position Acceptance
Exhibit F Notice of Distribution Date and Distribution Amount (FirstCity)
Exhibit G Notice of Distribution Date (Portfolio Committee)
Exhibit H Notice of Trust Expenses/Pre-Closing Costs Reserve Amount
Exhibit I Appointment Direction
Appendices
Appendix A Allocations of Trust Income and Losses
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<PAGE> 5
LIQUIDATING TRUST AGREEMENT
THIS LIQUIDATING TRUST AGREEMENT (this "Trust Agreement") is
made as of this 3rd day of July 1995, by and between First City Bancorporation
of Texas, Inc., a Delaware corporation ("Debtor"), for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and Shawmut Bank
Connecticut, National Association, as Trustee ("Trustee").
RECITALS
Reference is made to Article I of this Trust Agreement and the
defined terms used in the Joint Plan of Reorganization by First City
Bancorporation of Texas, Inc., Official Committee of Equity Security Holders,
and J-Hawk Corporation, with the Participation of Cargill Financial Services
Corporation, Under Chapter 11 of the United States Bankruptcy Code, filed with
the Court in Case No. 392-39474-HCA-11, as confirmed by order of the Court
entered on May 31, 1995 (as so confirmed, the "Plan"), for the definition of
any terms used but not defined herein. This Trust Agreement is being executed
to facilitate implementation of the Plan.
Under the terms of the Plan, the Trust Assets will be
contributed to the Trust evidenced hereby on the Effective Date (in the event
it is impracticable to contribute the Loss Sharing Assets to the Trust or the
Trust-Owned Affiliates on the Effective Date, such assets may be transferred to
the Trust or the Trust-Owned Affiliates after the Effective Date; provided,
that Debtor or the Interim Trust shall assign all of its right, title and
interest in and to the Loss-Sharing Settlement Agreements to the Trust or the
Trust-Owned Affiliates as of the Effective Date) so that the Trust-Owned
Affiliate Assets can be liquidated or otherwise disposed of in an expeditious
but orderly manner, and, in connection therewith, (i) the Trust Assets can be
held in trust for the benefit of the Beneficiaries entitled thereto as a
liquidating trust in accordance with Treasury Regulation Section 301.7701-4(d)
and Revenue Procedure 94-45, 1994-28 I.R.B. 124, for the objectives and
purposes set forth herein and in the Plan, (ii) distributions may be made in
accordance with the Plan, and (iii) administrative services relating to the
activities of the Trust and other entities (if any) created pursuant to the
Plan and relating to the implementation of the Plan can be performed by the
Trustee. With respect to the Trust Assets and the Trust-Owned Affiliate
Assets, the Trust and each Trust-Owned Affiliate will be a successor to Debtor
for purposes of Section 1145 of the Bankruptcy Code.
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<PAGE> 6
DECLARATION OF TRUST
NOW, THEREFORE, pursuant to the confirmation of the Plan and
in consideration of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and affirmed, Debtor hereby
executes this Trust Agreement for the benefit of the respective Beneficiaries
entitled to the Trust Assets, and, at the direction of such Beneficiaries
(because the transfer of title to or interests in each of the Trust-Owned
Affiliate Assets to such Beneficiaries, and the transfer of such interests by
such Beneficiaries to the Trust or the Trust-Owned Affiliates, would be
impractical), hereby absolutely and irrevocably assigns to the Trustee, and to
the Trustee's successors and assigns, all right, title and interest of Debtor
in and to the Trust Assets, in the manner provided for in the Plan;
TO HAVE AND TO HOLD unto the Trustee and the Trustee's
successors and assigns;
IN TRUST NEVERTHELESS, under and subject to the terms and
conditions set forth herein and for the benefit of the Beneficiaries of the
Trust (as their respective interests may appear from time to time in accordance
with the Plan and the terms hereof), and for the performance of and compliance
with the terms hereof and of the Plan;
PROVIDED, HOWEVER, that upon termination of the Trust in
accordance with Article VIII hereof, this Trust Agreement shall cease, be fully
and finally terminated and be of no further force and effect.
IT IS HEREBY FURTHER COVENANTED AND DECLARED, that the Trust
Assets and the Trust-Owned Affiliate Assets are to be held and applied by or on
behalf of the Trustee subject to the further covenants, conditions and terms
hereinafter set forth.
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Trust Agreement,
the following terms shall have the respective meanings specified below:
"Aggregate Distribution Amount" shall mean, at any time of
determination, the aggregate of all Distribution Amounts, whether previously
due and payable, then due and payable, or to become due and payable, and
whether already
2
<PAGE> 7
set forth or to be set forth at some later time in a Notice of Distribution
Date and Distribution Amount in the form of Exhibit F hereto.
"Available Cash" shall mean unused, unpaid and undistributed
cash of the Trust or the Trust-Owned Affiliates constituting or arising out of
the Trust Assets or the Trust-Owned Affiliate Assets.
"Available Net Cash" shall mean Available Cash less the Trust
Expenses/Pre-Closing Costs Reserve.
"Bankruptcy Code" shall mean 11 U.S.C. Sections 101-1330, as
such sections may be amended from time to time.
"Beneficiaries" shall mean FirstCity, holders of the Existing
Series B Interests and the Existing Series E Interests and holders of the
Existing Common Interests.
"Borrowed Funds" shall have the meaning assigned to such term
in Section 5.4 hereof.
"Certificateholders" shall mean the registered holders of the
Certificates.
"Certificates" shall have the meaning assigned to such term in
Section 6.1 hereof.
"Chief Credit Officer Member Position" shall have the meaning
assigned to such term in Section 10.1.1 hereof.
"Claims Amount" shall mean all sums required to satisfy the
Unclassified Claims specified in Article VI of the Plan, the Class 1 through
Class 5 and Class 8 Claims specified in Section 3.2 of the Plan, and the Class
6 Interests specified in Section 3.2 of the Plan (each to the extent not paid
prior to the date this Trust is established, and including without limitation
all payments of principal of and interest on the New Senior Secured Notes and
the New Senior Subordinated Notes).
"Class A Certificate" shall mean the Certificate representing
the Class A Interest.
"Class A Interest" shall mean the beneficial interests in the
Trust distributed to FirstCity pursuant to the Plan.
"Class B Certificates" shall mean the Certificates
representing the Class B Interests.
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<PAGE> 8
"Class B Certificates Amount" shall mean the beneficial
interest in the Trust which shall be up to but not exceeding the Pour-Over
Level.
"Class B Interests" shall mean the beneficial interests in the
Trust distributed to the holders of the Existing Series B Interests and
Existing Series E Interests pursuant to the Plan.
"Class C Certificates" shall mean the Certificates
representing the Class C Interests.
"Class C Interests" shall mean the beneficial interests in the
Trust distributed to holders of the Existing Common Interests pursuant to the
Plan.
"Court" shall mean the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division, presiding over Debtor, or, if
necessary, the United States District Court for the district having original
jurisdiction over Debtor's Chapter 11 case.
"Cullen Bank Letter of Credit" shall mean the letter of credit
to be issued on behalf of the Trust or any Trust-Owned Affiliate in favor of
Cullen Bank, with respect to certain indemnity obligations of the Debtor under
the Loss-Sharing Settlement Agreement with Cullen Bank.
"Debtor" shall have the meaning assigned to such term in the
first paragraph of this Trust Agreement.
"Distribution Amount" shall mean, with respect to any
Distribution Date, without duplication, the sum of that portion (or all) of the
following amounts due and payable on such Distribution Date, as set forth in
the Notice of Distribution Date and Distribution Amount in the form of Exhibit
F hereto provided to the Trustee and each member of the Portfolio Committee by
FirstCity not later than three Business Days prior to such Distribution Date:
(1) the Claims Amount, (2) the FirstCity Amount, (3) the New Special Preferred
Stock Dividend Amount, and (4) the New Special Preferred Stock Redemption
Amount.
"Distribution Date" shall mean (1) until the Aggregate
Distribution Amount has either been paid in full or reserved in full against
pursuant to Section 7.2 hereof, each date designated as such by FirstCity in a
Notice of Distribution Date and Distribution Amount in the form of Exhibit F
hereto given to the Trustee and each member of the Portfolio Committee not
later than three Business Days prior
4
<PAGE> 9
to such Distribution Date; and (2) after the Aggregate Distribution Amount has
either been paid in full or reserved in full against pursuant to Section
7.2(1)(d) hereof, each date designated as such by the Portfolio Committee in a
Notice of Distribution Date in the form of Exhibit G hereto given to the
Trustee and FirstCity not later than three Business Days prior to such
Distribution Date.
"Effective Date" shall mean July 3, 1995.
"Equity Committee Member Positions" shall have the meaning
assigned to such term in Section 10.1.1 hereof.
"FDIC Amount" shall mean any obligations of FirstCity, the
Trust or any Trust-Owned Affiliate to the FDIC under the FDIC Note.
"FDIC Note" shall mean the note issued to the FDIC by
FirstCity with respect to certain contingent obligations under the FDIC
Settlement Agreement (as such term is defined in the Interim Trust Agreement)
assumed or guaranteed by the Trust or any Trust-Owned Affiliate.
"FirstCity" shall mean FirstCity Financial Corporation, a
Delaware corporation.
"FirstCity Amount" shall mean all obligations and expenses
incurred by FirstCity in implementing the Plan to the extent such obligations
and expenses relate to the establishment of the Trust or the Trust-Owned
Affiliates and the transfer of the Trust Assets into the Trust or the
Trust-Owned Affiliate Assets into any Trust-Owned Affiliate (including without
limitation Pre-Closing Costs and interest on any funds borrowed by FirstCity in
connection therewith), but excluding all such obligations or expenses that are
elsewhere in Section 7.2(1) hereof specifically dealt with.
"Insufficiency Amount" shall have the meaning assigned to such
term in Section 5.4 hereof.
"Interim Trust" shall have the meaning assigned to such term
in the Interim Trust Agreement.
"Interim Trust Agreement" shall mean the interim liquidating
trust agreement dated June 21, 1995 between the Debtor and C. Ivan Wilson, as
Interim Trustee, in connection with the FDIC Settlement Agreement.
"Interim Trust Assets" shall have the meaning assigned to such
term in the Interim Trust Agreement.
5
<PAGE> 10
"Interim Trust-Owned Affiliate Assets" shall have the meaning
assigned to such term in the Interim Trust Agreement.
"Investment Management Agreement" shall mean the Investment
Management Agreement of even date herewith between the Trust, FirstCity and the
Trust-Owned Affiliates signatory thereto, attached hereto as Exhibit D and
incorporated herein by reference.
"Investment Manager" shall mean FirstCity and any successor
thereto appointed by the Portfolio Committee in accordance with the applicable
provisions of this Trust Agreement and the Investment Management Agreement,
provided, however, that if the Investment Manager is removed as permitted
hereunder and the Portfolio Committee shall fail to appoint a successor
Investment Manager, then all references herein to the Investment Manager shall
be deemed to be references to the Portfolio Committee.
"IRS" shall mean the Internal Revenue Service.
"Loss-Sharing Banks Letters of Credit" shall mean the TCB
Letter of Credit and the Cullen Bank Letter of Credit.
"New Senior Secured Notes Letter of Credit" shall mean the
irrevocable standby letter of credit issued on behalf of FirstCity in favor of
the trustee under the New Senior Secured Note Indenture, for the benefit of the
holders of the New Senior Secured Notes.
"New Special Preferred Stock Dividend Amount" shall mean an
amount equal to all accrued but unpaid dividends, regardless of declaration by
the board of directors of FirstCity, on the New Special Preferred Stock.
"New Special Preferred Stock Redemption Amount" shall mean the
redemption price of the New Special Preferred Stock, including all accrued and
unpaid dividends thereon to/through the redemption date thereof.
"Non-cash Trust-Owned Affiliate Assets" shall mean all
Trust-Owned Affiliate Assets other than those in the form of cash or cash
equivalents.
"Person" shall mean any individual, corporation, partnership,
joint venture, trust, estate, unincorporated organization, or a government or
any agency or political subdivision thereof.
6
<PAGE> 11
"Plan" shall have the meaning assigned to such term in the
recitals to this Trust Agreement.
"Portfolio Committee" shall have the meaning assigned to such
term in Section 10.1.1 hereof.
"Pour-Over Level" means the amount of the beneficial interest
in the Trust that equals the entitlement of holders of Existing Series B
Interests and Existing Series E Interests therein, which entitlement shall be
in the amount of the fixed liquidation preference of the Existing Series B
Interests and Existing Series E Interests as of the Effective Date, minus the
nominal stated value of the New Special Preferred Stock and the book value of
the New Merger Common Stock being distributed on account of Existing Series B
Interests and Existing Series E Interests, plus interest at the rate of 6.5%
per annum from and after the Effective Date.
"Pre-Closing Costs" shall mean all reasonable costs and
expenses incurred by the Debtor, the Equity Committee or J-HAWK, or by or on
behalf of the Trust or any Trust-Owned Affiliate, in connection with the
creation and establishment of the Trust or any Trust-Owned Affiliate and the
transfer of the Trust Assets to the Trust and the Trust-Owned Affiliate Assets
to any Trust-Owned Affiliate, including without limitation (1) all allowed
costs and expenses incurred by the Debtor or the Equity Committee, and their
representatives, agents and counsel, with respect to the preparation and
negotiation of this Trust Agreement and all documents related thereto
(including without limitation the Investment Management Agreement and the
Lock-Box Agreement), the Debtor's business and legal diligence review of the
Trust Assets and the Trust-Owned Affiliate Assets, the transfer of the Trust
Assets to the Trust and the Trust-Owned Affiliate Assets to any Trust-Owned
Affiliate and the compliance by the Trust or any Trust-Owned Affiliate with
applicable laws (including applicable tax and securities laws); (2) all costs
and expenses incurred by J-HAWK, and its representatives, agents and counsel,
with respect to the preparation and negotiation of this Trust Agreement and all
documents related thereto (including without limitation the Investment
Management Agreement and the Lock-Box Agreement), J-HAWK's business and legal
diligence review of the Trust Assets and the Trust-Owned Affiliate Assets, the
transfer of the Trust Assets to the Trust and the Trust-Owned Affiliate Assets
to any Trust-Owned Affiliate and the compliance by the Trust or any Trust-Owned
Affiliate with applicable laws (including applicable tax and securities laws);
and (3) all fees, costs and expenses related to or arising from the
implementation of
7
<PAGE> 12
any financing effected by or on behalf of the Trust or any Trust-Owned
Affiliate by J-Hawk or the Debtor, to facilitate the transfer of the Trust
Assets to the Trust and the Trust-Owned Affiliate Assets to any Trust-Owned
Affiliate.
"Principal Trust Account" shall mean a segregated trust
account of the Trust, established by the Trust with the Trustee at its office
at 777 Main Street, Hartford, Connecticut 06115, deposit account No. 0161971 or
such other account as may be agreed to from time to time by the Trustee and the
Portfolio Committee.
"Registrar and Transfer Agent" shall mean any Registrar and
Transfer Agent appointed by the Trustee at the direction of the Portfolio
Committee pursuant to Section 6.3.1 hereof.
"Reimbursable Expenses" shall mean the expenses of FirstCity
attributable to the Trust with respect to (1) the salaries, benefits and
severance amounts owed to Robert W. Brown, C. Ivan Wilson, or Joe S. Greak
under the employment agreement between Mr. Brown and FirstCity, the employment
agreement between Mr. Wilson and FirstCity or the Employment Agreement between
Mr. Greak and FirstCity, in any case set forth in writing prior to the
Effective Date by FirstCity and provided to the Trustee and the Portfolio
Committee, as such allocation may be modified as provided in such agreements
and (2) the bonus payments to Messrs. Wilson, Brown and Greak, and other Debtor
or FirstCity employees, under the terms of the bonus pool and executive
long-term incentive plan set forth in Exhibit O to the Plan.
"Reservation Amount" shall mean the sum of (1) that percentage
(expressed as a dollar amount) of each disputed Claim filed after the bar date
applicable thereto, together with all reasonable costs necessary to defend such
claims (including legal fees), as agreed in writing by FirstCity and the
Portfolio Committee (or as ordered by the Court in the absence of such
agreement), plus (2) 100% (expressed as a dollar amount) of all other disputed
Claims which if and when allowed by the Court will constitute part of the
Distribution Amount, together with all reasonable costs necessary to defend
such Claims (including legal fees); provided that FirstCity may at any time and
from time to time unilaterally reduce the Reservation Amount in effect at such
time.
"Robert W. Brown Member Position" shall have the meaning
assigned to such term in Section 10.1.1 hereof.
8
<PAGE> 13
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any corresponding provision or provisions of any
succeeding federal revenue law and any and all Treasury Regulations issued
pursuant to the section to which reference is made.
"TCB Letter of Credit" shall mean the letter of credit to be
issued on behalf of the Trust or any Trust-Owned Affiliate in favor of Texas
Commerce Bank, with respect to certain indemnity obligations under the Loss-
Sharing Settlement Purchase Agreement with Texas Commerce Bank.
"Treasury Regulations" shall mean the regulations promulgated
under the Tax Code by the Department of the Treasury of the United States.
"Trust" shall mean the FirstCity Liquidating Trust created
hereby.
"Trust Agreement" shall have the meaning assigned to such term
in the first paragraph of this Trust Agreement.
"Trust Assets" shall mean, collectively, (1) the ownership
interest of the Trust in all the Trust-Owned Affiliates directly owned by the
Trust, (2) all unused, unpaid and undistributed cash or cash equivalents of the
Trust, including without limitation such cash or cash equivalents held in the
Principal Trust Account and the Trust Expenses/Pre-Closing Costs Reserve and,
after payment of all sums due to be paid under the Plan on the Effective Date,
cash and cash equivalents owned by the Debtor and transferred to the Trust on
the Effective Date under the Plan and (3) any contract rights of the Debtor
assigned by the Debtor to the Trust.
"Trust Expenses" shall mean all costs, expenses and
liabilities incurred by or on behalf of the Trust or any Trust-Owned Affiliate
in connection with the administration of the Trust pursuant to and in
accordance with or as contemplated by the Plan and this Trust Agreement,
including without limitation (1) all current obligations of the Trust and any
Trust-Owned Affiliate, (2) all costs and expenses for the operation of the
Trust and the Trust-Owned Affiliates, the management, servicing, prosecution,
collection, maintenance (including maintenance of value), sale or other
disposition or distribution of any Trust-Owned Affiliate Assets and the
administration and implementation of the provisions of the Plan and this Trust
Agreement governing the Trust, (3) the fees and expenses of the Trustee
(whether arising before or after the Effective Date), including the
9
<PAGE> 14
reasonable fees and expenses of its counsel, (4) all costs and expenses related
to the procurement of any required bond, surety or other security for the
performance of the Trust duties under this Trust Agreement, (5) all costs and
expenses (including interest expense) related to any borrowing by the Trust or
any Trust-Owned Affiliate pursuant to and in accordance with Section 4.2(ix)
hereof, (6) all costs and expenses of the Trust or any Trust-Owned Affiliate,
as account party, and all fees of the issuing banks under, the Cullen Bank
Letter of Credit, the TCB Letter of Credit and any obligations of FirstCity
funded under the FDIC Note, (7) all fees, compensation, reimbursable advances
and other amounts owed by the Trust to an Investment Manager under this Trust
Agreement and the Investment Management Agreement, (8) all costs and expenses
(including compensation) of the Trust related to those Persons referenced in
Section 4.2(v) hereof, (9) the fees and expenses of the Registrar and Transfer
Agent, (10) all costs and expenses of the Trust under any written agreement
between the Debtor and the Trust regarding non-cash assets of the Debtor not
transferred to the Trust or any Trust-Owned Affiliate, (11) the compensation
for services owed to members of the Portfolio Committee as set forth herein and
(12) the reasonable fees, disbursements and related expenses of professionals
retained by the Portfolio Committee pursuant to Section 10.1.7 hereof.
"Trust Expenses/Pre-Closing Costs Reserve" shall mean, as of
any date, the reserve of Trust Assets established and maintained by the Trustee
in liquid assets to pay all Trust Expenses and Pre-Closing Costs as such Trust
Expenses and Pre-Closing Costs may become due and payable following such date,
such reserve to be maintained (1) in the segregated trust account of the Trust,
in the name of the Trust, established by the Trust with the Trustee at its
office at 777 Main Street, Hartford, Connecticut 06115, deposit account No.
0161970 or such other account number as may be agreed to from time to time by
the Trustee and the Portfolio Committee, and (2) in such amount as the
Portfolio Committee from time to time directs by means of a Notice of Trust
Expenses/Pre-Closing Costs Reserve Amount in the form attached hereto as
Exhibit H given by the Portfolio Committee to the Trustee and FirstCity.
"Trust-Owned Affiliate" shall mean any corporation,
partnership or other entity substantially wholly-owned directly or indirectly
by the Trust heretofore existing or hereafter created, including without
limitation FCLT REO One, L.P., a Texas limited partnership, FCLT REO Two, L.P.,
a Texas limited partnership, and FCLT Loans, L.P., a Texas limited partnership.
10
<PAGE> 15
"Trust-Owned Affiliate Assets" shall mean (1) cash and cash
equivalents of the Trust-Owned Affiliates, (2) the Loss-Sharing Assets, except
to the extent otherwise provided in a separate written agreement between the
Trustee and the Debtor approved by the Portfolio Committee, (3) the FDIC
Assets, except to the extent otherwise provided in a separate written agreement
between the Trustee and the Debtor approved by the Portfolio Committee, (4) the
Contingent Asset Claims, except to the extent otherwise provided in a separate
written agreement between the Trustee and the Debtor approved by the Portfolio
Committee, (5) all of the Debtor's other owned, non-cash assets (including
without limitation the Interim Trust-Owned Affiliate Assets and the capital
stock of certain subsidiaries of the Debtor), except to the extent otherwise
provided in a separate written agreement between the Trustee and the Debtor
approved by the Portfolio Committee, and (6) all proceeds of and interest or
other amounts earned on, the Trust-Owned Affiliate Assets set forth above in
clauses (1) through (5), and all proceeds of and interest or other amounts
earned on any Trust-Owned Affiliate Assets which are proceeds of or interest or
other amounts earned on any other Trust-Owned Affiliate Assets, in each case
received by or on behalf of the Trustee in connection with the management,
servicing, disposition or investment of such assets; provided, however, that
any and all assets of New J-HAWK immediately prior to the Effective Date which
become assets of FirstCity as a result of the merger of New J-Hawk into the
Debtor on the Effective Date shall not constitute Trust-Owned Affiliate Assets.
"Trust Register" shall mean the books kept by the Registrar
and Transfer Agent for the registration and transfer of Certificates and in
which shall be recorded the names and addresses of holders of the Certificates.
"Trustee" shall mean Shawmut Bank Connecticut, National
Association, in its capacity as trustee under this Trust Agreement, or any
successor thereto that is appointed by the Court in accordance with Section 3.6
hereof.
Section 1.2 Other Defined Terms. As used in this Trust
Agreement, terms defined in the Plan shall have the meanings attributed to them
in the Plan.
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<PAGE> 16
ARTICLE II
THE TRUST
Section 2.1 Creation and Name. There is hereby created the
Trust, which shall be known as the "FirstCity Liquidating Trust."
Section 2.2 Objective and Purposes. The objective of the
Trust and each of the Trust-Owned Affiliates is the liquidation of the
Trust-Owned Affiliate Assets in accordance with Treasury Regulation Section
301.7701-4(d) and Revenue Procedure 94-45, 1994-28 I.R.B. 124, with no
objective to continue or engage in the conduct of a trade or business. In
furtherance of this objective, the Portfolio Committee, on behalf of the Trust,
shall appoint the Investment Manager through execution of the Investment
Management Agreement as an agent of the Trust and each of the Trust-Owned
Affiliates to liquidate the Non-cash Trust-Owned Affiliate Assets, and the
Trustee, at the direction and at the discretion of the Portfolio Committee,
shall make timely distributions and not unduly prolong the duration of the
Trust, in accordance with this Trust Agreement. The purposes of the Trust are
(a) to marshall, liquidate and distribute the Trust-Owned Affiliate Assets in
an expeditious manner, and (b) to perform the functions and take the actions
provided for or permitted in this Trust Agreement and in any other agreement
executed by the Trustee for the Trust pursuant to the Plan.
Section 2.3 Acceptance. The Trustee accepts the trust
imposed upon him by this Trust Agreement and agrees to observe and perform that
trust, upon and subject to the terms and conditions set forth herein and in the
Plan.
Section 2.4 Further Assurances of Debtor. Debtor (and any
successor entity thereto) and the Beneficiaries will, upon reasonable request
of the Trustee, execute, acknowledge and deliver such further instruments and
do such further acts as may be necessary or proper to transfer to the Trustee
any portion of the Trust Assets or the Trust-Owned Affiliate Assets intended to
be conveyed hereby in the form and manner provided for in the Plan and to vest
in the Trustee the powers, instruments or funds in trust hereunder. Except in
its capacity as the holder of the Class A Interest, Debtor, for itself and any
predecessor or successor entity, hereby disclaims and waives any and all right
to any reversionary interest in any of the Trust Assets and the Trust-Owned
Affiliate Assets.
Section 2.5 Ownership by Trustee. At the direction of the
Portfolio Committee, the Trustee shall
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promptly record or register in his name, as Trustee, or in the name or names of
any Trust-Owned Affiliate, nominee or other Person in accordance with Section
4.1 hereof, ownership of and title to all Trust-Owned Affiliate Assets received
by or on behalf of the Trust and comply with all provisions of law which may
bear upon the evidencing of ownership of and title to any portion of the
Trust-Owned Affiliate Assets as are necessary and appropriate and which the
Portfolio Committee determines are in the best interests of the Trust and the
Trust-Owned Affiliates.
ARTICLE III
THE TRUSTEE
Section 3.1 Number and Qualifications. There shall be one
(1) Trustee of the Trust. Any Trustee appointed as a successor Trustee
pursuant to Section 3.6 hereof shall be a Person independent of FirstCity, Old
J-Hawk and the Plan Participant (and their respective Affiliates) who was not
at any time an officer, director or employee of FirstCity, Old J-Hawk or the
Plan Participant and whose experience, background and capabilities are
appropriate for the responsibilities of a Trustee hereunder. The Trustee shall
not be obligated to give any bond or surety or other security for the
performance of any Trust duties, except as otherwise provided in the Plan or
ordered by the Court; if so otherwise provided or ordered, all costs and
expenses of procuring any such bond, surety or other security shall be paid as
a cost of the Trust. The Trustee shall be entitled to engage in such other
activities as the Trustee deems appropriate which are not in conflict with the
interests of the Trust, provided the Trustee's duties as Trustee will
constitute a business endeavor for the Trustee and the Trustee shall devote
such time as is necessary to fulfill all of the Trustee's duties as Trustee.
Section 3.2 Action By Portfolio Committee. The Trust shall
be managed by the Portfolio Committee as it shall determine in its sole and
absolute discretion, subject to the limitations set forth herein; provided,
however, that the Investment Manager, under the Investment Management
Agreement, shall be charged with the liquidation of the Non-cash Trust-Owned
Affiliate Assets and with the performance of the duties set forth in Section
7.3 hereof that are expressly delegated to the Investment Manager, in each case
pursuant to and in accordance with the terms of this Trust Agreement and the
Investment Management Agreement. All actions taken and determinations made by
the Portfolio Committee hereunder in accordance with the provisions of this
Trust Agreement shall
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be final and binding upon the Trustee and any and all Persons holding
beneficial interests in the Trust, and the Trustee shall have no authority or
responsibility to question any such actions or determinations.
Section 3.3 Term of Service. The Trustee shall serve as a
trustee for the duration of the Trust, subject to the earlier of the Trustee's
death, resignation or removal.
Section 3.4 Resignation. The Trustee may resign the
Trustee's trust by an instrument in writing executed by the Trustee and filed
with the Portfolio Committee at least sixty (60) days prior to the proposed
effective date of such resignation; provided, however, that the Trustee shall
continue to serve in such capacity after the filing of such resignation until
its proposed effective date unless the Portfolio Committee shall otherwise
direct, or the Trustee consents, to an earlier effective date, which shall be
the date that appointment of a successor Trustee in accordance with Section 3.6
hereof shall become effective; provided, further, that nothing in this Section
3.4 shall restrict the right of the removal of the Trustee as provided in
Section 3.5 hereof.
Section 3.5 Removal of Trustee. The Trustee may be removed
from office (a) for fraud or willful misconduct in connection with the affairs
of the Trust upon a finding by the Portfolio Committee of fraud or willful
misconduct by such Trustee, (b) if the Trustee is a natural person, for such
physical, mental or legal disability as substantially prevents the Trustee from
performing the Trustee's duties as a Trustee hereunder or (c) by the holder of
the Class A Certificate representing the Class A Interest, in its capacity as
such.
Section 3.6 Appointment of Successor Trustee. In the event
of a vacancy by reason of the death or removal of the Trustee or prospective
vacancy by reason of resignation, the Portfolio Committee shall appoint a
successor Trustee; provided, however, that in the event of removal of the
Trustee pursuant to Section 3.5(c), the holder of the Class A Certificate shall
have the right to approve any successor Trustee (without which approval a
proposed successor Trustee may not become a successor Trustee hereunder).
Every successor Trustee appointed hereunder shall execute, acknowledge, and
deliver to the Trust, the Portfolio Committee, and the retiring Trustee, if
any, an instrument accepting such appointment subject to the terms and
provisions hereof. The successor Trustee, without any further act, deed or
conveyance, shall become vested with all
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the rights, powers, trusts and duties of the retiring Trustee, except that the
successor Trustee shall not be liable for the acts or omissions of the retiring
Trustee.
Section 3.7 Trust Continuance. The death, resignation, or
removal of the Trustee shall not operate to terminate the Trust created by this
Trust Agreement or to revoke any existing agency (other than any agency of such
Trustee as a Trustee) created pursuant to the terms of this Trust Agreement or
the Investment Management Agreement or invalidate any action theretofore taken
by the Trustee, and the Trustee agrees that the provisions of this Trust
Agreement shall be binding upon and inure to the benefit of the Trustee and his
heirs, legal and personal representatives, successors or assigns, as the case
may be. In the event of the resignation or removal of the Trustee, such
Trustee shall promptly (i) execute and deliver by the effective date of
resignation or removal such documents, instruments and other writings as may be
reasonably requested by the Portfolio Committee to effect the termination of
the Trustee's capacity under this Trust Agreement and the conveyance of the
Trust Assets and the Trust-Owned Affiliate Assets then held by the Trustee and
the Trust-Owned Affiliates to such Trustee's successor; (ii) deliver to the
Portfolio Committee all documents, instruments, records and other writings
relating to the Trust and the Trust-Owned Affiliates as may be in the
possession or under the control of the Trustee; and (iii) otherwise assist and
cooperate in effecting the assumption of the Trustee's obligations and
functions by the successor Trustee.
Section 3.8 Compensation of Trustee. As compensation for
services as Trustee hereunder and under any other agreements to which the
Trustee is a party as contemplated by the Plan, the Trustee shall receive such
compensation as shall be agreed upon from time to time by the Portfolio
Committee, on behalf of the Trust, and the Trustee. Any changes to such
compensation (whether with respect to amount, method, timing or otherwise) must
first be approved in writing by the Portfolio Committee.
Section 3.9 Indemnification; Exculpation. The Trustee,
acting in the capacity as such or in any other capacity contemplated by this
Trust Agreement or the Plan, shall not be personally liable in connection with
the affairs of the Trust or any Trust-Owned Affiliate to the Trust or to any
Person except for such of the Trustee's acts or omissions as shall constitute
fraud, willful misconduct or gross negligence. The Trustee shall not be
personally liable to the Trust or any Trust-Owned Affiliate for acts or
omissions
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of an officer, employee or agent of the Trust or any Trust-Owned Affiliate
unless such Trustee acted with gross negligence or willful misconduct in the
selection, retention or supervision of such officer, employee or agent of the
Trust or Trust-Owned Affiliate. Except in those situations in which the
Trustee is not exonerated of personal liability as aforesaid, the Trustee
(including each former Trustee) shall be indemnified by the Trust against, and
held harmless by the Trust from, any losses, claims, damages, liabilities or
expenses (including, without limitation, reasonable attorneys' fees,
disbursements and related expenses) to which such Trustee may become subject in
connection with any action, suit, proceeding or investigation brought or
threatened against such Trustee in such Trustee's capacity as Trustee or in any
other capacity contemplated by this Trust Agreement, the Plan or in connection
with any matter arising out of or related to the Plan, this Trust Agreement or
the affairs of the Trust or any Trust-Owned Affiliate.
If the Trustee becomes involved in any action, proceeding or
investigation in connection with any matter arising out of or in connection
with the Plan, this Trust Agreement or the affairs of the Trust or any Trust-
Owned Affiliate, the Trust shall periodically advance or otherwise reimburse on
demand the Trustee such Trustee's reasonable expenses (including, without
limitation, attorneys' fees, disbursements and related expenses) incurred in
connection therewith; provided, however, that the Trustee shall be required
promptly to repay to the Trust the amount of any such advanced or reimbursed
expenses paid thereto to the extent that it shall be ultimately determined by
final order of the Court that the Trustee engaged in fraud, willful misconduct
or gross negligence in connection with the affairs of the Trust or any
Trust-Owned Affiliate. The Trust may indemnify and hold harmless the employees
and agents of the Trust or any Trust-Owned Affiliate to the same extent as is
provided in this Section 3.9 for the Trustee. The provisions of this Section
3.9 shall remain available to and be binding upon any former Trustee or the
estate of any deceased Trustee.
Section 3.10 Reliance by the Trustee. The Trustee may rely,
and shall be fully protected in acting or refraining from acting, upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other instrument or document which the Trustee has
no reason to believe to be other than genuine and to have been signed or
presented by the proper party or parties or, in the case of cables, telecopies
and telexes, to have been sent by the proper party or parties, and the
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Trustee may conclusively rely as to the truth of the statements and correctness
of the opinions expressed therein. The Trustee may consult with the Trustee's
counsel, and any opinion of the Trustee's counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by the
Trustee in accordance therewith; provided, however, that the Trustee shall have
no authority to employ counsel for the Trust or any Trust-Owned Affiliate
(except as directed by the Portfolio Committee).
Section 3.11 Lien of Trustee. The Trustee shall have a lien
upon the Trust Assets to secure payment of any amounts payable to the Trustee
or employees or agents of the Trust or any Trust-Owned Affiliate as
compensation for services to the Trust or any Trust-Owned Affiliate or for
indemnification pursuant to Section 3.9 hereof, which lien shall be subject and
subordinate in all respects for all purposes to any lien upon the Trust Assets
granted by the Trust with respect to any borrowings of the Trust or any
Trust-Owned Affiliate under Section 4.2(ix) or Section 5.4 hereof.
Section 3.12 Reliance by Persons Dealing With the Trust. In
the absence of actual knowledge to the contrary, any Person dealing with the
Trust shall be entitled to rely on the authority of the Trustee or any of the
Trustee's agents to act in connection with the acquisition, management or
disposition of Trust-Owned Affiliate Assets and shall have no obligation to
inquire into the existence of such authority. Upon the sale of any portion of
the Non-cash Trust-Owned Affiliate Assets, such Trust-Owned Affiliate Assets
shall be delivered to the purchaser thereof free and clear of any lien or other
encumbrance, claim or interest of the Trustee, including the lien of the
Trustee pursuant to Section 3.11 hereof, or the Beneficiaries of the Trust,
except as may otherwise be agreed in writing by the purchaser.
Section 3.13 Accounting and Discharge of Trustee. The
Trustee shall, within thirty (30) days after termination of the Trust or the
Trustee's resignation, removal or death (in which case the Trustee's estate
shall), render a statement to the Portfolio Committee containing the following
information: (a) all assets and funds of the Trust and each Trust-Owned
Affiliate, (b) a summarized accounting, in sufficient detail, of all purchases,
sales, gains, losses and income in connection with the Trust and the
Trust-Owned Affiliates during such Trustee's term of service, and (c) the
ending balance of all assets and funds of the Trust and each Trust-Owned
Affiliate as of the date of discharge. Such
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statement may be audited by the Trust's independent nationally recognized
accountants in accordance with generally accepted auditing standards. The
expenses of any accounting hereunder shall be paid by the Trust. Each
Beneficiary of the Trust (other than FirstCity), for himself and his heirs,
successors, assigns and transferees, hereby waives any right such Beneficiary
may have, whether under common, statutory or other law, to apply to any court
for a judicial accounting of the Trustee except where such judicial accounting
is in connection with a motion to remove such Trustee pursuant to Section 3.5
hereof.
Section 3.14 Compensation of Investment Manager. The
compensation of the Investment Manager shall be as determined pursuant to the
Investment Management Agreement.
Section 3.15 Removal and Replacement of Investment Manager.
The Portfolio Committee may remove the Investment Manager pursuant to and in
accordance with the terms and conditions set forth in the Investment Management
Agreement. The Portfolio Committee may thereafter appoint a successor
Investment Manager to perform the duties of the Investment Manager hereunder
and under the Investment Management Agreement or, failing to do so, shall
itself perform the duties of the Investment Manager.
ARTICLE IV
POWERS OF THE TRUSTEE, INVESTMENT MANAGER AND THE PORTFOLIO COMMITTEE
Section 4.1 Title. Legal title to all Trust Assets and
Trust-Owned Affiliate Assets shall, consistent with Section 9.13(c) of the
Plan, be vested in the Trustee, except that the Trustee shall have the power
(at the direction of the Portfolio Committee) to cause legal title (or evidence
of title) to any of the Trust-Owned Affiliate Assets to be held by any
Trust-Owned Affiliate, nominee or other Person, on such terms, in such manner,
and with such powers as the Portfolio Committee may determine.
Section 4.2 Management Power. Except as otherwise expressly
limited in this Trust Agreement or the Plan, the Portfolio Committee shall
have, without prior or further authorization, sole control and authority over
the management and conduct of the liquidation of the Trust-Owned Affiliate
Assets. The Portfolio Committee is hereby authorized to delegate to the
Investment Manager such power and authority as may be necessary or appropriate
to liquidate the Non-cash Trust-Owned Affiliate Assets (including, without
limitation, those powers set forth in items (iii) through (x) and item
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(xii) of the next succeeding paragraph) pursuant and subject to and in
accordance with Section 4.4 hereof and to perform those duties set forth in
Section 7.3 hereof that are expressly delegated to the Investment Manager
pursuant to the Investment Management Agreement.
In connection with the management and conduct of the
liquidation of the Trust-Owned Affiliate Assets, the powers of the Portfolio
Committee, except as otherwise expressly limited in this Trust Agreement or the
Plan, shall include, but shall not be limited to, the following: (i) to direct
the Trustee to accept the Trust Assets and Trust-Owned Affiliate Assets
transferred from Debtor at the direction of the Beneficiaries entitled thereto,
to assume liabilities of the Debtor in connection therewith, to execute and
deliver appropriate agreements, instruments and documents in connection
therewith, and to preserve and protect the Trust Assets and the Trust-Owned
Affiliate Assets; (ii) to direct the Trustee to distribute the proceeds of the
Trust-Owned Affiliate Assets according to the terms hereof; (iii) to direct the
Trustee to engage in all acts that would constitute ordinary performance of the
obligations of a trustee under a liquidating trust; (iv) to direct the Trustee
to purchase insurance as a cost of the Trust with such coverage and limits as
the Portfolio Committee deems desirable including, without limitation,
insurance covering liabilities of the Trustee or the members of the Portfolio
Committee (and for the Trustee and the members of the Portfolio Committee such
insurance coverage may extend beyond the term of the Trust for a reasonable
period) or employees or agents of the Trust incurred in connection with their
services to the Trust; (v) to direct the Trustee to appoint, engage, employ,
supervise and compensate, as a cost of the Trust, officers, employees and other
Persons as may be necessary or desirable, including managers, consultants,
accountants, technical, financial, real estate or investment advisors or
managers, attorneys, agents or brokers, and corporate fiduciaries or
depositaries for the Trust or any Trust-Owned Affiliate; (vi) subject to
Section 5.2 hereof, to direct the Trustee to invest and reinvest cash available
to the Trust, pending distribution, and to liquidate such investments; (vii) to
direct the Trustee to hold cash or Certificates on behalf of Beneficiaries who
cannot be located in accordance with Section 7.4 hereof; (viii) to cause the
proper Person to object, prosecute objections, litigate, settle and resolve
issues with respect to Claims, causes of action, preferences, fraudulent
conveyances and related matters; (ix) to direct the Trustee to borrow money on
behalf of the Trust or any Trust-Owned Affiliate to permit the Trust or any
Trust-Owned Affiliate to assume and satisfy the
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obligations of Debtor under the Loss-Sharing Agreements, and to facilitate the
management and conduct of the liquidation of the Trust-Owned Affiliate Assets
pursuant to this Trust Agreement (all such borrowed money, together with all
amounts earned thereon, except as otherwise expressly provided herein, shall
constitute Trust Assets or Trust-Owned Affiliate Assets for all purposes under
this Trust Agreement), including without limitation to distribute such borrowed
money to FirstCity to enable FirstCity to meet its obligation to pay any
Insufficiency Amount or to prepay the amounts due to holders of the Class A
Certificate pursuant thereto (all such borrowed money to have a scheduled
maturity at the time of issuance on or before the termination of the Trust
pursuant to Article VIII hereof, and the repayment of any such borrowed money
may be secured by a lien on Trust Assets or Trust-Owned Affiliate Assets), (x)
to direct the Trust or any Trust-Owned Affiliate to act as account party under
the Cullen Bank Letter of Credit and the TCB Letter of Credit, and to enter
into or guarantee the FDIC Note, (xi) subject to the Investment Management
Agreement and any other agreements entered into by the Portfolio Committee, to
have the exclusive right to retain counsel and other professionals for the
Trust or any Trust-Owned Affiliate, and (xii) to take or cause to be taken any
and all such other actions as deemed necessary or desirable to effectuate and
carry out the purposes of this Trust Agreement as contemplated herein and in
the Plan.
It is the intention of the Debtor, the Portfolio Committee and
the Trustee that, unless specifically stated to the contrary in this Trust
Agreement, and regardless of whether there is a specific reference to the
authority of the Portfolio Committee in any specific provision of this Trust
Agreement, the Trustee is to be a directed Trustee, under the direction of the
Portfolio Committee, and is not to exercise discretion in the management and
conduct of the liquidation of the Trust-Owned Affiliate Assets. By way of
example and without limitation, the Trustee shall, upon the direction of the
Portfolio Committee, enter into the Investment Management Agreement and the
Lockbox Agreement, and in so doing shall not be expected or empowered to
exercise discretion with respect to the decision to enter into said agreements.
The Trustee shall have the right to request direction from the Portfolio
Committee with respect to any matter arising under this Trust Agreement.
Section 4.3 Commingling of Trust Assets and Trust-Owned
Affiliate Assets. The Trustee shall not commingle any of the Trust Assets or
the Trust-Owned Affiliate Assets with
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the Trustee's own property or the property of any other Person.
Section 4.4 Liquidation of Non-cash Trust-Owned Affiliate
Assets. The Non-cash Trust-Owned Affiliate Assets shall be liquidated by the
Investment Manager under the direction of the Portfolio Committee as provided
in the Investment Management Agreement.
ARTICLE V
OBLIGATIONS OF THE TRUSTEE
Section 5.1 Reports and Records.
Section 5.1.1 Monthly Reports. Within thirty (30)
days after the end of each month during which the Trust is in existence, the
Trustee shall, or shall direct the Investment Manager to, provide the Portfolio
Committee a written report and accounting, in reasonable detail, showing (i)
the assets and liabilities of the Trust at the end of each such month, (ii) any
changes in the Trust-Owned Affiliate Assets which have not been previously
reported, and (iii) any material action taken by the Investment Manager in the
performance of its duties under the Trust and Investment Management Agreement
which have not previously been reported.
Section 5.1.2 Records. The Trustee shall maintain,
or shall direct the Investment Manager to maintain, on behalf of the Trust,
records and books of account relating to the Trust-Owned Affiliate Assets, the
management thereof, all transactions undertaken by the Trustee or the
Investment Manager and all expenses incurred by or on behalf of the Trust at
the direction of the Portfolio Committee. The Trustee shall also maintain or
shall direct the Investment Manager to maintain, on behalf of the Trust,
records and books of account relating to all distributions either contemplated
or effectuated under the Plan or this Trust Agreement.
Section 5.2 Investment Guidelines. Cash held pending payment
or distribution shall, to the extent permitted by applicable law, be invested
by the Trustee as directed in writing by the Portfolio Committee in (a) direct,
short-term obligations of, or obligations guaranteed by, the United States of
America (including without limitation United States Treasury Bills); (b)
short-term obligations of any agency or corporation which is or may hereafter
be created by or pursuant to an Act of the Congress of the United States or an
agency or instrumentality thereof; or (c) demand deposits or short-term
certificates of deposit at any bank, trust
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company or other financial institution which has, at the time of the
acquisition by the Trustee of such investments, capital stock and surplus
aggregating at least $100,000,000 and whose short-term debt obligations are
rated by at least two nationally recognized rating agencies in one of the two
highest categories therefor; provided, however, that the scope of any such
permissible investments shall be limited to include only those investments, or
shall be expanded to include any additional investments, as the case may be,
that a liquidating trust may be permitted to hold. Such investments shall
mature in such amounts and at such times as, in the judgment of the Portfolio
Committee at the times such investments are made, are necessary or desirable
with a view to providing funds when needed to make payments or distributions
from the Trust-Owned Affiliate Assets.
Any investment purchased with the Trust-Owned Affiliate Assets
shall be deemed a part of the Trust-Owned Affiliate Assets. All interest,
distributions and dividends received by the Trustee in respect of such
investments shall be a part of the Trust-Owned Affiliate Assets.
Section 5.3 Letters of Credit; FDIC Note. The Trustee shall
cause the Trust or direct a Trust-Owned Affiliate to act as account party with
respect to the TCB Letter of Credit and the Cullen Bank Letter of Credit, and
to enter into or guarantee the FDIC Note.
Section 5.4 Borrowings to Meet Obligations Under Class A
Certificate. If, after giving effect to the distribution by the Trustee of
Available Net Cash under Section 7.2(1)(b)(i) hereof, FirstCity has not
received sufficient cash from the Trust (1) to pay the principal of or interest
on any of the New Senior Secured Notes when such principal or interest is due
and payable, (2) to pay the principal of or interest on any of the New Senior
Subordinated Notes when such principal or interest is due and payable or (3) to
satisfy reimbursement obligations resulting from draws under the Cullen Bank
Letter of Credit, the TCB Letter of Credit or the New Senior Secured Notes
Letter of Credit, or obligations to make any payment under the FDIC Note, when
such obligations are due and payable (the sum of all such deficiencies under
clauses (1), (2) and (3), the "Insufficiency Amount"), and if the Portfolio
Committee, in the exercise of its reasonable discretion, determines that it is
in the best interests of the Beneficiaries to borrow money to distribute to
FirstCity in respect of such Insufficiency Amount because a sale of assets to
generate distributable proceeds would not result in receipt by the Trust and
the Trust-Owned Affiliates of fair value for such assets, then
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the Trust or a Trust-Owned Affiliate shall borrow money as permitted under
Section 4.2(x) hereof (all such money borrowed for such purpose, and for the
purpose described in the next succeeding sentence, together with all amounts
earned thereon, the "Borrowed Funds") and the Trust or a Trust-Owned Affiliate
shall distribute to FirstCity that amount of such Borrowed Funds equal to the
Insufficiency Amount to enable FirstCity to pay the Insufficiency Amount. In
addition, if the Portfolio Committee, in the exercise of its reasonable
discretion, determines that it is in the best interests of the Beneficiaries to
borrow money to prepay some or all of the amounts which will thereafter become
due under the Class A Certificate, the Trust or a Trust-Owned Affiliate shall
borrow such amounts as it deems advisable, and such Borrowed Funds shall be
distributed in respect of the Class A Certificates in prepayment thereof. All
Borrowed Funds shall constitute Trust Assets or Trust-Owned Affiliate Assets,
as the case may be, for all purposes under this Trust Agreement, except that
all Borrowed Funds may only be used to make distributions and prepayments with
respect to the Class A Certificate and to satisfy the Insufficiency Amount and
no Borrowed Funds shall constitute Trust Assets or Trust-Owned Affiliate Assets
for the purpose of computing Available Cash.
Section 5.5 Borrowings to Acquire Loss-Sharing Assets. The
Trust and any Trust-Owned Affiliate may borrow money, as directed by, and on
such terms as shall be acceptable to, the Portfolio Committee, in order to
acquire the Loss Sharing Assets and to perform the obligations and exercise the
rights of Debtor under the Loss Sharing Agreements (insofar as such obligations
and rights have been assigned to the Trust).
ARTICLE VI
CERTIFICATES OF BENEFICIAL INTEREST
Section 6.1 Nature of Certificates. Beneficial interests in
the Trust shall be issued pursuant to Section 9.13 of the Plan and shall be
represented by three classes of Certificates. The Class A Interest shall be
represented by the Class A Certificate, the Class B Interests shall be
represented by the Class B Certificates and the Class C Interests shall be
represented by the Class C Certificates (collectively, "Certificates"). The
Class A Certificate shall be substantially in the form attached hereto as
Exhibit A, the Class B Certificates shall be substantially in the form attached
hereto as Exhibit B and the Class C Certificates shall be substantially in the
form attached hereto as Exhibit C; provided, however, that the forms
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thereof (including without limitation any global forms thereof) may be altered
as necessary or desirable, in the discretion of the Portfolio Committee, to
conform to the provisions of this Trust Agreement, the Plan and any applicable
laws or regulations. The Portfolio Committee may cause to be placed on any
Certificate such legends as it deems necessary or appropriate under tax laws or
regulations in connection with tax withholding pursuant to Section 7.3.3 or
otherwise. Any Person to whom a Certificate is issued or transferred, by
virtue of the acceptance thereof, shall assent to and be bound by the terms and
conditions of this Trust Agreement and the Plan. No fractional Certificates
shall be issued. All Certificates shall be executed by the manual or facsimile
signature of the Trustee and countersigned by the Registrar and Transfer Agent
at the direction of the Portfolio Committee.
Section 6.2 Securities Registration. As soon as practicable
after the creation of the Trust, the Trustee shall take such steps as may be
reasonable and appropriate to the extent required by law to register the
Certificates with the Securities and Exchange Commission pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, and to comply with all
other applicable securities laws, in each case as directed by the Portfolio
Committee.
Section 6.3 Transfer and Exchange.
Section 6.3.1 Appointment of Registrar and Transfer
Agent. The Trustee shall, at the direction of the Portfolio Committee, to the
extent deemed necessary and appropriate by the Portfolio Committee, appoint a
Registrar and Transfer Agent for the purpose of registering and transferring
Certificates. The Registrar and Transfer Agent may be the Trustee or some
other duly qualified institution. For its services hereunder, the Registrar
and Transfer Agent shall be entitled to receive reasonable compensation from
the Trust. On the Effective Date, the Trustee shall appoint American Stock
Transfer & Trust Company as the Registrar and Transfer Agent pursuant to an
Appointment Direction of the Portfolio Committee in the form of Exhibit I
attached hereto.
Section 6.3.2 Registration and Transfer of
Certificates. The Trustee shall cause to be kept at the office of the
Registrar and Transfer Agent, or at such other place or places as shall be
designated by them from time to time, the Trust Register and shall permit to be
transferred or registered thereon, subject to the terms of the Plan and
applicable law, any Certificates issued under this Trust Agreement entitled to
such registration or transfer. Any
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holder of a registered Certificate may, subject to the terms of the Plan and
applicable law, transfer his Certificates in person or by his duly authorized
attorney, upon presentation of the Certificate to the Registrar and Transfer
Agent for cancellation, accompanied by delivery of a duly executed written
instrument of transfer in the form approved by the Registrar and Transfer Agent
and such other documents as the Registrar and Transfer Agent (at the direction
of the Portfolio Committee) may reasonably require. Any such transfer shall be
registered in the Trust Register. The transferor of a Certificate shall pay
reasonable transfer charges established by the Registrar and Transfer Agent for
the purpose of reimbursing the Trust and the Registrar and Transfer Agent for
the expenses incident thereto, including any tax or other governmental charge.
Section 6.3.3 Access to Register by
Certificateholders. Certificateholders and their duly authorized
representatives shall have the right, upon reasonable prior written notice to
the Registrar and Transfer Agent, to inspect and, at the expense of the
Certificateholder, make copies of the Trust Register, in each case for a
purpose reasonably related to such Certificateholder's beneficial interest in
the Trust.
Section 6.4 Absolute Owners. The Trust, the Portfolio
Committee and the Trustee may deem and treat each Certificateholder of record
as the absolute owner of the underlying beneficial interest for the purpose of
receiving distributions and payment thereon or on account thereof and for all
other purposes whatsoever.
Section 6.5 Issuance of Certificates Upon Transfer. Whenever
any Certificate shall be presented for transfer or exchange as permitted by the
provisions of Sections 6.1 and 6.3 hereof, the Trustee shall cause the
Registrar and Transfer Agent to issue, authenticate and deliver in exchange
therefor, the Certificate for the beneficial interest which the person
presenting such Certificate shall be entitled to receive.
Section 6.6 Mutilated, Lost, Stolen or Destroyed
Certificates. If a Certificateholder claims that his Certificate has been
mutilated, defaced, lost, stolen or destroyed, the Trustee shall issue and the
Registrar and Transfer Agent shall authenticate a replacement Certificate if
the requirements of the Trustee, which may be established from time to time,
are met. Such Certificateholder shall pay reasonable charges established by
the Trustee and the Registrar and Transfer Agent for the purpose of reimbursing
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the Trust and the Registrar and Transfer Agent for the expenses incident
thereto, including any tax or other governmental charges. In the case of lost,
stolen or destroyed certificates, such Certificateholder will indemnify, and if
required by the Trustee or the Registrar and Transfer Agent, provide a bond or
other security sufficient in the judgment of the Trustee or the Registrar and
Transfer Agent to protect the Trust, the Portfolio Committee, the Trustee, the
Registrar and Transfer Agent or any authenticating agent from any loss which
any of them may suffer if a Certificate is replaced. The Trust, the Trustee,
the Portfolio Committee and the Registrar and Transfer Agent shall incur no
liability to anyone by reason of anything done or omitted to be done by either
of them in good faith under the provisions of this Section 6.6.
All Certificates shall be held and owned upon the express
condition that the provisions of this Section 6.6 are exclusive in respect of
the replacement or payment of mutilated, defaced, lost, stolen or destroyed
Certificates and shall, to the extent permitted by law, preclude any and all
other rights or remedies respecting such replacement or the payment in respect
thereto. Any duplicate Certificate issued pursuant to this Section 6.6 shall
constitute an original interest in the Trust and shall be entitled to equal and
proportionate benefits with all other Certificates of the same class issued
hereunder in the Trust Assets. After issuance of a duplicate Certificate, the
Trustee and the Registrar and Transfer Agent shall not treat the original
Certificate as outstanding.
Section 6.7 Record Date. A date of record for determining
the entitlement to any payments to Certificateholders shall be adopted by the
Trustee. The Trustee shall notify the Certificateholders of the record date
adopted promptly after such adoption.
ARTICLE VII
ADMINISTRATION OF THE TRUST
Section 7.1 Issuance of Certificates. On the Effective Date,
the Trust shall issue Certificate(s) to each holder of a beneficial interest
therein (or to an Exchange and Disbursement Agent pursuant to the Plan). As
provided in the Plan, (a) all of the Class A Interest represented by the Class
A Certificates shall be issued to FirstCity, (b) all of the Class B Interests
represented by the Class B Certificates shall be issued to the holders of the
Existing Series B Interests and the Existing Series E Interests (or to an
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Exchange and Disbursement Agent for subsequent disbursement to such holders
pursuant to the Plan) and (c) all of the Class C Interests represented by the
Class C Certificates shall be issued to the holders of the Existing Common
Interests (or to an Exchange and Disbursement Agent for subsequent disbursement
to such holders pursuant to the Plan). Each holder of an Existing Series B
Interest or Existing Series E Interest shall receive that number of Class B
Certificates that such holder is entitled to receive determined pursuant to the
Plan. Each holder of an Existing Common Interest shall receive that number of
Class C Certificates that such holder is entitled to receive determined
pursuant to the Plan.
Section 7.2 Use, Payment and Distribution of Trust Assets.
The Trustee shall use, pay and distribute Trust Assets as follows:
(1) Subject to Section 7.3.3 hereof, during the duration of
the Trust, the Trustee shall use, pay and distribute Trust Assets as follows
and in the following order of priority:
(a) During the duration of the Trust, the Trustee
shall pay all Trust Expenses and all Pre-Closing Costs as such Trust Expenses
and Pre-Closing Costs become due and payable from funds on deposit in the Trust
Expenses/Pre-Closing Costs Reserve, and if funds on deposit in the Trust
Expenses/Pre-Closing Costs Reserve are insufficient to pay such Trust Expenses
and Pre-Closing Costs, from Available Net Cash, to the extent of Available Net
Cash (including without limitation the payment on the Effective Date of all
Pre-closing Costs not theretofore paid); and
(b) On each Distribution Date during the duration of
the Trust, the Trustee, at the direction of the Portfolio Committee, shall
distribute all Available Net Cash on such Distribution Date as follows and in
the following order of priority:
(i) first, that amount of such Available Net
Cash (less any such Available Net Cash used, paid or distributed on such
Distribution Date pursuant to Section 7.2(1)(a) above) equal to the
Distribution Amount (or, if the amount of such Available Net Cash is less than
the Distribution Amount, then all of such Available Net Cash) shall be
distributed by the Trustee to the holder of record of the Class A Certificate
(as determined pursuant to Section 6.7 hereof), until the Aggregate
Distribution Amount has either been paid in full or reserved in full against
(by
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reserving Trust Assets or Trust-Owned Affiliate Assets in an amount equal to
the Reservation Amount) and before the distribution of any amount with respect
to the Class B Certificates or the Class C Certificates;
(ii) second, after the payment in full or
reservation in full against the Aggregate Distribution Amount, all remaining
such Available Net Cash (less any such Available Net Cash used, paid or
distributed on such Distribution Date pursuant to Section 7.2(1)(a) above)
shall be distributed by the Trustee to pay Reimbursable Expenses then due and
payable;
(iii) third, after the payment in full or
reservation in full against the Aggregate Distribution Amount, and the payment
of any Reimbursable Expenses theretofore due, all remaining such Available Net
Cash (less any such Available Net Cash used, paid or distributed on such
Distribution Date pursuant to Section 7.2(1)(a) above) shall be distributed by
the Trustee to the holders of record of the Class B Certificates (as determined
pursuant to Section 6.7 hereof), to each such record holder in proportion to
the ratio that the number of Class B Interests represented by such holder's
Class B Certificate bears to the total number of outstanding Class B Interests
held by all record holders of Class B Certificates as of the date of such
distribution (all of which ratios shall be provided to the Trustee by the
Portfolio Committee), until the Class B Certificates Amount has been paid in
full and before the distribution of any amount with respect to the Class C
Certificates; and
(iv) fourth, after the payment in full or
reservation in full against the Aggregate Distribution Amount, the payment of
any Reimbursable Expenses theretofore due, and the payment in full of the Class
B Certificates Amount, all remaining such Available Net Cash (less any such
Available Net Cash used, paid or distributed on such Distribution Date pursuant
to Section 7.2(1)(a) above) shall be distributed by the Trustee to the holders
of record of the Class C Certificates (as determined pursuant to Section 6.7
hereof), to each such record holder in proportion to the ratio that the number
of Class C Interests represented by such holder's Class C Certificate bears to
the total number of outstanding Class C Interests held by all record holders of
Class C Certificates as of the date of such distribution (all of which ratios
shall be provided to the Trustee by the Portfolio Committee); and
(c) In the event that on any Distribution Date
the amount of Available Net Cash (less any such
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Available Net Cash used, paid or distributed on such Distribution Date pursuant
to Section 7.2(1)(a) above) exceeds the Distribution Amount, the Portfolio
Committee, in its discretion, may direct the Trustee to distribute all or any
portion thereof to the holder of record of the Class A Certificate for
application to the Claims, interests and other amounts for which such Class A
Certificate was issued.
(2) Prior to the termination of the Trust as set forth in
Article VIII of this Trust Agreement, the Portfolio Committee shall direct the
Investment Manager to provide for a sealed bid sale of the remaining Non-cash
Trust-Owned Affiliate Assets. If the Investment Manager intends to bid on such
assets, such sale shall be conducted by the Portfolio Committee (or its
designee) on behalf of the Trust with the Investment Manager permitted to
submit its bid to the Trust to be considered with other bids obtained on such
assets. All such Trust-Owned Affiliate Assets shall be sold and, subject to
Section 7.3.3 hereof, the proceeds thereof shall be used, paid and distributed
as set forth above in Section 7.2(1).
Section 7.3 Tax Matters.
Section 7.3.1 Income Tax Status. Consistent with
Revenue Procedure 94-45, 1994-28 I.R.B. 124, and unless otherwise required by a
determination within the meaning of section 1313(a) of the Tax Code, the Trust
shall be treated as a liquidating trust pursuant to Treasury Regulation Section
301.7701-4(d) and as a grantor trust owned by the Beneficiaries holding
beneficial interests therein. Any items of income, deduction, credit or loss
of the Trust shall be allocated, for federal income tax purposes, among the
Certificateholders. The Portfolio Committee, on behalf of the Trustee, is
authorized to take any action as may be necessary or appropriate to minimize
any potential tax liability of the holders of Class B Certificates or Class C
Certificates arising out of the operation of the Trust.
Section 7.3.2 Tax Returns. In accordance with
Treasury Regulation Section 1.671-4(a) and subject to the prior written
approval of the Portfolio Committee, the Investment Manager, on behalf of the
Trustee, shall file with the IRS annual information tax returns (Form 1041).
In addition, the Investment Manager, on behalf of the Trustee, shall file in a
timely manner such other tax returns as required by applicable law by virtue of
the existence and operation of the Trust and pay any taxes shown as due
thereon.
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Section 7.3.3 Withholding. The Trustee, at the
direction of the Portfolio Committee, may withhold from the amount
distributable from the Trust at any time to any Person such sum or sums as may
be sufficient to pay any tax or taxes or other charge or charges which have
been or may be imposed on such Person or upon the Trust with respect to the
amount distributable or to be distributed under the income tax laws of the
United States or of any state or political subdivision or entity by reason of
any distribution provided for in Article VII hereof, whenever such withholding
is determined by the Portfolio Committee in its sole discretion to be required
by any law, regulation, rule, ruling, directive or other governmental
requirement. In the exercise of the Portfolio Committee's discretion and
judgment, the Trustee may enter into agreements with taxing or other
authorities for the payment of such amounts as may be withheld in accordance
with the provisions of this Section 7.3.3.
Section 7.3.4 Allocation of Income and Losses.
Allocations between Certificateholders of taxable income and loss of the Trust
for each of its tax years shall, except as otherwise permitted by Appendix A
attached hereto and incorporated herein by reference, be determined in
accordance with the convention set forth in Appendix A. The principal purpose
of such convention is to approximate the same federal, state and local income
tax consequences as would have resulted if undivided interests in the Trust
Assets, reflecting the Beneficiaries' respective beneficial interests in the
Trust, had been directly owned, managed and disposed of by such Beneficiaries,
and Appendix A shall be construed in accordance with such intent. If the
Trustee, at the direction of the Portfolio Committee, shall adopt a convention
different from that set forth in Appendix A, the Trustee shall notify the
Certificateholders of the convention adopted promptly after such adoption.
Section 7.3.5 Valuation of Trust Assets. As soon as
possible after the Effective Date, but in no event later than ninety (90) days
thereafter, the Portfolio Committee shall cause the Investment Manager, on
behalf of the Trustee, to obtain or complete a valuation of the Trust Assets
transferred to the Trust, and such valuation shall be used consistently by the
Investment Manager, the Trustee, Debtor and the holders of beneficial interests
in the Trust for all federal income tax purposes and for purposes of making the
determinations required pursuant to Appendix A. If subsequent valuations of
Trust Assets are deemed necessary by the Portfolio Committee, the Portfolio
Committee shall cause the Investment Manager to obtain the valuations and
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such valuations shall be used consistently by the Investment Manager, the
Trustee, Debtor and the holders of beneficial interests in the Trust for all
federal income tax purposes and for purposes of making the determinations
required pursuant to Appendix A.
Section 7.4 Unclaimed Cash or Distributions. If any Person
entitled to a Certificate from the Trust cannot be located on the Effective
Date or any time thereafter, then, subject to the provisions of this Section
7.4, such Certificate shall be set aside and maintained by the Trustee on
behalf of such Person. Any taxes allocable to any Certificates held by the
Trustee as provided in this Section 7.4 shall be funded from any cash held by
the Trust in respect of such Certificate. If such Person is located within two
(2) years of the Effective Date or within two (2) years of such Person's first
unclaimed distribution, such Certificate and cash allocated thereto, together
with any interest actually earned thereon and proceeds thereof (less the
allocable portion of taxes paid by the Trust on account of such Person), shall
be paid or distributed to such Person. If such Person cannot be located within
two (2) years of the Effective Date or within two (2) years of such Person's
first unclaimed distribution, (a) any such Certificate shall be canceled and
(b) any such cash, interest and proceeds thereon net of the allocable portion
of taxes paid by the Trust, shall be retained by the Trust free and clear of
and from any claim to such property by or on behalf of such Person who shall be
deemed to have released such claim; provided, however, that nothing contained
in this Trust Agreement or the Plan shall require the Trustee to attempt to
locate such Person.
ARTICLE VIII
TERMINATION
The Trust and the Trust-Owned Affiliates shall terminate upon
the date which is three (3) years and six (6) months after the Effective Date;
provided, however, that at least six (6) months prior to such termination the
Portfolio Committee (with Court approval) may extend the term of the Trust and
the Trust-Owned Affiliates if it is necessary to the liquidating purpose
thereof. Multiple extensions can be obtained so long as Court approval is
obtained at least six (6) months prior to the expiration of each extended term.
The aggregate of all such extensions shall not exceed five (5) years, so that
the Trust and the Trust-Owned Affiliates shall terminate no later than eight
(8) years and six (6) months after the Effective Date.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. Any notice required to be given under
this Trust Agreement shall be in writing and shall be sent by first class mail,
or overnight courier service, or in the case of mailing to a non-United States
address, air mail, postage prepaid:
(a) If to the Debtor or FirstCity, at
FirstCity Financial Corporation
P.O. Box 8216
Waco, Texas 76714
Attention: James T. Sartain
(b) If to the Trustee, at:
Shawmut Bank Connecticut, National Association
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration
(FirstCity Liquidating Trust)
(c) If to any Certificateholder in his capacity as such,
at his address as listed in the Trust Register.
(d) If to the Portfolio Committee, at the addresses for
each member of the Portfolio Committee as follows:
Rick R. Hagelstein
6400 Imperial Dr.
Waco, TX 76712
Robert W. Brown
1021 Main Street
Suite 2600
Houston, TX 77002
David Palmer
2817 Sancho Panza
Punta Gorda, FL 33950
Richard E. Bean
5643 Lynbrook
Houston, TX 77056
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Notice mailed shall be effective on the date mailed. All other
notices shall be effective on the date of delivery. Any Person may change the
address at which it is to receive notices under this Trust Agreement by
furnishing written notice of such change to the Trustee and FirstCity.
Section 9.2 Amendment. With the written consent of the
Certificateholders of not less than a majority of each of the Class A
Interests, Class B Interests and Class C Interests, the Trustee when authorized
by the Portfolio Committee, may enter into an amendment to this Trust Agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Trust Agreement or of modifying in
any manner the rights of the Certificateholders under this Trust Agreement;
provided, however, that no such amendment shall, without the consent of each
holder of the Class A Interests, Class B Interests, or Class C Interests, as
applicable, affected thereby,
(1) change the amount to be paid from the Trust Assets to
such Certificateholder, or alter or modify the provisions of Section
7.2 hereof; or
(2) modify any of the provisions of this Section 9.2
hereof except to increase any percentage set forth herein or to
provide that certain other provisions of this Trust Agreement cannot
be modified or waived without the consent of each Certificateholder of
any of the applicable interests affected thereby.
It shall not be necessary for any act of Certificateholders
under this Section 9.2 to approve the particular form of any proposed
amendment, but it shall be sufficient if such act shall approve the substance
thereof.
Section 9.3 Counterparts. This Trust Agreement and any
direction or authorization of the Portfolio Committee may be executed in one or
more counterparts, all of which shall be taken together to constitute one and
the same instrument.
Section 9.4 Governing Law; Severability. This Trust
Agreement shall be governed by, construed under and interpreted in accordance
with, the laws of the State of Texas. If it shall be determined by a court of
competent jurisdiction that any provision or wording of this Trust Agreement
shall be invalid or unenforceable under such applicable law, such invalidity or
unenforceability shall not invalidate the entire Trust Agreement. In that
case, this
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Trust Agreement shall be construed so as to limit any term or provision so as
to make it enforceable or valid within the requirements of applicable law, and,
in the event such term or provision cannot be so limited, this Trust Agreement
shall be construed to omit such invalid or unenforceable provisions; provided,
however, that such construction, to the maximum extent possible, shall give
effect to the purposes of the Plan.
Section 9.5 Headings. Sections, subheadings and other
headings used in this Trust Agreement are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 9.6 [Intentionally deleted].
Section 9.7 Retention of Jurisdiction. The Court shall
retain jurisdiction of the proceedings referred to in the Plan for the purposes
set forth in the Plan, including the determination of all controversies and
disputes arising under or in connection with the Trust, for the purposes of
interpreting the provisions of this Trust Agreement and for all other purposes
contemplated in the Plan.
ANY AND ALL RIGHT TO TRIAL BY JURY IS HEREBY WAIVED, AND THERE SHALL BE NO
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS TRUST AGREEMENT OR THE TRANSACTIONS SPECIFIED HEREIN.
Section 9.8 Observance and Compliance. Notwithstanding any
other provision of this Trust Agreement, the Portfolio Committee will act to
ensure that the Trust shall observe and comply with all corporate and
partnership formalities (including without limitation compliance with all
applicable partnership agreements) in connection with all matters pertaining to
the Trust-Owned Affiliates and the Trust-Owned Affiliate Assets.
ARTICLE X
PORTFOLIO COMMITTEE
Section 10.1 Portfolio Committee.
Section 10.1.1 Establishment and Constitution of
Portfolio Committee. Contemporaneous with the execution of this Trust
Agreement there shall be established a portfolio committee of the Trust (the
"Portfolio Committee"), consisting of four members (subject to reduction as set
forth in paragraph (2) of Section 10.1.5 hereof and subject to
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increase and reduction set forth in Section 10.3 hereof). Such four members
shall be the Chief Credit Officer of FirstCity (the "Chief Credit Officer
Member Position"), initially Rick R. Hagelstein; Robert W. Brown (the "Robert
W. Brown Member Position"); and two members designated by the Equity Committee
(the "Equity Committee Member Positions"), which two members initially shall be
Richard Bean and David Palmer. Messrs. Palmer and Bean, or their successors,
shall each receive compensation for their services as members of the Portfolio
Committee in an amount equal to $12,000 per annum, payable in $3,000 increments
on the first day of each calendar quarter.
Section 10.1.2 Term of Service. Subject to Section
10.3 hereof, each member of the Portfolio Committee shall serve as such for the
duration of the Trust, subject to such member's earlier death, resignation or
removal.
Section 10.1.3 Resignation. Subject to Section 10.3
hereof, any member of the Portfolio Committee may resign at any time by an
instrument in writing executed by him, which instrument must be submitted to
the Portfolio Committee and a copy thereof provided to the Trustee, FirstCity
and the Investment Manager at least ten (10) days prior to the effective date
of such resignation.
Section 10.1.4 Removal. Subject to Section 10.3
hereof, any member of the Portfolio Committee may be removed at any time, by a
vote of a majority of the other members of the Portfolio Committee, (a) for
fraud, willful misconduct or breach of fiduciary duty under applicable law in
connection with the affairs of the Trust, or (b) for such physical or mental
disability as substantially prevents such member from performing his duties as
such member.
Section 10.1.5 Vacancy. Subject to Section 10.3
hereof, in the event of a vacancy in the Portfolio Committee by reason of the
death, resignation or removal of any member of the Portfolio Committee, the
rules governing such vacancy shall be as follows:
(1) Chief Credit Officer Member
Position. For the duration of the Trust, there shall always be one Chief
Credit Officer Member Position and any vacancy therein shall automatically be
filled, without any further action by any Person, by a successor to the Chief
Credit Officer of FirstCity whose death, resignation or removal has caused such
vacancy (which successor shall be promptly appointed by FirstCity).
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(2) Robert W. Brown Member Position.
If, during the duration of the Trust, there is a vacancy in the Robert W. Brown
Member Position, then, contemporaneous with such vacancy, and automatically and
without any further action by any Person, the Robert W. Brown Member Position
shall be permanently eliminated and the number of members thereafter
constituting the Portfolio Committee shall be permanently reduced to three.
(3) Equity Committee Member Positions.
For the duration of the Trust, there shall always be two Equity Committee
Member Positions and any vacancy therein shall be filled by that holder of
Class B Certificates holding at the time such vacancy occurs those Class B
Certificates representing the largest outstanding Class B Interests who is not
already a member of the Portfolio Committee or, if such holder is a legal
entity rather than a natural person, a designee of such entity, so long as such
holder or its designee is willing to so serve as evidenced by a written
instrument in the form of Exhibit E attached hereto executed by such holder (or
such holder and such designee) and delivered to the Trustee, the Investment
Manager and FirstCity.
Section 10.1.6 Meetings; Quorum. Meetings of the
Portfolio Committee (which may be conducted telephonically) may be called by
any member of the Portfolio Committee on at least three (3) days' advance
written notice (or such shorter period of time as agreed to in writing by all
members of the Portfolio Committee). A majority of the total number of members
of the Portfolio Committee shall constitute a quorum for the transaction of
business, and, unless otherwise expressly provided in this Trust Agreement, the
vote of the majority of members of the Portfolio Committee present in person or
by telephone at a meeting at which a quorum is present shall be the act of the
Portfolio Committee; provided, however, that, unless the number of members of
the Portfolio Committee is then six or seven pursuant to Section 10.3 hereof,
in the event that the members of the Portfolio Committee are split equally with
respect to any vote, and the members thereof holding the Equity Committee
Member Positions have voted the same way, the vote of such members holding the
Equity Committee Member Positions shall prevail, and shall be the vote of the
Portfolio Committee.
Section 10.1.7 Retention of Professionals. At any
time and from time to time during the duration of the Trust, the Portfolio
Committee may consult with and shall, subject to the Investment Management
Agreement and any other
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agreements entered into by the Portfolio Committee, have the exclusive right on
behalf of the Trust and the Trust-Owned Affiliates to retain counsel and other
professionals (including accountants) for the Trust or the Trust-Owned
Affiliates, and may retain such counsel and any other professionals it deems
necessary to advise the Portfolio Committee with respect to any matters arising
under or related to the Trust, the Trust-Owned Affiliates or this Trust
Agreement, and the reasonable fees, disbursements and related expenses of such
counsel and other professionals shall constitute Trust Expenses for all
purposes hereunder. The Trustee and the Investment Manager shall not be
entitled to retain counsel or other professionals (including accountants) for
the Trust or the Trust-Owned Affiliates except, with respect to the Investment
Manager, as provided in the Investment Management Agreement or any other
agreements entered into by the Portfolio Committee.
Section 10.2 Indemnification; Exculpation. No person acting
in his capacity as a member of the Portfolio Committee or as an officer or
director of a Trust-Owned Affiliate (each such person an "Indemnified Person")
shall be personally liable in connection with the affairs of the Trust or the
Trust-Owned Affiliates to the Trust or the Trust-Owned Affiliates or to any
Person except for such of such Indemnified Person's acts or omissions as shall
constitute fraud, willful misconduct or gross negligence. Except in those
situations in which an Indemnified Person is not exonerated of personal
liability as aforesaid, such Indemnified Person shall be indemnified by the
Trust against, and held harmless by the Trust and each Trust-Owned Affiliate
from, any losses, claims, damages, liabilities or expenses (including, without
limitation, reasonable attorneys' fees, disbursements and related expenses) to
which such Indemnified Person may become subject in connection with any action,
suit, proceeding or investigation brought or threatened against such
Indemnified Person in his capacity as such Indemnified Person, or in connection
with any matter arising out of or related to this Trust Agreement or the
affairs of the Trust or the Trust-Owned Affiliates. If an Indemnified Person
becomes involved in any action, proceeding or investigation in connection with
any matter arising out of or in connection with this Trust Agreement or the
affairs of the Trust or the Trust-Owned Affiliates, the Trust shall
periodically advance or otherwise reimburse on demand such Indemnified Person
his reasonable expenses (including, without limitation, attorneys' fees,
disbursements and related expenses) incurred in connection therewith; provided,
however, that such Indemnified Person shall be required promptly to repay to
the Trust the amount of any such
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advanced or reimbursed expenses paid to him to the extent that it shall be
ultimately determined by final order of the Court that such Indemnified Person
engaged in fraud, willful misconduct or gross negligence in connection with the
affairs of the Trust or the Trust-Owned Affiliates. The Portfolio Committee
shall cause the Trustee to obtain insurance at the expense of the Trust in
amounts and kind deemed appropriate by the Portfolio Committee. The provisions
of this Section 10.2 shall remain available to and be binding upon any
Indemnified Person who ceases to be a member of the Portfolio Committee or to
serve as a director or officer of a Trust-Owned Affiliate or the estate of any
Indemnified Person.
Section 10.3 Increase in Portfolio Committee. Not less than
75 days before each distribution of Available Net Cash by the Trustee to the
holders of record of the Class A Certificate as provided herein, the Portfolio
Committee shall deliver a written statement to such holder, in form reasonably
satisfactory to such holder, certifying that such distribution will in fact be
made in the amount and at the time required herein, and further certifying that
the Trustee will comply with all of its obligations under Section 5.4 hereof.
In the event that such certification is not so delivered, or if such
certification is so delivered but either such distribution is not in fact so
made or the Trustee does not comply with such obligations, then the number of
members constituting the Portfolio Committee shall immediately be increased by
three, to a total of seven or six, as the case may be, and the holders of
record of the Class A Certificate shall have the exclusive right, voting
separately as a class, to elect all of the persons to fill such newly-created
memberships. Such rights will continue until such time as either such
distribution is made or the Trustee complies with such obligations, at which
time such voting right will terminate (and the persons elected to be members of
the Portfolio Committee pursuant to this Section 10.3 shall cease to be members
thereof), subject to revesting of such rights in the event of any subsequent
failure of the character described above. Any vacancy in the Portfolio
Committee caused by the death, resignation or removal of any member of the
Portfolio Committee elected by the holders of record of the Class A Certificate
shall be filled exclusively by a separate class vote of such holders.
Section 10.4 Actions of Trustee. The Trustee shall have no
authority or right to refuse to act when so ordered or directed to by the
Portfolio Committee.
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IN WITNESS WHEREOF, the parties hereto have executed this
Trust Agreement or caused this Trust Agreement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first
above written.
FIRST CITY BANCORPORATION OF TEXAS, INC., Debtor,
for the benefit of the respective Beneficiaries
entitled to the Trust Assets
By: /s/ Robert W. Brown
-----------------------------------------------
Name: Robert W. Brown
Title: President
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Susan T. Keller
-----------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
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EXHIBIT A
[FORM OF FACE OF CLASS A CERTIFICATE]
CLASS A BENEFICIAL INTEREST ("CLASS A INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS A INTERESTS
A-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class A Interest
This Certifies that __________ is the registered holder of
__________ Class A Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to the Joint Plan of
Reorganization by First City Bancorporation of Texas, Inc., Official Committee
of Equity Security Holders, and J-Hawk Corporation, with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of the United States
Bankruptcy Code, filed with the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, in Case No. 392-39474-HCA-11, as confirmed
by order of such Court entered on May 31, 1995 (as so confirmed, the "Plan").
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT AND THE PLAN, TO WHICH TRUST AGREEMENT AND
PLAN THE HOLDER OF THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS
AND BY WHICH SUCH HOLDER IS BOUND. All terms not specifically defined herein
shall have the meanings set forth in the Trust Agreement. Subject to the Trust
Agreement and the limitations set forth therein, including the payment of all
fees related to transfers, the transfer of Class A Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class A Interests will be issued to the designated transferee or transferees;
provided, however, that no Certificates evidencing fractional Class A Interests
shall be issued.
Exhibit A-1
<PAGE> 45
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
---------------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
Exhibit A-2
<PAGE> 46
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class A Beneficial Interest ("Class A Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class A Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on May 31, 1995.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class A Interest holders listed in
the Trust Register shall be established pursuant to the Trust Agreement.
At the office or agency of the Trustee maintained for such
purpose and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class A Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class A
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement. The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
Exhibit A-3
<PAGE> 47
The obligations and responsibilities of the Trustee with
respect to the Class A Interests under the Trust Agreement shall terminate upon
the payment to holders of Class A Interests of all amounts held in the Trust or
any Trust-Owned Affiliate and required to be paid to them pursuant to the Trust
Agreement and, in any event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
--------------------
THE CLASS A INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
Exhibit A-4
<PAGE> 48
EXHIBIT B
[FORM OF FACE OF CLASS B CERTIFICATE]
CLASS B BENEFICIAL INTEREST ("CLASS B INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS B INTERESTS
B-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class B Interest
This Certifies that __________ is the registered holder of
__________ Class B Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to the Joint Plan of
Reorganization by First City Bancorporation of Texas, Inc., Official Committee
of Equity Security Holders, and J-Hawk Corporation, with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of the United States
Bankruptcy Code, filed with the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, in Case No. 392-39474-HCA-11, as confirmed
by order of such Court entered on May 31, 1995 (as so confirmed, the "Plan").
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT AND THE PLAN, TO WHICH TRUST AGREEMENT AND
PLAN THE HOLDER OF THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS
AND BY WHICH SUCH HOLDER IS BOUND. All terms not specifically defined herein
shall have the meanings set forth in the Trust Agreement. Subject to the Trust
Agreement and the limitations set forth therein, including the payment of all
fees related to transfers, the transfer of Class B Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class B Interests will be issued to the designated transferee or transferees;
provided, however, that no
Exhibit B-1
<PAGE> 49
Certificates evidencing fractional Class B Interests shall be issued.
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
-----------------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
Exhibit B-2
<PAGE> 50
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class B Beneficial Interest ("Class B Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class B Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on May 31, 1995.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class B Interest holders listed in
the Trust Register shall be established pursuant to the Trust Agreement.
At the office or agency of the Trustee maintained for such
purpose and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class B Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class B
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement. The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
Exhibit B-3
<PAGE> 51
The obligations and responsibilities of the Trustee with
respect to the Class B Interests under the Trust Agreement shall terminate upon
the payment to holders of Class B Interests of all amounts held in the Trust or
any Trust-Owned Affiliate and required to be paid to them pursuant to the Trust
Agreement and, in any event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
--------------------
THE CLASS B INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
Exhibit B-4
<PAGE> 52
EXHIBIT C
[FORM OF FACE OF CLASS C CERTIFICATE]
CLASS C BENEFICIAL INTEREST ("CLASS C INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS C INTERESTS
C-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class C Interest
This Certifies that __________ is the registered holder of
__________ Class C Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to the Joint Plan of
Reorganization by First City Bancorporation of Texas, Inc., Official Committee
of Equity Security Holders, and J-Hawk Corporation, with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of the United States
Bankruptcy Code, filed with the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, in Case No. 392-39474-HCA-11, as confirmed
by order of such Court entered on May 31, 1995 (as so confirmed, the "Plan").
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT AND THE PLAN, TO WHICH TRUST AGREEMENT AND
PLAN THE HOLDER OF THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS
AND BY WHICH SUCH HOLDER IS BOUND. All terms not specifically defined herein
shall have the meanings set forth in the Trust Agreement. Subject to the Trust
Agreement and the limitations set forth therein, including the payment of all
fees related to transfers, the transfer of Class C Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class C Interests will be issued to the designated transferee or transferees;
provided, however, that no
Exhibit C-1
<PAGE> 53
Certificates evidencing fractional Class C Interests shall be issued.
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
--------------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
Exhibit C-2
<PAGE> 54
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class C Beneficial Interest ("Class C Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class C Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on May 31, 1995.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class C Interest holders listed in
the Trust Register shall be established pursuant to the Trust Agreement.
At the office or agency of the Trustee maintained for such
purpose and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class C Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class C
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement. The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
Exhibit C-3
<PAGE> 55
The obligations and responsibilities of the Trustee with
respect to the Class C Interests under the Trust Agreement shall terminate upon
the payment to holders of Class C Interests of all amounts held in the Trust or
any Trust-Owned Affiliate and required to be paid to them pursuant to the Trust
Agreement and, in any event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
--------------------
THE CLASS C INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
Exhibit C-4
<PAGE> 56
EXHIBIT E
SUCCESSOR EQUITY COMMITTEE MEMBER POSITION ACCEPTANCE
[Date]
[Trustee
Mailing address for notices]
[Investment Manager
Mailing address for notices]
[FirstCity Financial Corporation
Mailing address for notices]
Re: Liquidating Trust Agreement by and between First City
Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and the
Trustee (the "Liquidating Trust Agreement")
Ladies and Gentlemen:
Reference is hereby made to Section 10.1.5(iii) of the
Liquidating Trust Agreement. [The undersigned holder of Class B Certificates
(as such term is defined in the Liquidating Trust Agreement), _____________,
hereby notifies you that he/she is willing to serve as a member of the
Portfolio Committee (as such term is defined in the Liquidating Trust
Agreement).] [The undersigned holder of Class B Certificates (as such term is
defined in the Liquidating Trust Agreement), _______________, and its
designee, _______________________, hereby notify you that _______________ is
willing to serve as a member of the Portfolio Committee (as such term is
defined in the Liquidating Trust Agreement).]
[
-----------------------------
Name: ]
[
------------------------------
Holder of Class B Certificates
By:
---------------------------
Name:
-------------------------
Title:
------------------------
------------------------------
Name:
Designee of Holder of Class B
Certificates]
Exhibit E-1
<PAGE> 57
EXHIBIT F
Notice of Distribution Date and Distribution Amount
[Date]
[Trustee]
[Address for notices]
[Each member of Portfolio Committee]
[Address for notices]
Ladies and Gentlemen:
Reference is hereby made to the Liquidating Trust Agreement
dated July 3, 1995 (the "Trust Agreement") between First City Bancorporation of
Texas, Inc., a Delaware corporation, and Shawmut Bank Connecticut, National
Association, as Trustee. Capitalized terms used but not defined herein are
used herein with the meanings assigned to such terms in the Trust Agreement.
This letter constitutes notice that [date] shall be a Distribution Date under
the Trust Agreement. The applicable Distribution Amount for such Distribution
Date is set forth on Schedule A attached hereto.
FIRSTCITY FINANCIAL CORPORATION
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
F-1
<PAGE> 58
EXHIBIT G
Notice of Distribution Date
[Date]
[Trustee]
[Address for notices]
[FirstCity Financial Corporation]
[Address for notices]
Ladies and Gentlemen:
Reference is hereby made to the Liquidating Trust Agreement
dated July 3, 1995 (the "Trust Agreement") between First City Bancorporation of
Texas, Inc., a Delaware corporation, and Shawmut Bank Connecticut, National
Association, as Trustee. Capitalized terms used but not defined herein are
used herein with the meanings assigned to such terms in the Trust Agreement.
This letter constitutes notice that [date] shall be a Distribution Date under
the Trust Agreement.
[Portfolio Committee Members]
---------------------------------------------
Name:
Member of Portfolio Committee
---------------------------------------------
Name:
Member of Portfolio Committee
---------------------------------------------
Name:
Member of Portfolio Committee
---------------------------------------------
Name:
Member of Portfolio Committee
G-1
<PAGE> 59
EXHIBIT H
NOTICE OF TRUST EXPENSES/PRE-CLOSING COSTS RESERVE AMOUNT
[Date]
[Trustee]
[Address for notices]
FirstCity Financial Corporation
[Address for notices]
Ladies and Gentlemen:
Reference is hereby made to the Liquidating Trust Agreement
dated July 3, 1995 (the "Trust Agreement") between First City Bancorporation of
Texas, Inc., a Delaware corporation, and Shawmut Bank Connecticut, National
Association, as Trustee. Capitalized terms used but not defined herein are
used herein with the meanings assigned to such terms in the Trust Agreement.
This letter constitutes direction to the Trustee to maintain $____________ in
the Trust Expenses/Pre-Closing Costs Reserve until such time, if any, as you
are provided a further notice with different directions.
Very truly yours,
--------------------------------
Name:
Member of Portfolio Committee
--------------------------------
Name:
Member of Portfolio Committee
--------------------------------
Name:
Member of Portfolio Committee
--------------------------------
Name:
Member of Portfolio Committee
H-1
<PAGE> 60
EXHIBIT I
APPOINTMENT DIRECTION
[Date]
[Trustee]
[Address for notices]
Ladies and Gentlemen:
Reference is hereby made to the Liquidating Trust Agreement
dated July 3, 1995 (the "Trust Agreement") between First City Bancorporation of
Texas, Inc., a Delaware corporation, and Shawmut Bank Connecticut, National
Association, as Trustee. Capitalized terms used but not defined herein are
used herein with the meanings assigned to such terms in the Trust Agreement.
You are hereby directed to appoint American Stock Transfer & Trust Company as
Registrar and Transfer Agent for the Certificates pursuant to the letter of
engagement attached hereto as Exhibit 1.
Very truly yours,
--------------------------------
Name:
Member of Portfolio Committee
--------------------------------
Name:
Member of Portfolio Committee
--------------------------------
Name:
Member of Portfolio Committee
--------------------------------
Name:
Member of Portfolio Committee
I-1
<PAGE> 61
APPENDIX A
ALLOCATIONS OF TRUST INCOME AND LOSSES
For each calendar year or other period of the Liquidating
Trust, unless the Investment Manager, in the exercise of its reasonable
judgment, determines that the following convention for allocating the income or
loss of the Liquidating Trust does not appropriately reflect a Beneficiary's
interest in such income or loss or the purpose set forth in section 7.3.4 of
the Trust Agreement, the Investment Manager shall allocate the income and loss
of the Liquidating Trust among the Beneficiaries in accordance with the
following provisions:
I. Definitions
Whenever used herein, (a) any capitalized terms not expressly defined in this
Appendix A shall have the meanings assigned thereto by the liquidating trust
agreement of even date herewith executed by First City Bancorporation of Texas,
Inc., a Delaware corporation, and Shawmut Bank Connecticut, National
Association, as Trustee (the "Trust Agreement"); (b) unless otherwise expressly
indicated herein, any reference to a Section shall be a reference to a Section
of this Appendix A; and (c) the following terms shall have the following
meanings:
A. Adjusted Tax Basis of a Trust Asset shall mean the asset's
adjusted tax basis, as determined for federal income tax purposes. The initial
Adjusted Tax Basis of each Trust Asset or Trust-Owned Affiliate Asset shall be
an amount equal to the sum of (i) the fair market value on the Effective Date
of the Class B Certificateholders' and Class C Certificateholders' interest in
such Trust Asset or Trust-Owned Affiliate Asset that is deemed to have been
distributed to the holders of the Existing Series B Interests and Existing
Series E Interests and the holders of Existing Common Interests, respectively,
pursuant to Revenue Procedure 94-45, 1994-28 I.R.B. 124, plus (ii) the adjusted
basis (as determined for federal income tax purposes) of the Class A
Certificateholders' interest in such Trust Asset or Trust-Owned Affiliate Asset
in the hands of Debtor immediately before the Effective Date. For purposes of
determining the Adjusted Tax Basis of a Trust Asset or Trust-Owned Affiliate
Asset, unless otherwise determined by the Investment Manager in the exercise of
its reasonable judgment, (a) the fair market value on the Effective Date of the
Class B
Appendix A-1
<PAGE> 62
Certificateholders' interest in such Trust Asset or Trust-Owned Affiliate Asset
shall be presumed to equal the total fair market value on the Effective Date of
such Trust Asset or Trust-Owned Affiliate Asset multiplied by a fraction, the
numerator of which is the Class B Value and the denominator of which is the
aggregate Class A Value, Class B Value and Class C Value; (b) the fair market
value on the Effective Date of the Class C Certificateholders' interest in such
Trust Asset or Trust-Owned Affiliate Asset shall be presumed to equal the total
fair market value on the Effective Date of such Trust Asset or Trust-Owned
Affiliate Asset multiplied by a fraction, the numerator of which is the Class C
Value and the denominator of which is the aggregate Class A Value, Class B
Value and Class C Value; and (c) the adjusted basis (as determined for federal
income tax purposes) of the Class A Certificateholders' interest in such Trust
Asset or Trust-Owned Affiliate Asset in the hands of Debtor immediately before
the Effective Date shall be presumed to equal the total adjusted basis (as
determined for federal income tax purposes) of such Trust Asset or Trust-Owned
Affiliate Asset in the hands of Debtor immediately before the Effective Date
multiplied by a fraction, the numerator of which is the Class A Value and the
denominator of which is the aggregate Class A Value, Class B Value and Class C
Value.
B. Book Basis of a Trust Asset or Trust-Owned Affiliate Asset
shall mean the asset's adjusted tax basis for book purposes, determined in
accordance with the following provision:
1. The initial Book Basis of a noncash Trust Asset or
Trust-Owned Affiliate Asset shall be equal to its fair market value on the
Effective Date, as reasonably determined by the Investment Manager; provided,
however, that the initial Book Basis of such Trust Asset or Trust-Owned
Affiliate Asset shall not be less than the sum of the Class A Value, Class B
Value and Class C Value multiplied by a fraction, the numerator of which is the
fair market value of such Trust Asset or Trust-Owned Affiliate Asset on the
Effective Date, as reasonably determined by the Investment Manager, and the
denominator of which is the aggregate fair market value of all noncash Trust
Assets or Trust-Owned Affiliate Assets on the Effective Date, as reasonably
determined by the Investment Manager plus the total amount of cash that
constitutes a Trust Asset or Trust-Owned Affiliate Asset.
Appendix A-2
<PAGE> 63
2. The Book Basis of a Trust Asset or Trust-Owned
Affiliate Asset shall be adjusted as provided in the Tax Code (including,
without limitation, adjustments for depreciation and amortization deductions),
except that the amount of such adjustments shall be determined as if the
initial Adjusted Tax Basis of such Trust Asset or Trust-Owned Affiliate Asset
equalled its initial Book Basis.
C. Class A Value shall mean the excess of (i) the sum of the
amount of cash that constitutes a Trust Asset or Trust-Owned Affiliate Asset
plus the fair market value on the Effective Date (as reasonably determined by
the Investment Manager) of all noncash Trust Assets or Trust-Owned Affiliate
Assets, over (ii) the sum of the Class B Value and Class C Value.
D. Class B Value shall mean the aggregate fair market value on
the Effective Date of all of the Class B Interests distributed by Debtor to the
holders of the Existing Series B Interests and Existing Series E Interests, as
reasonably determined by the Investment Manager. If the Class B Interests are
actively traded on one or more "established securities markets" (as that term
is defined in Temporary Treasury Regulation Section 15A.453-1(e)(4)(iv)) for
at least 10 trading days during the period beginning 30 days before and ending
30 days after the Effective Date (such period being hereinafter referred to as
the "trading period") and at volumes that, in the reasonable judgment of the
Investment Manager, are sufficient to provide an accurate measurement of the
initial fair market value of such interests, then the aggregate fair market
value on the Effective Date of all of the Class B Interests distributed by
Debtor shall be presumed to equal the product of (i) the total number of such
Class B Interests distributed on the Effective Date times (ii) the average
quoted price paid for one Class B Interest on each such established securities
market during the trading period.
E. Class C Value shall mean the aggregate fair market value on
the Effective Date of all of the Class C Interests distributed by Debtor to the
holders of the Existing Common Interests, as reasonably determined by the
Investment Manager. If the Class C Interests are actively traded on one or
more "established securities markets" (as that term is defined in Temporary
Treasury Regulation Section 15A.453-1(e)(4)(iv)) for at least 10 trading days
during the period beginning 30 days before and ending 30 days after the
Effective Date (such period being hereinafter referred to as the "trading
period") and at volumes that, in the reasonable judgment of the Investment
Manager, are sufficient to provide
Appendix A-3
<PAGE> 64
an accurate measurement of the initial fair market value of such interests,
then the aggregate fair market value on the Effective Date of all of the Class
C Interests distributed by Debtor shall be presumed to equal the product of (i)
the total number of such Class C Interests distributed on the Effective Date
times (ii) the average quoted price paid for one Class C Interest on each such
established securities market during the trading period.
F. Net Income or Net Loss for each taxable year or other period
shall mean the Liquidating Trust's taxable income or loss for such period, on a
consolidated basis with all Trust-Owned Affiliates determined in accordance
with federal income tax principles, subject to the following adjustments:
1. any income of the Liquidating Trust that is exempt
from federal income tax and not otherwise taken into account as an item of
income pursuant to this definition shall be added to such taxable income or
loss;
2. any noncapital, nondeductible expenses of the
Liquidating Trust described in Treasury Regulation Section
1.1502-32(b)(3)(iii) (as in effect for taxable years beginning on or after
January 1, 1995) and not otherwise taken into account as an item of expense
pursuant to this definition, shall be subtracted from such taxable income or
loss;
3. gain or loss resulting from any disposition of any
Trust Assets or Trust-Owned Affiliate Assets with respect to which gain or loss
is recognized for federal income tax purposes shall be computed by reference to
the Book Basis of the property disposed of, notwithstanding that the Adjusted
Tax Basis of such property differs from its Book Basis;
4. in lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account depreciation, amortization, and other
cost recovery deductions for such period computed as if the initial Adjusted
Tax Basis of each Trust Asset or Trust-Owned Affiliate Asset equalled its
initial Book Basis; and
5. any items specially allocated to the Class A
Certificateholders pursuant to Section II.B. hereof shall not be taken into
account in computing Net Income or Net Loss.
G. Partially Adjusted Trust Book Account means, with respect to
each class of Certificateholders for which a Trust
Appendix A-4
<PAGE> 65
Book Account is maintained and with respect to each taxable year or other
taxable period of the Liquidating Trust, the Trust Book Account balance of such
class of Certificateholders at the beginning of such period, reduced as
provided in Section I.J.(iii) hereof for all distributions during such period
that are made to the class of Certificateholders for which such Trust Book
Account is maintained.
H. Target Trust Book Account means, with respect to each class of
Certificateholders for which a Trust Book Account is maintained and with
respect to each taxable year or other taxable period of the Liquidating Trust,
an amount equal to the hypothetical distribution (if any) such class of
Certificateholders would receive if all Trust Assets (including cash) were sold
for cash equal to their Book Basis on the last day of such period (taking into
account any adjustments to Book Basis for such period), all Liquidating Trust
liabilities were satisfied in cash according to their terms, and the net
proceeds of the Liquidating Trust (after satisfaction of said liabilities) were
distributed in full pursuant to Section 7.2 of the Trust Agreement on the last
day of such period.
I. Liquidating Trust shall mean liquidating trust created
pursuant to the Trust Agreement and the Plan.
J. Trust Book Account shall mean a single account maintained for
the Class A Certificateholders, as a class, a single account maintained for the
Class B Certificateholders, as a class, and a single account maintained for the
Class C Certificateholders, as a class. The Trust Book Account maintained for
each class of Certificateholders shall have an initial balance equal to the
Class A Value, in the case of the Class A Certificateholders, the Class B
Value, in the case of the Class B Certificateholders, and the Class C Value, in
the case of the Class C Certificateholders, and shall thereafter be adjusted as
follows: (i) each Trust Book Account shall be increased by the amount of any
Net Income allocated thereto pursuant to Section II.A hereof; (ii) each Trust
Book Account shall be decreased by the amount of any Net Loss allocated thereto
pursuant to Section II.A. hereof; and (iii) each Trust Book Account shall be
decreased by the sum of the amount of cash and the fair market value
(determined as of the date of distribution without regard to section 7701(g) of
the Tax Code) of any other property distributed by the Liquidating Trust to the
class of Certificateholders for which such account is maintained, net of any
liabilities assumed by the distributee in connection
Appendix A-5
<PAGE> 66
with the distribution or to which the cash or other distributed property is
subject.
II. Allocations of Liquidating Trust Income, Gain, Loss, Deduction and
Credit
A. Allocations of Net Income and Net Loss. For each taxable year
or part thereof, Net Income or Net Loss of the Liquidating Trust shall be
allocated among the Class A Certificateholders, as a group, the Class B
Certificateholders, as a group, and the Class C Certificateholders, as a group,
so as to eliminate the difference between the Partially Adjusted Trust Book
Account and Target Trust Book Account of each class of Certificateholders for
the period under consideration. If the Liquidating Trust has insufficient Net
Income or Net Loss for such period to satisfy the previous sentence with
respect to each class of Certificateholders, the available Net Income or Net
Loss shall be divided between each class of Certificateholders in proportion to
such difference. Net Income or Net Loss allocated to a class of
Certificateholders pursuant to this Section II.A. shall be allocated among the
members of such class in proportion to their respective interests. Thus, for
example, Net Income or Net Loss allocated to the Class B Certificateholders
shall be allocated to each Class B Certificateholder in proportion to his
percentage of the total Class B Interests.
B. Certain Book/Tax Differences. Taxable income, gain, loss,
deduction and depreciation (as determined for federal income tax purposes) with
respect to any Trust Asset which has a Book Basis different from its Adjusted
Tax Basis shall, solely for federal, state and local income tax purposes, be
allocated exclusively to the Class A Certificateholders (and among the Class A
Certificateholders in proportion to their respective ownership of Class A
Interests) so as to take into account any variation between the Adjusted Tax
Basis and the Book Basis of such Trust Asset, in accordance with the principles
of section 704(c) of the Tax Code and the Treasury Regulations issued
thereunder. Thus, for example, if a Trust Asset is disposed of for an amount
realized (as determined for federal income tax purposes) less than or equal to
its Book Basis, but in excess of its Adjusted Tax Basis, on the date of
disposition, then the taxable gain resulting from such disposition shall be
allocated entirely to the Class A Certificateholders.
C. Allocation of Credits. Any allowable credits against federal,
state or local income, excise or franchise
Appendix A-6
<PAGE> 67
taxes attributable to any Liquidating Trust expenditure, property, gross
receipt or income shall, unless otherwise required by law, be allocated among
the Beneficiaries in proportion to the manner in which such expenditure, gross
receipts or income (or any gains, losses or basis attributable to such
property) is allocated or required to be allocated among the Beneficiaries
pursuant to the preceding provisions of this Section II.
D. Allocation of Income and Loss in Respect of Transferred
Interests. If any beneficial interest in the Liquidating Trust is transferred
during any calendar year, the income or loss attributable to such interest in
the Liquidating Trust for such calendar year shall be divided and allocated
ratably between the Beneficiaries on a daily basis.
E. Federal, State and Local Tax Items. All federal, state and
local income and franchise tax returns and information returns of the
Liquidating Trust shall be prepared by the Investment Manager in a manner
consistent in all material respects with the allocations set forth in the
preceding provisions of this Section II. and in accordance with the provisions
of Section 7.3 of the Trust Agreement. Except as otherwise required by Section
II.B. hereof, each allocation of Net Income and Net Loss pursuant to the
preceding provisions of this Section II. shall be composed of a proportionate
share of the total amount of all federal, state and local income and franchise
tax items that make up the total amount of Net Income and Net Loss.
III. Construction. For purposes of this Appendix A, to the extent
necessary to prevent duplication, and only to such extent, the term "Trust
Asset" shall not include any interest of the Liquidating Trust in any
"Trust-Owned Affiliate."
Appendix A-7
<PAGE> 1
EXHIBIT 4.1
[FORM OF FACE OF CLASS B CERTIFICATE]
CLASS B BENEFICIAL INTEREST ("CLASS B INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS B INTERESTS
B-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class B Interest
This Certifies that __________ is the registered holder of
__________ Class B Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to the Joint Plan of
Reorganization by First City Bancorporation of Texas, Inc., Official Committee
of Equity Security Holders, and J-Hawk Corporation, with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of the United States
Bankruptcy Code, filed with the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, in Case No. 392-39474-HCA-11, as confirmed
by order of such Court entered on May 31, 1995 (as so confirmed, the "Plan").
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT AND THE PLAN, TO WHICH TRUST AGREEMENT AND
PLAN THE HOLDER OF THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS
AND BY WHICH SUCH HOLDER IS BOUND. All terms not specifically defined herein
shall have the meanings set forth in the Trust Agreement. Subject to the Trust
Agreement and the limitations set forth therein, including the payment of all
fees related to transfers, the transfer of Class B Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class B Interests will be issued to the designated transferee or transferees;
provided, however, that no
Exhibit B-1
<PAGE> 2
Certificates evidencing fractional Class B Interests shall be issued.
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
--------------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
Exhibit B-2
<PAGE> 3
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class B Beneficial Interest ("Class B Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class B Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on May 31, 1995.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class B Interest holders listed in
the Trust Register shall be established pursuant to the Trust Agreement.
At the office or agency of the Trustee maintained for such
purpose and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class B Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class B
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement. The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
Exhibit B-3
<PAGE> 4
The obligations and responsibilities of the Trustee with
respect to the Class B Interests under the Trust Agreement shall terminate upon
the payment to holders of Class B Interests of all amounts held in the Trust or
any Trust-Owned Affiliate and required to be paid to them pursuant to the Trust
Agreement and, in any event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
--------------------
THE CLASS B INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
Exhibit B-4
<PAGE> 1
EXHIBIT 4.2
[FORM OF FACE OF CLASS C CERTIFICATE]
CLASS C BENEFICIAL INTEREST ("CLASS C INTEREST")
IN THE FIRSTCITY LIQUIDATING TRUST ESTABLISHED UNDER
THE LIQUIDATING TRUST AGREEMENT
CERTIFICATE NO. NUMBER OF CLASS C INTERESTS
C-____ REPRESENTED BY THIS CERTIFICATE
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Class C Interest
This Certifies that __________ is the registered holder of
__________ Class C Interests in the Trust established under the Liquidating
Trust Agreement ("Trust Agreement"), as of the date listed below by and between
First City Bancorporation of Texas, Inc., Debtor, for the benefit of the
respective Beneficiaries entitled to the Trust Assets, and Shawmut Bank
Connecticut, National Association, as Trustee, pursuant to the Joint Plan of
Reorganization by First City Bancorporation of Texas, Inc., Official Committee
of Equity Security Holders, and J-Hawk Corporation, with the Participation of
Cargill Financial Services Corporation, Under Chapter 11 of the United States
Bankruptcy Code, filed with the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, in Case No. 392-39474-HCA-11, as confirmed
by order of such Court entered on May 31, 1995 (as so confirmed, the "Plan").
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT AND THE PLAN, TO WHICH TRUST AGREEMENT AND
PLAN THE HOLDER OF THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS
AND BY WHICH SUCH HOLDER IS BOUND. All terms not specifically defined herein
shall have the meanings set forth in the Trust Agreement. Subject to the Trust
Agreement and the limitations set forth therein, including the payment of all
fees related to transfers, the transfer of Class C Interests represented by
this Certificate is registrable in the Trust Register kept by the Registrar and
Transfer Agent upon surrender of this Certificate for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer satisfactory in
form to the Trustee and the Registrar and Transfer Agent duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates evidencing a like aggregate number of
Class C Interests will be issued to the designated transferee or transferees;
provided, however, that no
Exhibit C-1
<PAGE> 2
Certificates evidencing fractional Class C Interests shall be issued.
In Witness Whereof, this Certificate has been executed by the
Trustee hereunto duly authorized.
Dated:
-------------------------
[Name of Trustee]
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
Registrar and Transfer Agent
By:
Authorized Signature
Exhibit C-2
<PAGE> 3
[FORM OF REVERSE SIDE OF CERTIFICATE]
Class C Beneficial Interest ("Class C Interest")
in the FirstCity Liquidating Trust Established Under
the Liquidating Trust Agreement
The Class C Interests represented by this Certificate
represent beneficial interests in the Trust established under the Trust
Agreement and Plan as confirmed by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division, by Order entered on May 31, 1995.
The Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Plan. Such requests
should be made in writing to the Trustee at its principal office at:
[Office Address of Trustee]
The record date for determining entitlement to distributions
of Trust Assets, if any, from the Trust to Class C Interest holders listed in
the Trust Register shall be established pursuant to the Trust Agreement.
At the office or agency of the Trustee maintained for such
purpose and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate number of Class C Interests. Upon due presentation for
registration of transfer of this Certificate at the above-mentioned office or
agency and the payment of all fees provided in the Trust Agreement related to
such transfer, and subject to the limitations set forth in the Trust Agreement,
a new Certificate or Certificates evidencing a like aggregate number of Class C
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement. The Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with any exchange or
registration of transfer of this Certificate, in addition to the fees provided
in the Trust Agreement.
The Trustee or any agent of the Trustee may deem and treat the
Person in whose name this Certificate is registered upon the Trust Register as
the absolute owner hereof for all purposes, and neither the Trustee nor any
such agent shall be affected by any notice to the contrary until changed in the
Trust Register in accordance with the Trust Agreement.
Exhibit C-3
<PAGE> 4
The obligations and responsibilities of the Trustee with
respect to the Class C Interests under the Trust Agreement shall terminate upon
the payment to holders of Class C Interests of all amounts held in the Trust or
any Trust-Owned Affiliate and required to be paid to them pursuant to the Trust
Agreement and, in any event, upon termination of the Trust.
In the event of any omissions in the terms of this
Certificate, or in the event of any conflict between the terms of this
Certificate and the terms of the Trust Agreement, the terms of the Trust
Agreement shall control.
--------------------
THE HOLDER OF THIS CERTIFICATE, BY VIRTUE OF THE ACCEPTANCE HEREOF, WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY, AND THERE SHALL BE NO RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRUST AGREEMENT OR THE
PLAN OR THE TRANSACTIONS SPECIFIED THEREIN. THE BANKRUPTCY COURT SHALL RETAIN
JURISDICTION OVER ALL SUCH PROCEEDINGS.
--------------------
THE CLASS C INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES LAWS AND
HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION REQUIREMENTS
THEREOF AFFORDED BY 11 U.S.C. Section 1145. ACCORDINGLY, THIS CERTIFICATE CAN
ONLY BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED PURSUANT TO THE
PROVISIONS OF SUCH SECTION.
Exhibit C-1
<PAGE> 1
EXHIBIT 10.1
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") is made
and entered into as of the 3rd day of July, 1995, by and between FIRSTCITY
FINANCIAL CORPORATION, a Delaware corporation (the "Investment Manager"), THE
FIRSTCITY LIQUIDATING TRUST, a trust organized under the laws of Texas (the
"Trust"), and the Trust-Owned Affiliates signatory hereto.
W I T N E S S E T H:
WHEREAS, the Trust has acquired the Trust Assets from First
City Bancorporation of Texas, Inc., a Delaware corporation (the "Debtor"),
and/or the Interim Trust, pursuant to that certain Liquidating Trust Agreement
dated of even date herewith between the Debtor and Shawmut Bank Connecticut,
National Association, as Trustee (the "Liquidating Trust Agreement") under the
Joint Plan of Reorganization by First City Bancorporation of Texas, Inc.,
Official Committee of Equity Security Holders, and J-Hawk Corporation, with the
Participation of Cargill Financial Services Corporation, Under Chapter 11 of
the United States Bankruptcy Code dated December 23, 1994, as confirmed by
order of the Court entered on May 31, 1995 (as so confirmed, the "Plan"); and
WHEREAS, the parties agree that the Investment Manager shall
manage and service collection and liquidation of the Trust-Owned Affiliate
Assets pursuant to this Agreement for its services;
NOW THEREFORE, in consideration of the premises and agreements
herein contained, the Investment Manager, the Trust and each of the Trust-Owned
Affiliates signatory hereto hereby agree as follows:
DEFINITIONS.
Capitalized terms used in this Agreement and not otherwise
defined in this Agreement shall have the meaning
<PAGE> 2
set forth in the Plan and Exhibits thereto. As used herein, the following
terms shall have the following meanings:
"Agreement" shall have the meaning assigned to such term in
the first paragraph of this Agreement.
"Books and Records" shall have the meaning assigned to such
term in Section 1.4(d) hereof.
"Court" shall have the meaning assigned to such term in the
Liquidating Trust Agreement.
"Debtor" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Effective Date" shall have the meaning assigned to such term
in the Liquidating Trust Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Estimated Threshold Collection Amount" shall have the meaning
assigned to such term in Section 1.2 hereof.
"Event of Default" shall mean a material breach of any
representation or warranty of the Investment Manager in this Agreement or a
material breach of any obligations or duties of the Investment Manager under
this Agreement, in all cases continuing unremedied for more than ten days after
the receipt of written notice thereof by the Investment Manager from the Trust
or any Trust-Owned Affiliate.
"Event of Termination" shall have the meaning assigned to such
term in Section 1.12 hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FDIC Settlement Agreement" shall mean that certain Settlement
Agreement dated June 22, 1994 between the FDIC, in its corporate capacity (in
such capacity, "FDIC Corporate"), the FDIC-Receivers (as defined therein),
Debtor and the FCBOT Affiliated Entities (as defined therein), as amended by
that certain Amendment to Settlement Agreement dated January 28, 1995 between
FDIC Corporate, FDIC-Receivers (as defined therein), Debtor and the FCBOT
Affiliated Entities (as defined therein), as modified by the Court's deletion
of paragraph 21(v) of such Amendment, as finally approved by the Court in that
certain Order and Final Judgment Approving (a)
2
<PAGE> 3
Stipulation Resolving Objections To FDIC Settlement Agreement And Providing For
Approval And Closing Of FDIC Settlement Agreement, (b) Stipulation Resolving
Objections Of Official Committee Of Unsecured Creditors To Joint Plan Of
Reorganization By First City Bancorporation Of Texas, Inc., Official Committee
Of Equity Security Holders, And J-Hawk Corporation, With The Participation Of
Cargill Financial Services Corporation, Under Chapter 11 Of The United States
Bankruptcy Code, And (c) FDIC Settlement Agreement.
"Flat Sales Price" shall have the meaning assigned to such
term in Section 1.13.1 hereof.
"GPA Assets" shall mean, collectively, those loans under which
GPA Group PLC and/or its subsidiaries or affiliates are borrower(s), consisting
of loan account numbers 1306877 and 1262849 set forth on the Debtor's Asset
Repurchase List.
"Gross Income" shall mean all cash receipts generated by the
REO property in question of whatever kind, including all rents, reimbursements
from tenants for Operating Expenses and other revenues.
"Gross Sales Proceeds " shall mean, with respect to the sale
or conveyance of any Trust-Owned Affiliate Asset, the entire gross proceeds of
such sale or conveyance received by the Investment Manager on behalf of the
Trust or a Trust-Owned Affiliate in connection with such sale or conveyance,
without any deductions therefrom (including any deductions for commissions or
other closing costs or expenses paid by the Investment Manager in connection
therewith).
"Incentive Fee" shall have the meaning assigned to such term
in Section 1.2 hereof.
"Interim Trust" shall have the meaning assigned to such term
in the Interim Trust Agreement.
"Interim Trust Agreement" shall mean the interim liquidating
trust agreement dated June 21, 1995 between the Debtor and C. Ivan Wilson, as
Interim Trustee.
"Interim Trust Assets" shall have the meaning assigned to such
term in the Interim Trust Agreement.
"Interim Trust-Owned Affiliate Assets" shall have the meaning
assigned to such term in the Interim Trust Agreement.
3
<PAGE> 4
"Investment Manager" shall have the meaning assigned to such
term in the first paragraph of this Agreement.
"Investment Manager Advances" shall have the meaning assigned
to such term in Section 1.7 hereof.
"Liquidating Trust Agreement" shall have the meaning assigned
to such term in the recitals to this Agreement.
"Lock-Box Account" shall have the meaning assigned to such
term in the Lock-Box Agreement.
"Lock-Box Agent" shall have the meaning assigned to such term
in the Lock-Box Agreement.
"Lock-Box Agreement" shall mean the Lock-Box Agreement dated
July 3, 1995 by and among the Investment Manager, NationsBank of Texas, N.A., a
national banking association organized under the laws of the United States,
acting in its capacity as Lock-Box Agent, the Trust, FCLT Loans, L.P., a Texas
limited partnership, and the other Trust-Owned Affiliates signatory thereto,
or, if such Lock-Box Agreement has been replaced by a Lock-Box Agreement by and
among the Investment Manager, a lock-box agent, the Trust, the Trust-Owned
Affiliates signatory hereto and a lender or lenders (or agent thereof) to the
Trust or any Trust-Owned Affiliate, such replacement Lock-Box Agreement .
"Net Cash Proceeds" shall have the meaning assigned to such
term in Section 1.2 hereof.
"Net Operating Income" shall mean, with respect to any REO
Property, for any period, such property's Gross Income for such period, minus
all Operating Expenses paid during such period.
"Net Present Value" shall mean, with respect to any Non-cash
Trust-Owned Affiliate Asset, the net present value assigned to such Non-cash
Trust-Owned Affiliate Asset from time to time as specified in Sections 1.13.1
and 1.13.2 hereof.
"Net Sales Proceeds" shall mean, with respect to the sale or
conveyance of any Trust-Owned Affiliate Asset, the Gross Sales Proceeds less
reasonable and customary commissions and other closing costs and expenses of
the sale
4
<PAGE> 5
actually paid by the Investment Manager to any unrelated third parties.
"Non-cash Trust-Owned Affiliate Assets" shall have the meaning
assigned to such term in the Liquidating Trust Agreement.
"Operating Expenses" for any period shall mean all reasonable
and customary expenses actually paid during such period which, in accordance
with GAAP, would be classified as operating expenses for a similar type of
property, including utilities, taxes, insurance, repairs and maintenance,
janitorial and reasonable property management fees actually paid by Investment
Manager to any unrelated third parties.
"Permitted Lease-Up Expenses" shall mean, as to any REO
Property, (i) all reasonable and customary leasing commissions, (ii) all
reasonable tenant improvement costs actually paid by the Investment Manager or
a Trust-Owned Affiliate with respect to the leasing of space in such REO
Property pursuant to a written lease and (iii) all capital expenditures
actually paid by the Investment Manager or a Trust-Owned Affiliate with respect
to other improvements to such REO Property, provided that such leasing
commissions, tenant improvement costs and capital expenditures are expended in
accordance with a budget for such REO Property which has been approved in
writing by the Portfolio Committee; all as evidenced by invoices and such other
back-up information as the Portfolio Committee may reasonably require.
"Person" shall have the meaning assigned to such term in the
Liquidating Trust Agreement.
"Plan" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Portfolio Committee" shall have the meaning assigned to such
term in the Liquidating Trust Agreement.
"Property Manager" shall mean an independent management firm
which has been retained by the Investment Manager or by a Trust-Owned Affiliate
to manage an REO Property.
"REO Property" shall mean any real property, or any interest
therein, now or hereafter legally or beneficially owned by the Trust or any
Trust-Owned Affiliate including, without limitation, any real property which
has been
5
<PAGE> 6
foreclosed upon by the Trust or its predecessors in interest or a Trust-Owned
Affiliate or which was conveyed to the Trust or its predecessors in interest or
a Trust-Owned Affiliate by a deed in lieu of foreclosure.
"Resurgence Asset" shall mean that loan under which Resurgence
Properties, Inc. is a borrower, consisting of loan account number 1722479 set
forth on the Debtor's Asset Repurchase List.
"Required Insurance" shall have the meaning assigned to such
term in Section 3.15 hereof.
"RIVA" shall have the meaning assigned to such term in Section
1.1 hereof.
"Servicing Expenses" shall have the meaning assigned to such
term in Section 1.6 hereof.
"Supplemental Agreements" shall have the meaning assigned to
such term in Section 1.6 hereof.
"Trust" shall have the meaning assigned to such term in the
first paragraph of this Agreement.
"Trustee" shall have the meaning assigned to such term in the
Liquidating Trust Agreement.
"Trust Assets" shall have the meaning assigned to such term in
the Liquidating Trust Agreement.
"Trust-Owned Affiliate" shall have the meaning assigned to
such term in the Liquidating Trust Agreement.
"Trust-Owned Affiliate Assets" shall have the meaning assigned
to such term in the Liquidating Trust Agreement.
SECTION 1. LOAN SERVICING AND ASSET MANAGEMENT.
1.1 The Investment Manager. The Investment Manager shall perform
the services described in this Agreement relating to the Trust-Owned Affiliate
Assets in accordance with the terms and conditions set forth herein. The
Investment Manager may subcontract at its own expense its servicing obligations
hereunder to RIVA FINANCIAL SERVICES, INC., a Texas corporation ("RIVA"), so
long as RIVA is wholly owned by and under the control of the Investment
Manager; provided, however, that the Investment Manager and RIVA shall
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remain jointly and severally liable for the timely and full performance of all
obligations of Investment Manager hereunder; and further provided, that any
subservicing agreement entered into between RIVA and the Investment Manager
shall be subject to the prior written consent of the Trustee (as directed by
the Portfolio Committee) and shall expressly bind RIVA to all terms and
conditions of this Agreement.
1.2 Incentive Fee. The Investment Manager shall be paid a fee
("Incentive Fee") equal to (i) three percent (3%) of all cash proceeds derived
from the Trust-Owned Affiliate Assets (exclusive of tax and insurance escrow
amounts) ("Net Cash Proceeds") plus (ii) five percent (5%) of the Net Cash
Proceeds (excluding net proceeds realized from Contingent Asset Claims)
realized above $248,600,000 (the "Estimated Threshold Collection Amount") up to
an amount equal to $25 million in excess of the Estimated Threshold Collection
Amount; ten percent (10%) of the Net Cash Proceeds (excluding net proceeds
realized from Contingent Asset Claims) realized above $25 million in excess of
the Estimated Threshold Collection Amount up to an amount equal to $50 million
in excess of the Estimated Threshold Collection Amount; and fifteen percent
(15%) of the Net Cash Proceeds (excluding net proceeds realized from Contingent
Asset Claims) realized above $50 million in excess of the Estimated Threshold
Collection Amount actually collected during the term of this Agreement and
deposited in the Lock-Box Accounts. Notwithstanding the immediately preceding
sentence, that amount of the Incentive Fee payable as a result of aggregate
cash distributions to the Trust or any Trust-Owned Affiliate from the FDIC in
excess of $40 million shall not be payable to the Investment Manager to the
extent of an amount equal to the Incentive Fee, if any, actually paid the
Investment Manager on Net Cash Proceeds realized on the GPA Assets and the
Resurgence Asset. Net Cash Proceeds shall include without limitation any and
all amounts so received in respect of (i) principal and interest (excluding any
escrow payments or amounts received by, but not for the account of, the
Investment Manager or the Trust or any Trust-Owned Affiliate); (ii) all Net
Operating Income of REO Properties; (iii) all Net Sales Proceeds from the sales
of REO Properties and Trust-Owned Affiliate Assets; (iv) all insurance and
condemnation proceeds paid to the Investment Manager with respect to the
Trust-Owned Affiliate Assets; (v) settlements, compromises, liquidations or
dispositions (excluding any third party disposition costs); (vi) other cash
receipts; and (vii) all net cash proceeds realized from Contingent Asset
Claims. The Incentive Fee shall be payable solely from the
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Net Cash Proceeds. All cash proceeds derived from the Interim Trust-Owned
Affiliate Assets (exclusive of tax and insurance escrow amounts) shall
constitute Net Cash Proceeds for purposes of determining the Incentive Fee;
provided that any portion of any Incentive Fee paid under the Interim Trust
Agreement shall be credited against the payment of the Incentive Fee owed under
this Agreement. The Estimated Threshold Collection Amount of $248,600,000
assumes consummation of the purchase of $200,600,000 in Loss Sharing Assets.
If the final amount of the Loss Sharing Assets is less than or greater than
$200,600,000, the Estimated Threshold Collection Amount will be adjusted
accordingly by agreement of the Portfolio Committee and the Investment Manager.
If the Loss Sharing Assets are not acquired by the Trust-Owned Affiliates, then
the Estimated Threshold Collection Amount shall be revised to include only (1)
the collections included in the Estimated Threshold Collection Amount
attributable to (a) the FDIC GCR Assets and (b) the Trust-Owned Affiliate
Assets, plus (2) the currently estimated future distributions from the FDIC
receiverships as agreed to by the Investment Manager and the Portfolio
Committee, excluding estimated future FDIC receivership distributions
attributable to litigation reserves, such estimates to be agreed to by the
Investment Manager and the Portfolio Committee. In addition, the Estimated
Threshold Collection Amount may be adjusted by an amount equal to (i) the
difference in values of the 42 "Tier 2 Assets" (as defined in the loan
agreement contemplated to be entered into by one of the Trust-Owned Affiliates
and Fleet National Bank and/or NationsBank) from the value previously
extrapolated by the Investment Manager for purposes of inclusion thereof in the
Estimated Threshold Collection Amount and (ii) any difference in value from the
value attributed to 1001 Fannin, Houston, Texas for purposes of inclusion
thereof in the Estimated Threshold Collection Amount, as such difference in
value with respect to (i) or (ii) above shall be agreed upon by the Portfolio
Committee and Investment Manager (provided, if the Portfolio Committee and the
Investment Manager are unable to reach such agreement, no such adjustment in
the estimated Threshold Collection Amount shall be made).
1.3 Replacement of Investment Manager. If the Trust and the
Trust-Owned Affiliates shall exercise any right of termination of the
Investment Manager pursuant to the terms and conditions set forth herein, the
Trust and such Trust-Owned Affiliates may enter into a new loan servicing and
liquidation contract with a replacement investment manager, at such servicing
fee and on such other terms and conditions as are set forth in the Liquidating
Trust Agreement.
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1.4 Duties of the Investment Manager. Subject to and in
accordance with the Liquidating Trust Agreement, the Investment Manager agrees
to service the Trust-Owned Affiliate Assets and to liquidate the Non-cash
Trust-Owned Affiliate Assets by performing the following services:
(a) Provide customary asset management and loan servicing
and disposition services for the Trust-Owned Affiliate Assets, and manage,
dispose and collect such Trust-Owned Affiliate Assets in accordance with the
provisions of this Agreement and the Liquidating Trust Agreement. The
Investment Manager shall seek to achieve the expeditious liquidation of the
Non-Cash Trust-Owned Affiliate Assets in a manner which maximizes the value of
the Trust-Owned Affiliate Assets, taken as a whole, while minimizing the risks
associated therewith, in all cases pursuant to and in accordance with the terms
of this Agreement and the Liquidating Trust Agreement. In accordance with the
last paragraph of this Section 1.4, the Investment Manager shall at all times
act in good faith and in the best interests of the Trust and the Trust-Owned
Affiliates with respect to the Trust-Owned Affiliate Assets, and shall use its
best efforts to carry out its obligations hereunder in accordance with prudent
and normal standards and practices of the distressed asset management and
disposition industry and in accordance with applicable laws and regulations and
with such workout/settlement policies that may be prescribed from time to time
by the Portfolio Committee, the Trust and the Trust-Owned Affiliates.
(b) Coordinate the timely delivery of the quarterly
lock-box report prepared by the Lock-Box Agent;
(c) Furnish to the Trust and the Trust-Owned Affiliates
on a quarterly basis, or more frequently as may be required by the Trust and
the Trust-Owned Affiliates, a report in reasonable detail summarizing the
status of collection efforts for the Non-cash Trust-Owned Affiliate Assets,
containing a forecast of projected collections with respect to such Non-cash
Trust-Owned Affiliate Assets;
(d) Maintain files as property of the Trust and the
Trust-owned Affiliates, containing complete notes, correspondence and
documentation of all servicing and liquidation efforts and activities ("Books
and Records");
(e) Provide to the Trust and the Trust-Owned Affiliates,
on a quarterly basis and in such form and detail as the Trust and the
Trust-Owned Affiliates may reasonably
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request, lists of all Trust-Owned Affiliate Assets and any REO Properties,
specifying the location of such assets and the records pertaining thereto;
(f) prepare monthly financial statements of the Trust for
the Portfolio Committee and the Trustee; and
(g) Perform fully and in a timely manner its obligations
under the Plan Documents to which it is a party.
The Trust, the Trustee, the Investment Manager and each Trust-Owned Affiliate
hereby acknowledge that the Investment Manager's performance of the
aforementioned duties shall be overseen and directed by the Portfolio Committee
under the terms set forth in this Agreement and in the Liquidating Trust
Agreement. The Investment Manager shall prepare a budget for each Trust-Owned
Affiliate Asset reflecting projected net collections for such asset. The
Trust, the Trustee, the Investment Manager and each Trust-Owned Affiliate
hereby acknowledge that the budgets prepared by the Investment Manager will be
reviewed by the Portfolio Committee. Upon approval of the budgets by the
Portfolio Committee, the Investment Manager shall have full authority to
service the Trust-Owned Affiliate Assets in accordance with this Section 1.4,
including, without limitation, the authority to make sales, dispositions,
compromise or settlements of any of the Trust-Owned Affiliate Assets except as
otherwise provided in Section 1.13.
1.5 Servicing of REO Properties. The Investment Manager, on
behalf of the Trust and the Trust-Owned Affiliates, shall have full power and
authority, subject only to the terms of this Agreement and the Liquidating
Trust Agreement, to do any and all things in connection with any REO Property
as are consistent with the servicing and liquidation standards set forth
herein. The Investment Manager, on behalf of the Trust and the Trust-Owned
Affiliates, may employ Property Managers to manage any REO Property, the
reasonable fees to be paid to such Property Managers to be an Operating Expense
payable out of the Gross Income of the REO Property. Each agreement with a
Property Manager shall contain reasonable and customary terms, conditions and
provisions consistent with the budget. A Property Manager may establish and
maintain with respect to the REO Properties a property account or property
accounts and will account separately for funds received or expended with
respect to each REO Property. The Investment Manager, in its quarterly report,
or upon reasonable request, shall notify the Trust and the Trust-Owned
Affiliates in writing of
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the location and account number of each property account. In connection
therewith, the Investment Manager shall cause the Property Manager to deposit
on a daily basis in the property account, all revenues received by it with
respect to any REO Property and the Property Manager shall be permitted to
withdraw therefrom funds necessary for the proper operation, management and
maintenance of any REO Property, including all Operating Expenses and Permitted
Lease-Up Expenses. No later than fifteen (15) days after the end of each
month, the Investment Manager shall require the Property Manager to withdraw
from the property account and deposit into the Lock-Box Account the Net
Operating Income received or collected during the previous calendar month with
respect to such REO Property.
1.6 Expenses of Investment Manager. The Trust shall be
responsible for, and shall reimburse the Investment Manager for, all
out-of-pocket costs and expenses incurred by the Investment Manager in
performing services under this Agreement, including without limitation, such
costs and expenses incurred under Section 1.12. The Investment Manager, in
accordance with the budget described below in this Section 1.6, shall have the
authority to engage the services of third parties as are ordinarily and
customarily engaged by third party asset managers in accordance with prudent
and normal standards and practices of the distressed asset management and
disposition industry, including, without limitation, the engagement of
appraisers, environmental consultants, engineers, tax services, property
managers, legal counsel and accountants. The costs and expenses of all such
third parties will be reimbursed to Investment Manager by the Trust and may be
repaid out of Net Cash Proceeds. To the extent the Investment Manager
contracts for services of third parties as permitted by this Agreement, it may
do so in its own name. The Trust shall reimburse the Investment Manager for
all costs and expenses incurred by the Investment Manager in accordance with
the budget approved by the Portfolio Committee for property improvement
expenses, property protection expenses, insurance (including as required under
Section 3.15), other third party expenses, direct servicing expenses incurred
by the Investment Manager in providing the services contemplated by this
Agreement and other direct third party expenses or costs attributable to the
Debtor for actions or liabilities incurred prior to the Effective Date or
estimated in the determination of the Determination Value (collectively
"Servicing Expenses").
Payments and reimbursements of such costs and expenses under this
priority of distribution will be made to the
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Investment Manager or to a reserve account, as appropriate, established
pursuant to this Agreement or the Liquidating Trust Agreement which will be
maintained in an amount sufficient to cover anticipated Servicing Expenses for
each succeeding quarterly period with such payment to be considered a
reimbursement of the reserve account to levels considered appropriate for the
anticipated level of expenditures to be incurred in the next succeeding quarter
or to reimburse the Investment Manager for Investment Manager Advances, if any,
made during the preceding quarter to cover such expenses not provided for in
the establishment of the reserve at the beginning of the preceding quarter.
The Investment Manager and the Trust intend to enter into separate
supplemental agreements (the "Supplemental Agreements") to this Agreement to
provide for the services to be provided by the Investment Manager to the Trust
and the compensation to be paid to the Investment Manager for the specific
purpose of developing a servicing plan for the disposition of certain charged
off loans conveyed to the Trust-Owned Affiliates under the FDIC Settlement
Agreement. It is contemplated by the Trust and the Investment Manager that
such Supplemental Agreements will be executed pursuant to proposals developed
by the Investment Manager and approved by the Portfolio Committee on behalf of
the Trust. Until the Supplemental Agreements are entered into, the Investment
Manager shall have no responsibility to provide the services contemplated in
this paragraph.
1.7 Investment Manager Advances. The Investment Manager shall be
reimbursed by the Trust for any payments (including, without limitation,
reimbursing the Investment Manager for any and all interest costs incurred in
connection with borrowings made by the Investment Manager to make such
advances) made for any advance consistent with the budget or otherwise approved
or ratified by the Portfolio Committee which is made for the purpose of
preserving the value of any Trust-Owned Affiliate Asset or collateral or
security therefor, e.g., payments for taxes due but not paid, to purchase
interests senior to the Trust-Owned Affiliate's interest in collateral being
sold in any foreclosure proceeding, to purchase superior participation
interests in a Trust-Owned Affiliate Asset, or to pay legal expenses, if such
actions and/or payments will enhance or preserve the value of the Investment
Manager's interest in the Trust-Owned Affiliate Assets (collectively
"Investment Manager Advances").
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1.8 Lock-Box Account. The Investment Manager shall deposit or
cause to be deposited in the Lock-Box Account to be established pursuant to the
Lock-Box Agreement all Net Cash Proceeds as and when received and otherwise
shall comply with the requirements with respect to such deposits and the
Lock-Box Account as set forth in the Lock-Box Agreement annexed hereto as Annex
A.
1.9 Legal Compliance. The Investment Manager shall perform its
obligations hereunder in full compliance with all applicable laws and
regulations, including but not limited to laws, rules and regulations governing
debt collection. The Investment Manager warrants and represents to the Trust
and each Trust-Owned Affiliate that it is knowledgeable about and experienced
in complying with all applicable legal requirements with respect to such laws
and regulations.
1.10 Cash Flow Distributions. The Investment Manager shall
instruct the Lock-Box Agent to distribute the Net Cash Proceeds as required
pursuant to this Agreement, the Trust Agreement and the Lock-Box Agreement.
Prior to the termination of the Trust, the Investment Manager shall, if so
directed by the Portfolio Committee, provide for a sealed bid sale of the
remaining Non-cash Trust-Owned Affiliate Assets, subject to and as contemplated
by Section 7.2(2) of the Trust Agreement.
1.11 Liability and Indemnity.
(a) Neither the Investment Manager nor any of the
directors, officers, employees or agents of the Investment Manager shall be
under any liability to the Trust, any Trust-Owned Affiliate, or any third party
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Investment Manager against any breach
of warranties or representations made by the Investment Manager herein, or
against any liability which would otherwise be imposed on the Investment
Manager by reason of willful misconduct, bad faith or gross negligence in the
performance of its duties hereunder or by reason of a material breach of its
obligations or duties hereunder. The Trust and each Trust-Owned Affiliate
acknowledges that the Investment Manager has not made any warranties or
representations related to collectibility of the Trust Assets or the
Trust-Owned Affiliate Assets and it does not guarantee results of collections
related to the Trust Assets or the Trust-Owned Affiliate Assets. In the
absence of bad faith on its part,
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the Investment Manager and any director, officer, employee or agent of the
Investment Manager may rely on any document of any kind which, prima facie, is
properly executed and submitted by any appropriate Person respecting any
matters arising hereunder. The Investment Manager and any director, officer,
employee or agent of the Investment Manager shall be jointly and severally
indemnified and held harmless by the Trust and each Trust-Owned Affiliate
against any loss, liability or expense (including reasonable attorneys' fees)
incurred in connection with any legal action relating to this Agreement, other
than any loss, liability or expense incurred by the Investment Manager by
reason of any breach of warranties or representations made by the Investment
Manager herein or by reason of its willful misconduct, bad faith or gross
negligence in the performance of its duties hereunder or by reason of a
material breach of its obligations or duties hereunder. The Investment Manager
shall not be under any obligation to appear in, prosecute or defend any legal
action unless such action is related to its duties under this Agreement and in
its reasonable opinion does not expose it to any material expense or liability.
In such event, the legal expenses and costs of such action and any liability
resulting therefrom shall be Investment Manager Advances; provided, however,
that no such expenses, costs or liability shall be an Investment Manager
Advance to the extent the Investment Manager's breach of its warranties or
representations or the Investment Manager's own willful misconduct, bad faith,
gross negligence or a material breach of its obligations and duties hereunder
contributes to such expenses, costs or liabilities.
(b) Notwithstanding any other provision of this
Agreement, the Investment Manager shall not be liable for any acts or omissions
of the Investment Manager taken at the direction of the Portfolio Committee.
(c) The Investment Manager agrees to indemnify the Trust
from, and hold it harmless against, any and all losses, liabilities, damages,
claims or expenses (including reasonable attorneys' fees) resulting from any
breach of warranties or representations made by the Investment Manager herein
or by reason of the Investment Manager's willful misconduct, bad faith or gross
negligence in the performance of its duties hereunder or by reason of a
material breach of its obligations or duties hereunder, except to the extent
that the Trust's or the Portfolio Committee's, as the case may be, own bad
faith, willful misconduct or gross negligence contributes to the loss,
liability, damage, claim or expense or as expressly provided in Section 1.11.
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(d) The Trust and each Trust-Owned Affiliate agrees that
the sole cause of action against the Investment Manager for any damages arising
under or relating to this Agreement shall be limited to breach of contract and
recovery shall be limited to out-of-pocket damages actually incurred, including
any costs of collection and attorneys' fees incurred by the prevailing party.
As such, the Trust and each Trust-Owned Affiliate expressly waives any and all
rights to recovery from the Investment Manager of any consequential,
incidental, punitive, and other damages. The Trust and each Trust-Owned
Affiliate expressly waives any claims and causes of action against the
Investment Manager based on any fiduciary duties, except with respect to the
Investment Manager's willful misconduct, bad faith or gross negligence in the
performance of its duties hereunder.
1.12 Termination of the Investment Manager. This Agreement shall
terminate upon the occurrence of any of the following events (each an "Event of
Termination"):
(a) Termination of the Trust pursuant to the Liquidating
Trust Agreement, or full discharge and performance of all of Investment
Manager's obligations hereunder, or earlier upon the written agreement of the
parties hereto; or
(b) If the Investment Manager is removed (the Investment
Manager may be removed if, upon petition to the Court by the Portfolio
Committee, and after notice and a hearing, the Court determines that the
Investment Manager has acted, or failed to act, in a manner constituting gross
negligence or a willful breach of its fiduciary duty or a material breach of
its obligations hereunder); or
(c) At the option of the Trust and the Trust-Owned
Affiliates, upon the occurrence of any petition, application or order for
relief by or with respect to the Investment Manager as a debtor under the
United States Bankruptcy Code, any assignment for the benefit of the Investment
Manager's creditors made by the Investment Manager or the appointment of a
receiver for all or substantially all of the assets or business of the
Investment Manager, the attachment of all or execution on any material part of
the assets of the Investment Manager which shall not have been dismissed,
released or bonded to the reasonable satisfaction of the Trust and the
Trust-Owned Affiliates within thirty (30) days.
Upon notice from the Trust and the Trust-Owned Affiliates of
an Event of Termination, the Investment Manager
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shall (a) immediately deliver to the party exercising the right of termination,
or such other Person as such exercising party may designate, all of the
documents relating to the Trust-Owned Affiliate Assets in its possession, Books
and Records and all of the Investment Manager's files and records pertaining to
the Trust-Owned Affiliate Assets, including all data tapes or disks containing
information on the Trust-Owned Affiliate Assets (together with such conversions
and other information as is necessary to make beneficial use of same), (b)
provide full assistance and cooperation to such exercising party in the
transfer of the servicing of the remaining Trust-Owned Affiliate Assets and as
is necessary for such party to obtain useful possession of the foregoing, (c)
provide full assistance and cooperation in pursuing the prosecution of actions
and defense of claims which arose during the term of this Agreement, including
providing employees, agents and representatives of the Investment Manager at
depositions, trials and litigation strategy meetings relating to the
Trust-Owned Affiliate Assets they previously managed. Except as to those
obligations and duties of the Investment Manager which shall survive
termination of this Agreement and such liabilities of the Investment Manager
accruing prior to or as a result of such termination, all of the Investment
Manager's rights and obligations under this Agreement shall terminate upon
performance of the foregoing obligations.
1.13 Liquidation of Non-cash Trust-Owned Affiliate Assets.
1.13.1 Schedule of Non-cash Trust-Owned Affiliate Assets,
Initial Net Present Values and Flat Sales Price. A list of each of the
Non-cash Trust-Owned Affiliate Assets and the Net Present Value or Flat Sales
Price ("Flat Sales Price") assigned to each such Non-cash Trust-Owned Affiliate
Asset as of the date hereof has been prepared and delivered to the Investment
Manager and the members of the Portfolio Committee. Such Net Present Value has
been assigned either (1) by agreement between the Portfolio Committee and the
Investment Manager as indicated by the symbol "PC/J-H" following such assigned
initial Net Present Value, or (2) solely by the Portfolio Committee, as
indicated by the symbol "PC" following such assigned initial Net Present Value.
Such Flat Sales Price has been assigned by agreement between the Portfolio
Committee and the Investment Manager.
1.13.2 Adjustment of Net Present Values. From and after the
Effective Date, prior to the beginning of each fiscal quarter, the Portfolio
Committee and the Investment
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Manager shall review the Net Present Value and Flat Sales Price theretofore
assigned to each Non-cash Trust-Owned Affiliate Asset which has not been
liquidated, and shall prepare, for use by the Portfolio Committee and the
Investment Manager, a revised schedule of the Net Present Values of such assets
as of the first day of such fiscal quarter (such revision may include, by
mutual agreement of the Investment Manager and the Portfolio Committee, the
assignment of a Net Present Value to a Non-cash Trust-Owned Affiliate Asset to
which a Flat Sales Price was previously assigned). In the event (i) the
Portfolio Committee and the Investment Manager agree that any of the Net
Present Values of such assets should be adjusted (either up or down) or (ii)
the Portfolio Committee determines that any of such Net Present Values should
be so adjusted (and any Lender (as defined in the Lock-Box Agreement) which has
a security interest in such asset approves such proposed adjustment), the
Portfolio Committee shall instruct the Investment Manager to revise such
schedule to reflect such determinations, with the appropriate symbol "PC/J-H"
or "PC" following such assigned Net Present Value on each such revised
schedule. In addition, the Net Present Value of any asset may be adjusted at
any time by mutual agreement of the Investment Manager and the Portfolio
Committee (and shall be designated "PC/J-H").
1.13.3 Liquidation of Non-cash Trust-Owned Affiliate Assets.
From and after the Effective Date, the Investment Manager shall, consistent
with the servicing and liquidation standards set forth herein, comply with the
following rules in connection with the liquidation of the Non-cash Trust-Owned
Affiliate Assets:
(1) if at the time of the liquidation of a
Non-cash Trust-Owned Affiliate Asset, the Net Present Value at such date of
such Non-cash Trust-Owned Affiliate Asset is less than or equal to $200,000,
such Non-cash Trust-Owned Affiliate Asset may be liquidated at any price;
(2) if at the time of the liquidation of a
Non-cash Trust-Owned Affiliate Asset, the Net Present Value at such date of
such Non-cash Trust-Owned Affiliate Asset is greater than $200,000, then
(a) If the Gross Sales Proceeds to be
received from the liquidation of such Non-cash Trust-Owned Affiliate Asset
will be equal to or greater than the product of (i) the Net Present Value at
such date of such Non-cash Trust-Owned Affiliate Asset multiplied by (ii) 90%,
such Non-cash Trust-Owned Affiliate Asset may be liquidated without
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any further authorization by the Portfolio Committee or any other Person; and
(b) If the Gross Sales Proceeds to be
received from the liquidation of such Non-cash Trust-Owned Affiliate Asset
will be less than the product of (i) the Net Present Value at such date of such
Non-cash Trust-Owned Affiliate Asset multiplied by (ii) 90%, such Non-cash
Trust-Owned Affiliate Asset may be liquidated only with the prior written
authorization of the Portfolio Committee, such authorization to be evidenced by
a Liquidation Authorization in the form attached as Exhibit A hereto; and
(3) if the Gross Sales Proceeds to be received
from the liquidation of such Non-cash Trust-Owned Affiliate Asset will be equal
to or greater than the Flat Sales Price assigned to such Non-cash Trust-Owned
Affiliate Asset, such Non-cash Trust-Owned Affiliate Asset may be liquidated
without any further authorization by the Portfolio Committee or any other
Person.
SECTION 2. COVENANTS OF THE INVESTMENT MANAGER.
The Investment Manager hereby covenants and agrees that from
the date hereof and until termination of this Agreement, unless the Trust and
each of the Trust-Owned Affiliates signatory hereto shall otherwise consent in
writing, the Investment Manager will:
2.1 Business and Existence. Perform all things necessary to
preserve and keep in full force and effect its existence and use its best
efforts to comply with all laws applicable to it.
2.2 Records. Allow the Trust (acting through the Portfolio
Committee) and the Trust-Owned Affiliates to review the Books and Records
maintained by the Investment Manager with respect to the Trust-Owned Affiliate
Assets and the collections thereof.
2.3 Right of Inspection. Permit any person designated by the
Portfolio Committee, at the Trust's expense, and any person designated by any
Trust-Owned Affiliate, to visit, inspect and review all records relating to the
Trust-Owned Affiliate Assets or any REO Property and any of the properties,
books and financial reports of the Investment Manager pertaining to the
Trust-Owned Affiliate Assets or any REO Property and to discuss its affairs,
finances and accounts all at such reasonable times and as often as the
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Portfolio Committee may reasonably request for the purpose of determining
compliance with this Agreement.
2.4 Notification of Attachment. Promptly notify the Trustee, the
Portfolio Committee and the Trust-Owned Affiliates of any attachment or other
legal process levied against any of the Trust-Owned Affiliate Assets or
collateral therefore, or any REO Property, and any information received by the
Investment Manager relative to the Trust-Owned Affiliate Assets or collateral
therefore or any REO Property, which may materially or adversely affect the
value thereof or the rights and remedies of the Trust or any Trust-Owned
Affiliate with respect thereto.
2.5 Personnel of the Investment Manager. The Investment Manager
agrees to give due priority to the performance of its obligations under this
Agreement and to assign sufficient personnel to service the Trust-Owned
Affiliate Assets and REO Properties in accordance with its obligations under
this Agreement. The Investment Manager agrees that persons of requisite skill
and experience will devote such portions of their time to the performance of
the services described in this Agreement as are necessary and appropriate to
fulfill the obligations of the Investment Manager hereunder. The Investment
Manager will have a knowledgeable contact person available daily to respond to
inquiries from the Trust and the Trust-Owned Affiliates signatory hereto.
2.6 Complete Information. Ensure that all information provided by
the Investment Manager hereunder shall, to the best of the Investment Manager's
knowledge, be true and correct and complete so as not to be misleading to the
recipient thereof.
2.7 Notices. Furnish to Trust, the Portfolio Committee and each
Trust-Owned Affiliate:
(a) Promptly after the commencement thereof, notice of
all actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Investment Manager which, if determined adversely to the
Investment Manager, could have a material adverse affect on the financial
condition, properties or operations of the Investment Manager;
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(b) Promptly after the filing or receiving thereof,
copies of all reports and notices which pertain to a reportable event under
Section 4030(b) of ERISA;
(c) As soon as possible and in any event within five (5)
Business Days after the occurrence of each breach under this Agreement, a
written notice setting forth the details of such breach and the action which is
proposed to be taken by the Investment Manager with respect thereto;
(d) Within thirty (30) Business Days after the filing
thereof, copies of all federal and state tax returns, together with all
schedules thereto, filed by or on behalf of the Investment Manager; and
(e) Promptly upon request by the Trust or the Portfolio
Committee or any Trust-Owned Affiliate, such other information respecting the
condition or operations, financial or otherwise, of the Investment Manager as
the Trust or the Portfolio Committee or any Trust-Owned Affiliate may
reasonably from time to time request.
2.8 Legal Action. Notwithstanding any other provision of this
Agreement, the Investment Manager shall have no authority to retain attorneys
or other professionals (including accountants) on behalf of the Trust or any
Trust-Owned Affiliate; provided, however, the foregoing limitation shall not
limit in any way the right of the Investment Manager under Section 1.4 and 1.6
of this Agreement to retain attorneys or other professionals (including
accountants) necessary or advisable to service and liquidate Non-cash
Trust-Owned Affiliate Assets having a Net Present Value equal to or less than
$200,000.
SECTION 3. MISCELLANEOUS.
3.1 Effective Date and Termination. This Agreement shall be
effective as of the date hereof and shall continue in full force and effect
until terminated pursuant to Section 1.12.
3.2 Amendments. The provisions of this Agreement may from time to
time be amended, modified or waived only with the consent of the Investment
Manager, the Trust, the Portfolio Committee and the Trust-Owned Affiliates
signatory hereto if such amendment or modification is in writing and signed by
the Investment Manager and an authorized representative of the Trust and the
Trust-Owned Affiliates, except that the consent and signature of the Investment
20
<PAGE> 21
Manager shall not be required from and after the occurrence and during the
continuation of an Event of Default.
3.3 Transferability of Agreement. This Agreement shall be binding
upon the Investment Manager, the Trust and the Trust-Owned Affiliates signatory
hereto, and their respective successors and permitted assigns, except that the
Investment Manager may not transfer, assign or delegate any or all of its
rights or obligations hereunder without the prior written consent of the Trust
and the Trust-Owned Affiliates signatory hereto, except as otherwise
specifically permitted under Section 1.1 hereof. In connection with any such
transfer or assignment the Trust (under the direction of the Portfolio
Committee) and the Trust-Owned Affiliates may furnish any information
concerning this Agreement as is in the possession of the Investment Manager or
the Trust or the Trust-Owned Affiliates from time to time to such actual or
potential assignees or transferees provided that the actual or potential
assignee or transferee agrees to keep all such information confidential. Any
assignment or delegation in contravention of the foregoing shall be null and
void.
3.4 Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Texas,
without resort to that State's conflict of laws rules.
3.5 Enforceability of Agreement. Should any one or more of the
provisions of this Agreement be determined to be illegal or unenforceable, all
other provisions, nevertheless, shall remain effective and binding on the
parties hereto.
3.6 Titles. Titles of the Sections of this Agreement are merely
for convenience in reading and shall not be construed to alter, modify or
interpret the meaning of the provisions under said titles.
3.7 Definitions. All accounting terms used in this Agreement
shall have the meanings ascribed to them by generally accepted accounting
principles or as used within the Plan Documents.
3.8 Notice. Any notice, request or demand to or upon the parties
hereto must be given in writing. Notices shall be sent certified, postage
prepaid, shall be addressed to the party to receive the same as follows or to
such other address as may be hereafter designated in writing by the respective
parties hereto and shall be deemed given five (5) days after deposited in the
United States mail:
21
<PAGE> 22
To the Investment Manager: FirstCity Financial Corporation
P. O. Box 8216
Waco, Texas 76714-8216
Attn: James T. Sartain
To the Trust: FirstCity Liquidating Trust
c/o Shawmut Bank Connecticut,
National Association,
as Trustee
777 Main Street
Hartford, Connecticut 06115
Attn: Corporate Trust
Administration
(FirstCity Liquidating Trust)
with a copy to:
FirstCity Liquidating Trust
1021 Main Street, Suite 2600
Houston, Texas 77002
Attn: Robert W. Brown
To the Portfolio Committee: Rick R. Hagelstein
6400 Imperial Dr.
Waco, TX 76712
Robert W. Brown
1021 Main Street, Suite 2600
Houston, Texas 77002
David Palmer
2817 Sancho Panza
Punta Gorda, FL 33950
Richard E. Bean
5643 Lynbrook
Houston, TX 77056
22
<PAGE> 23
To FCLT REO One, L.P: FCLT REO One Asset Corp., General Partner
1021 Main Street, Suite 2600
Houston, Texas 77002
Attn: Robert W. Brown,
President
To FCLT REO Two, L.P: FCLT REO Two Asset Corp., General Partner
1021 Main Street, Suite 2600
Houston, Texas 77002
Attn: Robert W. Brown,
President
To FCLT Loans, L.P: FCLT Loans Asset Corp., General Partner
1021 Main Street, Suite 2600
Houston, Texas 77002
Attn: Robert W. Brown,
President
3.9 Business Day. "Business Day" for the purposes of this
Agreement shall mean any day other than a Saturday or Sunday, or a date on
which the Investment Manager or national banking associations generally in
Texas are closed for regular business.
3.10 Entire Agreement. This Agreement (including all Exhibits
hereto), the Liquidating Trust Agreement, the Lock-Box Agreement, and the Plan
Documents shall constitute the full and entire understanding and agreement of
the parties hereto and there are no further or other agreements or
undertakings, written or oral, in effect between the parties relating to the
subject matter hereof unless expressly referred to herein. All prior
negotiations, agreements, representations, warranties, statements and
undertakings concerning the subject matter hereof between the parties hereto
are superseded by the foregoing.
3.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same instrument.
3.12 Controlling Provision. Notwithstanding anything in this
Agreement to the contrary, the Investment Manager shall not receive any payment
or reimbursement under this Agreement
23
<PAGE> 24
at any time there exists under this Agreement an Event of Default, and in such
case, the Investment Manager agrees to continue to provide its services
hereunder for the benefit of the Trust and each Trust-Owned Affiliate signatory
hereto with the payment of all such compensation and reimbursement to be
deferred until such Event of Default is cured or waived.
3.13 [Intentionally deleted.]
3.14 [Intentionally deleted.]
3.15 Insurance. The Investment Manager shall obtain and maintain
at all times during the term of this Agreement the following coverages:
(a) Worker's compensation or approved self-insurance and
employer's liability insurance which shall fully comply with the statutory
requirements of all applicable state and federal laws.
(b) Commercial general liability insurance with a minimum
combined single limit of liability of $1,000,000 per occurrence and $2,000,000
aggregate for injury and/or death and/or property damage, including Broad Form
Contractual Liability insurance specifically covering this Agreement.
(c) Business automobile liability insurance covering all
owned, hired and non-owned vehicles and equipment used by the Investment
Manager's employees with a minimum combined single-limit of liability of
$1,000,000 for injury and/or death and/or property damage.
(d) Excess coverage with respect to (b) and (c) above
with a minimum combined single limit of $5,000,000.
The Investment Manager shall deliver promptly to the Trust
certificates of insurance made out by the applicable insurer(s) or their
authorized agents (the insurance required under this section, the "Required
Insurance") and for any material policy amendments thereto. Each policy shall
provide for thirty (30) days prior written notice to be given by the insurer to
the Trust in the event of any termination, non-renewal or cancellation, or of
any material change in coverage or deductibles. To the extent available with
responsible insurance companies of recognized standing which are authorized to
do business in the states in which any of the Trust Assets, the Trust-Owned
Affiliate Assets or REO Properties are located and which are rated A-XII or
better by
24
<PAGE> 25
A.M. Best, all Required Insurance shall insure the interests of the Investment
Manager regardless of any breach or violation by Investment Manager of
warranties, declarations or conditions contained in such policies or any action
or inaction of Investment Manager or any other person. All Required Insurance
shall be carried with responsible insurance companies of recognized standing
which are authorized to do business in the states in which any of the
Trust-Owned Affiliate Assets or REO Properties are located and are rated A-XII
or better by A.M. Best.
3.16 Legal Fees. Each prevailing party shall be entitled to be
reimbursed jointly and severally by the non-prevailing parties of all
reasonable costs and expenses (including reasonable attorney's fees and
disbursements) in its successful prosecution or defense of any provision of
this Agreement.
3.17 Survival. The provisions of Sections 1.8, 1.9, 1.10,
1.11, 2.2, 2.3, 2.7 and this 3.17 shall survive the termination of this
Agreement.
3.18 Location. The performance of the services hereunder shall be
conducted, and the Books and Records shall be kept, at the Investment Manager's
locations as set forth in Exhibit B attached hereto, and such additional
locations as the Portfolio Committee shall approve in writing. The Investment
Manager shall have no authority to store the Books and Records at the foregoing
locations or any other location approved as set forth above that are not owned
by the Investment Manager until it shall have delivered to the Trust and the
Trust-Owned Affiliates a landlord's consent in form and substance reasonably
acceptable to the Trust and the Trust-Owned Affiliates.
IN WITNESS, the undersigned have executed this Agreement as of
the date first above written.
FIRSTCITY FINANCIAL CORPORATION,
as Investment Manager
By: /s/ James T. Sartain
------------------------------------
Name: James T. Sartain
Title: President
25
<PAGE> 26
FIRSTCITY LIQUIDATING TRUST
BY: SHAWMUT BANK CONNECTICUT, as
Trustee
By: /s/ Susan T. Keller
----------------------------------
Name: Susan T. Keller
Title: Vice President
FCLT REO ONE, L.P.
By: FCLT REO One Asset Corp.,
General Partner
By: /s/ Robert W. Brown
----------------------------------
Name: Robert W. Brown
Title: President
FCLT REO TWO, L.P.
By: FCLT REO Two Asset Corp.,
General Partner
By: /s/ Robert W. Brown
----------------------------------
Name: Robert W. Brown
Title: President
26
<PAGE> 27
FCLT LOANS, L.P.
By: FCLT Loans Asset Corp.,
General Partner
By: /s/ Robert W. Brown
----------------------------------
Name: Robert W. Brown
Title: President
27
<PAGE> 28
EXHIBIT A
LIQUIDATION AUTHORIZATION
[Date]
Investment Manager
[Address for notices]
Trustee
[Address for notices]
Ladies and Gentlemen:
Reference is hereby made to the Investment Management
Agreement dated July 3, 1995 (the "Investment Management Agreement") between
FirstCity Financial Corporation, a Delaware corporation, the FirstCity
Liquidating Trust, a trust organized under the laws of Texas, and the
Trust-Owned Affiliates signatory thereto. Capitalized terms used but not
defined herein are used herein with the meanings assigned to such terms in the
Investment Management Agreement. This letter constitutes authorization and
direction to the Investment Manager to liquidate each Non-cash Trust-Owned
Affiliate Asset set forth on Schedule A attached hereto, for that amount of
Gross Sales Proceeds set forth directly opposite such Non-cash Trust-Owned
Affiliate Asset on such schedule, notwithstanding the fact that the Gross Sales
Proceeds to be received from the liquidation of each such Non-cash Trust-Owned
Affiliate Asset will be less than the product of (i)
28
<PAGE> 29
the Net Present Value of such Non-cash Trust-Owned Affiliate Asset multiplied
by (ii) 90%.
Very truly yours,
------------------------------
Name:
Member of Portfolio Committee
------------------------------
Name:
Member of Portfolio Committee
------------------------------
Name:
Member of Portfolio Committee
------------------------------
Name:
Member of Portfolio Committee
29
<PAGE> 30
EXHIBIT B
LOCATION
1. FirstCity Financial Corporation
1021 Main, Suite 2600
Houston, Texas 77002
2. FirstCity Financial Corporation
6400 Imperial Drive
Waco, Texas 76712
3. Certain documents (including certain collateral files) may be
kept at the location of a Collateral Agent under one or more
loan agreements between a lender (or group thereof) and the
Trust or any Trust-Owned Affiliate.
30
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of July 3,
1995, is made and entered into by and between FCLT LOANS ASSET CORP., a
corporation organized and operating under the laws of Texas and having its
principal place of business located at 1021 Main Street, Suite 2600, P.O. Box
105, Houston, Texas 77001-0105 (the "Employer") and ROBERT W. BROWN, an
individual currently residing at 2011 Castlerock, Houston, Texas 77090 (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Employer and Employee desire to commence the employment
relationship and enter into this Agreement in order to retain Employee's
services for and on behalf of Employer.
In consideration of the mutual promises and covenants set forth, the
Employer and Employee agree as follows:
ARTICLE 1.
TERM AND DUTIES OF EMPLOYMENT
1.01 Employment Term. The Employer agrees to employ the Employee
as President and the Employee accepts this employment and agrees to render
services to the Employer on the terms and conditions set forth in this
Agreement. The employment term of this Agreement shall begin on July 3, 1995
and terminate three (3) years later, unless further extended or terminated in
accordance with this Agreement.
1.02 Employee Duties. The Employee will perform executive services
for the Employer as may be consistent with Employee's title, President, along
with other duties that may be assigned from time to time by the Employer.
During this Agreement's term, the
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 1
<PAGE> 2
Employee's best efforts will be devoted to the affairs and business of the
Employer, as is customarily required for the position of President, including
membership on the Portfolio Committee of the First City Liquidating Trust.
(a) The Employee's duties will include the management and
payment of creditor claims, including payment to noteholders and
certificate holders pursuant to First City Financial Corporation's
bankruptcy reorganization plan (the "Reorganization Plan") in Case No.
392-3947Y-HCA-11, styled "In Re: First City Bancorporation of Texas,
Inc." as described more fully under paragraphs 2.02 through 2.07 of
this Agreement.
(b) The Employee's duties will include the liquidation of
First City Liquidating Trust (hereinafter "the Trust") assets in
accordance with the terms, conditions, rules, etc. of the Trust
agreement.
1.03 Approval of Portfolio Committee or First City Financial
Corporation Required. Before entering into any agreement with respect to the
liquidation of any Trust assets, the Employee must, in accordance with the
terms of the Trust agreement, first get written approval from either the
Portfolio Committee of the Trust or First City Financial Corporation pursuant
to the Investment Management Agreement.
ARTICLE 2.
COMPENSATION
2.01 Basic Compensation. Employer agrees to pay Employee for his
services as President throughout the term of this Agreement an annual salary of
$250,000.00, to be paid in two monthly installments in accordance with the
Employer's normal payroll practice and on the Employer's regularly scheduled
paydays.
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 2
<PAGE> 3
2.02 Conditional Bonus #1. Employer will pay Employee an
additional bonus in the event that all of the following conditions are
fulfilled as determined by the Portfolio Committee of the Trust:
(a) All Class 1, 2, 3, 4, 5, and 8 creditor claims are
paid in full according to the terms of the Reorganization Plan
(approximately $80,000,000.00);
(b) New Senior Subordinated Noteholders are paid in full
(approximately $115,000,000.00, including interest); and
(c) New Special Preferred Stockholders and Class B
Certificate holders are paid in cash a total of $100,000,000.00.
If all of the above conditions are fulfilled as determined by the
Portfolio Committee of the Trust, the Employer will pay Employee an additional
bonus of $250,000.00 in one lump sum payment within thirty (30) days of the
fulfillment of all the above conditions.
2.03 Conditional Bonus #2. Employer shall pay Employee an
additional bonus if all of the conditions in Section 2.02 of this Agreement are
fulfilled and if the following condition is also fulfilled as determined by the
Portfolio Committee of the Trust:
(a) An additional aggregate $30,000,000.00 has been paid
to the Class B Certificate holders.
If the conditions in Section 2.02 of this Agreement and the above
condition is fulfilled as determined by the Portfolio Committee of the Trust,
Employer shall pay Employee an additional bonus of $250,000.00 in one lump sum
payment within thirty (30) days of the fulfillment of the above condition.
2.04 Conditional Bonus #3. If Employee fulfills all the conditions
in Sections 2.02 and 2.03 of this Agreement as determined by the Portfolio
Committee of the Trust, then Employer shall pay Employee an additional bonus in
a sum equal to 1.67% of all additional aggregate
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 3
<PAGE> 4
payments made to the Special Preferred Stockholders and Class B Certificate H
Holders and Class C Certificate Holders. Such payments will be made within
thirty (30) days of each additional distribution.
2.05 Calculation of Bonuses - Payments Counted. In calculating any
bonus in this Agreement, the following payments will be counted:
(a) Payments to New Special Preferred Stockholders,
including principal payments, dividend payments, and the initial
$14,000,000.00 of book value attributed to New Common Shares awarded
to the Special Preferred Stockholders in the Reorganization Plan.
2.06 Calculation of Bonuses - Payments Not Counted. In calculating
any bonus in this Agreement, the following payments will not be counted:
(a) Payments to New Special Preferred Stockholders and
Class B Certificate Holders that are the result of interest earned on
Trust pool idle funds.
ARTICLE 3.
BENEFITS
Employee shall further be entitled to receive:
3.01 Benefit Plans. The Employer agrees to include and enroll the
Employee, if the Employee is eligible, in any benefit plans the Employer may
from time to time have in effect, including but not limited to hospital,
surgical, major medical, dental, vacation, sick leave, disability and life on
the same terms and conditions as these benefits are provided for or made
available to other employees.
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 4
<PAGE> 5
ARTICLE 4.
TERMINATION
4.01 Employee Termination of Agreement. During the term of this
Agreement, the Employee can terminate this Agreement by giving notice in
accordance with Section 5.01 at least thirty (30) days prior to the date of
termination. If the Employee terminates this Agreement prior to the end of the
term set forth in this Agreement under Section 1.01, the Employee will forfeit
any unpaid bonuses described in Sections 2.02 - 2.04 and his Basic Compensation
described in Section 2.01 of this Agreement will immediately cease. If
Employee is terminated for reasons other than those set forth in paragraphs
4.02 or 4.03 hereof, Employee shall receive one year's notice of termination.
Should the notice of termination occur prior to July 3, 1997, Employee shall
receive a severance payment equal to one year's annual salary set forth in
paragraph 2.02 hereof. Should the notice of termination not occur on July 3,
1997, the terms of this contract shall extend to the earliest of one year after
said notice or the termination of the Trust. However, the Employee's
termination of this Agreement in compliance with the notice provisions in this
Agreement shall not affect any of the Employee's basic compensation or bonuses
described in Article 2 of this Agreement previously paid to the Employee at the
time of termination.
4.02 Employer's Right to Terminate the Agreement for "Cause". The
Employer may terminate the Employee's employment for "cause". For purposes of
this Agreement, "cause" means the occurrence of any of the following:
(a) The Employee's act or acts in connection, directly or
indirectly, with the Employee's employment duties of dishonesty,
fraud, willful misconduct, incompetence, gross negligence or breach of
a fiduciary duty, which in the reasonable determination of
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 5
<PAGE> 6
the Employer would preclude the continued effective performance of the
Employee's duties; or
(b) The Employee's conviction of, or plea of guilty or
nolo contendere to, a felony, a crime of falsehood, or a crime
involving moral turpitude;
(c) The Employee's willful violation of any federal or
state law, rule, or regulation in the course and scope of employment.
4.03 Employer's Right to Terminate the Agreement for Reasons in
Addition to "Cause". The Employer may terminate the Employee's employment for
the following additional reasons:
(a) The Employee's refusal to perform duties assigned in
accordance with this Agreement or overt and willful disobedience of
orders or directives issued by the Employer to the Employee;
(b) The Employee's violation of the Employer's rules and
regulations concerning conflicts of interest.
(c) The Employee's failure to effectively perform the
duties described in this Agreement and duties which are customary and
ordinary for the Employee's title even if not described in this
Agreement.
(d) Any act of the Employee which is not in the best
interest of the Employer undertaken in the Employee's course and scope
of employment.
(e) Any violation of this Agreement by the Employee.
4.04 Employer's Right to Terminate the Agreement Because of the
Employee's Death. In the event that Employee dies during the term of this
Agreement then the Employer can terminate this Agreement.
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 6
<PAGE> 7
ARTICLE 5.
MISCELLANEOUS
5.01 Notices. Any notices, communications required under this
Agreement or consents, demands, requests, approvals or any other communications
regarding this Agreement shall be given to either party at the following
addresses:
(a) Notices to the Employer shall be delivered at 1021 Main
Street, Suite 2600, P.O. Box 105, Houston, Texas 77001-0105 with copies to
Richard Bean, 5643 Lynbrook, Houston, Texas 77056; David Palmer, 2817 Sancho
Panza, Punta Gorda, Florida 33950; and Rick Hagelstein, 6400 Imperial Drive,
P.O. Box 8216, Waco, Texas 76714-8216.
(b) Notices to the Employee shall be delivered at 2011 Castlerock,
Houston, Texas 77090.
Any and all notices contemplated by this Agreement shall be effected
in writing and delivered either by personal delivery or by certified mail,
return receipt requested. Notices delivered personally shall be deemed
communicated as of the actual receipt of the notice; notices delivered pursuant
to certified mail shall be deemed communicated as of three (3) days after
mailing.
5.02 Entire Agreement. This Agreement supersedes any and all other
agreements either oral or written, between the Employer and Employee with
respect to the subject matter of this Agreement and contains all of the
covenants and agreements between the parties regarding Employee's employment
with the Employer.
5.03 Severability. Each provision of this Agreement is intended to
be severable. If any term or provision hereof shall be determined by a court
of competent jurisdiction to be illegal or invalid for any reason whatsoever,
such term or provision shall be severed from this Agreement and shall not
affect the validity of the remainder of the Agreement.
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 7
<PAGE> 8
5.04 Waiver. Waiver by any party of any breach of this Agreement
or failure to exercise any right under this Agreement shall not be deemed to be
a waiver of any other breach or right. The failure of any party to take action
by reason of such breach or to exercise any such right shall not deprive the
party of the right to take action at any time while or after such breach or
condition giving rise to such right.
5.05 Modification of Agreement. No change or modification of this
Agreement shall be valid or binding upon the parties, nor shall any waiver of
any term or condition be binding, unless such change, modification or waiver
shall be in writing and signed by the Employer and the Employee.
5.06 Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with the
laws of the State of Texas.
5.07 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be finally settled by
arbitration in the State of Texas in accordance with the rules of the American
Arbitration Association by an arbitrator appointed in accordance with the rules
of the American Arbitration Association. The arbitrator shall follow the law
governing this Agreement. Any such arbitration decision will be final and
binding. Judgment upon the award may be entered in any court having
jurisdiction.
5.08 Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any relief to which he or it may be entitled.
5.09 Assignability. The corporation shall have the right to assign
this Agreement only to an entity which it has merged or in which it owns a
controlling interest. The rights, duties and benefits of this Agreement to
Employee are personal to him and any such right, duty, or benefit may not be
assigned by Employee.
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 8
<PAGE> 9
5.10 Binding Effect. This Agreement shall be binding upon the
parties hereto together with their personal executors, administrators,
successors, and personal representatives, heirs and permitted assigns.
5.11 Titles. The titles of the Articles in this Agreement do not
add or subtract from the obligations and rights contemplated in the text of
this Agreement.
5.12 Payment of Basic Compensation. The Employer will pay the
Employee's Compensation described in Article 2 of this Agreement. The Trust
will guarantee the payment of any of the Employee's Compensation as described
in Article 2 of this Agreement.
5.13 Withholdings, Deductions, Etc. The Employer may make
deductions, withholdings, or payments from sums payable to the Employee
pursuant to this Agreement as required by federal and/or state law or
regulation.
EMPLOYER:
FCLT LOANS ASSET CORP.
By:/s/ RICHARD BEAN
-----------------------------------------
Name: Richard Bean
Title: Director
EMPLOYEE:
/s/ ROBERT W. BROWN
--------------------------------------------
ROBERT W. BROWN
EMPLOYMENT AGREEMENT OF ROBERT W. BROWN - PAGE 9
<PAGE> 1
EXHIBIT 10.3
LOAN AGREEMENT
AMONG
FCLT LOANS, L.P.,
AS BORROWER,
AND
FLEET NATIONAL BANK,
AS AGENT AND AS LENDER
AND
NATIONSBANK OF TEXAS, N.A.,
AS LENDER
JULY 11, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Table of Contents
Preliminary Statement
Section 1
General Definitions
1.1. Defined Terms
1.2. Accounting and Other Terms
1.3. Certain Matters of Construction
Section 2
Financing Facility
2.1. The Loan & Letters of Credit
2.2. Manner of Borrowing
Section 3
Conditions Precedent and Condition Subsequent
3.1. Conditions Precedent
3.2. Conditions Subsequent
Section 4
Interest, Repayment, Fees and Extension Option
4.1. Interest
4.2. Principal Repayment
4.3. Cost Protection
4.4. Term of Agreement
4.5. Loan Fees
4.6. Option to Extend Maturity Date
4.7 Special Eurodollar Loan Provisions
Section 5
Cash Flow Distributions & Operational Issues
5.1 Net Cash Flow
5.2 Excess Net Cash Flow
5.3 If any Default Exists
5.4 Operational Issues
Section 6
Collateral: General Terms
6.1. Security Interest in Personal Property
6.2. Lien on REO Properties
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
6.3. Insurance of Collateral
6.4. Audits
6.5. Cash Reserve Account
6.6. Release Price & Minimum Release Price
6.7 Termination of Security Interests
6.8 REO Lease-Up Reserve
Section 7
Representations and Warranties
7.1. General Representations and Warranties
7.2. Reaffirmation and Survival of Representations
Section 8
Covenants and Continuing Agreements
8.1. Affirmative Covenants
8.2. Negative Covenants
Section 9
Events of Default: Rights and Remedies on Default
9.1. Events of Default
9.2. Remedies
9.3. Setoff, etc.
9.4. Remedies Cumulative; No Waiver
Section 10
Agency Provisions
Section 11
Miscellaneous
11.1. Power of Attorney
11.2. Modification of Agreement
11.3. Reimbursement of Expenses
11.4. Indulgences Not Waivers
11.5. Severability
11.6. Successors and Assigns; Participations by Lenders
11.7. Cumulative Effect: Conflict of Terms
11.8. Execution in Counterparts
11.9. Notice
11.10. Agent's or Lender's Consent
11.11. Time of Essence
11.12. Entire Agreement
11.13. Interpretation
11.14. No Preservation or Marshaling
11.15. Governing Law; Consent to Forum
11.16. Waivers by Borrower
11.17. DTPA Waiver
11.18. Oral Agreements Ineffective
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
11.19. Limitations on Lenders Recourse
SIGNATURES
</TABLE>
EXHIBITS:
EXHIBIT A-1 Notice of Borrowing
EXHIBIT A-2 Advance Certificate
EXHIBIT B Schedule of Collateral Loans and Allocated Values
(Definitions)
EXHIBIT C Schedule of Ownership Interests (Section 7.1.1)
EXHIBIT D Borrowing Base Schedule
EXHIBIT E Interest Election
EXHIBIT F Tier 1 Assets and Tier 2 Assets Not Having Business
Plans Approved By The Portfolio Committee
EXHIBIT G Additional Conditions Subsequent
EXHIBIT H Collateral Loans Not Being Paid Directly to the
Lock-Box Account
EXHIBIT I Additional Subsidiaries
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LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made as of the 11th day of July,
1995, by and among (i) FCLT LOANS, L.P, a Texas limited partnership
("Borrower"), having FCLT Loans Asset Corp., a Texas corporation, as its
general partner ("FCLT Loans Corp."), (ii) FLEET NATIONAL BANK, a national
banking association ("Fleet") and NATIONSBANK OF TEXAS, N.A., a national
banking association ("NationsBank"); Fleet and NationsBank being hereinafter
referred to individually as a "Lender" or jointly as the "Lenders"; and (iii)
and FLEET NATIONAL BANK, a national banking association, as Agent for the
Lenders (in such capacity hereinafter referred to as the "Agent").
PRELIMINARY STATEMENT
(i) All capitalized terms used but not specifically defined in this
Preliminary Statement, shall have the definitions assigned to them in Section 1
below.
(ii) Pursuant to the Sale Agreements and the Joint Plan:
(a) Borrower, as the designee of FC Liquidating Trust, will be
acquiring the Portfolio Assets and the Additional Assets; and
(b) FC Liquidating Trust will be acquiring the Trust Assets.
(iii) The Portfolio Assets have been segregated into the five (5)
separate Pools and have been assigned to three (3) Tranches, designated as
"Tranche 1", "Tranche 2", and "Tranche 3", respectively. In addition, for
administrative purposes, the Portfolio Assets have been divided into three (3)
Tiers designated as "Tier 1", "Tier 2" and "Tier 3", respectively.
(iv) Borrower warrants and represents to Lenders that the Portfolio
Assets consist of the Collateral Loans, all of which are being acquired and
assigned to Borrower, and REO Properties, each of which are being conveyed to
one of two REO Affiliates, and that all of the Tier 1 Assets and Tier 2 Assets
are listed in Exhibit B attached hereto and incorporated herein.
(v) Debt Structure. Pursuant to the Joint Plan:
(a) New FirstCity has issued the Senior Subordinated Notes to
the present Class A preferred shareholders of FCBOT;
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(b) FC Liquidating Trust has issued to New FirstCity a Class A
Certificate (the "Class A Certificate") which requires payments
to New FirstCity in order to provide New FirstCity with the
funds required to pay (1) the Senior Subordinated Notes (i.e.,
the Senior Subordinated Certificate Payments), (2) Special
Preferred Stock Payments and (3) certain other payments after
the payment in full to Lenders of the herein contemplated
Financing Facility; and
(c) Contemporaneously herewith, Borrower is issuing to FC
Liquidating Trust the Subordinate Note which requires payments
to FC Liquidating Trust in order to enable FC Liquidating Trust
to make the Senior Subordinated Certificate Payments, all of
which shall be in all respects subordinate to the herein
contemplated Financing Facility and is subject to the terms of
this Loan Agreement and the rights of Lenders hereunder.
(vi) Financing Facility. In connection with the above, Borrower has
requested Lenders to provide Borrower with a senior debt financing facility in
an amount of up to One Hundred Million Dollars ($100,000,000) (the "Financing
Facility") consisting of a Revolving Line of Credit (i.e., the Loans) and the
Letters of Credit. Each Lender, subject to the terms and conditions set forth
below, has agreed to provide fifty percent (50%) of such Financing Facility in
accordance with this Agreement.
SECTION 1 GENERAL DEFINITIONS
1.1. Defined Terms. When used herein, the following terms shall have
the following meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):
Account Debtor - the "borrower" (or other "obligor") under each of the
Collateral Loans, including each REO Affiliate.
Acquisition Price - the total prices actually paid by the Borrower to
the Sellers, pursuant to the Sale Agreements, for the acquisition of the
Assets.
Additional Assets - The following assets which have been or are being
transferred to Borrower contemporaneously herewith: (i) all remaining assets
held in the "First City Receiverships" (as defined in the Joint Plan) other
than the FC Intangible Assets, plus (ii) all cash payments previously paid or
to be hereafter paid by the FDIC to Borrower or FC Liquidating Trust in excess
of the $20,000,000 being paid to New FirstCity and the sums being paid with
respect to administrative claims and "Class 4" and "Class 8" creditor claims
under the Joint Plan on the "Effective Date" of the
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<PAGE> 7
Joint Plan, plus (iii) all Borrower Business Assets plus (iv) all FC Intangible
Assets.
Adjusted Eurodollar Rate - with respect to any Interest Period for a
Eurodollar Loan, the quotient of (i) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) quoted at 11:00 A.M. by NationsBank
two Business Days prior to the first day of such Interest Period for the
offering to leading banks in the interbank Eurodollar market of Dollar deposits
for a maturity substantially comparable to such Interest Period and in an
amount substantially comparable to the principal amount of such Loan, divided
by (ii) a number equal to the number one minus the Eurodollar Rate Reserve
Percentage. The "Eurodollar Rate Reserve Percentage" applicable to any
Interest Period means the maximum effective rate (expressed as a decimal) of
the statutory reserve requirements (without duplication, but including, without
limitation, basic, supplemental, marginal and emergency reserves) applicable to
either Lender during such Interest Period under regulations of the Board of
Governors of the Federal Reserve System (or any successor), including without
limitation Regulation D or any other regulation dealing with maximum reserve
requirements which are applicable to Lenders with respect to its "Eurocurrency
Liabilities", as that term may be defined from time to time by the Board of
Governors of the Federal Reserve System (or any successor) or which in any
other respect relate to the funding of Eurodollar Loans. The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Rate Reserve Percentage.
A.M. - a time from and including 12 o'clock midnight to and excluding 12
o'clock noon on any day using Dallas, Texas time.
Advance Certificate - A certificate (i) which is in the form attached
hereto as Exhibit A-2, (ii) which shall be submitted to Lenders in connection
with each Notice of Borrowing pursuant to Section 2 below, (iii) which is
addressed to both Lenders and signed by Borrower and Servicer and (iv) which:
(a) contains a calculation and certification of the applicable Maximum Revolver
Availability, (b) commencing six months after the Closing Date and continuing
for the remainder of the Term, contains a calculation and certification of the
applicable Maximum DSC Loan Amount, (c) contains a certification as to the
outstanding principal balances under each of the Revolving Notes as of the date
thereof, and (d) contains a certification (by Borrower only) that no Event of
Default exists under this Loan Agreement as of the date thereof and certain
other therein set forth loan estoppels/ratifications.
Advance Date - as defined in Section 2.1.3 of this Agreement.
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Advance Documents - as defined in Section 2.2.2 of this Agreement.
Affidavit of Lost Note - as to any Pledged Note which has been lost by
any of the Sellers, an affidavit executed by the Seller in question certifying
that such Pledged Note has been lost and that such Pledged Note remains in full
force and effect and an outstanding obligation of the "borrower" or "maker"
thereunder and attaching thereto a copy of such lost Pledged Note.
Affiliate - of any Person shall mean any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning or holding 35% or more of any class of voting stock or partnership
interests of such first-mentioned Person or (b) any Person of which such
first-mentioned Person owns or holds 35% or more of any class of voting stock
or partnership interests. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting stock or partnership interests or by contract or otherwise.
Allocated Value - with respect to each Portfolio Asset which constitutes
a Tier 1 Asset or a Tier 2 Asset, the "Allocated Value" assigned to such
Portfolio Asset and shown on the then effective Borrowing Base Schedule.
Unless and until a Tier 3 Asset is reclassified as a Tier 2 Asset as provided
under the definition of Borrowing Base Schedule, for purposes of this Agreement
the "Allocated Value" for each Tier 3 Asset shall be zero dollars ($0.00).
Approved Budgets - Cash flow budgets with respect to Borrower and FC
Liquidating Trust which (i) set forth on an annual and quarterly basis for
three years, statements of cash flow detailing, for each such period, beginning
cash, all expected cash inflows, all expected cash outflows and ending cash,
and (ii) have been approved in writing by Borrower, Servicer, the Portfolio
Committee and Lenders. Such Approved Budgets may only be amended with the
written consent of both Lenders.
Approved Expenditures - (i) Senior Subordinated Certificate Payments and
(ii) costs and obligations which have been incurred by Borrower and are to be
paid by Borrower in accordance with the
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<PAGE> 9
Approved Budgets (subject, as to such other costs and obligations, to a 10%
variance in the aggregate in any calendar quarter); each of which have been
approved by Lenders.
Assets - Collectively, each and every Portfolio Asset and all Additional
Assets.
Assignments - Assignments of Liens of even date herewith from the
Borrower to Agent in such form and content as Lenders may reasonably require in
their sole discretion, whereby Borrower assigns all Liens securing payment of
all Collateral Loans to Agent for the benefit of both Lenders.
Bankruptcy Case - That certain Chapter 11 bankruptcy proceeding entitled
"In Re: First City Bancorporation of Texas, Inc., Debtor", pending in the
Bankruptcy Court (Case No. 392-39474-HCA-11).
Bankruptcy Code - The United States Bankruptcy Code, 11 U.S.C. Section
101, et seq., as the same now exists or may hereafter be amended.
Bankruptcy Court - The United States Bankruptcy Court for the Northern
District of Texas, Dallas Division.
Borrower's Acquisition Costs - all due diligence, closing, legal and
other expenses which are incurred by Borrower and/or FC Liquidating Trust and
paid by Borrower in connection with the Loan and Borrower's acquisition of the
Assets and which are approved in writing by Lenders.
Borrower Business Assets - all Business Assets conveyed to Borrower
under one of the Sale Agreements or otherwise and all Business Assets hereafter
acquired by Borrower as a result of Borrower's exercise of its rights under
documents securing a Business Loan.
Borrowing Base Schedule - the schedule which (i) lists each Tier 1 Asset
and each Tier 2 Asset, (ii) lists the Tier and the Tranche to which each of
such Portfolio Assets have been assigned, (iii) lists the Allocated Value and
ERC for each of such Portfolio Assets and (iv) has been approved by Lenders in
writing, as the same may be amended from time to time with the written
approval of Lenders. As of the date hereof, Exhibit D attached hereto and
incorporated herein is the effective Borrower Base Schedule. From time to time
subsequent to the date hereof, but not less often than quarterly, Borrower will
update the Borrowing Base Schedule; which updated schedule will be submitted to
Lenders for their review and approval. In no event shall the Allocated Value
or ERC for any Portfolio Asset be increased without the prior written consent
of Lenders. Unless and until an updated Borrowing Base Schedule has
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been approved by Lenders, the most recent Borrowing Base Schedule which has
been approved in writing by Lenders shall be deemed to be the effective
Borrowing Base Schedule. Subsequent to the date hereof, from time to time,
Borrower may submit to Lenders for their consideration Tier 3 Assets which
Borrower would like to reclassify as Tier 2 Assets and to which Borrower would
like to assign a ERC, an Allocated Value and a Tranche; which submissions shall
be accompanied by such information as Lenders may require. Lenders, in their
sole discretion, may refuse to approve any such requested reclassification. If
Lenders, in their sole discretion do approve the reclassification of a Tier 3
Asset to a Tier 2 Asset, such reclassification shall be effective at such time
as (i) the Collateral Loan Documents with respect to such Portfolio Asset then
held by the Tier 3 Custodian have been transferred to the Custodian under the
Custodial Agreement and (ii) Borrower has submitted to Lenders and Lenders have
approved an updated Borrowing Base Schedule adding the respective reclassified
Tier 3 Assets thereto. Upon the approval by Lenders of such revised Borrowing
Base Schedule, such Tier 3 Assets shall each be deemed to be a Tier 2 Asset.
Business Assets - accounts receivable, inventory, equipment, furniture
and other personal property which were pledged/given as security for a Business
Loan (i.e., all assets securing a Collateral Loan other than real estate).
Business Day - every day other than Saturday, Sunday and any day which
is a legal holiday under the laws of the States of Rhode Island or Texas or is
a day on which banking institutions in Rhode Island or Texas are closed.
Business Loan - each loan acquired by Borrower pursuant to one of the
Sale Agreements which is secured by Business Assets and each and every other
loan (or interest therein) which is secured by Liens on Business Assets and
which is now or at any time hereafter owned by Borrower.
Capitalized Lease Obligations - All lease obligations which have been or
should be, in accordance with GAAP, capitalized on the books of the lessee.
Cash Reserve Account - as defined in Section 6.5 of this Agreement.
Cash Reserve Base Amount - as defined in Section 6.5 of this Agreement.
CERCLA - the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. Section 9601, et seq.), as amended from time
to time, which for purposes of this definition
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<PAGE> 11
shall include, without limitation, the Superfund Amendments and Reauthorization
Act.
Class A Certificate - as defined in subsection (v)(b) of the Preliminary
Statement appearing at the beginning of this Agreement.
Closing Date - the date of this Agreement, as shown on page 1 hereof.
Closing Expenditures - the following expenditures which are being paid
by Borrower in connection with the closing of the Financing Facility: (i) the
purchase prices actually paid by Borrower for the Assets, (ii) Borrower's
Acquisition Costs, (iii) Lenders' Transaction Costs (iv) Lenders' Loan Fees and
(v) other costs incurred by Borrower in accordance with the Approved Budgets.
Code - the Uniform Commercial Code as adopted and in force in the State
of Texas, as from time to time in effect.
Collateral - All presently owned or hereafter acquired or existing
property of the Borrower as follows:
(i) All Goods, Equipment, Inventory, Accounts, Instruments,
Documents, Chattel Paper, General Intangibles, Fixtures and
other personal property;
(ii) All "Pledged Loan Documents" consisting of:
(a) All promissory notes (together with all Affidavits of
Lost Note), bonds, other Instruments, Chattel Paper and
Participation Interests owned or acquired by Borrower
(whether or not acquired from Sellers), including, without
limitation, the promissory notes evidencing the Collateral
Loans (including all REO Notes), and any renewals,
modifications and extensions thereof and all promissory
notes, Instruments, Chattel Paper and other property
delivered in substitution therefor (collectively, the
"Pledged Notes"); and
(b) All security agreements, mortgages, deeds of trust,
assignments of rents or leases, UCC-1 Financing Statements
and REO Security Documents which secure the payment of the
Pledged Notes, whether or not such documents have been
recorded or filed with the appropriate records of land
evidence or other filing offices applicable to the real or
personal property (as the case may be) covered thereby
(collectively, the "Pledged Security Documents"); and
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(c) All guaranties, bonds, title or hazard insurance
policies (together with the proceeds thereof) commitments,
leases and other agreements now existing or hereafter
arising that provide collateral security or financial or
other support for the payment of the Pledged Notes
(collectively, the "Other Pledged Documents");
All of which Pledged Notes, Pledged Security Documents and
Other Pledged Documents are hereinafter collectively called
the "Pledged Loan Documents";
(iii) All money, bank accounts and deposits in the name of or for
the benefit of the Borrower, whether or not evidenced by any
certificates of deposit, passbooks or other documents; all
money, deposits, funds and balances from time to time in any
bank accounts or deposits maintained by Borrower with either
of the Lenders, whether the Lender in question maintains
such bank accounts or deposits as agent, escrow holder,
custodian or otherwise or for its own account pursuant to
the Custodial Agreement, the Lock-Box Agreement or the
Escrow Agreement, and any amendments thereto, including,
without limitation, the Cash Reserve Account, the Tax Escrow
Account, the Disbursement Account, the Operating Reserve
Account and the Lock-Box Account; all Instruments or Items
now or hereafter submitted as deposits or additions to any
bank accounts and deposits described herein; and all
revenues, income, interest, dividends, issues and profits
added to, earned or accrued on any bank accounts and
deposits described herein;
(iv) All contract and other rights of the Borrower pursuant to
the Pledged Notes or the other Pledged Loan Documents, the
Lock-Box Agreement, the Escrow Agreement, the Custodial
Agreement, the Tier 3 Custodial Agreement, and the Services
Agreement, including, without limitation, all claims and
causes of action arising from or pertaining to such contract
rights;
(v) All Judgments;
(vi) All land, improvements, fixtures and other interests in real
estate and leases thereof, including without limitation, all
REO Properties;
(vii) All Additional Assets;
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(viii) All books and records describing, used in connection with or
pertaining to any of the property described in paragraphs
(i) through (vii) hereof including, without limitation, all
credit files, correspondence, computer programs, printouts,
tapes and other records (collectively referred to as the
"Books and Records"); and
(ix) All accessions to, substitutions for, replacements of,
products of and Proceeds of any of the Collateral described
in paragraphs (i) through (viii) hereof including, without
limitation, all Non-Cash Proceeds (whether in the form of
personal property, real property or interests therein), Cash
Proceeds, investments of Collateral or Proceeds thereof, and
the revenues, income, interest, dividends, issues and
profits thereof.
As used herein, the term Goods, Equipment, Inventory,
Accounts, Chattel Paper, Instruments, Documents, General
Intangibles, Fixtures, Proceeds, Cash Proceeds and Non-Cash
Proceeds shall have the respective meanings assigned to them
in Chapter 9 of the Code and the term Items has the meaning
assigned to it in Chapter 4 of the Code.
Collateral Loan - each now existing or hereafter arising Business Loan
and Real Estate Loan and each and every other loan (or interest therein) now or
at any time hereafter owned by Borrower.
Collateral Loan Documents - all promissory notes evidencing Collateral
Loans (including all REO Notes), all mortgages, deeds of trust, security
agreements, guarantees and other documents securing Collateral Loans (including
all REO Security Documents) and all loan agreements and other documents
executed by Account Debtors in connection with Collateral Loans.
Collateral Loan Pool - the entire pool of (i.e., all) Collateral Loans
(which may from time to time include real and personal property that has been
foreclosed upon).
Collateral Loans Report - as defined in Section 8.1.13 of this
Agreement.
Commitment - the obligation of each Lender to lend to Borrower under
this Agreement, on a several and not on a joint basis, an aggregate principal
amount not to exceed Fifty Million and 00/100 Dollars ($50,000,000.00) for a
combined total commitment of One Hundred Million and 00/100 Dollars
($100,000,000.00).
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Compliance Certificate - as defined in Section 8.1.11 of this Agreement.
Contract Rate - The interest rate(s) applicable to the Loan as
determined in accordance with Section 4 below, which interest rate(s) shall be
(i) the Eurodollar Rate, and/or (ii) Effective Prime.
Custodial Agreement - that certain Custodial Agreement by and among
Custodian, Borrower, Agent, Subordinated Lender and Servicer whereby Custodian
agrees to act as bailee for the documents evidencing certain of the Collateral
Loans, as such Custodial Agreement may hereafter be amended or supplemented
from time to time, together with any replacement or substitution therefor.
Custodian - Fleet, in its capacity as custodian under the Custodial
Agreement.
DIDMCA - the Depositary Institutions Deregulation and Monetary Control
Act of 1980, Public Law 96-221, as amended, codified at 12 U.S.C. Section
1735f-7.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - a fluctuating rate of interest per annum which from day
to day is equal to the lesser of: (i) the Prime Rate plus four percent (4%) or
(ii) the Maximum Legal Rate.
Disbursement Account - an account to be maintained at NationsBank's main
office, 901 Main Street, Dallas, Texas, as more particularly defined in the
Escrow Agreement.
Disbursing Agent - NationsBank in its capacity as the Lender with
primary responsibility for (i) the receipt and review of Notices of Borrowing
and Advance Certificates, (ii) the administration of advances of Loan Proceeds
under the Notes and (iii) the making of disbursements/distributions of Net Cash
Flow and Excess DA Funds from the Disbursement Account.
Distribution Date - as defined in Section 5.1.1 of this Agreement.
Dollars and $ - currency of the United States of America.
DSC Calculation Period - In connection with the submission to Lenders of
each Advance Certificate and the calculation of the applicable Maximum DSC Loan
Amount, the two full calendar month period which commenced on the first day of
the calendar month which
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is three months prior to the date of the Advance Certificate in question and
which ends on the last day of the second calendar month after such commencement
(e.g. if an Advance Certificate is dated May 10, 1996, the applicable DSC
Calculation Period shall be February 1, 1996 through March 31, 1996).
DSC Coverage Rate - As calculated in each Advance Certificate, an amount
equal to the DSC Interest Rate multiplied by 1.15.
DSC Interest Rate - As calculated in each Advance Certificate, an
interest rate equal to the Eurodollar Rate in effect on the date of the Advance
Certificate in question.
DSC Net Cash Flow - As calculated in each Advance Certificate, an amount
equal to the sum of (i) the total amount of regularly scheduled principal
payments (i.e., not prepayments or "balloon" or maturity payments) and
regularly scheduled interest payments collected by Borrower under Pledged Notes
which constitute Tier 1 Assets and Tier 2 Assets during the DSC Calculation
Period in question, plus (ii) the total amount of Net Operating Income received
by Borrower with respect to REO Properties which constitute Tier 1 Assets and
Tier 2 Assets during the DSC Calculation Period in question plus (iii) an
amount equal to one sixth of the total amount then in the Cash Reserve Account;
which sum shall be annualized (i.e., multiplied by six and adjusted to reflect
any extraordinary sums received during such DSC Calculation Period) to
determine the applicable DSC Net Cash Flow.
Effective Prime - the lesser of (i) 1% in excess of the Prime Rate or
(ii) the Maximum Legal Rate.
Environmental Laws - all federal, state or local laws, statutes,
ordinances, or regulations pertaining to health, industrial hygiene,
environmental conditions or the existence, release, generation, storage or
disposal of any Hazardous Substance, including but not limited to, CERCLA and
RCRA.
Environmental Site Assessment - an environmental site assessment report
conforming to the standards for Phase I Environmental Site Assessments in ASTM
Standard Procedures for Environmental Site Assessments, E 1527-93 or other
standards reasonably satisfactory to Lenders (either of which is herein called
the "Acceptable Standards"), which is in all respects satisfactory to Lenders
and which has been prepared by a qualified environmental firm reasonably
satisfactory to Lenders (a) indicating that, on the basis of an investigation
conducted in accordance with the Acceptable Standards, (i) it found no
Hazardous Substances present on or in the property that is the subject of its
report at levels that require reporting or remediation, or both, pursuant to
any Environmental Laws that are applicable to such
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property ("Prohibited Hazardous Substances"), (ii) it did not learn of any
conditions on or in the land adjacent to the property that is the subject of
its report that would cause it to believe that there might be Prohibited
Hazardous Substances present on or in the property that is the subject of its
report, and (iii) no notice of violation of any of the Environmental Laws, or
other claim or order issued pursuant to any of the Environmental Laws, has been
duly filed against such property by any governmental authority; or (b) if any
Prohibited Hazardous Substance is present on such property or if any such
notice of violation, claim or order has been filed, providing evidence
satisfactory to Lenders as to the extent and nature of the environmental
problem caused thereby and the likely costs and duration of any recommended
remediation.
ERC - with respect to each Portfolio Asset which constitutes a Tier 1
Asset or a Tier 2 Asset, the "ERC" (which means the estimated remaining
collections which Borrower has determined will be collected with respect to
each of such Portfolio Assets) assigned to such Portfolio Asset and shown on
the then effective Borrowing Base Schedule. Unless and until a Tier 3 Asset is
reclassified as a Tier 2 Asset as provided under the definition of Borrowing
Base Schedule, for purposes of this Agreement the "ERC" for each Tier 3 Asset
shall be zero dollars ($0.00).
ERISA - the Employee Retirement Income Security Act of 1974, and all
rules and regulations from time to time promulgated thereunder.
Escrow Agent - Nationsbank in its capacity as "Escrow Agent" under the
Escrow Agreement.
Escrow Agreement - that certain Escrow Agreement of even date herewith
executed by and among Escrow Agent, Borrower, Agent and the Servicer, as such
Escrow Agreement may hereafter be amended or supplemented from time to time,
together with any replacement or substitute therefor.
Eurodollar Loan - any Loan Proceeds bearing interest at the Eurodollar
Rate.
Eurodollar Rate - for each Interest Period during the entire Term, the
lesser of (i) the Adjusted Eurodollar Rate for such Interest Period plus three
and one quarter percent (3.25%) or (ii) the Maximum Legal Rate, in each case
fixed for the Interest Period in question.
Event of Default - as defined in Section 9.1 of this Agreement.
Excess DA Funds - as determined on any Advance Date, the total amount of
funds then in the Disbursement Account minus a reserve in
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an amount equal to the sum of all interest payments, Loan Fees and other fees
and expenses which Disbursing Agent determines will be due and payable to
Lenders during the calendar month in question.
Excess Net Cash Flow - as defined in Section 5.2.1 of this Agreement.
Excluded FC Reserve Funds - the reserve of funds (not to exceed
$10,000,000) established by FC Liquidating Trust on or prior to the Closing
Date for the payment of class 4 administrative claims under the Joint Plan and
preclosing expenses (as defined in the FC Trust Agreement); which reserved
funds shall only be deemed to be Excluded FC Reserve Funds to the extent needed
for the payment of the above claims and expenses.
FCBOT - First City Bancorporation of Texas, Inc., a bank holding company
incorporated in the State of Delaware.
FC Intangible Assets - all "Fidelity Bond" policies and claims and "D &
O" policies and claims of FCBOT and all capital stock in First City Life
Insurance Company, a life insurance company owned by FCBOT, and all capital
stock in Central Texas Insurance Company, Inc.; all of which FC Intangible
Assets are being held in the name of New FirstCity for the benefit of Borrower
and/or FC Liquidating Trust, as provided in the FCLT Asset Agency Agreement.
FC Liquidating Trust - FirstCity Liquidating Trust, a Texas business
trust.
FCLT Asset Agency Agreement - collectively, (i) that certain Assignment
of Proceeds of Causes of Action dated June 21, 1995, pursuant to which FCBOT
assigned to Borrower all of its right, title and interest in and to any and all
proceeds recovered by FCBOT as the result of the assertion by it of any claims
related to that portion of the FC Intangible Assets consisting of "Fidelity
Bond" policies and claims, and agreed that Borrower would have the right to
direct the prosecution by FCBOT of any such claims, subject to certain terms
and conditions as set forth therein, (ii) that certain Assignment of Proceeds
of Causes of Action dated July 3, 1995, pursuant to which FCBOT assigned to
Borrower all of its right, title and interest in and to any and all proceeds
recovered by FCBOT as the result of the assertion by it of any claims related
to that portion of the FC Intangible Assets consisting of "D & O" policies and
claims, and agreed that Borrower would have the right to direct the prosecution
by FCBOT of any such claims, subject to certain terms and conditions as set
forth therein, and (iii) that certain Undertaking for Future Assignment dated
July 3, 1995, pursuant to which New FirstCity agreed to hold, for the benefit
of FC Liquidating Trust, that portion of the FC Intangible Assets consisting of
capital stock in First City Life
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Insurance Company and Central Texas Insurance Company, Inc., and agreed to
transfer to FC Liquidating Trust all proceeds in respect of such capital stock
for the account of Borrower, and to transfer, upon receipt of certain
regulatory approvals and other conditions, such capital stock to Borrower or
other designee of FC Liquidating Trust, subject to certain terms and conditions
as set forth therein.
FC Trust Agreement - that certain Liquidating Trust Agreement dated as
of July 3, 1995 under which Shawmut Bank Connecticut, National Association,
appears as Trustee (the "Trustee") and pursuant to which FC Liquidating Trust
was created, and any amendments thereto.
FDIC - the Federal Deposit Insurance Corporation in its corporate
capacity and in its capacity as receiver of the "First City Banks" (as defined
in the FDIC Loss Sharing Agreement).
FDIC Cushion Funds - all funds retained by the FDIC in the "Litigation
and Expense Cushion" which was established by the FDIC in the initial amount of
$60,000,000 pursuant to Section 3.2 of the FDIC Loss Sharing Agreement; which
funds are to be released to Borrower, as the assignee of FCBOT, pursuant to
Section 3.4 of the FDIC Loss Sharing Agreement.
FDIC Loss Sharing Agreement - that certain "Loss-Sharing Settlement
Agreement" dated March 3, 1995 among the FDIC, FCBOT and the FCBOT REO
Affiliated Entities, a copy of which is attached to the Motion to Approve Loss
Sharing Agreements as Exhibit A.
Financing Facility - as defined in subsection (vi) of the Preliminary
Statement appearing at the beginning of this Agreement.
Fleet - Fleet National Bank, a national banking association formed under
the laws of the United States of America.
Frost - the Frost National Bank, a national banking association.
Frost Letters of Credit - jointly (i) that certain Letter of Credit No.
RS1036995 in the amount of One Million Dollars ($1,000,000) dated July 11, 1995
and issued to Frost by Fleet (the "Fleet - Frost LC") pursuant to the Fleet -
Frost LC Application; and (ii) that certain Letter of Credit No. 151614 in the
amount of One Million Dollars ($1,000,000) dated July 11, 1995 issued to Frost
by NationsBank (the "NationsBank - Frost LC") pursuant to the NationsBank -
Frost LC Application; and any future amendments, extensions, replacements or
substitutions therefor or for either of them, whether of the same amount(s) or
otherwise.
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Frost LC Applications - jointly and severally (i) that certain
Application and Agreement for Standby Letter of Credit dated July 6, 1995
executed and delivered by Borrower to Fleet requesting the issuance by Fleet of
a Letter of Credit in the amount of One Million Dollars ($1,000,000) in favor
of Frost (the "Fleet - Frost LC Application"); and (ii) that certain
Application and Agreement for Standby Letter of Credit dated July 6, 1995
executed and delivered by Borrower to NationsBank requesting the issuance by
NationsBank of a Letter of Credit in the amount of One Million Dollars
($1,000,000) in favor of Frost (the "NationsBank - Frost LC Application"); and
any future amendments thereof.
Frost LC Documents - collectively, the Frost LC Applications and the
Frost Letters of Credit.
Frost Purchase Agreement - that certain Purchase Agreement between Frost
and FCBOT, a copy of which is attached to the Motion to Approve Loss Sharing
Agreements as Exhibit C.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
General Partner - FCLT Loans Asset Corp., a Texas corporation.
Hazardous Substance - one or more of the following substances:
(a) those substances included within the definitions of
"hazardous substances," "hazardous materials" or "toxic
substances," in CERCLA, RCRA, Toxic Substances Control
Act, Federal Insecticide, Fungicide and Rodenticide Act
and the Hazardous Materials Transportation Act (49
U.S.C. Section 1801, et seq.);
(b) such other substances, materials and wastes which at
the time in question are regulated as hazardous or
toxic under applicable local, state or federal law, or
which are classified as hazardous or toxic under
federal, state, or local laws or regulations; and
(c) any material, waste or substance which is (i) asbestos,
(ii) polychlorinated biphenyls, (iii) designated as a
"hazardous substance" pursuant to Section 311 of the
Clean Water Act, 33 U.S.C. Sections 1251 et seq. (33
U.S.C. 1321) or listed pursuant to Section 307 of the
Clean Water Act (33 U.S.C. 1317), (iv) explosives, (v)
radioactive materials, or (vi) petroleum, petroleum
products or any fraction thereof.
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Indebtedness - as applied to a Person means, without duplication (a) all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person on
the date as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations, (b) all obligations of other Persons
which such Person has guaranteed and (c) in the case of Borrower (without
duplication), the Obligations.
Indemnified Liabilities - as defined in Section 8.1.17 of this
Agreement.
Indemnified Parties - as defined in Section 8.1.17 of this Agreement.
Indemnity Agreement - that certain Servicer Indemnity Agreement from New
FirstCity to Agent and Lenders of even date herewith.
Initial Advance - as defined in Section 2.1 of this Agreement.
Interest Adjustment Date - the first Business Day after the fifth
calendar day of each calendar month; which shall be the first day of each
Interest Period pertaining to each Eurodollar Loan.
Interest Election - Borrower's irrevocable written notice of election of
Contract Rate(s) which shall be in the form of Exhibit E attached hereto and
which shall, subject to this Agreement, effect a change in the Contract Rate(s)
to be applicable to the portion of the outstanding Loan Proceeds specified
therein, such change to occur on the Interest Adjustment Date next succeeding
three (3) Business Days after receipt of such Interest Election by Disbursing
Agent. Any Interest Election received by Disbursing Agent after 12 o'clock
P.M. on a Business Day shall be deemed, for purposes of this Agreement, to have
been received prior to 12 o'clock P.M. on the next succeeding Business Day.
Interest Period - with respect to each Eurodollar Loan, each succeeding
approximately one month period commencing on each Interest Adjustment Date and
ending on the day immediately prior to the next succeeding Interest Adjustment
Date; provided however, any Interest Period that would otherwise extend beyond
the Maturity Date shall end on the Maturity Date.
Interim FDIC Settlement Agreement - that certain Settlement Agreement
dated June 22, 1994 between the FDIC, the FDIC Receivers, FCBOT and the "FCBOT
Affiliate Entities", as amended; which Settlement Agreement is more
particularly described in the Services Agreement.
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Joint Plan - That certain Joint Plan of reorganization dated December
23, 1994, as amended, filed with the Bankruptcy Court in the Bankruptcy Case by
FCBOT, the Official Committee of Equity Security Holders and J-Hawk Corporation
with the participation of Cargill Financial Services Corporation.
Judgment - a verdict or order obtained in a legal proceeding to enforce
any Instrument, note or mortgage, including without limitation any and all
verdicts or orders obtained by any of the Sellers or their predecessors,
Borrower or any REO Affiliate with respect to any of the Pledged Notes or any
of the other Pledged Loan Documents.
LC Documents - collectively, the Frost LC Documents and the TCB LC
Documents.
Lease-Up Expenses - as to any REO Property, (i) all reasonable and
customary leasing commissions, (ii) all reasonable tenant improvement costs
actually paid by Borrower or the REO Affiliate in question with respect to the
leasing of space in such REO Property pursuant to a written lease and (iii) all
capital expenditures actually paid by Borrower or the REO Affiliate in question
with respect to other improvements to such REO Property, provided that such
capital expenditures are expended in accordance with a budget for such REO
Property which has been approved in writing by Lenders; all as evidenced by
invoices and such other back-up information as Lenders may require.
Lender or Lenders - individually or jointly, Fleet and NationsBank.
Lender Pro Rata Share - the percentage interest in the Loan owned by
each Lender, as more particularly defined in Section 10.10 of this Agreement.
Lenders' Transaction Costs - (i) all of both Lenders' reasonable due
diligence and travel expenses, (ii) all of both Lenders' reasonable attorneys'
fees , (iii) all disbursements of Lenders' attorneys, and (iv) all reasonable
title costs, recording costs, appraisal fees, environmental fees and other
related costs incurred by Lenders.
Letter of Credit Agreements - collectively, the Fleet - Frost LC
Application, the NationsBank - Frost LC Application, the Fleet - TCB LC
Application and the NationsBank - TCB LC Application.
Letters of Credit - collectively, the Fleet - Frost LC, the NationsBank
- - Frost LC, the Fleet - TCB LC and the NationsBank -TCB LC.
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<PAGE> 22
Lien - any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, deed to secure debt, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes.
Loan or Loans - the revolving line of credit loans made by Lenders to
Borrower pursuant to this Agreement and evidenced by the Notes.
Loan Documents - this Agreement, the Notes, the Advance Documents, the
LC Documents, the Other Agreements, and the Security Documents.
Loan Fees - The fees payable by Borrower to Lenders in connection with
the Financing Facility, as more particularly described in Section 4.5 of this
Agreement.
Loan Proceeds - All proceeds of the Notes advanced by Lenders.
Lock-Box - one or more post office boxes opened by NationsBank, in its
capacity as Lock-Box Agent, with the United States Postal Service pursuant to
the Lock-Box Agreement for the receipt of payments under Collateral Loans and
all other payments with respect to all other Assets of the Borrower and all
assets of FC Liquidating Trust.
Lock-Box Account - an account to be maintained at NationsBank's main
office, 901 Main Street, Dallas, Texas, as more particularly defined in the
Lock-Box Agreement.
Lock-Box Agreement - that certain Lock-Box Agreement of even date
herewith by and among NationsBank in its capacity as Lock-Box Agent, Borrower,
Agent, Subordinated Lender, and Servicer, as such Agreement may hereafter be
amended or supplemented from time to time together with any replacement or
substitution therefor.
LT Guaranty - that certain Guaranty from FC Liquidating Trust, as
Guarantor, to Agent pursuant to the terms of which FC Liquidating Trust has
guaranteed the payment and performance in full by Borrower of all of its
Obligations to Agent and Lenders.
LT Security Instruments - the following documents of even date herewith
executed and delivered by FC Liquidating Trust to Agent for the benefit of both
Lenders as security for the payment and performance by FC Liquidating Trust of
its obligations under the LT Guaranty and the payment and performance by
Borrower of its
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<PAGE> 23
Obligations: (i) that certain Security Agreement and Assignment of Right
whereby FC Liquidating Trust grants to Agent a security interest in all of the
Trust Assets, (ii) those three (3) separate Stock Pledge Agreements whereby FC
Liquidating Trust pledges to Agent and grants to Agent a security interest in
all of the issued and outstanding capital stock of FCLT One Corp., FCLT Two
Corp. and FCLT Loans Corp., respectively, (iii) that certain Pledge and
Security Agreement whereby FC Liquidating Trust pledges to Agent and grants to
Agent a security interest in all of its limited partnership interest in
Borrower, (iv) that certain Pledge and Security Agreement whereby FCLT One
Corp. pledges to Agent and grants to Agent a security interest in all of its
general partnership interest in FCLT One, L.P. and (v) that certain Pledge and
Security Agreement whereby FCLT Two Corp. pledges to Agent and grants to Agent
a security interest in all of its limited partnership interest in FCLT Two,
L.P.; together with any modifications of any of the foregoing instruments,
additions thereto and substitutions therefor.
LT Loan Documents - the LT Guaranty and the LT Security Instruments.
Maturity Date - subject to the Borrower's right to extend the same on
the terms and conditions set forth in Section 4.6 below, the 30th day of June,
1997, being the date on which the Note is due and payable in full.
Maximum DSC Loan Amount - As calculated in each Advance Certificate, an
amount equal to the applicable DSC Net Cash Flow divided by the applicable DSC
Coverage Rate; which calculations shall be set forth in an attachment to the
respective Advance Certificate and shall be subject to the review and approval
of Lenders.
Maximum Facility Availability - As calculated in each Advance
Certificate, an amount equal to the lesser of:
(a) 70% of the total Allocated Values of the Portfolio
Assets then remaining in Tranche 1, plus 55% of the
total Allocated Values of the Portfolio Assets then
remaining in Tranche 2, plus 70% of the total Allocated
Values of the Portfolio Assets then remaining in
Tranche 3; or
(b) 60% of the total ERC of all Portfolio Assets then
remaining in Tranche 1, Tranche 2 and Tranche 3; or
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<PAGE> 24
(c) An amount equal to $91,100,000 plus 70% of the
total Allocated Values of the Portfolio Assets then
remaining in Tranche 3; or
(d) commencing six (6) months after the Closing Date
and continuing for the remainder of the Term, the
"Maximum DSC Loan Amount".
Maximum Legal Rate - on any day, the highest non-usurious rate of
interest permitted by applicable law on such day, computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as applicable.
Maximum Revolver Availability - As calculated in each Advance
Certificate, an amount equal to the then Maximum Facility Availability minus
the total combined amounts of all then outstanding Letters of Credit.
Minimum Release Price - as defined in Section 6.6 of this Agreement.
Motion to Approve Loss Sharing Agreement - Debtor's Motion to Approve
Loss Sharing Agreements . . . dated March 3, 1995 filed with the Bankruptcy
Court in connection with the confirmation of the Joint Plan.
Multi-Employer Plans - has the meaning set forth in Section 4001(a)(3)
of ERISA.
NationsBank - NationsBank of Texas, N.A., a national banking association
formed under the laws of the United States of America.
Net Cash Flow - all funds of every type and nature received by Borrower,
each REO Affiliate, the FC Liquidating Trust, the Servicer or any of their
respective agents with respect to the Collateral or the Trust Assets,
including, without limiting the generality of the foregoing: (a) all interest,
principal, Tax Escrow Payments and other payments and collections received on
or with respect to the Collateral Loans, (b) all Net Operating Income from REO
Properties, (c) all Net Sales Proceeds from the sales of REO Properties,
Collateral Loans and any other items of Collateral and any Trust Assets, (d)
all Net Insurance and Condemnation Proceeds (e) all payments received by
Borrower or FC Liquidating Trust from any of the Sellers pursuant to any of the
Sale Agreements, including all proceeds of all "put backs" to any of the
Sellers of any items of Collateral, (f) all Net Collection Proceeds, and (g)
all interest, dividends and other earnings directly or indirectly paid to
Borrower or FC Liquidating Trust on funds, accounts and investments of Borrower
or FC Liquidating Trust. Notwithstanding anything to the contrary contained in
this
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<PAGE> 25
Agreement, all Net Operating Income from any REO Property with respect to any
calendar month shall not be deemed to be Net Cash Flow which has been "received
by Borrower" until the first to occur of (i) the payment of such Net Operating
Income by the respective Property Manager to Borrower, the REO Affiliate in
question or the Servicer, or (ii) the 15th day of the next following calendar
month.
Net Collection Proceeds - with respect to the (i) payment in full of any
Collateral Loan, (ii) the settlement or compromise of any Collateral Loan or
(iii) any other collection on a Collateral Loan (including pursuant to a
foreclosure or other legal proceedings against the Account Debtor in question
or any guarantor), all proceeds received in connection with such
payment/collection (whether from the Account Debtor, a guarantor, pursuant to a
foreclosure, or otherwise) less reasonable and customary costs of collection
actually paid by the Borrower to Unrelated Third Parties.
Net Insurance and Condemnation Proceeds - All Insurance and Condemnation
Proceeds paid to Borrower, Servicer or REO Affiliates with respect to the
Collateral (including any of the REO Properties) less reasonable and customary
costs of collection actually paid by Borrower or the REO Affiliate in question
to Unrelated Third Parties.
Net Operating Income - with respect to each REO Property, for any
period, such property's "Gross Income" for such period, minus all "Operating
Expenses" paid during such period and minus all Permitted Lease-Up Expenses
paid during such period. "Gross Income" is defined as all cash receipts
(exclusive of Tenant Security Deposits) generated by the REO Property in
question of whatever kind, including all rents, reimbursements from tenants for
Operating Expenses and other revenues. "Operating Expenses" is defined as all
reasonable and customary expenses actually paid during such period which, in
accordance with GAAP, would be classified as operating expenses for a similar
type of property, including utilities, taxes, insurance, repairs and
maintenance, janitorial and reasonable property management fees actually paid
by Borrower or the REO Affiliate in question to Unrelated Third Parties.
Net Sales Proceeds - with respect to the sale or conveyance of any REO
Property, Collateral Loan, or other Collateral, the gross proceeds of such sale
minus reasonable and customary broker's commissions and other closing costs of
the sale actually paid by the Borrower or the REO Affiliate in question to
Unrelated Third Parties.
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New FirstCity - FirstCity Financial Corporation, a Delaware corporation,
resulting from the merger of FCBOT and J-Hawk Corporation pursuant to the Joint
Plan, having its main office at 6400 Imperial Drive, Waco Texas 76714-8216 .
Notes or Note - jointly, the $50,000,000.00 Revolving Credit Note of
even date herewith, executed by Borrower and delivered to Fleet pursuant to the
terms of this Agreement and the $50,000,000.00 Revolving Credit Note of even
date herewith executed by Borrower and delivered to NationsBank pursuant to the
terms of this Agreement; together with any renewals, extensions or
modifications thereof and substitutions therefor.
Notice of Borrowing - as defined in Section 2.2.1 of this Agreement.
Obligations - All liabilities and obligations of Borrower to Lenders
and/or Agent and/or Disbursing Agent under and with respect to the Loan, the
Notes, this Agreement, the LC Documents and the other Loan Documents, and all
renewals, increases, extensions, modifications, rearrangements or restatements
thereof, and all other advances, debts, liabilities, obligations, covenants and
duties owing, arising, due or payable from Borrower to Lenders or Agent of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under or with respect to this Agreement
or any of the other Loan Documents, whether direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising. The term includes, without limitation, all interest,
charges, expenses, fees, attorney's fees and any other sums chargeable to
Borrower under any of the Loan Documents.
Operating Reserve Account - an interest bearing checking account
established by Borrower with Fleet; which account shall be (i) funded and
disbursed in accordance with Sections 2.2 and 5.1.2(f) of this Agreement and
(ii) pledged and assigned to Agent and Lenders as additional security for the
payment, performance and observance of the Obligations.
Other Agreements - any and all agreements, instruments and documents
(other than this Agreement, the Note, the Advance Documents, and the Security
Documents), heretofore, now or hereafter executed by Borrower and/or delivered
to Lenders with respect to the transactions contemplated by this Agreement
(including, without limitation, the Services Agreement and the Subordination
Agreement), together with related documentation, all as amended, renewed,
modified, extended or restated from time to time.
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<PAGE> 27
Participation Agreement - a Participation Agreement pursuant to which
Borrower owns a Participation Interest in a loan.
Participation Interest - the interest of Borrower in a loan evidenced by
a Participation Agreement where Borrower is not the "lead" lender with respect
to such loan.
Permitted Lease-Up Expenses - all Lease-Up Expenses with respect to any
REO Property which do not exceed, in the aggregate and on a cumulative basis,
the lesser of (i) $100,000 or (ii) ten percent (10%) of the Allocated Value of
the REO Property in question, or such other limit as may be agreed to in
writing by Lenders.
Permitted Liens - (i) Liens at any time granted in favor of Lenders;
(ii) Liens on REO Properties at any time granted in favor of Borrower (with the
consent of Lenders) with respect to which Assignments have been delivered to
Lenders; (iii) Liens for taxes (excluding any Lien imposed pursuant to any of
the provisions of ERISA); provided, however, that all taxes or assessments that
are a Lien on any REO Property or any real property securing a Collateral Loan,
shall be paid by Borrower before any scheduled tax sale or any action to
foreclose such Lien; (iv) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons for labor,
materials, supplies or rentals incurred in the ordinary course of Borrower's
business, but only if such Liens are in all respects junior and subordinate to
the Liens in favor of Lenders and to all advances at any time to be made by
Lenders; (v) Liens resulting from deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment insurance,
social security and other like laws; (vi) attachment, judgment and other
similar non-tax Liens arising in connection with court proceedings, but only if
and for so long as (a) such Liens are in all respects junior and subordinate to
the Liens in favor of Lenders and to all advances at any time to be made by
Lenders or (b) the execution or other enforcement of such Liens is and
continues to be effectively stayed and bonded on appeal in a manner
satisfactory to Lenders for the full amount thereof, and in either case (i.e.,
either (a) or (b)) the validity and amount of the claims secured thereby are
being actively contested in good faith and by appropriate lawful proceedings,
and such Liens do not, in the aggregate, materially detract from the value of
the Collateral or materially impair the use thereof in the operation of
Borrower's business; (vii) liens to Subordinated Lender created pursuant to the
Subordinated Security Agreement; (viii) such other Liens as Lenders may
hereafter approve in writing and (ix) all Permitted Prior Liens.
Permitted Prior Liens - Liens and encumbrances upon any asset securing
payment of a Collateral Loan which have priority (are
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<PAGE> 28
senior and superior) to the Lien of the mortgage or deed of trust or security
interest securing such Collateral Loan and which are existing on the date the
Collateral Loan is purchased by Borrower or granted to Borrower by an REO
Affiliate, as the case may be, provided such prior Liens are disclosed to
Lenders by Borrower in writing prior to the Closing Date.
Person - an individual, partnership, corporation, joint stock company,
trust or unincorporated organization, or a governmental agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Pledge Agreements - collectively, those two (2) certain Pledge and
Security Agreements of even date herewith from Borrower to Agent for the
benefit of both Lenders whereby Borrower pledges to Agent and grants to Agent a
security interest in (i) all of Borrower's limited partnership interest in FCLT
One, L.P. and (ii) all of Borrower's limited partnership interest in FCLT Two,
L.P. and that certain Pledge and Security Agreement of even date herewith from
FCLT Loans Corp. to Agent for the benefit of both Lenders whereby FCLT Loans
Corp. pledges to Agent and grants to Agent a security interest in all of its
general partnership interest in Borrower.
Pledged Loan Documents - as defined in the definition of Collateral
under this Agreement.
Pledged Notes - as defined in the definition of Collateral under this
Agreement.
Pledged Security Documents - as defined in the definition of Collateral
under this Agreement.
P.M. - a time from and including twelve o'clock noon to and excluding
twelve o'clock midnight on any day using Dallas, Texas time.
Pools - the five (5) separate pools (designated as: (i) "TCB - Houston",
(ii) "TCB - Dallas", (iii) "Frost", (iv) "FCB-FDIC" and (v) "FCB Estate") into
which the Portfolio Assets have been segregated. The respective Pools into
which the Tier 1 Assets and the Tier 2 Assets have been segregated have been
shown on the Borrowing Base Schedule attached hereto as Exhibit D.
Portfolio Assets - collectively, all Collateral Loans and all REO
Properties.
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Portfolio Committee - the "Portfolio Committee" under that certain
Liquidating Trust Agreement dated as of July 3, 1995 pursuant to which FC
Liquidating Trust was created.
Power of Attorney - an irrevocable Power of Attorney to be delivered by
Borrower to Agent on the Closing Date, as more specifically defined in Section
11.1 of this Agreement.
Prime Rate - the floating rate of interest per annum announced by
NationsBank from time to time as being its "prime rate" of interest, such
interest rate to be adjusted on the effective date of any change thereof by
NationsBank.
Prime Rate Loan - any Loan Proceeds bearing interest at Effective Prime.
Principal Payments - all payments of principal under the Notes.
Prohibited Transaction - any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986.
Property Manager - an independent management firm which has been
retained by Servicer or by an REO Affiliate to manage an REO Property.
Property Management Agreement - as to each REO Property, an agreement
between Servicer or the respective REO Affiliate and the respective Property
Manager which contains provisions whereby such Property Manager agrees (i) to
collect all Gross Income with respect to such REO Property, (ii) to pay when
due all Operating Expenses (exclusive of taxes) with respect to such REO
Property, (iii) by not later than fifteen (15) days after the end of each
calendar month, to pay to Servicer or such REO Affiliate all Net Operating
Income from such REO Property with respect to the calendar month in question,
(iv) to render such other services as may be agreed upon by Servicer or such
REO Affiliate and such Property Manager and (v) that such Property Management
Agreement may be terminated by Lenders upon the occurrence of an Event of
Default hereunder and, upon such termination and upon Lenders's written
request, to deliver to Lenders all funds, books, records, leases and other
documents in such Property Manager's possession with respect to the REO
Property in question.
Real Estate Loan - Each loan acquired by Borrower pursuant to one of the
Sale Agreements which is secured by Liens (e.g. a deed of trust, mortgage,
etc.) on real estate.
RCRA - the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Sections 6901, et seq.), as amended from time to time.
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Regulation D - as defined in Section 4.3 of this Agreement.
Released Asset - as defined in Section 6.6 of this Agreement.
Release Price - as defined in Section 6.6 of this Agreement.
REO Affiliates - (i) FCLT REO One, L.P., a Texas limited partnership
("FCLT One L.P."), having FCLT REO One Asset Corp., a Texas corporation ("FCLT
One Corp.") as its general partner, (ii) FCLT REO Two, L.P, a Texas limited
partnership ("FCLT Two L.P."), having FCLT REO Two Asset Corp., a Texas
corporation ("FCLT Two Corp."), as its general partner and (iii) any other
legal entity (such as a limited partnership or a corporation) which is 100%
owned, directly or indirectly, by Borrower and/or the limited partners of
Borrower and/or the General Partner or any combination thereof, the ownership
interests in which have been pledged to Agent and which has been approved by
Lenders.
REO Note - as to each REO Property, a demand promissory note which (i)
is in form and substance satisfactory to Lenders (ii) is executed and delivered
to Borrower by the REO Affiliate which owns the REO Property in question, (iii)
is in an amount equal to not less than 130% of the Allocated Value of the REO
Property in question, (iv) bears interest at Effective Prime with a provision
whereby such interest rate shall increase to the Default Rate upon the
occurrence of a default thereunder, (v) requires the payment of interest
monthly in arrears on the last day of each month, (vi) requires a monthly
principal payment in an amount equal to all Net Operating Income received by
such REO Affiliate with respect to each calendar month minus any interest paid
by such REO Affiliate to Borrower with respect to the month in question and
(vii) contains provisions whereby the occurrence of an Event of Default
hereunder shall constitute an event of default under such REO Note.
REO Property - any real property, or any interest therein, now or
hereafter legally or beneficially owned by Borrower or an REO Affiliate
including, without limitation, any real property which has been foreclosed upon
by a Seller or Borrower or an REO Affiliate or which was conveyed to Borrower
or an REO Affiliate by a deed in lieu of foreclosure; which REO Property shall
in all respects be deemed to be proceeds of the Collateral.
REO Security Documents - those certain mortgages or deeds of trust,
assignments of leases and rents, security agreements and appropriate UCC
financing statements, all in form and substance satisfactory to Lenders, as
required by Lenders in their sole discretion for each REO Property, to be
executed by REO Affiliate(s) in favor of Borrower and pursuant to the terms of
which, as security for the applicable REO Note (and, at Lenders' option, the
Notes), there shall be (a) granted and conveyed to
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Borrower Liens upon each REO Property (including, all personal property
associated therewith) owned by REO Affiliate(s) from time to time as is
described therein and (b) assigned to Borrower all leases and rents with
respect thereto; as the same may be amended, renewed, modified, extended or
restated from time to time with the consent of Lenders.
REO Tax Escrow Payments - All payments made by REO Affiliates to
Borrower for a specified purpose (such as real estate tax payments, insurance
premiums, etc.) other than payments of principal, interest, fees and other
amounts owed to Borrower with respect to the Loan evidenced the respective REO
Note.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Responsible Officer - for each entity which is required to provide
reports hereunder, the chief executive officer, chief financial officer or
other vice president designated in writing to Lenders as a "Responsible
Officer".
Revolving Advances - as defined in Section 2.1.3 of this Agreement.
Sale Agreements - Collectively, (i) the FDIC Loss Sharing Agreement,
(ii) the Frost Purchase Agreement, (iii) the TCB Purchase Agreement, and (iv)
the Interim FDIC Settlement Agreement.
Security Agreement - that certain Security Agreement and Assignment of
Rights of even date herewith from Borrower to Agent for the benefit of both
Lenders whereby Borrower grants Agent a security interest in the Collateral;
together with any modifications thereof, additions thereto and substitutions
therefor.
Security Documents - The following documents: the (i) Security
Agreement, (ii) Assignments, (iii) Custodial Agreement, (iv) Lock-Box
Agreement, (v) Escrow Agreement, (vi) Indemnity Agreement, (vii) UCC-1
Financing Statements; (viii) Pledge Agreements, (ix) LT Loan Documents and (x)
all other agreements and documents executed by Borrower or Servicer now or at
any time hereafter securing the whole or any part of the Obligations, as
amended, renewed, modified, extended or restated from time to time.
Seller or Sellers - individually or collectively, the FDIC, TCB and
Frost.
Servicer - New FirstCity (which may also be doing business under the
name "J-Hawk Corporation") or any replacement servicer designated by Borrower
and approved in writing by Lenders. All
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references to Servicer shall be deemed to refer to each of such parties, all of
such parties and any of such parties.
Servicer Advances - all advances made to Borrower by Servicer in order
to provide Borrower with funds to pay Approved Expenditures.
Services Agreement - that certain Investment Management Agreement of
even date herewith by and among New FirstCity, Borrower, FC Liquidating Trust,
FCLT One Corp. and FCLT Two Corp., or any replacement to such agreement which
is entered into by Borrower with a replacement servicer and which is approved
in writing by Lenders.
Senior Subordinated Certificate Payments - payments required to be paid
to New FirstCity under the Class A Certificate in order to provide New
FirstCity with funds sufficient to make the scheduled payments required to be
paid under the Senior Subordinated Notes.
Senior Subordinated Notes - those certain "Senior Subordinated Notes"
dated July 3, 1995 issued by New FirstCity to the present Class A preferred
shareholders of FCBOT pursuant to the Joint Plan; which Senior Subordinated
Notes (i) are in the combined principal amount of $106,690,029, (ii) bear
interest at the rate of nine percent (9%) per annum payable quarterly and (iii)
require one (1) principal payment in the amount of $53,345,014.50 on September
30, 1996 and an additional principal payment in the amount of $53,345,014.50 on
September 30, 1997.
Settlement - with respect to any Collateral Loan, the satisfaction of
Borrower's claims against the respective Account Debtor in connection with such
Collateral Loan, whether pursuant to a full or discounted repayment.
Special Preferred Stock Payments - all dividends, redemption amounts and
other amounts at anytime payable to holders of the "New Special Preferred
Stock" issued by New FirstCity; which Special Preferred Stock Payments are in
all respects subordinate to the Financing Facility.
Subordinate Note - the $150,000,000 Subordinate Promissory Note of even
date herewith executed by Borrower and delivered to Subordinated Lender;
together with any renewals, extensions or modifications thereof or
substitutions therefor.
Subordinate Security Agreement - that certain Subordinate Security
Agreement and Assignment of Rights of even date herewith from Borrower to
Subordinated Lender whereby Borrower grants Subordinated Lender a security
interest in the Collateral which is in all respects subordinate and inferior
the Liens on the
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Collateral held by Agent and/or Lenders; together with any modifications
thereof, additions thereto and substitutions therefor.
Subordination Agreement - that certain Subordination Agreement by and
among Borrower, Agent and Subordinated Lender of even date herewith whereby
Subordinated Lender agrees, among other things, that the Subordinated
Indebtedness and all of its rights under the Subordinated Indebtedness
Documents are in all respects subordinate and inferior to the rights of Agent
and Lenders under the Loan Documents.
Subordinated Indebtedness - all Indebtedness of Borrower to Subordinated
Lender of every type and nature, whether now existing or hereafter arising.
Subordinated Indebtedness Documents - the Subordinate Note, the
Subordinate Security Agreement and all other documents and instruments
evidencing, securing or executed in connection with the Subordinated
Indebtedness, whether now existing or hereafter arising.
Subordinated Lender - FC Liquidating Trust.
Tax Escrow Account - an account to be opened in the name of Borrower and
maintained at Fleet's main office, 111 Westminster Street, Providence, Rhode
Island 02903 into which Tax Escrow Payments are to be deposited, as more
particularly defined in the Escrow Agreement.
Tax Escrow Payments - all payments made by Account Debtors (including
REO Affiliates) for a specified purpose (such as real estate tax payments,
insurance payments, etc.) other than payments of principal, interest, fees and
other amounts owed to Borrower with respect to the Collateral Loans and all Net
Insurance and Condemnation Proceeds received by Borrower which are not
available to be applied to the outstanding balance under the Collateral Loan in
question but, rather, are required by the Collateral Loan Documents in question
to be used for purposes of repairing or rebuilding of the real property in
question.
TCB - Texas Commerce Bank National Association, a national banking
association.
TCB Letters of Credit - jointly (i) that certain Letter of Credit No.
RS1036996 in the amount of Twelve Million Five Hundred Thousand Dollars
($12,500,000) dated July 11, 1995 and issued to TCB by Fleet (the "Fleet - TCB
LC") pursuant to the Fleet - TCB LC Application; and (ii) that certain Letter
of Credit No. 151615 in the amount of Twelve Million Five Hundred Thousand
Dollars
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($12,500,000) dated July 11, 1995 issued to TCB by NationsBank (the
"NationsBank - TCB LC") pursuant to the NationsBank - TCB LC Application; and
any future amendments, extensions, replacements or substitutions therefor or
for either of them, whether of the same amount(s) or otherwise.
TCB LC Applications - jointly and severally (i) that certain Application
and Agreement for Standby Letter of Credit dated July 6, 1995 executed and
delivered by Borrower to Fleet requesting the issuance by Fleet of a Letter of
Credit in the amount of Twelve Million Five Hundred Thousand Dollars
($12,500,000) in favor of TCB (the "Fleet - TCB LC Application"); and (ii) that
certain Application and Agreement for Standby Letter of Credit dated July 6,
1995 executed and delivered by Borrower to NationsBank requesting the issuance
by NationsBank of a Letter of Credit in the amount of Twelve Million Five
Hundred Thousand Dollars ($12,500,000) in favor of TCB (the "NationsBank - TCB
LC Application"); and any future amendments thereof.
TCB LC Documents - collectively, the TCB LC Applications and the TCB
Letters of Credit.
TCB Purchase Agreement - That certain Purchase Agreement between TCB and
FCBOT, a copy of which is attached to the Motion to approve Loss Sharing
Agreements as Exhibit B.
Tenant Security Deposits - all security deposits paid to Servicer or
Property Managers by tenants of space in one of the REO Properties.
Term - the period commencing on the Closing Date and ending on the
Maturity Date, as the same may be extended pursuant to the terms hereof.
Tiers - the three (3) separate tiers (designated as (i) "Tier 1", (ii)
"Tier 2", and (iii) "Tier 3") to which the Portfolio Assets have been divided
for administrative purposes.
Tier 1 Assets - the Portfolio Assets designated in the effective
Borrowing Base Schedule as being in Tier 1. As set forth in the Borrowing Base
Schedule attached hereto as Exhibit D, 59 Portfolio Assets have been designated
as Tier 1 Assets.
Tier 2 Assets - the Portfolio Assets designated in the effective
Borrowing Base Schedule as being in Tier 2. As set forth in the Borrowing
Base Schedule attached hereto as Exhibit D, 236 Portfolio Assets have been
designated as Tier 2 Assets.
Tier 3 Assets - Portfolio Assets which are not (at the time in question)
Tier 1 Assets or Tier 2 Assets.
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Tier 3 Custodian - New FirstCity, in its capacity as custodian under the
Tier 3 Custodial Agreement.
Tier 3 Custodial Agreement - that certain Tier 3 Custodial Agreement by
and among the Tier 3 Custodian, Borrower, Agent and Subordinated Lender whereby
the Tier 3 Custodian agrees to act as bailee for the documents evidencing the
Collateral Loans which constitute Tier 3 Assets, as such Tier 3 Custodial
Agreement hereafter be amended or supplemented from time to time together with
any replacement or substitution therefor.
Title Certificate - (i) as to any parcel of REO Property, a Certificate
issued by the Title Company to Lenders, showing title to the REO Property in
question to be vested in an REO Affiliate, reflecting the recording of the
respective REO Security Documents thereon, reflecting the recording of the
Assignment of such REO Security Documents to Lenders, showing no Liens or
encumbrances except the Permitted Prior Liens and being in all respects
otherwise reasonably satisfactory to Lenders; and (ii) as to any parcel of real
property securing a Collateral Loan, a Certificate issued by the Title Company
to Lenders, reflecting the recording of the respective mortgage or deed of
trust which secures such Collateral Loan, the assignment of such mortgage or
deed of trust to Borrower and the Assignment thereof to Lenders, showing no
Liens or encumbrances except the Permitted Liens and being in all respects
otherwise reasonably satisfactory to Lenders.
Title Company - such title insurance company(s) as are reasonably
satisfactory to Lenders.
Title Insurance Policy - (i) as to any parcel of REO Property, an ALTA
or ALTEX Standard-Form Mortgagee Title Insurance Policy issued by the Title
Company naming Borrower and Lenders as the "Insured", showing title to the REO
Property in question to be vested in an REO Affiliate, reflecting the recording
of the respective REO Security Documents thereon, reflecting the recording of
the Assignment of such REO Security Documents to Lenders, showing no Liens or
encumbrances except Permitted Prior Liens and being in all respects otherwise
reasonably satisfactory to Lenders; and (ii) as to each parcel of real property
securing a Collateral Loan, an ALTA or ALTEX Standard Form Mortgagee Title
Insurance Policy issued by the Title Company naming Borrower and Lenders as the
"Insured", reflecting the recording of the respective mortgage or deed of
trust which secures such Collateral Loan, the assignment of such mortgage or
deed of trust to Borrower and the Assignment thereof to Lenders, showing no
Liens or encumbrances except the Permitted Liens and being in all respects
otherwise reasonably satisfactory to Lenders.
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Tranches - the three (3) separate Tranches (designated as "Tranche 1",
"Tranche 2" and "Tranche 3") into which the Tier 1 and Tier 2 Assets have been
divided for administrative purposes and for purposes of determining the Maximum
Facility Availability.
Tranche 1 Assets - all Tier 1 Assets and Tier 2 Assets which have been
designated as being in Tranche 1 in the effective Borrowing Base Schedule. As
of the date hereof, 206 Portfolio Assets have been designated as being Tranche
1 Assets in the Borrowing Base Schedule attached hereto as Exhibit D.
Tranche 2 Assets - all Tier 1 Assets and Tier 2 Assets which have been
designated as being in Tranche 2 in the effective Borrowing Base Schedule. As
of the date hereof, 86 Portfolio Assets have been designated as being Tranche 2
Assets in the Borrowing Base Schedule attached hereto as Exhibit D.
Tranche 3 Assets - the 3 Portfolio Assets designated in the Borrowing
Base Schedule attached hereto as Exhibit D as being Tranche 3 Assets.
Trust Assets - all assets owned by FC Liquidating Trust.
UCC-1 Financing Statements - UCC-1 Financing Statements showing Borrower
as "Debtor" and Agent as "Secured Party", and listing all of the Collateral;
each of which UCC-1 Financing Statements shall be in form and substance
satisfactory to Lenders.
UCC Filing Offices - Each of the following filing offices with which
UCC-1 Financing Statements are to be filed:
(i) Texas Secretary of State; and
(ii) All filing offices required in connection with any REO
Security Documents.
Unrelated Third Party. Any Person who or which is not an Affiliate of
Borrower, any REO Affiliate, any of Borrower's or any REO Affiliate's
partners, the Servicer or the Subordinated Lender.
1.2. Accounting and Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with that applied in preparation of the financial statements
referred to in Section 8.1.11, and all financial data pursuant to the Agreement
shall be prepared in accordance with such principles. All other terms
contained in this Agreement shall have, when the context so indicates, the
meanings provided for by the Code to the extent the same are used or defined
therein.
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1.3. Certain Matters of Construction. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. The section titles, table of
contents and list of exhibits appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any instruments or agreements,
including, without limitation, references to any of the Loan Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
SECTION 2 FINANCING FACILITY
2.1. The Loan and Letters of Credit.
2.1.1 Commitment of Lenders. Notwithstanding the fact that
the combined principal amounts of the Notes equal $100,000,000.00 and that the
combined amounts of the Letters of Credit equal $27,000,000, at no time shall
the commitment of Lenders exceed the Maximum Facility Availability.
2.1.2 Letters of Credit. Contemporaneously herewith Lenders
are issuing the Letters of Credit to Frost and TCB. Notwithstanding anything
to the contrary contained in any of the Letter of Credit Agreements, it is
agreed that in the event of any conflict between the provisions of this
Agreement and the provisions of any of the Letter of Credit Agreements, the
provisions of this Agreement will govern and control. To the extent that funds
are ever drawn under any of the Letters of Credit, (i) each such draw will be
paid by the issuing Lender in question, (ii) Disbursing Agent will promptly pay
any then existing Excess DA Funds to each of the Lenders in reimbursement of
such draw(s) and (iii) each of the Lenders will make an equal advance under
their respective Notes in an amount sufficient to reimburse both Lenders for
the balance of such draw(s).
2.1.3 Revolving Loans. Subject to the terms and conditions
of this Agreement and the other Loan Documents, Lenders each agree, on a
several and not on a joint basis, to make advances of 50% of the proceeds of
the Loan to Borrower on a revolving basis up to the Maximum Revolver
Availability; which Maximum Revolver Availability, as calculated at any time
shall be the maximum combined amount of the proceeds of the Loan which Lenders
shall ever be obligated to advance. Subject to the above, advances of Loan
Proceeds shall be made by Lenders in accordance with the following:
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(a) Initial Advance. In connection with the closing of the
Financing Facility, Lender will make an initial advance of the Loan Proceeds
(the "Initial Advance") in an amount equal to such Closing Expenditures as
Borrower may request and Lenders may approve; and
(b) Revolving Advances. After the Closing Date, on up to two
(2) Business Days selected by Borrower in each calendar month and on such
additional Business Days as are required in connection with advances required
to be made by Borrower to Account Debtors under Collateral Loans (each an
"Advance Date") through the Maturity Date, Lenders shall make advances
("Revolving Advances") under the Notes for Approved Expenditures and for the
repayment of Servicer Advances, as detailed in a Notice of Borrowing which has
been received by Disbursing Agent and Lenders not later than five (5) Business
Days prior to the respective Advance Date requested by Borrower. To the extent
that, on any Advance Date upon which Lenders have agreed to make any advance of
Loan Proceeds, there exist Excess DA Funds, as determined by Disbursing Agent,
then on such Advance Date, (i) Disbursing Agent shall advance to Borrower all
then existing Excess DA Funds and (ii) Lenders shall advance to Borrower under
the Notes the balance of the amount requested in the respective Notice of
Borrowing and so approved by Lenders.
2.1.4 The Loan to Constitute One Obligation. The Financing
Facility shall constitute one general obligation of Borrower to Lenders, and
shall be secured by Lenders' security interests in and Liens upon all of the
Collateral, and by all other security interests and Liens heretofore, now or at
any time or times hereafter granted by Borrower to Lenders. Lenders shall
enter the Loan and all advances made by Lenders thereunder as debits to loan
accounts established on the books of Lenders and shall also record in such loan
accounts all payments made by Borrower on any Obligations and all proceeds of
Collateral which are finally paid to Lenders, and may record therein, in
accordance with customary accounting practice, all charges and expenses
properly chargeable to Borrower and any other Obligation. Absent manifest
error, each Lender's books and records with respect to the loan account shall
be conclusive and binding evidence of the outstanding amount of the Obligations
and such books and records may be admitted in evidence in any proceeding to
enforce the Lenders' rights with respect to the Obligations.
2.2. Manner of Borrowing.
2.2.1 Request for Loan. In connection with the Initial
Advance and each Revolving Advance requested by Borrower, Borrower shall give
Disbursing Agent (with a copy to Fleet) a written notice (a "Notice of
Borrowing") specifying (i) the amount of Loan Proceeds which Borrower is
requesting be advanced, (ii) the
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Advance Date upon which Borrower requests Lenders to make such advance of Loan
Proceeds and (iii) where Borrower requests Lenders to wire such Loan Proceeds
to a third party, the relevant wiring instructions. Each Notice of Borrowing
shall have attached to it (a) a fully executed Advance Certificate, (b) such
additional Schedules with respect to the Assets as Disbursing Agent may request
and (c) a Schedule which contains a detailed listing of all Approved
Expenditures and Servicer Advances for which Borrower is requesting the advance
of Loan Proceeds in question and which contains a listing of all such Approved
Expenditures and all other Approved Expenditures with respect to which
Revolving Advances have been made during the calendar quarter in question and a
comparison of same to the then effective Approved Budgets on a quarter-to-date
basis; which Schedule shall be accompanied by such invoices and other backup
information as Disbursing Agent may require. Each Notice of Borrowing shall be
irrevocable and binding on Borrower. Lenders will have no obligation to make
any advances in excess of the amount of Loan Proceeds specified in the Notice
of Borrowing delivered to Disbursing Agent in connection with the Initial
Advance or the respective Revolving Advance. In addition:
(a) The submission of each Notice of Borrowing to Disbursing
Agent shall constitute a reaffirmation by Borrower of each and every
representation and warranty contained in this Agreement as of the date of such
Notice of Borrowing and a further representation, warranty and covenant that no
Default or Event of Default then exists and that Borrower knows of no fact or
circumstance which will or could prejudice the repayment of the Financing
Facility;
(b) To the extent that Lenders make a Revolving Advance on a day
other than an Interest Adjustment Date, the Contract Rate applicable to such
Revolving Advance shall be Effective Prime until the next Interest Adjustment
Date;
(c) Each Lender will advance 50% of each Revolving Advance by
(i) in the case of Fleet, depositing same in the Operating Reserve Account at
Fleet and (ii) in the case of NationsBank, wire transferring same into the
Operating Reserve Account at Fleet; and
(d) Each Advance Date requested by Borrower shall be not less
than five (5) Business Days (or such shorter period as may be agreed to by
Disbursing Agent) after Lenders receive the respective Notice of Borrowing
together with all required attachments.
2.2.2 Delivery of Advance Documents. On or before the
Closing Date, Borrower shall execute and deliver or cause to be executed and
delivered, or cause to be delivered all of the "Documentation" described in
Section 3 of this Agreement and Borrower shall also execute and deliver or
cause to be executed and
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delivered or cause to be delivered to Lenders such other documents and
statements as Lenders deem advisable (collectively, the "Advance Documents").
2.2.3 Funding. If, and only if, Borrower satisfies all the
conditions set forth in Section 3 of this Agreement, Lenders shall make
available the requested Loan Proceeds to or on behalf of Borrower.
SECTION 3 CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
3.1 Conditions Precedent. Notwithstanding any other provision of this
Agreement or any of the other Loan Documents, and without affecting in any
manner the rights of Lenders under the other sections of this Agreement, it is
understood and agreed that Lenders shall be under no obligation to make the
Initial Advance or any Revolving Advances or to issue the Letters of Credit, as
contemplated under this Agreement, unless and until Lenders shall have received
each of the following documents and each of the following conditions has been
and continues to be satisfied, all in form and substance satisfactory to
Lenders and their counsel:
3.1.1. Loan Documents. This Agreement and the other Loan
Documents (including all of the Other Agreements), duly executed and delivered
by the parties thereto;
3.1.2 Subordinated Indebtedness Documents. Certified copies
of all of the Subordinated Indebtedness Documents together with a certification
from Borrower and Subordinated Lender that such documents so delivered
constitute all of the Subordinated Indebtedness Documents.
3.1.3 Equity Investment. Evidence satisfactory to Lenders
(such as the closing statements from the respective Sellers) that, in
connection with Borrower's acquisition of the Assets and the Financing
Facility, Borrower has expended cash equity funds in an amount contemplated by
the Approved Budgets.
3.1.4 Approved Budgets and Business Plans. The Approved
Budgets and Business Plans for the liquidation of all of the Tier 1 Assets and
Tier 2 Assets except those listed in Exhibit F attached hereto; each of which
Business Plans shall have been approved by Servicer, Lenders and (except as to
those Assets listed in Exhibit F) the Portfolio Committee.
3.1.5 Cash Reserve Account. Evidence satisfactory to Agent
that Borrower has funded the Cash Reserve Account as required by Section 6.5 of
this Agreement.
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3.1.6 Perfection of Personal Property Liens. With regard to
all Collateral comprised of personal property, current lien searches from each
of the UCC Filing Offices in each case evidencing that the respective UCC-1
Financing Statement has been filed and constitutes valid and perfected, first
priority, security interests in the Collateral, subject only to Permitted Prior
Liens with respect to security interests in assets securing payment of a
Collateral Loan.
3.1.7 Delivery of Pledged Notes: Receipt by Custodian of one
hundred percent (100%), measured both in number and in dollar amount, of the
original Pledged Notes constituting Tier 1 Assets and Tier 2 Assets (or, as to
each such Pledged Note which has been lost, an original Affidavit of Lost Note
attached to which is a copy of such lost Pledged Note), each of which notes
shall have been duly endorsed thereon or on an allonge attached thereto (by a
complete chain of endorsements from the original holder thereof) to Agent, or,
at Agent's option, endorsed in blank.
3.1.8 Organizational Documents.
(a) A copy of the Partnership Certificates of Borrower
and all REO Affiliates and the Articles/Certificate of Incorporation of the
General Partner, Servicer and the corporate general partners of all REO
Affiliates, and any amendments thereto, and a copy of the Partnership
Agreements of Borrower and all REO Affiliate's and the By-laws of the General
Partner, Servicer and the corporate general partners of all REO Affiliates,
and any amendments thereto, all certified to as of the Closing Date by the
General Partner with respect to Borrower and the General Partner and by the
corporate general partner of each REO Affiliate with respect to the REO
Affiliate in question;
(b) A copy of the FC Trust Agreement and any
amendments thereto; all certified to as of the Closing Date by the Portfolio
Committee or the Trustee thereunder;
(c) Appropriate partnership and corporate resolutions
on behalf of the partners of Borrower and each REO Affiliate and the boards of
directors of the General Partner, the corporate general partners of each REO
Affiliate and the Servicer; and
(d) Certificates of existence/subsistence and/or good
standing from the Secretary of State of Texas relating to the continuing
existence of Borrower, the General Partner, Servicer, each REO Affiliate and
the corporate general partner of each REO Affiliate.
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3.1.9 Legal Opinions. The written opinions of (i) Vander
Woude, Malone & Istre P.C., Akin, Gump, Strauss, Hauer & Feld, L.L.P. and/or
other counsel satisfactory to Lenders, regarding the Borrower, the General
Partner, each REO Affiliate, FC Liquidating Trust and the Servicer, the due
execution and enforceability of the Loan Documents and the transactions
contemplated by the Loan Documents and such other matters as Lenders shall
reasonably request and (ii) Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel
to the Subordinated Lender, (or other counsel satisfactory to Lenders)
regarding the due execution and enforceability of the Subordination Agreement
and such other matters as Lenders shall reasonably request; which opinions
shall be in all respects satisfactory to Lenders.
3.1.10 Formation Balance Sheets. "Formation Balance Sheets"
from FC Liquidating Trust, Borrower and the General Partner, each of which are
in all respects reasonably satisfactory to Lenders.
3.1.11 Other Documents. Such other documents, instruments and
agreements as Agent or Lenders shall reasonably request in connection with the
transaction contemplated hereby, including, without limitation, a Power of
Attorney and such other documents, instruments and agreements as Agent or
Lenders reasonably determine are necessary at any time to perfect any of their
security interests in the Collateral.
3.1.12 Information Concerning the Collateral Loan Pool. Any
and all information and documentation Agent or Lenders deem necessary to
conduct Lenders' analysis of the Collateral Loan Pool.
3.1.13 Other Conditions. The following other conditions have
been and shall continue to be satisfied:
(a) Defaults. No Default or Event of Default shall exist
hereunder or under the Subordinated Credit Agreement, the Subordination
Agreement or the Services Agreement;
(b) Material Adverse Changes. Since formation of Borrower,
there shall not have occurred any material adverse change in the business,
financial condition or results of operations of Borrower, or the existence or
value of any Collateral, or any event, condition or state of facts which would
reasonably be expected materially and adversely to affect the business,
financial condition or results of operations of Borrower;
(c) Proceedings, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to
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obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby or which,
in either Lender's judgment, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents;
(d) Payment of Origination Fee and Lender's Transaction Costs.
Borrower shall have paid (i) the Origination Fee described in Section 4.5
below, and (ii) all of Lenders' Transaction Costs;
(e) Representations and Warranties. All representations and
warranties made to Agent or Lenders by Borrower or any of Borrower's partners
in connection with the application for, processing of and closing of the Loan
shall be true and correct as if made on the Closing Date.
3.2 Conditions Subsequent. In addition to the Conditions Precedent to
funding set forth in Section 3.1 above, Lenders shall have received the
following within the time periods listed below:
3.2.1 Purchase Documentation. Within thirty (30) days after
the Closing Date, certified (by Borrower) copies of all final executed
documentation related to Borrower's acquisition of the Assets; provided,
however, upon either Lender's request (at any time prior to the expiration of
such thirty (30) days) Borrower shall promptly deliver to Lenders photocopies
of such specific purchase documents as either Lender may reasonably request.
3.2.2 Perfection of Real Property Liens. With regard to
Collateral comprised of real property (including Collateral Loans secured by
real property) Title Certificates or Title Insurance Policies in accordance
with Section 8.1.24 hereof;
3.2.3 Collateral Loan Documents.
(a) Within twenty (20) days after the Closing Date, evidence
satisfactory to Lenders that the Custodian has received one hundred percent
(100%) of (i) any and all "Possessory Collateral" (as defined in the Custodial
Agreement) with respect to all Tier 1 Assets and all Tier 2 Assets other than
the Pledged Notes delivered pursuant to Section 3.1.8 above, and (ii) one set
of originals of all Assignments with respect to all Tier 1 Assets and all Tier
2 Assets; and
(b) Within fifteen (15) days after Borrower's receipt of same, the
originals of all Assignments and all REO Security Documents which have been
recorded with the appropriate records of land evidence pursuant to Section
8.1.24 below; and
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(c) As to all Collateral Loans which constitute Tier 1 Assets or Tier 2
Assets, within twenty one (21) days after the Closing Date, (i) a "master"
listing of all Collateral Loan Documents received by Borrower or Servicer in
connection with Borrower's purchase of such Tier 1 and Tier 2 Collateral Loans
and noting whether each Collateral Loan Document is an original or a photocopy
(the "Master List"); which Master List shall have been certified to as being
accurate and complete by the Servicer, and (ii) evidence satisfactory to
Lenders that the Custodian has received 100% of all "legal binders" containing
originals (or photocopies in instances where originals were not received by
Borrower) of all mortgages, deeds of trust and other Collateral Loan Documents
(as set forth on the "Master List") with respect to all such Tier 1 and Tier 2
Collateral Loans; and
(d) As to all Collateral Loans constituting Tier 3 Assets, within thirty
(30) days after the Closing Date, (i) evidence satisfactory to Lenders that the
Tier 3 Custodian has received 100% of any and all "Possessory Collateral" (as
defined in the Tier 3 Custodial Agreement) with respect to all Tier 3 Assets
and (ii) a "master" listing of all Collateral Loan Documents received by the
Tier 3 Custodian in connection with Borrower's purchase of such Tier 3
Collateral Loans and noting whether each Collateral Loan Document is an
original or a photocopy; which "master" listing shall have been certified to as
being accurate and complete by the Tier 3 Custodian.
(e) Within fifteen (15) days after either Lender's request, originals of
such Collateral Loan Documents as either Lender, in its discretion, may from
time to time request.
3.2.4 Additional Conditions Subsequent. Attached hereto as
Exhibit G is a listing of additional items to be delivered to Lenders and
additional conditions to be satisfied by Borrower subsequent to the Closing
Date (the "Additional Conditions Subsequent"). Within the respective time
periods set forth on such Exhibit G, Lenders shall have received all items set
forth thereon and Borrower shall have satisfied all conditions set forth
thereon.
3.2.5 Other. At Lenders' option, the satisfaction of each of
the above Conditions Subsequent shall be Conditions Precedent to the funding of
any Revolving Advances.
SECTION 4 INTEREST, REPAYMENT, FEES AND EXTENSION OPTION.
4.1. Interest
4.1.1 Contract Rate.
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(a) The unpaid principal balance of the Loan from
time to time outstanding shall bear interest at the Contract Rate calculated on
a daily basis (computed on the actual number of days elapsed over a year of 360
days) from the date of advance to maturity, at the Contract Rate. Provided
however, in the event that the Contract Rate is the Maximum Legal Rate, such
Contract Rate shall be computed on the actual number of days elapsed over a
year of 365 days or 366 days as applicable.
(b) As to all Loan Proceeds outstanding under the
Notes on the Closing Date and on each Interest Adjustment Date thereafter, to
the extent that the Eurodollar Rate is available pursuant to the terms of this
Agreement, the Contract Rate applicable thereto for the entire respective
Interest Period shall be the Eurodollar Rate for an Interest Period of one
month or Effective Prime, as elected by Borrower. Borrower may elect to
allocate up to two separate portions of the outstanding Loan Proceeds to
different Contract Rates as specified in an Interest Election; provided
however, the minimum amount of each such portion of the outstanding Loan
Proceeds shall be $5,000,000. For example, if the $50,000,000 of Loan Proceeds
are outstanding on an Interest Adjustment Date, Borrower may elect to have
$10,000,000 of such outstanding Loan Proceeds subject to Effective Prime and
$40,000,000 of such outstanding Loan Proceeds subject to the Eurodollar Rate
for a one month Interest Period. Each separate Contract Rate shall only apply
to that portion of the Loan Proceeds as is specified in the Interest Election.
In no event shall Lender be obligated to permit Borrower to have more than two
(2) separate Contract Rates in effect at any one time.
(c) As to all Loan Proceeds advanced on any day other
than an Interest Adjustment Date, the Contract Rate applicable thereto until
the next Interest Adjustment Date shall be Effective Prime. During any period
that the Eurodollar Rate is unavailable pursuant to the terms of this
Agreement, the Contract Rate shall be Effective Prime.
(b) With respect to any Loan Proceeds as to which
the Contract Rate is the Eurodollar Rate, the Contract Rate shall be adjusted
as of each Interest Adjustment Date with respect to such Eurodollar Loan. As
to any Loan Proceeds with respect to which the Contract Rate is Effective
Prime, Effective Prime shall be increased or decreased, as the case may be, by
an amount equal to any increase or decrease in the Prime Rate, with such
adjustments to be effective as of the opening of business on the Business Day
that any such change in the Prime Rate becomes effective.
4.1.2 Interest Period in Absence of Interest Election. If,
by not later than three (3) Business Days prior to the next
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Interest Adjustment Date, Disbursing Agent has not received an Interest
Election by Borrower which is effective in accordance with the terms and
conditions of this Agreement and which elects to have a portion of the then
outstanding Loan Proceeds subject to Effective Prime, then on such Interest
Adjustment Date, the Contract Rate on all then outstanding Loan Proceeds shall
thereupon become the Eurodollar Rate.
4.1.3 Default Rate. Upon and after the occurrence of an
Event of Default and during the continuation thereof and from and after the
Maturity Date, the principal amount of all Obligations shall bear interest,
calculated daily (computed on the actual days elapsed over a year of 360 days),
at the Default Rate. Provided however, in the event that the Contract Rate is
the Maximum Legal Rate, such Contract Rate shall be computed on the actual
number of days elapsed over a year of 365 days or 366 days as applicable.
4.1.4 Late Charges. In the event that any payment of
principal or interest herein provided for shall become overdue for more than
ten (10) days after notice given under Section 9.1.1 hereof, a "late charge"
of five percent (5%) of the overdue payment shall become immediately due and
payable to the Lenders as liquidated damages for failure to make prompt
payment, and the same shall be secured by the Security Documents.
4.1.5 Interest Installments. All accrued, but unpaid,
interest on the Notes shall be due and payable, in arrears, on the last day of
each calendar month commencing July 31, 1995.
4.1.6 Recapture of Interest. Notwithstanding the foregoing,
if at any time the amount of interest computed on the basis of the Contract
Rate or the Default Rate would exceed the Maximum Legal Rate, then the interest
payable under this Agreement shall be computed upon the basis of the Maximum
Legal Rate, but any subsequent reduction in the Contract Rate or Default Rate,
as applicable, shall not reduce such interest thereafter payable hereunder
below the amount computed on the basis of the Maximum Legal Rate until the
aggregate amount of such interest accrued and payable under this Agreement
equals the total amount of interest which would have accrued if such interest
had been at all times computed solely on the basis of the Contract Rate or
Default Rate, as applicable.
4.1.7 Maximum Interest Rate. Regardless of any provision
contained in any of the Loan Documents, Lenders shall never be entitled to
contract for, charge, take, reserve, receive, or apply, as interest on the
Obligations, or any part thereof, any amount in excess of the Maximum Legal
Rate, and, in the event either Lender ever contracts for, charges, takes
reserves,
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receives, or applies as interest any such excess, it shall be deemed a partial
prepayment of principal and treated hereunder as such and any remaining excess
shall be refunded to Borrower. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Maximum Legal Rate,
Borrower and Lenders shall, to the maximum extent permitted under applicable
law, (a) treat the Loan as but a single extension of credit (and Lenders and
Borrower agree that such is the case), (b) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (c) exclude
voluntary prepayments and prepayments resulting from the exercise by Lenders of
its remedies upon the occurrence of an Event of Default and, in each case, the
effects thereof, and (d) "spread" the total amount of interest throughout the
entire contemplated term of the Obligations; provided that, if the Obligations
are paid and performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of existence
thereof exceeds the Maximum Legal Rate, Lenders shall refund such excess, and,
in such event, Lenders shall not be subject to any penalties provided by any
laws for contracting for, charging, taking, reserving, or receiving interest in
excess of the Maximum Legal Rate. The provisions of this Section 4.1.6 shall
be deemed to be incorporated into every document or communication relating to
the Obligations which sets forth or prescribes any account, right or claim or
alleged account, right or claim of Lenders with respect to Borrower (or any
other obligor in respect of Obligations), whether or not any provision of this
Section 4.1.6 is referred to therein. All such documents and communications
and all figures set forth therein shall, for the sole purpose of computing the
extent of the Obligations and obligations of the Borrower (or other obligor)
asserted by Lenders thereunder, be automatically recomputed by any Borrower or
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by this Section 4.1.6.
4.1.8 Amendments to Current Law. If the applicable state or
federal law is amended in the future to allow a greater rate of interest to be
charged under this Agreement or the other Loan Documents than is presently
allowed by applicable state or federal law, then the limitation of interest
hereunder shall be increased to the maximum rate of interest allowed by
applicable state or federal law as amended, which increase shall be effective
hereunder on the effective date of such amendment, and all interest charges
owing to Lenders by reason thereof shall be due and payable upon the earlier of
six (6) months from the effective date of such amendment or the termination of
this Agreement.
4.2. Principal Repayment.
4.2.1 Maturity Date. Subject to the Borrower's option to
extend the same on the terms and conditions set forth in Section
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4.6 below, all unpaid principal, interest and other Obligations shall be paid
in full on the Maturity Date.
4.2.2 Mandatory Payments - Foreclosure Under Collateral
Loans.
(a) Without Lenders' prior written consent,
Borrower shall not consummate foreclosure proceedings against any real property
securing any Collateral Loan having an Allocated Value in excess of $100,000
without having first delivered to Lenders a new Environmental Site
Assessment(s) (or a copy of the Environmental Site Assessment with respect to
the real property in question which was delivered to Lenders in connection with
closing of the Loan (the "Original ESA") and which is accompanied by such
updates as Lenders may reasonably require) with respect to the real property
in question and either (i) received Lenders' written acknowledgement that the
results thereof are acceptable to Lenders or (ii) received Lenders' written
approval of a plan of remediation and deposited with Agent an amount which is
equal to 120% of the estimated costs of effectuating such remediation plan, as
reasonably approved by Lenders; and
(b) If at any time Borrower forecloses its
liens upon any asset securing payment of a Collateral Loan, which asset has an
Allocated Value or an estimated value at the time of the proposed foreclosure
of $100,000 or more, and Lenders reasonably believe that the foreclosure may
result in a liability to Lenders or Borrower or the REO Affiliate in question
under any Environmental Laws, Borrower, upon demand made by Lenders, shall make
a prepayment on the Loan (a "Mandatory Payment") in an amount equal to the
Minimum Release Price of such Asset, and Lenders shall release any Liens it
holds upon such asset.
4.2.3 Prepayment and Certain Payments.
(a) All or any portion of the unpaid principal
balance of any Prime Rate Loan may be prepaid at any time by a payment to Agent
of immediately available Dollars by the Borrower, and all or any portion of the
unpaid principal balance of any Eurodollar Loan may be prepaid or paid to
Disbursing Agent by a payment of immediately available Dollars on the Interest
Adjustment Date for such Loan, upon three (3) Business Days' prior written
notice from the Borrower to Agent, in each case without premium or penalty,
except as provided in Section 4.7; provided that all such payments and
prepayments of Eurodollar Loans shall be accompanied by the interest accrued on
the principal amount being paid or prepaid through the date of payment or
prepayment. All Principal Payments received by Disbursing Agent shall first be
applied to any outstanding Prime Rate Loan. If there is no Prime Rate Loan
outstanding, any Principal Payments received by Disbursing Agent on
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a day that is not a Interest Adjustment Date, shall be deposited in the
Disbursement Account and shall be then applied against the outstanding
Eurodollar Loan on the next succeeding Interest Adjustment Date with respect
thereto.
(b) In the event that there occurs any payment or
prepayment of all or any portion of the Loan, Agent shall allocate any such
payment or prepayment to any outstanding Prime Rate Loan, if any, until paid or
prepaid in full and thereafter to the Eurodollar Loan. In the event that any
mandatory payment is required upon acceleration or for any other reason
(including without limitation any Mandatory Payment under Section 4.2.2), and
on the date any such payment is due, the amount of Prime Rate Loans, if any,
plus the amount of Eurodollar Loans as to which such date is an Interest
Adjustment Date for such Eurodollar Loans is less than the amount of such
required payment or prepayment, such payment or prepayment shall nevertheless
be paid in full by the Borrower when due and the proceeds thereof will be
applied first to any outstanding Prime Rate Loan until paid in full, second to
the Eurodollar Loans as to which such date is an Interest Adjustment Date for
such Eurodollar Loans until paid in full, and thereafter to the Disbursement
Account for disbursement in accordance with Section 5 below.
4.2.4 Net Payments. All payments by Borrower of
principal, interest, fees, indemnities and other amounts payable to Lenders
hereunder shall be made without set-off or counterclaim.
4.2.5 Application of Payments and Collections. After the
occurrence of an Event of Default and during the continuance thereof, Borrower
shall have no right, and it hereby irrevocably waives the right, to direct the
application of any and all payments and collections at any time or times
received by Agent or Lenders from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Lenders shall, after the occurrence of an Event
of Default and during the continuance thereof, have the continuing exclusive
right to apply and reapply any and all such payments and collections received
at any time or times by Agent or Lenders against the Obligations, in such
manner as Lenders may deem advisable, notwithstanding any entry by Lenders upon
any of their books and records.
4.3. Cost Protection.
4.3.1 Taxes or Assessments. If (i) after the date hereof,
the FDIC, (ii) after the date hereof, Regulation D of the Board of Governors of
the Federal Reserve System ("Regulation D"), (iii) the adoption after the date
hereof of any law, (iv) any change after the date hereof in any law, (v) any
published change after the date hereof in the interpretation or administration
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thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or (vi) compliance
by either Lender with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency:
(a) shall subject either Lender to any tax,
duty or other charge with respect to any loans made by either Lender, or shall
change the basis of taxation of payments to either Lender of the principal of
or interest on the Loan or any other amounts due under this Agreement;
(b) shall impose, modify or deem applicable
any assessment or other charge (including any assessment for insurance of
deposits) against assets of, deposits with or for the account of, or credit
extended by either Lender;
(c) shall impose, modify or deem applicable
any reserve (including any reserve imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by either Lender;
or
(d) shall impose on either Lender any other
condition affecting this Agreement, the Loan or the Notes;
and the result of any of the foregoing is to increase the cost to either Lender
of making or maintaining the Loan and the Commitment hereunder, or to reduce
the amount of any sum received or receivable by either Lender under this
Agreement or under the Notes then, within ten (10) days after demand by either
Lender (which demand shall be made promptly after such Lender becomes aware of
such conditions and shall be accompanied by a statement setting forth the basis
of such demand), Borrower shall pay directly to such Lender such additional
amount or amounts as will compensate such Lender for that portion of such cost,
increased cost or such reduction which relates to Indebtedness of Borrower.
Neither costs considered by Agent in determining the Prime Rate nor any
federal, state, local or foreign taxes based on gross or net income, or any
franchise, net worth or capital tax payable by either Lender, shall be
considered in making the determination of increased cost or reduction in amount
receivable to Lenders under this Section 4.3.1. Neither Lender shall be
entitled to make a demand for and Borrower shall not be liable for payment of
any amount under the terms of this provision following payment in full of the
Notes.
4.3.2 Capital Adequacy, Etc. If, with respect to all or
any portion of the Loan, any adoption of, ruling on, change in, or
interpretation of any law or treaty now existing or hereafter promulgated by
any tribunal or central bank regarding capital
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adequacy, or compliance by either Lender with any request, directive, or
requirement hereafter imposed by any tribunal or central bank regarding capital
adequacy (whether or not having the force of law) hereafter occurs, and, as a
result of such adoption, ruling, change, interpretation or compliance, the rate
of return on either Lender's capital as a consequence of either Lender's
obligations under this Agreement decreases to a level below that which
otherwise could have been achieved (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by either Lender to be
material (and each Lender may, in determining such amount, utilize such
assumptions and allocations of costs and expenses as such Lender shall deem
reasonable and may use any reasonable averaging or attribution method), and
such reduction in the rate of return on such Lender's capital is not
compensated for by an increase in the Prime Rate (to the extent the Prime Rate
is the rate of interest applicable under the Loan at the time in question),
then such Lender shall notify Borrower and deliver to Borrower a certificate
setting forth in detail the calculation on a reasonable basis of the amount
necessary to compensate such Lender therefor, which certificate shall be
conclusive and binding, and Borrower shall promptly pay such amount to such
Lender. Notwithstanding the foregoing sentence, Borrower shall not be
obligated to pay such amount unless notice thereof is given within ninety (90)
Business Days after a Lender actually incurs such reduction in its rate of
return. Neither Lender shall be entitled to make a demand for and Borrower
shall not be liable for payment of any amount under the terms of this provision
following payment in full of the Notes.
4.4. Term of Agreement. The provisions of this Agreement shall be
and remain in effect until full and final payment in immediately available
funds of all of the Obligations.
4.5. Loan Fees. In connection with the Financing Facility, Borrower
shall pay to Lenders the following fees (the "Loan Fees"); which Loan Fees
shall be shared by Lenders equally (i.e. 50% each):
(i) Origination Fee.
(a) Borrower has agreed to pay to Lenders, an
origination fee (the "Origination Fee") in the
amount of $1,095,000.00. Lenders hereby
acknowledge receipt of $300,000.00 of such
Origination Fee and Borrower agrees to pay to
Lenders on the Closing Date the $795,000.00 balance
of the Origination Fee.
(b) Tranche 3 Rebate. To the extent that, within
sixty (60) days after the Closing Date, Borrower
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sells or collects amounts due with respect to
Tranche 3 Assets and pays to Lenders the appropriate
Release Price(s), Lenders will promptly rebate to
Borrower a portion of the Origination Fee in an
amount equal to the lesser of (a) a combined
cumulative amount (i.e., as to all such Tranche 3
Release Prices) of $111,250, or (b) 1.25% of seventy
percent (70%) of the Allocated Value of each of such
Released Assets. The above rebate provision shall
terminate sixty (60) days after the Closing Date.
(ii) Administrative Fee. A quarterly Administrative Fee in an
amount equal to .0625% of the average Maximum Facility
Availability during each calendar quarter; which Fee shall be
paid to Lenders within fifteen (15) days after the last day of
each calendar quarter; and
(iii) Letter of Credit Fees. Quarterly Letter of Credit Fees in
an amount equal to .5% of the average outstanding amounts of all
of the Letters of Credit during each calendar quarter; which
Fees shall be paid to Lenders within fifteen (15) days after the
last day of each calendar quarter.
4.6. Option to Extend Maturity Date. All outstanding principal,
interest, fees, expenses and other Obligations are due and payable in full on
the Maturity Date. Provided, however, upon and subject to the terms and
conditions hereinafter set forth, at Borrower's request, Lenders will consider
extending the Maturity Date for a period of one (1) year (such extension period
to terminate on the 30th day of June, 1998) subject to the prior satisfaction
of all of the following conditions precedent:
(a) receipt by Agent, at least thirty (30) days prior to
the commencement of the extension period, of each of the following:
(i) a written request for the extension signed
by a Responsible Officer of the General
Partner on behalf of the Borrower; and
(ii) payment of an extension fee in an amount
equal to one percent (1%) of the then
Maximum Facility Availability;
(b) On June 1, 1997, the then Maximum Facility
Availability having been reduced to an amount in all respects satisfactory to
Lenders;
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(c) there shall exist no Default or Event of Default at
the time of the submission of such extension request or at any time thereafter;
(d) the Borrower, the Subordinated Lender, the Servicer
and other parties required by Lenders shall execute and deliver such documents
and agreements as Lenders may reasonably require in form satisfactory to
Lenders; and
(e) the satisfaction of such other conditions as Lenders
may reasonably require.
Notwithstanding anything to the contrary contained herein, Lenders shall
have absolutely no obligations whatsoever to agree to an extension of the
Maturity Date; it being understood that Lenders, in their sole and absolute
discretion, shall have the right to refuse to grant such extension.
4.7 Special Eurodollar Loan Provisions. All Eurodollar Loans shall
be subject to and governed by the following terms and conditions:
4.7.1 Eurodollar Loans Unavailable. Notwithstanding any other
provision of this Agreement, if, prior to or on the date on which all or any
portion of the Loan is to be made as or converted into a Eurodollar Loan,
Disbursing Agent shall determine, for any reason whatsoever (which
determination shall be conclusive and binding on Borrower), that:
(i) Dollar deposits in the relevant amounts and for
the relevant Interest Period are not offered to
Disbursing Agent in the interbank eurodollar
market referred to below,
(ii) by reason of circumstances affecting the
interbank eurodollar market referred to below,
adequate and reasonable means do not exist for
ascertaining the interest rate applicable
hereunder to such Eurodollar Loan, or
(iii) the Adjusted Eurodollar Rate shall no longer
represent the effective cost to Lenders for
Dollar deposits in the interbank eurodollar
market in which Lenders regularly participate,
Lenders shall promptly give notice of such determination and the reason
therefor to Borrower, and all or such portion of the Loans, as the case may be,
which are subject to any of Section 4.7.1(i) through (iii) as a result of
Lenders' determination shall be made as or converted into, as the case may be,
Prime Rate Loans and
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Lenders shall have no further obligation to make Eurodollar Loans, until
further written notice to the contrary is given by Lenders to the Borrower. If
such circumstances subsequently change so that Lenders shall no longer be so
affected, Lenders' obligation to make or maintain all or any portion of the
Loans as Eurodollar Loans shall be reinstated when Lenders obtain actual
knowledge of such change of circumstances and promptly after obtaining such
actual knowledge Lenders shall forward written notice thereof to the Borrower.
Upon the first day of the next Interest Period after receipt by the Borrower of
such written notice, the Eurodollar Rate shall again be the applicable interest
rate in accordance with this Agreement. During any period throughout which
Lenders have no obligation to make or maintain the Loan as a Eurodollar Loan,
Effective Prime (or the Default Rate, as the case may be) shall be the rate of
interest that is payable with respect to all Loans.
4.7.2 Eurodollar Lending Unlawful. In the event that any
change in applicable laws or regulations (including the introduction of any new
applicable law or regulation) or in the interpretation thereof (whether or not
having the force of law) by any governmental or other regulatory authority
charged with the administration thereof, shall make it unlawful for Lenders to
make or continue to maintain all or any portion of the Loans as Eurodollar
Loans, the obligation of Lenders to make or maintain the Loans or such portion
thereof as Eurodollar Loans shall, upon the happening of such event, terminate
and Lenders shall, by telephonic notice to Borrower, declare that such
obligation has so terminated, and the Loans or any portion thereof, to the
extent then maintained as Eurodollar Loans, shall, on the last day on which
Lenders can lawfully continue to maintain the Loans or any portion thereof as
Eurodollar Loans, automatically convert into Prime Rate Loans. If
circumstances subsequently change so that Lenders shall no longer be so
affected, Lenders' obligation to make or maintain all or any portion of the
Loans as Eurodollar Loans shall be reinstated when Lenders obtains actual
knowledge of such change of circumstances, and promptly after obtaining such
actual knowledge Lenders shall forward written notice thereof to Borrower.
Upon the first day of the next Interest Period after receipt by the Borrower
of such written notice, the Eurodollar Rate shall again be the applicable
interest rate in accordance with this Agreement. During any period throughout
which Lenders have no obligation to make or maintain the Loan as a Eurodollar
Loan, Effective Prime shall be the rate of interest that is payable with
respect to all Loans.
4.7.3 Additional Costs on Eurodollar Loans. Borrower further
agrees to pay to Lenders, such amounts as will compensate Lenders for any
increase in the cost to Lenders of making or maintaining (or of its obligation
to make or maintain) all or any portion of the Loans as Eurodollar Loans and
for any reduction in the amount of any sum receivable by Lenders under this
Agreement in
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respect of making or maintaining all or any portion of the Loans as Eurodollar
Loans, in either case, from time to time by reason of:
(a) any reserve (other than any reserve already
reflected in the Adjusted Eurodollar Rate), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Lenders, under or pursuant to any law, treaty, rule, regulation
(including, without limitation, any Regulations of the Board of Governors of
the Federal Reserve System) or requirement in effect on or after the date
hereof, any interpretation thereof by any governmental authority charged with
administration thereof or by any central bank or other fiscal or monetary
authority or other authority, or any requirement imposed by any central bank or
such other authority whether or not having the force of law; or
(b) any change in (including the introduction of
any new) applicable law, treaty, rule, regulation or requirement or in the
interpretation thereof by any official authority, or the imposition of any
requirement of any central bank, whether or not having the force of law, which
shall subject Lenders or Borrower to any tax (other than taxes on net income
imposed on Lenders by the United States of America or the state in which the
head office of Lenders is located), levy, impost, charge, fee, duty, deduction
or withholding of any kind whatsoever or change the taxation of Lenders with
respect to making or maintaining all or any portion of the Loans as Eurodollar
Loans and the interest thereon (other than any change which affects, and to the
extent that it affects, the taxation of net income of Lenders by the United
States of America or the state in which the head office of Lenders is located);
provided, that with respect to any withholding the foregoing shall not apply to
any withholding tax described in sections 1441, 1442 or 3406 of the Internal
Revenue Code, or any succeeding provision of any legislation that amends,
supplements or replaces any such section, or to any tax, levy, impost, duty,
charge, fee, deduction or withholding that results from any noncompliance by
Lenders with any federal, state or foreign law or from any failure by Lenders
to file or furnish any report, return, statement or form the filing or
furnishing of which would not have an adverse effect on Lenders and would
eliminate such tax, impost, duty, deduction or withholding.
In any such event, Lenders shall promptly notify Borrower thereof in writing
stating the reasons therefor and the additional amounts required to fully
compensate Lenders for such increased or new cost or reduced amount as
determined by Lenders. Such additional amounts shall be payable on each date
on which interest is to be paid hereunder. Lenders' certificate as to any such
increased or new cost or reduced amount (including calculations, in reasonable
detail, showing how Lenders computed such cost or reduction) shall
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be submitted by Lenders to Borrower and shall, in the absence of manifest
error, be conclusive and binding. In determining any such amount, the Lenders
may use any reasonable averaging and attribution methods. Neither Lender shall
be entitled to make a demand for and Borrower shall not be liable for payment
of any amount under the terms of this provision following payment in full of
the Notes.
4.7.4 Eurodollar Funding Losses. In the event the Lenders
shall incur any loss or expense (including, without limitation, any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by Lenders to fund or maintain all or any portion of the
Loans as Eurodollar Loans) as a result of:
(a) payment or prepayment by the Borrower of all or
any portion of any Eurodollar Loan on a date other than the scheduled last day
of the Interest Period applicable thereto, for any reason; or
(b) conversion of all or any portion of any
Eurodollar Loan on a day other than the last day of an Interest Period
applicable to such Loan to a Prime Rate Loan for any reason including, without
limitation, acceleration of the Loan upon or after an Event of Default, or any
other cause whether voluntary or involuntary and whether or not referred to or
described in this Agreement;
then upon the request of Lenders, Borrower shall pay directly to Lenders such
amount as will (in the reasonable determination of Lenders, which shall be
conclusive absent manifest error) reimburse Lenders for such loss or expense
with respect to the applicable Interest Period. Lenders shall furnish to the
Borrower, upon written request, a written statement setting forth the
computation of any such amounts payable to Lenders under this Section 4.7.4.
4.7.5 Banking Practices. Lenders agree that upon the
occurrence of any of the events described in Section 4.7.1(i), (ii) or (iii),
4.7.3 or 4.7.4, Lenders will exercise reasonable efforts to take such
reasonable actions at no expense to Lenders (other than expenses which are
covered by Borrower's advance deposit of funds with Lenders for such purpose,
or if Lenders agree, which the Borrower has agreed to pay or reimburse to
Lenders in full upon demand), in accordance with Lenders' usual banking
practices in such situations and subject to any statutory or regulatory
requirements applicable to Lenders, as Lenders may take without the consent or
participation of any other person to, in the case of an event described in
Sections 4.7.3 or 4.7.4, mitigate the cost of such events to the Borrower and,
in the case of an event described in Section 4.7.1(i), (ii) or (iii), to seek
Dollar
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deposits in any other interbank Eurodollar market in which Disbursing Agent
regularly participates and in which the applicable determination(s) described
in Section 4.7.1(i), (ii) or (iii), as the case may be, does not apply.
SECTION 5 CASH FLOW DISTRIBUTIONS & OPERATIONAL ISSUES.
5.1. Net Cash Flow & Excess DA Funds.
5.1.1 Funding of Disbursement Account and Distribution
Dates. As set forth in the Lock-Box Agreement and Section 8.1.21 hereof, (i)
except as set forth on Exhibit H attached hereto, all Account Debtors
(including all REO Affiliates) and all "lead" lenders under Participation
Agreements will be advised and instructed to deliver all payments under
Collateral Loans directly to the Lock-Box, (ii) Borrower, each REO Affiliate,
FC Liquidating Trust and Servicer will promptly remit (or cause to be remitted)
to the Lock-Box Account all Net Cash Flow received by any of them or any of
their respective agents; and (iii) NationsBank, in its capacity as Lock-Box
Agent, will periodically transfer funds in the Lock-Box Account to the
Disbursement Account. As set forth below and in the Escrow Agreement, (a) Net
Cash Flow will be distributed by Escrow Agent from the Disbursement Account on
each Interest Adjustment Date and (b) Excess DA Funds will be distributed by
Escrow Agent from the Disbursement Account (as contemplated in Sections 5.1.4
below) on up to three (3) additional Business Days selected by Borrower in each
calendar month (each an "Interim Distribution Date"). Each date upon which a
distribution is to be made from the Disbursement Account is hereinafter
referred to as a "Distribution Date".
5.1.2 Application of Net Cash Flow. Subject to the Escrow
Agreement and to Section 5.3 below, on each Distribution Date which is an
Interest Adjustment Date, all Net Cash Flow then in the Disbursement Account
will be paid and applied by Escrow Agent as follows:
(a) First for transfer to Fleet for deposit in the
Tax Escrow Account, an amount specified by Servicer in the "Request for
Disbursements from Escrow Accounts" certificate (as defined in the Escrow
Agreement); which sum shall represent the total amount of Tax Escrow Payments
paid into the Lock-Box Account prior to the Distribution Date in question to
the extent not previously deposited in the Tax Escrow Account;
(b) Second to the payment to Lenders of all
interest on the Loan which is then due and payable or will be due and payable
on the last day of the calendar month in question;
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(c) Third to the payment to Lenders of any Loan
Fees, late charges, fees and expenses which are then due and payable to Lenders
or either of them under this Agreement, the Custodial Agreement, the Escrow
Agreement or the Lock-Box Agreement or which will become so due and payable on
the last day of the calendar month in question;
(d) Fourth to the payment to Lenders, as a Principal
Payment, of an amount equal to the amount (if any) by which the then
outstanding principal balance under the Loan exceeds the then Maximum Revolver
Availability, as calculated on the Distribution Date in question;
(e) Fifth (unless payment of such fees is prohibited
by the terms of this Agreement), to the payment to the Servicer of any
"Servicing Fees" (as such term is defined in the Services Agreement) then owed
to the Servicer pursuant to the Services Agreement; which Servicing Fees shall
not exceed three percent (3%) of the Net Cash Flow paid into the Lock-Box
Account during the calendar month in question;
(f) Sixth to the payment to Fleet for deposit in the
Operating Reserve Account of such amount as may be requested by Borrower and
approved by Disbursing Agent for the payment of Approved Expenditures and for
the repayment of Servicer Advances owed to the Servicer; and
(g) Seventh to the payment to Lenders, as Principal
Payments, of an amount equal to the then outstanding principal balances under
the Notes (i.e., under the Loan) such payment to be divided equally between
Lenders.
5.1.3 Borrower's Obligation to Pay Lenders.
Notwithstanding anything to the contrary contained in this Agreement or any of
the other Loan Documents, in the event that at any time insufficient Net Cash
Flow is available to make any payment then due and payable by Borrower to Agent
or Lenders, Borrower shall be required to make each such payment directly to
Agent promptly when due.
5.1.4 Application of Excess DA Funds. Subject to the
Escrow Agreement and to Section 5.3 below, on each Interim Distribution Date,
Excess DA Funds in an amount equal to any then outstanding Prime Rate Loan will
be paid to Lenders for application to such Prime Rate Loan; such payment to be
divided equally between Lenders.
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5.2 Excess Net Cash Flow.
5.2.1 Excess Net Cash Flow. "Excess Net Cash Flow" is
defined as all Net Cash Flow remaining in the Disbursement Account on any
Distribution Date which is an Interest Adjustment Date after the payment in
full of each of the seven (7) payment categories listed in Subsection 5.1.2(a)
through (g) above.
5.2.2 Application of Excess Net Cash Flow. All Excess Net
Cash Flow will be retained in the Disbursement Account as security for the
Obligations subject to (i) Borrower's right to have such funds advanced
pursuant to Section 2 above or distributed pursuant to Section 5.1 above.
Provided, however, at such time as (a) all Obligations owed to Lenders under
and with respect to the Financial Facility have been paid in full, (b) all
Letters of Credit have been cancelled and (c) all obligations of Lenders under
and with respect to the Financing Facility have been terminated, any then
existing excess Net Cash Flow will be paid to Borrower.
5.3 If Any Default Exists. Notwithstanding any of the foregoing
provisions of this Section 5, at any time when there shall exist any Default or
any Event of Default, all Net Cash Flow (including all Excess DA Funds) and all
Excess Net Cash Flow shall be distributed from the Disbursement Account and
paid to Lenders for application against the Obligations.
5.4 Operational Issues.
5.4.1 Servicer and Services Agreement. Borrower shall at all
times retain the services of a servicer reasonably satisfactory to Lenders to
service the Collateral Loan Pool and the REO Properties. Such Servicer shall
render its services pursuant to a Services Agreement in all respects reasonably
satisfactory to Lenders. In this regard, Lenders have approved New FirstCity
as the Servicer and have approved that certain Services Agreement (i.e., the
Investment Management Agreement) of even date herewith. Any replacement
servicer and any replacement services agreement must be approved in writing by
Lenders in their sole discretion. For all purposes, the Servicer shall be
deemed to be the agent of Borrower and any and all funds of Borrower in the
possession of Servicer or any of its agents shall be deemed to be in the
possession of the Borrower.
5.4.2 Property Management Agreements. As to each REO
Property with respect to which the REO Affiliate in question enters into a
Property Management Agreement, such Property Management Agreement shall conform
to and contain the provisions of the definition of Property Management
Agreement contained herein.
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5.4.3. Tenant Security Deposits. All Tenant Security Deposits
will be maintained by Servicer or the applicable Property Manager in accordance
with applicable law. Upon Agent's demand, Servicer and each Property Manager
will pay to Agent all Tenant Security Deposits held by them, which Tenant
Security Deposits will then be held by Agent in accordance with applicable law.
SECTION 6 COLLATERAL: GENERAL TERMS
6.1 Security Interest in Personal Property. To secure the prompt
payment and performance to Lenders of the Obligations, Borrower, pursuant to
the Security Agreement and the other Security Documents, shall grant to Lenders
a first and prior continuing security interest in and Liens upon all of the
Collateral, except for the portion of the Collateral which is REO Property, and
expressly including, without limitation, all of the Borrower's rights in the
Cash Reserve Account, the Lock-Box Account, the Disbursement Account, the Tax
Escrow Account (subject to the rights of Account Debtors), the Services
Agreement and the Sale Agreements. At the time the Borrower forecloses upon
any personal property securing payment of a Collateral Loan, upon Agent's
request, Borrower shall also execute a "Supplement to Security Agreement",
which "Supplement to Security Agreement" shall detail the specific assets being
foreclosed upon. Borrower agrees to execute the UCC-1 Financing Statements
provided for by the Code or otherwise together with any and all other
instruments, assignments or documents and shall take such other action
(including the filing of such UCC-1 Financing Statements and other documents
with appropriate filing offices at the expense of Borrower) as may be required
by Agent or Lenders to perfect or to continue the perfection of Agent's
security interest in the Collateral. Unless prohibited by applicable law,
Borrower hereby authorizes Agent to execute and file any such Financing
Statement on Borrower's behalf. The parties agree that, if permitted by
applicable law, a photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof.
6.2 Lien on REO Properties. All REO Properties will be owned by an
REO Affiliate approved by Lenders; it being understood that Borrower will not
be taking title to any REO Properties. Except in instances where Lenders
demand a prepayment in accordance with Section 4.2.2 hereof, promptly upon the
acquisition of title to a REO Property, Borrower agrees (i) to cause the REO
Affiliate in question to execute and deliver to Borrower a REO Note, which
shall be promptly endorsed by Borrower to Agent and delivered to Custodian, and
REO Security Documents granting to Borrower a first and prior Lien upon each
such REO Property, or in cases where such asset was subject to a prior Lien at
the time Borrower purchased the Collateral Loan secured by such asset and such
prior Lien was
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disclosed to Lenders in writing prior to the Closing Date, a Lien subject only
to Permitted Prior Liens, and (ii) to promptly execute and deliver to Lenders
an Assignment with respect to such REO Security Documents. Such REO Security
Documents and such Assignment shall all be recorded, at the expense of
Borrower, with such filing offices as may be required by Lenders to evidence
Agent's Lien on such REO Property. Prior to the taking of title to any REO
Property by an REO Affiliate, Borrower shall provide Lenders with an
Environmental Site Assessment with respect to each such parcel of REO Property
or an update of the Environmental Site Assessment which was delivered to
Lenders in connection with the closing of the Loan, and Borrower shall have
received Lenders' written acknowledgement that the results thereof are
acceptable to Lenders. In addition, in the event that such REO Property has an
Allocated Loan Amount of $250,000 or more, and upon Lenders' request, Borrower
shall be obligated, at Borrower's expense, to provide for Lenders' benefit such
additional documentation as Lenders would ordinarily require in connection with
real estate collateral, including without limitation, the following: an
appraisal performed in accordance with applicable law, a Title Certificate or,
if requested by Lenders, a Title Insurance Policy, in accordance with Section
8.1.24 below, a survey, and policies of liability, hazard and casualty
insurance naming Lenders as additional insured, mortgagee and loss payee.
6.3 Insurance of Collateral.
6.3.1 Borrower shall promptly notify Lenders of the failure of
any Account Debtor under a Collateral Loan to maintain the insurance coverage
required under such Collateral Loan and, as to Collateral Loans having an
Allocated Value of greater than $100,000, except as otherwise agreed to by
Lenders in writing, the Borrower shall procure the required coverage. Borrower
agrees to maintain and pay for (or cause the respective REO Affiliate to
maintain and pay for) insurance upon all REO Properties having an Allocated
Value of in excess of $100,000 covering casualty, hazard, public liability and
such other risks and in such amounts and with such insurance companies as shall
be reasonably satisfactory to Lenders; provided, however, as long as Borrower
maintains casualty and hazard coverage in amounts sufficient to avoid the
application of any applicable co-insurance provision, Borrower shall not be
required to maintain such coverage in excess of the lesser of the replacement
cost or the Minimum Release Price of an asset owned by Borrower. In addition,
upon Agent's or Lenders' request, (i) Borrower will maintain and pay for such
insurance upon REO Properties having an Allocated Value of less than $100,000
upon Agent's or Lenders' request on a case by case basis, and (ii) Borrower
will maintain and pay for insurance covering Borrower for casualty loss with
respect to any Collateral where the Account Debtor under a Collateral Loan has
failed to maintain such
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insurance coverage. Borrower shall deliver certified copies of such policies
to Agent with satisfactory endorsements naming Lenders as additional insured,
as loss payee and as mortgagee pursuant to a standard mortgagee clause. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than thirty (30) days prior written notice to Lenders in the
event of cancellation of the policy for any reason whatsoever and a clause
that the interest of Lenders shall not be impaired or invalidated by any act or
neglect of Borrower or any owner of the insured property nor by the occupation
of the premises for purposes more hazardous than are permitted by said policy.
If Borrower fails to provide and pay for such insurance, Lenders may, at
Borrower's expense, procure the same, but Lenders shall not be required to do
so. Borrower agrees to deliver to Lenders, promptly as rendered, true copies
of all reports made in any reporting forms to insurance companies.
6.3.2 It is agreed that Borrower may elect to provide the
insurance required by Section 6.3.1 above by one or more multi-property
policies in lieu of individual insurance policies for each property. Any such
multi-property policy will be (i) in the amounts required under Section 6.3.1
above as to each covered property, (ii) shall be in a total amount in all
respects satisfactory to Lenders and (iii) shall provide coverage for public
liability in an amount not less than $5,000,000.00; provided however, Lenders
reserve the right to require a separate insurance policy on any REO Property
which is owned by an REO Affiliate for more than six (6) months.
6.4 Audits. Lenders may from time to time, upon notification to
Borrower, conduct an audit of any and all Collateral and all books and records
of Borrower and each REO Affiliate, and all costs of one audit per calendar
year shall be reimbursed by Borrower within thirty (30) days after the
notification by Lenders to Borrower of the completion of such audit. The costs
and expenses of such audits shall not exceed $5,000.00 per audit.
6.5 Cash Reserve Account.
6.5.1 As additional security for Borrower's payment and
performance of the Obligations, the Borrower shall deposit with Agent, on the
Closing Date, in an interest-bearing account, in the name of "Fleet National
Bank", and will at all times thereafter maintain, subject to Section 6.5.3
below, a cash reserve account (the "Cash Reserve Account") in an amount equal
to three (3) months' interest on the Maximum Facility Availability, calculated
at an interest rate of ten percent (10%) per annum, (the "Cash Reserve Base
Amount"). The Cash Reserve Base Amount as of the Closing Date is $2,500,000.
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6.5.2 The Cash Reserve Account shall be pledged and assigned
to the Agent as additional collateral for the payment and performance of the
Obligations. Agent shall have no obligation to apply any funds in the Cash
Reserve Account against interest payments due in connection with the Loan and
any such application shall be made by Lenders in their sole discretion.
6.5.3 Upon Borrower's request at the end of each quarter,
provided that there does not then exist any Default or any Event of Default,
the Cash Reserve Base Amount will be reduced to an amount equal to three (3)
months' interest on the then outstanding principal amount of the Loan,
calculated at the Eurodollar Rate in effect at the end of such quarter, and any
funds (if any) in excess of the Cash Reserve Base Amount will be wire
transferred into the Disbursement Account.
6.6. Release Price & Minimum Release Price. In connection with any
sale of an REO Property to an Unrelated Third Party, in connection with any
sale (whether in the normal course of business or pursuant to a foreclosure) of
each other item of Collateral to an Unrelated Third Party and in connection
with the settlement of each Collateral Loan (each such item of Collateral and
Collateral Loan being hereinafter referred to as a "Released Asset"), Agent
shall release/discharge its Lien(s) on the respective REO Property, other item
of Collateral or Collateral Loan upon receipt of a payment to the Lock-Box
Account of a sum (the "Release Price") equal to the greater of (a) all Net
Sales Proceeds or Net Collection Proceeds with respect to the Released Asset in
question or (b) the "Minimum Release Price" with respect to such Released
Asset. As to each Released Asset having an Allocated Value of $50,000 or less,
the "Minimum Release Price" shall be $1,000.00. As to each Released Asset
having an Allocated Value of greater than $50,000, the "Minimum Release Price"
is defined to be an amount equal to one hundred percent (100%) of the then
outstanding Allocated Value (i.e., the Allocated Value minus all principal
payments theretofore received by Lenders with respect to such Collateral Loan)
with respect to the Released Asset in question . Provided, however, such
Minimum Release Price shall not exceed the total of all sums due to Lenders
hereunder, under the Notes or under any of the other Loan Documents at the time
in question. The above provisions shall be applicable to all Assets, whether
owned by Borrower or by an REO Affiliate and as to each REO Property owned by
an REO Affiliate, the Release Price shall be calculated as if Borrower were the
owner of the REO Property in question and as if no REO Note existed.
6.7. Termination of Security Interests. Upon payment in full of the
Obligations, Agent shall release, terminate and satisfy all of its security
interests in and Liens upon all remaining Collateral, and shall deliver to
Borrower any and all written
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instruments requested by Borrower which are reasonably necessary to evidence
such release, termination and satisfaction. Neither Agent nor Lenders shall
have any obligation to pay any costs or fees associated with the filing or
recordation of any such release, termination or satisfaction and Borrower
agrees to pay all reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Agent or Lenders in connection with the
preparation of any of such instruments.
SECTION 7 REPRESENTATIONS AND WARRANTIES
7.1. General Representations and Warranties. To induce Agent and
Lenders to enter into this Agreement and to make the Loan hereunder, Borrower
warrants, represents and covenants to Agent and Lenders, as of the date of this
Agreement, as follows:
7.1.1 Organization, Ownership; Etc. Borrower, FCLT One, L.P.
and FCLT Two, L.P. are limited partnerships; the General Partner, FCLT One
Corp. and FCLT Two Corp. are corporations; and each of such entities are duly
organized, validly existing and in good standing under the laws of the State of
Texas; each will be, within ninety (90) days after the Closing Date, duly
qualified and authorized to do business and in good standing in all states and
jurisdictions where the character of its assets or the nature of its activities
make such qualification necessary; and Borrower has not been known as or used
any corporate, fictitious or trade names in the past. The General Partner is
the sole general partner of the Borrower and the General Partner holds a 2%
partnership interest in the Borrower. All of the general and limited
partnership interests in each of the above-referenced limited partnerships are
owned as set forth in Exhibit C attached hereto and incorporated herein by
reference. All of the legal and beneficial ownership interests in each general
partner and each limited partner, are also as set forth on such Exhibit C.
7.1.2 Power and Authority. Borrower and the General Partner
each has the right and power and is duly authorized to enter into, deliver and
perform this Agreement and each of the other Loan Documents to which it is a
party, and this Agreement is, and each of the other Loan Documents when
delivered pursuant to this Agreement will be, legal, valid and binding
obligations of Borrower enforceable against it in accordance with their
respective terms.
7.1.3 Use of Loan Proceeds. The Loan Proceeds will be used
solely to fund Closing Expenditures, Approved Expenditures and Servicer
Advances. Borrower is not engaged principally, or as one of its important
activities, in the business of purchasing or carrying "margin stock" (within
the meaning of Regulation G or U of the Board of Governors of the Federal
Reserve System), and no part
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of the proceeds of the Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock, or be used for any purpose which violates or is inconsistent with
the provisions of Regulations G, T, U or X of said Board of Governors.
7.1.4 Consents, Etc.
(a) Borrower, the General Partner, FCLT One
L.P., FCLT One Corp., FCLT Two L.P., FCLT Two Corp. each has, and each is in
good standing with respect to, all governmental consents, approvals,
authorizations, permits, certificates, inspections, and franchises necessary to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its assets as now owned or leased by it; and
(b) The execution, delivery and performance by
(i) the Borrower and the General Partner of the Loan Documents, (ii) FCLT One
L.P. and FCLT One Corp. and FCLT Two L.P. and FCLT Two Corp. of the REO Notes
and REO Security Documents do not and will not (1) require any consent or
approval of the stockholders of the General Partner, FCLT One Corp. or FCLT Two
Corp.; (2) contravene the Borrower's or FCLT One L.P.'s or FCLT Two L.P.'s
Limited Partnership Agreements or Certificate or the General Partner's or FCLT
One Corp.'s and FCLT Two Corp.'s Articles of Incorporation or Bylaws; (3)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower, General Partner, FCLT One L.P., FCLT Two L.P.,
FCLT One Corp. or FCLT Two Corp.; (4) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower, General Partner, FCLT One L.P., FCLT
Two L.P., FCLT One Corp. or FCLT Two Corp. are a party or by which the
Borrower, General Partner, FCLT One L.P., FCLT Two L.P., FCLT One Corp. or FCLT
Two Corp. or their properties may be bound or affected; (5) except as may be
provided by the Security Documents or the REO Security Documents (with respect
to FCLT One L.P., FCLT Two L.P., FCLT One Corp. or FCLT Two Corp.), result in
the creation or imposition of any Lien upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower, General Partner,
FCLT One L.P., FCLT Two L.P., FCLT One Corp. or FCLT Two Corp.; and (6) cause
the Borrower, General Partner, FCLT One L.P., FCLT Two L.P., FCLT One Corp. or
FCLT Two Corp. to be in default under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination, or award or any such
indenture, agreement, lease or instrument.
7.1.5 Pending Proceedings. There are no actions, suits,
proceedings or investigations pending, or to the knowledge of Borrower,
threatened, against or affecting Borrower or the General
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Partner or any of their assets in any court or before any governmental
authority or arbitration board or tribunal.
7.1.6 Title to Assets. Borrower has good and indefeasible
title to and fee simple ownership of, or valid and subsisting leasehold
interests in, all of its real property, and good title to all of its other
property and Assets (specifically including all of the Portfolio Assets), in
each case, free and clear of all Liens except Permitted Liens.
7.1.7 Financial Condition. There are no liabilities of
the Borrower, the General Partner, FCLT One L.P., FCLT Two L.P., FCLT One Corp.
or FCLT Two Corp. fixed or contingent, which are material and which have not
been disclosed to Lenders in writing. The fiscal years of Borrower, General
Partner, FCLT One L.P., FCLT Two L.P., FCLT One Corp. or FCLT Two Corp. end on
December 31 of each year.
7.1.8 Material Facts. There is no fact which Borrower or
the Servicer has failed to disclose to Lenders in writing which materially
affects adversely or, so far as Borrower can now foresee, will materially
affect adversely the assets, business, prospects, profits, or condition
(financial or otherwise) of Borrower or the Servicer or the ability of Borrower
to perform this Agreement. No information, exhibit or report furnished by the
Borrower to the Lenders in connection with the negotiation of this Agreement
contained any material misstatement of fact or omitted a material fact or any
fact necessary to make the statement contained therein not materially
misleading.
7.1.9 ERISA Compliance. The Borrower is in compliance in
all material respects with all applicable requirements of ERISA and the
regulations promulgated thereunder. No fact or situation that could result in
a material adverse change in the financial condition of Borrower (including,
but not limited to, any Reportable Event or Prohibited Transaction) exists in
connection with any Plan. Borrower does not have any withdrawal liability in
connection with a Multi-Employer Plan. None of the equity funds being provided
by Borrower or by any of its partners are being invested on behalf of a pension
plan or other entity which is subject to ERISA.
7.1.10 Taxes and Assessments. Borrower and the Servicer
have filed all federal, state and local tax returns and other reports they are
required by law to file and have paid, or made provision for the payment of,
all taxes, assessments, fees and other governmental charges that are due and
payable.
7.1.11 Compliance with Laws. Borrower and Servicer have
duly complied with, and their assets, business operations and
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leaseholds are in compliance in all material respects with, the provisions of
all federal, state and local laws, rules and regulations (including, without
limitation, Environmental Laws) applicable to Borrower, Servicer and their
assets or the conduct of their businesses. Neither Borrower nor any REO
Affiliate, nor, to the best of Borrower's knowledge, any of their respective
assets is in material violation of any Environmental Laws or subject to any
existing, pending or overtly threatened investigation by any governmental
authority under any Environmental Law. To the best of Borrower's knowledge, no
Hazardous Substance has been disposed of or released on any of Borrower's
assets.
7.1.12 Existence of Defaults. No Default or Event of
Default will exist or result from the execution and delivery of this Agreement
or Borrower's performance hereunder.
7.1.13 Commissions, Etc.. There are no claims for
brokerage commissions, finder's fees or investment banking fees in connection
with the transactions contemplated by this Agreement.
7.1.14 Solvency. Borrower is, and after giving effect to
the transactions contemplated under the Loan Documents will be, solvent. After
giving effect to the transactions contemplated under the Loan Documents, the
Borrower: (a) will be able to pay its debts as they become due, and (b) will
have funds and capital sufficient to carry on its business and all businesses
in which it is about to engage.
7.1.15 Other Agreements. Neither the Borrower nor the
General Partner nor the Servicer is a party to any indenture, loan, or credit
agreement, or to any lease or other agreement or instrument, or subject to any
charter or corporate restriction which could have a material adverse effect on
the businesses, properties, assets, operations or conditions, financial or
otherwise of the Borrower, the General Partner or the Servicer, or the ability
of the Borrower or the General Partner or the Servicer to carry out its
respective obligations under the Loan Documents to which it is a party.
Neither the Borrower nor the General Partner nor the Servicer is in default in
any material respect in the performance, observance or fulfillment of any of
the obligations, covenants, or conditions contained in any agreement or
instrument material to its business to which it is a party.
7.1.16 Principal Place of Business; Books and Records. The
Borrower's principal place of business is located at the Borrower's address set
forth in Section 11.9 of this Agreement. All of the Borrower's books and
records are kept at its principal place of business.
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7.1.17 Subsidiaries, etc. The Borrower has no subsidiaries
other than any currently existing or hereafter organized REO Affiliates and the
additional subsidiaries listed on Exhibit I attached hereto (the "Additional
Borrower Subsidiaries"); which Additional Borrower Subsidiaries have no assets
other than the cash amounts set forth in Exhibit I.
7.1.18 Preliminary Statement. All information and
statements set forth in the Preliminary Statement of this Agreement are true
and accurate as of the date hereof.
7.2. Reaffirmation and Survival of Representations. The submission
of a Notice of Borrowing by Borrower pursuant to this Agreement shall
constitute (a) an automatic representation and warranty by Borrower to Agent
and Lenders that there does not then exist any Default or Event of Default, and
(b) in the event the date of such Notice of Borrowing is different than the
date of this Agreement, a reaffirmation as of the date of said Notice of
Borrowing that all of the representations and warranties of Borrower contained
in this Agreement and the other Loan Documents are true in all material
respects as if made on such date rather than the date of this Agreement.
Borrower covenants, warrants and represents to Agent and Lenders that all
representations and warranties of Borrower contained in this Agreement or any
of the other Loan Documents shall be true at the time of Borrower's execution
of this Agreement and the other Loan Documents, and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the
closing of the transactions described therein or related thereto.
SECTION 8 COVENANTS AND CONTINUING AGREEMENTS
8.1. Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lenders, Borrower
covenants that, unless otherwise consented to by Lenders in writing, it shall
and each REO Affiliate shall:
8.1.1 Use Proceeds. Use the proceeds of the Loan only to
pay for Closing Expenditures, Approved Expenditures and Servicer Advances.
Without the prior written consent of Lenders, no Loan Proceeds or other funds
of Borrower shall be utilized to make any Special Preferred Stock Payments.
8.1.2 Payment of Taxes; Liens. Pay and discharge all
taxes, assessments and governmental charges upon it, its income and assets as
and when such taxes, assessments and charges are due and payable, except and to
the extent only that such taxes, assessments and charges are being actively
contested in good faith and by appropriate proceedings, Borrower maintains
adequate reserves on its books therefor and the nonpayment of such taxes does
not result
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in a Lien upon any assets of Borrower other than a Permitted Lien. Borrower
shall also pay and discharge any lawful, valid claims which, if unpaid, might
become a Lien against any of Borrower's or any REO Affiliate's assets except
for Permitted Liens.
8.1.3 Filings. File all federal, state and local tax
returns and other reports Borrower is required by law to file and maintain
adequate reserves for the payment of all taxes, assessments, governmental
charges, and levies imposed upon it, its income, or its profits, or upon any
assets belonging to it.
8.1.4 Certain Expenses. Pay to Agent and Lenders, upon
demand therefor, any and all reasonable fees, costs or expenses which either
Lender pays to a bank or other similar institution arising out of or in
connection with (i) the forwarding to Borrower or any other Person on behalf of
Borrower proceeds of the Loan and (ii) the depositing for collection of any
check or item of payment received by or delivered to Agent or Lenders on
account of the Obligations.
8.1.5 Maintenance of Rights. Preserve and maintain its
separate existence and all rights, privileges, and franchises in connection
therewith, and maintain its qualification and good standing in all states in
which such qualification is necessary.
8.1.6 Maintenance of Assets. Maintain its physical assets
in as good of a condition as they existed on the date acquired by Borrower or
an REO Affiliate, ordinary wear and tear excepted.
8.1.7 Compliance with Laws. Comply with all laws,
ordinances, governmental rules and regulations to which it is subject, and
obtain and keep in force any and all licenses, permits, franchises, or other
governmental authorizations necessary to the ownership of its assets or to the
conduct of its business, which violation or failure to obtain might materially
and adversely affect the assets or condition (financial or otherwise) of
Borrower. Borrower and each REO Affiliate shall at all times keep and maintain
its assets in material compliance with, and shall not cause or permit any of
the same to be in material violation of, any applicable Environmental Law.
8.1.8 Compliance with ERISA. (i) At all times make prompt
payment of contributions required to meet the minimum funding standards set
forth in ERISA with respect to each Plan; (ii) promptly after the filing
thereof, furnish to Lenders copies of any annual report required to be filed
pursuant to ERISA in connection with each Plan and any other employee benefit
plan of it and its affiliates subject to said Section; (iii) notify Lenders as
soon as practicable of any Reportable Event and of any additional
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act or condition arising in connection with any Plan which Borrower believes
might constitute grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
district court of a trustee to administer the Plan; and (iv) furnish to
Lenders, promptly upon either Lenders' request therefor, such additional
information concerning any Plan or any other such employee benefit plan as may
be reasonably requested.
8.1.9 Records and Books. Keep adequate records and books
of account with respect to its business activities and the business activities
of each REO Affiliate in which proper entries are made in accordance with GAAP
reflecting all its financial transactions.
8.1.10 Inspections. Upon reasonable notice, permit
representatives of Lenders, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and inspect the
assets of Borrower and each REO Affiliate, inspect and make extracts from its
books and records, and discuss with its partners, its employees, its
independent accountants and its Property Managers, Borrower's and such REO
Affiliate's business, assets, liabilities, financial condition, business
prospects and results of operations.
8.1.11 Financial Reports. Cause to be prepared and
furnished to Agent and Lenders the following (all to be kept and prepared in
accordance with GAAP applied on a consistent basis):
(a) as soon as possible, but not later than the
earlier to occur of a date that is (i) ninety (90) days after FC Liquidating
Trust receives an opinion letter issued by the certified public accountants
engaged by FC Liquidating Trust to audit its fiscal year-end financial
statements or (ii) one hundred fifty (150) days after the close of each fiscal
year of FC Liquidating Trust, unqualified audited consolidated and
consolidating financial statements of FC Liquidating Trust (which shall include
Borrower and each REO Affiliate) as of the end of such year, certified by a
firm of independent certified public accountants of recognized standing
selected by FC Liquidating Trust and acceptable to Lenders; and
(b) as soon as possible, but not later than thirty (30)
days after the end of each calendar month, unaudited interim financial
statements of Borrower, FC Liquidating Trust and each REO Affiliate as of the
end of such month and as of the portion of Borrower's, FC Liquidating Trust's
and each REO Affiliate's fiscal year then elapsed, certified by a Responsible
Officer of the General Partner and by a Responsible Officer of the Servicer as
being prepared in accordance with GAAP and fairly presenting the financial
position and results of operations of Borrower, FC
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Liquidating Trust and each REO Affiliate (on a REO Property by REO Property
basis) for such calendar month and period, subject only to changes from audit
and year-end adjustments and except that such statements need not contain
accountant's notes thereto; and
(c) as soon as possible, but not later than the
earlier to occur of a date that is (i) ninety (90) days after Servicer receives
an opinion letter issued by the certified public accountants engaged by
Servicer to audit its fiscal year-end financial statements or (ii) one hundred
fifty (150) days after the close of each fiscal year of Servicer, unqualified
audited consolidated financial statements of Servicer as of the end of such
year, certified by a firm of independent certified public accountants of
recognized standing selected by Servicer and acceptable to Lenders; and
(d) as to each REO Property in Tier 1 and Tier 2 with
an Allocated Value above $50,000, as soon as possible, but not later than
thirty (30) days after the end of each calendar quarter, a "rent roll",
so-called, dated as of the end of such calendar quarter and stating with
respect to each rental unit in the REO Property in question, the name of the
Tenant thereof, the rent paid by such Tenant, the date to which such rent is
paid, the date on which such Tenant's leasehold interest terminates and the
amount held by the REO Affiliate in question by way of security deposit from
each such Tenant; which rent roll is to be certified to as being accurate by a
Responsible Officer of the general partner of the REO Affiliate in question and
by a Responsible Officer of the Servicer.
Concurrently with the delivery of the financial statements described in
clause (a) of this Section 8.1.11, Borrower shall forward to Lenders a copy of
the independent auditor's report to Borrower's management that is prepared in
connection with such financial statements. Concurrently with the delivery of
all financial statements described in this Section 8.1.11, Borrower shall cause
to be prepared and furnished to Lenders a certificate from a Responsible
Officer of the General Partner, from a Responsible Officer of each REO
Affiliate, and from a Responsible Officer of the Servicer certifying to Lenders
that, to the best of such Responsible Officer's knowledge, no Default or Event
of Default has occurred, or, if such Default or Event of Default has occurred,
specifying the nature thereof (a "Compliance Certificate").
8.1.12 Tax Escrow Reports & Tenant Security Deposit Reports.
Within ten (10) Business Days after the end of each calendar month, furnish to
Lenders:
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(a) a "Tax Escrow Report" detailing on an Asset by Asset basis
(i) the annual real estate taxes (and to the extent applicable, insurance
premiums) payable with respect to each Asset, (ii) a detail by category (i.e.
real estate taxes, insurance, Net Insurance and Condemnation Proceeds, etc.) of
the total amount of Tax Escrow Payments deposited in the Tax Escrow Account
during the calendar month in question, (iii) a detail by category of the total
amount of withdrawals from the Tax Escrow Account during such calendar month,
and (iv) the remaining balance of real estate taxes (and where applicable,
insurance premiums) due with respect to the Asset in question, which report
shall be certified to by a Responsible Officer of the Servicer and the General
Partner; and
(b) As to all Tier 1 Assets and Tier 2 Assets having an
Allocated Value of $50,000 or more, a "Tenant Security Deposit Report"
detailing, on an Asset by Asset basis and a tenant by tenant basis, the total
amount of Tenant Security Deposits held by Servicer or the applicable Property
Manager as of the end of the calendar month in question which report shall be
certified to by a Responsible Officer of the Servicer and the General Partner.
8.1.13 Collateral Loans Reports. As soon as possible but no
later than thirty (30) days after the end of each calendar month, furnish to
Lenders an analysis of all Collateral Loans reflecting monthly collections,
outstanding balances, anticipated future collections, settlement information,
default status and such information as Lenders may otherwise request (the
"Collateral Loans Reports"). In addition, at Lenders' option, Lenders shall
have the right to require such Collateral Loans Reports and such other
information as Lenders may otherwise reasonably request, on a weekly or
bi-weekly basis.
8.1.14 Further Assurances. At Lenders' request, promptly
execute and deliver or cause to be executed and delivered to Agent any and all
documents, instruments and agreements deemed necessary by Lenders to perfect or
to continue the perfection of Agent's Liens, to facilitate collection of the
Collateral or otherwise to give effect to or carry out the terms or intent of
this Agreement or any of the other Loan Documents.
8.1.15 Ancillary Agreements. Enter into the Lock-Box
Agreement, the Custodial Agreement, the Escrow Agreement, and the Services
Agreement and the Subordination Agreement and fully comply with all terms
thereof; and pay, perform and observe each of its obligations under any other
agreement to which it is a party in accordance with the terms thereof.
8.1.16 Substitute Notes. Execute such replacement and
substitute notes as may be requested by either Lender from time to time to
facilitate the assignment by either Lender of all or part
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of its rights and obligations under this Agreement, provided, however, such
replacement and substitute notes shall in the aggregate total the amount of the
note being replaced, and upon delivery of a substitute note, Agent shall
conspicuously mark the face of the note being substituted with the following
legend: "THIS NOTE HAS BEEN RENEWED AND SUBSTITUTED".
8.1.17 General Indemnity. Indemnify, protect, and hold Agent
and Lenders and their respective parents, subsidiaries, directors, officers,
employees, representatives, agents, successors, assigns, and attorneys
(collectively, the "Indemnified Parties") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses (including, without limitation, reasonable
attorneys' fees and legal expenses whether or not suit is brought and
settlement costs), and disbursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against the Indemnified Parties, in any
way relating to or arising out of the Loan, the Collateral, the Sale
Agreements, the Other Agreements, the Loan Documents or any of the
transactions contemplated therein (EXPRESSLY INCLUDING THE ORDINARY NEGLIGENCE
OF LENDERS AND AGENT, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF LENDERS AND AGENT) (collectively, the "Indemnified Liabilities"), to the
extent that any of the Indemnified Liabilities results, directly or indirectly,
from any claim made or action, suit, or proceedings commenced by or on behalf
of any Person other than the Indemnified Parties or Borrower; PROVIDED,
HOWEVER, THAT ALTHOUGH EACH INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO BE
INDEMNIFIED FROM ITS OWN ORDINARY NEGLIGENCE, NO INDEMNIFIED PARTY SHALL HAVE
THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS OWN FRAUD, GROSS NEGLIGENCE, OR
WILLFUL MISCONDUCT; provided further, however, that Agent and Lenders shall not
be indemnified against claims resulting from Agent or Lenders' own actions
taken with respect to any asset after Agent forecloses its Lien upon such
asset. The provisions of and undertakings and indemnification set forth in
this paragraph shall survive the satisfaction and payment of the Obligations
and termination of this Agreement.
8.1.18 Environmental Site Assessments. With respect to all
real property (whether REO Property or real property securing any Collateral
Loan), which constitutes a Tier 1 Asset, by July 31, 1995, Borrower shall have
delivered to Lenders all environmental site assessments in Borrower's
possession which are less than one (1) year old (the "Existing Assessments")
and as to all such real property with respect to which Borrower does not
possess an environmental site assessment, by September 15, 1995 (or within five
(5) days after Borrower's receipt of same), Borrower shall have ordered,
obtained and delivered to Lenders, at Borrower's expense, a "Phase I"
Environmental Site Assessment and, where appropriate, a "Phase II"
Environmental Site Assessment; each of
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which ordered Environmental Site Assessments shall be addressed to Borrower and
Lenders. Within sixty (60) days after its receipt of each of such Existing
Assessments and each of such ordered Environmental Site Assessments Lenders
shall provide written notice to Borrower specifying each such assessment which
does not qualify as an Environmental Site Assessment and specifying the reasons
for such non-qualification. Lenders agree that no Existing Assessment shall
disqualify by reason of being out of date provided that such assessment is
dated after June 1, 1994. To the extent that any such Environmental Site
Assessment is not approved by Lenders in accordance with the above or that as
to any such real property, Lenders have not received an Environmental Site
Assessment by September 15, 1995, then thereafter as to each such Tier 1 Asset,
unless and until Lenders shall have approved an Environmental Site Assessment,
such Tier 1 Asset will be excluded from all calculations with respect to the
Maximum Facility Availability and the Maximum Revolver Availability.
8.1.19 Environmental Indemnity. Indemnify, protect, and hold
each of the Indemnified Parties harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, proceedings, costs, expenses (including, without limitation, all
reasonable attorneys' fees and legal expenses whether or not suit is brought
and settlement costs), and disbursements of any kind or nature whatsoever which
may at any time be imposed on, incurred by, or asserted against such
Indemnified Parties, (EXPRESSLY INCLUDING THE ORDINARY NEGLIGENCE OF LENDERS
AND AGENT, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDERS
AND AGENT) with respect to or as a direct or indirect result of the violation
of any Environmental Law by Borrower, by any Account Debtor under any
Collateral Loan or by the condition of any of the Collateral or any real or
personal property which secures any Collateral Loan; or with respect to or as a
direct or indirect result of Borrower's or any REO Affiliate's or any such
Account Debtor's generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence in connection with its
properties of a Hazardous Substance including, without limitation, (a) all
damages of any such use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal, or presence, or (b) the costs of any
required or necessary environmental investigation, monitoring, repair, cleanup,
or detoxification and the preparation and implementation of any closure,
remedial, or other plans. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligations and termination of this Agreement. In addition to
the foregoing, in the event that Borrower learns that any REO Property which
has an Allocated Loan Value of $100,000 or more has a condition that may
require reporting or remediation, or both, pursuant to any Environmental Law
applicable to such REO Property,
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Borrower or the applicable REO Affiliate shall obtain an Environmental Site
Assessment of such REO Property, and if the report of such Assessment states
that there is a condition on or in such REO Property that requires reporting or
remediation as aforesaid, then Borrower or the applicable REO Affiliate shall,
at Lenders' election, promptly either: (a) take any and all actions necessary
to comply with the applicable Environmental Laws with respect to such
condition(s) or (b) obtain the release/discharge of Agent's Lien on such REO
Property by paying to Agent the Minimum Release Price (as a prepayment on the
Loan) and otherwise complying with the provisions of Section 6.6 above (except
that it shall not be necessary for the REO Affiliate to sell such REO Property
to anyone), and Agent agrees to consent to such release/discharge.
8.1.20 Sale of Collateral and Collection of Collateral Loans.
If at any time Borrower or an REO Affiliate sells any items of Collateral, real
or personal, then, promptly upon its receipt of the proceeds of such sale,
Borrower or such REO Affiliate shall make a payment into the Lock-Box Account
in an amount equal to the Release Price with respect to such item of
Collateral. If at any time Borrower (a) makes a collection in full of a
Collateral Loan, (b) agrees to settle any Collateral Loan or (c) makes a
collection against a Collateral Loan in connection with a sale to an Unrelated
Third Party of any item of personal property or real property securing a
Collateral Loan pursuant to a foreclosure or other legal proceedings, then,
promptly upon its receipt of same, Borrower shall make a payment into the
Lock-Box Account in an amount equal to the Release Price with respect to such
Collateral Loan. To the extent that any funds are not deposited in the
Lock-Box Account in accordance with the above by reason of the inability to
properly identify same, Borrower or Servicer shall not be in default of this
Section if such funds are deposited in the Lock-Box Account within two (2)
Business Days after the proper identification of same.
8.1.21 Deposit all Funds in Lock-Box Account. Deposit, or
cause to be deposited, in the Lock-Box Account, all Net Cash Flow (specifically
including without limiting the generality of the foregoing, all FDIC Cushion
Funds received by Borrower and all Excluded FC Reserve Funds to the extent not
expended by FC Liquidating Trust) within two (2) Business Days after the
receipt thereof. To the extent that any funds are not deposited in the
Lock-Box Account in accordance with the above by reason of the inability to
properly identify same, Borrower or Servicer shall not be in default of this
Section if such funds are deposited in the Lock-Box Account within two (2)
Business Days after the proper identification of same.
8.1.22 Compliance with Sale Agreements. Faithfully pay,
perform and observe in a timely manner all of the Borrower's obligations under
any agreements executed by the Borrower in
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connection with the acquisition of the Collateral Loan Pool including, without
limitation, the Sale Agreements and take no action(s) which could result in the
early termination of any "Due Diligence Period" under any Sale Agreement. In
addition Borrower shall exercise all of Borrower's rights under such documents
in a timely manner including, without limiting the generality of the foregoing,
exercise all rights to "put" Assets back to the respective Seller; provided
however, Borrower shall not be required to "put" an Asset back to the Seller if
Borrower shall have obtained Lenders' written consent thereto prior to the
expiration of the applicable "put back" time period under the respective Sale
Agreements. In the event that Lenders do not consent to Borrower's not
"putting back" an Asset, Borrower shall have the right to pay to Lenders the
Minimum Release Price with respect to such Asset in lieu of putting such Asset
back to the Seller in question.
8.1.23 Seller Notices. Promptly deliver to Lenders, within
three (3) Business Days after the Borrower's delivery or receipt of same,
copies of any notice to or from any Seller with respect to any matter having a
monetary effect or a potential monetary effect of in excess of $50,000.00.
8.1.24 Title Insurance Policies.
(a) As to each parcel of REO Property constituting a
Tier 1 Asset or a Tier 2 Asset purchased on the Closing Date, (i) on the
Closing Date, the appropriate REO Affiliate shall have executed and delivered
to Borrower the appropriate REO Note and the appropriate REO Security Documents
with respect to such parcel of REO Property and Borrower shall have executed
and delivered to Agent an Assignment thereof to Agent and, as to each parcel
REO Property constituting a Tier 1 Asset, within fifteen (15) days after the
Closing Date duplicate originals of such REO Security Documents and such
Assignment shall have been properly recorded with the appropriate records of
land evidence, (ii) as to each parcel of REO Property constituting a Tier 1
Asset or a Tier 2 Asset, by not later than August 31, 1995, Borrower shall have
delivered to Agent a Title Certificate with respect to each parcel of REO
Property constituting a Tier 2 Asset and a Title Insurance Policy with respect
to each parcel of REO Property constituting a Tier 1 Asset. As to any parcel
of REO Property with respect to which Lenders have not required the recording
of the respective REO Security Documents and/or the Assignment thereof to
Agent, (i) within ten (10) business days after receipt of written notice from
Agent, Borrower shall record such REO Security Documents and/or Assignment in
the appropriate records of land evidence and within forty-five (45) days after
receipt of such notice, Borrower shall have delivered to Agent a Title
Certificate with respect to such parcel of real property; it being understood
that Agent shall have
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the absolute right to require such recordings at any time Agent, in its sole
discretion, deems advisable.
(b) As to each parcel of real property securing a
Collateral Loan, (i) within ten (10) Business Days after the Closing Date,
Borrower shall have recorded with the appropriate records of land evidence the
appropriate assignment from Seller to Borrower of the mortgage or deed of trust
which secures such Collateral Loan together with, as to each such Collateral
Loan constituting a Tier 1 Asset (subject to subsection (c) below), the
Assignment to Agent of each such mortgage or deed of trust, and (ii) as to each
Collateral Loan constituting a Tier 1 Asset or a Tier 2 Asset, by not later
than August 31, 1995, Borrower shall have delivered to Agent a Title
Certificate with respect to each Collateral Loan constituting a Tier Two Asset
and a Title Insurance Policy with respect to each Collateral Loan constituting
a Tier 1 Asset.
(c) As to any parcel of real property securing a
Collateral Loan which Lenders agree to refrain from requiring the recording of
the Assignment to Agent of the respective mortgage or deed of trust securing
the respective Collateral Loan, (i) within ten (10) Business Days after receipt
of written notice from Lenders, Borrower shall record such Assignment in the
appropriate records of land evidence, (ii) within forty-five (45) days after
receipt of such notice, Borrower shall deliver to Agent a Title Certificate
(or, to the extent requested by Lenders, a Title Insurance Policy) with respect
to such parcel of real property and (iii) Agent shall have the absolute right
to so record each or any Assignment at any time Lenders deems advisable and in
its sole discretion.
(d) As to any parcel of REO Property acquired by
Borrower or an REO Affiliate after the Closing Date, (i) within ten (10)
Business Days after the date of Borrower's or such REO Affiliate's acquisition
of such parcel of REO Property, the appropriate REO Affiliate shall have
executed and delivered to Borrower the appropriate REO Note and the appropriate
REO Security Documents with respect to such parcel of REO Property and Borrower
shall have executed and delivered to Agent an Assignment thereof to Agent and
as to any parcel of REO Property constituting a Tier 1 Asset, Borrower shall
have had duplicate originals of such REO Security Documents and such Assignment
properly recorded with the appropriate records of land evidence and (ii) within
forty-five (45) days after such acquisition date, Borrower shall have delivered
to Agent a Title Insurance Policy or a Title Certificate (as required by
Lenders) with respect to such parcel of REO Property.
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8.1.25 Tax and Other Escrows. Properly maintain and monitor
all escrow accounts for taxes and other expenses with respect to all Collateral
Loans and, unless prohibited by applicable law, deposit and maintain all such
escrow funds in the Tax Escrow Account.
8.1.26 Notice to Obligors. Within five (5) Business Days
after the Closing Date, give written notice to each Account Debtor on each
Collateral Loan constituting a Tier 1 Asset or a Tier Two Asset, at its last
known address, advising such Account Debtor of the assignment of such
Collateral Loan to Borrower and directing that all future payments be made to
the Lock-Box.
8.1.27 Adjustment of Collateral Loan Pool Purchase Price. Give
the Lenders prior written notice of all proposed post Closing Date adjustments
to the "Purchase Price" (as such term is defined in the Sale Agreements) and
the basis thereof at least ten (10) Business Days before the date of settlement
of any such adjustments.
8.1.28 Additional Information. Furnish to the Lenders:
(a) Promptly after the commencement thereof, notice
of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower, any REO Affiliate, FC Liquidating Trust or the
Servicer which, if determined adversely to the Borrower, any REO Affiliate, FC
Liquidating Trust or the Servicer, could have a material adverse affect on the
financial condition, properties or operations of the Borrower, any REO
Affiliate, FC Liquidating Trust or the Servicer;
(b) Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the Borrower
files with or receives from the Pension Benefit Guaranty Corporation or the
United States Department of Labor under ERISA;
(c) As soon as possible and in any event within
five (5) Business Days after the occurrence of each Default or Event of
Default, a written notice setting forth the details of such Default or Event of
Default and the action which is proposed to be taken by the Borrower with
respect thereto;
(d) Within thirty (30) Business Days after the
filing thereof, copies of all federal and state tax returns, together with all
schedules thereto, filed by or on behalf of the Borrower, any REO Affiliate, FC
Liquidating Trust and the Servicer; and
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(e) Promptly upon request by either Lender, such
other information respecting the condition or operations, financial or
otherwise, of the Borrower, any REO Affiliate, FC Liquidating Trust and the
Servicer as the Lenders may reasonably from time to time request including,
without limitation, all such information that the Lenders may reasonably
request (i) as to the Borrower with respect to asset compromise/sale
experience, asset business plans, specific cash flow information, information
concerning capital expenditures, etc. and (ii) as to the Servicer, on a "pool"
by "pool" basis, with respect to asset compromise/sale experience, specific
cash flow information, information concerning capital expenditures, etc.
8.1.29 Improvements to REO Properties. In connection with the
making of any improvements to any REO Properties:
(a) Comply with all applicable building, fire,
health, sanitation, environmental protection, land use, subdivision and zoning
laws, ordinances, rules and regulations promulgated by any governmental
authority having jurisdiction over the REO Property in question, comply with
all restrictions or other encumbrances affecting title to the REO Property in
question, fulfill in every way the applicable requirements of any such
governmental authority and furnish to Agent such evidence thereof as Agent may
from to time reasonably require;
(b) File all plans for any such improvements with,
and obtain all necessary approvals from, all governmental authorities having
jurisdiction over the REO Property in question and submit copies of such
approvals to Agent;
(c) Perform all of Borrower's obligations under any
construction contract and pay when due all sums for labor, materials, and
equipment, including, without limitation, all fixtures and personalty
incorporated in the REO Property in question;
(d) Give forthwith to Agent notice of any claim by
any party of any material breach under any material construction contract in
connection with any such improvements;
(e) Use only materials and equipment, including
without limitation, fixtures and personalty incorporated in the REO Property in
question, to which Borrower has absolute title, except as otherwise
specifically approved in writing by Agent;
(f) Furnish to Agent from time to time, as
requested by Lenders, such budgets and revisions of budgets as the Lenders may
require in order to show the estimated cost of the improvements
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and the amount of funds required, at any given time, to complete and pay for
the construction of such improvements; and
(g) Take all reasonable steps to prevent the
recording of any notice of architect's, artisan's, materialmen's or mechanic's
lien relating to the REO Property in question or the construction of the
improvements and not permit or suffer to exist any Liens (other than the
Permitted Prior Liens and the Permitted Liens) on the REO Property in question,
any material stored thereon or therein or any insurance proceeds relating
thereto or any sums due or to become due to Borrower under this Agreement, and,
in the event of the recording of any such notice or lien, take all steps
(including, without limitation, bonding) to remove the same from the record
within fifteen (15) days after Borrower's receipt of such notice.
8.1.30 Tax Escrow Payments.
(a) Deposit, or cause to be deposited, in the Tax
Escrow Account all Tax Escrow Payments.
(b) Use funds deposited in the Tax Escrow Account
only to pay the specific tax or other item for which such funds were deposited.
(c) Upon payment and other satisfaction in full of
the Obligations, any funds remaining in the Tax Escrow Account shall be
refunded to the Borrower.
8.1.31 Due Diligence. Lenders shall be entitled to review,
receive summaries of and otherwise inspect all due diligence of the Collateral
Loan Pool performed by Borrower after the Closing Date.
8.2. Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations outstanding, Borrower
covenants that, unless Lenders have first consented thereto in writing, it will
not and each REO Affiliate will not:
8.2.1 Dissolution, Merger, Etc. Dissolve or otherwise
terminate its existence or merge or consolidate with any Person; or acquire all
or any substantial part of the assets of any Person except in cases where
assets are acquired pursuant to a foreclosure of Borrower's Liens upon the
assets securing payment of a Collateral Loan.
8.2.2 Loans, Advances, and Investments. Make any loan,
advance, extension of credit, or capital contribution to, make any investment
in, or purchase or commit to purchase any stock
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or other securities or evidences of Indebtedness of, or interests in, any other
Person, other than:
(a) advances to employees of Borrower in the ordinary
course of business not to exceed $1,500.00 in the aggregate outstanding at any
time;
(b) investments in obligations of the United State of
America and agencies thereof and obligations guaranteed by the United States of
America maturing within one year from the date of acquisition;
(c) certificates of deposit which are fully insured by
the Federal Deposit Insurance Corporation or are issued by commercial banks
organized under the Laws of the United States of America or any state thereof
and having combined capital, surplus, and undivided profits of not less than
$100,000,000.00 (as shown on such Person's most recently published statement of
condition), and which certificates of deposit have one of the three (3) highest
ratings from Moody's Investors Service, Inc., or Standard & Poor Corporation;
(d) commercial paper which has one of the two highest
ratings from Moody's Investors Service, Inc., or Standard & Poors Corporation;
(e) eurodollar investments with financial institutions
having combined capital, surplus, and undivided profits of not less than U.S.
$100,000,000.00 (as shown on such Person's most recently published statement of
condition), and whose certificates of deposit have one of the two highest
ratings from Moody's Investors Service, Inc., or Standard & Poor Corporation,
respectively, or, if such institution does not have a commercial paper rating,
a comparable bond rating; and
(f) loans to or investments in REO Affiliates in
connection with the acquisition by such REO Affiliates of REO Properties.
Nothing contained in this Section 8.2.2 shall be deemed to in any way
alter or diminish Borrower's obligations to fully comply with the provisions of
Section 8.1.20 and 8.1.21 above.
8.2.3 Other Indebtedness. Create, incur, assume, or suffer
to exist, any Indebtedness, or guarantee, assume, endorse or otherwise, in any
way, become directly or contingently liable with respect to the Indebtedness of
any Person except:
(a) the Obligations;
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(b) the Subordinated Indebtedness;
(c) obligations under the Services Agreement;
(d) contingent liabilities arising out of endorsements
of checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(e) contingent liabilities which may arise solely as a
result of Borrower acquiring an asset subject to, but not assuming, a Permitted
Prior Lien;
(f) obligations incurred in connection with the
ordinary course of Borrower's business or the business of any REO Affiliate;
and
(g) loans from Servicer for Servicer Advances.
8.2.4 Transactions with Affiliates. Enter into any
transaction with any Affiliate or partner of Borrower, the General Partner, FC
Liquidating Trust or the Servicer, except for capital contributions or advances
by Borrower's partners to Borrower, loans to or investments in REO Affiliates
or those transactions evidenced by the Subordinated Indebtedness and the
Services Agreement.
8.2.5 Other Liens. Create or suffer to exist any Lien upon
any of its property, income or profits, whether now owned or hereafter
acquired, except for Permitted Liens or Permitted Prior Liens.
8.2.6 Distributions. Declare or make any distributions of
any of its assets, income or profits to any of its partners.
8.2.7 New Places of Business. Transfer its principal place
of business or chief executive office, except upon at least sixty (60) days
prior written notice to Lenders and after the delivery to Lenders of financing
statements, if required by Lenders, in form satisfactory to Lenders to perfect
or continue the perfection of Lenders's Liens and security interests hereunder.
8.2.8 New Businesses. Enter into any new business or make
any material change in any of Borrower's business objectives, purposes and
operations.
8.2.9 Disposition of Assets. Sell, lease or otherwise
dispose of any of its assets, except sales of assets in the ordinary course of
Borrower's business; provided, that Borrower or the appropriate REO Affiliate
shall immediately pay all Net Sales Proceeds to Lenders for deposit in the
Lock-Box Account.
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8.2.10 Fictitious Names. Use any fictitious name or "d/b/a".
8.2.11 Margin Stock. Own, purchase or acquire (or enter into
any contract to purchase or acquire) any "margin security", as defined by any
regulation of the Federal Reserve Board as now in effect or as the same may
hereafter be in effect.
8.2.12 Fiscal Year. Change its fiscal year.
8.2.13 Compliance with Environmental Laws. Except in material
compliance with all applicable laws (including all applicable Environmental
Laws), use, generate, manufacture, produce, store, release, discharge, or
dispose of on, under, or about any of its real property or transport to or from
any of its real property any Hazardous Substance, or allow any other Person or
entity to do so.
8.2.14 Discounts of Collateral Loans. Discount or otherwise
settle the amount owed on any Collateral Loan for an amount which is less than
the Minimum Release Price of such Collateral Loan.
8.2.15 Modification of Ancillary Agreements. Amend, modify or
terminate either of the Sale Agreements, the Services Agreement, the Lock-Box
Agreement, the Escrow Agreement or the Custodial Agreement.
8.2.16 Modification of Subordinated Indebtedness. Amend,
modify or terminate any document governing, evidencing or otherwise related to
the Subordinated Indebtedness in any way that creates any change that conflicts
with the Subordination Agreement or this Agreement, or that otherwise
materially impairs the rights of Lenders; this prohibition including by way of
illustration but not by way of limitation, any increase in the amortization
schedule of the Subordinated Indebtedness, and any increase in the rate of
interest that accrues on the Subordinated Indebtedness.
8.2.17 Certain Prohibited Payments. Make any payment under
the Subordinated Indebtedness at any time when any Default or Event of Default
exists hereunder or if such payment would cause a Default or Event of Default
hereunder; or make any payment under the Subordinated Indebtedness or the
Services Agreement (i) in a manner that is inconsistent with the terms of the
Subordination Agreement or (ii) which is not specifically authorized under the
terms of this Agreement.
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SECTION 9 EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
9.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
9.1.1 Nonpayment of any installment of principal and/or
interest due under the Notes when it shall become due and payable (no prior
demand therefor being necessary) and such nonpayment shall have continued for
more than ten (10) days after notice thereof from Disbursing Agent to Borrower.
9.1.2 Nonpayment of any other sum payable under this
Agreement, the Note, any of the Security Documents or any of the Other
Agreements and, unless a different grace or notice period is elsewhere
specified, such nonpayment shall have continued for more than ten (10) days
after notice thereof from Agent to Borrower.
9.1.3 Nonpayment, nonperformance or nonobservance of any of
the other covenants, agreements, or conditions of this Agreement (except for
the covenants contained in Sections 4.2.3, 8.1.20, 8.1.21 and 8.2 of this
Agreement), or any of the Security Documents or any of the Other Agreements,
and, unless a different grace or notice period is elsewhere specified, such
nonperformance or nonobservance shall have continued for more than thirty (30)
days after notice thereof from Lenders to Borrower. The foregoing shall not be
deemed to provide a grace or notice period for nonperformance or nonobservance
of any covenant, agreement or condition which is specifically listed as an
Event of Default in any other Section of this Section 9.1.
9.1.4 Nonpayment, non-performance or non-observance of any of
the covenants, agreements or conditions contained in Sections 4.2.3, 8.1.20,
8.1.21, and 8.2 of this Agreement (no prior demand being necessary except with
respect to Section 8.2.13, where Agent agrees to give Borrower ten (10) days
notice).
9.1.5 The occurrence of any "Event of Default" under the
Notes, any of the Security Documents or any of the Other Agreements, or the
occurrence of any event or condition which entitles Agent or Lenders to
exercise any of their remedies under any of the Security Documents or any of
the Other Agreements.
9.1.6 Title to the Collateral is not satisfactory to the
Lenders by reason of any lien, charge, encumbrance, title condition or
exception (other than Permitted Liens and Permitted Prior Liens) and such
condition continues for more than thirty (30) days after notice thereof from
Agent to Borrower.
9.1.7 The Title Company shall fail to issue a Title
Certificate, Title Insurance Policy or any endorsement referred to
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in Section 8.1.24 or shall otherwise refuse to insure the Loan as being secured
by a valid lien on the real property portion of the Collateral subject only to
Permitted Liens and Permitted Prior Liens.
9.1.8 The cancellation, lapse or termination of any insurance
coverage required to be maintained by Borrower under this Agreement or under
any of the Security Documents.
9.1.9 Borrower assigns this Agreement or any interest herein.
9.1.10 The Collateral or any portion thereof or any interest
therein is conveyed, voluntarily encumbered or otherwise transferred in any
way, except as may be specifically permitted by this Agreement, in each case,
without the prior written consent of Lenders.
9.1.11 If any notice of responsibility, notice of violation,
notice letter or similar notice or claim is issued or filed by any governmental
authority against Borrower or any REO Affiliate or against any items of
Collateral under any Environmental Laws and within sixty (60) days after the
issuance or filing thereof either (a) the condition referenced therein is not
cured or (b) a consent agreement reasonably satisfactory to Lenders has not
been entered into such governmental authority.
9.1.12 Borrower or any REO Affiliate or FC Liquidating Trust
fails to deposit (or cause to be deposited) in the Lock-Box Account any funds
required to be deposited therein in accordance with the provisions of Sections
8.1.20 and 8.1.21 hereof when due or Borrower fails to make any Mandatory
Payment required under Section 4.2.3 when due (in either event, no prior demand
being necessary).
9.1.13 If any REO Affiliate fails to promptly pay to Lenders
100% of each month's Net Operating Income from the REO Property in question.
9.1.14 If Borrower requests a termination of the Loan or
confesses inability to continue performance in accordance with this Agreement.
9.1.15 Breach or the proving false or misleading, in any
material respect, of any representation or warranty now or hereafter made to
Agent or Lenders by, on behalf of, or for the benefit of Borrower, the General
Partner, the Servicer or the Subordinated Lender contained in:
(a) this Agreement;
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(b) any of the Security Documents or Other Agreements;
(c) the Notes; or
(d) any loan application, statement, financial
statement, certificate or other document, agreement
or instrument furnished, executed or delivered in
connection herewith by, on behalf of, or for the
benefit of Borrower, the General Partner, Servicer
or the Subordinated Lender.
9.1.16 The occurrence of any "event of default" under any
document, agreement or instrument now or hereafter (a) evidencing or securing
any other obligation or indebtedness of Borrower or any REO Affiliate to
Lenders now existing or hereafter arising or (b) evidencing any obligation or
other indebtedness secured in whole or in part by any or all of the property
covered by any of the Security Documents, or the nonpayment, nonperformance or
nonobservance of any of the covenants, agreements or conditions of any such
documents, agreements or instruments, which nonpayment, nonperformance or
nonobservance shall have continued beyond the expiration of any applicable
grace or notice period, or the occurrence of any event or condition which
entitles the obligee of or under any such documents, agreements or instruments
to exercise any of its remedies thereunder.
9.1.17 The occurrence of any "event of default" under any of
the Subordinated Indebtedness Documents or the occurrence of any event or
condition as the result of which Subordinated Lender has exercised any of its
rights or remedies thereunder.
9.1.18 The occurrence of any "event of default" by Borrower
under any document, agreement or instrument now or hereafter executed in
connection with the Borrower's purchase of the Collateral Loan Pool from
Sellers, including, without limitation the Sale Agreements; or the non-payment,
non-performance or non-observance of any of the covenants, agreements or
conditions or such documents, agreements or instruments, which non-payment,
non-performance or non-observance shall have continued beyond the expiration of
any applicable grace or notice period, if any, or the occurrence of any event
or condition which entitles the obligee of or under any such documents,
agreements or instruments to exercise any of its remedies thereunder.
9.1.19 Nonpayment of any Indebtedness of the Borrower (other
than the Notes or other Indebtedness referred to in the preceding subsection)
if the effect of such nonpayment is to accelerate the maturity of such
Indebtedness or to permit the holder thereof to cause such Indebtedness to
become due prior to the stated maturity thereof, or if any other Indebtedness,
the validity of which is not being contested in good faith by appropriate
proceedings, is not paid when due and payable in
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accordance with the terms of such Indebtedness or customary trade practice.
9.1.20 (a) (i) The insolvency or inability of the Borrower or
any REO Affiliate or the General Partner or Servicer or FC Liquidating Trust to
pay its debts as they mature; (ii) the appointment of a receiver, trustee,
custodian or other fiduciary, for, or for any of the property of, the Borrower
or any REO Affiliate or the General Partner or Servicer or FC Liquidating
Trust; (iii) the making of an assignment for the benefit of creditors, or the
making of or entering into a trust mortgage or deed or other instrument of
similar import for the benefit of creditors, by the Borrower or any REO
Affiliate or the General Partner or Servicer or FC Liquidating Trust; or (iv)
the convening of a meeting of the creditors, or the selection of a committee
representing the creditors of the Borrower or any REO Affiliate or the General
Partner or Servicer or FC Liquidating Trust; or
(b) The filing of a petition, complaint, motion or
other pleading seeking any relief under any receivership, insolvency, or debtor
relief law, or seeking any readjustment of indebtedness, reorganization,
composition, extension or any similar type of relief, or the filing of a
petition, complaint, or motion under any chapter of the Bankruptcy Code by the
Borrower or any REO Affiliate or the General Partner or Servicer or FC
Liquidating Trust; or
(c) The filing of a petition, complaint, motion or
other pleading seeking any relief under any receivership, insolvency, or debtor
relief law, or under any chapter of the Bankruptcy Code, or seeking any
readjustment of indebtedness, reorganization, composition, extension or any
similar type of relief, or the entry of any order for relief under any chapter
of the Bankruptcy Code, against the Borrower or any REO Affiliate or the
General Partner or Servicer or FC Liquidating Trust; provided, however, that if
Borrower shall immediately notify Lenders in writing of the filing of any such
petition, complaint, motion or other pleading against the Borrower or any REO
Affiliate or the General Partner or Servicer or FC Liquidating Trust, and shall
provide evidence satisfactory to Lenders that the Borrower or any REO Affiliate
or the General Partner or Service or FC Liquidating Trust, as the case may be,
has in good faith and within ten (10) days after the filing of any such
petition, complaint, motion or other pleading filed an answer thereto
contesting same, then there shall be no Event of Default under this
subparagraph (c) until the earliest of (i) the entry of an order for relief or
a judgment under any proceedings referred to in this subparagraph (c), (ii) the
appointment of a receiver, trustee, custodian or other fiduciary in any such
proceeding or (iii) the expiration of a
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period of thirty (30) days, at the end of which such petition, complaint,
motion or other pleading remains undismissed; or
(d) The entry of any judgment against, or the
attachment or garnishment of any of the property, goods or credits of, the
Borrower or any REO Affiliate or the General Partner or Servicer or FC
Liquidating Trust with respect to any claim or claims in excess of One Hundred
Thousand Dollars ($100,000) which remains unpaid, unstayed, undismissed or
unbonded for a period of thirty (30) days; or if any foreclosure is instituted
(by judicial proceedings, by publication of notice pursuant to a power of sale
or otherwise) against the Borrower or any REO Affiliate or the General Partner
or Servicer or FC Liquidating Trust under any mortgage, deed of trust or
security agreement granted by the Borrower or any REO Affiliate or the General
Partner or Servicer or FC Liquidating Trust and is not dismissed or terminated
for a period of fifteen (15) days.
9.1.21 The dissolution, liquidation or termination of
existence of the Borrower or any REO Affiliate or Servicer or FC Liquidating
Trust or a sale of assets of Borrower or any REO Affiliate or Servicer or FC
Liquidating Trust out of the ordinary course of business.
9.1.22 Any material adverse change in the financial condition
of, or any act or omission of Borrower or Servicer or FC Liquidating Trust, or
any act or omission of any officer, director, partner or trustee of Borrower
which leads Lenders reasonably to believe that performance of any of the
covenants, agreements, or conditions of any of the Loan Documents, is or may be
substantially impaired.
9.1.23 The transfer of any interest in Borrower or any REO
Affiliate by any of the present partners thereof or dilution of the percentage
interests in Borrower or any REO Affiliate held by any of the present partners
thereof without the prior written consent of Lenders.
9.1.24 Any change in the ownership or control of Servicer
which would reduce the total percentage stock ownership in Servicer owned by
(a) shareholders of J-Hawk Corporation as of the Closing Date to less than 30%
or (b) James T. Sartain or Rick R. Hagelstein to less than 3.5% each, in every
case without Lenders' prior written consent.
9.1.25 The merger or consolidation with any corporation by the
General Partner, Servicer or any corporate general partner of any REO
Affiliate, or the transfer of any of the capital stock of the General Partner
or any corporate general partner of any REO Affiliate by any of the present
stockholders thereof, or dilution
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of the percentage of the capital stock of, or voting rights in the General
Partner or any corporate general partner of any REO Affiliate held by any of
the present stockholders thereof, or the acquisition of any of the capital
stock of the General Partner or any corporate general partner of any REO
Affiliate by any person, corporation or entity not presently a stockholder
thereof, without the prior written consent of Lenders.
9.1.26 If any of Borrower's partners claims that Borrower or
any REO Affiliate or any of Borrower's other partners are in default under
Borrower's partnership agreement or claims that such partner is not obligated
to contribute all or any portion of such partner's contribution to the
Borrower's capital or any such partner fails to make any such contribution in
accordance with said partnership agreement and such claim, action or inaction
leads Lenders reasonably to believe that the performance of any of the
covenants, agreements or conditions of any of the Loan Documents is or may be
substantially impaired.
9.1.27 If Borrower fails to promptly notify Lenders, in
writing, and in any event within ten (10) days, of the occurrence of any event
or condition of which Borrower is aware which constitutes a Default or an Event
of Default, and together with such notice, furnish a written statement to
Lenders which shall set forth the details of any action Borrower proposes to
take with respect thereto.
9.1.28 The failure of Servicer to maintain, at all times, a
minimum net worth of at least $30,000,000.
9.1.29 The occurrence of any "Guaranty Event of Default" under
the Guaranty.
9.2. Remedies. After the occurrence of an Event of Default (unless
such Event of Default has been waived in writing by Lenders), Agent and/or
Lenders shall have and may exercise from time to time the following rights and
remedies:
9.2.1 Acceleration of the Obligations. The right to declare,
at Lenders' sole option, immediately due and payable all or any portion of the
Obligations due or to become due from Borrower to Lenders (whether under the
Loan or otherwise) without presentment, demand, protest, notice of dishonor,
notice of default, notice of intent to accelerate, notice of acceleration, or
any other notice whatsoever, and Borrower shall forthwith pay to Disbursing
Agent for the account of Lenders, in addition to any and all sums and charges
due, the entire principal of and interest accrued on the Obligations; provided,
however, that in the case of an Event of Default under Section 9.1.20, the
Obligations automatically shall become at once due and payable without
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presentment, demand, protest, notice of dishonor, notice of default, notice of
intent to accelerate, notice of acceleration, or any other notice or action
whatsoever by Lenders.
9.2.2 Cessation of Fundings. The right to cease any and all
fundings hereunder.
9.2.3 UCC Remedies. All of the rights and remedies of a
secured party under the Security Documents or under the Code or under other
applicable law, and all other legal and equitable rights to which Agent or
Lenders may be entitled, all of which rights and remedies shall be cumulative,
and none of which shall be exclusive, and shall be in addition to any other
rights or remedies contained in this Agreement or any of the other Loan
Documents.
9.2.4 Possession of Collateral. The right to take immediate
possession of the Collateral (specifically including, without limitation, all
records and all original documents), and (i) to require Borrower to assemble
the Collateral, at Borrower's expense, and make it available to Agent at a
place designated by Agent which is reasonably convenient to both parties, and
(ii) to enter any of the premises of Borrower or wherever any of the Collateral
shall be located, and to keep and store the same on said premises until sold
(and if said premises be the property of Borrower, Borrower agrees not to
charge Agent for storage thereof).
9.2.5 Disposition of Collateral. The right to sell or
otherwise dispose of all or any of the Collateral at public or private sale or
sales, with such notice as may be required by law, in lots or in bulk, for cash
or on credit, all as Agent, in its discretion, may deem advisable. Borrower
agrees that thirty (30) days' written notice to Borrower or the applicable REO
Affiliate of any public or private sale or other disposition of any Collateral
shall be reasonable notice thereof, and such sale shall be at such locations as
Agent may designate in said notice. Agent shall have the right to conduct such
sales on Borrower's or REO Affiliates' premises, without charge therefor, and
such sales may be adjourned from time to time in accordance with applicable
law. Agent shall have the right to sell, lease or otherwise dispose of any
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lenders may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set-off the amount of such price against the Obligations. Agent is
hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in advertising for sale and selling
any Collateral and Borrower's rights under all licenses and all franchise
agreements shall inure
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to Agent's and Lenders' benefit. The proceeds realized from the sale of any
Collateral may be applied, after allowing two (2) Business Days for collection,
first to the costs, expenses and reasonable attorneys' fees incurred by Agent
or Lenders in collecting the Obligations, in enforcing Agent's and Lenders'
rights under the Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
of the Collateral; secondly, to interest due upon any of the Obligations; and
thirdly, to the principal of the Obligations. If any deficiency shall arise,
Borrower shall remain liable to Agent and Lenders therefor.
9.2.6 Completion of Construction, etc. The right (i) to enter
upon any REO Property and construct, equip and/or complete any improvements,
and to appoint watchmen to protect any REO Property, all at the risk, cost, and
expense of Borrower; (ii) to discontinue, at any time, any work with respect to
any improvements commenced by Agent or change any course of action undertaken
by Lenders in connection therewith; and/or (iii) to assume any construction
contract or related agreement made by Borrower in any way pertaining to any
improvements and to take over and use all or any part or parts of the labor,
materials, supplies, and equipment contracted for by Borrower, all in the sole
discretion of Agent. In connection with any construction, equipping, and/or
completion of any improvements undertaken by Agent pursuant to the provisions
of this Section 9.2.6 (but without intending to limit the powers and
discretions conferred by said Section), Agent may engage builders, contractors,
architects, engineers, and others for the purpose of furnishing labor,
materials, and equipment; pay, settle, or compromise all bills or claims which
may become Liens or which have been or shall be incurred in any manner in
connection with such construction, equipping, and/or completion of
improvements; and take such action or refrain from acting hereunder as Agent
may, in its sole discretion, from time to time determine in order to carry out
the intent of this Section 9. Borrower shall be liable to Agent and Lenders
for all costs paid or incurred for the construction, completion, and/or
equipping of any improvements, whether the same shall be paid or incurred
pursuant to the provisions of this Section 9.2.6, or otherwise, and all
payments made or liabilities incurred by Agent or Lenders under this Agreement
of any kind whatsoever shall be paid by Borrower to Agent on demand, with
interest to the date of payment at the Default Rate and shall be secured by the
Security Documents.
9.2.7 Rights Under Loan Documents. The rights granted under
any of the other Loan Documents and any of the Other Agreements.
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9.3. Setoff, Etc.
9.3.1 Upon the occurrence of any Event of Default, Agent and
Lenders are hereby authorized at any time and from time to time, without notice
to the Borrower (any such notice being expressly waived by the Borrower), and
regardless of the adequacy of any Collateral, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by either Lender (or by any of
either Lender's Affiliates) to or for the credit or the account of the Borrower
(including without limitation all funds held in the Lock-Box Account, the Cash
Reserve Account, Disbursement Account, the Operating Reserve Account, and the
Tax Escrow Account but excluding, however, any funds deposited in the Tax
Escrow Account which, to Lenders' knowledge, are the property of any Account
Debtor) against any and all of the Obligations of the Borrower now or hereafter
existing under the Loan Documents irrespective of whether or not Lenders shall
have made any demand under the Loan Documents and although such Obligations may
be unmatured. Lenders agree to promptly notify the Borrower after any such
setoff and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application.
9.3.2 Any such right of setoff may be exercised by the
Lenders against the Borrower or against any bankruptcy trustee,
debtor-in-possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor or any of them, or against anyone
else claiming through or against them.
9.3.3 As security for the due payment and performance of all
Obligations to the Lenders now in existence or hereafter arising, including
without limitation, all Obligations hereunder and under the other Loan
Documents, Borrower hereby grants to the Agent and Lenders a lien on any and
all deposits or other sums at any time credited by or due from the Lenders and
any Affiliate of either Lender to Borrower, whether in regular or special
depository accounts or otherwise (including without limitation all funds held
in the Lock-Box Account, the Cash Reserve Account, Disbursement Account, the
Operating Reserve Account, and the Tax Escrow Account but excluding, however,
any funds deposited in the Tax Escrow Account which, to Lenders' knowledge, are
the property of any Account Debtor), and any and all moneys, securities and
other property of Borrower and the proceeds thereof, now or hereinafter held or
received by or in transit to either Lender, or any Affiliate of either Lender,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and any such deposits, sums, moneys, securities and other property,
may at any time after the occurrence of any Event of Default be set off,
appropriated and applied by the Lenders against any of such
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Obligations, whether or not any of the Obligations are then due or are secured
by any other Collateral, or, if they are so secured, whether or not the other
Collateral held by the Lenders is considered to be adequate.
9.3.4 The rights of Lenders under this Section 9.3 are in
addition to all other rights and remedies (including, without limitation, other
rights of setoff) which Lenders may have.
9.4. Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lenders or contained in any other agreement between
Borrower, Agent and/or and Lenders heretofore, concurrently, or hereafter
entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent or either Lender to
exercise or enforce any rights, Liens, powers or remedies hereunder or under
any of the aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such Liens, rights, powers and remedies, but
all such Liens, rights, powers, and remedies shall continue in full force and
effect until the Loan and all other Obligations shall have been fully
satisfied. All Liens, rights, powers, and remedies herein provided for are
cumulative and none are exclusive.
SECTION 10 AGENCY PROVISIONS
10.1. Appointment.
10.1.1 The Lenders have designated and appointed Fleet or
NationsBank as agent for the Lenders to act as specified herein and the other
Loan Documents (as used in this Section 10, the term "Agent" means each of
Fleet and NationsBank in its capacity as "Agent" under the respective Loan
Document), and each such Lender hereby irrevocably authorizes the Agent, as the
agent for such Lender, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms hereof
and of the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere herein and in the other Loan Documents, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations
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or liabilities shall be read into this Agreement or any of the other Loan
Documents, or shall otherwise exist against the Agent.
10.1.2 The provisions of this Section: (i) are solely for the
benefit of the Agent and the Lenders, (ii) are not for the benefit of Borrower
and Borrower shall have no right as a third party beneficiary of the provisions
hereof, (iii) are not to be relied upon by Borrower or any third party, and
(iv) shall not affect the rights or obligations of Borrower or create any
obligations of Borrower. In performing its functions and duties under this
Agreement and the other Loan Documents, the Agent shall act solely as agent of
the Lenders and does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for the Borrower.
10.1.3 Notwithstanding the authority delegated to Agent
pursuant to Section 10.1.1 or otherwise in the Loan Documents, Agent shall not
enter into any amendment or modification of any of the Loan Documents or take
other action specifically requiring the consent, direction or approval of
Lenders without the consent, direction or approval of both Lenders. Lenders
may direct Agent to take certain actions in respect of Borrower, any REO
Affiliate or otherwise related to the authority granted to such Agent under the
Loan Documents, including the granting or denial of waivers, the giving of
consents or approvals, the exercise of remedies or the initiation of suit or
other legal proceedings, and if so directed, Agent shall take such actions.
Agent may take any actions so approved or directed by Lenders in its name
without the joinder of Lenders, and Borrower, any REO Affiliate and all third
parties shall be entitled to rely on the actions taken by Agent with respect to
the execution by Agent of any and all agreements, financing statements,
affidavits, notices or any other type of document or instrument pertaining
thereto, including, without limitation, in connection with the exercise of any
rights or remedies of Lenders under the Loan Documents, and the same shall be
binding upon all Lenders as to any third party relying on such actions by
Agent. Either Agent may also be named secured party or beneficiary under the
Security Documents and in such capacity shall take and maintain possession of
the respective Security Documents, as agent for and on behalf of Lenders, and
the grant to either Agent of any Lenders' liens or security interests under any
Security Document shall be for the ratable benefit of Lenders.
10.2 Delegation of Duties. The Agent may execute any of its duties
hereunder or under the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
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10.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection herewith or in connection with any of the
other Loan Documents (IT BEING EXPRESSLY UNDERSTOOD THAT SUCH INDEMNIFIED PARTY
SHALL BE INDEMNIFIED FOR ITS OR HIS ORDINARY NEGLIGENCE BUT NOT FOR SUCH
PERSON'S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), or (ii) responsible in
any manner to either of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any partner thereof
contained herein or in any of the other Loan Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection herewith or in connection with the other
Loan Documents, or enforceability or sufficiency hereof or of any of the other
Loan Documents, or for any failure of the Borrower to perform its obligations
hereunder or thereunder. The Agent shall not be responsible to either Lender
for the collectibility of the Loan or the effectiveness, genuineness, validity,
or enforceability of this Loan Agreement or any of the other Loan Documents or
for any representations, warranties, recitals or statements made herein or
therein or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by the Agent to the Lenders
or by or on behalf of the Borrower to the Agent or either Lender. The Agent
shall not be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or in any of the other Loan Documents (except as expressly
required by any provision hereof or of any other Loan Document) or as to the
use of the proceeds of the Loan or of the existence or possible existence of
any Default or Event of Default or to inspect the properties, books or records
or the Borrower.
10.4 Reliance on Communications. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper person or persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the agent with
reasonable care. The Agent may deem and treat the Lenders as the owner of
their respective interests hereunder for all purposes. The Agent shall be
fully justified in failing or refusing to take any action under this Loan
Agreement or under any of the other Loan Documents unless it shall first
receive such advice or concurrence of both Lenders as it deems appropriate or
it
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shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting or in refraining from acting, hereunder or under any of the
other Loan Documents in accordance with a request of both Lenders and such
request and any action taken or failure to act pursuant thereto shall be
binding upon both Lenders (including their successors and assigns).
10.5. Notice of Default.
10.5.1 The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender or the Borrower referring to the
Loan Document, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives
such a notice, the Agent shall give prompt notice thereof to the Lenders.
Thereafter, during the continuance of such Event of Default, the Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by both Lenders; provided that, the Agent may (but shall
not be obligated to) take such other action, or refrain from taking such other
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders to protect Lenders' rights and
interests under the Loan Documents and in the Collateral.
10.5.2 Notwithstanding the above, in the event that the
Lenders cannot come to agreement regarding acceleration of the Loan and the
exercise of remedies under the Loan Documents within ninety (90) days after the
time when the Lenders shall have had actual notice of the Event of Default in
question, thereby resulting in a deadlock, then Fleet shall, at the end of such
ninety (90) day period, give notice to the Borrower that the Loan is
accelerated and each Agent shall thereafter take such action (pursuant to the
Loan Documents under which it is acting as agent) as the Agent deems advisable
to enforce the Lenders' rights under the respective Loan Agreement and the
other Loan Documents; provided, further, however, that in the event the Agent
(whether in its capacity as a Lender or Agent, or both) shall not be in
agreement with such acceleration of the Loan and exercise of remedies in
connection therewith at the end of any such deadlock period, then the Agent
shall have the option to withdraw as Agent prior to any such action being taken
in connection with the Loan and the other Lender shall automatically be
appointed successor Agent under the applicable Loan Document.
10.6. Non-Reliance on Agent and other Lender. Each Lender expressly
acknowledges that neither the Agent nor any of its
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officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the Agent or
any affiliate thereof hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Agent to either Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or the other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrower and made its own decision to make available to the Borrower its
portion of the Loan hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder and under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide either Lender with any credit or other information
concerning the business, prospects or creditworthiness of the Borrower which
may come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7. Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not promptly reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Lender Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent in its capacity
as such in any way relating to or arising out of this Agreement or the other
Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct [IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT
THE INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR ITS
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ORDINARY NEGLIGENCE]. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Notes and all other
amounts payable hereunder and under the other Loan Documents.
10.8. Agent in its Individual Capacity. The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Agent were not the Agent hereunder.
With respect to the Loan, the Agent, in its individual capacity as a Lender,
shall have the same rights and powers under this Agreement as either Lender and
may exercise the same as though it were not the Agent, and the terms "Lender"
and "Lenders" shall include the Agent in its individual capacity.
10.9. Successor Agent. The Agent may, at any time, resign as Agent
under the applicable Loan Document upon twenty (20) days' written notice to the
Lenders and the Borrower, and be removed as Agent under the applicable Loan
Document with or without cause by the Lenders upon thirty (30) days written
notice to the Agent. Upon any such resignation or removal, the other Lender
shall have the option of becoming the Agent hereunder and, if the other Lender
does not agree to act as Agent within ten (10) days of such resignation or
removal, the Lenders shall have the right to appoint a successor Agent. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as Agent under the
applicable Loan Document and the provisions of this Section 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under the applicable Loan Document. Any successor Agent shall have the
right to cause itself or an affiliate entity to serve as the Escrow Agent,
Custodian, Lock-Box Agent (as defined in the Lock-Box Agreement) or other
similar function under the Loan Documents by so notifying the retiring Agent.
The retiring Agent shall cooperate with the successor Agent to cause such
functions to be so transferred as soon as reasonably and practically possible.
Notwithstanding the foregoing provisions of this Section 10.9, the Lenders,
each acknowledge and agree that only NationsBank or Fleet shall serve as Agent
under the Loan Documents unless otherwise agreed to by the Borrower.
10.10. Lender Pro Rata Shares. Fleet's Lender Pro Rata Share shall be
50% and NationsBank's Lender Pro Rata Share shall be 50% and accordingly each
Lender shall be deemed to own an undivided 50% interest in (i) the Loan; (ii)
all Loan Documents; and (iii)
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all principal and interest payments due under or in connection with the Loan
and all Loan Fees and all other fees and other sums due under the Loan
Documents. Each Lender shall be entitled to its Lender Pro Rata Share of all
payments of principal, interest fees and other sums due under or in connection
with the Loan. Neither Lender shall have any priority of ownership or interest
in Loan, the Loan Documents or any payment thereunder over the other Lender.
10.11. Pro Rata Treatment. Each payment received by Agent for the
account of Lenders shall be distributed to each Lender in accordance with the
Lender Pro Rata Share of each Lender by not later than the end of the next
Business Day after Disbursing Agent's receipt of "good" funds (as determined in
accordance with Agent's customary practices). If either Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off or otherwise) in excess of the Lender Pro Rata Share of such Lender,
such Lender shall forthwith pay to the other Lender such amount as shall be
necessary to cause both Lenders to share such excess payment ratably. In
addition, in the event that any amount received by either Lender with respect
to the Loan is subsequently invalidated, declared to fraudulent or
preferential, set aside or judicially required to be repaid to a trustee,
receiver or any other person under any applicable creditors' remedy preceding,
including without limitation, any bankruptcy proceeding, the other Lender shall
pay to the Lender from which said amount is recovered, such amount as will
result in both Lenders retaining their respective Lender Pro Rata Shares after
such recovery. In addition, Agent shall promptly forward to both Lenders,
copies of all documents, instruments, requests, lists and other written
information delivered to Agent under the Loan Documents, which are intended for
the files of or to be reviewed by Lenders.
10.12. Assignments/Participations. Neither Lender shall have the right
to assign any of its interests, rights and obligations under this Agreement.
Notwithstanding the above prohibition on assignments, without the consent of
Agent, Borrower or the other Lender, each Lender shall have the right to sell
participation interests in its respective Lender Pro Rata Share to such other
lenders (collectively, "Participants") as the Lender in question may deem
appropriate. No Participant shall have any rights in the Loan or hereunder or
under any of the other Loan Documents; it being understood that each Lender
shall be responsible for interacting with its respective Participant(s).
Notwithstanding the fact that a Lender may sell participation interests in its
Lender Pro Rata Share, such Lender shall remain fully liable and responsible
for the administration of the full Lender Pro Rata Share of such Lender and the
performance of all of such Lender's obligations hereunder as if such Lender had
never sold any such participation interest. In the event that either Lender
does sell a participation interest in its Lender Pro Rata
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Share, neither the Agent nor the other Lender nor Borrower shall have duty to
in any way whatsoever give notices to or otherwise communicate with, make
payments to, or interact with such Participant.
SECTION 11 MISCELLANEOUS
11.1. Power of Attorney. Contemporaneously herewith, Borrower has
executed a power of attorney in favor of Agent (the "Power of Attorney")
subject to the condition that such Power of Attorney may be used by Agent or
Agent's agent only in accordance with the following provisions:
11.1.1 At such time or times hereafter as Agent or said agent
may determine, Agent may use the Power of Attorney (i) to endorse Borrower's
name on any checks, notes, acceptances, drafts, money orders or any other
evidence of payment or proceeds of the Collateral which are payable to Borrower
and which come into the possession of Agent or either Lender or under Agent's
or either Lenders' control and (ii) to affix a stamped endorsement with
facsimile signature by Borrower to Agent on any Pledged Note, any Assignment or
any other Collateral Loan Document.
11.1.2 At such time or times upon or after the occurrence of
an Event of Default, as Agent or its agent may determine, Agent may use the
Power of Attorney to: (a) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Lenders on account of the Obligations; (b) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to the Collateral; (c)
make and adjust claims under policies of insurance; and (d) do all other acts
and things contemplated in the Power of Attorney or necessary, in Agent's
determination, to fulfill Borrower's obligations under this Agreement, which
must be performed in the name of Borrower and for which Borrower has failed or
refused to give Agent the necessary assignments.
11.2. Modification of Agreement. All modifications, consents,
amendments or waivers of any provision of any Loan Document, or consent to any
departure by Borrower therefrom, shall be effective only if the same shall be
in writing and concurred with by Agent and Lenders and then shall be effective
only in the specific instance and for the purpose for which given.
11.3. Reimbursement of Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not an Event of Default
then exists or any of the transactions contemplated hereunder are concluded,
either Lender reasonably
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employs counsel for advice or other representation, or incurs legal expenses or
other costs or out-of-pocket expenses in connection with: (a) the negotiation
and preparation of this Agreement or any of the other Loan Documents ); (b) any
amendment of or modification of this Agreement or any of the other Loan
Documents or any release of any Collateral; (c) the determination of whether a
Default or Event of Default exists under this Agreement and Lenders' rights
with respect to such potential Default or Event of Default; (d) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by Lenders,
Borrower or any other Person) in any way relating to the Collateral, this
Agreement or any of the other Loan Documents or Borrower's affairs; (e) any
attempt to enforce any rights of Agent and/or Lenders against Borrower or any
other Person which may be obligated to Agent and/or Lenders by virtue of this
Agreement or any of the other Loan Documents, including, without limitation,
the obligors under any Collateral Loan; or (f) after the occurrence of an Event
of Default hereunder, any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then, in any such event, the reasonable attorneys' fees arising
from such services and all expenses, costs and charges of such counsel or of
Agent or Lenders or relating to any of the events or actions described in this
Section 11.3 shall be due and payable, by Borrower to Agent, five (5) days
after notice to Borrower (which notice shall include invoices for such costs,
fees or expenses) and demand for payment thereof, and all such amounts shall be
additional Obligations hereunder secured by the Collateral. Additionally, if
any taxes (excluding taxes imposed upon or measured by the net income of
Lenders but including, without limitation, any note or mortgage taxes and all
revenue stamps) shall be payable on account of the execution or delivery of
this Agreement, or the execution, delivery, issuance or recording of any of the
other Loan Documents, or the creation of any of the Obligations hereunder, by
reason of any existing or hereafter enacted federal or state statute, Borrower
will pay all such taxes, including, but not limited to, any interest and
penalties thereon, and will indemnify and hold Agent and Lenders harmless from
and against liability in connection therewith. Additionally, Borrower shall
pay all recording, filing, title insurance and related costs incurred by Agent
or Lenders in connection with the Loan, together with the fees and expenses of
all appraisers, engineers, surveyors and environmental consultants engaged by
Agent or Lenders in connection with the Loan.
11.4. Indulgences Not Waivers. Agent's or Lenders' failure, at any
time or times hereafter, to require strict performance by Borrower of any
provision of the Loan Documents shall not waive, affect or diminish any right
of Agent or Lenders thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Agent or Lenders of an Event of Default
by Borrower
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under any Loan Document shall not suspend, waive or affect any other Event of
Default by Borrower under any Loan Document, whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in any Loan Document and no Event of Default by Borrower under any
Loan Documents shall be deemed to have been suspended or waived by Agent or
Lenders, unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by a duly authorized
representative of Lenders and directed to Borrower.
11.5. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
11.6. Successors and Assigns; Participations by Lenders. This Agreement
and the other Loan Documents shall be binding upon and inure to the benefit of
the successors and assigns of Borrower, Agent and Lenders; provided, however,
that Borrower may not sell, assign or transfer any interest in the Loan
Documents, or any portion thereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or thereunder.
In the case of any participations sold by either Lender, each participating
lender shall be entitled to receive all information received by Lenders
regarding the creditworthiness of Borrower, including, without limitation,
information required to be disclosed to a participant pursuant to Banking
Circular 181 (Rev., August 2, 1984), issued by the Comptroller of the Currency
(whether such participating lender is subject to the Circular or not).
11.7. Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the Other
Agreements or the Security Documents by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in
direct conflict with, or inconsistent with, any provision in any of the Other
Agreements or the Security Documents, the provision contained in this Agreement
shall govern and control.
11.8. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which
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counterparts taken together shall constitute but one and the same instrument.
11.9. Notice. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon a party hereto shall be in writing,
and shall be deemed to have been validly served, given or delivered (a) if sent
by certified or registered mail against receipt, three (3) Business Days after
deposit in the mail, postage prepaid, or, if earlier, when delivered against
receipt, (b) if sent by telegraphic notice, when delivered to the telegraph
company, or (c) if sent by any other method (including by overnight courier),
upon actual delivery, in each case addressed as follows:
If to Lenders or Agent:
To:
Fleet National Bank
c/o Fleet Real Estate, Inc.
Suite 800
111 Westminster Street
Providence, Rhode Island 02903
ATTN: Deborah T. Fox
Vice President
and
NationsBank of Texas, N.A.
c/o Real Estate Group
901 Main Street
51st Floor
NationsBank Plaza
Dallas, Texas 75202
ATTN: Christopher J. Martineau
Assistant Vice President
with a copy to:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
ATTN: Matthew T. Marcello III, Esq.
If to Borrower:
FCLT Loans, L.P.
1021 Main Street, Suite 2600
Houston, Texas 77002
Attention: Robert W. Brown
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with a courtesy copy to:
FirstCity Financial Corporation
6400 Imperial Drive
P.O. Box 8216
Waco, Texas 76712-8216
Attention: James T. Sartain
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 11.9; provided, however, that any notice,
request or demand to or upon Lenders pursuant to Section 2, Section 4 and
Section 5 shall not be effective until received by Lenders.
11.10. Agent's or Lender's Consent. Whenever Agent's or Disbursing
Agent's or Lenders' consent is required to be obtained under any Loan Documents
as a condition to any action, inaction, condition or event, Agent or Disbursing
Agent or Lenders, as the case may be, shall be authorized to give or withhold
such consent in their sole and absolute discretion without regard to
reasonableness (unless otherwise expressly provided herein) and to condition
their consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
11.11. Time of Essence. Time is of the essence with respect to each of
the Loan Documents and payment and performance of the obligations thereunder.
11.12. Entire Agreement. The Loan Documents embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13. Interpretation. No provision in any of the Loan Documents shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party
having or being deemed to have structured, drafted or dictated such provision.
11.14. No Preservation or Marshaling. Borrower agrees that neither
Agent nor either Lender shall have any obligation to preserve rights to the
Collateral against prior parties or to marshal any Collateral for the benefit
of any Person.
11.15. Governing Law; Consent to Forum. THE LOAN DOCUMENTS HAVE BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
HOUSTON, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT
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RESORT TO THAT STATE'S CONFLICT OF LAWS RULES; PROVIDED, HOWEVER, THAT IF ANY
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF AGENT'S OR LENDERS' LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF AGENT'S OR LENDERS' OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF TEXAS. AS PART OF THE CONSIDERATION FOR NEW
VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF BORROWER, ANY REO AFFILIATE, AGENT OR EITHER LENDER,
BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS COUNTY,
TEXAS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS (DALLAS DIVISION), SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND AGENT OR
EITHER LENDER PERTAINING TO THE LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF
OR RELATED THERETO. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER OR ANY REO AFFILIATE MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENCE AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT OR EITHER LENDER TO SERVE LEGAL PROCESS IN
ANY MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR EITHER
LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.16. Waivers by Borrower. EXCEPT AS IS OTHERWISE EXPRESSLY PROVIDED
FOR HEREIN, BORROWER WAIVES (A) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND
LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL; (B) PRESENTMENT, DEMAND AND PROTEST AND NOTICE
OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO ACCELERATE,
ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL
OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR EITHER
LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND
CONFIRMS WHATEVER AGENT OR EITHER LENDER MAY DO IN THIS REGARD; (C) NOTICE
PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR OBTAINING ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT OR
LENDER TO EXERCISE ANY OF AGENT'S OR LENDERS' REMEDIES; (D) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (E) ANY RIGHT BORROWER MAY HAVE
UPON PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE AGENT TO TERMINATE ITS
SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF BORROWER UNTIL
TERMINATION OF THIS AGREEMENT IN
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ACCORDANCE WITH ITS TERMS, EXCLUDING, HOWEVER THE TERMS OF THIS AGREEMENT THAT
PERTAIN TO CLAIMS OF INDEMNITY THAT ARE UNMATURED AS OF THE DATE OF TERMINATION
OF THIS AGREEMENT; AND (F) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES
THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND LENDERS'
ENTERING INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING UPON THE
FOREGOING WAIVERS IN FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL
AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.17. DTPA Waiver. IF IT EVER SHOULD BE DETERMINED BY A COURT OF
COMPETENT JURISDICTION THAT THE DECEPTIVE TRADE PRACTICES -CONSUMER PROTECTION
ACT (TEXAS BUS. & COM. CODE ANN. SECTION 17.01 ET SEQ. (VERNON SUPP. 1987)), IS
APPLICABLE TO THIS TRANSACTION, BORROWER HEREBY WAIVES ALL PROVISIONS OF SUCH
ACT OTHER THAN SECTION 17.555 THEREOF PERTAINING TO CONTRIBUTION AND INDEMNITY,
AND BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT BORROWER (A) HAS ASSETS OF
$5,000,000 OR MORE, (B) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS THAT ENABLE BORROWER TO EVALUATE THE MERITS AND RISKS OF THIS
TRANSACTION, (C) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION
RELATIVE TO LENDERS AND (D) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
11.18. Limitation on Interest.
(a) Notwithstanding anything herein or in the Loan
Documents, expressed or implied, to the contrary, in no event shall any
interest rate charged hereunder or under the Notes or any of the Loan
Documents, or any interest contracted for, collected or received by the Lenders
or either of them exceed the Maximum Legal Rate or the maximum amount of
interest permitted under applicable law. With respect to the Notes, if at any
time the rate of interest calculated with reference to the applicable Contract
Rate is limited to the Maximum Legal Rate, any subsequent reductions in the
applicable Contract Rate shall not reduce the rate of interest on the Notes
below the Maximum Legal Rate until the total amount of interest accrued equals
the amount of interest which would have accrued if the contract rate had at all
times been in effect. In the event that at maturity (stated or by
acceleration), or at final payment of the Notes, the total amount of interest
paid or accrued on the Notes is less than the amount of interest which would
have accrued if the applicable Contract Rate had at all times been in effect,
then at such time, to the extent permitted by law, Borrower shall pay to
Lenders an amount equal to the difference between (i) the lesser of the amount
of interest which would have accrued if the applicable Contract Rate had at
all times been in effect and
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<PAGE> 107
the amount of interest which would have accrued if the Maximum Legal Rate had
at all times been in effect, and (ii) the amount of interest actually paid on
the Notes.
(b) Borrower and Lenders acknowledge and agree that
they intend for the Loans to be, and to the fullest extent possible the Loans
shall be, subject to DIDMCA, and the interest on the Loans shall be calculated
in accordance with Section 501 of DIDMCA, such that there will be no legal
limitation on the amount or rate of interest that Lenders may charge on amounts
outstanding under the Loans. Borrower and Lenders further agree that if DIDMCA
does not apply to the Loans or any funds advanced hereunder, then (i) the
interest rate shall be limited to the Maximum Legal Rate as herein provided and
(ii) Borrower's sole remedies for any violation of any usury limitation shall
be those set forth in the usury savings clauses herein and in the Notes.
(c) It is expressly stipulated and agreed to be the
intent of Borrower and Lender at all times to comply with the applicable law
governing the maximum rate or amount of interest payable on or in connection
with the Notes and the Loans. If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under the Notes or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Notes, or if acceleration of the
maturity of the Notes, any prepayment by Borrower, or any other circumstance
whatsoever, results in Lender having been paid any interest in excess of that
permitted by applicable law, then it is the express intent of Borrower and
Lender that all excess amounts theretofore collected by Lender be credited on
the principal balance of the Notes (or, if the Notes have been or would thereby
be paid in full, refunded to Borrower), and the provisions of the Notes and the
other applicable Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. The right to accelerate the maturity of the Notes
does not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and Lender does not intend to collect
any unearned interest in the event of acceleration. All sums paid or agreed to
be paid to Lender for the use, forbearance or detention of the indebtedness
evidenced hereby or by any other Loan Documents shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or amount
of interest on account of such indebtedness does not exceed the Maximum Legal
Rate. The term "applicable law" as used herein shall mean the laws of the
State of Texas, or DIDMCA or any other applicable United
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States federal law to the extent that it permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under Texas
law. The provisions of this paragraph shall control all agreements between
Borrower and Lenders.
11.19. Oral Agreements Ineffective. THE LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
BORROWER:
WITNESS AS TO ALL: FCLT LOANS, L.P.
By: FCLT LOANS ASSET CORP.,
its General Partner
/s/ Lori-Ann Zannini
- ------------------------ By: /s/ Robert W. Brown
----------------------------
Robert W. Brown
President
LENDERS AND AGENT:
FLEET NATIONAL BANK, as Lender
and Agent
By: /s/ Deborah T. Fox
--------------------------------
Deborah T. Fox
Vice President
By: /s/ Sarah A. Cousineau
--------------------------------
Sarah A. Cousineau
Loan Officer
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NATIONSBANK OF TEXAS, N.A., as
Lender
By: /s/ Deborah L. Newman
--------------------------------
Deborah L. Newman
Senior Vice President
By: /s/ Huvishka Ali
--------------------------------
Huvishka Ali
Real Estate Banking Officer
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<PAGE> 1
EXHIBIT 22.1
SUBSIDIARIES OF THE TRUST
I. CORPORATE SUBSIDIARIES
<TABLE>
<CAPTION>
Name of Subsidiary State of Domicile
- ------------------ -----------------
<S> <C>
Broadway Center, Inc. Texas
Financial Center, Inc.* Texas
First City Asset Servicing Company Texas
FCB Real Estate Services, Inc. Texas
First City Energy Finance Company Texas
First City Payroll Management Company Texas
First City Portfolio, Inc. Delaware
FCLT Loans Asset Corp. Texas
FCLT REO One Asset Corp. Texas
FCLT REO Two Asset Corp. Texas
New First Security National Corporation Texas
</TABLE>
II. PARTNERSHIPS
<TABLE>
<S> <C>
FC Tower Property Partners, L.P. Texas
FCLT Loans, L.P. Texas
FCLT REO One, L.P. Texas
FCLT REO Two, L.P. Texas
</TABLE>
- ---------------
* Financial Center, Inc. is 100% directly owned by FCB Real Estate Services,
Inc. which in turn is 100% directly owned by the Trust.
