<PAGE> 1
United States
Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
(Mark One)
( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30,1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from
to
- - ---------------------------------- ----------------------------------
Commission file number 0-5467
THE FOOTHILL GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-1663353
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11111 Santa Monica Boulevard
Los Angeles, California 90025
- - --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(310) 996-7000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ ------
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of latest practicable date.
<TABLE>
<CAPTION>
Title of Each Class Number of Shares Outstanding
------------------- ----------------------------
<S> <C>
Class A Common Stock, No Par Value 16,635,397
(As of June 30,1994)
</TABLE>
<PAGE> 2
THE FOOTHILL GROUP, INC.
FORM 10-Q
INDEX
<TABLE>
Part I - Financial Information Page No.
- - ------------------------------ --------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . 4 to 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 6 to 12
Part II - Other Information
- - ---------------------------
Items 1 to 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
THE FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1994 AND DECEMBER 31, 1993
(Dollars in thousands)
ITEM 1
- - ------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and cash equivalents $32,718 $50,907
Equity, debt and partnership investments 36,050 32,842
Finance receivables:
Accounts receivable loans 400,683 326,373
Term loans 182,311 188,145
-------- --------
Finance receivables 582,994 514,518
Allowance for credit losses 15,556 14,057
-------- --------
Finance receivables, net 567,438 500,461
Repossessed assets, net 236 -
Prepaid income taxes 8,105 9,009
Deferred fund and debt issuance costs, net 8,816 9,897
Property and equipment, at cost less accumulated depreciation and
amortization ($2,064 at June 30, 1994; $1,769 at December 31, 1993) 2,198 2,269
Other assets (principally monies due from participants) 9,452 1,122
-------- --------
$665,013 $606,507
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $201,111 $148,283
Senior notes payable 226,042 237,404
Accounts payable and accrued liabilities 18,492 14,948
Subordinated notes and debentures 52,075 53,725
-------- --------
Total liabilities 497,720 454,360
-------- --------
Stockholders' equity:
Convertible preferred stock, $1.00 par value, $30.00 per share liquidation
preference, 9% cumulative, 100,000 shares issued and outstanding 2,900 2,900
Class A common stock, no par value, 16,635,397 shares
issued and outstanding (16,538,874 at December 31, 1993) 101,994 101,285
Unrealized gains, net of tax, on marketable debt and equity securities 17,860 19,672
Retained earnings 44,539 28,290
-------- --------
Total stockholders' equity 167,293 152,147
-------- --------
$665,013 $606,507
======== ========
</TABLE>
See accompanying notes.
1
<PAGE> 4
THE FOOTHILL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ------------------------
1994 1993 1994 1993
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Interest and fees earned $19,177 $15,619 $37,033 $30,408
Interest expense 5,973 5,073 11,150 10,013
------- ------- ------- -------
Net interest revenue 13,204 10,546 25,883 20,395
Asset management fees 1,316 1,523 2,855 3,227
Gains from asset sales and managed partnerships 5,650 7,676 20,510 9,079
Provision for credit losses 2,513 2,759 4,928 6,162
General and administrative expenses 6,072 5,404 12,662 9,761
------- ------- ------- -------
Income from continuing operations before income taxes 11,585 11,582 31,658 16,778
Provision for income taxes - continuing operations 4,981 4,870 13,613 7,057
------- ------- ------- -------
Income from continuing operations 6,604 6,712 18,045 9,721
Loss from discontinued operations - (629) - (219)
------- ------- ------- -------
Net income $ 6,604 $ 6,083 $18,045 $ 9,502
======= ======= ======= =======
Per share data (shares in thousands):
Primary:
Income from continuing operations $ 0.39 $ 0.41 $ 1.06 $ 0.59
Discontinued operations - (0.04) - (0.02)
------- ------- ------- -------
Earnings per common and common equivalent share $ 0.39 $ 0.37 $ 1.06 $ 0.57
======= ======= ======= =======
Fully diluted:
Income from continuing operations $ 0.37 $ 0.39 $ 1.02 $ 0.57
Discontinued operations - (0.04) - (0.01)
------- ------- ------- -------
Earnings per common share assuming full dilution $ 0.37 $ 0.35 $ 1.02 $ 0.56
======= ======= ======= =======
Number of shares used in per share computations:
Primary 16,946 16,624 16,954 16,580
======= ======= ======= =======
Fully diluted 17,614 17,304 17,621 17,260
======= ======= ======= =======
</TABLE>
See accompanying notes.
2
<PAGE> 5
THE FOOTHILL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Income from continuing operations $ 18,045 $ 9,721
Adjustments to reconcile income from continuing operations to
net cash provided by operating activities:
Provision for credit losses 4,928 6,162
Depreciation and amortization 294 264
Amortization of deferred fund and debt issuance costs 1,151 1,157
Increase in accounts payable and accrued liabilities 3,540 6,506
Loss from discontinued operations - (219)
Other (7,120) (988)
----------- -----------
Net cash provided by operating activities 20,838 22,603
----------- -----------
INVESTING ACTIVITIES:
Proceeds from sales of investments and distributions from partnerships 1,160 4,386
Contributions made to partnerships and purchases of investments (2,451) (4,921)
Payments received from net finance receivables and sales of
repossessed assets 2,894,990 2,087,658
Disbursements made for net finance receivables and repossessed assets (2,971,167) (2,181,561)
Purchase of property and equipment (222) (263)
----------- -----------
Net cash used in investing activities (77,690) (94,701)
----------- -----------
FINANCING ACTIVITIES:
Increase in deferred fund and debt issuance costs (71) (2,284)
Proceeds from commercial paper sales 513,867 318,652
Payments on commercial paper maturities (461,039) (241,514)
Payments on senior notes payable and net bank borrowings (11,363) (19,260)
Payments on subordinated notes and debentures (1,650) (4,030)
Dividends paid per common share ($.10 in 1994) (1,655) (487)
Dividends paid on preferred stock (135) (135)
Issuance of common stock, net of related costs 709 140
----------- -----------
Net cash provided by financing activities 38,663 51,082
----------- -----------
Net decrease in cash and cash equivalents (18,189) (21,016)
Cash and cash equivalents at beginning of period 50,907 39,765
----------- -----------
Cash and cash equivalents at end of period $ 32,718 $ 18,749
=========== ===========
Cash paid during the period for:
Interest expense $ 11,307 $ 15,548
Income taxes $ 12,361 $ 7,737
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 6
THE FOOTHILL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1994
NOTE 1. BASIS OF PRESENTATION
The interim Financial Statements included herein have been prepared by
The Foothill Group, Inc. ("Registrant"; the Registrant together with its wholly
owned subsidiary, Foothill Capital Corporation, or "Foothill Capital", is
referred to as the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). Certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
condensed or omitted pursuant to such SEC rules and regulations; nevertheless,
the Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's latest Annual Report. In the opinion of management,
all adjustments, including normal recurring adjustments necessary to present
fairly the financial position of the Company with respect to the interim
financial statements, and of the results of its operations for the six month
period ended June 30, 1994, have been included. Certain reclassifications have
been made to prior year amounts to conform to the 1994 presentation. The
results of operations for interim periods are not necessarily indicative of
results for the full year.
NOTE 2. INCOME TAXES
For the interim periods ended June 30, 1994 and 1993, the Company's
provision for income taxes was 43% and 42%, respectively, which is based on
combined state and federal statutory tax rates.
NOTE 3. EARNINGS PER COMMON SHARE
Primary earnings per common share were determined by dividing net
income applicable to common stock by the weighted average number of common
equivalent shares outstanding. Fully diluted earnings per share calculations
also reflect the additional dilution which would occur through the conversion
of the Company's Convertible Preferred Stock and the resultant increased
availability of earnings due to the elimination of the cumulative dividend on
this preferred stock.
NOTE 4. CONTINGENCIES
Litigation
There are several lawsuits and claims pending against the Company
which management considers incident to normal operations, some of which seek
substantial monetary damages. Management, after review, including consultation
with counsel, believes that any ultimate liability which could arise from these
lawsuits and claims would not materially affect the consolidated financial
position of the Company.
NOTE 5. EQUITY, DEBT AND PARTNERSHIP INVESTMENTS
Equity securities are generally received as a result of exchanges of
private debt instruments and discounted receivables for new securities of the
reorganized debtors. At December 31, 1993, the Company adopted the
requirements of FASB Statement No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," and classified its marketable debt and equity
securities as "available for sale." Accordingly, these securities have been
marked-to-market, with the increase in their carrying value, net of income
taxes, included as a component of stockholder's equity. Current market values
of both equity securities and marketable debt securities are estimated by the
Company's management based on market quotations which may be available only
from a limited number of dealers (or, for some securities, are not available)
and may not represent firm bids of such dealers or prices for actual sales.
The Company has recorded valuation adjustments in cases where an "other than
temporary" impairment in estimated net realizable value below the Company's
cost basis in corporate marketable debt securities is believed to have
occurred.
4
<PAGE> 7
THE FOOTHILL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 1994
The Company has investments in four limited partnerships, The Foothill
Fund, Foothill Recovery Fund, Foothill Partners, L.P. and Foothill Partners II,
L.P. ("the Funds"), in which the Registrant is a general partner. The 1%
general partner interest in Foothill Partners, L.P. is owned 60% by the
Registrant and 40% by certain of its officers as individuals. The 1% general
partner interest in Foothill Partners II, L.P. is owned 48% by the Registrant
and 52% by certain of its officers as individuals. The 1% general partner
interest in The Foothill Fund and in Foothill Recovery Fund is wholly owned by
the Registrant. The general partners make all investment decisions on behalf
of the partnerships and manage their operations. Foothill Partners, L.P. and
Foothill Partners II, L.P. were established to invest in performing and
nonperforming senior bank loans of distressed companies. The Registrant is
also a limited partner in The Foothill Fund and Foothill Recovery Fund. The
Foothill Fund and Foothill Recovery Fund were established to invest, primarily,
in the debt of restructuring and reorganizing companies. The Foothill Fund and
Foothill Recovery Fund are in their final year of operation and are expected to
be fully liquidated by December 31, 1994. The Registrant's investments in the
Funds are accounted for on an equity basis.
Management fees from the Funds, net of amortization of deferred fund
issuance costs, totaled $2,855,000 and $3,227,000 for the six months ended June
30, 1994 and 1993, respectively. Asset management fees will increase or
decrease depending on the amount of assets under management. Equity method
earnings recognized by the Registrant for its investments in the Funds for the
six months ended June 30, 1994 and 1993 totaled $6,090,000 and $2,791,000,
respectively, and are included in gains from asset sales and managed
partnerships. Additionally, the Registrant has received override allocations
totaling $3,880,000 (the maximum level as defined in the Foothill Partners II,
L.P. limited partnership agreement) through June 30, 1994 resulting from its
general partnership interest in Foothill Partners II, L.P.. Under the terms of
the Foothill Partners II, L.P. limited partnership agreement, these allocations
are held in the partnership and treated as a limited partnership investment by
the Registrant. These allocations will, if necessary, be used by the limited
partners to fulfill any shortage in their hurdle return distributions in the
final liquidating stages of the partnership. Due to the uncertainty of
ultimate receipt of these allocations, the Registrant has not recorded them as
earnings, but will earn income on them in the future, pro-rata, with all other
limited partners. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Foothill Capital has agreements to jointly purchase loans with
Foothill Partners, L.P. and Foothill Partners II. L.P. At June 30, 1994, loans
outstanding which were purchased under these agreements by Foothill Capital
amounted to $33,510,000. Loan purchases under both of these agreements are
subject to Foothill Capital's normal due diligence and loan approval process.
NOTE 6. NET INTEREST REVENUE
Net interest revenue is interest income plus loan related fees less
interest expense. The Company does not currently accrue income on certain
assets including discounted finance receivables due from certain borrowers in
reorganization or in the midst of restructuring, nonperforming finance
receivables and repossessed assets, but does incur holding costs, primarily
interest expense, which adversely affects net interest revenue. Fees consist
primarily of fees and charges related to finance receivables. These fees and
charges arise from the Company's commercial lending activities and include
servicing fees, prepayment penalties, commitment and guarantee fees, unused
line of credit fees and other miscellaneous charges. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
NOTE 7. GAINS FROM ASSET SALES AND MANAGED PARTNERSHIPS
Gains from asset sales arise from sales or exchanges of finance
receivables and equity securities, and occur irregularly. The Company often
does not control the timing of such sales or exchanges, which typically occur
in connection with the restructuring of discounted receivables held by the
Company. Gains from managed partnerships represent equity method earnings from
the Company's investment in the Funds. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
NOTE 8. FOOTHILL THRIFT SPIN-OFF
Effective December 23, 1993, the Registrant completed the spin-off of
its Foothill Thrift and Loan subsidiary to the Registrant's stockholders. All
previously reported financial results of Foothill Thrift and Loan, through the
record date for the spin-off, are classified as discontinued operations.
5
<PAGE> 8
ITEM 2
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
The following tables illustrate selected financial data (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------------ --------------------------------------
1994 1993 1994 1993
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA FOR THE
FOOTHILL GROUP, INC.*:
Interest and fees earned $ 19,177 13.06% $ 15,619 12.80% $ 37,033 12.78% $ 30,408 12.99%
Interest expense 5,973 4.07% 5,073 4.16% 11,150 3.85% 10,013 4.28%
-------- ----- -------- ----- -------- ----- -------- -----
Net interest revenue 13,204 8.99% 10,546 8.64% 25,883 8.93% 20,395 8.71%
Asset management fees 1,316 0.90% 1,523 1.25% 2,855 0.99% 3,227 1.38%
Gains from asset sales and managed
partnerships 5,650 3.85% 7,676 6.29% 20,510 7.08% 9,079 3.88%
Provision for credit losses 2,513 1.71% 2,759 2.26% 4,928 1.70% 6,162 2.63%
General and administrative expenses 6,072 4.14% 5,404 4.43% 12,662 4.37% 9,761 4.17%
-------- ----- -------- ----- -------- ----- -------- -----
Income from continuing operations
before taxes 11,585 7.89% 11,582 9.49% 31,658 10.93% 16,778 7.17%
Provision for income taxes - continuing
operations 4,981 3.39% 4,870 3.99% 13,613 4.70% 7,057 3.02%
-------- ----- -------- ----- -------- ----- -------- -----
Income from continuing operations 6,604 4.50% 6,712 5.50% 18,045 6.23% 9,721 4.15%
Loss from discontinued operations - - (629) (0.52)% - - (219) (0.09)%
-------- ----- -------- ----- -------- ----- -------- -----
Net income $ 6,604 4.50% $ 6,083 4.98% $ 18,045 6.23% $ 9,502 4.06%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
* Percentages are computed using average assets of continuing
operations (excluding unrealized gains on investments) and
have been annualized.
Discontinued operations are those of Foothill Thrift and Loan
which was spun off to stockholders on December 23, 1993.
<TABLE>
<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $665,013 $547,065 $665,013 $547,065
Average assets** 587,200 504,648 579,618 484,525
Average assets of continuing
operations** 587,200 487,961 579,618 467,996
Average stockholders' equity** 146,456 134,212 143,178 132,592
Average stockholders' equity in
continuing operations** 146,456 117,525 143,178 116,062
Finance receivables 582,994 483,444 582,994 483,444
Average finance receivables** 538,621 469,564 531,010 446,560
======== ======== ======== ========
Sources of funds employed:
Commercial paper and bank
borrowings $201,111 $142,053 $201,111 $142,053
Senior notes 226,042 202,957 226,042 202,957
Subordinated notes and debentures 52,075 44,910 52,075 44,910
Stockholders' equity 167,293 137,547 167,293 137,547
-------- -------- -------- --------
Total funds employed $646,521 $527,467 $646,521 $527,467
======== ======== ======== ========
</TABLE>
**Averages are for the three and six months ended. Average assets and average
equity exclude unrealized gains on marketable debt and equity securities.
6
<PAGE> 9
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
(Dollars in thousands)
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------------ ---------------------------------
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $18,861 13.67% $15,249 12.71% $36,388 13.34% $29,907 13.05%
Interest expense 6,218 4.51% 5,360 4.47% 11,643 4.27% 10,582 4.62%
------- ----- ------- ----- ------- ----- ------- -----
Net interest revenue 12,643 9.16% 9,889 8.24% 24,745 9.07% 19,325 8.43%
Gains on asset sales 3,647 2.64% 4,838 4.03% 13,250 4.86% 6,046 2.64%
Provision for credit losses 2,513 1.82% 2,711 2.26% 4,928 1.81% 5,822 2.54%
General and administrative expenses 5,257 3.81% 4,440 3.70% 10,737 3.94% 8,263 3.60%
------- ----- ------- ----- ------- ----- ------- -----
Income before income taxes 8,520 6.17% 7,576 6.31% 22,330 8.18% 11,286 4.93%
Provision for income taxes 3,664 2.66% 3,182 2.65% 9,602 3.52% 4,740 2.07%
------- ----- ------- ----- ------- ----- ------- -----
Net income $ 4,856 3.51% $ 4,394 3.66% $12,728 4.66% $ 6,546 2.86%
======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
* Percentages are computed using average assets (excluding unrealized gains on
investments) and have been annualized.
<TABLE>
<S> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Total assets $625,954 $505,310 $625,954 $505,310
Average assets** 551,780 479,839 545,509 458,422
Finance receivables 566,660 481,087 566,660 481,087
Average finance receivables** 530,229 465,573 523,000 439,236
======== ======== ======== ========
Sources of funds employed:
Commercial paper and bank borrowings $201,111 $142,053 $201,111 $142,053
Senior notes 223,650 198,173 223,650 198,173
Subordinated notes and debentures 61,575 57,160 61,575 57,160
Stockholder's equity 124,466 89,673 124,466 89,673
-------- -------- -------- --------
Total funds employed $610,802 $487,059 $610,802 $487,059
======== ======== ======== ========
</TABLE>
**Averages are for the three and six months ended. Average assets exclude
unrealized gains on marketable debt and equity securities.
<TABLE>
<S> <C> <C> <C> <C>
Other Selected Data:
Nonperforming finance receivables
and repossessed assets*** $14,072 $14,048 $14,072 $14,048
Allowance for credit losses $15,356 $12,377 $15,356 $12,377
Actual writeoffs during the period $ 1,613 $ 1,711 $ 3,428 $ 3,972
Number of employees 112 103 112 103
======= ======= ======= =======
</TABLE>
***Includes repossessed assets and loans that have contractual installments
more than sixty days past due.
7
<PAGE> 10
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
FINANCE RECEIVABLES OUTSTANDING
Finance receivables increased $68,476,000 between December 31, 1993
and June 30, 1994 from $514,518,000 to $582,994,000. This increase in
outstanding loans was primarily the result of new business at Foothill Capital,
offset by normal loan repayments, payoffs and liquidations during the six month
period.
Included in finance receivables at June 30, 1994 and December 31, 1993
are purchased receivables totaling $27,899,000 and $44,262,000, respectively.
These loans, including several which can be valued using market quotations,
have an estimated market value of $31,474,000 and $49,480,000, which is
$3,575,000 and $5,218,000 more than the carrying value at June 30, 1994 and
December 31, 1993, respectively.
NET INCOME
The Company recorded net income of $6,604,000 for the three months
ended June 30, 1994 compared to $6,083,000 for the three months ended June 30,
1993. For the six months ended June 30, 1994 and 1993, the Company recorded
net income of $18,045,000 and $9,502,000 respectively. The increase in net
income for the six months ended June 30, 1994 as compared to the six months
ended June 30,1993 was primarily due to a significant increase in net interest
revenue and gains from asset sales and managed partnerships combined with a
reduction in the provision for credit losses. This increase in net income was
offset by a reduction in asset management fees and increases in general and
administrative expenses and the provision for income taxes. Quarterly results
of operations are not necessarily indicative of results of future quarters.
ANALYSIS OF NET INTEREST REVENUE
Net interest revenue is interest income plus loan related fees less
interest expense.
Three months ended June 30, 1994 compared to three months ended June 30, 1993:
Net interest revenue increased to $13,204,000 for the three months
ended June 30, 1994 from $10,546,000 for the same period in the previous year,
and increased as a percentage of average assets from 8.64% to 8.99% For the
three months ended June 30, 1994, the increase in net interest revenue in
dollars was primarily due to a higher level of average finance receivables.
The increase as a percentage of average assets was due to an increase in loan
related fees as a percentage of average assets at Foothill Capital and a
reduction in cost of funds at Foothill Capital due to increases in outstanding
commercial paper and the effect of interest rate swap agreements. Loan related
fees were $2,436,000 and $1,460,000 for the three months ended June 30, 1994
and 1993, respectively.
Six months ended June 30, 1994 compared to six months ended June 30, 1993:
Net interest revenue increased to $25,883,000 for the six months ended
June 30, 1994 from $20,395,000 for the same period in the previous year, and
increased as a percentage of average assets from 8.71% to 8.93%. For the six
months ended June 30, 1994, the increase in net interest revenue in dollars was
primarily due to a higher level of average finance receivables. The increase
as a percentage of average assets was due to an increase in loan related fees
as a percentage of average assets at Foothill Capital and a reduction in cost
of funds at Foothill Capital due to increases in outstanding commercial paper
and the effect of interest rate swap agreements. Loan related fees were
$5,146,000 and $3,265,000 for the six months ended June 30, 1994 and 1993,
respectively.
8
<PAGE> 11
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
ASSET MANAGEMENT FEES
For the three months ended June 30, 1994 and 1993, the Company
recorded asset management fees of $1,316,000 and $1,523,000, respectively. The
decrease for the three month period ended June 30, 1994 was due to a decrease
in the average level of assets managed by the Company as Foothill Fund and
Foothill Recovery Fund are liquidating.
For the six months ended June 30, 1994 and 1993, the Company recorded
asset management fees of $2,855,000 and $3,227,000, respectively. The decrease
for the six month period ended June 30, 1994 was due to a decrease in the
average level of assets managed by the Company as Foothill Fund and Foothill
Recovery Fund are liquidating.
Fees received from Foothill Fund and Foothill Recovery Fund for the
six months ended June 30, 1994 were $249,000 and $111,000, respectively.
GAINS FROM ASSET SALES AND MANAGED PARTNERSHIPS
Gains from asset sales arise from sales or exchanges of finance
receivables and equity securities, and occur irregularly. Gains from managed
partnerships arise from profit distributions received from the Registrant's
investments in the Funds and vary by quarter, depending on the level of profits
generated by the Funds.
For the three months ended June 30, 1994 and 1993, the Company
recorded gains from asset sales and managed partnerships of $5,650,000 and
$7,676,000, respectively. For the six months ended June 30, 1994 and 1993, the
Company recorded gains from asset sales and managed partnerships of $20,510,000
and $9,079,000, respectively.
WRITEOFFS AND ALLOWANCE FOR CREDIT LOSSES
The Company maintains an allowance for credit losses at a level it
considers adequate to cover future potential losses on finance receivables.
The amount of the allowance is based on management's evaluation of numerous
factors, including historical loss experience and adequacy of collateral. The
level of the allowance is affected by the provision for losses charged to
expense, writeoffs and recoveries of amounts previously written off.
The provision for credit losses decreased from $2,759,000 for the
three months ended June 30, 1993 to $2,513,000 for the three months ended June
30, 1994. The provision decreased from $6,162,000 for the six months ended
June 30, 1993 to $4,928,000 in 1994. As shown in the table below, the decrease
in the provision was primarily due to lower actual writeoffs recorded in both
the three and six month periods ending June 30, 1994. The general allowance
for credit losses as a percentage of finance receivables plus repossessed
assets was increased from 2.56% at June 30 1993 to 2.67% at June 30, 1994,
respectively.
The following chart illustrates the level of the allowance, the
provision charged to expense and net credit losses:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
(Dollars in thousands) 6/30/94 6/30/93 6/30/94 6/30/93
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Finance receivables plus repossessed assets $583,230 $483,444 $583,230 $483,444
Allowance for credit losses 15,556 12,377 15,556 12,377
Percent of such allowance to finance receivables plus repossessed assets 2.67% 2.56% 2.67% 2.56%
Actual writeoffs during the period, net of recoveries 1,613 1,758 3,428 4,312
Provision for credit losses charged to income during the period 2,513 2,759 4,928 6,162
Percent of provision for credit losses to net writeoffs during the period 156% 157% 144% 143%
Percent of net writeoffs to finance receivables plus repossessed assets 0.28% 0.36% 0.59% 0.89%
Annualized percent of net writeoffs to finance receivables plus 1.11% 1.45% 1.18% 1.78%
repossessed assets
</TABLE>
9
<PAGE> 12
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
NONPERFORMING FINANCE RECEIVABLES AND REPOSSESSED ASSETS
The following table contains information concerning delinquencies on
loans under which installments are more than sixty days past due, loans which
are contractually in default, other than discounted finance receivables, and
for which legal proceedings have been initiated to repossess or liquidate the
underlying collateral, and repossessed assets, all of which are classified as
nonperforming assets. Nonperforming assets have a significant effect on
interest margin and general and administrative expense since the Company does
not recognize income on these accounts but does incur holding costs (primarily
interest expense). As the following table illustrates, the Company's
nonperforming assets as a percent of finance receivables plus repossessed
assets decreased from 3.17% at December 31, 1993 to 2.41% at June 30, 1994:
<TABLE>
<CAPTION>
(Dollars in thousands) 6/30/94 12/31/93 6/30/93
------- -------- -------
<S> <C> <C> <C>
Finance receivables plus repossessed assets $583,230 $514,518 $483,444
Loans more than 60 days past due 13,836 16,296 14,048
Percent of above to finance receivables plus repossessed assets 2.37% 3.17% 2.91%
Repossessed assets, net 236 - -
Percent of above to finance receivables plus repossessed assets 0.04% - -
-------- -------- --------
Total nonperforming assets $ 14,072 $ 16,296 $ 14,048
======== ======== ========
Percent of above to finance receivables plus repossessed assets 2.41% 3.17% 2.91%
======== ======== ========
</TABLE>
As shown in the preceding table, nonperforming assets have decreased
in both dollars and as a percentage of finance receivables plus repossessed
assets since December 31, 1993. Historically, such percentage of nonperforming
assets has generally ranged between 2% and 6% of finance receivables plus
repossessed assets and has fluctuated within this range from quarter to
quarter. The Company expects continued fluctuations in the amount of
nonperforming assets. The Company's finance receivable portfolio is well
diversified within various industries. This diversification should reduce the
risk that nonperforming assets will increase materially.
Loans more than 60 days past due can vary based on borrowers'
timeliness in servicing their obligations. Foreclosure proceedings can
commence at any time, but generally commence when payments are past due 91 days
or more. Repossession occurs when the Company has taken physical possession
and title to the chattel or other property.
Repossessed assets and loans more than 60 days past due have been
written down to estimated realizable values. These values are based on
management's evaluation of numerous factors, including costs and length of time
held prior to ultimate disposition, appraisals, sales of comparable assets and
estimated market conditions at projected disposal dates.
GENERAL AND ADMINISTRATIVE EXPENSES
The following table sets forth major items of general and
administrative expenses for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
(Dollars in thousands) 6/30/94 6/30/93 6/30/94 6/30/93
------- ------- ------- -------
<S> <C> <C> <C> <C>
Employee related $4,569 $4,136 $ 9,562 $7,163
Occupancy and office 529 475 1,069 917
Professional services 94 142 174 264
Data processing and communications 204 186 406 361
Credit, collection and commissions 248 179 665 535
Advertising 163 101 271 175
Other 265 185 515 346
------ ------ ------- ------
Total general and administrative expenses $6,072 $5,404 $12,662 $9,761
====== ====== ======= ======
</TABLE>
10
<PAGE> 13
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
General and administrative expenses increased from $5,404,000 for the
three months ended June 30, 1993 to $6,072,000 for the three months ended June
30, 1994. As a percent of average assets, general and administrative expenses
decreased from 4.43% to 4.14% for the three months ended June 30, 1993 and
1994, respectively.
General and administrative expenses increased from $9,761,000 for the
six months ended June 30, 1993 to $12,662,000 for the six months ended June 30,
1994. As a percent of average assets, general and administrative expenses
increased from 4.17% to 4.37% for the six months ended June 30, 1993 and 1994,
respectively.
The increases in dollars for the three months and six months ended
June 30, 1994 over the comparable periods in the preceding year were primarily
due to increases in employee compensation and incentive accrual levels and
related expenses at Foothill Capital and the Registrant.
PROVISION FOR INCOME TAXES
For the six months ended June 30, 1994 and 1993, the Company's
provision for income taxes was 43% and 42%, respectively, which is based on
combined state and federal statutory tax rates.
CAPITAL RESOURCES AND LIQUIDITY
Growth of the Company's assets is dependent, in part, on its ability
to increase capital funds (common and/or preferred stock, retained earnings and
subordinated debt). Liquidity is the ability to meet cash requirements such as
payment of maturing debt obligations or availability of funds for existing or
new customers' borrowing needs.
Foothill Capital maintains short-term assets in excess of short-term
liabilities and finances its growth by increasing its bank line and issuing
term debt and commercial paper. The primary source of Foothill Capital's short
term funding is commercial paper borrowings. During the six months ended June
30, 1994, commercial paper borrowings increased by $52,828,000 to $201,111,000.
Commercial paper borrowings are supported by a committed bank credit facility
with 22 banks, which totaled $300,000,000 as of June 30, 1994. The credit
facility consists of a $200,000,000 multi-year revolving credit facility
expiring on June 30, 1997, and a $100,000,000 revolving credit facility
expiring on June 29, 1995. As of June 30, 1994, Foothill Capital had
$98,989,000 in availability (total amount of credit facilities minus
outstanding commercial paper and bank borrowings) under its bank credit
facility. During 1993, Foothill Capital issued $60,000,000 of fixed rate
senior notes to several institutional lenders with maturities ranging from
three to seven years and $25,000,000 in fixed rate senior subordinated notes
with a final maturity of ten years. Proceeds from the issuance were used to
prepay approximately $29,000,000 of higher coupon senior and subordinated debt,
repay maturities and fund growth in Foothill Capital's finance receivable
portfolio. Foothill Capital also issued $10,000,000 in variable rate senior
notes with maturities of one year to two bank lenders in 1993.
Foothill Capital has numerous interest rate swap agreements with
financial institutions with notional amounts aggregating $275,000,000 as of
June 30, 1994. The purpose of these agreements is to manage Foothill Capital's
exposure to interest rate fluctuations. These swaps are "plain vanilla"
interest rate swaps and are used solely to match the interest rate sensitivity
of Foothill Capital's assets and liabilities. These swaps simply convert fixed
rate liabilities into variable rate liabilities. Foothill Capital's commercial
paper is rated "Duff 2" by Duff & Phelps Credit Rating Company and "F-2" by
Fitch Investor's Service, Inc. Privately placed senior debt is rated "BBB+" by
both Duff & Phelps and Fitch.
The major cash outflows of the Registrant consist primarily of
expenditures for general and administrative costs, payment of fees due
placement agents involved in its partnership activities, tax payments and
payment of preferred and common stock dividends. These expenditures are funded
largely through management fees and profits earned in its asset management
operations and by management fees and loan repayments from Foothill Capital.
Management believes these potential sources of liquidity should be sufficient
to meet its obligations for the foreseeable future.
There have been no other significant changes in the Company's capital
resources and liquidity from those discussed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
December 31, 1993 Annual Report to Stockholders.
11
<PAGE> 14
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
PARTICIPATION IN HIGHLY LEVERAGED TRANSACTIONS
Since its inception, the Registrant and Foothill Capital have been in
the commercial finance business. This business includes accounts receivable
and term lending on a secured basis. Such business has historically been
perceived to contain a higher degree of credit risk than unsecured or partially
secured commercial lending.
Since 1972, Foothill Capital's portfolio of finance receivables has
included loans made to highly leveraged borrowers and loans made in conjunction
with corporate recapitalizations and bankruptcy reorganizations. Foothill
Capital has historically extended credit lines up to $70,000,000 by
participating portions of these lines with other commercial finance lenders.
Under the terms of its various borrowing agreements, Foothill Capital's largest
allowable loan (net of participations) at June 30, 1994 was $27,906,000.
Foothill Capital's largest loan (net of participations) to any borrower and its
affiliates was $14,992,000 and $17,550,000 at June 30, 1994 and 1993,
respectively. Loans in this portfolio are made in numerous industries
throughout the United States.
The Company has been involved with highly leveraged transactions since
inception and presently intends to continue its involvement in transactions of
this nature.
INVESTMENTS
The Company had $36,050,000 and $32,842,000 at June 30, 1994 and
December 31, 1993, respectively, in its investment portfolio, including some
investments which are in unrated or less than investment grade corporate
securities. This portfolio includes several debt and equity security positions
as well as partnership investment positions held by the Company. Some of these
investments are in companies undergoing reorganization or restructuring.
Unrealized market appreciation as of June 30, 1994 and December 31, 1993,
before income taxes, was $30,144,000 ($17,182,000 net of tax) and $32,587,000
($18,575,000 net of tax), respectively.
The Registrant is a general and/or limited partner in four limited
partnerships, The Foothill Fund, Foothill Recovery Fund, Foothill Partners,
L.P. and Foothill Partners II, L.P. ("the Funds"). The Foothill Fund and
Foothill Recovery Fund were established to invest, primarily, in the debt of
restructuring and reorganizing companies. Foothill Partners, L.P. and Foothill
Partners II, L.P. were established to invest in performing and nonperforming
senior bank debt of distressed companies. The Registrant's investments in the
Funds are accounted for on an equity basis.
Investments in unrated or less than investment grade corporate
securities have different risks than investments in corporate securities rated
investment grade. Risk of loss upon default by the borrower is significantly
greater with respect to such corporate securities than with other corporate
securities because these securities are generally unsecured and are often
subordinated to other creditors of the issuer. These issuers also usually have
higher levels of indebtedness and are more sensitive to adverse economic
conditions, such as recession or increasing interest rates, than are investment
grade issuers. There is only a thinly traded market for some of these
securities and market quotes are generally available only from a limited number
of dealers which may not represent firm bids of such dealers or prices for
actual sales.
12
<PAGE> 15
PART II - OTHER INFORMATION
ITEMS 1 TO 5 NOT APPLICABLE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10.25 - Multiyear Credit Agreement and Revolving
Credit Agreement dated as of June 30, 1994 among Foothill
Capital Corporation, Bank of America, NT&SA as agent, and
other banks named in the loan agreement.
Exhibit 10.36 - ISDA Interest Rate Swap Agreement dated
February 23, 1994 by and between Foothill Capital
Corporation and National Bank of Canada.
(b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Item(s) Financial Statements
Date of Report Reported Filed
-------------- -------- --------------------
<S> <C> <C>
July 6, 1994 7 None
</TABLE>
13
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE FOOTHILL GROUP, INC.
Date: August 9, 1994 s/David C. Hilton
------------------- --------------------------------
David C. Hilton
Executive Vice President
Date: August 9, 1994 s/Henry K. Jordan
------------------- --------------------------------
Henry K. Jordan
Senior Vice President;
Chief Financial Officer and
Corporate Secretary
14
<PAGE> 17
Exhibit 11
THE FOOTHILL GROUP, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE AND SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(Dollars and shares in thousands,except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
1994 1993 1994 1993
------- ------- ------- --------
<S> <C> <C> <C> <C>
PRIMARY:
Income from continuing operations $ 6,604 $ 6,712 $18,045 $ 9,721
Discontinued operations - (629) - (219)
Less preferred stock dividends (68) (67) (135) (135)
------- ------- ------- --------
Net income for primary calculation $ 6,536 $ 6,016 $17,910 $ 9,367
======= ======= ======= ========
Weighted average number of common shares outstanding 16,622 16,227 16,589 16,216
Effect of dilutive stock options 324 397 365 364
------- ------- ------- --------
Number of common shares used in computation 16,946 16,624 16,954 16,580
======= ======= ======= ========
Per share data:
Income from continuing operations $ 0.39 $ 0.41 $ 1.06 $ 0.59
Discontinued operations - (0.04) - (0.02)
------- ------- ------- --------
Earnings per common and common equivalent share $ 0.39 $ 0.37 $ 1.06 $ 0.57
======= ======= ======= ========
FULLY DILUTED:
Income from continuing operations $ 6,604 $ 6,712 $18,045 $ 9,721
Discontinued operations - (629) - (219)
------- ------- ------- --------
Income for fully diluted calculation $ 6,604 $ 6,083 $18,045 $ 9,502
======= ======= ======= ========
Weighted average number of shares outstanding 16,622 16,227 16,589 16,216
Effect of dilutive stock options 325 410 365 377
Shares issued upon assumed conversion of convertible
preferred stock 667 667 667 667
------- ------- ------- --------
Number of shares used in computation 17,614 17,304 17,621 17,260
======= ======= ======= ========
Per share data:
Income before extraordinary items $ 0.37 $ 0.39 $ 1.02 $ 0.57
Extraordinary items - (0.04) - (0.01)
------- ------- ------- --------
Earnings per common and common equivalent share $ 0.37 $ 0.35 $ 1.02 $ 0.56
======= ======= ======= ========
</TABLE>
<PAGE> 1
EXHIBIT 10.25
MULTIYEAR REVOLVING CREDIT AGREEMENT
AMONG
FOOTHILL CAPITAL CORPORATION
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS AGENT
AND
THE BANKS SIGNATORY HERETO
DATED AS OF JUNE 30, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- - ------- ----
<S> <C>
ARTICLE I
DEFINITIONS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
AMOUNT AND TERMS OF LOANS
2.1 Commitments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Loan Notes; Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 Procedures Applicable to Borrowings and Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.4 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.5 Interest on Delinquent Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.6 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.8 Payments on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.9 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.10 Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.11 Change in Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE III
FEES AND PAYMENTS
3.1 Fees Payable to Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.2 Agency Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.3 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Status and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.2 Organizational Status of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.3 Location of Offices, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.4 Organizational Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.5 Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.6 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.7 No Burdensome Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.8 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.9 Good Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.10 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.11 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
- i -
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- - ------- ----
<S> <C>
4.13 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.14 Trademarks, Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.15 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.17 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.18 Environmental Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.19 No Default or Event of Default; Compliance with Instruments . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.21 Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.22 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.24 Ownership and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.25 Partnerships and Other Affiliated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.26 Other Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Initial Loans and Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.3 Conditions to Extension of Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.4 Conditions to New Bank or Increase in Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Reporting and Information Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.4 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.5 Properties in Good Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.6 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.7 Pay Indebtedness and Perform Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.8 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.9 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.10 Environmental Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.13 Maintain Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VII
FINANCIAL COVENANTS
7.1 Adjusted Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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7.3 Unused Committed Bank Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.4 Purchased Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.5 Industry Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.6 Settlement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.3 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.4 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.5 Merger, Consolidation, Sale and Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.6 Permitted Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.7 Amendments of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.9 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.10 Borrower Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.11 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.12 Consolidated Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.13 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.3 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.4 Rights and Remedies Not Waived . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE X
MISCELLANEOUS
10.1 Collection Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.2 Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.3 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.5 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.6 Costs and Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.7 WAIVER OF JURY TRIAL AND SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.9 Setoff by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.10 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.11 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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10.13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.17 Loss, Theft, etc. of Loan Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.19 Relief From Bankruptcy Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XI
AGENCY
11.1 Appointment and Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.2 Independent Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.3 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.4 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE XII
PARTICIPATION; SYNDICATIONS AND TRANSFERS
12.1 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.2 Syndications and Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
EXHIBITS
A Commitments and Addresses of the Banks
B-1 Form of Notice for Extension of Commitments
B-2 Form of Supplement for Increase in Commitments
B-3 Form of Supplement for New Bank
C-1 Form of Revolving Credit Note
C-2 Form of Term Loan Note
D-1 Form of Loan Request
D-2 Form of Swing Loan Request
E Form of Opinion of Counsel
F Form of Foothill Group Subordination Agreement
G Form of Assignment and Acceptance
SCHEDULES
I Subsidiary Information
II Location of Offices
III Tax Sharing Arrangements
IV Certain Transactions with Affiliates
V Permitted Senior Debt
VI Permitted Subordinated Debt
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<PAGE> 6
MULTIYEAR REVOLVING CREDIT AGREEMENT
MULTIYEAR REVOLVING CREDIT AGREEMENT, dated as of June 30,
1994, among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"),
the banks that from time to time are signatories hereto (including Assignees
and New Banks (as hereinafter defined), collectively, the "Banks" and
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association ("BOA"), as a Bank and as Agent
(the "Agent") for the Banks.
WHEREAS, Company, BOA, as administrative agent, National
Westminster Bank USA, as documentation agent, and the banks named therein are
parties to a certain Amended and Restated Loan Agreement, dated as of June 30,
1993, as heretofore amended and supplemented, (as such agreement has been
amended, the "Existing Loan Agreement");
WHEREAS, Company has applied for, and the Agent and the Banks
are willing to, among other things, provide for the refinancing of indebtedness
outstanding under the Existing Loan Agreement upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the
terms defined in the recitals hereto shall have the respective meanings
ascribed thereto in said recitals and the following terms shall have the
following respective meanings:
"Adjusted Consolidated Net Worth" means, as of any
date of calculation, the amount, if any, by which the Eligible
Assets of the Company and its Consolidated Subsidiaries
exceeds the Total Liabilities of the Company and its
Consolidated Subsidiaries as of such date.
"Adjusted LIBO Rate" means, with respect to any
Interest Period applicable to any LIBO Rate Loan, the rate of
interest per annum, as determined by the Agent, equal to the
quotient (rounded upward to the nearest 1/100 of 1.00% or, if
there is no nearest 1/100 of 1.00%, then to the next higher
1/100 of 1.00%) obtained by dividing the LIBO Rate by an
amount equal to the result obtained by subtracting the
Eurodollar Reserve Percentage (expressed as a decimal) from
1.00. The Adjusted LIBO Rate shall be adjusted automatically
on and as of the opening of business on the effective date of
any change in the Eurodollar Reserve Percentage.
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"Advances" means unsecured borrowings by the Company
from Foothill Group, in an aggregate outstanding principal
amount not exceeding $5,000,000 at any one time, that (a) are
evidenced by demand promissory notes, (b) are subordinated
pursuant to the Foothill Group Subordination Agreement and (c)
bear interest at no greater rate and involve fees and other
amounts in respect thereof that are no higher than would be
available at the time from a Person that is not an Affiliate.
"Affiliate" means any Person that, directly or
indirectly, controls or is controlled by or is under common
control with any other Person and, without limiting the
generality of the foregoing, shall include any Person that (a)
beneficially owns or holds 5% or more of the Voting Interest
of such other Person (determined either by number of shares or
number of votes) or (b) is an "associate" (as such term is
defined in Rule 405 under the Securities Act of 1933, as in
effect on the Effective Date) of such other Person. For
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,
means 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
Interests, by contract or otherwise.
"Agent" has the meaning specified at the beginning of
this Agreement.
"Aggregate Commitment" means, as of any date,
$200,000,000, as the same may be (a) reduced from time to time
or terminated pursuant to Sections 2.1(c), 2.1(d), or 9.1
hereof or (b) increased from time to time pursuant to Sections
2.1(e) or 2.1(f) hereof; provided, however, the Aggregate
Commitment shall not exceed $250,000,000. As of the Effective
Date, the Commitments of the Banks shall be as set forth on
Exhibit A hereto, as the same may be amended from time to time
as herein provided.
"Agreement" means this Multiyear Revolving Credit
Agreement, as the same may be amended and supplemented from
time to time.
"Allowance for Credit Losses" means items of the type
included on the Consolidated balance sheet of the Company and
its Consolidated Subsidiaries as at December 31, 1993, within
the heading "Allowance for Credit Losses".
"Applicable Margin" means, during the applicable
periods or portions thereof, (a) unless an Event of
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<PAGE> 8
Default has occurred and is continuing, (i) 0.00% per annum
with respect to Reference Rate Loans, and (ii) 0.75% per annum
with respect to LIBO Rate Loans, and (b) during the
continuance of an Event of Default and prior to the earlier of
Maturity or the expiration of the applicable Interest Period,
if any, (i) 2.00% per annum with respect to Reference Rate
Loans, and (ii) 2.75% per annum with respect to LIBO Rate
Loans; provided, however, for each day that the Company's
commercial paper does not have an Investment Grade Rating from
at least two Rating Agencies, each percentage set forth in
clauses (a) and (b) above shall be increased by 0.25% per
annum.
"Assignee" or "Assignees" shall have the meaning set
forth in Section 12.2 hereof.
"Assignment" or "Assignments" shall have the meaning
set forth in Section 12.2 hereof.
"Authorized Representative" means, with respect to
the Company or Foothill Group, the respective president,
executive vice president, chief financial officer, and any
other officer of the Company or Foothill Group designated as
such from time to time in a written notice to the Agent,
accompanied by an incumbency certificate with specimen
signature included.
"Banking Day" means any Business Day on which
dealings in deposits in Dollars are transacted in the London
interbank market.
"Board" means the Board of Governors of the Federal
Reserve System, or any Person that hereafter shall succeed to
its duties with respect to the regulation of margin credits or
the establishment of reserve requirements for commercial
banks.
"Business Day" means any day other than (a) a
Saturday, Sunday or public holiday under the laws of the
United States of America, the State of California, or the
State of New York, or (b) any other day on which banking
institutions in the State of California or the State of New
York are authorized or required by law or executive order not
to be open for the conduct of their commercial banking
business.
"Capital Interest" means, with respect to (a) any
corporation, common stock, preferred stock, and any and all
shares or other equivalents (however designated) of any other
corporate stock, of such corporation, and (b) any partnership,
partnership interests, whether general, special or limited, in
such partnership.
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<PAGE> 9
"Capitalized Lease" means at any time any lease which
is, or is required under GAAP to be, capitalized on the
balance sheet of the lessee at such time, and "Capitalized
Lease Obligation" of any Person at any time means the
aggregate amount which is, or is required under GAAP to be,
reported as a liability on the balance sheet of such Person at
such time as lessee under a Capitalized Lease.
"Change of Control" means:
(a) In the case of the Company,
(i) an issuance by the Company of
its Voting Interests, or a sale or other
disposition of Voting Interests of the
Company, whether by the Company, Foothill
Group, any other Subsidiary of Foothill
Group, or any other Person, which issuance,
sale or other disposition has not been
consented to by the Required Banks and which
either:
(A) results in Foothill Group,
directly or through one or more of
its Subsidiaries, owning or
controlling less than 100% of the
then outstanding Voting Interests of
the Company, or
(B) occurs during any period in
which Foothill Group, directly or
through one or more of its
Subsidiaries, owns or controls less
than 100% of the then outstanding
Voting Interests of the Company and
does not result in an increase in
the percentage of such Voting
Interests so owned and controlled by
Foothill Group; or
(ii) the election of a majority of the
corporate directors of the Company against
the recommendation of the management or board
of directors of the Company that was
incumbent immediately prior to such election;
or
(iii) the ceasing of continuous and
active participation in the Company's
operations with responsibilities at least
equal to those assumed as of the date hereof
by any two or more of John F. Nickoll, Peter
E. Schwab and David C. Hilton.
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<PAGE> 10
(b) In the case of Foothill Group,
(i) the acquisition by any Person
(other than Foothill Group) or by any two or
more Persons acting in concert (which group
of Persons will be deemed to be a separate
"Person" that "acquires" the Voting Interests
held by the members of such group upon its
formation for purposes of this definition),
of 50% or more of the then outstanding Voting
Interests of Foothill Group, which
acquisition has not been consented to by the
Required Banks; or
(ii) the election of a majority of the
corporate directors of Foothill Group against
the recommendation of the management or board
of directors of Foothill Group that was
incumbent immediately prior to such election.
(c) For purposes hereof, in any case where
Voting Interests of the Company are owned or controlled by a
Subsidiary of a Person, the percentage of Voting Interests of
the Company deemed to be owned or controlled by such Person as
a result of such Subsidiary's ownership or control shall be
determined by multiplying the percentage of the Voting
Interests of such Subsidiary which are owned and controlled by
such Person by the percentage of the Voting Interests of the
Company which are owned and controlled by such Subsidiary.
(d) In the case of a Change of Control
event described in clause (b)(i) of this definition, if all of
the then outstanding unsecured senior debt securities of the
Person acquiring the Voting Interests have an Investment Grade
Rating, the consent of the Banks to such event shall not
unreasonably be withheld. Notwithstanding the consent of the
Banks to a Change of Control event described in clause (b)(i)
of this definition, if within six months immediately following
any such event the rating of any of the then outstanding
unsecured senior debt securities of the Person having acquired
the Voting Interests is lower than an Investment Grade Rating,
such occurrence shall be deemed a separate Change of Control.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to
time. Reference to sections of the Code shall be construed
also to refer to any successor sections.
"Commitment" of any Bank means, as of any date of
calculation, the maximum aggregate amount of Revolving
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<PAGE> 11
Credit Loans and/or participations in Swing Loans such Bank is
obligated to make or have outstanding in accordance with the
provisions of this Agreement as of such date (determined
without regard to compliance by the Company with the
provisions hereof). As of the Effective Date, the respective
Commitments of the Banks shall be as set forth on Exhibit A
hereto, as the same may be amended from time to time.
"Commitment Period" means, with respect to the
Commitment of any Bank, the period from and including the
Effective Date or, in the case of a New Bank, the New Bank
Effective Date to and excluding the Termination Date
applicable to such Bank.
"Company" has the meaning specified at the beginning
of this Agreement.
"Consolidated" or "consolidated" means, as applied to
any financial or accounting term, determined on a consolidated
basis in accordance with GAAP for the applicable Person.
"Consolidated Assets" means, as of any date of
calculation, the consolidated assets of the Company and its
Consolidated Subsidiaries on the calculation date.
"Consolidated Capital Funds" means, as of any date of
calculation, the sum of Consolidated Net Worth and
Subordinated Debt.
"Consolidated Net Income" means, for any period of
calculation, the consolidated net income (after deduction of
taxes chargeable to the Company or its Consolidated
Subsidiaries) of the Company and its Consolidated Subsidiaries
for such period.
"Consolidated Net Worth" means, as of any date of
calculation, the excess of assets of the Company and its
Consolidated Subsidiaries over their liabilities on the
calculation date.
"Consolidated Subsidiaries" of a Person means, as of
any date of determination, those Subsidiaries whose accounts
are or should be consolidated with those of such Person in
accordance with GAAP.
"D&P" means Duff & Phelps Credit Rating Company or
any successor thereto.
"Default" means an event which would constitute an
Event of Default but for the requirement that notice be given
or time elapse or both.
"Delinquent Receivable" means the full unpaid amount
of a Finance Receivable (excluding Discount Receivables) on
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<PAGE> 12
which an installment payment of accrued interest, finance
charges or discount or outstanding principal has not been
made within 90 days of its due date (including any such
obligations relating to property or assets which are the
subject of foreclosure proceedings, whether judicial or
otherwise), and includes the full amount of any such
obligations with respect to which there are arrearages,
notwithstanding that installment payments of principal or
interest are currently being made.
"Discount Receivable" means a debt instrument (of a
type that meets the criteria for Finance Receivables set forth
in clauses (a) through (c), inclusive, of the definition
thereof, other than any requirement for security) originating
from a Person other than the Company or any Subsidiary thereof
which is acquired at less than face or par value and, at the
time of acquisition, is contractually in default, but without
defense, set-off or counterclaim.
"Dollars" and the sign "$" each means lawful money of
the United States.
"Effective Date" means the date on which (a)
counterparts of this Agreement executed and delivered by the
parties hereto shall have been received by the Company and the
Agent, and (b) the conditions precedent set forth in Article V
hereto shall have been satisfied or waived in writing by the
Agent on behalf of or at the request of the Required Banks.
"Eligible Assets" means, as of any date of
calculation, an amount equal to the sum (without duplication)
of the following assets of the Company and its Consolidated
Subsidiaries:
(a) cash, plus the cash surrender value of
life insurance policies, if any; plus
(b) Permitted Liquid Investments and
Investments permitted by Section 8.4 of this Agreement; plus
(c) prepaid expenses; plus
(d) Repossessed Assets, at the lower of cost
or estimated net realizable value; plus
(e) the Net Amount of Finance Receivables
less an amount equal to the greater of (i) Allowance for
Credit Losses, as shown on the Consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of such date,
or (ii) an amount equal to the sum of 75% of Non-Performing
Assets as of such date.
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<PAGE> 13
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended, and any successor statute of
similar import, and regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA
shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any Person that controls, is
controlled by, or is under common control with the Company or
any Subsidiary thereof within the meaning of Section 4001 of
ERISA.
"Eurodollar Reserve Percentage" means, with respect
to the calculation of the Adjusted LIBO Rate, the percentage
(expressed as a decimal) that is in effect for any date
included in such calculation, as prescribed by the Board for
determining the maximum reserve requirement (including without
limitation any basic, marginal, special, supplemental or
emergency reserves and determined without benefit of any
credits for proration, exceptions, or offsets that may be
available from time to time) for a member bank of the Federal
Reserve System applicable to Eurocurrency funding by such
member bank, currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board (or in respect of
any other category of liabilities, which includes deposits by
reference to which the interest rate on LIBO Rate Loans is
determined, or any category of extensions of credit or other
assets, including loans by a non-United States office of the
Agent to United States residents).
"Event of Default" has the meaning specified in
Section 9.1 hereof.
"Existing Loan Agreement" means the Amended and
Restated Credit Agreement dated as of June 30, 1993, as
amended, among the Company, the Co-Agents (as defined therein)
and the banks named therein, as in effect immediately prior to
the Effective Date.
"Existing Loans" means the revolving credit loans and
swing loans outstanding under the Existing Loan Agreement
immediately prior to the Effective Date.
"FCC Holdings" means FCC Holdings Limited, a
California corporation.
"Finance Receivables" means:
(a) accounts receivable arising from
commercial loans entered into or acquired by the Company or
any of its Consolidated Subsidiaries, as lender, in the
ordinary course of business, but only if such commercial
loans are secured by accounts receivable, inventory,
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<PAGE> 14
equipment and/or other property of the account
debtor/borrower,
(b) accounts receivable arising from secured
equipment leases entered into or acquired by the Company or
any of its Consolidated Subsidiaries, as lessor, in the
ordinary course of business,
(c) accounts receivable arising from secured
equipment installment sales contracts entered into or acquired
by the Company or any of its Consolidated Subsidiaries, as
seller, in the ordinary course of business, and
(d) accounts receivable arising from "loan"
participations in transactions of a type described in clauses
(a) through (c) above, acquired in the ordinary course of
business by the Company or any of its Consolidated
Subsidiaries as participant, but only if such participations
vest in such participant an enforceable beneficial ownership
interest in the subject loan, lease or sales contract and the
accounts receivable arising therefrom, all of which are of the
types included on the audited Consolidated financial
statements of the Company and its Consolidated Subsidiaries as
at December 31, 1993, within the heading "Finance Receivables"
and including, without limitation, Discount Receivables,
Non-Public Debt Instruments and Public Debt Securities.
"Fitch" means Fitch Investor's Service, Inc. or any
successor thereto.
"Foothill Group" means The Foothill Group, Inc., a
Delaware corporation.
"Foothill Group Subordinated Debt" means the
Indebtedness of the Company to Foothill Group listed on
Schedule VI and any additional Junior Subordinated Debt issued
to Foothill Group as Permitted Subordinated Debt, including
Advances.
"Foothill Group Subordination Agreement" means the
subordination agreement executed by the Company and Foothill
Group substantially in the form of Exhibit F hereto, as
amended or supplemented from time to time.
"GAAP" means generally accepted accounting principles
as such principles in the United States of America are in
effect from time to time.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof
and any entity or officer exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to any government, and any corporation or other
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<PAGE> 15
entity owned or controlled (through ownership of Capital
Interests or otherwise) by any of the foregoing.
"Guaranties" means guaranties, endorsements (other
than for collection in the ordinary course of business), and
other contingent obligations of such Person, including
obligations to make Investments, in respect of or in
connection with the obligations of others.
"Hazardous Materials" means and includes, without
limitation, gasoline, petroleum products, explosives,
radioactive materials, radon, hazardous materials, hazardous
wastes, hazardous or toxic substances, polychlorinated
biphenyls or related or similar materials, asbestos or any
material containing asbestos, or any other substance or
material as may be defined as a hazardous or toxic substance
by any Federal, state or local environmental law, ordinance,
rule or regulation.
"Indebtedness" of a Person means and includes,
without duplication, (a) all items that, in accordance with
GAAP, would be included in determining total liabilities as
shown on the liability side of a balance sheet as at the date
Indebtedness of such Person is to be determined, other than
distributions on Capital Interests declared, but not paid (to
the extent such distributions are not Restricted Payments),
(b) any liability secured by any mortgage, pledge, lien or
security interest on property owned or acquired by such
Person, whether or not such liability shall have been assumed
by such Person and Capitalized Lease Obligations of such
Person (without regard to any limitation of the rights and
remedies or the holder of such Lien or the lessor under such
Capitalized Lease to repossession or sale of such property)
and (c) Guaranties.
"Ineligible Rewrite" means a Finance Receivable (a)
the terms and conditions of which have been rewritten, (b)
that was more than 60 days delinquent as of the later of the
date of actual execution or the effective date of the revised
documentation therefor, and (c) in respect of which at least
one of the following statements is not accurate and complete
in all respects:
(i) the monthly payment on the rewritten
Finance Receivable is at least 50% of the original
monthly payment (without giving effect to previous
rewrites);
(ii) the obligor on the rewritten Finance
Receivable has made at least three (3) consecutive
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<PAGE> 16
payments in accordance with the rewritten payment
schedule and each such payment was made within thirty
(30) days of the date due;
(iii) the rate of interest payable on the
rewritten Finance Receivable is a reasonable market
rate and, unless such rewritten Finance Receivable
arises from a rewritten equipment lease, in no event
is the all-in-loan-yield less than two percent above
the Reference Rate; or
(iv) said Finance Receivable has not been
more than sixty days delinquent more than once since
the date first rewritten.
"Initial Loans" means the first Loans made to the
Company on or after the Effective Date.
"Initial Term" means, with respect to the Commitment
of any Bank, the period from and including the Effective Date
to and including June 30, 1997.
"Interest Period" means, with respect to a LIBO Rate
Loan, a period of borrowing commencing on and including the
date of advance, continuation or conversion and ending on the
numerically corresponding date that is one, two, three, four,
five or six months thereafter, as set forth in the related
Loan Request, during which such Loan bears interest at a
particular fixed rate based upon the Adjusted LIBO Rate.
Notwithstanding the foregoing:
(a)(i) if the numerically corresponding date
in the appropriate month is not a Banking Day, such Interest
Period shall be extended to the next succeeding day that is a
Banking Day unless such day falls in the succeeding calendar
month, in which event such Interest Period shall end on the
first preceding day that is a Banking Day and (ii) if there is
no numerically corresponding date in the appropriate month,
such Interest Period shall end on the last Banking Day in such
month, and
(b) in no case shall an Interest Period end
on a date subsequent to the Termination Date applicable to the
Commitment of any Bank.
"Investment" in any Person means any loan, advance,
or extension of credit to or for the account of, any guaranty,
endorsement (other than for collection in the ordinary course
of business) or other direct or indirect contingent liability
in connection with the obligations, Capital Interests or
dividends or other distribution of, any ownership, purchase or
acquisition of any Capital Interest, obligations or
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<PAGE> 17
securities of, or any other interest in or capital
contribution to, such Person.
"Investment Grade Rating" means (a) with respect to
unsecured senior debt securities issued by a Person,
(i) a rating equal to or higher than "BBB"
by S&P and equal to or higher than "Baa2" by Moody's,
or
(ii) in the event the applicable unsecured
senior debt securities are not rated by both S&P and
Moody's, (A) the rating described in (i) for either
S&P or Moody's and (B) a rating equal to or higher
than "BBB" by D&P or by Fitch, or a comparable rating
by another nationally recognized rating organization,
which rating and organization are approved by the
Required Banks, or
(iii) in the event the applicable unsecured
senior debt securities are not rated by either of S&P
and Moody's, any two of (A) a rating equal to or
higher than "BBB" by Fitch, (B) a rating equal to or
higher than "BBB" by D&P, or (C) a comparable rating
by another nationally recognized rating organization,
which rating and organization are approved by the
Required Banks.
(b) with respect to commercial paper of a
Person, a rating equal to or higher than D-2 by D&P, F-2 by
Fitch, Prime-2 by Moody's or A-2 by S&P.
"Junior Subordinated Debt" means Subordinated Debt
that is subordinated in right and time of payment to all
Senior Subordinated Debt.
"Letter of Credit Agreement" means that certain
Amended and Restated Letter of Credit and Guaranty Agreement
dated as of August 6, 1993, among the Company, the Agent and
the banks party thereto, as amended from time to time.
"LIBO Rate" means, with respect to any Interest
Period, the rate of interest determined by the Agent to be the
average (rounded upward to the nearest 1/100 of 1.00% or, if
there is no nearest 1/100 of 1.00%, then to the next higher
1/100 of 1.00%) of the rates per annum at which Dollar
deposits are offered to the principal London office of BOA by
major banks in the London interbank euro-dollar market at or
about 11:00 a.m., prevailing London time, two Banking Days
prior to the commencement of such Interest Period, for
delivery on the first day of such Interest Period, for the
number of days comprised therein and in an amount
approximately equal to the amount of the LIBO Rate Loans for
which the determination is made.
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<PAGE> 18
"LIBO Rate Loan" means a Revolving Credit Loan
bearing interest during an Interest Period applicable to such
Revolving Credit Loan at a rate or rates determined by
reference to the Adjusted LIBO Rate.
"Lien" means any interest in property securing an
obligation owed to a Person, whether such interest is based on
the common law, statute or contract, and including but not
limited to the security interest arising from a mortgage,
mortgage deed, deed of trust, encumbrance, pledge, conditional
sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" includes reservations,
exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other similar
title exceptions and encumbrances, including but not limited
to mechanics', materialmen's, warehousemen's, carriers' and
other similar encumbrances, affecting property. For the
purposes of this Agreement, a Person shall be deemed to be the
owner of any property which it has acquired or holds subject
to a conditional sale agreement or other arrangement pursuant
to which title to the property has been retained by or vested
in some other Person for security purposes.
"Loans" or "Revolving Credit Loan(s)" or "Swing
Loans" means the applicable loan(s) to the Company referred to
in Section 2.1 hereof.
"Loan Documents" means and includes this Agreement,
the Revolving Credit Note or Notes, the Swing Loan Note, the
Foothill Group Subordination Agreement, and all other
agreements and instruments (including supplements) extending,
renewing, refinancing or refunding any indebtedness,
obligation or liability arising under any of the foregoing, in
each case as the same may be amended, modified or supplemented
from time to time hereafter.
"Loan Request" means a request for one or more
Revolving Credit Loans, substantially in the form of Exhibit
D-1 hereto, executed by an Authorized Representative on behalf
of the Company.
"Material Adverse Effect" means, with respect to an
event, action or condition affecting the Company, any
Subsidiary thereof, or any of their respective properties or
revenues, an event, action or condition that would (a)
adversely affect the validity or enforceability of, or the
authority of the Company to perform its obligations under, any
of the Loan Documents, (b) materially adversely affect the
business, operations, assets or condition (financial or
otherwise) of the Company or any Subsidiary thereof or the
ability of the Company to perform its obligations under any
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<PAGE> 19
of the Loan Documents or (c) materially adversely affect the
business, operations, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a
whole.
"Maturity" means, with respect to any Loan, the
earlier of (a) the Termination Date, and (b) any other date on
which such Loan shall be or become due and payable, in whole
or in part, in accordance with the terms of this Agreement,
whether by required or optional prepayment, declaration,
acceleration, or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Multiemployer Plan" means a Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Amount" means, as of any date of calculation,
with respect to a Finance Receivable or a Discount Receivable
an amount equal to the sum of:
(a) the outstanding principal component
thereof (exclusive of any unearned interest or finance charges
or any unaccrued discount representing compensation for the
use of borrowed money), less
(b) the portion, if any, of such principal
component that is the subject of a participation interest
granted by the Company or any of its Consolidated Subsidiaries
to any Person other than the Company or any of its
Consolidated Subsidiaries, less
(c) in the case of a Discount Receivable,
the discount from face or par value thereof at the time such
Discount Receivable was acquired (but without duplication for
amounts excluded from the principal component thereof in
clause (a) above).
"New Bank" means any Person that becomes a party to
this Agreement after the Effective Date pursuant to the
provisions of Section 2.1(f) hereof.
"New Bank Effective Date" means the date on which a
New Bank becomes a Bank under this Agreement.
"Non-Performing Assets" means Delinquent Receivables,
Repossessed Assets and Ineligible Rewrites. For purposes of
this definition, Repossessed Assets shall be valued at the
lower of cost or estimated net realizable value.
"Non-Public Debt Instruments" means debt instruments
that are not required to be registered under the Securities
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<PAGE> 20
Act of 1933, as amended (other than those classified as
Discount Receivables).
"Note(s)" or "Revolving Credit Note(s)" or "Swing
Loan Note" means the applicable promissory note(s) of the
Company referred to in Section 2.2 hereof and shall include
any replacement(s) therefor issued pursuant to Section 10.17
or 12.2 hereof or otherwise.
"Notice of Address" means, (a) with respect to the
Company, the address set forth in Section 10.4 hereof, (b)
with respect to the Agent or any Bank, the address set forth
in Exhibit A hereto, and (c) with respect to any party hereto,
such other address as such party may specify in writing to the
Agent from time to time.
"Obligations" means and includes all loans, advances,
debts, liabilities, and obligations, howsoever arising, owing
by the Company to the Agent or the Banks of every kind and
description (whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising pursuant to the terms of this
Agreement or the other Loan Documents.
"Participant" means any Person (other than an
Assignee) that now or hereafter participates by contract
directly or indirectly in the rights and/or obligations of any
Bank under this Agreement, the Commitments or any Loan.
"PBGC" means the Pension Benefit Guaranty Corporation
established under Title IV of ERISA or any other governmental
agency, department or instrumentality succeeding to the
functions of said corporation.
"Percentage" means, as of any date of calculation and
with respect to any Bank, the percentage (expressed as a
decimal, rounded upward to the nearest 1/10,000th of 1%) that
is equal to the Commitment of such Bank as of such date,
divided by the Aggregate Commitment of all Banks as of such
date, and multiplied by 100.
"Permitted Liquid Investment" means an Investment in
any of the following:
(a) direct obligations of, or obligations
guaranteed as to principal and interest by, the United States
of America;
(b) demand deposits in, certificates of
deposit issued by, or bankers' acceptances (eligible for
rediscount at Federal Reserve Banks) of, or collateralized
repurchase agreements in respect of obligations described in
clause (a) with, any of the Banks or any bank or trust company
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<PAGE> 21
organized under the laws of the United States of America or
any State thereof whose obligations or whose holding company's
obligations are rated as least A by S&P or at least A by
Moody's at the time such Investment is made;
(c) readily marketable commercial paper
that, at the time such Investment is made, is rated at least
A-1 by S&P or at least Prime-1 by Moody's;
(d) Indebtedness that is (i) traded on a
national securities exchange and (ii) rated A or better by
Moody's or S&P on the date of acquisition; or
(e) readily marketable commercial paper
(other than commercial paper described in clause (c));
provided that (i) the aggregate extended principal or face
amount thereof held does not exceed $5,000,000 at any one time
outstanding and (ii) at the time such Investment is made, such
commercial paper is rated at least Prime-2 by Moody's or at
least A-2 by S&P; and provided, that such Investment shall be
payable in Dollars and shall mature or be subject to
redemption at the option of the holder by its terms within
twelve months after the date of acquisition thereof.
"Permitted Senior Debt" means (a) all Senior
Indebtedness of the Company and its Subsidiaries that is
listed on Schedule V hereto and (b) additional unsecured
Senior Indebtedness of the Company issued after the Effective
Date, subject to the following conditions:
(i) the covenants, defaults and other
requirements applicable to such Senior Indebtedness
are no more restrictive, in any material respect,
upon the Company and its Subsidiaries than those
contained in the Loan Documents or applicable to the
Senior Indebtedness listed on Schedule V hereto;
(ii) if Foothill Group enters into a
subordination agreement in respect thereof, the terms
thereof shall not differ in any material respect from
the terms of the Foothill Group Subordination
Agreement; and
(iii) no Default or Event of Default shall
exist at the date of issuance of such Senior
Indebtedness and after giving effect thereto.
"Permitted Subordinated Debt" means (a) all
Subordinated Debt of the Company and its Subsidiaries that is
listed on Schedule VI hereto and (b) additional unsecured
Subordinated Debt of the Company issued after the Effective
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<PAGE> 22
Date, subject to the following conditions:
(i) the final maturity of such Subordinated
Debt (other than Advances) may not be earlier than
November 15, 2003;
(ii) the weighted average life to maturity
of such Subordinated Debt (other than Advances) shall
extend at least three years beyond the Termination
Date as in effect as of the date of issuance thereof;
(iii) no principal or sinking fund payment
on or other redemption of such Subordinated Debt
(other than Advances) may occur prior to November 15,
1998;
(iv) the covenants, defaults and other
requirements applicable to such Subordinated Debt are
no more restrictive, in any material respect, upon
the Company and its Subsidiaries than those contained
in the Loan Documents or applicable to the
Subordinated Debt listed on Schedule VI hereto;
(v) the subordination provisions applicable
to such Subordinated Debt (other than Foothill Group
Subordinated Debt) do not differ in any respect from
those applicable to the Subordinated Debt listed on
Schedule VI hereto;
(vi) if Foothill Group enters into a
subordination agreement in respect thereof, the terms
thereof shall not differ in any material respect from
the terms of the Foothill Group Subordination
Agreement; and
(vii) no Default or Event of Default shall
exist at the date of issuance of such Subordinated
Debt and after giving effect thereto.
"Person" or "person" means any individual,
partnership, firm, corporation, association, joint venture,
trust or other entity, or any Governmental Authority.
"Plan" means, at any particular time, any employee
benefit plan that is covered by ERISA and in respect of which
the Company or an ERISA Affiliate is (or, if such plan were
terminated at such time, under Section 4069 of ERISA would be
deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prohibited Transaction" shall have the meaning set
forth in Section 406 of ERISA or Code Section 4975.
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<PAGE> 23
"Property" means all equipment, real estate or other
real or personal property, tangible or intangible, owned or
operated by the Company or any Subsidiary thereof.
"Public Debt Securities" means debt instruments that
are registered under the Securities Act of 1933, as amended
(other than those classified as Discount Receivables).
"Purchased Receivables" means Discount Receivables,
Non-Public Debt Instruments and Public Debt Securities.
"Rating Agency" or "Rating Agencies" means any of
D&P, Fitch, Moody's and S&P, or any other nationally
recognized rating organization approved by the Required Banks.
"Reference Rate" means the annual rate of interest
publicly announced from time to time by BOA in San Francisco,
California, as its "Reference Rate". The Reference Rate is
set by BOA based on various factors, including BOA's costs and
desired returns, general economic conditions and other
factors, and is used as a reference point for pricing some
loans. BOA may price loans at, above or below its Reference
Rate. Any change in the Reference Rate shall take effect on
the day specified in the public announcement of such change.
"Reference Rate Loan" means, as of any date of
determination, (a) a Revolving Credit Loan bearing interest,
as of such date of determination, at a variable rate
determined by reference to the Reference Rate or (b) a Swing
Loan.
"Renewal Reply Date" means June 1, 1995 and June 1,
1996, respectively (or if June 1 in such year is not a
Business Day, the next succeeding Business Day).
"Renewal Request Date" means April 1, 1995 and April
1, 1996, respectively (or if April 1 in such year is not a
Business Day, the next succeeding Business Day).
"Renewal Term" means, with respect to the Commitment
of any Bank, a one-year period commencing upon the expiration
of the Initial Term or the immediately preceding Renewal Term.
"Reportable Event" means any of the events set forth
in Section 4043(b) of ERISA, other than those events as to
which the 30-day notice period is waived under subsections
.13, .14, .16, .18, .19 or .20 of PBGC Reg. 2615.
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<PAGE> 24
"Repossessed Assets" means items of the type included
on the balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1993, within the heading
"Repossessed Assets".
"Required Banks" shall mean, as of any date of
determination, such Bank or Banks as have outstanding Loans in
excess of 67% of the aggregate principal amount of Revolving
Credit Loans outstanding as of such date or, if no Revolving
Credit Loans are then outstanding, have Commitments in excess
of 67% of the Aggregate Commitment.
"Restricted Investment" means any Investment, to the
extent it does not constitute a Permitted Liquid Investment.
"Restricted Payment" means, with respect to the
Company and its Subsidiaries:
(a) the payment of any distribution or
dividend on any Capital Interest of the Company (other than
dividends paid solely in Capital Interests of the Company); or
(b) any defeasance, redemption, repurchase
or other acquisition or retirement for value prior to
scheduled maturity of any installment of principal of any
Subordinated Debt (other than Advances) and any early payment
of interest on, or other amounts due in respect of, any
Subordinated Debt; or
(c) any payment on account of the purchase,
redemption or other retirement of any Capital Interest of the
Company, or of any warrants, options or other rights to
acquire any Capital Interest in the Company (except a payment
on account of the principal of and prepayment charge, if any,
on convertible Indebtedness) or any other distribution made in
respect thereof, either directly or indirectly.
"Revolving Credit Loan" means a loan or advance made
pursuant to Section 2.1(a) hereof.
"Revolving Credit Loans" means, collectively, the
Revolving Credit Loans from time to time outstanding and
unpaid.
"Revolving Credit Note(s)" means the promissory
note(s) of the Company referred to in Section 2.2(a)(i) hereof
and shall include any replacement(s) therefor issued pursuant
to Sections 10.17 or 12.2 hereof or otherwise.
"S&P" means Standard & Poor's Corporation or any
successor thereto.
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<PAGE> 25
"Senior Indebtedness" means, as of any date, all
Indebtedness of the Company and its Subsidiaries outstanding
as of such date other than Subordinated Debt.
"Senior Subordinated Debt" means Subordinated Debt
that is senior in time and right of payment to Junior
Subordinated Debt.
"Settlement Securities" means Capital Interests
granted in consideration or good faith settlement of
Investments permitted by Section 8.4 hereof.
"Single Employer Plan" means any Plan which is
covered by Title IV of ERISA, but is not a Multiemployer Plan.
"Solvent" means, as to any Person, that such Person
has capital sufficient to carry on its business and
transactions and all business and transactions in which it is
about to engage, is able to pay its debts as they mature, and
owns property having a value, both at fair valuation and at
then current fair salable value, greater than the amount
required to pay its debts (including contingencies).
"State" means and includes, unless otherwise limited,
any State of the United States, the District of Columbia and
the Commonwealth of Puerto Rico.
"Subordination Custodian" shall have the meaning
specified in the Foothill Group Subordination Agreement.
"Subordinated Debt" means all Indebtedness of the
Company which shall have been subordinated in time and right
of payment to the obligations of the Company arising
hereunder.
"Subsidiary" or "Subsidiaries" of any Person means
any corporation or partnership of which more than 50% of the
outstanding Voting Interests in such corporation or
partnership is at the time owned, directly or indirectly, by
such Person, or by one or more of its Subsidiaries, or by such
person and one or more of its Subsidiaries.
"Swing Loan" means a loan or advance made pursuant to
Section 2.1(b) hereof.
"Swing Loan Bank" means (a) initially, BOA and (b)
subject to the written consent of the Company and the Agent,
any Assignee of the entirety of the Swing Loan Commitment of
the predecessor Swing Loan Bank.
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<PAGE> 26
"Swing Loan Commitment" means, as of any date of
calculation, the maximum aggregate amount of Swing Loans that
the Swing Loan Bank is obligated to make or have outstanding
in accordance with the provisions of this Agreement as of such
date (determined without regard to (a) compliance by the
Company with the provisions hereof and (b) the amount of
Revolving Credit Loans such Bank has outstanding as of such
date). The Swing Loan Commitment of the Swing Loan Bank is a
part of, and is not in addition to, such Bank's Commitment.
The Swing Loan Commitment expires not later than the Swing
Loan Bank's Commitment and is subject to separate renewal. As
of the Effective Date, the initial Swing Loan Commitment of
the Swing Loan Bank shall be as set forth on Exhibit A hereto.
"Swing Loan Note" means the promissory note of the
Company referred to in Section 2.2(a)(ii) hereof and shall
include any replacement(s) thereof issued pursuant to Section
10.17 hereof or otherwise.
"Swing Loan Participation Certificate" means a
certificate in the form of Exhibit D-3 hereto with the blanks
appropriately filled.
"Swing Loan Request" means a request for a Swing
Loan, substantially in the form of Exhibit D-2 hereto,
executed by an Authorized Representative on behalf of the
Company.
"Swing Loans" means, collectively, the Swing Loans
from time to time outstanding and unpaid.
"Tax Expense" means, for any period, all federal,
state and local taxes paid or owed by the Company or any
Subsidiary thereof during such period.
"Termination Date" means, with respect to the
Commitment of each Bank, the earlier of (a) the date on which
such Bank's obligations under this Agreement shall terminate
in accordance with the provisions of Section 2.1 hereof, or
(b) the Business Day, if any, on which the Commitments are
terminated in accordance with Section 2.1 or 9.1 hereof.
"Total Liabilities" means, as of any date of
calculation, the aggregate outstanding Indebtedness of the
Company and its Consolidated Subsidiaries as of such date,
determined on consolidated basis in accordance with GAAP.
"Total Revenues" means, with respect to any fiscal
year, an amount equal to the sum included in the audited
Consolidated financial statements of the Company and its
Consolidated Subsidiaries for such year within the heading
"Total Revenues" but only to the
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<PAGE> 27
extent consistent with its audited Consolidated financial
statements for the fiscal year ended December 31, 1993.
"364 Day Agreement" means that certain Revolving
Credit Agreement dated as of June 30, 1994, among the Company,
the Agent and the Banks, as amended or supplemented from time
to time.
"Voting Interest" means securities, as defined in
Section 2(1) of the Securities act of 1933, as amended, of any
class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to (a) vote for the
election of the corporate directors (or Persons performing
similar functions) or (b) in the case of a partnership, manage
or direct the business or assets thereof. References in this
Agreement to percentages of Voting Interests, unless otherwise
noted, refer to percentages of votes in which such Voting
Interests are entitled in the (i) election of corporate
directors (or Persons performing similar functions) or (ii)
management of the business or assets thereof in the case of a
partnership, rather than to the number of shares.
SECTION 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement in the
singular shall have comparable meanings when used in the plural, and vice
versa.
(b) The words "hereof," "hereby," "herein," and
"hereunder" and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provisions of this
Agreement; the term "hereafter" means after, and the term "heretofore" means
before, the date of this Agreement; and Article, Section, schedule, exhibit and
like references are to this Agreement unless otherwise specified.
(c) Any defined term that relates to a document
shall include within its definition any amendments, modifications, renewals,
restatements, extensions, supplements, or substitutions that heretofore may
have been or hereafter may be executed in accordance with the terms thereof
and, if applicable, hereof.
(d) References in this Agreement to particular
sections of the Code, ERISA or any other legislation shall be deemed to refer
also to any successor sections thereto or other redesignations for codification
purposes.
(e) All terms defined in the Uniform Commercial Code
in effect in the State of California and not otherwise defined or modified
herein shall have the respective meanings ascribed to such terms in such
Uniform Commercial Code.
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(f) All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, consistently applied. Where
any accounting determination or calculation is required to be made under this
Agreement, such determination or calculation (unless otherwise provided) will
be made in accordance with GAAP, consistently applied, except that if, because
of a change in GAAP, a Person would have to alter a previously utilized
accounting method or policy in order to remain in compliance with GAAP, such
determination or calculation will continue to be made in accordance with such
Person's previous accounting methods or policy unless the Required Banks
otherwise direct. Unless otherwise specified herein all financial statements
required to be delivered hereunder shall be prepared and all financial records
shall be maintained in accordance with GAAP.
ARTICLE II
AMOUNT AND TERMS OF LOANS
SECTION 2.1 Commitments and Loans.
(a) Revolving Credit Commitments. Subject to the
terms and conditions of this Agreement, each Bank severally agrees to make one
or more Revolving Credit Loans to the Company on the Effective Date and from
time to time thereafter during the Commitment Period; provided, however, that
the aggregate principal amount of such Bank's
(i) Revolving Credit Loans, plus
(ii) participations in the Swing Loans, plus
(iii) if such Bank is the Swing Loan Bank,
Swing Loans in which the other Banks have not participated
outstanding at such time shall not exceed such Bank's Commitment. During the
Commitment Period, the Company may borrow, prepay, re-borrow and repay the
Revolving Credit Loans, all in accordance with the terms and conditions hereof;
provided, however, that in no event will any Bank be obligated to lend more
than its Commitment, whether as a Revolving Credit Loan, a Swing Loan, or a
participation in a Swing Loan; and provided, further, that the aggregate
principal amount of all Loans that all Banks shall be committed to have
outstanding hereunder shall not exceed the Aggregate Commitment.
(b) Swing Loan Commitment. Subject to the terms and
conditions of this Agreement, the Swing Loan Bank agrees to make one or more
Swing Loans to the Company on the Effective Date and from time to time
thereafter during the Commitment Period; provided, however, that:
(i) the aggregate principal amount of such
Bank's Swing Loans outstanding at any one time shall
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<PAGE> 29
not exceed the Swing Loan Commitment of such Bank at such
time; and
(ii) the aggregate principal amount of such
Bank's (A) Swing Loans in which the other Banks have not
participated, plus (B) Revolving Credit Loans outstanding at
any one time shall not exceed such Bank's Commitment at such
time.
(c) Termination and Reduction of Aggregate
Commitment. Subject to the provisions of Section 2.4 hereof, the Company shall
have the option to terminate and, from time to time, to reduce permanently the
Aggregate Commitment or the Swing Loan Commitment of the Swing Loan Bank, upon
irrevocable written notice to the Agent (who shall promptly notify the Banks)
at least three (3) Business Days prior to the proposed Termination Date or
reduction date, as the case may be, specifying such date, whether a termination
or reduction is being requested and, if a reduction is being requested, the
amount thereof. On the date specified in such notice, such termination or
reduction shall be effected; provided, however, that:
(i) in the case of a termination of the
Aggregate Commitment, such termination is accompanied by
repayment of the Revolving Credit Loans and Swing Loans in
full, together with all other amounts, if any, owed to the
Agent or any Bank pursuant to any of the Loan Documents;
(ii) in the case of a termination of the
Swing Loan Commitment, such termination is accompanied by
repayment of the Swing Loans in full, together with all other
amounts, if any, owed to the Swing Loan Bank in its capacity
as such pursuant to any of the Loan Documents;
(iii) in the case of any reduction of the
Aggregate Commitment, such reduction is accompanied by
repayment of Revolving Credit Loans and Swing Loans to the
extent (if any) that the aggregate principal amount of the
Revolving Credit Loans and/or Swing Loans then outstanding
exceeds the amount of the Aggregate Commitment and/or Swing
Loan Commitment as then reduced; and
(iv) in the case of any reduction of the
Swing Loan Commitment, such reduction is accompanied by
repayment of Swing Loans to the extent (if any) that the
aggregate principal amount of the Swing Loans then outstanding
exceeds the amount of the Swing Loan Commitment as then
reduced.
Any such repayment shall be subject to the provisions of Section 2.4(a) hereof.
Any reduction of the Aggregate Commitment shall be in an aggregate amount of
$5,000,000 or an integral multiple thereof and shall be applied among the
Commitments of the Banks
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in accordance with their respective Percentages so that the Banks retain the
same Percentage after giving effect to the reduction. The Swing Loan
Commitment shall automatically be reduced by each reduction of the Commitment
of the Swing Loan Bank to less than the Swing Loan Commitment prior to such
reduction. Any other reduction of the aggregate Swing Loan Commitment shall be
in an aggregate amount of $1,000,000 or an integral multiple thereof.
Upon termination of the Aggregate Commitment pursuant to this
Section 2.1 and upon payment of all amounts due by the Company to the Agent and
the Banks under the Loan Documents, the obligations of the parties hereto,
except as otherwise provided herein, shall be deemed terminated; provided,
however, that this Agreement and the other Loan Documents shall continue to be
effective or shall be reinstated, as the case may be, if any payment hereunder
or in connection with any of the Loan Documents at any time is rescinded or
otherwise must be returned as a result of the bankruptcy, insolvency or
reorganization of the Company or otherwise, all as if such payment had not been
made.
(d) Term of Commitments.
(i) Termination of Obligations. Subject to
the other provisions of this Section 2.1, (A) during the
Initial Term, the Commitment and other obligations of each
Bank under this Agreement shall terminate on the last day of
the Initial Term, and (B) during any Renewal Term applicable
to any Bank, the Commitment and other obligations of such Bank
under this Agreement shall terminate on the last day of such
Renewal Term.
(ii) Renewal Terms. On or before each
Renewal Request Date, the Company may request (a "Renewal
Request") the extension of the Banks' Commitments and, if
desired, the Swing Loan Commitment for a Renewal Term of one
year commencing upon the next succeeding July 1. Each Bank,
in its sole discretion and subject to the conditions set forth
in Section 5.3 hereof, may agree to extend such Bank's
Commitment and, in the case of the Swing Loan Bank, the Swing
Loan Commitment by delivering a notice to the Agent in the
form of Exhibit B-1 hereto on or before the next Renewal Reply
Date. If, by the Renewal Reply Date, Banks then holding 25%
or more of the principal amount of the then outstanding
Revolving Credit Loans (or, if no Revolving Credit Loans are
outstanding, Banks then holding 25% or more of the Aggregate
Commitment) have not consented to the Renewal Request, the
Agent shall notify the Banks of this fact and each Bank that
had consented to the Renewal Request in whole or in part shall
have until the next succeeding June 15 to withdraw its consent
upon notice to the Agent. Failure to respond by any Bank by
the Renewal Reply Date shall constitute a nonconsent.
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The Commitment of each nonconsenting Bank shall
terminate on the Termination Date applicable to such Bank and
shall not be otherwise renewed or extended, and any future
Renewal Request shall be delivered only to Banks that, on such
future Renewal Request Date, have continuing Commitments. The
Agent and the Banks shall be under no obligation whatsoever to
extend the Termination Date. Notwithstanding the foregoing,
if any nonconsenting Bank, at any time after the Renewal Reply
Date but in no event later than the next succeeding June 15,
shall determine at its option to extend its Commitment and, if
applicable, Swing Loan Commitment until a later Termination
Date and so shall notify the Agent and the Company thereof in
writing, such nonconsenting Bank thereafter shall be deemed to
have consented to the Renewal Request as set forth in such
notice for all purposes of this Agreement and its Commitment
and, if applicable, Swing Loan Commitment, shall be deemed to
be extended until the earlier of the Termination Date set
forth in the related Renewal Request or the notice of such
Bank to the Agent and the Company.
Notwithstanding the foregoing, if the Agent has not received
consents for the extension from Banks then holding 75% or more
of the principal amount of the then outstanding Revolving
Credit Loans (or, if no Revolving Credit Loans are
outstanding, Banks then holding 75% or more of the Aggregate
Commitment), by the next succeeding June 15, the Commitments
of the Banks shall terminate on the then existing Termination
Date and the Agent shall so notify the Company and the Banks.
(iii) Events of Default. Notwithstanding
the foregoing provisions of this Section 2.1(d), upon the
occurrence of an Event of Default, the provisions of Article
IX hereof shall apply and the Agent may take any action
permitted or required thereunder.
(iv) Survival of Rights. The occurrence of
the Termination Date shall not release, terminate or limit the
rights or remedies of the Agent or any Bank, or the
obligations of the Company under this Agreement or any other
Loan Document, and such rights and remedies and such
obligations shall survive until the Company shall have fully
paid and performed all its obligations hereunder and
thereunder in full.
(e) Increase in Commitments. During the term of
this Agreement, with the consent of the Company and the Agent, any Bank may
increase its Commitment and the Swing Loan Bank may increase its Swing Loan
Commitment (but not in excess of its Commitment) by executing and delivering to
the Company and the Agent (with notice by the Company to the other Banks) a
supplement hereto, substantially in the form of Exhibit B-2, whereupon, subject
to the conditions set forth in Section 5.4
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<PAGE> 32
hereof, (i) the Commitment and/or Swing Loan Commitment of such Bank as shown
on Exhibit A shall be increased to the respective amounts set forth in such
supplement, (ii) the Aggregate Commitment as shown on Exhibit A shall be
automatically increased by the amount of the increase in such Bank's
Commitment, and (iii) such Bank shall share in each Revolving Credit Loan made
thereafter based upon its Percentage as recalculated as of the effective date
of such increase after giving effect to the Aggregate Commitment (as increased
by such Bank's Commitment increase). For purposes of the foregoing
calculation, a Revolving Credit Loan shall be deemed to have been made at any
time a Revolving Credit Loan is funded pursuant to Section 2.3(b) hereof or
continued or converted pursuant to Section 2.3(c) hereof and, in the case of a
Reference Rate Loan (including any Swing Loan) outstanding on both the
effective date of such increase and on the first day of the month following
such effective date, on the first day of such month.
(f) New Banks. During the term of this Agreement,
with the consent of the Company and the Agent, one or more additional
commercial banks may become a party to this Agreement by executing and
delivering to the Company and the Agent (with notice by the Company to the
Banks) a supplement hereto, substantially in the form of Exhibit B-3, whereupon
(subject to the conditions set forth in Section 5.4 hereof), as of the first
Business Day of the next calendar quarter, (i) such New Bank shall become a
Bank for all purposes and to the same extent as if originally a party hereto
and shall be bound by and entitled to the benefits hereof, (ii) the Company
shall execute and deliver to the Agent for transmittal to such New Bank a
Revolving Credit Note conforming to the requirements of Section 2.2 hereof,
except that it shall be dated as of the New Bank Effective Date and shall bear
interest from such date, (iii) the Aggregate Commitment as shown on Exhibit A
shall be increased automatically by the amount of such New Bank's Commitment
(which shall be in a minimum amount of $5,000,000 or any integral multiple
thereof) and (iv) such New Bank shall share in each Revolving Credit Loan made
after such New Bank Effective Date and shall share in participations in Swing
Loans entered into on or after the New Bank Effective Date (but shall not share
in any Revolving Credit Loans made, or participations in Swing Loans entered
into, and that are outstanding on, the New Bank Effective Date) in an amount
based upon its Percentage as calculated as of the New Bank Effective Date after
giving effect to the Aggregate Commitment (as so increased by such New Bank's
Commitment). For purposes of the foregoing calculation, a Revolving Credit
Loan shall be deemed to have been made at any time a Revolving Credit Loan is
funded pursuant to Section 2.3(b) hereof or continued or converted pursuant to
Section 2.3(c) hereof and, in the case of a Reference Rate Loan (including any
Swing Loan) outstanding on both the New Bank Effective Date and on the first
day of the month following such New Bank Effective Date, on the first day of
such month.
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SECTION 2.2 Loan Notes; Interest.
(a) Notes. (i) Revolving Credit Notes. The
Revolving Credit Loans of each Bank shall be evidenced by a single Revolving
Credit Note of the Company, in substantially the form of Exhibit C-1 hereto,
payable to the order of such Bank and representing the obligation of the
Company to pay the lesser of (A) the Commitment of such Bank as shown on
Exhibit A, as the same may be amended from time to time as herein provided, and
(B) the aggregate principal amount of the Revolving Credit Loans from time to
time outstanding from such Bank, in each case together with interest thereon.
Each Bank is hereby authorized to endorse the date, amount and Loan type of
each Revolving Credit Loan, the Interest Periods during which such Revolving
Credit Loan is a LIBO Rate Loan and each payment or prepayment of principal
thereof on the schedule (including additional pages thereto added by such Bank
as required) annexed to and constituting a part of its Revolving Credit Note,
which endorsement shall constitute prima facie evidence of the accuracy of the
information so endorsed; provided, however, that the failure of any Bank to
insert any such date or amount or other information on such schedule shall not
in any manner affect the obligation of the Company to repay any Revolving
Credit Loans in accordance with the terms of this Agreement.
(ii) Swing Loan Note. The Swing Loans shall
be evidenced by a single Swing Loan Note of the Company, in
substantially the form of Exhibit C-2 hereto, payable to the
order of the Swing Loan Bank and representing the obligation
of the Company to pay the lesser of (A) the Swing Loan
Commitment as shown on Exhibit A, as the same may be amended
from time to time as herein provided and (B) the aggregate
principal amount of the Swing Loans from time to time
outstanding, in each case together with interest thereon. The
Swing Loan Bank is hereby authorized to endorse the date and
amount of each Swing Loan, and each payment or prepayment of
principal thereof, on the schedule (including additional pages
thereto added by such Bank as required) annexed to and
constituting a part of the Swing Loan Note, which endorsement
shall constitute prima facie evidence of the accuracy of the
information so endorsed; provided, however, that the failure
of the Swing Loan Bank to insert any such date or amount or
other information on such schedule shall not in any manner
affect the obligation of the Company to repay any Swing Loans
or the obligation of other Banks to acquire participations in
or to fund Revolving Credit Loans to refund such Swing Loans
in accordance with the terms of this Agreement.
(b) Interest. Each Note shall (i) except as
otherwise provided in Section 2.1(e) or (f) or 12.2 hereof, be dated the
Effective Date, (ii) be payable at its Maturity, and (iii) bear interest,
subject to the provisions of Section 10.13 hereof, until its Maturity on the
principal amount thereof from time to time outstanding at an annual rate
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(A) in the case of Revolving Credit Loans, elected by the Company in accordance
with the notice provisions set forth in Section 2.3 hereof, equal to the sum of
the Applicable Margin plus the Adjusted LIBO Rate or the Reference Rate and
(B) in the case of Swing Loans, equal to the sum of the Applicable Margin plus
the Reference Rate. Such rate of interest shall be computed for the actual
number of days elapsed on the basis of a 360-day year, in the case of LIBO Rate
Loans, and on the basis of a 365- or 366-day year (as applicable), in the case
of Reference Rate Loans. The unpaid principal balance of each Note shall bear
interest from and including its Maturity until paid at the rate specified in
Section 2.5 hereof.
(c) Interest Payment Dates. Interest accrued on
each Loan shall be payable, without duplication, on:
(i) the Maturity of such Loan;
(ii) with respect to any repayment or
prepayment of (A) any Revolving Credit Loan or Loans
outstanding as of the date of such repayment or prepayment or
(B) any Swing Loans pursuant to Section 2.4 hereof or all
Swing Loans outstanding as of the date of such repayment or
prepayment, as the case may be, the date of such repayment or
prepayment, as the case may be;
(iii) with respect to the portion of the
outstanding principal amount of all Revolving Credit Loans
maintained as Reference Rate Loans and all Swing Loans,
payable quarterly and in arrears on the first Business Day of
each calendar quarter commencing with the first date following
the date of (A) the making of such Revolving Credit Loans as,
or their conversion into, Reference Rate Loans or (B) the
making of such Swing Loans;
(iv) with respect to the portion of the
outstanding principal amount of all Revolving Credit Loans
maintained as LIBO Rate Loans, the last day of each applicable
Interest Period and, in connection with any such Revolving
Credit Loan having a four-, five-, or six-month Interest
Period, the day that would be the last day of a three-month
Interest Period commencing on the same day as such four-,
five-, or six-month Interest Period commences; and
(v) with respect to that portion of the
outstanding principal amount of all Revolving Credit Loans
that is converted to Reference Rate Loans or LIBO Rate Loans
on a day when interest otherwise would not have been payable
pursuant to Section 2.2(c)(iii) or (iv) hereof, the date of
such conversion.
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(d) The Agent may charge any account of the Company
maintained at the Agent for the principal of and interest on the Notes and for
any other amounts due the Agent or any Bank pursuant to the Loan Documents.
SECTION 2.3 Procedures Applicable to Borrowings and
Conversions.
(a) (i) Revolving Credit Loans. Subject to the
limitations applicable to Interest Periods for LIBO Rate Loans, the Company may
borrow Revolving Credit Loans from the Banks on any Business Day (in the case
of LIBO Rate Loans, on any Banking Day) during the Commitment Period; provided,
however, the Company shall give the Agent irrevocable written notice in the
form of a Loan Request (which may be sent via teletransmission) as follows:
(A) in the case of a borrowing of a
Revolving Credit Loan as a Reference Rate Loan, on or
before 12:00 noon, prevailing San Francisco time, on
the Business Day next preceding the requested
borrowing date (or irrevocable oral notice on or
before 12:00 noon, prevailing San Francisco time, on
such date confirmed in a Loan Request (which may be
sent via teletransmission) no later than 4:00 p.m.,
prevailing San Francisco time, on such Business Day
next preceding the borrowing date); and
(B) in the case of a borrowing of a
Revolving Credit Loan as a LIBO Rate Loan, on or
before 9:00 a.m., prevailing San Francisco time, on
the third Banking Day preceding the first day of the
requested Interest Period (or irrevocable oral notice
on or before 9:00 a.m., prevailing San Francisco
time, on such date confirmed in a Loan Request (which
may be sent via teletransmission) no later than 4:00
p.m., prevailing San Francisco time, on such third
Banking Day preceding the first day of the requested
Interest Period).
If the Company furnishes a Loan Request to the Agent, but no election is made
as to either the Loan type or Interest Period to be applicable thereto, the
Revolving Credit Loan will be made as a Reference Rate Loan. The Agent,
promptly upon receipt of any Loan Request (whether oral or written), shall give
notice thereof to the Banks. Each borrowing of a given Loan type shall be in
an aggregate principal amount, together with Revolving Credit Loans of the same
Loan type to be continued as such and Revolving Credit Loans of other Loan
types to be converted to such Loan type on the same Business Day or Banking
Day, as appropriate, of at least (i) $1,000,000 or any integral multiple
thereof, in the case of Reference Rate Loans (other than Reference Rate Loans
made pursuant to Section 2.4 hereof) and (ii) $1,000,000 or any integral
multiple thereof in the case of LIBO Rate Loans.
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(ii) Swing Loans. The Company may borrow
Swing Loans from the Swing Loan Bank on any Business Day
during the Commitment Period; provided, however, that the
Company shall give the Swing Loan Bank irrevocable written
notice in the form of a Swing Loan Request (which may be sent
via teletransmission), with a copy to the Agent, on or before
1:30 p.m., prevailing San Francisco time, on the Business Day
of the requested borrowing date (or irrevocable oral notice on
or before 1:30 p.m., prevailing San Francisco time, on such
date confirmed in a Swing Loan Request (which may be sent by
teletransmission) no later than 4:00 p.m., prevailing San
Francisco time, on such borrowing date. Each borrowing of
Swing Loans shall be at least $100,000 or any integral
multiple thereof.
(b) Funding Mechanics.
(i) Revolving Credit Loans.
(A) Each Bank shall provide the Agent
with funds, on or before 12:00 noon, prevailing San
Francisco time, on each borrowing date (other than
the Effective Date) for a Revolving Credit Loan in an
amount equal to such Bank's Percentage of the
requested borrowing by transferring same day or
immediately available funds to such account as the
Agent shall specify from time to time by notice to
the Banks. Except as otherwise provided in Section
2.4 hereof, on the date requested in such notice, the
Agent shall make available to the Company at its
account at such Bank or at such other account as the
Company shall designate in the related Loan Request,
in immediately available funds, the proceeds of the
Revolving Credit Loans being made; provided, however,
that the Agent shall be obligated to make the
proceeds of such Revolving Credit Loans available
only to the extent received by it from the Banks. No
Bank's obligation to fund any Revolving Credit Loan
shall be affected by any other Bank's failure to fund
any Revolving Credit Loan, nor shall any Bank's
commitment be increased as a result of any such
failure of any other Bank.
(B) In the event that the Agent
advances proceeds of any Revolving Credit Loan to or
for the account of the Company and one or more of the
Banks fail to fund all or any portion of such
Revolving Credit Loan, immediately upon receipt of
notice from the Agent, (I) such Bank shall pay
directly to the Agent the amount thereof together
with interest thereon calculated if such payment is
received by the Agent on or before the third Business
Day following the date on which such funding was due,
at the federal funds rate described in
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Section 2.3(b)(iii) hereof and in all other cases at the rate
specified in Section 2.5 hereof and (II) if not paid by such
Bank, the Company shall repay directly to the Agent such
amount as will equal the amount that such Bank or Banks failed
to fund, together with interest thereon at the applicable rate
determined in accordance with Section 2.2(b) hereof.
(ii) Swing Loans. The Swing Loan Bank shall
make available to the Company at its account at such Bank, on
or before the close of business on the requested borrowing
date, in immediately available funds, the proceeds of the
Swing Loans being made on such date.
(iii) Remittances by the Agent. In the
event that the Agent remits in same day or immediately
available funds to any Bank its share of any payments to be
made by the Company pursuant to this Agreement or the
Revolving Credit Notes prior to the time that the Agent
receives such payments from the Company, and the Company fails
to make such payments when due, immediately upon receipt of
notice from the Agent, such Bank shall repay directly to the
Agent in same day or immediately available funds such amount
as will equal the amount that the Company failed to pay,
together with interest thereon at a rate equal to the weighted
average of the rates on overnight Federal Funds transactions
with members of the Federal Reserve System arranged by Federal
Funds brokers, as published by the Federal Reserve Bank of New
York (in Weekly Release H. 15) for the day on which the
Company shall fail to make such payments, or, if such rate is
not so published for any such day, the average of the
quotations for such day on such transactions received by the
Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
(c) Continuations and Conversions. Subject to the
limitations applicable to Interest Periods for LIBO Rate Loans, the Company may
continue any LIBO Rate Loan as such for an additional Interest Period or
convert any Revolving Credit Loan of a given Loan type into a Revolving Credit
Loan of a different Loan type on any Business Day (in the case of LIBO Rate
Loans to be continued or converted, on any Banking Day) during the Commitment
Period; provided, however, that:
(i) the Company shall give the Agent
irrevocable written notice in the form of a Loan Request in
the manner and by the applicable time specified in Section
2.3(a) hereof for the borrowing of a Revolving Credit Loan of
the Loan type to be converted to or continued and, if
applicable, the Interest Period therefor;
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(ii) in the case of the continuation of less
than all of the outstanding Revolving Credit Loans of a given
Loan type on the same Business Day, the aggregate principal
amount of Revolving Credit Loans of such Loan type to be
continued as such, together with any Revolving Credit Loans to
be made as or converted to the same Loan type on such Business
Day, shall not be less than $5,000,000 or an integral multiple
thereof;
(iii) in the case of the conversion of less
than all of the outstanding Revolving Credit Loans of a given
Loan type to another Loan type on the same Business Day, the
aggregate principal amount of Revolving Credit Loans of such
Loan type to be converted to another Loan type, together with
any Revolving Credit Loans of such other Loan type to be made
or continued as such on such Business Day, shall not be less
than $5,000,000 or any integral multiple thereof;
(iv) LIBO Rate Loans may be converted only
at the end of the then applicable Interest Period;
(v) no LIBO Rate Loan may be continued as
such, nor may any Revolving Credit Loan be converted to a LIBO
Rate Loan, for less than the minimum applicable Interest
Period therefor; and
(vi) no LIBO Rate Loan may be continued as
such, nor may any Revolving Credit Loan be converted to a LIBO
Rate Loan, if any Default or Event of Default shall have
occurred and be continuing as of any date during the period
commencing on the date the Loan Request is required to be
submitted to the Agent and ending on the first day of the
requested Interest Period.
If the Company fails, in connection with the expiration of an Interest Period
applicable to a Revolving Credit Loan that is a LIBO Rate Loan, to furnish a
Loan Request to the Agent for the continuation or conversion thereof or fails
to elect a Loan type or permitted Interest Period therefor, or if the
continuation or conversion of Revolving Credit Loans as LIBO Rate Loans is
prohibited due to the occurrence and continuance of a Default or Event of
Default, such Revolving Credit Loans (unless prepaid in accordance with the
provisions of Section 2.4 hereof or accelerated in accordance with Section 9.1
hereof) shall be converted automatically to a Reference Rate Loan as of the
expiration of the then applicable Interest Period. The Agent, promptly upon
receipt of any Loan Request, shall give notice thereof to the Banks.
SECTION 2.4 Prepayments.
(a) Voluntary. Provided that such prepayment is
made with internally generated funds or proceeds from the sale of
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Capital Interests in or permitted Indebtedness of the Company, the Company from
time to time may prepay Loans, in whole or in part, without premium or penalty
(except as otherwise provided in Section 2.9 hereof), upon irrevocable written
notice to the Agent (in connection with the prepayment of Revolving Credit
Loans) or the Swing Loan Bank (in connection with the prepayment of Swing
Loans), with a copy to the Agent, given at least as early before the proposed
date of such prepayment as the corresponding time specified in Section 2.3(a)
hereof for notice of the borrowing with respect to such Loan, specifying the
date of prepayment and the amount of the prepayment; provided, however, that
(i) each partial prepayment of a Revolving Credit Loan shall be in an aggregate
amount not less than $1,000,000 or any integral multiple thereof and (ii) each
partial prepayment of a Swing Loan shall be in an aggregate amount not less
than $100,000 or any integral multiple thereof. If any such notice is given,
the amount specified in such notice, shall be due and payable in the manner and
by the time provided in Section 3.3 hereof on the date specified in such
notice, together with accrued interest thereon to such date to the extent
provided in Section 2.2(c) hereof. Any such prepayment of a Revolving Credit
Loan may be reborrowed, subject to the terms and conditions of this Agreement,
from time to time.
(b) Mandatory. If the aggregate outstanding
principal balance of the Loans exceeds the Aggregate Commitment, the Company
shall make a prepayment of such Loans in the amount of such excess (rounded
upwards to the next higher integral multiple of $1,000,000), together with
accrued interest thereon to the date of prepayment, to the extent provided in
Section 2.2(c) hereof. In connection with any such mandatory prepayment under
this Section 2.4(b), the Company shall prepay Reference Rate Loans first, and
LIBO Rate Loans last.
(c) Special Provisions for Swing Loans.
(i) Revolving Credit Loans to Prepay Swing
Loans. If more than $5,000,000 aggregate principal amount of
Swing Loans is outstanding at any time the Company requests
the borrowing, continuation or conversion of Revolving Credit
Loans, the Company shall request Revolving Credit Loans in an
amount sufficient to prepay the principal amount of such Swing
Loans in excess of $5,000,000. The Agent shall apply the
proceeds of such Revolving Credit Loans, together with other
funds of the Company as necessary, to prepay such Swing Loans
in excess of $5,000,000, plus accrued interest thereon to the
date of repayment.
(ii) Banks to Make Revolving Credit Loans.
(A) The Swing Loan Bank, at any time
in its sole and absolute discretion, upon written
request to the Agent (with a copy to the Company) on
or before 12:00 noon, prevailing San Francisco time,
on the Business Day next preceding the requested
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borrowing date, which shall be a Business Day), may
require each Bank (including the Swing Loan Bank)
to make a Revolving Credit Loan, subject to the
provisions of Section 2.1(a) hereof, in an amount
equal to such Bank's Percentage of the aggregate
principal amount of the outstanding Swing Loans.
Promptly upon receipt of any such request, the Agent
shall give notice thereof to the Banks. The Agent
shall apply the proceeds of such Revolving Credit
Loans to prepay the Swing Loans of the Swing Loan
Bank; provided, however, that the Agent shall be
obligated to make the proceeds of such Revolving
Credit Loans available only to the extent received by
it from the Banks. All Revolving Credit Loans made
pursuant to this Section 2.4 shall be Reference Rate
Loans.
(B) In the event that the Agent
advances proceeds of any Revolving Credit Loan to the
Swing Loan Bank and one or more of the Banks (other
than such Swing Loan Bank) fail to fund all or any
portion of such Revolving Credit Loan, immediately
upon receipt of notice from the Agent, (I) such Bank
shall pay directly to the Agent the amount thereof,
together with interest thereon calculated if such
payment is received by the Agent on or before the
third Business Day following the date on which such
funding was due, at the federal funds rate, and in
all other cases at the rate specified in Section 2.5
hereof, and (II) if not paid by such Bank, the Swing
Loan Bank shall repay directly to the Agent such
amount as will equal the amount that such other Bank
or Banks failed to fund, together with interest
thereon at a rate equal to the weighted average of
the rates on overnight Federal Funds transactions
with members of the Federal Reserve System arranged
by Federal Funds brokers, as published by the Federal
Reserve Bank of New York (in Weekly Release H. 15)
for the day on which such Bank shall fail to make
such payments, or, if such rate is not so published
for any such day, the average of the quotations for
such day on such transactions received by the Agent
from three Federal Funds brokers of recognized
standing selected by the Agent, whereupon the Swing
Loans shall be reinstated pro rata.
(iii) Participations in Swing Loans.
(A) If, at any time prior to the
making of Revolving Credit Loans pursuant to Section
2.4(c)(ii) hereof, any Event of Default described in
Sections 9.1(g) or (h) hereof shall have occurred,
each Bank, on the date such Revolving Credit Loan
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was to have been made or, if no request for
Revolving Credit Loans had been made pursuant to
Section 2.4(c)(ii) hereof, promptly upon request by
the Swing Loan Bank delivered to the Agent, shall
purchase an undivided participation interest in all
outstanding Swing Loans in an amount equal to its
Percentage of such Swing Loans. Each Bank (other
than the Swing Loan Bank) will transfer immediately
to the Swing Loan Bank, in immediately available
funds, the amount of its participation and, upon
receipt thereof, the Swing Loan Bank will deliver to
such other Bank a Swing Loan Participation
Certificate, dated the date of receipt of such funds
and in the amount of such Bank's participation.
(B) Whenever, at any time after the
Swing Loan Bank has received from any other Bank such
other Bank's participating interest in a Swing Loan,
the Swing Loan Bank receives any payment on account
thereof, the Swing Loan Bank will distribute to such
other Bank its participating interest in such amount
(appropriately adjusted, in the case of interest
payments, to reflect the period of time during which
such Bank's participating interest was outstanding
and funded); provided, however, that in the event
that any payment received by the Swing Loan Bank is
required to be returned, such other Bank will return
to the Swing Loan Bank any portion thereof previously
distributed to it.
(iv) Acknowledged Privity. The Company
expressly agrees that, in respect of each Bank's funded
participation interest in any Swing Loan, such Bank shall be
deemed to be in privity of contract with the Company and have
the same rights and remedies against the Company under the
Loan Documents as if such funded participation interest in
such Swing Loan were a Revolving Credit Loan.
(v) Unconditional Obligation. Each Bank's
obligation to make the Revolving Credit Loans or to purchase
participation interests in the Swing Loans as provided in this
Section 2.4(c) shall be absolute and unconditional and shall
not be affected by any circumstance, including without
limitation, (A) any set-off, counterclaim, recoupment, defense
or other right which such Bank may have against the Swing Loan
Bank, the Company or any other Person for any reason
whatsoever, (B) the existence of any Default or Event of
Default (other than, in the case only of Revolving Credit
Loans referred to in this Section 2.4(c), any Event of Default
described in Sections 9.1(g) or (h) hereof) at any time, (C)
the occurrence of any event or existence of any condition that
might have a Material Adverse Effect, or (D) any other
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circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
SECTION 2.5 Interest on Delinquent Payments. All unpaid
amounts due under the Notes or any other Loan Document that are not paid when
due (including, to the extent permitted by law, unpaid interest on the Notes)
shall be payable upon demand and bear interest, subject to the provisions of
Section 10.13 hereof, from and including its due date until paid in full
(whether before or after the occurrence of any Event of Default described in
Sections 9.1(g) or (h) hereof) at an annual rate equal to the sum of (a) 2.00%
plus (b) the Reference Rate. Such rate of interest shall be computed for the
actual number of days elapsed on the basis of a 365 or 366 day year.
SECTION 2.6 Increased Costs. In the event any applicable
existing or future law, regulation, guideline, treaty or directive or condition
or interpretation thereof (including, without limitation, any request,
guideline or policy, whether or not having the force of law), by any
Governmental Authority charged with the administration or interpretation
thereof, or any change in any of the foregoing, which:
(a) subjects any Bank to any tax with respect to its
Commitment or any Loan (other than any tax on the overall net income of such
Bank no matter in what jurisdiction); or
(b) changes the basis of taxation of payments to
such Bank of principal of and/or interest on the Loans or its Commitment and/or
fees and other amounts payable hereunder (other than any tax on the overall net
income of such Bank no matter in what jurisdiction); or
(c) imposes, modifies or deems applicable or results
in the application of or increases any reserve, special deposit, or similar
requirement against extensions of credit or any deposits or other liabilities
taken or entered into by such Bank (based upon such Bank's reasonable
allocation of the aggregate of such requirements); or
(d) imposes upon such Bank any other condition with
respect to its Commitment, the Loans or this Agreement;
and the result of any of the foregoing is to increase the actual cost to such
Bank of making or maintaining its Commitment or the Loans hereunder or to
reduce the amount of any payment (whether of principal, interest, or otherwise)
received or receivable by such Bank or to require such Bank to make any
payment, in each case by or in an amount which such Bank reasonably deems
material; or
(e) if any Bank shall determine that any applicable
law, rule or regulation regarding capital adequacy, capital maintenance,
capital ratios or other similar requirements against such Bank's Commitment or
any Loan (including, without limitation, the issuance of any final rule or
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<PAGE> 43
regulation), or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by such Bank with any
request or directive or guideline regarding capital adequacy, capital
maintenance, capital ratios or other similar requirements against such Bank's
Commitment or any Loan (whether or not having the force of law) of any such
Governmental Authority, has or would have the effect of reducing the rate of
return on such Bank's capital (after giving effect to all applicable taxes on
net income, no matter what the jurisdiction, and taking into consideration such
Bank's policies with respect to capital adequacy);
then and in any such case set forth in paragraphs (a) through (e) above:
(i) such Bank shall notify the Company and
the Agent promptly in writing of the happening of such event;
(ii) such Bank shall deliver to the Company
and the Agent promptly a certificate of such Bank stating the
event that has occurred or the reserve or requirements or
other conditions that have affected such Bank or the request,
directive, guideline or requirement with which it has
compiled, together with the date thereof and the amount (based
upon such Bank's reasonable policies as to the allocation of
capital and costs, as applicable) of such increased cost,
reduction or payment for one or more periods ending not later
than the date of such certificate; and
(iii) The Company shall pay within 10 days
after the demand therefor such amount or amounts as will
compensate such Bank for such additional cost, reduction or
payment (without reduction or abatement for any participations
sold to Participants).
The certificate of such Bank as to the additional amounts payable pursuant to
this Section 2.6 delivered to the Company, in the absence of manifest error,
shall be conclusive as to the amount thereof. The protection of this Section
2.6 shall be available to such Bank regardless of any possible contention of
invalidity or inapplicability of the law, regulation or condition that has been
imposed. In the event that any such law, regulation or condition is
subsequently held to be invalid or inapplicable and the result thereof is to
eradicate any such additional cost, reduction or payment, such Bank shall
promptly pay to the Company an amount equal to the amount of compensation paid
by the Company to such Bank as a result of such invalid or inapplicable law,
regulation or condition.
SECTION 2.7 Use of Proceeds. The proceeds of the Initial
Loans shall be used to pay all outstanding Indebtedness, if any, in connection
with the Existing Loan Agreement. The proceeds of all other Loans made to the
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<PAGE> 44
Company hereunder shall be used by the Company to conduct its business of
commercial financing and leasing and to make advances to its Subsidiary, FCC
Holdings, to fund such Subsidiary's business of owning, operating, and
liquidating Repossessed Assets.
SECTION 2.8 Payments on Non-Business Days. Whenever any
payment to be made under the Notes (other than principal of or any interest on
LIBO Rate Loans), under this Agreement or any other Loan Document, shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time in such case
shall be included in the computation of payment of interest or fees, as the
case may be.
SECTION 2.9 Funding Losses.
(a) The Company shall pay, within 10 days after the
written demand therefor, such amount as will compensate the Agent and the Banks
for any loss or reasonable expense they may sustain as a consequence of:
(i) any default in payment of the principal
amount of any LIBO Rate Loan or any part thereof or interest
accrued thereon, or any other amount due,
(ii) the occurrence of any Event of Default,
(iii) the receipt or recovery or conversion
for any reason (including without limitation mandatory
prepayment pursuant to Section 2.4 hereof or mandatory
conversion pursuant to Section 2.11 hereof) of all or any part
of a LIBO Rate Loan prior to the last day of the applicable
Interest Period therefor, or
(iv) any failure to borrow, convert to, or
continue any LIBO Rate Loan as such after submitting a Loan
Request (whether oral or written) relating thereto to the
Agent,
including, but not limited to, (A) any loss or expense sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain a LIBO Rate Loan or any part thereof or (B) any loss of margin on
reemployment of the funds so received or recovered.
(b) Each Bank shall be entitled to fund its Loans in
such manner as it may determine in its sole discretion, including without
limitation the London interbank market; provided, however, that, for the
purposes of calculations under this Section 2.9, each LIBO Rate Loan shall be
deemed to have been funded by the purchase in the London interbank euro-dollar
market of a Dollar deposit in an amount comparable to the principal amount of
such LIBO Rate Loan and having a maturity comparable to the applicable Interest
Period therefor.
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<PAGE> 45
(c) A certificate of the Agent or any Bank as to any
additional amounts payable pursuant to this Section 2.9 setting forth the basis
and method of determining such amounts shall be conclusive, absent manifest
error, as to the determination by the Agent or such Bank set forth therein.
SECTION 2.10 Alternate Rate of Interest. In the event, and
on each occasion on which, any Bank shall determine, on the day that is two (2)
Banking Days prior to the commencement of any Interest Period for any of its
LIBO Rate Loans, that:
(a) Dollar deposits in an amount comparable to the
principal amount of such LIBO Rate Loan and having a scheduled maturity
comparable to the Interest Period set forth in the related Loan Request are not
generally available in the London interbank euro-dollar market,
(b) the rate at which such Dollar deposits are being
offered will not adequately and fairly reflect the cost to such Bank of making
or maintaining such LIBO Rate Loan during such Interest Period, or
(c) reasonable means do not exist for ascertaining
the LIBO Rate
such Bank, as soon as practicable thereafter, shall give oral notice of such
determination to the Agent and the Company, promptly confirmed in writing
(which may be by teletransmission), and to each of the other Banks. In the
event of any such determination and until such Bank notifies the Company and
the Agent that the circumstances giving rise to such notice no longer exist, no
Revolving Credit Loans will be made as LIBO Rate Loans and no Revolving Credit
Loans will be converted to or continued as LIBO Rate Loans, but shall convert
to Reference Rate Loans at the end of the applicable Interest Period, if any,
therefor. Each determination by such Bank hereunder shall be conclusive,
absent manifest error.
SECTION 2.11 Change in Legality. If, anything to the
contrary herein contained notwithstanding, any applicable existing or future
law, regulation, guideline, treaty or directive or condition or interpretation
thereof (including, without limitation, any request, guideline or policy,
whether or not having the force of law), by any Governmental Authority charged
with the administration or interpretation thereof, or any change in any of the
foregoing, shall make it unlawful or improper for any Bank to make or maintain
any Revolving Credit Loans as LIBO Rate Loans, then, by oral notice to the
Company and the Agent, promptly confirmed in writing (which may be by
teletransmission), the Agent may:
(a) declare that Revolving Credit Loans thereafter
will not be made by it as LIBO Rate Loans, whereupon the Company shall be
prohibited from requesting Revolving Credit Loans of the Loan type or types
covered by such declaration (the
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<PAGE> 46
"Affected Loan Types") unless and until such declaration is withdrawn; and
(b) require that all outstanding Revolving Credit
Loans of the Affected Loan Types be converted to Reference Rate Loans, in which
event all such Revolving Credit Loans shall be converted automatically to
Reference Rate Loans as of the end of their applicable Interest Periods or as
of such earlier date as may be required of any Bank for the lawful or proper
conduct of its lending activities.
ARTICLE III
FEES AND PAYMENTS
SECTION 3.1 Fees Payable to Banks.
(a) The Company shall pay to the Agent for the
account of the applicable Banks an annual commitment fee equal to 0.35% per
annum on the average daily unused portion of the Aggregate Commitment for the
period from the Effective Date to and including the last day of the Commitment
Period, payable quarterly in arrears on the first Business Day of each calendar
quarter during the Commitment Period, commencing with the first such date after
the Effective Date and on the Termination Date; provided, however, that the
annual commitment fee shall be increased to 0.45% per annum on the average
daily unused portion of the Aggregate Commitment for each day on which the
Company's commercial paper does not have an Investment Grade Rating from at
least two Rating Agencies; and provided, further, that the annual commitment
fee shall be decreased to 0.30% per annum on the average daily unused portion
of the Aggregate Commitment for each day on which the Company's commercial
paper has an Investment Grade Rating from at least three Rating Agencies.
Commitment fees for any period shall be calculated on the basis of a 365- or
366-day year for the actual number of days elapsed.
(b) The Company shall pay to the Agent for the
account of the applicable Banks a utilization fee on the weighted average
aggregate principal amount of Loans outstanding during the specified period
equal to (i) 0.25% per annum for each day on which the aggregate principal
amount of Loans outstanding is equal to or less than 25% of the Aggregate
Commitment for such day, (ii) 0.375% per annum for each day on which the
aggregate principal amount of Loans outstanding exceeds 25% but is equal to or
less than 50% of the Aggregate Commitment in effect for such day, and (iii)
0.50% per annum for each day on which the aggregate principal amount of Loans
outstanding exceeds an amount equal to 50% of the Aggregate Commitment in
effect for such day. The utilization fee shall be payable quarterly in arrears
on the first Business Day of each calendar quarter during the Commitment
Period, commencing with the first such date after the Effective Date and on the
Termination Date, and shall be calculated on the basis of a 365 or 366 day year
for the actual number of days elapsed.
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SECTION 3.2 Agency Fee. The Company shall pay an agency fee
to the Agent as provided in the agency fee letter dated as of the Effective
Date of this Agreement.
SECTION 3.3 Payments.
(a) Each payment (including each prepayment) by the
Company pursuant to this Agreement or the Notes, whether in respect of
principal, interest, increased costs, or other amounts, shall be made by the
Company to the Agent for the accounts of the Persons entitled thereto;
provided, however, that payments in respect of Swing Loans shall be made by the
Company directly to the Swing Loan Bank. All payments required to be made to
the Agent or the Swing Loan Bank shall be made, without set-off, withholding,
deduction, or counterclaim, not later than 12:00 noon, prevailing San Francisco
time, on the date due, in same day or immediately available funds, to such
account as the Agent or the Swing Loan Bank, as applicable, shall specify from
time to time by notice to the Company. Funds received after that time shall be
deemed to have been received on the following Business Day.
(b) Except as otherwise expressly provided in
Section 2.4(c) hereof, the Agent shall promptly remit in same day or
immediately available funds to each Bank (or other holder of a Note notified to
the Agent) its applicable share, if any, of such payments received by the Agent
for the account of such Bank or holder.
SECTION 3.4 Taxes.
(a) Any and all payments by the Company pursuant to
the Loan Documents shall be made, in accordance with the terms hereof and
thereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes described in the
parenthetical contained in Section 2.6(a) hereof and franchise taxes imposed on
the Agent or any Bank by the jurisdiction under the laws of which the Agent or
such Bank is organized or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Indemnified Taxes"). If the
Company shall be required by law to deduct any Indemnified Taxes from or in
respect of any sum payable hereunder or under the other Loan Documents to the
Agent or any Bank,
(i) the sum payable shall be increased as
may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 3.4) the Agent or such Bank shall receive
an amount equal to the sum it would have received had no such
deductions been made,
(ii) the Company shall make such deductions,
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(iii) the Company shall pay the full amount
deducted to the relevant taxation authority or other authority
in accordance with applicable law, and
(iv) the Company shall deliver to the Agent
evidence of such payment to the relevant Governmental
Authority.
(b) In addition, the Company agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies of the United States of America or any State
or political subdivision thereof or any applicable foreign jurisdiction that
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Document (hereinafter referred to as "Other Taxes") and to deliver to the Agent
evidence of such payment to the relevant Governmental Authority.
(c) The Company will indemnify the Agent and the
Banks for the full amount of Indemnified Taxes and Other Taxes (including
without limitation Indemnified Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.4) paid by the Agent or
any Bank (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within ten (10) days after written demand
therefor by the Agent or any Bank.
(d) Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of the
Company contained in this Section 3.4 shall survive the payment in full of
principal, interest, fees and other amounts hereunder and under the other Loan
Documents.
(e) Each Bank, if any, that is not organized under
the laws of the United States of America or any State agrees (i) prior to the
first payment of such Bank of any amounts due to such Bank under the Loan
Documents, upon request by the Company, to execute and deliver to the Company
and the Agent completed original counterparts of IRS Form W-8, 1001, or 4224
(or any successor thereto or substitute therefor), as applicable, and (ii)
thereafter, upon request by the Company from time to time in order to maintain
the effectiveness and accuracy of such tax forms and otherwise to comply with
United States tax laws, to execute and deliver to the Company and the Agent
additional or supplemental completed original tax forms with respect to amounts
due to such Bank under the Loan Documents as such Bank properly can execute in
conformity with applicable law as in effect at the time.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this
Agreement and to make the Loans herein provided for, the Company hereby makes
the following representations and warranties, which shall survive the execution
and delivery of the Loan Documents and (except to the extent that any of such
representations and warranties expressly relate to earlier dates) shall be
deemed repeated and confirmed as of each date on which any Loans are requested
by the Company or made, continued or converted by any Bank:
SECTION 4.1 Status and Standing. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its organization, is properly licensed, has the power and
authority and the legal right to own its property and conduct the business in
which it is engaged or currently proposes to engage and is duly licensed and
qualified and in good standing under the laws of the each jurisdiction where
the failure to qualify would have a Material Adverse Effect.
SECTION 4.2 Organizational Status of Subsidiaries. Schedule
I annexed hereto correctly sets forth the name of each Subsidiary of the
Company in existence on the date hereof, its jurisdiction and form of
organization and the ownership of its Capital Interests. Each of such
Subsidiaries is duly organized and validly existing in the form of organization
indicated on Schedule I, duly licensed and in good standing under the laws of
its jurisdiction of organization, and is duly licensed and qualified and in
good standing in each jurisdiction where the failure to qualify as such would
have a Material Adverse Effect.
SECTION 4.3 Location of Offices, Books and Records. Schedule
II annexed hereto completely and accurately lists all places at which each of
the Company and its Subsidiaries maintains, as of the date hereof, its books
and records relating to its Finance Receivables and the collateral related
thereto. The principal office or principal executive office of each of the
Company and its Subsidiaries in each jurisdiction is correctly indicated on
Schedule II as of the date hereof.
SECTION 4.4 Organizational Power and Authority.
(a) The Company and its Subsidiaries have the
corporate power and authority and the legal right to execute, deliver and
perform this Agreement and the other Loan Documents to which they are a party.
The Company and its Subsidiaries have taken all necessary corporate action
(including, but not limited to, the obtaining of any consent of the holders of
its Capital Interests required by law or by the organizational documents
thereof) to authorize the execution, delivery, and performance the Loan
Documents to which they are a party or by which they otherwise are affected and
to authorize the transactions contemplated hereby and thereby.
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(b) Foothill Group has the corporate power and
authority and the legal right to make, deliver and perform each Loan Document
to which it is a party. Foothill Group has taken all necessary corporate
action (including, but not limited to, the obtaining of any consent of the
holders of its Capital Interests required by law or by the organizational
documents thereof) to authorize the execution, delivery, and performance of the
Loan Documents to which it is a party or by which it otherwise is affected and
to authorize the transactions contemplated hereby and thereby.
SECTION 4.5 Enforceable Obligations. Each Loan Document, and
each other agreement or undertaking executed by the Company, any Subsidiary
thereof, or Foothill Group and delivered to the Agent constitutes the legal,
valid, and binding obligation of the Company or such Subsidiary, or Foothill
Group, as the case may be, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally, and general principles of equity,
and there are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against, or affecting, the Company, any Subsidiary
thereof, or Foothill Group or any of their respective officers or directors
calling into question the legality, validity or enforceability thereof.
SECTION 4.6 Absence of Conflicts. Neither the execution and
delivery of this Agreement or any other Loan Document nor consummation of the
transactions herein or therein contemplated nor performance of or compliance
with the terms and conditions hereof or thereof will
(a) violate any law, or
(b) conflict with or result in a breach of or a
default under or result in (or give rise to any right, contingent or otherwise,
of any Person to cause) any termination, cancellation, prepayment or
acceleration of performance of, or result in the creation or imposition of (or
give rise to any obligation, contingent or otherwise, to create or impose) any
Lien upon any property of the Company or any Subsidiary of the Company pursuant
to, or otherwise result in (or give rise to any right, contingent or otherwise,
of any Person to cause) any change in any right, power, privilege, duty or
obligation of the Company or any such Subsidiary under or in connection with,
(i) the articles of incorporation or by-laws
(or other constituent documents) of the Company or any
Subsidiary of the Company, or
(ii) any agreement or instrument to which
the Company or any Subsidiary of the Company is a party or by
which any of them or any of their respective properties (now
owned or hereafter acquired) may be subject or bound.
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SECTION 4.7 No Burdensome Agreements. Neither the Company
nor any Subsidiary thereof is a party to any agreement or instrument or subject
to any restriction set forth in its organizational documents or provisions
relating to its Capital Interests that has a Material Adverse Effect.
SECTION 4.8 No Material Litigation. There are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary thereof or any of their
respective officers or directors before any court, arbitrator or governmental
or administrative body or agency that, if adversely determined in the
reasonable opinion of the Company acting in consultation with counsel, would
have a Material Adverse Effect. No injunction, writ, restraining order or
other order of any nature adverse to the Company or any Subsidiary thereof or
the conduct of their respective businesses or inconsistent with the due
consummation of any transaction contemplated by any Loan Document has been
issued by any Governmental Authority. Neither the Company nor any Subsidiary
thereof is in default under any applicable material statute, rule, order,
decree or regulation of any court, arbitrator or governmental body or agency
having jurisdiction over the Company or any Subsidiary thereof.
SECTION 4.9 Good Title to Properties. The Company and its
Subsidiaries have good and marketable title to all their respective properties
and assets, subject only to such defects in title as do not detract materially
from the value of such property or assets or impair the use thereof in the
operation of their respective businesses, and subject to no Liens of any kind
other than Liens which are expressly permitted under this Agreement.
SECTION 4.10 Margin Regulations. The Company will apply the
proceeds of the borrowings made pursuant to this Agreement only for the
purposes set forth in Section 2.7 hereof. No part of the proceeds made
hereunder and none of the proceeds of any loan or advance made by the Company
or any Subsidiary thereof will at any time constitute "purpose credit" or
"carrying credit" as such terms are defined in Regulation G of the Board (12
C.F.R. 207), or will be used for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Company in a
violation of Regulation X of the Board (12 C.F.R. 224) or any violation of
Regulation U of the Board (12 C.F.R. 221). In particular, without limitation
of the foregoing, the Company will not use any part of the proceeds of the
borrowings hereunder or any part of the proceeds of any loan or advance made by
the Company or any Subsidiary thereof, directly or indirectly, (a) to reacquire
any of its own publicly-held securities, or (b) to enable any other Person to
acquire any publicly-held securities of the Company, or (c) to acquire for
itself or for any other Person any other publicly-held equity securities of any
kind, including, without limitation, any "margin stock," as such term is used
in said Regulation G.
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SECTION 4.11 Investment Company. Neither the Company nor any
Subsidiary thereof is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. The
performance of the transactions contemplated by this Agreement and the other
Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission
thereunder.
SECTION 4.12 Disclosure. No representation or warranty made
by, and no information regarding, the Company or any Subsidiary thereof in any
Loan Document or any other document furnished from time to time in connection
herewith or therewith (other than projections or forecasts of future financial
performance), contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
are or will be made, not misleading. The projections and forecasts of future
financial performance of the Company delivered to the Agent and the Banks will
be reasonable at the time they are delivered to the Agent and the Banks in
light of then available current information. There is no fact known to the
Company that has, or that in the future might have in the reasonable judgment
of the Company, a Material Adverse Effect, except as set forth or referred to
in this Agreement or in another document or instrument heretofore furnished to
the Agent and the Banks.
SECTION 4.13 Taxes and Claims. Each of the Company and its
Subsidiaries has filed or caused to be filed, all federal, state and local tax
returns and reports that are required to be filed and has paid all taxes shown
to be due and payable on said returns or any assessments made against it or any
of its property and all other taxes, fees or charges imposed on it or any of
its property by any Governmental Authority (other than those the amount or
validity of which are currently being contested diligently in good faith by
appropriate proceedings and in respect of which adequate reserves in conformity
with GAAP have been provided on the books of the Company or its Subsidiaries,
as the case may be); and no tax Liens (other than those the amount or validity
or which are currently being contested diligently in good faith by appropriate
proceedings and in respect of which adequate reserves in conforming with GAAP
have been provided on the books of the Company or its Subsidiaries, as the case
may be) have been filed and, to the knowledge of the Company, no claims are
being asserted with respect to any such taxes, fees or other charges. The
income taxes chargeable against the income of the Company and its Subsidiaries
are paid by the Foothill Group on consolidated income tax returns. The federal
income tax liabilities of Foothill Group and each of its Subsidiaries have been
finally determined by the Internal Revenue Service, or the time for audit has
expired, for all fiscal periods ending on or prior to December 31, 1989; and
all such liabilities (including all deficiencies assessed following audit) have
been satisfied, except liabilities which would not be required to be satisfied
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under the provisions of Section 6.2 hereof. Schedule III describes all tax
sharing arrangements or agreements to which the Company or any Subsidiary
thereof is a party or is subject or bound.
Each of the Company and its Subsidiaries, to the knowledge of
the Company, has paid and discharged all lawful claims for labor, material,
supplies and anything else that might or could, if unpaid, become a Lien on any
of its properties (other than those the amount or validity of which are
currently being contested diligently in good faith by appropriate proceedings
and in respect of which adequate reserves in conformity with GAAP have been
provided on the books of the Company or its Subsidiaries, as the case may be).
SECTION 4.14 Trademarks, Patents, Etc. Each of the Company
and its Subsidiaries possesses all trademarks and service marks (or has
licenses for the use thereof), trade names, copyrights, patents, licenses,
permits, approvals and consents (including, without limitation, licenses,
approvals and consents of Governmental Authorities) and rights in any thereof,
adequate for the conduct of their respective businesses as now conducted or as
currently proposed to be conducted, without conflict with the rights or claimed
rights of others.
SECTION 4.15 Consents. No consent, authorization or action
of, or filing with, any Governmental Authority or any other Person is required
to authorize, or otherwise is required of the Company or any Subsidiary thereof
in connection with, the execution, delivery, performance, validity, or
enforceability of any Loan Document or any of the instruments or documents to
be delivered pursuant to any Loan Document, except in connection with the
Existing Loan Agreement.
SECTION 4.16 Employee Benefit Plans.
(a) None of the Plans maintained at any time or the
trusts created thereunder has engaged in any Prohibited Transaction that could
subject any such Plan or trust to a material tax or penalty on Prohibited
Transactions imposed under Code Section 4975 or ERISA Sections 502(i) or
502(1).
(b) The consummation of the transactions
contemplated hereby does not and will not involve any Prohibited Transaction
that could subject the Company or an ERISA Affiliate to any material liability,
tax or penalty imposed under Code Section 4975 or ERISA Sections 502(i) or
502(l).
(c) Neither the Company nor any ERISA Affiliate
contributes to or maintains, or since 1974 has contributed to or maintained,
any employee pension benefit plan within the meaning of Section 3(2) of ERISA,
including any employee pension benefit plan subject to Title IV of ERISA or
subject to the funding requirements of Section 412 of the Code.
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(d) All Plans have at all times been operated and
maintained in substantial compliance with ERISA and applicable provisions of
the Code (including, but not limited to, Code Section 105). All Plans have
substantially complied with, and are in substantial compliance with, Code
Section 4980B and Treasury Regulations (whether proposed or final) relating
thereto. No Plan provides benefits to retired employees of the Company or such
ERISA Affiliate, except to the extent required under Code Section 4980B and
Treasury Regulations (whether proposed or final) relating thereto.
(e) Neither the Company nor any ERISA Affiliate,
individually or in the aggregate, has taken actions or undergone events which
would cause liability to arise under WARN or regulations issued thereunder, or
any applicable state law regarding employee terminations, mass layoffs or plant
closings, and neither the Company nor any ERISA Affiliate is aware of the
existence of any such actions or events.
(f) The Company and each ERISA Affiliate have made
all contributions required to be made under each Plan as of the date of this
Agreement.
SECTION 4.17 Financial Condition. The (a) consolidated
balance sheet of the Company and its Consolidated Subsidiaries, and
consolidated statements of income, cash flow, and retained earnings of the
Company and its Consolidated Subsidiaries, as at the end of and for the fiscal
year ended on December 31, 1993, as certified by Ernst & Young, independent
certified public accountants, and (b) consolidated balance sheet of the Company
and its Consolidated Subsidiaries for the fiscal quarter ended March 31, 1994,
and related consolidated statements of income, cash flow, and retained
earnings, as certified by the chief financial officer of the Company to be true
and correct, in each case heretofore furnished to the Agent and the Banks,
present fairly the financial condition of the Company and its Consolidated
Subsidiaries as at the dates of such balance sheets, and the results of their
operations for such periods. All such financial statements have been prepared
in accordance with GAAP applied on a basis consistent with that of the
comparable preceding period.
SECTION 4.18 Environmental Laws, Etc. Except to the extent
that none of the following has or would have a Material Adverse Effect:
(a) all Property heretofore, now, or hereafter owned
or operated by the Company or any Subsidiary thereof and in their possession or
over which they exercise control (including Repossessed Assets, collectively,
the "Foothill Property") complied, complies and will comply in all material
respects with all applicable federal, state and local environmental, health and
safety statutes, guidelines, codes, ordinances and regulations;
(b) the Foothill Property does not contain and has
not been, is not being, and will not be, used to generate,
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manufacture, refine, produce, store, handle, transfer, process, dispose of, or
transport, any Hazardous Materials, the effect of which would be to (i) violate
any applicable Federal, state or local law or regulation or (ii) cause the
occurrence of any liability that would have a Material Adverse Effect; and
(c) there are no underground storage tanks or
surface impoundments located on, under, or within the Foothill Property that
(i) are in violation of any applicable Federal, state or local law or
regulation and (ii) the cost of remediation of which (to the extent not covered
by insurance) would have a Material Adverse Effect.
SECTION 4.19 No Default or Event of Default; Compliance with
Instruments. No event or condition has occurred and is continuing that
constitutes a Default or an Event of Default or that would constitute a Default
or Event of Default after notice or lapse of time or both. The Company and
each Subsidiary thereof is (a) in compliance with its charter instruments and
by-laws and (b) in substantial compliance with the terms of all agreements and
instruments of any kind to which it is a party or subject (including but not
limited to agreements to repay borrowed money, guarantees, leases of real or
personal property as lessor or lessee, contracts for future purchase or
delivery of goods or rendering of services, powers of attorney, distribution
arrangements, patent license agreements, collective bargaining agreements,
employment agreements, bonus, pension or retirement plans, or vacation pay,
insurance or welfare agreements), other than agreements or instruments, the
breach or termination of which, singly and in the aggregate, would not have a
Material Adverse Effect; and no party is in default thereunder and no event has
occurred that, with the giving of notice or the passage of time or both, would
constitute such a default.
SECTION 4.20 Solvency. The Company and each of its
Subsidiaries is Solvent, and neither the Company nor any Subsidiary thereof, as
a result of the transactions contemplated hereby or by any other Loan Document,
will (a) become not Solvent, (b) be left with unreasonably small capital, or
(c) have liabilities (including contingencies) in excess of either the fair
value or the then fair salable value of its assets.
SECTION 4.21 Proceeds. The Company shall apply the proceeds
of (a) the Initial Loans solely to repay loans and other obligations
outstanding, if any, under the Existing Loan Agreement and (b) all other Loans
to the conduct of its business of commercial financing and leasing and to make
advances to its Subsidiary, FCC Holdings, to fund such Subsidiary's business of
owning, operating and liquidating Repossessed Assets.
SECTION 4.22 No Material Adverse Change. As of the Effective
Date, there has not occurred since December 31, 1993, a material adverse change
in the business, operations, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries taken as a whole; there has not occurred any
other event, act or condition which could have a Material Adverse
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Effect; and, as of the Effective Date, there is not threatened, with a
reasonable likelihood of occurrence, either an adverse change since March 31,
1994, in the business, operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole or any other
event, act or condition which could have a Material Adverse Effect.
SECTION 4.23 Insurance. The Company and each Subsidiary
thereof maintain with financially sound and reputable insurers (not related to
or affiliated with the Company) insurance with respect to their properties and
business and against at least such liabilities, casualties and contingencies
and in at least such types and amounts as is customary in the case of
corporations engaged in the same or a similar business or having similar
properties similarly situated.
SECTION 4.24 Ownership and Subsidiaries. The Company is a
wholly-owned Subsidiary of Foothill Group. The Company has no Subsidiaries
except FCC Holdings. There are no options, warrants, calls, subscriptions,
conversion rights, exchange rights, preemptive rights or other rights,
agreements or arrangements (contingent or otherwise) which may in any
circumstances now or hereafter obligate any Subsidiary to issue any shares of
its capital stock.
SECTION 4.25 Partnerships and Other Affiliated Entities.
Neither the Company nor any Subsidiary thereof (a) is or has agreed or
otherwise has a duty to become a general partner of any person or otherwise
generally liable for or on account of the liabilities, acts or omissions of
another Person, (b) has agreed or otherwise has a duty to make capital
contributions to or on account of another Person, or (c) has an interest in
another Person or has or may have a liability to or on account of such Person
which interest or liability could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.26 Other Debt.
(a) Each offering and sale of Senior Indebtedness
and Subordinated Debt has been and will be made in accordance with the
applicable terms of the Securities Act of 1933, as amended (including
applicable rules and regulations thereunder), the Securities Exchange Act of
1934, as amended (including applicable rules and regulations thereunder),
applicable state securities and "blue sky" laws and other applicable laws.
(b) All of the obligations of the Company hereunder
constitute and will constitute "Superior Indebtedness" or "Senior Indebtedness"
within the meaning ascribed to such term in all loan agreements, indentures,
and other agreements relating to, and all notes evidencing, Subordinated Debt.
The subordination provisions of such agreements and instruments relating to or
evidencing Subordinated Debt are enforceable against Foothill Group and the
holders from time to time (including any pledgee thereof and any trustee or
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other representative of such holders) of the Subordinated Debt in accordance
with their respective terms.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions to Initial Loans and Effectiveness.
The obligations of the Banks to enter into this Agreement and to make the
Initial Loans hereunder on the Effective Date are subject to the satisfaction
of the following conditions precedent:
(a) The Agent shall have received on behalf of the
Banks, on or before the Effective Date, the following, each in
form and substance satisfactory to the Agent in all respects:
(i) an original Revolving Credit Note for
each Bank and an original Swing Loan Note for the Swing Loan
Bank, all executed by an Authorized Representative on behalf
of the Company;
(ii) evidence that all existing revolving
credit loans and other outstanding Indebtedness under the
Existing Loan Agreement simultaneously are being paid in full;
(iii) original counterparts of this
Agreement executed by an Authorized Representative on behalf
of the Company for each Bank and the Agent;
(iv) opinions, dated the Effective Date, of
counsel to the Company and Foothill Group, substantially in
the form of Exhibit E hereto, for each Bank and the Agent;
such opinions shall also cover such other matters incident to
the transactions contemplated by this Agreement and the other
Loan Documents as the Agent or any Bank reasonably may
request, all such opinions being rendered at the request and
direction and with the consent of the Company and Foothill
Group;
(v) a copy of the Articles of Incorporation
of the Company and all amendments thereto, certified as of a
recent date by the Secretary of State of the State of
California, and a copy of the Certificate of Incorporation of
Foothill Group and all amendments thereto, certified as of a
recent date by the Secretary of State of the State of
Delaware, each certified by the Secretary of the Company or
Foothill Group to the effect that such organizational
documents have not been amended since such date;
(vi) a copy of the by-laws of the Company
and Foothill Group, in effect as of the Effective Date,
certified by the Secretary of the Company or Foothill Group.
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(vii) certified copies of the resolutions or
other determinations of the Board of Directors of the Company
and Foothill Group, approving each of the Loan Documents and
each of the other instruments and documents to be executed and
delivered to the Agent or the Banks pursuant to this Agreement
or any other Loan Document, certified by the Secretary of the
Company or Foothill Group, and certified copies of all
documents evidencing other necessary organizational action and
governmental approvals, if any, with respect thereto;
(viii) certificates of the Authorized
Representatives certifying on behalf of the Company and
Foothill Group the names and true signatures of the officers
of the Company who are authorized to sign each document to
which it is a signatory and which is to be delivered hereunder
or pursuant to any other Loan Document;
(ix) a Loan Request and, if applicable,
Swing Loan Request, shall have been given by the Company on or
before the applicable time set forth in Section 2.3(a) hereof;
(x) an original Foothill Group Subordination
Agreement;
(xi) a certificate of an Authorized
Representative to the effect that (A) the financial statements
referred to in Section 6.1 hereof present fairly the financial
condition of the Company and Foothill Group as of the
respective dates of such financial statements, (B) no material
adverse change in the condition (financial or otherwise) of
the Company or any Subsidiary thereof has occurred since the
respective dates of such financial statements, and (C) the
representations and warranties of the Company or any
Subsidiary thereof contained herein or in any other document
or instrument submitted to the Agent or any Bank are true and
correct in all material respects as of the date of such
certificate (except to the extent any representation or
warranty expressly related to an earlier date); and
(xii) copies of all other documents,
instruments and agreements requested by the Agent in
connection with the transactions contemplated by this
Agreement.
(b) Each of the Company, any Subsidiary thereof and
Foothill Group shall be duly organized and validly existing, shall have all
licenses, permits and authorizations necessary to own its properties and to
carry on its business as now conducted and as currently proposed to be
conducted and shall be in good standing in the jurisdiction of its organization
and in each other jurisdiction in which the nature of its business or
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ownership or use of its property requires such qualification, and the Agent
shall have received such evidence thereof as the Agent or its counsel may have
requested in connection therewith.
(c) All requisite organizational action and
proceedings, as the case may be, in connection with the Loan Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all documents, including without
limitation, records of requisite organizational action and proceedings that the
Agent and its counsel may have requested in connection therewith, such
documents, where so requested, to be certified by Persons satisfactory to the
Agent.
(d) All necessary approvals, authorizations and
consents, if any, required by, and all filings with, any Governmental Authority
having jurisdiction with respect to any of the transactions contemplated by
this Agreement and the other Loan Documents shall have been obtained or made.
In addition, the Company, any Subsidiary thereof, and Foothill Group shall be
in compliance with all laws, rules, regulations, orders and administrative
guidelines applicable to the operation of their business unless failure to
comply would not have a Material Adverse Effect.
(e) The Company shall have paid all reasonable fees,
costs and expenses incurred or sustained by the Agent (including the fees and
disbursements of its counsel, including, without limitation, actual charges and
disbursements of "in house" counsel) in connection with the preparation,
execution and delivery of this Agreement, the other Loan Documents and any
related documents.
SECTION 5.2 Conditions to All Loans. The obligations of the
Banks to make any Loans (including the Initial Loans) are further subject to
the satisfaction of the following conditions precedent:
(a) a Loan Request or, if applicable, Swing Loan
Request shall have been given by the Company on or before the applicable time
set forth in Section 2.3 hereof;
(b) each of the representations and warranties made
by the Company or any Subsidiary thereof in or pursuant to any Loan Document or
which is contained in any agreement, instrument, certificate, document or other
writing furnished at any time under or in connection with any Loan Document
shall be true and correct in all material respects when made and on and as of
the borrowing date for such Loans (except to the extent any such representation
or warranty, including those contained in Section 4.22 hereof, expressly
relates to an earlier date), and each of the covenants and agreements contained
in any Loan Document shall have been performed on or prior to such date);
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(c) no Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Loans to
be made on such date; and
(d) neither the making nor use of the Loans shall
cause any Bank to violate or conflict with any applicable law, rule, regulation
or administrative guideline.
Each borrowing hereunder shall constitute a representation and warranty by the
Company as of the date of such borrowing that the conditions set forth in this
Section 5.2 have been satisfied.
SECTION 5.3 Conditions to Extension of Termination Date. Any
extensions of the Termination Date agreed to by the Banks pursuant to Section
2.1(d) hereof shall be subject to the satisfaction of the following conditions
precedent:
(a) The Agent shall have received on behalf of the
Banks that have agreed to extend the Termination Date, on or before the
expiration of the Initial or then current Renewal Term, the following, each in
form and substance satisfactory to the Agent in all respects:
(i) a certificate of the Secretary or
Assistant Secretary of the Company, dated as of June 30 of
such year, as to true copies of all corporate action taken by
the Company relative to the extension of the Termination Date;
and
(ii) opinions, dated as of the last day of
the Initial or then current Renewal Term, as the case may be,
of counsel to the Company and Foothill Group, substantially in
form of Exhibit E hereto (as modified to the satisfaction of
the Agent to take into account such extension of the
Termination Date), for each extending Bank and the Agent.
(b) As of the last day of the Initial Term or
Renewal Term, as applicable, each of the Company, any Subsidiary thereof and
Foothill Group shall be duly organized and validly existing, shall have all
licenses, permits and authorizations necessary to own its properties and to
carry on its business as then conducted and then proposed to be conducted and
shall be in good standing in the jurisdiction of its organization and in each
other jurisdiction in which the nature of its business or ownership or use of
its property requires such qualification, and the Agent shall have received
such evidence thereof as the Agent or its counsel may have requested in
connection therewith.
(c) All requisite organizational action and
proceedings, as the case may be, in connection with the extension of the
Termination Date shall be satisfactory in form and substance to the Agent, and
the Agent shall have received all information and copies of all documents,
including without limitation, records of requisite organizational action and
proceedings that the Agent and its counsel may have requested in
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connection therewith, such documents, where so requested, to be certified by
Persons satisfactory to the Agent.
(d) All necessary approvals, authorizations and
consents, if any, required in connection with the extension of the Termination
Date by, and all filings with, any Governmental Authority having jurisdiction
with respect to any of the transactions contemplated by this Agreement and the
other Loan Documents shall have been obtained or made, as the case may be. In
addition, as of the last day of the Initial Term or Renewal Term, as
applicable, the Company, any Subsidiary thereof, and Foothill Group shall be in
compliance with all laws, rules, regulations, orders and administrative
guidelines applicable to the operation of their business unless failure to
comply would not have a Material Adverse Effect.
(e) The Company shall have paid all reasonable fees,
costs and expenses incurred or sustained by the Agent (including the fees and
disbursements of its counsel, including, without limitation, actual charges and
disbursements of "in house" counsel) in connection with the preparation,
execution and delivery of documents related to the extension of the Termination
Date.
SECTION 5.4 Conditions to New Bank or Increase in Commitment.
The addition of any New Bank pursuant to Section 2.1(f) hereof or the increase
in the Commitment of a Bank pursuant to Section 2.1(e) hereof shall be subject
to the satisfaction of the following conditions precedent:
(a) The Agent shall have received on behalf of the
New Banks, and the Banks that have increased their Commitments and, if the
Aggregate Commitment has been increased, all Banks, on or before the New Bank
Effective Date or the effective date of the increase, as the case may be, the
following, each in form and substance satisfactory to the Agent in all
respects:
(i) an original Revolving Credit Note for
each New Bank and for each Bank that has increased its
Commitment, all executed by an Authorized Representative on
behalf of the Company; and
(ii) a certificate of the Secretary or
Assistant Secretary of the Company, dated as of the New Bank
Effective Date or the effective date of such increase, as to
true copies of all corporate action taken by the Company
relative to each New Bank or increased Commitment, including
the signatures and incumbency of each officer executing any
new Notes.
(b) As of each New Bank Effective Date or the
effective date of any increase in a Bank's Commitment, as applicable, each of
the Company, any Subsidiary thereof and Foothill Group shall be duly organized
and validly existing, shall have all licenses, permits and authorizations
necessary to
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own its properties and to carry on its business as then conducted and as then
proposed to be conducted and shall be in good standing in the jurisdiction of
its organization and in each other jurisdiction in which the nature of its
business or ownership or use of its property requires such qualification, and
the Agent shall have received such evidence thereof as the Agent or its counsel
may have requested in connection therewith.
(c) All requisite organizational action and
proceedings, as the case may be, in connection with any New Bank, any increase
in a Bank's Commitment and any increase in the Aggregate Commitment shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all documents, including without
limitation, records of requisite organizational action and proceedings that the
Agent and its counsel may have requested in connection therewith, such
documents, where so requested, to be certified by Persons satisfactory to the
Agent.
(d) All necessary approvals, authorizations and
consents, if any, required in connection with any New Bank, any increase in a
Bank's Commitment and any increase in the Aggregate Commitment by, and all
filings with, any Governmental Authority having jurisdiction with respect to
any of the transactions contemplated by this Agreement and the other Loan
Documents shall have been obtained or made, as the case may be. In addition,
as of each New Bank Effective Date or the effective date of any increase in a
Bank's Commitment, as applicable, the Company, any Subsidiary thereof and
Foothill Group shall be in compliance with all laws, rules, regulations, orders
and administrative guidelines applicable to the operation of their business
unless failure to comply would not have a Material Adverse Effect.
(e) The Company shall have paid all reasonable fees,
costs and expenses incurred or sustained by the Agent (including the fees and
disbursements of their counsel, including, without limitation, actual charges
and disbursements of "in house" counsel) in connection with the preparation,
execution and delivery of documents related to the New Banks or increased
Commitments.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until the Notes,
together with interest and all other Indebtedness of the Company to the Agent
or the Banks under this Agreement and all other Loan Documents, are paid in
full and the Aggregate Commitment is terminated, unless specifically waived in
writing by the Agent on behalf of the Required Banks:
SECTION 6.1 Reporting and Information Requirements.
(a) Annual Audit Reports. As soon as practicable,
and in any event within 90 days after the close of
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each fiscal year of the Company, the Company shall furnish to the Agent and the
Banks:
(i) consolidated and consolidating
statements of income, retained earnings and cash flow of
Foothill Group and its Consolidated Subsidiaries for such
fiscal year and consolidated and consolidating balance sheets
of Foothill Group and its Consolidated Subsidiaries as of the
close of such fiscal year, and notes to each, and
(ii) consolidated and consolidating
statements of income, retained earnings and cash flow of the
Company and its Consolidated Subsidiaries for such fiscal year
and a consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year,
and notes to each,
all in reasonable detail, setting forth in comparative form the corresponding
figures of the preceding fiscal year, and all accompanied by a report thereon
of Ernst & Young, or other independent public accountants of recognized
national standing selected by the Company, containing an opinion unqualified as
to scope limitations imposed by the Company, unqualified as to the Company
being a going concern and otherwise without qualification except as therein
noted, to the effect that the consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the Company
and its Subsidiaries as of the end of the fiscal year being reported on and
that the consolidated results of the operations and cash flows for said year
are in conformity with generally accepted accounting principles and that the
examination of such accountants in connection with such financial statements
has been conducted in accordance with generally accepted auditing standards and
included such tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the circumstances;
(b) Quarterly Reports. As soon as practicable, and
in any event within 45 days after the close of each of the first three quarters
of each fiscal year of the Company, the Company shall furnish to the Agent and
the Banks:
(i) unaudited consolidated and consolidating
statements of income, retained earnings and cash flows for
Foothill Group and its Consolidated Subsidiaries for such
fiscal quarter and for the period from the beginning of such
fiscal year to the end of such fiscal quarter, and unaudited
consolidated and consolidating balance sheets of Foothill
Group and its Consolidated Subsidiaries as of the close of
such fiscal quarter, and exhibits to each, and
(ii) unaudited consolidated and
consolidating statements of income, retained and cash flow for
the Company and its Consolidated Subsidiaries
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for such fiscal quarter and for the period from the beginning
of such fiscal year to the end of such fiscal quarter, and an
unaudited consolidated and consolidating balance sheet of the
Company and its Consolidated Subsidiaries as of the close of
such fiscal quarter, and exhibits to each.
all in reasonable detail, setting forth in comparative form the corresponding
figures for the same period or as of the same date during the preceding fiscal
quarter (except for the balance sheets, which shall set forth in comparative
form the corresponding balance sheets as of the prior fiscal year end), and
(except in the case of such consolidating statements) certified by an
Authorized Representative of the Company as presenting fairly the financial
position of the Company and its Consolidated Subsidiaries as of the end of such
fiscal quarter, and the results of their operations and the changes in their
financial position for such fiscal quarter, in conformity with GAAP, subject to
year-end audit adjustments.
(c) Compliance Certificates. Within 90 days after
the end of each fiscal year of the Company and within 45 days after the end of
each of the first three quarters of each fiscal year, the Company shall deliver
to the Agent and the Banks a certificate dated as of the end of such fiscal
year or quarter, signed on behalf of the Company by its Authorized
Representative (i) stating that as of the date thereof no Default or Event of
Default has occurred and is continuing or exists, or if a Default or Event of
Default has occurred and is continuing or exists, specifying in detail the
nature and period of existence thereof and any action with respect thereto
taken or contemplated to be taken by the Company, (ii) stating in reasonable
detail the information and calculations necessary to establish compliance with
the provisions of Article VII and Sections 8.2(a)(vii), 8.2(a)(viii), 8.3 and
8.8 hereof and (iii) stating that the signer has personally reviewed this
Agreement and that such certificate is based on an examination made by or under
the supervision of the signer sufficient to assure that such certificate is
accurate.
(d) Accountant's Certificate. Each set of
consolidated statements and balance sheet of the Company delivered pursuant to
Section 6.1(a) hereof shall be accompanied by a certificate or report dated as
of the date of such statements and balance sheet by the accountants who
certified such statements and balance sheet stating in substance that they have
reviewed this Agreement and that in making the examination necessary for their
certification of such statements and balance sheet they did not become aware of
any Default or Event of Default, or if they did become so aware, such
certificate or report shall state the nature and period of existence thereof.
(e) Other Reports and Information. Promptly upon
the issuance or filing thereof, the Company shall deliver to the Agent and the
Banks a copy of all reports that the Company, any Subsidiary thereof or the
Foothill Group shall file with the
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Securities and Exchange Commission (or any successor thereto), any other
Governmental Authority with responsibility for regulating the business of the
Company, any Subsidiary thereof, or Foothill Group or any securities exchange,
and all reports, notices or statements sent to all holders of Capital Interests
in or Indebtedness of the Company, any Subsidiary thereof or Foothill Group.
The Company shall provide the Agent and the Banks with copies of any
certificates or notices furnished to any party in respect of any optional
redemption of, or default under, any Senior Indebtedness (other than arising
under the Revolver Agreement) or Subordinated Debt, which notice or certificate
shall be delivered concurrently with the Company's delivery of such certificate
or notice to such other party.
(f) Net Receivable Information. As soon as
practicable and in any event within 45 days after the close of each of the
first three fiscal quarters of the Company and within 90 days after the close
of the fiscal year of the Company, the Company shall furnish to the Agent and
the Banks a report (i) describing items included in the Net Amount of Finance
Receivables and reports on Non-Performing Assets, in any case in excess of
$1,000,000, (ii) describing the type and estimated market value of items
included in Purchased Receivables in excess of $2,000,000, (iii) describing the
type and estimated market value of items included in Purchased Receivables
which are not secured or are not fully secured, (iv) listing each new Finance
Receivable having a Net Amount in excess of $2,000,000 closed during such
fiscal quarter, including a designation as to the type of Finance Receivable
and a description of the collateral, (v) identifying the ten largest obligers
by Net Amount of Finance Receivables, including a designation as to the type of
Finance Receivable and a description of the collateral and (vi) listing all
outstanding letters of credit and guarantees in excess of $1,000,000 as of the
end of such fiscal quarter or fiscal year.
(g) Further Information. The Company will promptly
furnish to the Agent and the Banks such other information and in such form as
any Bank or the Agent may reasonably request.
SECTION 6.2 Taxes and Claims. The Company and its
Subsidiaries shall pay and discharge (a) all taxes, assessments and
governmental charges upon or against them or their respective properties or
assets prior to the date on which penalties attach thereto, unless and to the
extent that such charges are being contested diligently in good faith by
appropriate proceedings and adequate reserves in conformity with GAAP have been
provided therefor on the books of the Company or such Subsidiary, as the case
may be, and (b) all lawful claims, whether for labor, materials, supplies,
services or anything else that might or could, if unpaid, become a Lien or
charge upon the properties or assets of the Company or any Subsidiary thereof,
which Lien would not be permitted under this Agreement, unless and to the
extent such claims are being contested diligently in good faith by appropriate
proceedings and adequate reserves in conformity with
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GAAP have been provided therefor on the books of the Company or such
Subsidiary.
SECTION 6.3 Insurance. The Company and its Subsidiaries
shall (a) keep all of their respective properties adequately insured at all
times with responsible insurance carriers against loss or damage by fire ad
other hazards, and (b) maintain adequate insurance at all times with
responsible carriers against liability on account of damage to persons and
property and under all applicable worker's compensation laws. For the purposes
of this Section 6.3, insurance shall be deemed adequate if the same is not less
extensive in coverage and amount than is customarily maintained by other
persons engaged in the same or similar business similarly situated.
SECTION 6.4 Books and Records. The Company and its
Subsidiaries shall maintain at all times true and complete books, records and
accounts in which true and correct entries shall be made of its transactions in
accordance with GAAP consistently applied and in compliance with the
regulations of any Governmental Authority having jurisdiction over it.
SECTION 6.5 Properties in Good Condition. The Company and
its Subsidiaries shall keep their respective properties in good repair, working
order and condition (subject to such wear and tear as may occur in the ordinary
course of business) and, from time to time, make all needful and proper
repairs, renewals, replacements, additions and improvements thereto, so that
the business carried on may be properly and advantageously conducted at all
times in accordance with prudent business management.
SECTION 6.6 Inspection. The Company shall allow any
representative of the Agent or any Bank to visit and inspect its properties and
the properties of any Subsidiary of the Company, to examine and audit the books
of account and other records and files of the Company and its Subsidiaries to
make copies thereof and to discuss the affairs, business, finances and accounts
of the Company and its Subsidiaries with their respective officers and
employees, all at such reasonable times and as often as the Agent, the Issuing
Bank or such Bank may request. Audits and inspections by or at the request of
any Bank shall be at the expense of such Bank, and audits and inspections by or
on behalf of the Agent shall be at the expense of all the Banks, except that,
if an Event of Default shall have occurred and be continuing, all such audits
and inspections by the Agent shall be at the expense of the Company. Any Bank
may request an audit and inspection by the Agent if an Event of Default shall
have occurred and be continuing.
SECTION 6.7 Pay Indebtedness and Perform Other Covenants.
The Company shall make full and timely payments of the principal of and
interest on the Notes and all other amounts owed by the Company to the Agent or
the Banks, whether now existing or hereafter arising, under the Agreement or
otherwise, and the Company and its Subsidiaries shall comply duly with all the
terms and covenants contained in each of the instruments and
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documents furnished in connection with or pursuant to the Loan Documents or
otherwise, all at the times and places and in the manner set forth therein.
SECTION 6.8 Compliance With Laws. The Company and its
Subsidiaries shall comply with all applicable laws and regulations, including
but not limited to, federal, state and local laws and regulations relating to
commercial lending, disclosure, collection and licensing, where the failure so
to comply would have, in the opinion of management in consultation with
counsel, a Material Adverse Effect.
SECTION 6.9 Notice of Certain Events. Promptly, but in no
event later than ten Business Days after obtaining knowledge thereof, the
Company shall give written notice to the Agent and the Banks of:
(a) any litigation, including arbitrations, and any
investigations or proceedings before any Governmental Authority brought against
the Company or any Subsidiary thereof (whether or not the claim is considered
to be covered by insurance) that might, if determined adversely, have a
Material Adverse Effect, or where the amount involved, when added together with
all other amounts involved in any other litigation, investigation, arbitration
or proceeding affecting the Company or any Subsidiary thereof, might have a
Material Adverse Effect;
(b) any written notice of a violation received by
the Company or any Subsidiary thereof from any Governmental Authority that, if
such violation were established, might have a Material Adverse Effect;
(c) any written notice of any change in its
commercial paper rating received by the Company from any Rating Agency; and
(d) any Default or Event of Default, specifying
the nature and extent thereof and specifying the course of action to be taken
by the Company to cure such Default or Event of Default.
SECTION 6.10 Environmental Laws, Etc.
(a) Except to the extent that the following does not
have and would not have, in the reasonable opinion of management, a Material
Adverse Effect, the Company and each Subsidiary thereof shall: (i) keep all
Property owned or operated by them or in their possession or over which they
exercise control free of Hazardous Materials, (ii) comply with all requirements
of all applicable federal, state and local environmental, health, safety and
sanitation laws, ordinances, regulatory and administrative authorities with
respect thereof, (iii) not use any Property to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce, process or in any
manner deal with, Hazardous Materials, (iv) not knowingly make or acquire any
Finance Receivable secured by
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Property that has been used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce, process, or deal in any manner with
Hazardous Materials except upon conducting an environmental liability review
that is satisfactory in the reasonable opinion of management, (v) not knowingly
foreclose on or repossess any Property that has been so used, (vi) not
knowingly cause or permit the installation or placement of Hazardous Materials
onto any Property or onto any adjacent property or suffer the presence of
Hazardous Materials on any Property. The Company and its Subsidiaries shall
undertake promptly and pursue diligently to complete appropriate remedial clean
up action in the event of any release of Hazardous Materials on, upon or into
any property owned or operated by any of them or any Property adjacent thereto.
(b) The Company agrees to provide the Agent with
copies of any notifications of releases of Hazardous Materials that the Company
or any Subsidiary thereof either gives to or receives from any Governmental
Authority or any other Person with respect to any Property owned or operated by
any thereof or securing any Finance Receivable or Purchased Receivables, except
where such release could not have a Material Adverse Effect. Such copies shall
be sent to the Agent concurrently with the mailing or delivery of such copies
of the Governmental Authority.
SECTION 6.11 Further Assurances. Upon the request of either
the Agent or the Required Banks, the Company shall duly execute and deliver, or
cause to be duly executed and delivered, to the Agent (without cost to the
Agent or the Banks) such further instruments and do and cause to be done such
further acts as may be reasonably necessary or proper in the opinion of either
the Agent or such Banks to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
SECTION 6.12 ERISA. The Company and each ERISA Affiliate
shall comply with, and shall operate and maintain each Plan in compliance with,
ERISA and all applicable provisions of the Code.
SECTION 6.13 Maintain Existence. The Company and each
Subsidiary thereof shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect:
(a) their current form of organization;
(b) their good standing in their jurisdiction of
organization;
(c) their qualification and good standing in each
jurisdiction in which the ownership of their properties or the nature of their
business or both makes such qualification necessary or desirable; and
(d) all their other rights, licenses, permits and
franchises,
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the change, termination or loss of which might (other than as specified in
clause (a) above) have a Material Adverse Effect; and shall conduct and operate
their respective businesses in substantially the manner in which they currently
are conducted and operated, without material alteration or change in the nature
of such business; provided, however, that the merger of FCC Holdings into the
Company shall not be deemed in and of itself to have a Material Adverse Effect.
ARTICLE VII
FINANCIAL COVENANTS
The Company covenants and agrees that, until the Notes,
together with interest and all other Indebtedness of the Company to the Agent
or the Banks under this Agreement and all other Loan Documents, are paid in
full and the Aggregate Commitment is terminated, the Company shall not, without
the prior written consent of the Agent on behalf of the Required Banks, suffer
or permit:
SECTION 7.1 Adjusted Consolidated Net Worth. Adjusted
Consolidated Net Worth shall not be less than $75,000,000 at any time.
SECTION 7.2 Indebtedness.
(a) Outstanding Senior Indebtedness (other than
Guaranties) shall not exceed an amount equal to 340% of the sum of (i) Adjusted
Consolidated Net Worth, plus (ii) outstanding Subordinated Debt.
(b) Outstanding Subordinated Debt shall not exceed
an amount equal to 125% of Adjusted Consolidated Net Worth.
(c) Outstanding Senior Subordinated Debt shall not
exceed an amount equal to 60% of the sum of (i) Adjusted Consolidated Net
Worth, plus (ii) outstanding Junior Subordinated Debt.
Notwithstanding the foregoing, the Company agrees that the
Banks shall have the benefit of the covenants contained in Section 9.6A of the
Loan Agreement dated as of November 10, 1980 between the Company and each of
the lenders named therein; provided that the Banks shall only be entitled to
the benefits of said Section 9.6A so long as said section has not been amended
to be less restrictive than Section 7.2 hereof or any notes issued under the
Loan Agreement dated as of November 10, 1980 shall remain outstanding;
provided, however, the Company shall at all times be and remain subject to the
provisions of Section 7.2 hereof.
SECTION 7.3 Unused Committed Bank Credit Facilities. The sum
of (i) the aggregate outstanding face amount of commercial paper issued by the
Company and (ii) the aggregate outstanding principal amount of loans permitted
by Section
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8.2(a)(ii)(B)(II) hereof shall not exceed the aggregate unborrowed amount
available to the Company at such time under committed credit facilities.
SECTION 7.4 Purchased Receivables. The Net Amount of
Purchased Receivables shall not exceed $75,000,000.
SECTION 7.5 Industry Concentration. The aggregate Net Amount
of all Finance Receivables owed by all borrowers in any single industry, as
defined by two-digit SIC codes, shall not exceed an amount equal to 10% of
Consolidated Assets at the end of any two consecutive fiscal quarters of the
Company. Notwithstanding the foregoing, Wholesale Trade Durable Goods (SIC
Code 50) and Wholesale Trade Non-Durable Goods (SIC Code 51) shall be excluded
from the above limitation.
SECTION 7.6 Settlement Securities. The aggregate book value
(as measured by original cost) of all Settlement Securities granted to and held
by the Company or any of its Subsidiaries shall not exceed 7.5% of Consolidated
Assets.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees that until the Notes,
together with interest and all other Obligations of the Company to the Agent or
the Banks under this Agreement and the other Loan Documents, are paid in full
and the Aggregate Commitment is terminated, the Company shall not, without the
prior written consent of the Agent on behalf of the Required Banks, do or
suffer to occur or exist or agree to be liable to do, any of the following:
SECTION 8.1 Liens. The Company shall not, and shall not
permit any Subsidiary to, at any time create, incur, assume or suffer to exist
any Lien on any of its property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except:
(a) Liens on Property existing on the Effective Date
which secure Indebtedness in an aggregate amount of less than $100,000;
(b) Liens constituting renewals, extensions or
replacements of Liens permitted by clause (a) above, provided that the
principal amount of the Indebtedness secured by any such new Lien does not
exceed the principal amount of the Indebtedness being renewed, extended or
refunded at the time of renewal, extension or refunding thereof and that such
new Lien attaches only to the same property subject to such earlier Lien;
(c) Liens securing taxes, assessments or
governmental charge or levies, or the claims or demands of materialmen,
mechanics, carriers, workmen, repairmen, warehousemen, landlords and other like
Persons, not yet delinquent or that are being contested diligently in good
faith
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by appropriate proceedings and in respect of which adequate reserves in
conformity with GAAP have been provided on the books of the Company or the
applicable Subsidiary thereof;
(d) other Liens (including pledges or deposits in
accordance with worker's compensation laws), incidental to the conduct of its
business or the ownership of its property and assets, that are not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and that in the aggregate do not detract materially from the value of its
property or assets, or materially impair the use thereof in the operation of
its business;
(e) attachment, judgment and other similar Liens
arising in connection with court proceedings,provided that execution or other
enforcement of such Liens is effectively stayed, the claims secured thereby are
being contested diligently in good faith by appropriate proceedings and
adequate reserves in conformity with GAAP have been provided on the books of
the Company or the applicable Subsidiary thereof;
(f) purchase money Liens on tangible personal
property securing all or part of the purchase price thereof payable by the
Company or a Subsidiary thereof (including, without limitation, tangible
personal property acquired to be leased to customers of the Company or any
Subsidiary thereof in the ordinary course of business) and Liens (whether or
not assumed) existing in property at the time of purchase thereof by the
Company or any Subsidiary thereof, as the case may be; provided that each such
Lien is confined solely to the property so purchased, improvements thereto and
proceeds thereof;
(g) zoning restrictions, easements, minor
restrictions on the use of real property, minor irregularities in title thereto
and other minor Liens that do not secure the payment of money or the
performance of an obligation and that do not in the aggregate materially
detract from the value of a property or asset to, or materially impair its use
in the business of, the Company or any Subsidiary thereof;
(h) Liens on assets of the Company acquired by the
Company as a result of foreclosures or deeds in lieu relating to collateral
securing extensions of credit by the Company made in the ordinary course of
business; provided, that in each such case such Lien is limited to such
acquired asset; and
(i) Liens (exclusive of those described in
subparagraphs (a) through (h) above) that secure or represent the incurring of
Indebtedness the repayment of which in the aggregate for the Company and its
Subsidiaries does not exceed $100,000 per fiscal year of the Company.
In no event shall this Section 8.1 be construed to permit any Lien imposed by,
or required to be granted pursuant to, ERISA or any environmental law or any
Lien on Capital Interests of any direct or indirect Subsidiary of the Company.
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SECTION 8.2 Indebtedness.
(a) The Company shall not, and shall not permit
any Subsidiary thereof to, create, incur, assume or suffer to exist,
contingently or otherwise, any Indebtedness, except:
(i) Indebtedness to the Agent and the Banks
arising hereunder or under any of the other Loan Documents
and, prior to the Effective Date, Indebtedness under the
Existing Loan Agreement;
(ii) the following other Senior Indebtedness:
(A) Permitted Senior Debt, and
(B) subject to compliance with the
requirements of Section 7.3 hereof,
(I) Indebtedness evidenced by
commercial paper issued by the Company,
(II) Indebtedness in respect of loans
under uncommitted credit facilities extended
by any financial institution provided that,
the covenants, defaults and other
requirements applicable to such Indebtedness
are no more restrictive upon the Company and
its Subsidiaries than those contained in the
Loan Documents;
(iii) Permitted Subordinated Debt;
(iv) Indebtedness secured by a Lien
described in subsections (f) or (h) of Section 8.1 hereof;
provided that any such Indebtedness that is secured by a Lien
described in such subsection (h) is not assumed by the Company
or any Subsidiary thereof;
(v) unsecured accounts payable and other
current liabilities incurred in the ordinary course of
business other than liabilities that are for money borrowed or
are evidenced by bonds, debentures, notes or other similar
instruments;
(vi) obligations to return cash collateral
or security deposits taken as collateral for loans and leases
extended by the Company in the ordinary course of its
business;
(vii) the following other Indebtedness:
(A) contingent liabilities arising
from the endorsement of negotiable or other
instruments for deposit or collection or similar
transactions in the ordinary course of business;
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(B) Indebtedness in respect of letters
of credit and guarantees, whether (I) issued directly
by the Company or by a financial institution for the
account of the Company or of third party customers of
the Company, in either case fully supported by
collateral pledged to the Company by third parties
under existing credit facilities, issued in the
ordinary course of the Company's business under usual
and customary terms for the account of persons who
are not Affiliates or Subsidiaries of the Company or
Foothill Group or (II) issued by a financial
institution for the account of the Company to secure
or support interest rate swaps, caps, collars or
other interest rate risk management contracts entered
into by the Company, provided, the aggregate
contingent liability of the Company under such
letters of credit and guarantees does not at any time
exceed an amount equal to 60% of Consolidated Net
Worth at such time;
(C) indemnities by the Company or any
Subsidiary thereof of the liabilities of its
directors or officers pursuant to provisions
contained in its articles of incorporation or by-laws
or as otherwise permitted by applicable law; and
(viii) advances to, and other Indebtedness
of, any Subsidiary of the Company owed to or held by the
Company, provided that the aggregate of all such advances and
other Indebtedness at any time outstanding does not exceed an
amount equal to 6% of Consolidated Net Worth at such time.
(b) The Company shall not, and shall not permit any
Subsidiary thereof to, enter into any arrangements, directly or indirectly,
with any Person, whereby the Company or any Subsidiary thereof shall sell or
transfer any property, whether now owned or hereafter acquired, used or useful
in its business in connection with the rental or lease of the property so sold
or transferred or of other property that the Company or any Subsidiary thereof
intends to use for substantially the same purpose or purposes as the property
so sold or transferred.
SECTION 8.3 Restricted Payments.
(a) the Company, on a consolidated basis with its
subsidiaries, shall not make, or commit to make, any Restricted Payment if
after giving effect to the proposed Restricted Payment, at the date of
declaration in the case of a dividend or at the date of distribution in the
case of any other proposed Restricted Payment (each such date, as the case may
be, being herein called the "Computation Date"),
(i) the sum of
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(A) the aggregate amount of all
dividends (other than dividends payable solely in
Capital Interests of the Company) declared during the
period commencing January 1, 1994 and ending on the
Computation date (herein called the "Computation
Period"), plus
(B) the aggregate amount of all other
Restricted Payments made during the Computation
Period (and any commitments for other Restricted
Payments during the Computation Period and
outstanding on the Computation Date)
exceeds $15,326,000 plus 50% (or, in the case of a deficit,
minus 100%) of Consolidated Net Income for the Computation
Period;
(ii) the sum of all such Restricted Payments
for the current fiscal year exceeds Consolidated Net Income
for the immediately preceding fiscal year; and
(iii) at the time of such Restricted Payment
and immediately after giving effect thereto, a Default or
Event of Default shall have occurred and be continuing.
(b) Notwithstanding the foregoing restrictions of
this Section 8.3, the Company may make an optional payment in respect of any
outstanding Subordinated Debt in exchange for, or out of the net proceeds of
the substantially concurrent sale of, its Capital Interests or other
Subordinated Debt, and no such optional payment shall be included in any
computation for the above subsection (a).
SECTION 8.4 Investments. The Company shall not make or
obligate itself to make, and shall not permit any Subsidiary to make or
obligate itself to make any Restricted Investment, except:
(a) trade credit extended, and loans and advances
extended to subcontractors or suppliers, under usual and customary terms in the
ordinary course of business;
(b) advances to employees to meet expenses incurred
by such employees in the ordinary course of business;
(c) subject to Section 8.10 hereof, credit extended
under usual and customary terms in the ordinary course of the Company's
business to Persons who are not Affiliates or Subsidiaries of the Company or
Foothill Group;
(d) subject to Section 7.6 hereof, Settlement
Securities;
(e) Capital Interests in Persons that, as of the
Effective Date, are Subsidiaries;
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(f) advances by the Company to, and other
Indebtedness held by the Company of, any Subsidiary thereof; provided, that
such advances and other Indebtedness are permitted pursuant to Section
8.2(a)(viii) hereof; and
(g) subject to Section 7.4, Public Debt Securities
and Non-Public Debt Instruments.
SECTION 8.5 Merger, Consolidation, Sale and Transfer of
Assets.
(a) The Company shall not, and shall not permit any
Subsidiary thereof to, enter into any transaction of merger, consolidation,
partnership, or joint venture with, or transfer, sell, assign, lease, or
otherwise dispose of their respective properties or assets to any Person or
purchase all or a substantial portion of the properties or assets of any other
Person from such Person, other than in the ordinary course of business, except
that:
(i) The Company may make cash acquisitions
of secured commercial finance or leasing portfolios in an
amount, in any fiscal year, up to 10% of Consolidated Assets
as of the end of the previous fiscal year;
(ii) The Company may sell or dispose of
assets, other than in the ordinary course of business, in an
amount, in any fiscal year, up to 2.5% of Consolidated Assets
as of the end of the previous fiscal year; and
(iii) Any Subsidiary of the Company may
consolidate or merge into the Company, provided that the
Company is the survivor of any such consolidation or merger.
(b) The Company shall not, and shall not permit any
Subsidiary thereof to, sell to any Person (other than the Company or a
Subsidiary thereof) any Capital Interests in any Subsidiary of the Company
owned by the Company or any other Subsidiary thereof.
SECTION 8.6 Permitted Business. The Company shall not engage
in any business which is substantially different from the business of secured
commercial financing and leasing. FCC Holdings shall only engage in its
business of owning, operating and liquidating Repossessed Assets.
SECTION 8.7 Amendments of Agreements. The Company shall not
amend, modify or change, in any material respect, any of the terms of its
Subordinated Debt if after giving effect to such modification, such
Subordinated Debt would fail to qualify as Permitted Subordinated Debt if newly
issued upon such modified terms (other than because of its then remaining
maturity and weighted average life to maturity). The Company shall not amend,
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modify, or change any of the terms of the subordination provisions applicable
to any Subordinated Debt. The Company will not amend, modify or change in any
material respect any of the terms of its Senior Indebtedness if, after giving
effect to such modification, such Senior Indebtedness would fail to qualify as
Permitted Senior Debt if newly issued upon such modified terms.
SECTION 8.8 Transactions with Affiliates.
(a) Neither the Company nor any Subsidiary thereof
shall enter into, or cause, suffer, or permit to exist, any transactions,
including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service, with any Affiliate, on terms that are
less favorable to it than those that would be obtainable at the time from any
Person that is not such an Affiliate.
(b) neither the Company nor any Subsidiary thereof
shall make any payments to or on behalf of, or transfer funds to, Foothill
Group or any Subsidiary thereof, except that if no Default or Event of Default
has occurred and is continuing or exists or would occur or exist as a result
thereof:
(i) the Company and its Subsidiaries may pay
allocated administrative overhead expenses in an aggregate
amount not to exceed 2% of Total Revenues per fiscal year of
the Company, to the extent charged to the Company and its
Subsidiaries by Foothill Group;
(ii) the Company and its Subsidiaries may
pay taxes chargeable, on the basis of GAAP, to the Company and
such Subsidiaries in accordance with the tax sharing
arrangements described on Schedule III;
(iii) subject to the provisions of the
Foothill Group Subordination Agreement, the Company may make
regularly scheduled payments on account of the Foothill Group
Subordinated Debt; and
(iv) the Company may pay dividends on its
Capital Interests held by Foothill Group and other Restricted
Payments to the extent such payments otherwise are permitted
under the provisions of Section 8.3 hereof.
(c) The Company and its Subsidiaries may carry out
such transactions with its Affiliates as are described on Schedule IV hereto.
SECTION 8.9 Inconsistent Agreements. The Company shall not,
and shall not permit any Subsidiary thereof to, enter into any agreement that
contains any provisions that would be violated or breached by any borrowings
hereunder or by the performance by the Company or any Subsidiaries of their
respective obligations under any of the Loan Documents or by the granting of
any security for the pro rata benefit of the holders
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of the obligations of the Company hereunder and other Senior Indebtedness on a
pari passu basis. The Company shall not, and shall not permit any Subsidiary
thereof to, enter into, become or remain subject to any agreement or instrument
to which the Company or such Subsidiary is a party or by which either of them
or any of their respective properties (now owned or hereafter acquired) may be
subject or bound that would prohibit or require the consent of any Person to
any amendment, modification or supplement to any of the Loan Documents.
SECTION 8.10 Borrower Concentration. The Company will not
enter into any lending arrangement with any borrower if, immediately after the
consummation of such lending arrangement and after giving effect thereto: (a)
there shall be more than ten borrowers for which the aggregate principal amount
of all loans, letters of credit, guarantees and other obligations by the
Company to each such borrower exceeds 10% of Consolidated Capital Funds or (b)
the aggregate principal amount of all loans, letters of credit, guarantees and
other obligations by the Company to such borrower would exceed 15% of
Consolidated Capital Funds.
SECTION 8.11 Subsidiaries. The Company shall not, and shall
not permit any Subsidiary thereof to, undertake or cause the incorporation or
organization of any Subsidiaries.
SECTION 8.12 Consolidated Tax Return. The Company shall not,
and shall not suffer any Subsidiary thereof to, file or consent to the filing
of any consolidated income tax return with any Person other than Foothill Group
and its Subsidiaries or to pay income tax liabilities otherwise than in
accordance with the tax sharing arrangements described on Schedule III.
SECTION 8.13 Compliance with ERISA. The Company shall not
permit or suffer to exist any Prohibited Transaction involving any of the Plans
or any trust created thereunder that would subject the Company or any ERISA
Affiliate to a material tax or penalty on Prohibited Transactions imposed under
Code Section 4975 or ERISA Sections 502(i) or 502(l); fail to pay to any Plan
any required contribution under the terms of such Plan; permit or suffer to
exist any liability under Code Section 4980B or Treasury Regulations (whether
proposed or final) relating thereto; or permit or suffer to exist any tax or
penalty for failure to comply with the requirements of Title of ERISA, which
singly or in the aggregate would result in any material liability, tax or
penalty to the Company and/or any ERISA Affiliate.
ARTICLE IX
DEFAULTS AND REMEDIES
SECTION 9.1 Events of Default. If any one or more of the
following events (herein called "Events of Default") shall occur for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any
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judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if default shall be made by the Company in the
due and punctual payment of the principal of or interest on any of the Loans or
any other amounts due and owing to the Agent or the Banks, when and as the same
shall become due and payable and, with respect to defaults in payment other
than payment of principal, such default shall continue for more than two days;
(b) if default shall be made by the Company, or any
Subsidiary thereof in the performance or observance of, or shall occur under,
any covenant, agreement or provision contained in Section 6.2, 6.4, 6.13,
Article VII or Article VIII hereof;
(c) if default shall be made by the Company or any
Subsidiary thereof in the performance or observance of, or shall occur under,
any other covenant, agreement or provision of this Agreement (other than
Section 6.7 hereof) and such default shall not have been remedied within 30
days after such failure shall first have become known to any officer of the
Company or such Subsidiary, as the case may be;
(d) if default shall be made by the Company or any
Subsidiary thereof in the performance or observance of, or shall occur under,
any covenant, agreement or provision of any other Loan Document or in any other
agreement, instrument or document delivered to the Agent or the Banks and such
default shall not have been remedied within such grace or cure period, if any,
as may be provided therefor;
(e) if the Company or any Subsidiary thereof shall
default (i) in the payment of any principal, interest or premium with respect
to any Indebtedness (other than Indebtedness under the Loan Documents) for
borrowed money or any obligation that is the substantive equivalent thereof and
such default shall continue for more than the period of grace, if any, therein
specified, and (ii) the performance or observance of any other term, condition
or agreement contained in any such obligation or in any agreement relating
thereto if the effect thereof is to cause, or permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders) to cause,
such obligation to become due or requiring the Company to repurchase or repay
prior to its scheduled maturity;
(f) if any representation or warranty or any other
statement of fact herein or in the other Loan Documents, or in connection with
the transactions contemplated hereby or thereby, or in any writing,
certificate, report or statement at any time furnished by the Company or any
Subsidiary thereof to the Agent or any of the Banks pursuant to or in
connection with this Agreement or the other Loan Documents shall prove to have
been false or misleading in any material respect when made;
(g) if the Company or any Subsidiary thereof shall
admit in writing its inability to pay its debts or
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obligations or shall file a petition or seek relief under or take advantage of
any insolvency law; make an assignment for the benefit of its creditors;
commence a proceeding for the appointment of a receiver, trustee, liquidator,
custodian or conservator of itself or of the whole or substantially all of its
property; file a petition or an answer to a petition under any chapter of the
United States Bankruptcy Code, as amended (11 U.S.C. 101 et seq.); or file a
petition or seek relief under or take advantage or any other similar law of
the United States of America, any state thereof or any foreign country;
(h) if a court of competent jurisdiction shall enter
an order, judgment or decree appointing or authorizing a receiver, trustee,
liquidator, custodian or conservator of the Company or any Subsidiary thereof
or of the whole or substantially all of the property of any thereof, or enter
an order for relief against the Company or any Subsidiary thereof in any case
commenced under any chapter of the United States Bankruptcy Code, as amended,
or grant relief under any other similar law or statute of the United States of
America, any state thereof or any foreign country; or if, under the provisions
of any law for the relief or aid of debtors, a court of competent jurisdiction
or a receiver, trustee, liquidator, custodian or conservator shall assume
custody or control or take possession of the Company or any Subsidiary thereof
or of the whole or substantially all of the property of any thereof; or if
there is commenced against the Company or any Subsidiary thereof any proceeding
for any of the foregoing relief or if a petition is filed against the Company
or any Subsidiary thereof under any chapter of the United States Bankruptcy
Code, as amended, or under any other similar law or statute of the United
States of America or any state thereof or any foreign country and such
proceeding or petition remains undismissed for a period of 60 days; or if the
Company or any Subsidiary thereof by an act indicates its consent to, approval
of or acquiescence in any such proceeding or petition;
(i) if any judgment or judgments against the Company
or any Subsidiary thereof or any attachment or execution against any of their
respective properties for any amount or amounts, in any case or in the
aggregate, in excess of $500,000 shall remain unpaid, unstayed, undismissed or
unbonded for a period of more than 60 days;
(j) if (i) any Person shall engage in any Prohibited
Transaction involving any Plan, or (ii) any other event or condition shall
occur or exist with respect to a Plan; and in the case of clause (i) above,
such event or condition, together with all other such events or conditions, if
any, could subject the Company or any of its ERISA Affiliates to any tax,
penalty or other liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition of the Company
or such Subsidiary;
(k) if Capital Interests of the Company are pledged
as security for any obligations of Foothill Group;
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(l) if a Change in Control shall occur; or
(m) if any term or provision of the subordination
provisions contained in the documents related to the Subordinated Debt shall
cease to be in full force and effect, or the Company, Foothill Group, or any
holder of any Subordinated Debt (or any trustee or agent on behalf of, or
pledgee of such holders) shall, or shall purport to, terminate, repudiate,
declare voidable or void or otherwise contest any term or provision of such
subordination provisions;
then, in the case of an Event of Default described in clause (g) or (h) above,
the Aggregate Commitment shall automatically terminate and the unpaid balance
of the Notes and all interest accrued thereon and any accrued and unpaid fees
and expenses due and payable hereunder or under any other Loan Document shall
automatically (without any action on the part of the Agent or any Bank and
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived) forthwith become due and payable, and, in the case of
any other Event of Default, then and in any such event, and at any time
thereafter, if such or any other Event of Default shall then be continuing, the
Agent, upon the direction of the Required Banks, shall declare (i) the
Aggregate Commitment to be terminated, whereupon the obligation of the Banks to
make further Loans hereunder shall terminate immediately, and (ii) the Notes to
be due and payable, whereupon the then unpaid balance of the Notes shall be
accelerated and the same, and all interest accrued thereon and any accrued and
unpaid fees and expenses due and payable hereunder or under any other Loan
Document shall forthwith become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes to the contrary notwithstanding.
SECTION 9.2 Suits for Enforcement. In case any one or more
Events of Default shall occur and be continuing, the Agent and the Banks may
proceed to protect and enforce their rights or remedies either by suit in
equity or by action at law, or both, whether for the specific performance of
any covenant, agreement or other provision contained herein, in the other Loan
Documents, or in any other instrument delivered in connection with or pursuant
to this Agreement or the other Loan Documents or to enforce the payment of the
Notes or any other legal or equitable right or remedy.
SECTION 9.3 Rights and Remedies Cumulative. No right or
remedy herein conferred upon the Banks or the Agent is intended to be exclusive
of any other right or remedy contained herein or in the other Loan Documents or
in any instrument or document delivered in connection with or pursuant to this
Agreement or the other Loan Documents, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity
or by statute, or otherwise.
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SECTION 9.4 Rights and Remedies Not Waived. No course of
dealing between the Company and any of the Banks or the Agent or any failure or
delay on the part of any Bank or the Agent in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of such or any
other Bank or the Agent and no single or partial exercise of any rights or
remedies hereunder shall operate as a waiver or preclude the exercise of any
other rights or remedies hereunder.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Collection Costs. In the event that the Banks
or the Agent or any of them shall retain or engage an attorney or attorneys
(including "in house" counsel) to collect or enforce or protect its interests
with respect to this Agreement, any of the other Loan Documents, or any
instrument or document delivered pursuant to this Agreement or the other Loan
Documents, including, without limitation, each of the documents referred to in
Section 5.1 hereof, or to protect the rights of any holder or holders with
respect thereto, the Company shall pay, within 10 days after demand therefor,
all of the costs and expenses of such collection, enforcement or protection,
including reasonable attorneys' fees and disbursements (actual charges and
disbursements in the case of "in house" counsel), and the Banks or the Agent or
the holders of such Notes, as the case may be, may take judgment for all such
amounts, in addition to the unpaid principal balance of the Notes and accrued
interest thereon and any accrued and unpaid fees and expenses due and payable
hereunder.
SECTION 10.2 Modification and Waiver. No modification,
amendment or waiver of any provision of any Loan Document, nor any consent by
the Banks or the Agent to any departure therefrom by the Company or any
Subsidiary thereof shall be effective unless such modification, amendment,
waiver or consent shall be in writing and signed by the Required Banks and then
such modification, amendment, waiver or consent shall be effective only for the
period and on the conditions and for the specific instances and purposes
specified in such writing; provided, however, that (a) no provision of Article
XI hereof or any provision governing or providing for the rights or duties of
the Agent can be amended, modified or waived except with the written consent of
the Agent, (b) none of the following may be amended, modified or waived except
with the written consent of all the Banks: (i) the definition of "Required
Banks," or (ii) any provision governing or providing for: the rate of interest
payable on the Loans, the mandatory prepayments of principal thereof or fees or
other amounts payable to any of the Banks or the scheduled maturity of the
Loans, (c) none of the following may be amended, modified or waived except with
the written consent of all the Banks and the Agent: the definitions of
"Aggregate Commitment", "Commitment Period", Revolving Credit Loans", or any
other provisions of this Agreement that relate to the Loans or the Aggregate
Commitment, and (d) none of the following may be amended, modified or waived
except with the
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written consent of the Swing Loan Bank and the Agent: the definitions of
"Swing Loan Commitment" and "Swing Loans", Section 2.4(c) or any other
provisions of this Agreement that relate to the Swing Loans, the Swing Loan
Commitment, the making of Revolving Credit Loans to repay Swing Loans, or the
purchase of participations in Swing Loans. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances. By the execution hereof, each Bank
consents to the termination of the Subordination Agreement, dated as of June
30, 1993, entered into by the Company and Foothill Group.
SECTION 10.3 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND DUTIES OF THE PARTIES THEREUNDER AND WITH RESPECT TO INTEREST,
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 10.4 Notices. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be
deemed to have been given (a) three days after the date mailed if sent by
registered or certified mail, postage prepaid, return receipt requested, (b) on
the day of delivery if personally delivered, addresses, as the case may be, to
the Banks, the Agent at their respective Notice of Addresses set forth on
Exhibit A hereto, and the Company at 11111 Santa Monica Boulevard, Suite 1500,
Los Angeles, California 90025 (Attention: David C. Hilton) with a copy of each
notice to the Company to
Buchalter, Nemer, Fields & Younger
601 S. Figueroa Street, Suite 2400
Los Angeles, California 90017
(Attention: Robert C. Colton, Esq.)
or to such other person or address as any other shall designate to the others
from time to time in writing forwarded in like manner, or (c) on the day of
transmission if sent by telecopier and confirmed, on the same day as such
notice is sent, by telephonic notice and by one of the other two methods listed
above.
SECTION 10.5 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP,
consistently applied. Where any accounting determination or calculation is
required to be made under this Agreement, such determination or calculation
(unless otherwise provided) will be made in accordance with GAAP, consistently
applied except that if, because of a change in GAAP, a Person would have to
alter a previously utilized accounting method or policy in order to remain in
compliance with GAAP, such determination or calculation will continue to be
made in accordance with such Person's previous accounting methods or policy
unless the Required Banks otherwise direct. Unless otherwise specified herein
all financial statements required to be delivered hereunder, shall be prepared
and all financial records shall be maintained in accordance with GAAP.
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SECTION 10.6 Costs and Expenses; Indemnity.
(a) The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses incurred by (i) the Agent in
connection with the preparation, execution, delivery, filing, recording,
administration, modification, restatement or amendment of this Agreement, the
other Loan Documents and all instruments and documents delivered pursuant to
this Agreement or the other Loan Documents (including any Assignments, waivers
or consents that may be requested by the Company) including, without
limitation, each of the documents referred to in Section 5.1 hereof, (ii) the
Banks and the Agent in connection with enforcement (whether in the context of a
civil action, adversary proceeding, bankruptcy or otherwise, but excluding any
negotiated workout) of this Agreement, the other Loan Documents, and such other
instruments and documents, including, without limitation, reasonable attorneys'
fees (including "in-house" counsel), audit charges, appraisal fees, search fees
and filing fees, and (iii) the Agent in connection with any negotiated workout
of this Agreement, the other Loan Documents, and such other instruments and
documents, including, without limitation, reasonable attorneys' fees, audit
charges, appraisal fees, search fees and filing fees. The Company agrees to be
responsible for payment of the amounts referred to in this Section 10.6 whether
or not any Loans are made hereunder.
(b) The Company further agrees to indemnify and
save harmless the Banks (without reduction or abatement for any participations
sold to Participants), and the Agent and each of their respective officers,
directors, employees, agents, attorneys-in-fact and Affiliates from and against
any and all actions, causes of action, suits, investigations, proceedings,
losses, liabilities and damages and expenses (including, without limitation,
attorneys' fees) in connection therewith, whether or not such Person is a party
to any such proceeding, action, suit, or investigation (herein called the
"Indemnified Liabilities") incurred by the Banks, or the Agent or any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates as a result of, or arising out of or relating to any of the
transactions contemplated hereby or by the other Loan Documents, except for any
Indemnified Liabilities arising on account of the gross negligence or willful
misconduct of the Person seeking indemnity under this Section 10.6(b);
provided, however, that, if and to the extent such agreement to indemnify may
be unenforceable for any reason the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which
shall be permissible under applicable law. The agreements in this Section
10.6(b) shall survive the payment of the Notes and related obligations.
SECTION 10.7 WAIVER OF JURY TRIAL AND SETOFF. EACH OF THE
COMPANY, THE AGENT AND THE BANKS HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION
IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY INSTRUMENT OR DOCUMENT DELIVERED
PURSUANT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR THE VALIDITY,
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PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN THE COMPANY AND ANY OF THE BANKS OR
THE AGENT, BETWEEN ANY BANKS, AND BETWEEN THE AGENT AND THE BANKS; AND THE
COMPANY HEREBY WAIVES THE RIGHT TO INTERPOSE ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM AGAINST THE BANKS AND THE AGENT, OR ANY OF THEM, IN CONNECTION WITH
ANY SUCH LITIGATION, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, COUNTERCLAIM OR
CROSS-CLAIM; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE PRECLUDED FROM
ASSERTING ANY SUCH CROSS-CLAIM OR COUNTERCLAIM THAT, PURSUANT TO APPLICABLE
PROCEDURAL LAWS, COULD NOT BE RAISED IN A SEPARATE PROCEEDING.
SECTION 10.8 Captions. The captions of the various sections
and paragraphs of this Agreement have been inserted only for the purpose of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
SECTION 10.9 Setoff by Banks.
(a) The Company hereby acknowledges a setoff right
(to the extent given by applicable law) in favor of the Agent and the Banks for
Indebtedness to the Agent and the Banks upon any and all moneys, securities and
other property of the Company and/or its Subsidiaries and the proceeds thereof,
now or hereafter held or received by or in transit to, the Agent or any of the
Banks from or for any of them, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and also upon any and all deposits
(general or special) and credits of the Company and/or its Subsidiaries with,
and any and all claims of the Company and/or its Subsidiaries against, the
Agent or the Banks, at any time existing. Upon the occurrence of any Event of
Default, the Agent and the Banks are hereby authorized at any time and from
time to time, without notice, to setoff, appropriate and apply any or all items
herein-above referred to against all Indebtedness to the Agent and the Banks,
whether under this Agreement, the Notes, the 364 Day Agreement, the Letter of
Credit Agreement or otherwise, and whether now existing or hereafter arising.
The Agent and the Banks agree that any setoff shall be applied ratably based
upon the Indebtedness outstanding under this Agreement, the 364 Day Agreement
and the Letter of Credit Agreement. The Agent and each Bank agrees to notify
the Company, no later than five (5) Business Days after any such setoff and
application is made by the Agent or such Bank, as the case may be, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.
(b) Each holder of a Note agrees that if, through
the exercise of a right of setoff, counterclaim or otherwise, it shall obtain
payment with respect to any Note that results in its receiving more than its
pro rata share of the aggregate payments or reductions of all Revolving Credit
Notes (based on such holder's outstanding Loans) or the Swing Loan Note (based
on such holder's Percentage), it shall forthwith purchase from such other
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holders a participation in all of the Notes (or, in the case of the Swing Loan
Note, a participation in all of the participations in Swing Loan Note) held by
such other holders so that the amount of all unpaid Notes and participations
therein held by all holders shall be pro rata (based on such holder's
outstanding Loans in the case of Revolving Credit Notes and such holder's
Percentage in the case of the Swing Loan Note or participation therein).
(c) Each Bank agrees that if and to the extent
that any amount received by any Bank from the Company or any other obligor is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or judicially required to be repaid to a trustee, receiver or any other person
under any applicable creditors' remedy proceeding, including without limitation
any bankruptcy proceeding, the other Banks hereto shall purchase from the Bank
from which said amount is recovered an additional participation in such amount
equal to such Bank's pro rata share of that amount (based on such holder's
outstanding Loans in the case of recovered amounts previously credited against
Revolving Credit Notes and such holder's Percentage in the case of recovered
amounts previously credited against the Swing Loan Note or participations
therein). The amount invalidated, declared to be fraudulent or preferential,
set aside or judicially required to be repaid to a trustee, receiver or any
other person under any applicable creditors' remedy proceeding shall be deemed
to be an amount immediately due and owing from the Company.
(d) The Company expressly acknowledges the
foregoing arrangements in Sections 10.9(b) and (c) and agrees that any holder
of a participation in a Note so acquired may exercise any and all rights of
setoff, counterclaim or otherwise with respect to any and all moneys owing by
such holder to the Company or its Subsidiaries as fully as if such holder were
a holder of a Note in the amount of such participation. If all or any portion
of any such excess payment described in Section 10.9(b) is thereafter recovered
from the holder which received the same, the purchase provided for in Section
10.9(b) shall be rescinded to the extent of such recovery, without interest.
SECTION 10.10 Limitation of Liability. TO THE FULLEST EXTENT
PERMITTED BY LAW, NO CLAIM MAY BE MADE BY THE COMPANY AGAINST THE AGENT, ANY
BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF ANY
OF THEM FOR ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES IN RESPECT OF ANY CLAIM ARISING FROM OR RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION, OR
EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF
CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY). TO THE FULLEST EXTENT
PERMITTED BY LAW, THE COMPANY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM PRESENTLY EXISTS OR
ARISES HEREAFTER AND WHETHER OR NOT SUCH CLAIM IS KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
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SECTION 10.11 Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of the Company, the Agent, and the Banks
and their respective successors and assigns, and all subsequent holders of the
Notes, except that the obligations of the Banks to make Loans hereunder shall
not inure to the benefit of any successors or assigns of the Company.
SECTION 10.12 Counterparts. This Agreement may be executed
by the parties hereto individually or in any combination, in one or more
counterparts, each of which shall be an original and all of which shall
together constitute one and the same agreement.
SECTION 10.13 Interest.
(a) Usury Limitation. It is the intention of the
parties hereto to conform strictly to the usury laws now in force in the
appropriate controlling jurisdiction. Accordingly, if the transactions
contemplated hereby would be usurious, under any controlling law, then, in that
event, notwithstanding anything to the contrary in this Agreement, the Notes or
any other instrument or agreement entered into in connection therewith, it is
agreed as follows: (i) the aggregate of all charges which constitute interest
under the laws of the controlling jurisdiction that are contracted for,
chargeable or receivable under this Agreement or under any of the other
aforesaid instruments or agreements or otherwise in connection with the Notes
("Interest") shall under no circumstances exceed the maximum amount of interest
permitted by law (the "Maximum Amount"), and any Interest in excess of the
Maximum Amount shall be canceled automatically and shall not be payable under
this Agreement, the Notes or the aforesaid instruments or agreements and, if
theretofore paid, shall be either refunded to the Company or credited ratably
on the principal of the Notes; and (ii) in the event that the Maturity of the
Notes is accelerated either automatically or by reason of an election of the
Required Banks resulting from any Event of Default under this Agreement or
otherwise, or in the event of any voluntary or mandatory prepayment by the
Company permitted or required by this Agreement, the Notes or any of the other
aforesaid instruments or agreements, then Interest may never include more than
the Maximum Amount, and excess Interest, if any, shall be cancelled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall be either refunded to the Company or credited ratably
on the principal of the Notes; provided, that, nothing contained in this
Section 10.13 shall be deemed to imply that the laws of any State other than
the State of California shall govern this Agreement or the Notes.
(b) Recapture. If, at any time, Interest would
exceed the Maximum Amount but for the foregoing limitation, Interest shall
remain at the Maximum Amount, notwithstanding any subsequent reduction of
Interest, until the total amount of Interest equals the amount of Interest that
would have accrued if Interest had not been limited to the Maximum Amount, but
nothing
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in this paragraph shall affect or extend the Maturity of any of the Notes.
If, at Maturity or final payment of any of the Notes, the
total amount of Interest paid is less than the total amount of Interest that
would have accrued had Interest not been limited to the Maximum Amount, the
Company agrees, to the full extent permitted by law, to pay to the Banks an
amount equal to the positive difference, if any, derived by subtracting (i) the
amount of Interest that accrued on the Notes pursuant to the provisions of
Section 10.13(a) hereof from (ii) the lesser of (A) the amount of Interest that
would have accrued on such Notes if the Maximum Amount had at all times been in
effect, and (B) the amount of Interest that would have accrued if Interest on
such Notes, not limited to the Maximum Amount, had at all times been in effect.
SECTION 10.14 Attorneys' Fees. As used in this Agreement,
"attorneys' fees" shall include, without limitation, all reasonable fees of
counsel (including, without limitation, "in-house" counsel to the Agent or any
Bank) arising from such services (including, without limitation, appeals) and
all reasonably incurred expenses, costs, charges and other fees of such
counsel, and all such fees shall constitute Indebtedness of the Company to the
Agent and the Banks under this Agreement. Without limiting the generality of
the foregoing, such expenses, costs, charges and fees may include: paralegal
fees, costs and expenses; accountants' fees, costs and expenses; court costs
and expenses; photocopying and duplicating expenses; long distance telephone
charges; air express charges; telegram charges; secretarial overtime charges;
and expenses for travel, lodging and food paid or incurred in connection with
the performance of such legal services. Without prejudice to the survival of
any other agreement of the Company hereunder, the agreements and obligations of
the Company contained in Sections 2.6, 2.9 and 10.6(a) shall survive the
payment in full of the Notes and other amounts hereunder and under the Loan
Documents.
SECTION 10.15 Severability. Any provision of this Agreement
prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, or modified to conform with such
laws, without invalidating the remaining provisions of this Agreement, and any
such prohibition in any jurisdiction shall not invalidate such provisions in
any other jurisdiction.
SECTION 10.16 Confidentiality. The Agent, Bank, Participant
and Assignee or other transferee is hereby authorized to deliver copies of any
financial statements and any other information relating to the business,
operations or financial condition of the Company or any Subsidiary thereof that
may be furnished to it hereunder or otherwise (including without limitation any
information developed by or on behalf of the Agent or any Bank in connection
with audits performed pursuant to Section 6.6 hereof), to any regulatory or
administrative body or agency having jurisdiction over such Agent, Bank,
Participant or
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Assignee or to any Person that shall, or shall have any right or obligation to,
succeed to all or any part of the interest of such Agent, Bank, Participant or
Assignee in, this Agreement, the other Loan Documents and any security herein
or therein provided for or otherwise securing the Notes. Except as provided
above, the Agent and the Banks agree that from the date hereof, they will not,
without the prior written consent of the Company, submit or disclose to or file
with any Person other than a Bank or a Participant or a Person that may become
a Bank or a Participant, any confidential or non-public information relating to
the Company, except: (a) disclosure required by subpoena or similar process or
applicable law or regulations; (b) disclosure to counsel, auditors or other
professional advisors to the Agent or Banks provided that such affiliates shall
agree to keep such information confidential as set forth herein; (c) disclosure
in connection with any litigation or dispute involving the Company, any
Subsidiary thereof, Foothill Group and the Agent or any Bank; (d) disclosure of
information which was in the possession of the Agent or any Bank or their
affiliates prior to the Company furnishing it to the Agent or such Bank; (e)
disclosure of information which was received by the Agent or any Bank to the
banks party to the 364 Day Agreement or Letter of Credit Agreement provided
that such parties shall agree to keep such information confidential as set
forth herein; or (f) disclosure of information which was received by the Agent
or any Bank, without restriction as to its disclosure or use, from a person
who, to the Agent's or Bank's knowledge or reasonable belief, was not
prohibited from disclosing it by any duty of confidentiality.
SECTION 10.17 Loss, Theft, etc. of Loan Notes. Upon receipt
by the Company of (a) an affidavit of an authorized officer of any Bank setting
forth the fact of loss, theft, or destruction of any Note and of its ownership
of the Note at the time of such loss, theft, or destruction or (b) a mutilated
Note, such affidavit or mutilated Note shall be accepted as satisfactory
evidence thereof and no further indemnity shall be required as a condition to
the execution and delivery of a new Note of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note without expense to the holder thereof,
provided that such Bank agrees in writing to indemnify the Company.
SECTION 10.18 Entire Agreement. This Agreement and the Loan
Documents constitute the entire agreement among the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect
to the subject matter hereof is superseded by this Agreement and the other Loan
Documents.
SECTION 10.19 Relief From Bankruptcy Stay. The Company
agrees that, in the event that the Company or any Subsidiary thereof shall (a)
file with any bankruptcy court of competent jurisdiction or be the subject of
any petition under the United States Bankruptcy Code, as amended, (b) be the
subject of any order for relief issued under the United States Bankruptcy Code,
(c) file or be the subject of any petition seeking any reorganization,
arrangement, composition, readjustment,
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liquidation, dissolution, or similar relief under any present or future federal
or state act or law relating to bankruptcy, insolvency, or other relief for
debtors, (d) have sought or consented to or acquiesced in the appointment of
any trustee, receiver, conservator, or liquidator, or (e) be the subject of any
order, judgment, or decree entered by any court of competent jurisdiction
approving a petition filed against such party for any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency, or relief for debtors, the Agent and the Banks shall
thereupon be entitled and the Company irrevocably consents and agrees to cause
each such Subsidiary to consent to immediate and unconditional relief from any
automatic stay imposed by Section 362 of the United States Bankruptcy Code, or
otherwise, on or against the exercise of the rights and remedies otherwise
available to the Agent and the Banks as provided for herein, in the Notes and
in the other Loan Documents and as otherwise provided by law, and the Company
hereby irrevocably waives and agrees to cause each such Subsidiary to waive any
right to object to such relief and will not contest, and will cause any such
Subsidiary not to contest, any motion by the Agent or the Banks seeking relief
from the automatic stay and the Company will cooperate and will cause each such
Subsidiary to cooperate with the Agent and the Banks, in any manner requested
by the Agent or the Banks, in their efforts to obtain relief from any such stay
or other prohibition.
ARTICLE XI
AGENCY
The Company and the Banks agree with the Agent as follows:
SECTION 11.1 Appointment and Actions.
(a) Each Bank hereby irrevocably designates and
appoints Bank of America National Trust and Savings Association as the Agent of
such Bank under the Loan Documents (including any additional documents referred
to therein as "Loan Documents"), and each such Bank hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions
hereof and thereof and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms hereof and thereof, together with
such other powers as are reasonably incidental thereof. Notwithstanding any
provision to the contrary in this Agreement or any of the other Loan Documents,
the Agent shall not have any duties or responsibilities except those expressly
set forth herein or therein, nor any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against
the Agent.
(b) The Agent may execute any of its duties by or
through agents or attorneys-in-fact and shall be entitled to
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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.
(c) Neither of 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 the Agent or any
of its officers, directors, employees, agents, attorney-in-fact or Affiliates
under or in connection with any of the Loan Documents (except for the Agent's
own gross negligence or willful misconduct and the gross negligence or willful
misconduct of any of the Agent's officers, directors, employees, agents,
attorney-in-fact or Affiliates), or (ii) responsible in any manner to any Bank
or Participant for any recitals, statements, representations or warranties made
by the Company, any Subsidiary thereof, or Foothill Group contained herein or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with any of the Loan
Documents, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any of the Loan Documents or for any failure
of any of the Company, any Subsidiary thereof, or Foothill Group to perform any
obligations under any of the Loan Documents. The Agent shall not be under any
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of any of the
Loan Documents, or to inspect the properties, books or records of the Company,
any Subsidiary thereof, or Foothill Group.
(d) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any 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 Company and Foothill Group),
independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent.
(e) The Agent shall be fully justified in failing
or refusing to take any action under any of the Loan Documents unless it first
shall receive such advice or concurrence of the Banks as it deems appropriate
or as may be required by the specific terms of this Agreement or the other Loan
Documents or be indemnified to its satisfaction by the Banks against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. In all cases, the Agent shall be protected
fully in acting, or in refraining from acting, under any of the Loan Documents
in accordance with a request of the Required Banks (or all of the Banks if
specifically required by the terms of this Agreement or the other
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Loan Documents), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks and all future holders of
the Notes and all Participants.
(f) The Agent shall not be deemed to have
knowledge or notice of any change in the Company's commercial paper rating or
the occurrence of any Default or Event of Default or any default under any
document, agreement or instrument delivered in connection herewith, or of the
occurrence of any default under the 364 Day Agreement and/or the Letter of
Credit Agreement, unless the Agent shall have actual knowledge thereof or shall
have received notice from any Bank or the Company describing such event, act or
condition, Default or Event of Default and stating that such notice is a notice
required by Section 6.9 hereof. In the event that the Agent has such actual
knowledge or receives such a notice, the Agent shall give notice thereof to the
Banks. The Agent shall take such action with respect to such event, act or
condition or Default or Event of Default as reasonably shall be directed by the
Required Banks (or all of the Banks if specifically required by the terms of
this Agreement or the other Loan Documents) in writing; provided that, unless
and until the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such event, act or condition, Default or Event of
Default as the Agent shall deem advisable in the best interests of the Banks.
(g) Until such time as the Agent shall have been
notified in writing duly executed on behalf of any Bank by an officer thereof
duly authorized to take such action that such Bank has sold all or a portion of
the Loans made by, or the Commitment of, such Bank, the Agent may treat such
Bank as the owner or holder of such Bank's share of the Loans or Aggregate
Commitment, as applicable, in accordance with the amounts thereof advanced by
such Bank.
(h) At any time or times, in order to comply with
any legal requirement in any jurisdiction, the Agent may appoint another bank
or trust company or one or more other Persons, either to act as co-agent or
co-agents, jointly with the Agent, or to act as separate agent or agents on
behalf of the Banks with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which, in the discretion of the Agent, may include
provisions for the protection of such co-agent or separate agent similar to the
provisions of this Article XI).
(i) The Company and the Banks acknowledge and
consent to the Agent acting as Agent under the 364 Day Agreement and the Letter
of Credit Agreement and waive any conflict or potential conflict that may occur
as a result of its acting in such capacity.
SECTION 11.2 Independent Credit Decisions. Each Bank
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or
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Affiliates have made any representations or warranties to it and that no act by
the Agent hereafter taken, including any review of the affairs of the Company,
its Subsidiary and Foothill Group shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon the Agent or the
other Banks, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Company, its Subsidiary, Foothill Group and made its own decision to enter into
this Agreement. Each Bank also represents that it will continue, independently
and without reliance upon either the Agent or the other Banks, and based on
such documents and information as it shall deem appropriate at the time, to
make its own credit analysis, appraisals and decisions in taking or not taking
action hereunder and under the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, prospects, financial and other condition and
creditworthiness of the Company and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
operations, property, prospects, financial and other condition or
creditworthiness of the Company, any Subsidiary thereof, or Foothill Group that
may come into the possession of the Agent or any of its respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 11.3 Indemnification of Agent. Each Bank agrees to
indemnify the Agent (to the extent not reimbursed by the Company), ratably
(according to such Bank's Loans or, if no Loans are then outstanding, according
to such Bank's Percentage, in either case as of the time of the action,
inaction or other event giving rise to the liability to be indemnified), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that at any time (including without limitation at any time following
the payment of any of the Notes) may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement, the
other Loan Documents or the transactions contemplated hereby or thereby or any
action taken or omitted to be taken by the Agent under or in connection with
any of the foregoing; provided that no Bank shall be liable to the Agent for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this Section 11.3 shall survive the payment of the Notes and
related obligations.
SECTION 11.4 Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Company. Upon any
such resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor
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Agent shall have been so appointed by the Required Banks, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States or of any State thereof, or an Affiliate of such
bank, having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed 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 under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XI shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Loan Documents.
ARTICLE XII
PARTICIPATION; SYNDICATIONS AND TRANSFERS
SECTION 12.1 Participations.
(a) In addition to participations in Swing Loans
as contemplated by Section 2.4(c) hereof, each Bank may grant participations to
other commercial banks of such Bank's choosing in all or any portion of its
rights and/or obligations hereunder, under such Bank's Commitment and the
Loans. As between the Company or the Agent and such Bank, no Bank shall be
relieved of its Commitment or any of its obligations hereunder as a result of
the granting of any participation. No Bank shall transfer or grant any
participating interest under which the participant shall have rights to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in Section 10.2. The
Company hereby acknowledges and agrees that each Participant may rely on, and
possess rights under, any opinions, certificates, or other instruments
delivered under or in connection with this Agreement or the other Loan
Documents; provided, however, that the Company shall only be required to
deliver information and data required pursuant to this Agreement to the Bank
granting a participation (in whole or in part) in its Commitment, the Loans,
the Notes and other rights; and provided, further, that no Participant shall be
entitled to any payment from the Company in an amount greater than that which
the applicable originating Bank would have been entitled to under this
Agreement.
(b) Each Bank may furnish to Participants and
Assignees (including, without limitation, prospective Participants and
Assignees) any information concerning the Company or its Subsidiaries received
by such Bank from time to time pursuant to this Agreement; provided, however,
that each Participant and Assignee to whom any such information is
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delivered shall agree not to use or to disclose to any other Person such
information except as provided in Section 10.16.
SECTION 12.2 Syndications and Transfers.
(a) Subject to the provisions of this Section
12.2, any Bank may execute an assignment and acceptance substantially in the
form of Exhibit G hereto, with appropriate insertions (herein individually
called an "Assignment" and collectively called the "Assignments"), whereby such
Bank (herein individually called an "Assignor" and collectively called the
"Assignors") shall assign, without recourse and without representation or
warranty except as specifically set forth in said Assignment, to one or more
commercial banks (herein individually called an "Assignee" and collectively
called "Assignees") all or any part of the Assignor's rights and benefits, and
delegate all or any part of the Assignor's obligations, under this Agreement,
its Commitment, the Loans and the Notes. Notwithstanding the foregoing, any
Bank may execute an assignment with the Federal Reserve.
(b) Upon execution, delivery and acceptance of
each Assignment and subject to the payment by the Assignor of a $2,500
assignment fee to the Agent, from and after the effective date specified
therein, which effective date shall be at least five (5) Business Days after
the execution thereof, the Company, the Agent, and the Banks agree that, to the
extent of any such Assignment,
(i) the Assignee shall, in addition to any
rights, benefits and obligations hereunder held by it
immediately prior to such effective date, have the rights,
benefits and obligations of a Bank under this Agreement, the
Assignor's Commitment, the applicable Loans, and the
applicable Notes as it would have if it were a Bank hereunder
to the extent that the same have been assigned and delegated
to it pursuant to such Assignment; and
(ii) the Assignor shall, to the extent that
rights, benefits and obligations hereunder have been assigned
and delegated by it pursuant to such Assignment, relinquish
its rights and benefits and be released from its obligations
under this Agreement (and, in the case of an Assignment
covering all or the remaining portion of the Assignor's
rights, benefits and obligations under this Agreement, the
Assignor shall cease to be a Bank hereunder), except that in
all cases the Assignor shall remain entitled to the rights and
benefits arising under Sections 2.6, 2.9, 3.4, and 10.6, and
shall remain liable with respect to any of its obligations
arising under Section 10.13 and Article XI, with respect to
any matters arising prior to the effective date of any such
Assignment; provided, however, that:
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(A) the Agent and each Bank and the
Company shall be entitled to continue to deal solely
and directly with the Assignor in connection with the
interests so assigned and delegated to the Assignee
until written notice of such Assignment, together
with addresses and related information with respect
to the Assignee, shall have been given to the Agent
and each Bank and the Company by the Assignor and the
Assignee, and
(B) except with the prior consent
of the Agent and the Company in their sole
discretion, no Bank may effect any Assignment if
either (I) such Bank would continue to be a Bank
thereafter and would have a Commitment of less than
$5,000,000 or (II) the proposed Assignee thereafter
would have a Commitment of less than $5,000,000.
(c) Upon its receipt of an Assignment, completed
and executed by the Assignor and an Assignee in substantially the form of
Exhibit G hereto, together with the Note or Notes subject to such Assignment,
the Agent shall accept such Assignment and forward a photostatic copy thereof
to the Company. Within five (5) Business Days after its receipt of a
photostatic copy of such Assignment, the Company shall execute and deliver to
the Agent, a new Note or Notes payable to the order of the Assignee in an
amount equal to the Commitment assumed by it pursuant to such Assignment and as
shown on Exhibit A as amended as provided in (d) below. Such new Note or Notes
shall be dated the effective date of such Assignment, shall be payable to the
order of the Assignee and shall constitute Note(s) under this Agreement. Such
new Note or Notes shall be in replacement and substitution for, and not in
payment of, the Notes delivered to the Agent by the Assignor. The Agent shall
deliver such new Note or Notes to the payee or payees thereof and shall mark
the Note or Notes previously held by the Assignor as "replaced" and shall
deliver the same to the Company.
(d) Within five (5) Business Days after each
Assignment has been accepted by the Agent in accordance with the terms hereof,
the Company and the Agent shall revise Exhibit A hereto to set forth (i) the
Commitment of each Assignee and such Assignee's name and address and (ii) the
Commitment, if any, retained by the Assignor, and the appropriate official of
each of the Company and the Agent shall initial each such revision.
THIS AGREEMENT CONTAINS A WAIVER OF TRIAL BY JURY. SEE
SECTION 10.7 HEREOF.
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IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of the
date first above written.
FOOTHILL CAPITAL CORPORATION
By: __________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, solely as
Agent
By: __________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: __________________________
Title:________________________
By: __________________________
Title:________________________
(Signatures continue)
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REVOLVING CREDIT AGREEMENT
AMONG
FOOTHILL CAPITAL CORPORATION
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS AGENT
AND
THE BANKS SIGNATORY HERETO
DATED AS OF JUNE 30, 1994
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II
AMOUNT AND TERMS OF LOANS
2.1 Commitments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 Loan Notes; Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Procedures Applicable to Borrowings and Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.4 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5 Interest on Delinquent Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.6 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.8 Payments on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.9 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.10 Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.11 Change in Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE III
FEES AND PAYMENTS
3.1 Fees Payable to Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.2 Agency Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Status and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.2 Organizational Status of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3 Location of Offices, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4 Organizational Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.5 Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.6 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.7 No Burdensome Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.8 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.9 Good Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.10 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.11 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.13 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.14 Trademarks, Patents, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.15 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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4.17 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.18 Environmental Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.19 No Default or Event of Default; Compliance with Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.21 Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.22 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.24 Ownership and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.25 Partnerships and Other Affiliated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.26 Other Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Initial Loans and Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.3 Conditions to Extension of Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.4 Conditions to New Bank or Increase in Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1 Reporting and Information Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.4 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.5 Properties in Good Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.6 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.7 Pay Indebtedness and Perform Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.8 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.9 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.10 Environmental Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.13 Maintain Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII
FINANCIAL COVENANTS
7.1 Adjusted Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.3 Unused Committed Bank Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Purchased Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.5 Industry Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.6 Settlement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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ARTICLE VIII
NEGATIVE COVENANTS
8.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.3 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.4 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.5 Merger, Consolidation, Sale and Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.6 Permitted Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.7 Amendments of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.9 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.10 Borrower Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.11 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.12 Consolidated Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.13 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.2 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.3 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.4 Rights and Remedies Not Waived . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE X
MISCELLANEOUS
10.1 Collection Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.2 Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.3 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.5 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.6 Costs and Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.7 WAIVER OF JURY TRIAL AND SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.9 Setoff by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.10 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.11 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.17 Loss, Theft, etc. of Loan Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.19 Relief From Bankruptcy Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
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ARTICLE XI
AGENCY
11.1 Appointment and Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.2 Independent Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.3 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.4 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XII
PARTICIPATION; SYNDICATIONS AND TRANSFERS
12.1 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.2 Syndications and Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
EXHIBITS
A Commitments and Addresses of the Banks
B-1 Form of Notice for Extension of Commitments
B-2 Form of Supplement for Increase in Commitments
B-3 Form of Supplement for New Bank
C-1 Form of Revolving Credit Note
C-2 Form of Term Loan Note
D-1 Form of Loan Request
D-2 Form of Term Loan Conversion Request
E Form of Opinion of Counsel
F Form of Foothill Group Subordination Agreement
G Form of Assignment and Acceptance
SCHEDULES
I Subsidiary Information
II Location of Offices
III Tax Sharing Arrangements
IV Certain Transactions with Affiliates
V Permitted Senior Debt
VI Permitted Subordinated Debt
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REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT, dated as of June 30, 1994, among
FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"), the banks
that from time to time are signatories hereto (including Assignees and New
Banks (as hereinafter defined), collectively, the "Banks" and individually, a
"Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
banking association ("BOA"), as a Bank and as Agent (the "Agent") for the
Banks.
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the
terms defined in the recitals hereto shall have the respective meanings
ascribed thereto in said recitals and the following terms shall have the
following respective meanings:
"Adjusted Consolidated Net Worth" means, as of any
date of calculation, the amount, if any, by which the Eligible Assets of the
Company and its Consolidated Subsidiaries exceeds the Total Liabilities of the
Company and its Consolidated Subsidiaries as of such date.
"Adjusted LIBO Rate" means, with respect to any
Interest Period applicable to any LIBO Rate Loan, the rate of interest per
annum, as determined by the Agent, equal to the quotient (rounded upward to the
nearest 1/100 of 1.00% or, if there is no nearest 1/100 of 1.00%, then to the
next higher 1/100 of 1.00%) obtained by dividing the LIBO Rate by an amount
equal to the result obtained by subtracting the Eurodollar Reserve Percentage
(expressed as a decimal) from 1.00. The Adjusted LIBO Rate shall be adjusted
automatically on and as of the opening of business on the effective date of any
change in the Eurodollar Reserve Percentage.
"Advances" means unsecured borrowings by the Company
from Foothill Group, in an aggregate outstanding principal amount not exceeding
$5,000,000 at any one time, that (a) are evidenced by demand promissory notes,
(b) are subordinated pursuant to the Foothill Group Subordination Agreement and
(c) bear interest at no greater rate and involve fees and other amounts in
respect thereof that are no higher than would be available at the time from a
Person that is not an Affiliate.
"Affiliate" means any Person that, directly or
indirectly, controls or is controlled by or is under common control with any
other Person and, without limiting the generality of the foregoing, shall
include any Person that (a) beneficially owns or holds 5% or more of the Voting
Interest of such other Person (determined either by number of shares or number
of votes) or (b) is an "associate" (as such term is defined in Rule 405 under
the Securities Act of 1933, as in
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effect on the Effective Date) of such other Person. For 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, means 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 Interests, by contract or otherwise.
"Agent" has the meaning specified at the beginning of
this Agreement.
"Aggregate Commitment" means, as of any date,
$100,000,000, as the same may be (a) reduced from time to time or terminated
pursuant to Sections 2.1(c), 2.1(d), or 9.1 hereof or (b) increased from time
to time pursuant to Sections 2.1(e) or 2.1(f) hereof; provided, however, the
Aggregate Commitment shall not exceed $125,000,000. As of the Effective Date,
the Commitments of the Banks shall be as set forth on Exhibit A hereto, as the
same may be amended from time to time as herein provided.
"Agreement" means this Revolving Credit Agreement, as
the same may be amended and supplemented from time to time.
"Allowance for Credit Losses" means items of the type
included on the Consolidated balance sheet of the Company and its Consolidated
Subsidiaries as at December 31, 1993, within the heading "Allowance for Credit
Losses".
"Applicable Margin" means, during the applicable
periods or portions thereof, (a) unless an Event of Default has occurred and is
continuing, (i) 0.00% per annum with respect to Reference Rate Loans, and (ii)
0.75% per annum with respect to LIBO Rate Loans, and (b) during the continuance
of an Event of Default and prior to the earlier of Maturity or the expiration
of the applicable Interest Period, if any, (i) 2.00% per annum with respect to
Reference Rate Loans, and (ii) 2.75% per annum with respect to LIBO Rate Loans;
provided, however, for each day that the Company's commercial paper does not
have an Investment Grade Rating from at least two Rating Agencies, each
percentage set forth in clauses (a) and (b) above shall be increased by 0.25%
per annum.
"Assignee" or "Assignees" shall have the meaning set
forth in Section 12.2 hereof.
"Assignment" or "Assignments" shall have the meaning
set forth in Section 12.2 hereof.
"Authorized Representative" means, with respect to
the Company or Foothill Group, the respective president, executive vice
president, chief financial officer, and any other officer of the Company or
Foothill Group designated as such from time to time in a written notice to the
Agent, accompanied by an incumbency certificate with specimen signature
included.
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"Banking Day" means any Business Day on which
dealings in deposits in Dollars are transacted in the London interbank market.
"Board" means the Board of Governors of the Federal
Reserve System, or any Person that hereafter shall succeed to its duties with
respect to the regulation of margin credits or the establishment of reserve
requirements for commercial banks.
"Business Day" means any day other than (a) a
Saturday, Sunday or public holiday under the laws of the United States of
America, the State of California, or the State of New York, or (b) any other
day on which banking institutions in the State of California or the State of
New York are authorized or required by law or executive order not to be open
for the conduct of their commercial banking business.
"Capital Interest" means, with respect to (a) any
corporation, common stock, preferred stock, and any and all shares or other
equivalents (however designated) of any other corporate stock, of such
corporation, and (b) any partnership, partnership interests, whether general,
special or limited, in such partnership.
"Capitalized Lease" means at any time any lease which
is, or is required under GAAP to be, capitalized on the balance sheet of the
lessee at such time, and "Capitalized Lease Obligation" of any Person at any
time means the aggregate amount which is, or is required under GAAP to be,
reported as a liability on the balance sheet of such Person at such time as
lessee under a Capitalized Lease.
"Change of Control" means:
(a) In the case of the Company,
(i) an issuance by the Company of its
Voting Interests, or a sale or other disposition of Voting
Interests of the Company, whether by the Company, Foothill
Group, any other Subsidiary of Foothill Group, or any other
Person, which issuance, sale or other disposition has not been
consented to by the Required Banks and which either:
(A) results in Foothill Group,
directly or through one or more of its Subsidiaries,
owning or controlling less than 100% of the then
outstanding Voting Interests of the Company, or
(B) occurs during any period in
which Foothill Group, directly or through one or more
of its Subsidiaries, owns or controls less than 100%
of the then outstanding Voting Interests of the
Company and does not result in an increase in the
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percentage of such Voting Interests so owned and controlled by
Foothill Group; or
(ii) the election of a majority of the
corporate directors of the Company against the recommendation
of the management or board of directors of the Company that
was incumbent immediately prior to such election; or
(iii) the ceasing of continuous and active
participation in the Company's operations with
responsibilities at least equal to those assumed as of the
date hereof by any two or more of John F. Nickoll, Peter E.
Schwab and David C. Hilton.
(b) In the case of Foothill Group,
(i) the acquisition by any Person (other
than Foothill Group) or by any two or more Persons acting in
concert (which group of Persons will be deemed to be a
separate "Person" that "acquires" the Voting Interests held by
the members of such group upon its formation for purposes of
this definition), of 50% or more of the then outstanding
Voting Interests of Foothill Group, which acquisition has not
been consented to by the Required Banks; or
(ii) the election of a majority of the
corporate directors of Foothill Group against the
recommendation of the management or board of directors of
Foothill Group that was incumbent immediately prior to such
election.
(c) For purposes hereof, in any case where Voting
Interests of the Company are owned or controlled by a
Subsidiary of a Person, the percentage of Voting Interests of
the Company deemed to be owned or controlled by such Person as
a result of such Subsidiary's ownership or control shall be
determined by multiplying the percentage of the Voting
Interests of such Subsidiary which are owned and controlled by
such Person by the percentage of the Voting Interests of the
Company which are owned and controlled by such Subsidiary.
(d) In the case of a Change of Control event
described in clause (b)(i) of this definition, if all of the
then outstanding unsecured senior debt securities of the
Person acquiring the Voting Interests have an Investment Grade
Rating, the consent of the Banks to such event shall not
unreasonably be withheld. Notwithstanding the consent of the
Banks to a Change of Control event described in clause (b)(i)
of this definition, if within six months immediately following
any such event the rating of any of the then outstanding
unsecured senior debt securities of the
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Person having acquired the Voting Interests is lower than an
Investment Grade Rating, such occurrence shall be deemed a
separate Change of Control.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. Reference to sections
of the Code shall be construed also to refer to any successor sections.
"Commitment" of any Bank shall mean, as of any date
of calculation, the maximum aggregate amount of Revolving Credit Loans or,
following the Term Loan Effective Date, the maximum amount of the Term Loan
such Bank is obligated to make or have outstanding in accordance with the
provisions of this Agreement as of such date (determined without regard to
compliance by the Company with the provisions hereof). As of the Effective
Date, the respective Commitments of the Banks shall be as set forth on Exhibit
A hereto, as the same may be amended from time to time as herein provided.
"Commitment Period" means, with respect to the
Revolving Credit Commitment of any Bank, the period from and including the
Effective Date or, in the case of a New Bank, the New Bank Effective Date to
and excluding the Revolving Credit Termination Date applicable to such Bank.
"Company" has the meaning specified at the beginning
of this Agreement.
"Consolidated" or "consolidated" means, as applied to
any financial or accounting term, determined on a consolidated basis in
accordance with GAAP for the applicable Person.
"Consolidated Assets" means, as of any date of
calculation, the consolidated assets of the Company and its Consolidated
Subsidiaries on the calculation date.
"Consolidated Capital Funds" means, as of any date of
calculation, the sum of Consolidated Net Worth and Subordinated Debt.
"Consolidated Net Income" means, for any period of
calculation, the consolidated net income (after deduction of taxes chargeable
to the Company or its Consolidated Subsidiaries) of the Company and its
Consolidated Subsidiaries for such period.
"Consolidated Net Worth" means, as of any date of
calculation, the excess of assets of the Company and its Consolidated
Subsidiaries over their liabilities on the calculation date.
"Consolidated Subsidiaries" of a Person means, as of
any date of determination, those Subsidiaries whose accounts are or should be
consolidated with those of such Person in accordance with GAAP.
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"D&P" means Duff & Phelps Credit Rating Company or
any successor thereto.
"Default" means an event which would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"Delinquent Receivable" means the full unpaid amount
of a Finance Receivable (excluding Discount Receivables) on which an
installment payment of accrued interest, finance charges or discount or
outstanding principal has not been made within 90 days of its due date
(including any such obligations relating to property or assets which are the
subject of foreclosure proceedings, whether judicial or otherwise), and
includes the full amount of any such obligations with respect to which there
are arrearages, notwithstanding that installment payments of principal or
interest are currently being made.
"Discount Receivable" means a debt instrument (of a
type that meets the criteria for Finance Receivables set forth in clauses (a)
through (c), inclusive, of the definition thereof, other than any requirement
for security) originating from a Person other than the Company or any
Subsidiary thereof which is acquired at less than face or par value and, at the
time of acquisition, is contractually in default, but without defense, set-off
or counterclaim.
"Dollars" and the sign "$" each means lawful money of
the United States.
"Effective Date" means the date on which (a)
counterparts of this Agreement executed and delivered by the parties hereto
shall have been received by the Company and the Agent, and (b) the conditions
precedent set forth in Article V hereto shall have been satisfied or waived in
writing by the Agent on behalf of or at the request of the Required Banks.
"Eligible Assets" means, as of any date of
calculation, an amount equal to the sum (without duplication) of the following
assets of the Company and its Consolidated Subsidiaries:
(a) cash, plus the cash surrender value of life
insurance policies, if any; plus
(b) Permitted Liquid Investments and Investments
permitted by Section 8.4 of this Agreement; plus
(c) prepaid expenses; plus
(d) Repossessed Assets, at the lower of cost or
estimated net realizable value; plus
(e) the Net Amount of Finance Receivables less an
amount equal to the greater of (i) Allowance for Credit Losses, as shown on the
Consolidated balance sheet of the Company and its
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Consolidated Subsidiaries as of such date, or (ii) an amount equal to the sum
of 75% of Non-Performing Assets as of such date.
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended, and any successor statute of similar import,
and regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" means any Person that controls, is
controlled by, or is under common control with the Company or any Subsidiary
thereof within the meaning of Section 4001 of ERISA.
"Eurodollar Reserve Percentage" means, with respect
to the calculation of the Adjusted LIBO Rate, the percentage (expressed as a
decimal) that is in effect for any date included in such calculation, as
prescribed by the Board for determining the maximum reserve requirement
(including without limitation any basic, marginal, special, supplemental or
emergency reserves and determined without benefit of any credits for proration,
exceptions, or offsets that may be available from time to time) for a member
bank of the Federal Reserve System applicable to Eurocurrency funding by such
member bank, currently referred to as "Eurocurrency liabilities" in Regulation
D of the Board (or in respect of any other category of liabilities, which
includes deposits by reference to which the interest rate on LIBO Rate Loans is
determined, or any category of extensions of credit or other assets, including
loans by a non-United States office of the Agent to United States residents).
"Event of Default" has the meaning specified in
Section 9.1 hereof.
"FCC Holdings" means FCC Holdings Limited, a
California corporation.
"Finance Receivables" means:
(a) accounts receivable arising from
commercial loans entered into or acquired by the Company or
any of its Consolidated Subsidiaries, as lender, in the
ordinary course of business, but only if such commercial loans
are secured by accounts receivable, inventory, equipment
and/or other property of the account debtor/borrower,
(b) accounts receivable arising from secured
equipment leases entered into or acquired by the Company or
any of its Consolidated Subsidiaries, as lessor, in the
ordinary course of business,
(c) accounts receivable arising from secured
equipment installment sales contracts entered into or acquired
by the Company or any of its Consolidated
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<PAGE> 109
Subsidiaries, as seller, in the ordinary course of business,
and
(d) accounts receivable arising from "loan"
participations in transactions of a type described in clauses
(a) through (c) above, acquired in the ordinary course of
business by the Company or any of its Consolidated
Subsidiaries as participant, but only if such participations
vest in such participant an enforceable beneficial ownership
interest in the subject loan, lease or sales contract and the
accounts receivable arising therefrom, all of which are of the
types included on the audited Consolidated financial
statements of the Company and its Consolidated Subsidiaries as
at December 31, 1993, within the heading "Finance Receivables"
and including, without limitation, Discount Receivables,
Non-Public Debt Instruments and Public Debt Securities.
"Fitch" means Fitch Investor's Service, Inc. or any
successor thereto.
"Foothill Group" means The Foothill Group, Inc., a
Delaware corporation.
"Foothill Group Subordinated Debt" means the
Indebtedness of the Company to Foothill Group listed on Schedule VI and any
additional Junior Subordinated Debt issued to Foothill Group as Permitted
Subordinated Debt, including Advances.
"Foothill Group Subordination Agreement" means the
subordination agreement executed by the Company and Foothill Group
substantially in the form of Exhibit F hereto, as amended or supplemented from
time to time.
"GAAP" means generally accepted accounting principles
as such principles in the United States of America are in effect from time to
time.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof and any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government, and any
corporation or other entity owned or controlled (through ownership of Capital
Interests or otherwise) by any of the foregoing.
"Guaranties" means guaranties, endorsements (other
than for collection in the ordinary course of business), and other contingent
obligations of such Person, including obligations to make Investments, in
respect of or in connection with the obligations of others.
"Hazardous Materials" means and includes, without
limitation, gasoline, petroleum products, explosives, radioactive materials,
radon, hazardous materials, hazardous wastes,
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<PAGE> 110
hazardous or toxic substances, polychlorinated biphenyls or related or similar
materials, asbestos or any material containing asbestos, or any other substance
or material as may be defined as a hazardous or toxic substance by any Federal,
state or local environmental law, ordinance, rule or regulation.
"Indebtedness" of a Person means and includes,
without duplication,
(a) all items that, in accordance with GAAP, would
be included in determining total liabilities as shown on the
liability side of a balance sheet as at the date Indebtedness
of such Person is to be determined, other than distributions
on Capital Interests declared, but not paid (to the extent
such distributions are not Restricted Payments),
(b) any liability secured by any mortgage, pledge,
lien or security interest on property owned or acquired by
such Person, whether or not such liability shall have been
assumed by such Person and Capitalized Lease Obligations of
such Person (without regard to any limitation of the rights
and remedies or the holder of such Lien or the lessor under
such Capitalized Lease to repossession or sale of such
property) and
(c) Guaranties.
"Ineligible Rewrite" means a Finance Receivable
(a) the terms and conditions of which have
been rewritten,
(b) that was more than 60 days delinquent as
of the later of the date of actual execution or the effective
date of the revised documentation therefor, and
(c) in respect of which at least one of the
following statements is not accurate and complete in all
respects:
(i) the monthly payment on the
rewritten Finance Receivable is at least 50% of the
original monthly payment (without giving effect to
previous rewrites);
(ii) the obligor on the rewritten
Finance Receivable has made at least three (3)
consecutive payments in accordance with the rewritten
payment schedule and each such payment was made
within thirty (30) days of the date due;
(iii) the rate of interest payable on
the rewritten Finance Receivable is a reasonable
market rate and, unless such rewritten Finance
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<PAGE> 111
Receivable arises from a rewritten equipment lease,
in no event is the all-in-loan-yield less than two
percent above the Reference Rate; or
(iv) said Finance Receivable has not
been more than sixty days delinquent more than once
since the date first rewritten.
"Initial Loans" means the first Loans made to the
Company on or after the Effective Date.
"Initial Term" means, with respect to the Revolving
Credit Commitment of any Bank, the period from and including the Effective Date
to and including June 29, 1995.
"Interest Period" means, with respect to a LIBO Rate
Loan, a period of borrowing commencing on and including the date of advance,
continuation or conversion and ending on the numerically corresponding date
that is one, two, three, four, five or six months thereafter, as set forth in
the related Loan Request, during which such Loan bears interest at a particular
fixed rate based upon the Adjusted LIBO Rate.
Notwithstanding the foregoing:
(a) (i) if the numerically corresponding date
in the appropriate month is not a Banking Day, such Interest
Period shall be extended to the next succeeding day that is a
Banking Day unless such day falls in the succeeding calendar
month, in which event such Interest Period shall end on the
first preceding day that is a Banking Day and (ii) if there is
no numerically corresponding date in the appropriate month,
such Interest Period shall end on the last Banking Day in such
month, and
(b) in no case shall an Interest Period end
on a date subsequent to the Revolving Credit Termination Date
or Term Loan Maturity Date applicable to the Commitment of any
Bank.
"Investment" in any Person means any loan, advance,
or extension of credit to or for the account of, any guaranty, endorsement
(other than for collection in the ordinary course of business) or other direct
or indirect contingent liability in connection with the obligations, Capital
Interests or dividends or other distribution of, any ownership, purchase or
acquisition of any Capital Interest, obligations or securities of, or any other
interest in or capital contribution to, such Person.
"Investment Grade Rating" means
(a) with respect to unsecured senior debt
securities issued by a Person,
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<PAGE> 112
(i) a rating equal to or higher than
"BBB" by S&P and equal to or higher than "Baa2" by
Moody's, or
(ii) in the event the applicable
unsecured senior debt securities are not rated by
both S&P and Moody's, (A) the rating described in (i)
for either S&P or Moody's and (B) a rating equal to
or higher than "BBB" by D&P or by Fitch, or a
comparable rating by another nationally recognized
rating organization, which rating and organization
are approved by the Required Banks, or
(iii) in the event the applicable
unsecured senior debt securities are not rated by
either of S&P and Moody's, any two of (A) a rating
equal to or higher than "BBB" by Fitch, (B) a rating
equal to or higher than "BBB" by D&P, or (C) a
comparable rating by another nationally recognized
rating organization, which rating and organization
are approved by the Required Banks.
(b) with respect to commercial paper of a
Person, a rating equal to or higher than D-2 by D&P, F-2 by
Fitch, Prime-2 by Moody's or A-2 by S&P.
"Junior Subordinated Debt" means Subordinated Debt
that is subordinated in right and time of payment to all Senior Subordinated
Debt.
"Letter of Credit Agreement" means that certain
Amended and Restated Letter of Credit and Guaranty Agreement dated as of August
6, 1993, among the Company, the Agent and the banks party thereto, as amended
from time to time.
"LIBO Rate" means, with respect to any Interest
Period, the rate of interest determined by the Agent to be the average (rounded
upward to the nearest 1/100 of 1.00% or, if there is no nearest 1/100 of 1.00%,
then to the next higher 1/100 of 1.00%) of the rates per annum at which Dollar
deposits are offered to the principal London office of BOA by major banks in
the London interbank euro-dollar market at or about 11:00 a.m., prevailing
London time, two Banking Days prior to the commencement of such Interest
Period, for delivery on the first day of such Interest Period, for the number
of days comprised therein and in an amount approximately equal to the amount of
the LIBO Rate Loans for which the determination is made.
"LIBO Rate Loan" means a Revolving Credit Loan or,
following the Term Loan Effective Date, a Term Loan bearing interest during an
Interest Period applicable to such Revolving Credit Loan or Term Loan at a rate
or rates determined by reference to the Adjusted LIBO Rate.
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<PAGE> 113
"Lien" means any interest in property securing an
obligation owed to a Person, whether such interest is based on the common law,
statute or contract, and including but not limited to the security interest
arising from a mortgage, mortgage deed, deed of trust, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other similar title exceptions and encumbrances, including but not
limited to mechanics', materialmen's, warehousemen's, carriers' and other
similar encumbrances, affecting property. For the purposes of this Agreement,
a Person shall be deemed to be the owner of any property which it has acquired
or holds subject to a conditional sale agreement or other arrangement pursuant
to which title to the property has been retained by or vested in some other
Person for security purposes.
"Loans" or "Revolving Credit Loan(s)" or "Term Loans"
means the applicable loan(s) to the Company referred to in Section 2.1 hereof.
"Loan Documents" means and includes this Agreement,
the Revolving Credit Note or Notes, the Term Loan Note or Notes, the Foothill
Group Subordination Agreement, and all other agreements and instruments
(including supplements) extending, renewing, refinancing or refunding any
indebtedness, obligation or liability arising under any of the foregoing, in
each case as the same may be amended, modified or supplemented from time to
time hereafter.
"Loan Request" means a request for one or more
Revolving Credit Loans, substantially in the form of Exhibit D-1 hereto,
executed by an Authorized Representative on behalf of the Company.
"Material Adverse Effect" means, with respect to an
event, action or condition affecting the Company, any Subsidiary thereof, or
any of their respective properties or revenues, an event, action or condition
that would (a) adversely affect the validity or enforceability of, or the
authority of the Company to perform its obligations under, any of the Loan
Documents, (b) materially adversely affect the business, operations, assets or
condition (financial or otherwise) of the Company or any Subsidiary thereof or
the ability of the Company to perform its obligations under any of the Loan
Documents or (c) materially adversely affect the business, operations, assets
or condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole.
"Maturity" means, with respect to any Loan, the
earlier of (a) the Revolving Credit Termination Date, unless the Revolving
Credit Loans are converted to Term Loans, or the Term Loan Maturity Date, and
(b) any other date on which such Loan shall be or become due and payable, in
whole or in part, in
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<PAGE> 114
accordance with the terms of this Agreement, whether by required or optional
prepayment, declaration, acceleration, or otherwise.
"Moody's means Moody's Investors Service, Inc. or any
successor thereto.
"Multiemployer Plan" means a Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Multiyear Agreement" means that certain Multiyear
Revolving Credit Agreement dated as of June 30, 1994, among the Company, the
Agent and the Banks, as amended or supplemented from time to time.
"Net Amount" means, as of any date of calculation,
with respect to a Finance Receivable or a Discount Receivable an amount equal
to the sum of:
(a) the outstanding principal component
thereof (exclusive of any unearned interest or finance charges
or any unaccrued discount representing compensation for the
use of borrowed money), less
(b) the portion, if any, of such principal
component that is the subject of a participation interest
granted by the Company or any of its Consolidated Subsidiaries
to any Person other than the Company or any of its
Consolidated Subsidiaries, less
(c) in the case of a Discount Receivable,
the discount from face or par value thereof at the time such
Discount Receivable was acquired (but without duplication for
amounts excluded from the principal component thereof in
clause (a) above).
"New Bank" means any Person that becomes a party to
this Agreement after the Effective Date pursuant to the provisions of Section
2.1(f) hereof.
"New Bank Effective Date" means the date on which a
New Bank becomes a Bank under this Agreement.
"Non-Performing Assets" means Delinquent Receivables,
Repossessed Assets and Ineligible Rewrites. For purposes of this definition,
Repossessed Assets shall be valued at the lower of cost or estimated net
realizable value.
"Non-Public Debt Instruments" means debt instruments
that are not required to be registered under the Securities Act of 1933, as
amended (other than those classified as Discount Receivables).
"Note(s)" or "Revolving Credit Note(s)" or "Term Loan
Note(s)" means the applicable promissory note(s) of the Company referred to in
Section 2.2 hereof and shall include any
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<PAGE> 115
replacement(s) therefor issued pursuant to Section 10.17 or 12.2 hereof or
otherwise.
"Notice of Address" means, (a) with respect to the
Company, the address set forth in Section 10.4 hereof, (b) with respect to the
Agent or any Bank, the address set forth in Exhibit A hereto, and (c) with
respect to any party hereto, such other address as such party may specify in
writing to the Agent from time to time.
"Obligations" means and include all loans, advances,
debts, liabilities, and obligations, howsoever arising, owing by the Company to
the Agent or the Banks of every kind and description (whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising pursuant to the terms of this Agreement
or the other Loan Documents.
"Participant" means any Person (other than an
Assignee) that now or hereafter participates by contract directly or indirectly
in the rights and/or obligations of any Bank under this Agreement, the
Commitments or any Loan.
"PBGC" means the Pension Benefit Guaranty Corporation
established under Title IV of ERISA or any other governmental agency,
department or instrumentality succeeding to the functions of said corporation.
"Percentage" means, as of any date of calculation and
with respect to any Bank, the percentage (expressed as a decimal, rounded
upward to the nearest 1/10,000th of 1%) that is equal to the Commitment of such
Bank as of such date, divided by the Aggregate Commitment of all Banks as of
such date, and multiplied by 100.
"Permitted Liquid Investment" means an Investment in
any of the following:
(a) direct obligations of, or obligations
guaranteed as to principal and interest by, the United States
of America;
(b) demand deposits in, certificates of
deposit issued by, or bankers' acceptances (eligible for
rediscount at Federal Reserve Banks) of, or collateralized
repurchase agreements in respect of obligations described in
clause (a) with, any of the Banks or any bank or trust company
organized under the laws of the United States of America or
any State thereof whose obligations or whose holding company's
obligations are rated as least A by S&P or at least A by
Moody's at the time such Investment is made;
(c) readily marketable commercial paper
that, at the time such Investment is made, is rated at least
A-1 by S&P or at least Prime-1 by Moody's;
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<PAGE> 116
(d) Indebtedness that is (i) traded on a
national securities exchange and (ii) rated A or better by
Moody's or S&P on the date of acquisition; or
(e) readily marketable commercial paper
(other than commercial paper described in clause (c));
provided that (i) the aggregate extended principal or face
amount thereof held does not exceed $5,000,000 at any one time
outstanding and (ii) at the time such Investment is made, such
commercial paper is rated at least Prime-2 by Moody's or at
least A-2 by S&P; and provided, that such Investment shall be
payable in Dollars and shall mature or be subject to
redemption at the option of the holder by its terms within
twelve months after the date of acquisition thereof.
"Permitted Senior Debt" means
(a) all Senior Indebtedness of the Company
and its Subsidiaries that is listed on Schedule V hereto and
(b) additional unsecured Senior Indebtedness
of the Company issued after the Effective Date, subject to the
following conditions:
(i) the covenants, defaults and other
requirements applicable to such Senior Indebtedness
are no more restrictive, in any material respect,
upon the Company and its Subsidiaries than those
contained in the Loan Documents or applicable to the
Senior Indebtedness listed on Schedule V hereto;
(ii) if Foothill Group enters into a
subordination agreement in respect thereof, the terms
thereof shall not differ in any material respect from
the terms of the Foothill Group Subordination
Agreement; and
(iii) no Default or Event of Default
shall exist at the date of issuance of such Senior
Indebtedness and after giving effect thereto.
"Permitted Subordinated Debt" means
(a) all Subordinated Debt of the Company and
its Subsidiaries that is listed on Schedule VI hereto and
(b) additional unsecured Subordinated Debt of
the Company issued after the Effective Date, subject to the
following conditions:
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<PAGE> 117
(i) the final maturity of such
Subordinated Debt (other than Advances) may not be
earlier than November 15, 2003;
(ii) the weighted average life to
maturity of such Subordinated Debt (other than
Advances) shall extend at least three years beyond
the Revolving Credit Termination Date as in effect as
of the date of issuance thereof;
(iii) no principal or sinking fund
payment on or other redemption of such Subordinated
Debt (other than Advances) may occur prior to
November 15, 1998;
(iv) the covenants, defaults and other
requirements applicable to such Subordinated Debt are
no more restrictive, in any material respect, upon
the Company and its Subsidiaries than those contained
in the Loan Documents or applicable to the
Subordinated Debt listed on Schedule VI hereto;
(v) the subordination provisions
applicable to such Subordinated Debt (other than
Foothill Group Subordinated Debt) do not differ in
any respect from those applicable to the Subordinated
Debt listed on Schedule VI hereto;
(vi) if Foothill Group enters into a
subordination agreement in respect thereof, the terms
thereof shall not differ in any material respect from
the terms of the Foothill Group Subordination
Agreement; and
(vii) no Default or Event of Default
shall exist at the date of issuance of such
Subordinated Debt and after giving effect thereto.
"Person" or "person" means any individual,
partnership, firm, corporation, association, joint venture, trust or other
entity, or any Governmental Authority.
"Plan" means, at any particular time, any employee
benefit plan that is covered by ERISA and in respect of which the Company or an
ERISA Affiliate is (or, if such plan were terminated at such time, under
Section 4069 of ERISA would be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prohibited Transaction" shall have the meaning set
forth in Section 406 of ERISA or Code Section 4975.
"Property" means all equipment, real estate or other
real or personal property, tangible or intangible, owned or operated by the
Company or any Subsidiary thereof.
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<PAGE> 118
"Public Debt Securities" means debt instruments that
are registered under the Securities Act of 1933, as amended (other than those
classified as Discount Receivables).
"Purchased Receivables" means Discount Receivables,
Non-Public Debt Instruments and Public Debt Securities.
"Rating Agency" or "Rating Agencies" means any of
D&P, Fitch, Moody's and S&P, or any other nationally recognized rating
organization approved by the Required Banks.
"Reference Rate" means the annual rate of interest
publicly announced from time to time by BOA in San Francisco, California, as
its "Reference Rate". The Reference Rate is set by BOA based on various
factors, including BOA's costs and desired returns, general economic conditions
and other factors, and is used as a reference point for pricing some loans.
BOA may price loans at, above or below its Reference Rate. Any change in the
Reference Rate shall take effect on the day specified in the public
announcement of such change.
"Reference Rate Loan" means, as of any date of
determination prior to the Term Loan Effective Date, a Revolving Credit Loan
bearing interest, as of such date of determination, at a variable rate
determined by reference to the Reference Rate, and as of any date of
determination on or after the Term Loan Effective Date, a Term Loan bearing
interest, as of such date of determination, at a variable rate determined by
reference to the Reference Rate.
"Renewal Reply Date" means June 1, 1995 (or if June 1
in such year is not a Business Day, the next succeeding Business Day).
"Renewal Request Date" means May 1, 1995 (or if May 1
in such year is not a Business Day, the next succeeding Business Day).
"Renewal Term" means, with respect to the Revolving
Credit Commitment of any Bank, a 364-day period commencing upon the expiration
of the Initial Term.
"Reportable Event" means any of the events set forth
in Section 4043(b) of ERISA, other than those events as to which the 30-day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of
PBGC Reg. 2615.
"Repossessed Assets" means items of the type included
on the balance sheet of the Company and its Consolidated Subsidiaries as of
December 31, 1993, within the heading "Repossessed Assets".
"Required Banks" means, as of any date of
determination, such Bank or Banks as have outstanding Loans in excess of 67% of
the aggregate principal amount of Loans
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<PAGE> 119
outstanding as of such date or, if no Loans are then outstanding, have
Commitments in excess of 67% of the Aggregate Commitment.
"Restricted Investment" means any Investment, to the
extent it does not constitute a Permitted Liquid Investment.
"Restricted Payment" means, with respect to the
Company and its Subsidiaries:
(a) the payment of any distribution or
dividend on any Capital Interest of the Company (other than
dividends paid solely in Capital Interests of the Company); or
(b) any defeasance, redemption, repurchase
or other acquisition or retirement for value prior to
scheduled maturity of any installment of principal of any
Subordinated Debt (other than Advances) and any early payment
of interest on, or other amounts due in respect of, any
Subordinated Debt; or
(c) any payment on account of the purchase,
redemption or other retirement of any Capital Interest of the
Company, or of any warrants, options or other rights to
acquire any Capital Interest in the Company (except a payment
on account of the principal of and prepayment charge, if any,
on convertible Indebtedness) or any other distribution made in
respect thereof, either directly or indirectly.
"Revolving Credit Commitment" means, with respect to
any Bank, the maximum aggregate amount of Revolving Credit Loans, such Bank is
obligated to make or have outstanding in accordance with the provisions of this
Agreement.
"Revolving Credit Loan" means a loan or advance made
pursuant to Section 2.1(a) hereof.
"Revolving Credit Loans" means, collectively, the
Revolving Credit Loans from time to time outstanding and unpaid.
"Revolving Credit Note(s)" means the promissory
note(s) of the Company referred to in Section 2.2(a)(i) hereof and shall
include any replacement(s) therefor issued pursuant to Sections 10.17 or 12.2
hereof or otherwise.
"Revolving Credit Termination Date" means, with
respect to the Revolving Credit Commitment of each Bank, the earlier of (a) the
date on which such Bank's obligations under this Agreement shall terminate in
accordance with the provisions of Section 2.1 hereof, or (b) the Business Day,
if any, on which the Commitments are terminated in accordance with Section 2.1
or 9.1 hereof.
"S&P" means Standard & Poor's Corporation or any
successor thereto.
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<PAGE> 120
"Senior Indebtedness" means, as of any date, all
Indebtedness of the Company and its Subsidiaries outstanding as of such date
other than Subordinated Debt.
"Senior Subordinated Debt" means Subordinated Debt
that is senior in time and right of payment to Junior Subordinated Debt.
"Settlement Securities" means Capital Interests
granted in consideration or good faith settlement of Investments permitted by
Section 8.4 hereof.
"Single Employer Plan" means any Plan which is
covered by Title IV of ERISA, but is not a Multiemployer Plan.
"Solvent" means, as to any Person, that such Person
has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage, is able to pay its
debts as they mature, and owns property having a value, both at fair valuation
and at then current fair salable value, greater than the amount required to pay
its debts (including contingencies).
"State" means and includes, unless otherwise limited,
any State of the United States, the District of Columbia and the Commonwealth
of Puerto Rico.
"Subordination Custodian" shall have the meaning
specified in the Foothill Group Subordination Agreement.
"Subordinated Debt" means all Indebtedness of the
Company which shall have been subordinated in time and right of payment to the
obligations of the Company arising hereunder.
"Subsidiary" or "Subsidiaries" of any Person means
any corporation or partnership of which more than 50% of the outstanding Voting
Interests in such corporation or partnership is at the time owned, directly or
indirectly, by such Person, or by one or more of its Subsidiaries, or by such
person and one or more of its Subsidiaries.
"Tax Expense" means, for any period, all Federal,
state and local taxes paid or owed by the Company or any Subsidiary thereof
during such period.
"Term Loan" means a loan made pursuant to 2.1(b)
hereof.
"Term Loans" means, collectively, the Term Loans
outstanding and unpaid.
"Term Loan Conversion Request" means a request for a
Term Loan, substantially in the form of Exhibit D-2 hereto, executed by an
Authorized Representative on behalf of the Company.
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<PAGE> 121
"Term Loan Effective Date" means the date on which
the conditions precedent set forth in Section 5.2 hereof shall have been
satisfied or waived in writing by the Agent on behalf of or at the request of
the Required Banks.
"Term Loan Maturity Date" means the date that is the
one year anniversary date of the Term Loan Effective Date (or if such day in
such year is not a Business Day, the next succeeding Business Day).
"Total Liabilities" means, as of any date of
calculation, the aggregate outstanding Indebtedness of the Company and its
Consolidated Subsidiaries as of such date, determined on consolidated basis in
accordance with GAAP.
"Total Revenues" means, with respect to any fiscal
year, an amount equal to the sum included in the audited Consolidated financial
statements of the Company and its Consolidated Subsidiaries for such year
within the heading "Total Revenues" but only to the extent consistent with its
audited Consolidated financial statements for the fiscal year ended December
31, 1993.
"Voting Interest" means securities, as defined in
Section 2(1) of the Securities act of 1933, as amended, of any class or
classes, the holders of which are ordinarily, in the absence of contingencies,
entitled to (a) vote for the election of the corporate directors (or Persons
performing similar functions) or (b) in the case of a partnership, manage or
direct the business or assets thereof. References in this Agreement to
percentages of Voting Interests, unless otherwise noted, refer to percentages
of votes in which such Voting Interests are entitled in the (i) election of
corporate directors (or Persons performing similar functions) or (ii)
management of the business or assets thereof in the case of a partnership,
rather than to the number of shares.
SECTION 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement in the
singular shall have comparable meanings when used in the plural, and vice
versa.
(b) The words "hereof," "hereby," "herein," and
"hereunder" and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provisions of this
Agreement; the term "hereafter" means after, and the term "heretofore" means
before, the date of this Agreement; and Article, Section, schedule, exhibit and
like references are to this Agreement unless otherwise specified.
(c) Any defined term that relates to a document
shall include within its definition any amendments, modifications, renewals,
restatements, extensions, supplements, or substitutions that heretofore may
have been or hereafter may
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be executed in accordance with the terms thereof and, if applicable, hereof.
(d) References in this Agreement to particular
sections of the Code, ERISA or any other legislation shall be deemed to refer
also to any successor sections thereto or other redesignations for codification
purposes.
(e) All terms defined in the Uniform Commercial Code
in effect in the State of California and not otherwise defined or modified
herein shall have the respective meanings ascribed to such terms in such
Uniform Commercial Code.
(f) All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, consistently applied. Where
any accounting determination or calculation is required to be made under this
Agreement, such determination or calculation (unless otherwise provided) will
be made in accordance with GAAP, consistently applied, except that if, because
of a change in GAAP, a Person would have to alter a previously utilized
accounting method or policy in order to remain in compliance with GAAP, such
determination or calculation will continue to be made in accordance with such
Person's previous accounting methods or policy unless the Required Banks
otherwise direct. Unless otherwise specified herein all financial statements
required to be delivered hereunder shall be prepared and all financial records
shall be maintained in accordance with GAAP.
ARTICLE II
AMOUNT AND TERMS OF LOANS
SECTION 2.1 Commitments and Loans.
(a) Revolving Credit Commitments. Subject to the
terms and conditions of this Agreement, each Bank severally agrees to make one
or more Revolving Credit Loans to the Company on the Effective Date and from
time to time thereafter during the Commitment Period; provided, however, that
the aggregate principal amount of such Bank's Revolving Credit Loans
outstanding at such time shall not exceed such Bank's Revolving Credit
Commitment. During the Commitment Period, the Company may borrow, prepay,
re-borrow and repay the Revolving Credit Loans, all in accordance with the
terms and conditions hereof; provided, however, that in no event will any Bank
be obligated to lend more than its Revolving Credit Commitment; and provided,
further, that the aggregate principal amount of all Revolving Credit Loans that
all Banks shall be committed to have outstanding hereunder shall not exceed the
Aggregate Commitment.
(b) Term Loan Commitments. Subject to the terms
and conditions of this Agreement, the Company may at any time during the
Commitment Period elect to convert the aggregate amount of outstanding
Revolving Credit Loans to one year Term Loans. Upon the request of the
Company, each Bank severally agrees to make a Term Loan to the Company on the
Term Loan
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Effective Date in an amount equal to the aggregate principal amount of such
Bank's outstanding Revolving Credit Loans. The Company shall give the Agent
(who shall promptly notify the Banks) irrevocable written notice in the form of
a Term Loan Conversion Request (which may be sent via teletransmission) at
least 15 Business Days preceding the requested conversion date, of its election
to convert the aggregate amount of all outstanding Revolving Credit Loans to
Term Loans. Upon the date of the Term Loan Conversion Request, the Revolving
Credit Commitments of the Banks shall terminate. Amounts borrowed as a Term
Loan which are repaid or prepaid by the Company may not be reborrowed.
(c) Termination and Reduction of Aggregate
Commitment. Subject to the provisions of Section 2.4 hereof, the Company shall
have the option to terminate and, from time to time, to reduce permanently the
Aggregate Commitment upon irrevocable written notice to the Agent (who shall
promptly notify the Banks) at least three (3) Business Days prior to the
proposed termination or reduction date, as the case may be, specifying such
date, whether a termination or reduction is being requested and, if a reduction
is being requested, the amount thereof. On the date specified in such notice,
such termination or reduction shall be effected; provided, however, that:
(i) in the case of a termination of the
Aggregate Commitment, such termination is accompanied by
repayment of the Revolving Credit Loans or Term Loans in full,
together with all other amounts, if any, owed to the Agent or
any Bank pursuant to any of the Loan Documents;
(ii) in the case of any reduction of the
Aggregate Commitment, such reduction is accompanied by
repayment of Revolving Credit Loans or Term Loans to the
extent (if any) that the aggregate principal amount of the
Revolving Credit Loans or Term Loans then outstanding exceeds
the amount of the Aggregate Commitment as then reduced.
Any such repayment shall be subject to the provisions of Section 2.4(a) hereof.
Any reduction of the Aggregate Commitment shall be in an aggregate amount of
$5,000,000 or an integral multiple thereof and shall be applied among the
Commitments of the Banks in accordance with their respective Percentages so
that the Banks retain the same Percentage after giving effect to the reduction.
Upon termination of the Aggregate Commitment pursuant to this Section 2.1 and
upon payment of all amounts due by the Company to the Agent and the Banks under
the Loan Documents, the obligations of the parties hereto, except as otherwise
provided herein, shall be deemed terminated; provided, however, that this
Agreement and the other Loan Documents shall continue to be effective or shall
be reinstated, as the case may be, if any payment hereunder or in connection
with any of the Loan Documents at any time is rescinded or otherwise must be
returned as a result of the
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bankruptcy, insolvency or reorganization of the Company or otherwise, all as if
such payment had not been made.
(d) Term of Commitments.
(i) Termination of Obligations. Subject to
the other provisions of this Section 2.1, (A) during the
Initial Term, the Commitment and other obligations of each
Bank under this Agreement shall terminate on the last day of
the Initial Term, and (B) during the Renewal Term, if
applicable to a Bank, the Commitment and other obligations of
such Bank under this Agreement shall terminate on the last day
of such Renewal Term.
(ii) Renewal Terms. On the Renewal Request
Date, the Company may request (a "Renewal Request") the
extension of the Banks' Revolving Credit Commitments for a
Renewal Term of 364 days commencing upon the expiration of the
Initial Term. Each Bank, in its sole discretion and subject
to the conditions set forth in Section 5.3 hereof, may agree
to extend such Bank's Revolving Credit Commitment by
delivering a notice to the Agent in the form of Exhibit B-1
hereto on or before the Renewal Reply Date. If, by the
Renewal Reply Date, Banks then holding 25% or more of the
principal amount of the then outstanding Revolving Credit
Loans (or, if no Revolving Credit Loans are outstanding, Banks
then holding 25% or more of the Aggregate Commitment) have not
consented to the Renewal Request, the Agent shall notify the
Banks of this fact and each Bank that had consented to the
Renewal Request in whole or in part shall have until the next
succeeding June 15 to withdraw its consent upon notice to the
Agent. Failure to respond by any Bank by the Renewal Reply
Date shall constitute a nonconsent.
The Revolving Credit Commitment of each nonconsenting
Bank shall terminate on the last day of the Initial Term. The
Agent and the Banks shall be under no obligation whatsoever to
extend the Revolving Credit Termination Date.
Notwithstanding the foregoing, if any nonconsenting Bank, at
any time after the Renewal Reply Date but in no event later
than the next succeeding June 15, shall determine at its
option to extend its Revolving Credit Commitment until a later
Revolving Credit Termination Date and so shall notify the
Agent and the Company thereof in writing, such nonconsenting
Bank thereafter shall be deemed to have consented to the
Renewal Request as set forth in such notice for all purposes
of this Agreement and its Revolving Credit Commitment shall be
deemed to be extended until the earlier of the Revolving
Credit Termination Date set forth in the Renewal Request or
the notice of such Bank to the Agent and the Company.
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Notwithstanding the foregoing, if the Agent has not
received consents for the extension from Banks then holding
75% or more of the principal amount of the then outstanding
Revolving Credit Loans (or, if no Revolving Credit Loans are
outstanding, Banks then holding 75% or more of the Aggregate
Commitment), by the next succeeding June 15, the Revolving
Credit Commitments of the Banks shall terminate on the then
existing Revolving Credit Termination Date and the Agent shall
so notify the Company and the Banks.
(iii) Events of Default. Notwithstanding
the foregoing provisions of this Section 2.1(d), upon the
occurrence of an Event of Default, the provisions of Article
IX hereof shall apply and the Agent may take any action
permitted or required thereunder.
(iv) Survival of Rights. The occurrence of
the Revolving Credit Termination Date shall not release,
terminate or limit the rights or remedies of the Agent or any
Bank, or the obligations of the Company under this Agreement
or any other Loan Document, and such rights and remedies and
such obligations shall survive until the Company shall have
fully paid and performed all its obligations hereunder and
thereunder in full.
(e) Increase in Commitments. During the Commitment
Period, with the consent of the Company and the Agent, any Bank may increase
its Commitment by executing and delivering to the Company and the Agent (with
notice by the Company to the other Banks) a supplement hereto, substantially in
the form of Exhibit B-2, whereupon, subject to the conditions set forth in
Section 5.4 hereof, (i) the Commitment of such Bank as shown on Exhibit A shall
be increased to the amount set forth in such supplement, (ii) the Aggregate
Commitment as shown on Exhibit A shall be automatically increased by the amount
of the increase in such Bank's Commitment and (iii) such Bank shall share in
each Revolving Credit Loan made thereafter based upon its Percentage as
recalculated as of the effective date of such increase after giving effect to
the Aggregate Commitment (as increased by such Bank's Commitment increase).
For purposes of the foregoing calculation, a Revolving Credit Loan shall be
deemed to have been made at any time a Revolving Credit Loan is funded pursuant
to Section 2.3(b) hereof or continued or converted pursuant to Section 2.3(c)
hereof and, in the case of a Reference Rate Loan outstanding on both the
effective date of such increase and on the first day of the month following
such effective date, on the first day of such month.
(f) New Banks. During the Commitment Period, with
the consent of the Company and the Agent, one or more additional commercial
banks may become a party to this Agreement by executing and delivering to the
Company and the Agent (with notice by the Company to the Banks) a supplement
hereto, substantially in the form of Exhibit B-3, whereupon (subject to
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the conditions set forth in Section 5.4 hereof), as of the first Business Day
of the next calendar quarter, (i) such New Bank shall become a Bank for all
purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits hereof, (ii) the Company shall execute
and deliver to the Agent for transmittal to such New Bank a Revolving Credit
Note conforming to the requirements of Section 2.2 hereof, except that it shall
be dated as of the New Bank Effective Date and shall bear interest from such
date, (iii) the Aggregate Commitment as shown on Exhibit A shall be increased
automatically by the amount of such New Bank's Commitment (which shall be in a
minimum amount of $5,000,000 or any integral multiple thereof) and (iv) such
New Bank shall share in each Revolving Credit Loan made after such New Bank
Effective Date (but shall not share in any Revolving Credit Loans made, and
that are outstanding on, the New Bank Effective Date) in an amount based upon
its Percentage as calculated as of the New Bank Effective Date after giving
effect to the Aggregate Commitment (as so increased by such New Bank's
Commitment). For purposes of the foregoing calculation, a Revolving Credit
Loan shall be deemed to have been made at any time a Revolving Credit Loan is
funded pursuant to Section 2.3(b) hereof or continued or converted pursuant to
Section 2.3(c) hereof and, in the case of a Reference Rate Loan outstanding on
both the New Bank Effective Date and on the first day of the month following
such New Bank Effective Date, on the first day of such month.
SECTION 2.2 Loan Notes; Interest.
(a) Notes.
(i) Revolving Credit Notes. The Revolving
Credit Loans of each Bank shall be evidenced by a single
Revolving Credit Note of the Company, in substantially the
form of Exhibit C-1 hereto, payable to the order of such Bank
and representing the obligation of the Company to pay the
lesser of (A) the Commitment of such Bank as shown on Exhibit
A, as the same may be amended from time to time as herein
provided, and (B) the aggregate principal amount of the
Revolving Credit Loans from time to time outstanding from such
Bank, in each case together with interest thereon. Each Bank
is hereby authorized to endorse the date, amount and Loan type
of each Revolving Credit Loan, the Interest Periods during
which such Revolving Credit Loan is a LIBO Rate Loan and each
payment or prepayment of principal thereof on the schedule
(including additional pages thereto added by such Bank as
required) annexed to and constituting a part of its Revolving
Credit Note, which endorsement shall constitute prima facie
evidence of the accuracy of the information so endorsed;
provided, however, that the failure of any Bank to insert any
such date or amount or other information on such schedule
shall not in any manner affect the obligation of the Company
to repay
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any Revolving Credit Loans in accordance with the terms of
this Agreement.
(ii) Term Loan Notes. The Term Loan of each
Bank shall be evidenced by a single Term Loan Note of the
Company, in substantially the form of Exhibit C-2 hereto,
payable to the order of such Bank and representing the
obligation of the Company to pay the outstanding principal
amount of such Term Loan, together with interest thereon. On
or before the Term Loan Effective Date, the Company shall
execute and deliver to the Agent a Term Loan Note payable to
the order of each Bank in an amount equal to the aggregate
amount of each Bank's outstanding Revolving Credit Loans.
Such Term Loan Note shall be dated the Term Loan Effective
Date. The Term Loan Notes shall be in replacement and
substitution for, and not in payment of, the Revolving Credit
Notes delivered to the Agent by the Banks. The Agent shall
deliver the Term Loan Notes to the payees thereof and shall
mark the Revolving Credit Notes previously held by the Banks
as "replaced" and shall deliver the same to the Company. Each
Bank is hereby authorized to endorse the date, amount, Loan
type, the Interest Periods during which such Term Loan is a
LIBO Rate Loan and each payment or prepayment of principal
thereof on the schedule (including additional pages thereto
added by such Bank as required) annexed to and constituting
part of its Term Loan Note, which endorsement shall constitute
prima facie evidence of the accuracy of the information so
endorsed; provided, however, that the failure of any Bank to
insert any such date or amount or other information on such
schedule shall not in any manner affect the obligation of the
Company to repay the Term Loans in accordance with the terms
of this Agreement.
(b) Interest. Each Note shall
(i) except as otherwise provided in Section
2.1(e) or (f) or 12.2 hereof, be dated the Effective Date,
with respect to the Revolving Credit Notes, or the Term Loan
Effective Date, with respect to the Term Loan Notes,
(ii) be payable at its Maturity, and
(iii) bear interest, subject to the
provisions of Section 10.13 hereof, until its Maturity on the
principal amount thereof from time to time outstanding at an
annual rate elected by the Company in accordance with the
notice provisions set forth in Section 2.3 hereof, equal to
the sum of the Applicable Margin plus the Adjusted LIBO Rate
or the Reference Rate. Such rate of interest shall be
computed for the actual number of days elapsed on the basis of
a 360-day year, in the case of LIBO Rate Loans, and on the
basis
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of a 365- or 366-day year (as applicable), in the case of
Reference Rate Loans. The unpaid principal balance of each
Note shall bear interest from and including its Maturity until
paid at the rate specified in Section 2.5 hereof.
(c) Interest Payment Dates. Interest accrued on
each Loan shall be payable, without duplication, on:
(i) the Maturity of such Loan;
(ii) with respect to any repayment or
prepayment of (A) any Revolving Credit Loan or Loans
outstanding as of the date of such repayment or prepayment or
(B) any or all Term Loans outstanding as of the date of such
repayment or prepayment, as the case may be, the date of such
repayment or prepayment, as the case may be;
(iii) with respect to the portion of the
outstanding principal amount of all Revolving Credit Loans and
all Term Loans maintained as Reference Rate Loans payable
quarterly and in arrears on the first Business Day of each
calendar quarter commencing with the first date following the
date of the making of such Revolving Credit Loans or Term
Loans as, or their conversion into, Reference Rate Loans;
(iv) with respect to the portion of the
outstanding principal amount of all Revolving Credit Loans or
Term Loans maintained as LIBO Rate Loans, the last day of each
applicable Interest Period and, in connection with any such
Revolving Credit Loan or Term Loans having a four-, five-, or
six-month Interest Period, the day that would be the last day
of a three-month Interest Period commencing on the same day as
such four-, five-, or six-month Interest Period commences; and
(v) with respect to that portion of the
outstanding principal amount of all Revolving Credit Loans or
Term Loans that is converted to Reference Rate Loans or LIBO
Rate Loans on a day when interest otherwise would not have
been payable pursuant to Section 2.2(c)(iii) or (iv) hereof,
the date of such conversion.
(d) The Agent may charge any account of the Company
maintained at the Agent for the principal of and interest on the Notes and for
any other amounts due the Agent or any Bank pursuant to the Loan Documents.
SECTION 2.3 Procedures Applicable to Borrowings and
Conversions. (a) Loans. Subject to the limitations applicable to Interest
Periods for LIBO Rate Loans, the Company may borrow Revolving Credit Loans from
the Banks on any Business Day (in the
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case of LIBO Rate Loans, on any Banking Day) during the Commitment Period or,
as provided in Section 2.1(b), Term Loans from the Banks on any Business Day
(or in the case of LIBO Rate Loans, on any Banking Day); provided, however, the
Company shall give the Agent irrevocable written notice in the form of a Loan
Request or Term Loan Conversion Request (which may be sent via
teletransmission) as follows:
(i) in the case of a borrowing of a
Revolving Credit Loan or Term Loan as a Reference
Rate Loan, on or before 12:00 noon, prevailing San
Francisco time, on the Business Day next preceding
the requested borrowing date (or irrevocable oral
notice on or before 12:00 noon, prevailing San
Francisco time, on such date confirmed in a Loan
Request or Term Loan Conversion Request (which may be
sent via teletransmission) no later than 4:00 p.m.,
prevailing San Francisco time, on such Business Day
next preceding the borrowing date); and
(ii) in the case of a borrowing of a
Revolving Credit Loan or Term Loan as a LIBO Rate
Loan, on or before 9:00 a.m., prevailing San
Francisco time, on the third Banking Day preceding
the first day of the requested Interest Period (or
irrevocable oral notice on or before 9:00 a.m.,
prevailing San Francisco time, on such date confirmed
in a Loan Request or Term Loan Conversion Request
(which may be sent via teletransmission) no later
than 4:00 p.m., prevailing San Francisco time, on
such third Banking Day preceding the first day of the
requested Interest Period).
If the Company furnishes a Loan Request or Term Loan Conversion Request to the
Agent, but no election is made as to either the Loan type or Interest Period to
be applicable thereto, the Loan will be made as a Reference Rate Loan. The
Agent, promptly upon receipt of any Loan Request or Term Loan Conversion
Request, whether oral or written, shall give notice thereof to the Banks. Each
borrowing of a given Loan type shall be in an aggregate principal amount,
together with Loans of the same Loan type to be continued as such and Loans of
other Loan types to be converted to such Loan type on the same Business Day or
Banking Day, as appropriate, of at least (A) $1,000,000 or any integral
multiple thereof, in the case of Reference Rate Loans (other than Reference
Rate Loans made pursuant to Section 2.4 hereof) and (B) $1,000,000 or any
integral multiple thereof in the case of LIBO Rate Loans.
(b) Funding Mechanics.
(i) Revolving Credit Loans.
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(A) Each Bank shall provide the Agent
with funds, on or before 12:00 noon, prevailing San
Francisco time, on each borrowing date (other than
the Effective Date) for a Revolving Credit Loan in an
amount equal to such Bank's Percentage of the
requested borrowing by transferring same day or
immediately available funds to such account as the
Agent shall specify from time to time by notice to
the Banks. Except as otherwise provided in Section
2.4 hereof, on the date requested in such notice, the
Agent shall make available to the Company at its
account at such Bank or at such other account as the
Company shall designate in the related Loan Request,
in immediately available funds, the proceeds of the
Revolving Credit Loans being made; provided, however,
that the Agent shall be obligated to make the
proceeds of such Revolving Credit Loans available
only to the extent received by it from the Banks. No
Bank's obligation to fund any Revolving Credit Loan
shall be affected by any other Bank's failure to fund
any Revolving Credit Loan, nor shall any Bank's
commitment be increased as a result of any such
failure of any other Bank.
(B) In the event that the Agent
advances proceeds of any Revolving Credit Loan to or
for the account of the Company and one or more of the
Banks fail to fund all or any portion of such
Revolving Credit Loan, immediately upon receipt of
notice from the Agent, (I) such Bank shall pay
directly to the Agent the amount thereof together
with interest thereon calculated if such payment is
received by the Agent on or before the third Business
Day following the date on which such funding was due,
at the federal funds rate described in Section
2.3(b)(ii) hereof and in all other cases at the rate
specified in Section 2.5 hereof and (II) if not paid
by such Bank, the Company shall repay directly to the
Agent such amount as will equal the amount that such
Bank or Banks failed to fund, together with interest
thereon at the applicable rate determined in
accordance with Section 2.2(b) hereof.
(ii) Remittances by the Agent. In the event
that the Agent remits in same day or immediately available
funds to any Bank its share of any payments to be made by the
Company pursuant to this Agreement, the Revolving Credit Notes
or the Term Loan Notes prior to the time that the Agent
receives such payments from the Company, and the Company fails
to make such payments when due, immediately upon receipt of
notice from the Agent, such Bank shall repay directly to the
Agent in same day or immediately available funds such amount
as will equal the amount that the Company failed
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to pay, together with interest thereon at a rate equal to the
weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published by the Federal
Reserve Bank of New York (in Weekly Release H. 15) for the day
on which the Company shall fail to make such payments, or, if
such rate is not so published for any such day, the average of
the quotations for such day on such transactions received by
the Agent from three Federal Funds brokers of recognized
standing selected by the Agent.
(c) Continuations and Conversions. Subject to the
limitations applicable to Interest Periods for LIBO Rate Loans, the Company may
continue any LIBO Rate Loan as such for an additional Interest Period or
convert any Loan of a given Loan type into a Loan of a different Loan type on
any Business Day (in the case of LIBO Rate Loans to be continued or converted,
on any Banking Day) during the Commitment Period; provided, however, that:
(i) the Company shall give the Agent
irrevocable written notice in the form of a Loan Request or
Term Loan Conversion Request in the manner and by the
applicable time specified in Section 2.3(a) hereof for the
borrowing of a Loan of the Loan type to be converted to or
continued and, if applicable, the Interest Period therefor;
(ii) in the case of the continuation of less
than all of the outstanding Loans of a given Loan type on the
same Business Day, the aggregate principal amount of Loans of
such Loan type to be continued as such, together with any
Loans to be made as or converted to the same Loan type on such
Business Day, shall not be less than $5,000,000 or an integral
multiple thereof;
(iii) in the case of the conversion of less
than all of the outstanding Loans of a given Loan type to
another Loan type on the same Business Day, the aggregate
principal amount of Loans of such Loan type to be converted to
another Loan type, together with any Loans of such other Loan
type to be made or continued as such on such Business Day,
shall not be less than $5,000,000 or any integral multiple
thereof;
(iv) LIBO Rate Loans may be converted only
at the end of the then applicable Interest Period;
(v) no LIBO Rate Loan may be continued as
such, nor may any Loan be converted to a LIBO Rate Loan, for
less than the minimum applicable Interest Period therefor; and
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(vi) no LIBO Rate Loan may be continued as
such, nor may any Loan be converted to a LIBO Rate Loan, if
any Default or Event of Default shall have occurred and be
continuing as of any date during the period commencing on the
date the Loan Request or Term Loan Conversion Request is
required to be submitted to the Agent and ending on the first
day of the requested Interest Period.
If the Company fails, in connection with the expiration of an Interest Period
applicable to a Loan that is a LIBO Rate Loan, to furnish a Loan Request or
Term Loan Conversion Request to the Agent for the continuation or conversion
thereof or fails to elect a Loan type or permitted Interest Period therefor, or
if the continuation or conversion of Loans as LIBO Rate Loans is prohibited due
to the occurrence and continuance of a Default or Event of Default, such Loans
(unless prepaid in accordance with the provisions of Section 2.4 hereof or
accelerated in accordance with Section 9.1 hereof) shall be converted
automatically to a Reference Rate Loan as of the expiration of the then
applicable Interest Period. The Agent, promptly upon receipt of any Loan
Request or Term Loan Conversion Request, shall give notice thereof to the
Banks.
SECTION 2.4 Prepayments.
(a) Voluntary. Provided that such prepayment is
made with internally generated funds or proceeds from the sale of Capital
Interests in or permitted Indebtedness of the Company, the Company from time to
time may prepay Loans, in whole or in part, without premium or penalty (except
as otherwise provided in Section 2.9 hereof), upon irrevocable written notice
to the Agent, with a copy to the Agent, given at least as early before the
proposed date of such prepayment as the corresponding time specified in Section
2.3(a) hereof for notice of the borrowing with respect to such Loan, specifying
the date of prepayment and the amount of the prepayment; provided, however,
that each partial prepayment of a Revolving Credit Loan or Term Loan shall be
in an aggregate amount not less than $1,000,000 or any integral multiple
thereof. If any such notice is given, the amount specified in such notice,
shall be due and payable in the manner and by the time provided in Section 3.3
hereof on the date specified in such notice, together with accrued interest
thereon to such date to the extent provided in Section 2.2(c) hereof. Any such
prepayment of a Revolving Credit Loan may be reborrowed, subject to the terms
and conditions of this Agreement, from time to time.
(b) Mandatory. If the aggregate outstanding
principal balance of the Loans exceeds the Aggregate Commitment, the Company
shall make a prepayment of such Loans in the amount of such excess (rounded
upwards to the next higher integral multiple of $1,000,000), together with
accrued interest thereon to the date of prepayment, to the extent provided in
Section 2.2(c) hereof. In connection with any such mandatory prepayment
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under this Section 2.4(b), the Company shall prepay Reference Rate Loans first,
and LIBO Rate Loans last.
SECTION 2.5 Interest on Delinquent Payments. All unpaid
amounts due under the Notes or any other Loan Document that are not paid when
due (including, to the extent permitted by law, unpaid interest on the Notes)
shall be payable upon demand and bear interest, subject to the provisions of
Section 10.13 hereof, from and including its due date until paid in full
(whether before or after the occurrence of any Event of Default described in
Sections 9.1(g) or (h) hereof) at an annual rate equal to the sum of (a) 2.00%
plus (b) the Reference Rate. Such rate of interest shall be computed for the
actual number of days elapsed on the basis of a 365- or 366-day year.
SECTION 2.6 Increased Costs. In the event any applicable
existing or future law, regulation, guideline, treaty or directive or condition
or interpretation thereof (including, without limitation, any request,
guideline or policy, whether or not having the force of law), by any
Governmental Authority charged with the administration or interpretation
thereof, or any change in any of the foregoing, which:
(a) subjects any Bank to any tax with respect to its
Commitment or any Loan (other than any tax on the overall net income of such
Bank no matter in what jurisdiction); or
(b) changes the basis of taxation of payments to
such Bank of principal of and/or interest on the Loans or its Commitment and/or
fees and other amounts payable hereunder (other than any tax on the overall net
income of such Bank no matter in what jurisdiction); or
(c) imposes, modifies or deems applicable or results
in the application of or increases any reserve, special deposit, or similar
requirement against extensions of credit or any deposits or other liabilities
taken or entered into by such Bank (based upon such Bank's reasonable
allocation of the aggregate of such requirements); or
(d) imposes upon such Bank any other condition with
respect to its Commitment, the Loans or this Agreement;
and the result of any of the foregoing is to increase the actual cost to such
Bank of making or maintaining its Commitment or the Loans hereunder or to
reduce the amount of any payment (whether of principal, interest, or otherwise)
received or receivable by such Bank or to require such Bank to make any
payment, in each case by or in an amount which such Bank reasonably deems
material; or
(e) if any Bank shall determine that any applicable
law, rule or regulation regarding capital adequacy, capital maintenance,
capital ratios or other similar requirements against such Bank's Commitment or
any Loan (including, without limitation, the issuance of any final rule or
regulation), or any
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change therein, or any change in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation or administration
thereof, or compliance by such Bank with any request or directive or guideline
regarding capital adequacy, capital maintenance, capital ratios or other
similar requirements against such Bank's Commitment or any Loan (whether or not
having the force of law) of any such Governmental Authority, has or would have
the effect of reducing the rate of return on such Bank's capital (after giving
effect to all applicable taxes on net income, no matter what the jurisdiction,
and taking into consideration such Bank's policies with respect to capital
adequacy);
then and in any such case set forth in paragraphs (a) through (e) above:
(i) such Bank shall notify the Company and
the Agent promptly in writing of the happening of such event;
(ii) such Bank shall deliver to the Company
and the Agent promptly a certificate of such Bank stating the
event that has occurred or the reserve or requirements or
other conditions that have affected such Bank or the request,
directive, guideline or requirement with which it has
compiled, together with the date thereof and the amount (based
upon such Bank's reasonable policies as to the allocation of
capital and costs, as applicable) of such increased cost,
reduction or payment for one or more periods ending not later
than the date of such certificate; and
(iii) The Company shall pay within 10 days
after the demand therefor such amount or amounts as will
compensate such Bank for such additional cost, reduction or
payment (without reduction or abatement for any participations
sold to Participants).
The certificate of such Bank as to the additional amounts payable pursuant to
this Section 2.6 delivered to the Company, in the absence of manifest error,
shall be conclusive as to the amount thereof. The protection of this Section
2.6 shall be available to such Bank regardless of any possible contention of
invalidity or inapplicability of the law, regulation or condition that has been
imposed. In the event that any such law, regulation or condition is
subsequently held to be invalid or inapplicable and the result thereof is to
eradicate any such additional cost, reduction or payment, such Bank shall
promptly pay to the Company an amount equal to the amount of compensation paid
by the Company to such Bank as a result of such invalid or inapplicable law,
regulation or condition.
SECTION 2.7 Use of Proceeds. The proceeds of all Loans made
to the Company hereunder shall be used by the Company to conduct its business
of commercial financing and leasing and to make advances to its Subsidiary, FCC
Holdings, to fund such
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Subsidiary's business of owning, operating, and liquidating Repossessed Assets.
SECTION 2.8 Payments on Non-Business Days. Whenever any
payment to be made under the Notes (other than principal of or any interest on
LIBO Rate Loans), under this Agreement or any other Loan Document, shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time in such case
shall be included in the computation of payment of interest or fees, as the
case may be.
SECTION 2.9 Funding Losses.
(a) The Company shall pay, within 10 days after the
written demand therefor, such amount as will compensate the Agent and the Banks
for any loss or reasonable expense they may sustain as a consequence of:
(i) any default in payment of the principal
amount of any LIBO Rate Loan or any part thereof or interest
accrued thereon, or any other amount due,
(ii) the occurrence of any Event of Default,
(iii) the receipt or recovery or conversion
for any reason (including without limitation mandatory
prepayment pursuant to Section 2.4 hereof or mandatory
conversion pursuant to Section 2.11 hereof) of all or any part
of a LIBO Rate Loan prior to the last day of the applicable
Interest Period therefor, or
(iv) any failure to borrow, convert to, or
continue any LIBO Rate Loan as such after submitting a Loan
Request (whether oral or written) relating thereto to the
Agent,
including, but not limited to, (A) any loss or expense sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain a LIBO Rate Loan or any part thereof or (B) any loss of margin on
reemployment of the funds so received or recovered.
(b) Each Bank shall be entitled to fund its Loans in
such manner as it may determine in its sole discretion, including without
limitation the London interbank market; provided, however, that, for the
purposes of calculations under this Section 2.9, each LIBO Rate Loan shall be
deemed to have been funded by the purchase in the London interbank euro-dollar
market of a Dollar deposit in an amount comparable to the principal amount of
such LIBO Rate Loan and having a maturity comparable to the applicable Interest
Period therefor.
(c) A certificate of the Agent or any Bank as to any
additional amounts payable pursuant to this Section 2.9 setting forth the basis
and method of determining such amounts
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shall be conclusive, absent manifest error, as to the determination by the
Agent or such Bank set forth therein.
SECTION 2.10 Alternate Rate of Interest. In the event, and
on each occasion on which, any Bank shall determine, on the day that is two (2)
Banking Days prior to the commencement of any Interest Period for any of its
LIBO Rate Loans, that:
(a) Dollar deposits in an amount comparable to the
principal amount of such LIBO Rate Loan and having a scheduled maturity
comparable to the Interest Period set forth in the related Loan Request or Term
Loan Conversion Request are not generally available in the London interbank
euro-dollar market,
(b) the rate at which such Dollar deposits are being
offered will not adequately and fairly reflect the cost to such Bank of making
or maintaining such LIBO Rate Loan during such Interest Period, or
(c) reasonable means do not exist for ascertaining the LIBO Rate,
such Bank, as soon as practicable thereafter, shall give oral notice of such
determination to the Agent and the Company, promptly confirmed in writing
(which may be by teletransmission), and to each of the other Banks. In the
event of any such determination and until such Bank notifies the Company and
the Agent that the circumstances giving rise to such notice no longer exist, no
Revolving Credit Loans or Term Loans will be made as LIBO Rate Loans and no
Revolving Credit Loans or Term Loans will be converted to or continued as LIBO
Rate Loans, but shall convert to Reference Rate Loans at the end of the
applicable Interest Period, if any, therefor. Each determination by such Bank
hereunder shall be conclusive, absent manifest error.
SECTION 2.11 Change in Legality. If, anything to the
contrary herein contained notwithstanding, any applicable existing or future
law, regulation, guideline, treaty or directive or condition or interpretation
thereof (including, without limitation, any request, guideline or policy,
whether or not having the force of law), by any Governmental Authority charged
with the administration or interpretation thereof, or any change in any of the
foregoing, shall make it unlawful or improper for any Bank to make or maintain
any Revolving Credit Loans or Term Loans as LIBO Rate Loans, then, by oral
notice to the Company and the Agent, promptly confirmed in writing (which may
be by teletransmission), the Agent may:
(a) declare that Revolving Credit Loans or Term
Loans thereafter will not be made by it as LIBO Rate Loans, whereupon the
Company shall be prohibited from requesting Revolving Credit Loans or Term
Loans of the Loan type or types covered by such declaration (the "Affected Loan
Types") unless and until such declaration is withdrawn; and
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(b) require that all outstanding Revolving Credit
Loans or Term Loans of the Affected Loan Types be converted to Reference Rate
Loans, in which event all such Revolving Credit Loans or Term Loans shall be
converted automatically to Reference Rate Loans as of the end of their
applicable Interest Periods or as of such earlier date as may be required of
any Bank for the lawful or proper conduct of its lending activities.
ARTICLE III
FEES AND PAYMENTS
SECTION 3.1 Fees Payable to Banks.
(a) The Company shall pay to the Agent for the
account of the applicable Banks an annual commitment fee equal to 0.225% per
annum on the average daily unused portion of the Aggregate Commitment for the
period from the Effective Date to and including the last day of the Commitment
Period, payable quarterly in arrears on the first Business Day of each calendar
quarter during the Commitment Period, commencing with the first such date after
the Effective Date and on the Revolving Credit Termination Date; provided,
however, that the annual commitment fee shall be increased to 0.325% per annum
on the average daily unused portion of the Aggregate Commitment for each day on
which the Company's commercial paper does not have an Investment Grade Rating
from at least two Rating Agencies; and provided, further, that the annual
commitment fee shall be decreased to 0.20% per annum on the average daily
unused portion of the Aggregate Commitment for each day on which the Company's
commercial paper has an Investment Grade Rating from at least three Rating
Agencies. Commitment fees for any period shall be calculated on the basis of a
365- or 366-day year for the actual number of days elapsed.
(b) The Company shall pay to the Agent for the
account of the applicable Banks a utilization fee on the weighted average
aggregate principal amount of Loans outstanding during the specified period
equal to (i) 0.25% per annum for each day on which the aggregate principal
amount of Loans outstanding is equal to or less than 25% of the Aggregate
Commitment for such day, (ii) 0.375% per annum for each day on which the
aggregate principal amount of Loans outstanding exceeds 25% but is equal to or
less than 50% of the Aggregate Commitment in effect for such day, and (iii)
0.50% per annum for each day on which the aggregate principal amount of Loans
outstanding exceeds an amount equal to 50% of the Aggregate Commitment in
effect for such day. The utilization fee shall be payable quarterly in arrears
on the first Business Day of each calendar quarter during the Commitment
Period, commencing with the first such date after the Effective Date and on the
Revolving Credit Termination Date or, if applicable, the Term Loan Maturity
Date, and shall be calculated on the basis of a 365 or 366 day year for the
actual number of days elapsed.
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SECTION 3.2 Agency Fee. The Company shall pay an agency fee
to the Agent as provided in the agency fee letter dated as of the Effective
Date of this Agreement.
SECTION 3.3 Payments.
(a) Each payment (including each prepayment) by the
Company pursuant to this Agreement or the Notes, whether in respect of
principal, interest, increased costs, or other amounts, shall be made by the
Company to the Agent for the accounts of the Persons entitled thereto. All
payments required to be made to the Agent shall be made, without set-off,
withholding, deduction, or counterclaim, not later than 12:00 noon, prevailing
San Francisco time, on the date due, in same day or immediately available
funds, to such account as the Agent shall specify from time to time by notice
to the Company. Funds received after that time shall be deemed to have been
received on the following Business Day.
(b) The Agent shall promptly remit in same day or
immediately available funds to each Bank (or other holder of a Note notified to
the Agent) its applicable share, if any, of such payments received by the Agent
for the account of such Bank or holder.
SECTION 3.4 Taxes.
(a) Any and all payments by the Company pursuant to
the Loan Documents shall be made, in accordance with the terms hereof and
thereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes described in the
parenthetical contained in Section 2.6(a) hereof and franchise taxes imposed on
the Agent or any Bank by the jurisdiction under the laws of which the Agent or
such Bank is organized or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Indemnified Taxes"). If the
Company shall be required by law to deduct any Indemnified Taxes from or in
respect of any sum payable hereunder or under the other Loan Documents to the
Agent or any Bank,
(i) the sum payable shall be increased as
may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 3.4) the Agent or such Bank shall receive
an amount equal to the sum it would have received had no such
deductions been made,
(ii) the Company shall make such deductions,
(iii) the Company shall pay the full amount
deducted to the relevant taxation authority or other authority
in accordance with applicable law, and
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(iv) the Company shall deliver to the Agent
evidence of such payment to the relevant Governmental
Authority.
(b) In addition, the Company agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies of the United States of America or any State
or political subdivision thereof or any applicable foreign jurisdiction that
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Document (hereinafter referred to as "Other Taxes") and to deliver to the Agent
evidence of such payment to the relevant Governmental Authority.
(c) The Company will indemnify the Agent and the
Banks for the full amount of Indemnified Taxes and Other Taxes (including
without limitation Indemnified Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.4) paid by the Agent or
any Bank (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within ten (10) days after written demand
therefor by the Agent or any Bank.
(d) Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of the
Company contained in this Section 3.4 shall survive the payment in full of
principal, interest, fees and other amounts hereunder and under the other Loan
Documents.
(e) Each Bank, if any, that is not organized under
the laws of the United States of America or any State agrees (i) prior to the
first payment of such Bank of any amounts due to such Bank under the Loan
Documents, upon request by the Company, to execute and deliver to the Company
and the Agent completed original counterparts of IRS Form W-8, 1001, or 4224
(or any successor thereto or substitute therefor), as applicable, and (ii)
thereafter, upon request by the Company from time to time in order to maintain
the effectiveness and accuracy of such tax forms and otherwise to comply with
United States tax laws, to execute and deliver to the Company and the Agent
additional or supplemental completed original tax forms with respect to amounts
due to such Bank under the Loan Documents as such Bank properly can execute in
conformity with applicable law as in effect at the time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this
Agreement and to make the Loans herein provided for, the Company hereby makes
the following representations and warranties, which shall survive the execution
and delivery of the Loan Documents and (except to the extent that any of such
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representations and warranties expressly relate to earlier dates) shall be
deemed repeated and confirmed as of each date on which any Loans are requested
by the Company or made, continued or converted by any Bank:
SECTION 4.1 Status and Standing. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its organization, is properly licensed, has the power and
authority and the legal right to own its property and conduct the business in
which it is engaged or currently proposes to engage and is duly licensed and
qualified and in good standing under the laws of the each jurisdiction where
the failure to qualify would have a Material Adverse Effect.
SECTION 4.2 Organizational Status of Subsidiaries. Schedule
I annexed hereto correctly sets forth the name of each Subsidiary of the
Company in existence on the date hereof, its jurisdiction and form of
organization and the ownership of its Capital Interests. Each of such
Subsidiaries is duly organized and validly existing in the form of organization
indicated on Schedule I, duly licensed and in good standing under the laws of
its jurisdiction of organization, and is duly licensed and qualified and in
good standing in each jurisdiction where the failure to qualify as such would
have a Material Adverse Effect.
SECTION 4.3 Location of Offices, Books and Records. Schedule
II annexed hereto completely and accurately lists all places at which each of
the Company and its Subsidiaries maintains, as of the date hereof, its books
and records relating to its Finance Receivables and the collateral related
thereto. The principal office or principal executive office of each of the
Company and its Subsidiaries in each jurisdiction is correctly indicated on
Schedule II as of the date hereof.
SECTION 4.4 Organizational Power and Authority.
(a) The Company and its Subsidiaries have the
corporate power and authority and the legal right to execute, deliver and
perform this Agreement and the other Loan Documents to which they are a party.
The Company and its Subsidiaries have taken all necessary corporate action
(including, but not limited to, the obtaining of any consent of the holders of
its Capital Interests required by law or by the organizational documents
thereof) to authorize the execution, delivery, and performance the Loan
Documents to which they are a party or by which they otherwise are affected and
to authorize the transactions contemplated hereby and thereby.
(b) Foothill Group has the corporate power and
authority and the legal right to make, deliver and perform each Loan Document
to which it is a party. Foothill Group has taken all necessary corporate
action (including, but not limited to, the obtaining of any consent of the
holders of its Capital Interests required by law or by the organizational
documents thereof) to authorize the execution, delivery, and performance of
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the Loan Documents to which it is a party or by which it otherwise is affected
and to authorize the transactions contemplated hereby and thereby.
SECTION 4.5 Enforceable Obligations. Each Loan Document, and
each other agreement or undertaking executed by the Company, any Subsidiary
thereof, or Foothill Group and delivered to the Agent constitutes the legal,
valid, and binding obligation of the Company or such Subsidiary, or Foothill
Group, as the case may be, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally, and general principles of equity,
and there are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against, or affecting, the Company, any Subsidiary
thereof, or Foothill Group or any of their respective officers or directors
calling into question the legality, validity or enforceability thereof.
SECTION 4.6 Absence of Conflicts. Neither the execution and
delivery of this Agreement or any other Loan Document nor consummation of the
transactions herein or therein contemplated nor performance of or compliance
with the terms and conditions hereof or thereof will
(a) violate any law, or
(b) conflict with or result in a breach of or a
default under or result in (or give rise to any right, contingent or otherwise,
of any Person to cause) any termination, cancellation, prepayment or
acceleration of performance of, or result in the creation or imposition of (or
give rise to any obligation, contingent or otherwise, to create or impose) any
Lien upon any property of the Company or any Subsidiary of the Company pursuant
to, or otherwise result in (or give rise to any right, contingent or otherwise,
of any Person to cause) any change in any right, power, privilege, duty or
obligation of the Company or any such Subsidiary under or in connection with,
(i) the articles of incorporation or by-laws
(or other constituent documents) of the Company or any
Subsidiary of the Company, or
(ii) any agreement or instrument to which
the Company or any Subsidiary of the Company is a party or by
which any of them or any of their respective properties (now
owned or hereafter acquired) may be subject or bound.
SECTION 4.7 No Burdensome Agreements. Neither the Company
nor any Subsidiary thereof is a party to any agreement or instrument or subject
to any restriction set forth in its organizational documents or provisions
relating to its Capital Interests that has a Material Adverse Effect.
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SECTION 4.8 No Material Litigation. There are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary thereof or any of their
respective officers or directors before any court, arbitrator or governmental
or administrative body or agency that, if adversely determined in the
reasonable opinion of the Company acting in consultation with counsel, would
have a Material Adverse Effect. No injunction, writ, restraining order or
other order of any nature adverse to the Company or any Subsidiary thereof or
the conduct of their respective businesses or inconsistent with the due
consummation of any transaction contemplated by any Loan Document has been
issued by any Governmental Authority. Neither the Company nor any Subsidiary
thereof is in default under any applicable material statute, rule, order,
decree or regulation of any court, arbitrator or governmental body or agency
having jurisdiction over the Company or any Subsidiary thereof.
SECTION 4.9 Good Title to Properties. The Company and its
Subsidiaries have good and marketable title to all their respective properties
and assets, subject only to such defects in title as do not detract materially
from the value of such property or assets or impair the use thereof in the
operation of their respective businesses, and subject to no Liens of any kind
other than Liens which are expressly permitted under this Agreement.
SECTION 4.10 Margin Regulations. The Company will apply the
proceeds of the borrowings made pursuant to this Agreement only for the
purposes set forth in Section 2.7 hereof. No part of the proceeds made
hereunder and none of the proceeds of any loan or advance made by the Company
or any Subsidiary thereof will at any time constitute "purpose credit" or
"carrying credit" as such terms are defined in Regulation G of the Board (12
C.F.R. 207), or will be used for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Company in a
violation of Regulation X of the Board (12 C.F.R. 224) or any violation of
Regulation U of the Board (12 C.F.R. 221). In particular, without limitation
of the foregoing, the Company will not use any part of the proceeds of the
borrowings hereunder or any part of the proceeds of any loan or advance made by
the Company or any Subsidiary thereof, directly or indirectly, (a) to reacquire
any of its own publicly-held securities, or (b) to enable any other Person to
acquire any publicly-held securities of the Company, or (c) to acquire for
itself or for any other Person any other publicly-held equity securities of any
kind, including, without limitation, any "margin stock," as such term is used
in said Regulation G.
SECTION 4.11 Investment Company. Neither the Company nor any
Subsidiary thereof is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. The
performance of the transactions contemplated by this Agreement and the other
Loan Documents will not violate any provision of said Act, or any
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rule, regulation or order issued by the Securities and Exchange Commission
thereunder.
SECTION 4.12 Disclosure. No representation or warranty made
by, and no information regarding, the Company or any Subsidiary thereof in any
Loan Document or any other document furnished from time to time in connection
herewith or therewith (other than projections or forecasts of future financial
performance), contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
are or will be made, not misleading. The projections and forecasts of future
financial performance of the Company delivered to the Agent and the Banks will
be reasonable at the time they are delivered to the Agent and the Banks in
light of then available current information. There is no fact known to the
Company that has, or that in the future might have in the reasonable judgment
of the Company, a Material Adverse Effect, except as set forth or referred to
in this Agreement or in another document or instrument heretofore furnished to
the Agent and the Banks.
SECTION 4.13 Taxes and Claims. Each of the Company and its
Subsidiaries has filed or caused to be filed, all federal, state and local tax
returns and reports that are required to be filed and has paid all taxes shown
to be due and payable on said returns or any assessments made against it or any
of its property and all other taxes, fees or charges imposed on it or any of
its property by any Governmental Authority (other than those the amount or
validity of which are currently being contested diligently in good faith by
appropriate proceedings and in respect of which adequate reserves in conformity
with GAAP have been provided on the books of the Company or its Subsidiaries,
as the case may be); and no tax Liens (other than those the amount or validity
or which are currently being contested diligently in good faith by appropriate
proceedings and in respect of which adequate reserves in conforming with GAAP
have been provided on the books of the Company or its Subsidiaries, as the case
may be) have been filed and, to the knowledge of the Company, no claims are
being asserted with respect to any such taxes, fees or other charges. The
income taxes chargeable against the income of the Company and its Subsidiaries
are paid by the Foothill Group on consolidated income tax returns. The federal
income tax liabilities of Foothill Group and each of its Subsidiaries have been
finally determined by the Internal Revenue Service, or the time for audit has
expired, for all fiscal periods ending on or prior to December 31, 1989; and
all such liabilities (including all deficiencies assessed following audit) have
been satisfied, except liabilities which would not be required to be satisfied
under the provisions of Section 6.2 hereof. Schedule III describes all tax
sharing arrangements or agreements to which the Company or any Subsidiary
thereof is a party or is subject or bound.
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Each of the Company and its Subsidiaries, to the knowledge of
the Company, has paid and discharged all lawful claims for labor, material,
supplies and anything else that might or could, if unpaid, become a Lien on any
of its properties (other than those the amount or validity of which are
currently being contested diligently in good faith by appropriate proceedings
and in respect of which adequate reserves in conformity with GAAP have been
provided on the books of the Company or its Subsidiaries, as the case may be).
SECTION 4.14 Trademarks, Patents, Etc. Each of the Company
and its Subsidiaries possesses all trademarks and service marks (or has
licenses for the use thereof), trade names, copyrights, patents, licenses,
permits, approvals and consents (including, without limitation, licenses,
approvals and consents of Governmental Authorities) and rights in any thereof,
adequate for the conduct of their respective businesses as now conducted or as
currently proposed to be conducted, without conflict with the rights or claimed
rights of others.
SECTION 4.15 Consents. No consent, authorization or action
of, or filing with, any Governmental Authority or any other Person is required
to authorize, or otherwise is required of the Company or any Subsidiary thereof
in connection with, the execution, delivery, performance, validity, or
enforceability of any Loan Document or any of the instruments or documents to
be delivered pursuant to any Loan Document.
SECTION 4.16 Employee Benefit Plans.
(a) None of the Plans maintained at any time or
the trusts created thereunder has engaged in any Prohibited Transaction that
could subject any such Plan or trust to a material tax or penalty on Prohibited
Transactions imposed under Code Section 4975 or ERISA Sections 502(i) or
502(1).
(b) The consummation of the transactions
contemplated hereby does not and will not involve any Prohibited Transaction
that could subject the Company or an ERISA Affiliate to any material liability,
tax or penalty imposed under Code Section 4975 or ERISA Sections 502(i) or
502(l).
(c) Neither the Company nor any ERISA Affiliate
contributes to or maintains, or since 1974 has contributed to or maintained,
any employee pension benefit plan within the meaning of Section 3(2) of ERISA,
including any employee pension benefit plan subject to Title IV of ERISA or
subject to the funding requirements of Section 412 of the Code.
(d) All Plans have at all times been operated and
maintained in substantial compliance with ERISA and applicable provisions of
the Code (including, but not limited to, Code Section 105). All Plans have
substantially complied with, and are in substantial compliance with, Code
Section 4980B and Treasury Regulations (whether proposed or final) relating
thereto. No Plan provides benefits to retired employees of the
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Company or such ERISA Affiliate, except to the extent required under Code
Section 4980B and Treasury Regulations (whether proposed or final) relating
thereto.
(e) Neither the Company nor any ERISA Affiliate,
individually or in the aggregate, has taken actions or undergone events which
would cause liability to arise under WARN or regulations issued thereunder, or
any applicable state law regarding employee terminations, mass layoffs or plant
closings, and neither the Company nor any ERISA Affiliate is aware of the
existence of any such actions or events.
(f) The Company and each ERISA Affiliate have made
all contributions required to be made under each Plan as of the date of this
Agreement.
SECTION 4.17 Financial Condition. The (a) consolidated
balance sheet of the Company and its Consolidated Subsidiaries, and
consolidated statements of income, cash flow, and retained earnings of the
Company and its Consolidated Subsidiaries, as at the end of and for the fiscal
year ended on December 31, 1993, as certified by Ernst & Young, independent
certified public accountants, and (b) consolidated balance sheet of the Company
and its Consolidated Subsidiaries for the fiscal quarter ended March 31, 1994,
and related consolidated statements of income, cash flow, and retained
earnings, as certified by the chief financial officer of the Company to be true
and correct, in each case heretofore furnished to the Agent and the Banks,
present fairly the financial condition of the Company and its Consolidated
Subsidiaries as at the dates of such balance sheets, and the results of their
operations for such periods. All such financial statements have been prepared
in accordance with GAAP applied on a basis consistent with that of the
comparable preceding period.
SECTION 4.18 Environmental Laws, Etc. Except to the extent
that none of the following has or would have a Material Adverse Effect:
(a) all Property heretofore, now, or hereafter owned
or operated by the Company or any Subsidiary thereof and in their possession or
over which they exercise control (including Repossessed Assets, collectively,
the "Foothill Property") complied, complies and will comply in all material
respects with all applicable federal, state and local environmental, health and
safety statutes, guidelines, codes, ordinances and regulations;
(b) the Foothill Property does not contain and has
not been, is not being, and will not be, used to generate, manufacture, refine,
produce, store, handle, transfer, process, dispose of, or transport, any
Hazardous Materials, the effect of which would be to (i) violate any applicable
Federal, state or local law or regulation or (ii) cause the occurrence of any
liability that would have a Material Adverse Effect; and
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(c) there are no underground storage tanks or
surface impoundments located on, under, or within the Foothill Property that
(i) are in violation of any applicable Federal, state or local law or
regulation and (ii) the cost of remediation of which (to the extent not covered
by insurance) would have a Material Adverse Effect.
SECTION 4.19 No Default or Event of Default; Compliance with
Instruments. No event or condition has occurred and is continuing that
constitutes a Default or an Event of Default or that would constitute a Default
or Event of Default after notice or lapse of time or both. The Company and
each Subsidiary thereof is (a) in compliance with its charter instruments and
by-laws and (b) in substantial compliance with the terms of all agreements and
instruments of any kind to which it is a party or subject (including but not
limited to agreements to repay borrowed money, and guarantees, leases of real
or personal property as lessor or lessee, contracts for future purchase or
delivery of goods or rendering of services, powers of attorney, distribution
arrangements, patent license agreements, collective bargaining agreements,
employment agreements, bonus, pension or retirement plans, or vacation pay,
insurance or welfare agreements), other than agreements or instruments, the
breach or termination of which, singly and in the aggregate, would not have a
Material Adverse Effect; and no party is in default thereunder and no event has
occurred that, with the giving of notice or the passage of time or both, would
constitute such a default.
SECTION 4.20 Solvency. The Company and each of its
Subsidiaries is Solvent, and neither the Company nor any Subsidiary thereof, as
a result of the transactions contemplated hereby or by any other Loan Document,
will (a) become not Solvent, (b) be left with unreasonably small capital, or
(c) have liabilities (including contingencies) in excess of either the fair
value or the then fair salable value of its assets.
SECTION 4.21 Proceeds. The Company shall apply the proceeds
of all Loans to the conduct of its business of commercial financing and leasing
and to make advances to its Subsidiary, FCC Holdings, to fund such Subsidiary's
business of owning, operating and liquidating Repossessed Assets.
SECTION 4.22 No Material Adverse Change. As of the Effective
Date, there has not occurred since December 31, 1993, a material adverse change
in the business, operations, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries taken as a whole; there has not occurred any
other event, act or condition which could have a Material Adverse Effect; and,
as of the Effective Date, there is not threatened, with a reasonable likelihood
of occurrence, either an adverse change since March 31, 1994, in the business,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole or any other event, act or condition which
could have a Material Adverse Effect.
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SECTION 4.23 Insurance. The Company and each Subsidiary
thereof maintain with financially sound and reputable insurers (not related to
or affiliated with the Company) insurance with respect to their properties and
business and against at least such liabilities, casualties and contingencies
and in at least such types and amounts as is customary in the case of
corporations engaged in the same or a similar business or having similar
properties similarly situated.
SECTION 4.24 Ownership and Subsidiaries. The Company is a
wholly-owned Subsidiary of Foothill Group. The Company has no Subsidiaries
except FCC Holdings. There are no options, warrants, calls, subscriptions,
conversion rights, exchange rights, preemptive rights or other rights,
agreements or arrangements (contingent or otherwise) which may in any
circumstances now or hereafter obligate any Subsidiary to issue any shares of
its capital stock.
SECTION 4.25 Partnerships and Other Affiliated Entities.
Neither the Company nor any Subsidiary thereof (a) is or has agreed or
otherwise has a duty to become a general partner of any person or otherwise
generally liable for or on account of the liabilities, acts or omissions of
another Person, (b) has agreed or otherwise has a duty to make capital
contributions to or on account of another Person, or (c) has an interest in
another Person or has or may have a liability to or on account of such Person
which interest or liability could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.26 Other Debt.
(a) Each offering and sale of Senior Indebtedness
and Subordinated Debt has been and will be made in accordance with the
applicable terms of the Securities Act of 1933, as amended (including
applicable rules and regulations thereunder), the Securities Exchange Act of
1934, as amended (including applicable rules and regulations thereunder),
applicable state securities and "blue sky" laws and other applicable laws.
(b) All of the obligations of the Company hereunder
constitute and will constitute "Superior Indebtedness" or "Senior Indebtedness"
within the meaning ascribed to such term in all loan agreements, indentures,
and other agreements relating to, and all notes evidencing, Subordinated Debt.
The subordination provisions of such agreements and instruments relating to or
evidencing Subordinated Debt are enforceable against Foothill Group and the
holders from time to time (including any pledgee thereof and any trustee or
other representative of such holders) of the Subordinated Debt in accordance
with their respective terms.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions to Initial Loans and Effectiveness.
The obligations of the Banks to enter into this
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Agreement and make the Initial Loans hereunder on the Effective Date are
subject to the satisfaction of the following conditions precedent:
(a) The Agent shall have received on behalf of the
Banks, on or before the Effective Date, the following, each in form and
substance satisfactory to the Agent in all respects:
(i) an original Revolving Credit Note
for each Bank executed by an Authorized Representative on
behalf of the Company;
(ii) original counterparts of this
Agreement executed by an Authorized Representative on behalf
of the Company for each Bank and the Agent;
(iii) opinions, dated the Effective Date, of
counsel to the Company and Foothill Group, substantially in
the form of Exhibit E hereto, for each Bank and the Agent;
such opinions shall also cover such other matters incident to
the transactions contemplated by this Agreement and the other
Loan Documents as the Agent or any Bank reasonably may
request, all such opinions being rendered at the request and
direction and with the consent of the Company and Foothill
Group;
(iv) a copy of the Articles of Incorporation
of the Company and all amendments thereto, certified as of a
recent date by the Secretary of State of the State of
California, and a copy of the Certificate of Incorporation of
Foothill Group and all amendments thereto, certified as of a
recent date by the Secretary of State of the State of
Delaware, each certified by the Secretary of the Company or
Foothill Group to the effect that such organizational
documents have not been amended since such date;
(v) a copy of the by-laws of the Company and
Foothill Group, in effect as of the Effective Date, certified
by the Secretary of the Company or Foothill Group.
(vi) certified copies of the resolutions or
other determinations of the Board of Directors of the Company
and Foothill Group, approving each of the Loan Documents and
each of the other instruments and documents to be executed and
delivered to the Agent or the Banks pursuant to this Agreement
or any other Loan Document, certified by the Secretary of the
Company or Foothill Group, and certified copies of all
documents evidencing other necessary organizational action and
governmental approvals, if any, with respect thereto;
(vii) certificates of the Authorized
Representatives certifying on behalf of the Company and
Foothill Group the names and true signatures of the
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officers of the Company who are authorized to sign each
document to which it is a signatory and which is to be
delivered hereunder or pursuant to any other Loan Document;
(viii) a Loan Request shall have been given
by the Company on or before the applicable time set forth in
Section 2.3(a) hereof;
(ix) an original Foothill Group
Subordination Agreement;
(x) a certificate of an Authorized
Representative to the effect that (A) the financial statements
referred to in Section 6.1 hereof present fairly the financial
condition of the Company and Foothill Group as of the
respective dates of such financial statements, (B) no material
adverse change in the condition (financial or otherwise) of
the Company or any Subsidiary thereof has occurred since the
respective dates of such financial statements, and (C) the
representations and warranties of the Company or any
Subsidiary thereof contained herein or in any other document
or instrument submitted to the Agent or any Bank are true and
correct in all material respects as of the date of such
certificate (except to the extent any representation or
warranty expressly related to an earlier date); and
(xi) copies of all other documents,
instruments and agreements requested by the Agent in
connection with the transactions contemplated by this
Agreement.
(b) Each of the Company, any Subsidiary thereof and
Foothill Group shall be duly organized and validly existing, shall have all
licenses, permits and authorizations necessary to own its properties and to
carry on its business as now conducted and as currently proposed to be
conducted and shall be in good standing in the jurisdiction of its organization
and in each other jurisdiction in which the nature of its business or ownership
or use of its property requires such qualification, and the Agent shall have
received such evidence thereof as the Agent or its counsel may have requested
in connection therewith.
(c) All requisite organizational action and
proceedings, as the case may be, in connection with the Loan Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all documents, including without
limitation, records of requisite organizational action and proceedings that the
Agent and its counsel may have requested in connection therewith, such
documents, where so requested, to be certified by Persons satisfactory to the
Agent.
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(d) All necessary approvals, authorizations and
consents, if any, required by, and all filings with, any Governmental Authority
having jurisdiction with respect to any of the transactions contemplated by
this Agreement and the other Loan Documents shall have been obtained or made.
In addition, the Company, any Subsidiary thereof, and Foothill Group shall be
in compliance with all laws, rules, regulations, orders and administrative
guidelines applicable to the operation of their business unless failure to
comply would not have a Material Adverse Effect.
(e) The Company shall have paid all reasonable fees,
costs and expenses incurred or sustained by the Agent (including the fees and
disbursements of its counsel, including, without limitation, actual charges and
disbursements of "in house" counsel) in connection with the preparation,
execution and delivery of this Agreement, the other Loan Documents and any
related documents.
SECTION 5.2 Conditions to All Loans. The obligations of the
Banks to make any Loans (including the Initial Loans) are further subject to
the satisfaction of the following conditions precedent:
(a) a Loan Request or, if applicable, Term Loan
Conversion Request shall have been given by the Company on or before the
applicable time set forth in Section 2.3 hereof;
(b) if a Term Loan is to be made, an original
Term Loan Note for each Bank, executed by an Authorized Representative on
behalf of the Company. Upon delivery of the Term Loan Notes, the Agent shall
cause the Revolving Credit Notes to be marked replaced and returned to the
Company;
(c) each of the representations and warranties made
by the Company or any Subsidiary thereof in or pursuant to any Loan Document or
which is contained in any agreement, instrument, certificate, document or other
writing furnished at any time under or in connection with any Loan Document
shall be true and correct in all material respects when made and on and as of
the borrowing date for such Loans (except to the extent any such representation
or warranty, including those contained in Section 4.22 hereof, expressly
relates to an earlier date), and each of the covenants and agreements contained
in any Loan Document shall have been performed on or prior to such date);
(d) no Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Loans to
be made on such date; and
(e) neither the making nor use of the Loans shall
cause any Bank to violate or conflict with any applicable law, rule, regulation
or administrative guideline.
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Each borrowing hereunder shall constitute a representation and warranty by the
Company as of the date of such borrowing that the conditions set forth in this
Section 5.2 have been satisfied.
SECTION 5.3 Conditions to Extension of Termination Date. Any
extension of the Revolving Credit Termination Date agreed to by the Banks
pursuant to Section 2.1(d) hereof shall be subject to the satisfaction of the
following conditions precedent:
(a) The Agent shall have received on behalf of the
Banks that have agreed to extend the Revolving Credit Termination Date, on or
before the expiration of the Initial Term, the following, each in form and
substance satisfactory to the Agent in all respects:
(i) a certificate of the Secretary or
Assistant Secretary of the Company, dated as of the last day
of the Initial Term, as to true copies of all corporate action
taken by the Company relative to the extension of the
Revolving Credit Termination Date; and
(ii) opinions, dated as of the last day of
the Initial Term, of counsel to the Company and Foothill
Group, substantially in form of Exhibit E hereto (as modified
to the satisfaction of the Agent to take into account such
extension of the Revolving Credit Termination Date), for each
extending Bank and the Agent.
(b) As of the last day of the Initial Term, each of
the Company, any Subsidiary thereof and Foothill Group shall be duly organized
and validly existing, shall have all licenses, permits and authorizations
necessary to own its properties and to carry on its business as then conducted
and then proposed to be conducted and shall be in good standing in the
jurisdiction of its organization and in each other jurisdiction in which the
nature of its business or ownership or use of its property requires such
qualification, and the Agent shall have received such evidence thereof as the
Agent or its counsel may have requested in connection therewith.
(c) All requisite organizational action and
proceedings, as the case may be, in connection with the extension of the
Revolving Credit Termination Date shall be satisfactory in form and substance
to the Agent, and the Agent shall have received all information and copies of
all documents, including without limitation, records of requisite
organizational action and proceedings that the Agent and its counsel may have
requested in connection therewith, such documents, where so requested, to be
certified by Persons satisfactory to the Agent.
(d) All necessary approvals, authorizations and
consents, if any, required in connection with the extension of the Revolving
Credit Termination Date by, and all filings with, any Governmental Authority
having jurisdiction with respect to
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any of the transactions contemplated by this Agreement and the other Loan
Documents shall have been obtained or made, as the case may be. In addition,
as of the last day of the Initial Term or Renewal Term, as applicable, the
Company, any Subsidiary thereof, and Foothill Group shall be in compliance with
all laws, rules, regulations, orders and administrative guidelines applicable
to the operation of their business unless failure to comply would not have a
Material Adverse Effect.
(e) The Company shall have paid all reasonable fees,
costs and expenses incurred or sustained by the Agent (including the fees and
disbursements of its counsel, including, without limitation, actual charges and
disbursements of "in house" counsel) in connection with the preparation,
execution and delivery of documents related to the extension of the Revolving
Credit Termination Date.
SECTION 5.4 Conditions to New Bank or Increase in Commitment.
The addition of any New Bank pursuant to Section 2.1(f) hereof or the increase
in the Commitment of a Bank pursuant to Section 2.1(e) hereof shall be subject
to the satisfaction of the following conditions precedent:
(a) The Agent shall have received on behalf of the
New Banks, and the Banks that have increased their Commitments and, if the
Aggregate Commitment has been increased, all Banks, on or before the New Bank
Effective Date or the effective date of the increase, as the case may be, the
following, each in form and substance satisfactory to the Agent in all
respects:
(i) an original Revolving Credit Note for
each New Bank and for each Bank that has increased its
Commitment, all executed by an Authorized Representative on
behalf of the Company; and
(ii) a certificate of the Secretary or
Assistant Secretary of the Company, dated as of the New Bank
Effective Date or the effective date of such increase, as to
true copies of all corporate action taken by the Company
relative to each New Bank or increased Commitment, including
the signatures and incumbency of each officer executing any
new Notes.
(b) As of each New Bank Effective Date or the
effective date of any increase in a Bank's Commitment, as applicable, each of
the Company, any Subsidiary thereof and Foothill Group shall be duly organized
and validly existing, shall have all licenses, permits and authorizations
necessary to own its properties and to carry on its business as then conducted
and as then proposed to be conducted and shall be in good standing in the
jurisdiction of its organization and in each other jurisdiction in which the
nature of its business or ownership or use of its property requires such
qualification, and the Agent shall have received such evidence thereof as the
Agent or its counsel may have requested in connection therewith.
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(c) All requisite organizational action and
proceedings, as the case may be, in connection with any New Bank, any increase
in a Bank's Commitment and any increase in the Aggregate Commitment shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all documents, including without
limitation, records of requisite organizational action and proceedings that the
Agent and its counsel may have requested in connection therewith, such
documents, where so requested, to be certified by Persons satisfactory to the
Agent.
(d) All necessary approvals, authorizations and
consents, if any, required in connection with any New Bank, any increase in a
Bank's Commitment and any increase in the Aggregate Commitment by, and all
filings with, any Governmental Authority having jurisdiction with respect to
any of the transactions contemplated by this Agreement and the other Loan
Documents shall have been obtained or made, as the case may be. In addition,
as of each New Bank Effective Date or the effective date of any increase in a
Bank's Commitment, as applicable, the Company, any Subsidiary thereof and
Foothill Group shall be in compliance with all laws, rules, regulations, orders
and administrative guidelines applicable to the operation of their business
unless failure to comply would not have a Material Adverse Effect.
(e) The Company shall have paid all reasonable fees,
costs and expenses incurred or sustained by the Agent (including the fees and
disbursements of their counsel, including, without limitation, actual charges
and disbursements of "in house" counsel) in connection with the preparation,
execution and delivery of documents related to the New Banks or increased
Commitments.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until the Notes,
together with interest and all other Indebtedness of the Company to the Agent
or the Banks under this Agreement and all other Loan Documents, are paid in
full and the Aggregate Commitment is terminated, unless specifically waived in
writing by the Agent on behalf of the Required Banks:
SECTION 6.1 Reporting and Information Requirements.
(a) Annual Audit Reports. As soon as practicable,
and in any event within 90 days after the close of each fiscal year of the
Company, the Company shall furnish to the Agent and the Banks:
(i) consolidated and consolidating
statements of income, retained earnings and cash flow of
Foothill Group and its Consolidated Subsidiaries for such
fiscal year and consolidated and consolidating balance sheets
of Foothill Group and its Consolidated
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Subsidiaries as of the close of such fiscal year, and notes
to each, and
(ii) consolidated and consolidating
statements of income, retained earnings and cash flow of the
Company and its Consolidated Subsidiaries for such fiscal year
and a consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year,
and notes to each,
all in reasonable detail, setting forth in comparative form the corresponding
figures of the preceding fiscal year, and all accompanied by a report thereon
of Ernst & Young, or other independent public accountants of recognized
national standing selected by the Company, containing an opinion unqualified as
to scope limitations imposed by the Company, unqualified as to the Company
being a going concern and otherwise without qualification except as therein
noted, to the effect that the consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the Company
and its Subsidiaries as of the end of the fiscal year being reported on and
that the consolidated results of the operations and cash flows for said year
are in conformity with generally accepted accounting principles and that the
examination of such accountants in connection with such financial statements
has been conducted in accordance with generally accepted auditing standards and
included such tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the circumstances;
(b) Quarterly Reports. As soon as practicable, and
in any event within 45 days after the close of each of the first three quarters
of each fiscal year of the Company, the Company shall furnish to the Agent and
the Banks:
(i) unaudited consolidated and consolidating
statements of income, retained earnings and cash flows for
Foothill Group and its Consolidated Subsidiaries for such
fiscal quarter and for the period from the beginning of such
fiscal year to the end of such fiscal quarter, and unaudited
consolidated and consolidating balance sheets of Foothill
Group and its Consolidated Subsidiaries as of the close of
such fiscal quarter, and exhibits to each, and
(ii) unaudited consolidated and
consolidating statements of income, retained and cash flow for
the Company and its Consolidated Subsidiaries for such fiscal
quarter and for the period from the beginning of such fiscal
year to the end of such fiscal quarter, and an unaudited
consolidated and consolidating balance sheet of the Company
and its Consolidated Subsidiaries as of the close of such
fiscal quarter, and exhibits to each.
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all in reasonable detail, setting forth in comparative form the corresponding
figures for the same period or as of the same date during the preceding fiscal
quarter (except for the balance sheets, which shall set forth in comparative
form the corresponding balance sheets as of the prior fiscal year end), and
(except in the case of such consolidating statements) certified by an
Authorized Representative of the Company as presenting fairly the financial
position of the Company and its Consolidated Subsidiaries as of the end of such
fiscal quarter, and the results of their operations and the changes in their
financial position for such fiscal quarter, in conformity with GAAP, subject to
year-end audit adjustments.
(c) Compliance Certificates. Within 90 days after
the end of each fiscal year of the Company and within 45 days after the end of
each of the first three quarters of each fiscal year, the Company shall deliver
to the Agent and the Banks a certificate dated as of the end of such fiscal
year or quarter, signed on behalf of the Company by its Authorized
Representative (i) stating that as of the date thereof no Default or Event of
Default has occurred and is continuing or exists, or if a Default or Event of
Default has occurred and is continuing or exists, specifying in detail the
nature and period of existence thereof and any action with respect thereto
taken or contemplated to be taken by the Company, (ii) stating in reasonable
detail the information and calculations necessary to establish compliance with
the provisions of Article VII and Sections 8.2(a)(vii), 8.2(a)(viii), 8.3 and
8.8 hereof and (iii) stating that the signer has personally reviewed this
Agreement and that such certificate is based on an examination made by or under
the supervision of the signer sufficient to assure that such certificate is
accurate.
(d) Accountant's Certificate. Each set of
consolidated statements and balance sheet of the Company delivered pursuant to
Section 6.1(a) hereof shall be accompanied by a certificate or report dated as
of the date of such statements and balance sheet by the accountants who
certified such statements and balance sheet stating in substance that they have
reviewed this Agreement and that in making the examination necessary for their
certification of such statements and balance sheet they did not become aware of
any Default or Event of Default, or if they did become so aware, such
certificate or report shall state the nature and period of existence thereof.
(e) Other Reports and Information. Promptly upon
the issuance or filing thereof, the Company shall deliver to the Agent and the
Banks a copy of all reports that the Company, any Subsidiary thereof or the
Foothill Group shall file with the Securities and Exchange Commission (or any
successor thereto), any other Governmental Authority with responsibility for
regulating the business of the Company, any Subsidiary thereof, or Foothill
Group or any securities exchange, and all reports, notices or statements sent
to all holders of Capital Interests in or Indebtedness of the Company, any
Subsidiary thereof or Foothill Group. The Company shall provide the Agent and
the
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Banks with copies of any certificates or notices furnished to any party in
respect of any optional redemption of, or default under, any Senior
Indebtedness (other than arising under the Revolver Agreement) or Subordinated
Debt, which notice or certificate shall be delivered concurrently with the
Company's delivery of such certificate or notice to such other party.
(f) Net Receivable Information. As soon as
practicable and in any event within 45 days after the close of each of the
first three fiscal quarters of the Company and within 90 days after the close
of the fiscal year of the Company, the Company shall furnish to the Agent and
the Banks a report (i) describing items included in the Net Amount of Finance
Receivables and reports on Non-Performing Assets, in any case in excess of
$1,000,000, (ii) describing the type and estimated market value of items
included in Purchased Receivables in excess of $2,000,000, (iii) describing the
type and estimated market value of items included in Purchased Receivables
which are not secured or are not fully secured, (iv) listing each new Finance
Receivable having a Net Amount in excess of $2,000,000 closed during such
fiscal quarter, including a designation as to the type of Finance Receivable
and a description of the collateral, (v) identifying the ten largest obligers
by Net Amount of Finance Receivables, including a designation as to the type of
Finance Receivable and a description of the collateral and (vi) listing all
outstanding letters of credit and guarantees in excess of $1,000,000 as of the
end of such fiscal quarter or fiscal year.
(g) Further Information. The Company will promptly
furnish to the Agent and the Banks such other information and in such form as
any Bank or the Agent may reasonably request.
SECTION 6.2 Taxes and Claims. The Company and its
Subsidiaries shall pay and discharge (a) all taxes, assessments and
governmental charges upon or against them or their respective properties or
assets prior to the date on which penalties attach thereto, unless and to the
extent that such charges are being contested diligently in good faith by
appropriate proceedings and adequate reserves in conformity with GAAP have been
provided therefor on the books of the Company or such Subsidiary, as the case
may be, and (b) all lawful claims, whether for labor, materials, supplies,
services or anything else that might or could, if unpaid, become a Lien or
charge upon the properties or assets of the Company or any Subsidiary thereof,
which Lien would not be permitted under this Agreement, unless and to the
extent such claims are being contested diligently in good faith by appropriate
proceedings and adequate reserves in conformity with GAAP have been provided
therefor on the books of the Company or such Subsidiary.
SECTION 6.3 Insurance. The Company and its Subsidiaries
shall (a) keep all of their respective properties adequately insured at all
times with responsible insurance carriers against loss or damage by fire ad
other hazards, and (b) maintain adequate insurance at all times with
responsible
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carriers against liability on account of damage to persons and property and
under all applicable worker's compensation laws. For the purposes of this
Section 6.3, insurance shall be deemed adequate if the same is not less
extensive in coverage and amount than is customarily maintained by other
persons engaged in the same or similar business similarly situated.
SECTION 6.4 Books and Records. The Company and its
Subsidiaries shall maintain at all times true and complete books, records and
accounts in which true and correct entries shall be made of its transactions in
accordance with GAAP consistently applied and in compliance with the
regulations of any Governmental Authority having jurisdiction over it.
SECTION 6.5 Properties in Good Condition. The Company and
its Subsidiaries shall keep their respective properties in good repair, working
order and condition (subject to such wear and tear as may occur in the ordinary
course of business) and, from time to time, make all needful and proper
repairs, renewals, replacements, additions and improvements thereto, so that
the business carried on may be properly and advantageously conducted at all
times in accordance with prudent business management.
SECTION 6.6 Inspection. The Company shall allow any
representative of the Agent or any Bank to visit and inspect its properties and
the properties of any Subsidiary of the Company, to examine and audit the books
of account and other records and files of the Company and its Subsidiaries to
make copies thereof and to discuss the affairs, business, finances and accounts
of the Company and its Subsidiaries with their respective officers and
employees, all at such reasonable times and as often as the Agent, the Issuing
Bank or such Bank may request. Audits and inspections by or at the request of
any Bank shall be at the expense of such Bank, and audits and inspections by or
on behalf of the Agent shall be at the expense of all the Banks, except that,
if an Event of Default shall have occurred and be continuing, all such audits
and inspections by the Agent shall be at the expense of the Company. Any Bank
may request an audit and inspection by the Agent if an Event of Default shall
have occurred and be continuing.
SECTION 6.7 Pay Indebtedness and Perform Other Covenants.
The Company shall make full and timely payments of the principal of and
interest on the Notes and all other amounts owed by the Company to the Agent or
the Banks, whether now existing or hereafter arising, under the Agreement or
otherwise, and the Company and its Subsidiaries shall comply duly with all the
terms and covenants contained in each of the instruments and documents
furnished in connection with or pursuant to the Loan Documents or otherwise,
all at the times and places and in the manner set forth therein.
SECTION 6.8 Compliance With Laws. The Company and its
Subsidiaries shall comply with all applicable laws and regulations, including
but not limited to, federal, state and local laws and regulations relating to
commercial lending,
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disclosure, collection and licensing, where the failure so to comply would
have, in the opinion of management in consultation with counsel, a Material
Adverse Effect.
SECTION 6.9 Notice of Certain Events. Promptly, but in no
event later than ten Business Days after obtaining knowledge thereof, the
Company shall give written notice to the Agent and the Banks of:
(a) any litigation, including arbitrations, and any
investigations or proceedings before any Governmental Authority brought against
the Company or any Subsidiary thereof (whether or not the claim is considered
to be covered by insurance) that might, if determined adversely, have a
Material Adverse Effect, or where the amount involved, when added together with
all other amounts involved in any other litigation, investigation, arbitration
or proceeding affecting the Company or any Subsidiary thereof, might have a
Material Adverse Effect;
(b) any written notice of a violation received by
the Company or any Subsidiary thereof from any Governmental Authority that, if
such violation were established, might have a Material Adverse Effect;
(c) any written notice of any change in its
commercial paper rating received by the Company from any Rating Agency; and
(d) any Default or Event of Default, specifying the
nature and extent thereof and specifying the course of action to be taken by
the Company to cure such Default or Event of Default.
SECTION 6.10 Environmental Laws, Etc. (a) Except to the
extent that the following does not have and would not have, in the reasonable
opinion of management, a Material Adverse Effect, the Company and each
Subsidiary thereof shall: (i) keep all Property owned or operated by them or in
their possession or over which they exercise control free of Hazardous
Materials, (ii) comply with all requirements of all applicable federal, state
and local environmental, health, safety and sanitation laws, ordinances,
regulatory and administrative authorities with respect thereof, (iii) not use
any Property to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce, process or in any manner deal with, Hazardous
Materials, (iv) not knowingly make or acquire any Finance Receivable secured by
Property that has been used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce, process, or deal in any manner with
Hazardous Materials except upon conducting an environmental liability review
that is satisfactory in the reasonable opinion of management, (v) not knowingly
foreclose on or repossess any Property that has been so used, (vi) not
knowingly cause or permit the installation or placement of Hazardous Materials
onto any Property or onto any adjacent property or suffer the presence of
Hazardous Materials on any Property. The Company and its
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Subsidiaries shall undertake promptly and pursue diligently to complete
appropriate remedial clean up action in the event of any release of Hazardous
Materials on, upon or into any property owned or operated by any of them or any
Property adjacent thereto.
(b) The Company agrees to provide the Agent with
copies of any notifications of releases of Hazardous Materials that the Company
or any Subsidiary thereof either gives to or receives from any Governmental
Authority or any other Person with respect to any Property owned or operated by
any thereof or securing any Finance Receivable or Purchased Receivables, except
where such release could not have a Material Adverse Effect. Such copies shall
be sent to the Agent concurrently with the mailing or delivery of such copies
of the Governmental Authority.
SECTION 6.11 Further Assurances. Upon the request of either
the Agent or the Required Banks, the Company shall duly execute and deliver, or
cause to be duly executed and delivered, to the Agent (without cost to the
Agent or the Banks) such further instruments and do and cause to be done such
further acts as may be reasonably necessary or proper in the opinion of either
the Agent or such Banks to carry out more effectively the provisions and
purposes of this Agreement and the other Loan Documents.
SECTION 6.12 ERISA. The Company and each ERISA Affiliate
shall comply with, and shall operate and maintain each Plan in compliance with,
ERISA and all applicable provisions of the Code.
SECTION 6.13 Maintain Existence. The Company and each
Subsidiary thereof shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect:
(a) their current form of organization;
(b) their good standing in their jurisdiction of
organization;
(c) their qualification and good standing in each
jurisdiction in which the ownership of their properties or the nature of their
business or both makes such qualification necessary or desirable; and
(d) all their other rights, licenses, permits and
franchises,
the change, termination or loss of which might (other than as specified in
clause (a) above) have a Material Adverse Effect; and shall conduct and operate
their respective businesses in substantially the manner in which they currently
are conducted and operated, without material alteration or change in the nature
of such business; provided, however, that the merger of FCC Holdings into the
Company shall not be deemed in and of itself to have a Material Adverse Effect.
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ARTICLE VII
FINANCIAL COVENANTS
The Company covenants and agrees that, until the Notes,
together with interest and all other Indebtedness of the Company to the Agent
or the Banks under this Agreement and all other Loan Documents, are paid in
full and the Aggregate Commitment is terminated, the Company shall not, without
the prior written consent of the Agent on behalf of the Required Banks, suffer
or permit:
SECTION 7.1 Adjusted Consolidated Net Worth. Adjusted
Consolidated Net Worth shall not be less than $75,000,000 at any time.
SECTION 7.2 Indebtedness.
(a) Outstanding Senior Indebtedness (other than
Guaranties) shall not exceed an amount equal to 340% of the sum of (i) Adjusted
Consolidated Net Worth, plus (ii) outstanding Subordinated Debt.
(b) Outstanding Subordinated Debt shall not exceed
an amount equal to 125% of Adjusted Consolidated Net Worth.
(c) Outstanding Senior Subordinated Debt shall not
exceed an amount equal to 60% of the sum of (i) Adjusted Consolidated Net
Worth, plus (ii) outstanding Junior Subordinated Debt.
Notwithstanding the foregoing, the Company agrees that the
Banks shall have the benefit of the covenants contained in Section 9.6A of the
Loan Agreement dated as of November 10, 1980 between the Company and each of
the lenders named therein; provided that the Banks shall only be entitled to
the benefits of said section 9.6A so long as said section has not been amended
to be less restrictive than Section 7.2 hereof or any notes issued under the
Loan Agreement dated as of November 10, 1980 shall remain outstanding;
provided, however, the Company shall at all times be and remain subject to the
provisions of Section 7.2 hereof.
SECTION 7.3 Unused Committed Bank Credit Facilities. The sum
of (i) the aggregate outstanding face amount of commercial paper issued by the
Company and (ii) the aggregate outstanding principal amount of loans permitted
by Section 8.2(a)(ii)(B)(II) hereof shall not exceed the aggregate unborrowed
amount available to the Company at such time under committed credit facilities.
SECTION 7.4 Purchased Receivables. The Net Amount of
Purchased Receivables shall not exceed $75,000,000.
SECTION 7.5 Industry Concentration. The aggregate Net Amount
of all Finance Receivables owed by all borrowers in any
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single industry, as defined by two-digit SIC codes, shall not exceed an amount
equal to 10% of Consolidated Assets at the end of any two consecutive fiscal
quarters of the Company. Notwithstanding the foregoing, Wholesale Trade
Durable Goods (SIC Code 50) and Wholesale Trade Non-Durable Goods (SIC Code 51)
shall be excluded from the above limitation.
SECTION 7.6 Settlement Securities. The aggregate book value
(as measured by original cost) of all Settlement Securities granted to and held
by the Company or any of its Subsidiaries shall not exceed 7.5% of Consolidated
Assets.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees that until the Notes,
together with interest and all other Obligations of the Company to the Agent or
the Banks under this Agreement and the other Loan Documents, are paid in full
and the Aggregate Commitment is terminated, the Company shall not, without the
prior written consent of the Agent on behalf of the Required Banks, do or
suffer to occur or exist or agree to be liable to do, any of the following:
SECTION 8.1 Liens. The Company shall not, and shall not
permit any Subsidiary to, at any time create, incur, assume or suffer to exist
any Lien on any of its property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except:
(a) Liens on Property existing on the Effective Date
which secure Indebtedness in an aggregate amount of less than $100,000;
(b) Liens constituting renewals, extensions or
replacements of Liens permitted by clause (a) above, provided that the
principal amount of the Indebtedness secured by any such new Lien does not
exceed the principal amount of the Indebtedness being renewed, extended or
refunded at the time of renewal, extension or refunding thereof and that such
new Lien attaches only to the same property subject to such earlier Lien;
(c) Liens securing taxes, assessments or
governmental charge or levies, or the claims or demands of materialmen,
mechanics, carriers, workmen, repairmen, warehousemen, landlords and other like
Persons, not yet delinquent or that are being contested diligently in good
faith by appropriate proceedings and in respect of which adequate reserves in
conformity with GAAP have been provided on the books of the Company or the
applicable Subsidiary thereof;
(d) other Liens (including pledges or deposits in
accordance with worker's compensation laws), incidental to the conduct of its
business or the ownership of its property and assets, that are not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and that in the
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aggregate do not detract materially from the value of its property or assets,
or materially impair the use thereof in the operation of its business;
(e) attachment, judgment and other similar Liens
arising in connection with court proceedings, provided that execution or other
enforcement of such Liens is effectively stayed, the claims secured thereby are
being contested diligently in good faith by appropriate proceedings and
adequate reserves in conformity with GAAP have been provided on the books of
the Company or the applicable Subsidiary thereof;
(f) purchase money Liens on tangible personal
property securing all or part of the purchase price thereof payable by the
Company or a Subsidiary thereof (including, without limitation, tangible
personal property acquired to be leased to customers of the Company or any
Subsidiary thereof in the ordinary course of business) and Liens (whether or
not assumed) existing in property at the time of purchase thereof by the
Company or any Subsidiary thereof, as the case may be; provided that each such
Lien is confined solely to the property so purchased, improvements thereto and
proceeds thereof;
(g) zoning restrictions, easements, minor
restrictions on the use of real property, minor irregularities in title thereto
and other minor Liens that do not secure the payment of money or the
performance of an obligation and that do not in the aggregate materially
detract from the value of a property or asset to, or materially impair its use
in the business of, the Company or any Subsidiary thereof;
(h) Liens on assets of the Company acquired by the
Company as a result of foreclosures or deeds in lieu relating to collateral
securing extensions of credit by the Company made in the ordinary course of
business; provided, that in each such case such Lien is limited to such
acquired asset; and
(i) Liens (exclusive of those described in
subparagraphs (a) through (h) above) that secure or represent the incurring of
Indebtedness the repayment of which in the aggregate for the Company and its
Subsidiaries does not exceed $100,000 per fiscal year of the Company.
In no event shall this Section 8.1 be construed to permit any Lien imposed by,
or required to be granted pursuant to, ERISA or any environmental law or any
Lien on Capital Interests of any direct or indirect Subsidiary of the Company.
SECTION 8.2 Indebtedness.
(a) The Company shall not, and shall not permit any
Subsidiary thereof to, create, incur, assume or suffer to exist, contingently
or otherwise, any Indebtedness, except:
(i) Indebtedness to the Agent and the Banks
arising hereunder or under any of the other Loan
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Documents and, prior to the Effective Date, Indebtedness under
the Existing Loan Agreement;
(ii) the following other Senior
Indebtedness:
(A) Permitted Senior Debt, and
(B) subject to compliance with the
requirements of Section 7.3 hereof,
(I) Indebtedness evidenced by
commercial paper issued by the Company,
(II) Indebtedness in respect of loans
under uncommitted credit facilities extended
by any financial institution provided that,
the covenants, defaults and other
requirements applicable to such Indebtedness
are no more restrictive upon the Company and
its Subsidiaries than those contained in the
Loan Documents;
(iii) Permitted Subordinated Debt;
(iv) Indebtedness secured by a Lien
described in subsections (f) or (h) of Section 8.1 hereof;
provided that any such Indebtedness that is secured by a Lien
described in such subsection (h) is not assumed by the Company
or any Subsidiary thereof;
(v) unsecured accounts payable and other
current liabilities incurred in the ordinary course of
business other than liabilities that are for money borrowed or
are evidenced by bonds, debentures, notes or other similar
instruments;
(vi) obligations to return cash collateral
or security deposits taken as collateral for loans and leases
extended by the Company in the ordinary course of its
business;
(vii) the following other Indebtedness:
(A) contingent liabilities arising
from the endorsement of negotiable or other
instruments for deposit or collection or similar
transactions in the ordinary course of business;
(B) Indebtedness in respect of letters
of credit and guarantees, whether (I) issued directly
by the Company or by a financial institution for the
account of the Company or of third party customers of
the Company, in either case fully supported by
collateral pledged to the Company by third parties
under existing credit
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facilities, issued in the ordinary course of the
Company's business under usual and customary terms
for the account of persons who are not Affiliates or
Subsidiaries of the Company or Foothill Group or (II)
issued by a financial institution for the account of
the Company to secure or support interest rate swaps,
caps, collars or other interest rate risk management
contracts entered into by the Company, provided, the
aggregate contingent liability of the Company under
such letters of credit and guarantees does not at any
time exceed an amount equal to 60% of Consolidated
Net Worth at such time;
(C) indemnities by the Company or any
Subsidiary thereof of the liabilities of its
directors or officers pursuant to provisions
contained in its articles of incorporation or by-laws
or as otherwise permitted by applicable law; and
(viii) advances to, and other Indebtedness
of, any Subsidiary of the Company owed to or held by the
Company, provided that the aggregate of all such advances and
other Indebtedness at any time outstanding does not exceed an
amount equal to 6% of Consolidated Net Worth at such time.
(b) The Company shall not, and shall not permit any
Subsidiary thereof to, enter into any arrangements, directly or indirectly,
with any Person, whereby the Company or any Subsidiary thereof shall sell or
transfer any property, whether now owned or hereafter acquired, used or useful
in its business in connection with the rental or lease of the property so sold
or transferred or of other property that the Company or any Subsidiary thereof
intends to use for substantially the same purpose or purposes as the property
so sold or transferred.
SECTION 8.3 Restricted Payments.
(a) the Company, on a consolidated basis with its
subsidiaries, shall not make, or commit to make, any Restricted Payment if
after giving effect to the proposed Restricted Payment, at the date of
declaration in the case of a dividend or at the date of distribution in the
case of any other proposed Restricted Payment (each such date, as the case may
be, being herein called the "Computation Date"),
(i) the sum of
(A) the aggregate amount of all
dividends (other than dividends payable solely in
Capital Interests of the Company) declared during the
period commencing January 1, 1994 and ending on the
Computation date (herein called the "Computation
Period"), plus
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(B) the aggregate amount of all other
Restricted Payments made during the Computation
Period (and any commitments for other Restricted
Payments during the Computation Period and
outstanding on the Computation Date)
exceeds $15,326,000 plus 50% (or, in the case of a deficit,
minus 100%) of Consolidated Net Income for the Computation
Period;
(ii) the sum of all such Restricted Payments
for the current fiscal year exceeds Consolidated Net Income
for the immediately preceding fiscal year; and
(iii) at the time of such Restricted Payment
and immediately after giving effect thereto, a Default or
Event of Default shall have occurred and be continuing.
(b) Notwithstanding the foregoing restrictions of
this Section 8.3, the Company may make an optional payment in respect of any
outstanding Subordinated Debt in exchange for, or out of the net proceeds of
the substantially concurrent sale of, its Capital Interests or other
Subordinated Debt, and no such optional payment shall be included in any
computation for the above subsection (a).
SECTION 8.4 Investments. The Company shall not make or
obligate itself to make, and shall not permit any Subsidiary to make or
obligate itself to make any Restricted Investment, except:
(a) trade credit extended, and loans and advances
extended to subcontractors or suppliers, under usual and customary terms in the
ordinary course of business;
(b) advances to employees to meet expenses incurred
by such employees in the ordinary course of business;
(c) subject to Section 8.10 hereof, credit extended
under usual and customary terms in the ordinary course of the Company's
business to Persons who are not Affiliates or Subsidiaries of the Company or
Foothill Group;
(d) subject to Section 7.6 hereof, Settlement
Securities;
(e) Capital Interests in Persons that, as of the
Effective Date, are Subsidiaries;
(f) advances by the Company to, and other
Indebtedness held by the Company of, any Subsidiary thereof; provided, that
such advances and other Indebtedness are permitted pursuant to Section
8.2(a)(viii) hereof; and
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(g) subject to Section 7.4, Public Debt Securities
and Non-Public Debt Instruments.
SECTION 8.5 Merger, Consolidation, Sale and Transfer of
Assets.
(a) The Company shall not, and shall not permit any
Subsidiary thereof to, enter into any transaction of merger, consolidation,
partnership, or joint venture with, or transfer, sell, assign, lease, or
otherwise dispose of their respective properties or assets to any Person or
purchase all or a substantial portion of the properties or assets of any other
Person from such Person, other than in the ordinary course of business, except
that:
(i) The Company may make cash acquisitions
of secured commercial finance or leasing portfolios in an
amount, in any fiscal year, up to 10% of Consolidated Assets
as of the end of the previous fiscal year;
(ii) The Company may sell or dispose of
assets, other than in the ordinary course of business, in an
amount, in any fiscal year, up to 2.5% of Consolidated Assets
as of the end of the previous fiscal year; and
(iii) Any Subsidiary of the Company may
consolidate or merge into the Company, provided that the
Company is the survivor of any such consolidation or merger.
(b) The Company shall not, and shall not permit any
Subsidiary thereof to, sell to any Person (other than the Company or a
Subsidiary thereof) any Capital Interests in any Subsidiary of the Company
owned by the Company or any other Subsidiary thereof.
SECTION 8.6 Permitted Business. The Company shall not engage
in any business which is substantially different from the business of secured
commercial financing and leasing. FCC Holdings shall only engage in its
business of owning, operating and liquidating Repossessed Assets.
SECTION 8.7 Amendments of Agreements. The Company shall not
amend, modify or change, in any material respect, any of the terms of its
Subordinated Debt if after giving effect to such modification, such
Subordinated Debt would fail to qualify as Permitted Subordinated Debt if newly
issued upon such modified terms (other than because of its then remaining
maturity and weighted average life to maturity). The Company shall not amend,
modify, or change any of the terms of the subordination provisions applicable
to any Subordinated Debt. The Company will not amend, modify or change in any
material respect any of the terms of its Senior Indebtedness if, after giving
effect to such
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modification, such Senior Indebtedness would fail to qualify as Permitted
Senior Debt if newly issued upon such modified terms.
SECTION 8.8 Transactions with Affiliates.
(a) Neither the Company nor any Subsidiary thereof
shall enter into, or cause, suffer, or permit to exist, any transactions,
including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service, with any Affiliate, on terms that are
less favorable to it than those that would be obtainable at the time from any
Person that is not such an Affiliate.
(b) neither the Company nor any Subsidiary thereof
shall make any payments to or on behalf of, or transfer funds to, Foothill
Group or any Subsidiary thereof, except that if no Default or Event of Default
has occurred and is continuing or exists or would occur or exist as a result
thereof:
(i) the Company and its Subsidiaries may pay
allocated administrative overhead expenses in an aggregate
amount not to exceed 2% of Total Revenues per fiscal year of
the Company, to the extent charged to the Company and its
Subsidiaries by Foothill Group;
(ii) the Company and its Subsidiaries may
pay taxes chargeable, on the basis of GAAP, to the Company and
such Subsidiaries in accordance with the tax sharing
arrangements described on Schedule III;
(iii) subject to the provisions of the
Foothill Group Subordination Agreement, the Company may make
regularly scheduled payments on account of the Foothill Group
Subordinated Debt; and
(iv) the Company may pay dividends on its
Capital Interests held by Foothill Group and other Restricted
Payments to the extent such payments otherwise are permitted
under the provisions of Section 8.3 hereof.
(c) The Company and its Subsidiaries may carry out
such transactions with its Affiliates as are described on Schedule IV hereto.
SECTION 8.9 Inconsistent Agreements. The Company shall not,
and shall not permit any Subsidiary thereof to, enter into any agreement that
contains any provisions that would be violated or breached by any borrowings
hereunder or by the performance by the Company or any Subsidiaries of their
respective obligations under any of the Loan Documents or by the granting of
any security for the pro rata benefit of the holders of the obligations of the
Company hereunder and other Senior Indebtedness on a pari passu basis. The
Company shall not, and shall not permit any Subsidiary thereof to, enter into,
become or remain subject to any agreement or instrument to which the
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Company or such Subsidiary is a party or by which either of them or any of
their respective properties (now owned or hereafter acquired) may be subject or
bound that would prohibit or require the consent of any Person to any
amendment, modification or supplement to any of the Loan Documents.
SECTION 8.10 Borrower Concentration. The Company will not
enter into any lending arrangement with any borrower if, immediately after the
consummation of such lending arrangement and after giving effect thereto: (a)
there shall be more than ten borrowers for which the aggregate principal amount
of all loans, letters of credit, guarantees and other obligations by the
Company to each such borrower exceeds 10% of Consolidated Capital Funds or (b)
the aggregate principal amount of all loans, letters of credit, guarantees and
other obligations by the Company to such borrower would exceed 15% of
Consolidated Capital Funds.
SECTION 8.11 Subsidiaries. The Company shall not, and shall
not permit any Subsidiary thereof to, undertake or cause the incorporation or
organization of any Subsidiaries.
SECTION 8.12 Consolidated Tax Return. The Company shall not,
and shall not suffer any Subsidiary thereof to, file or consent to the filing
of any consolidated income tax return with any Person other than Foothill Group
and its Subsidiaries or to pay income tax liabilities otherwise than in
accordance with the tax sharing arrangements described on Schedule III.
SECTION 8.13 Compliance with ERISA. The Company shall not
permit or suffer to exist any Prohibited Transaction involving any of the Plans
or any trust created thereunder that would subject the Company or any ERISA
Affiliate to a material tax or penalty on Prohibited Transactions imposed under
Code Section 4975 or ERISA Sections 502(i) or 502(1); fail to pay to any Plan
any required contribution under the terms of such Plan; permit or suffer to
exist any liability under Code Section 4980B or Treasury Regulations (whether
proposed or final) relating thereto; or permit or suffer to exist any tax or
penalty for failure to comply with the requirements of Title of ERISA, which
singly or in the aggregate would result in any material liability, tax or
penalty to the Company and/or any ERISA Affiliate.
ARTICLE IX
DEFAULTS AND REMEDIES
SECTION 9.1 Events of Default. If any one or more of the
following events (herein called "Events of Default") shall occur for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) if default shall be made by the Company in the
due and punctual payment of the principal of or interest on
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any of the Loans or any other amounts due and owing to the Agent or the Banks,
when and as the same shall become due and payable and, with respect to defaults
in payment other than payment of principal, such default shall continue for
more than two days;
(b) if default shall be made by the Company, or any
Subsidiary thereof in the performance or observance of, or shall occur under,
any covenant, agreement or provision contained in Section 6.2, 6.4, 6.13,
Article VII or Article VIII hereof;
(c) if default shall be made by the Company or any
Subsidiary thereof in the performance or observance of, or shall occur under,
any other covenant, agreement or provision of this Agreement (other than
Section 6.7 hereof) and such default shall not have been remedied within 30
days after such failure shall first have become known to any officer of the
Company or such Subsidiary, as the case may be;
(d) if default shall be made by the Company or any
Subsidiary thereof in the performance or observance of, or shall occur under,
any covenant, agreement or provision of any other Loan Document or in any other
agreement, instrument or document delivered to the Agent or the Banks and such
default shall not have been remedied within such grace or cure period, if any,
as may be provided therefor;
(e) if the Company or any Subsidiary thereof shall
default (i) in the payment of any principal, interest or premium with respect
to any Indebtedness (other than Indebtedness under the Loan Documents) for
borrowed money or any obligation that is the substantive equivalent thereof and
such default shall continue for more than the period of grace, if any, therein
specified, and (ii) the performance or observance of any other term, condition
or agreement contained in any such obligation or in any agreement relating
thereto if the effect thereof is to cause, or permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders) to cause,
such obligation to become due or requiring the Company to repurchase or repay
prior to its scheduled maturity;
(f) if any representation or warranty or any other
statement of fact herein or in the other Loan Documents, or in connection with
the transactions contemplated hereby or thereby, or in any writing,
certificate, report or statement at any time furnished by the Company or any
Subsidiary thereof to the Agent or any of the Banks pursuant to or in
connection with this Agreement or the other Loan Documents shall prove to have
been false or misleading in any material respect when made;
(g) if the Company or any Subsidiary thereof shall
admit in writing its inability to pay its debts or obligations or shall file a
petition or seek relief under or take advantage of any insolvency law; make an
assignment for the benefit of its creditors; commence a proceeding for the
appointment of a receiver, trustee, liquidator, custodian or conservator of
itself or of the whole or substantially all of its
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property; file a petition or an answer to a petition under any chapter of the
United States Bankruptcy Code, as amended (11 U.S.C. 101 et seq.); or file a
petition or seek relief under or take advantage or any other similar law of
the United States of America, any state thereof or any foreign country;
(h) if a court of competent jurisdiction shall enter
an order, judgment or decree appointing or authorizing a receiver, trustee,
liquidator, custodian or conservator of the Company or any Subsidiary thereof
or of the whole or substantially all of the property of any thereof, or enter
an order for relief against the Company or any Subsidiary thereof in any case
commenced under any chapter of the United States Bankruptcy Code, as amended,
or grant relief under any other similar law or statute of the United States of
America, any state thereof or any foreign country; or if, under the provisions
of any law for the relief or aid of debtors, a court of competent jurisdiction
or a receiver, trustee, liquidator, custodian or conservator shall assume
custody or control or take possession of the Company or any Subsidiary thereof
or of the whole or substantially all of the property of any thereof; or if
there is commenced against the Company or any Subsidiary thereof any proceeding
for any of the foregoing relief or if a petition is filed against the Company
or any Subsidiary thereof under any chapter of the United States Bankruptcy
Code, as amended, or under any other similar law or statute of the United
States of America or any state thereof or any foreign country and such
proceeding or petition remains undismissed for a period of 60 days; or if the
Company or any Subsidiary thereof by an act indicates its consent to, approval
of or acquiescence in any such proceeding or petition;
(i) if any judgment or judgments against the Company
or any Subsidiary thereof or any attachment or execution against any of their
respective properties for any amount or amounts, in any case or in the
aggregate, in excess of $500,000 shall remain unpaid, unstayed, undismissed or
unbonded for a period of more than 60 days;
(j) if (i) any Person shall engage in any Prohibited
Transaction involving any Plan, or (ii) any other event or condition shall
occur or exist with respect to a Plan; and in the case of clause (i) above,
such event or condition, together with all other such events or conditions, if
any, could subject the Company or any of its ERISA Affiliates to any tax,
penalty or other liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition of the Company
or such Subsidiary;
(k) if Capital Interests of the Company are pledged
as security for any obligations of Foothill Group;
(l) if a Change in Control shall occur; or
(m) if any term or provision of the subordination
provisions contained in the documents related to the Subordinated
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Debt shall cease to be in full force and effect, or the Company, Foothill
Group, or any holder of any Subordinated Debt (or any trustee or agent on
behalf of, or pledgee of such holders) shall, or shall purport to, terminate,
repudiate, declare voidable or void or otherwise contest any term or provision
of such subordination provisions;
then, in the case of an Event of Default described in clause (g) or (h) above,
the Aggregate Commitment shall automatically terminate and the unpaid balance
of the Notes and all interest accrued thereon and any accrued and unpaid fees
and expenses due and payable hereunder or under any other Loan Document shall
automatically (without any action on the part of the Agent or any Bank and
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived) forthwith become due and payable, and, in the case of
any other Event of Default, then and in any such event, and at any time
thereafter, if such or any other Event of Default shall then be continuing, the
Agent, upon the direction of the Required Banks, shall declare (i) the
Aggregate Commitment to be terminated, whereupon the obligation of the Banks to
make further Loans hereunder shall terminate immediately, and (ii) the Notes to
be due and payable, whereupon the then unpaid balance of the Notes shall be
accelerated and the same, and all interest accrued thereon and any accrued and
unpaid fees and expenses due and payable hereunder or under any other Loan
Document shall forthwith become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes to the contrary notwithstanding.
SECTION 9.2 Suits for Enforcement. In case any one or more
Events of Default shall occur and be continuing, the Agent and the Banks may
proceed to protect and enforce their rights or remedies either by suit in
equity or by action at law, or both, whether for the specific performance of
any covenant, agreement or other provision contained herein, in the other Loan
Documents, or in any other instrument delivered in connection with or pursuant
to this Agreement or the other Loan Documents or to enforce the payment of the
Notes or any other legal or equitable right or remedy.
SECTION 9.3 Rights and Remedies Cumulative. No right or
remedy herein conferred upon the Banks or the Agent is intended to be exclusive
of any other right or remedy contained herein or in the other Loan Documents or
in any instrument or document delivered in connection with or pursuant to this
Agreement or the other Loan Documents, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity
or by statute, or otherwise.
SECTION 9.4 Rights and Remedies Not Waived. No course of
dealing between the Company and any of the Banks or the Agent or any failure or
delay on the part of any Bank or the Agent in exercising any rights or remedies
hereunder shall operate as a
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waiver of any rights or remedies of such or any other Bank or the Agent and no
single or partial exercise of any rights or remedies hereunder shall operate as
a waiver or preclude the exercise of any other rights or remedies hereunder.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Collection Costs. In the event that the Banks
or the Agent or any of them shall retain or engage an attorney or attorneys
(including "in house" counsel) to collect or enforce or protect its interests
with respect to this Agreement, any of the other Loan Documents, or any
instrument or document delivered pursuant to this Agreement or the other Loan
Documents, including, without limitation, each of the documents referred to in
Section 5.1 hereof, or to protect the rights of any holder or holders with
respect thereto, the Company shall pay, within 10 days after demand therefor,
all of the costs and expenses of such collection, enforcement or protection,
including reasonable attorneys' fees and disbursements (actual charges and
disbursements in the case of "in house" counsel), and the Banks or the Agent or
the holders of such Notes, as the case may be, may take judgment for all such
amounts, in addition to the unpaid principal balance of the Notes and accrued
interest thereon and any accrued and unpaid fees and expenses due and payable
hereunder.
SECTION 10.2 Modification and Waiver. No modification,
amendment or waiver of any provision of any Loan Document, nor any consent by
the Banks or the Agent to any departure therefrom by the Company or any
Subsidiary thereof shall be effective unless such modification, amendment,
waiver or consent shall be in writing and signed by the Required Banks and then
such modification, amendment, waiver or consent shall be effective only for the
period and on the conditions and for the specific instances and purposes
specified in such writing; provided, however, that (a) no provision of Article
XI hereof or any provision governing or providing for the rights or duties of
the Agent can be amended, modified or waived except with the written consent of
the Agent, (b) none of the following may be amended, modified or waived except
with the written consent of all the Banks: (i) the definition of "Required
Banks," or (ii) any provision governing or providing for: the rate of interest
payable on the Loans, the mandatory prepayments of principal thereof or fees or
other amounts payable to any of the Banks or the scheduled maturity of the
Loans, and (c) none of the following may be amended, modified or waived except
with the written consent of all the Banks and the Agent: the definitions of
"Aggregate Commitment", "Commitment Period", Revolving Credit Loans", or any
other provisions of this Agreement that relate to the Loans or the Aggregate
Commitment. No notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances. By the execution hereof, each Bank consents to the termination
of the Subordination Agreement, dated as of June 30, 1993, entered into by the
Company and Foothill Group.
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SECTION 10.3 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND DUTIES OF THE PARTIES THEREUNDER AND WITH RESPECT TO INTEREST,
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 10.4 Notices. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be
deemed to have been given (a) three days after the date mailed if sent by
registered or certified mail, postage prepaid, return receipt requested, (b) on
the day of delivery if personally delivered, addresses, as the case may be, to
the Banks, the Agent at their respective Notice of Addresses set forth on
Exhibit A hereto, and the Company at 11111 Santa Monica Boulevard, Suite 1500,
Los Angeles, California 90025 (Attention: David C. Hilton) with a copy of each
notice to the Company to
Buchalter, Nemer, Fields & Younger
601 S. Figueroa Street, Suite 2400
Los Angeles, California 90017
(Attention: Robert C. Colton, Esq.)
or to such other person or address as any other shall designate to the others
from time to time in writing forwarded in like manner, or (c) on the day of
transmission if sent by telecopier and confirmed, on the same day as such
notice is sent, by telephonic notice and by one of the other two methods listed
above.
SECTION 10.5 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP,
consistently applied. Where any accounting determination or calculation is
required to be made under this Agreement, such determination or calculation
(unless otherwise provided) will be made in accordance with GAAP, consistently
applied except that if, because of a change in GAAP, a Person would have to
alter a previously utilized accounting method or policy in order to remain in
compliance with GAAP, such determination or calculation will continue to be
made in accordance with such Person's previous accounting methods or policy
unless the Required Banks otherwise direct. Unless otherwise specified herein
all financial statements required to be delivered hereunder, shall be prepared
and all financial records shall be maintained in accordance with GAAP.
SECTION 10.6 Costs and Expenses; Indemnity.
(a) The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses incurred by (i) the Agent in
connection with the preparation, execution, delivery, filing, recording,
administration, modification, restatement or amendment of this Agreement, the
other Loan Documents and all instruments and documents delivered pursuant to
this Agreement or the other Loan Documents (including any Assignments, waivers
or consents that may be requested by the Company) including, without
limitation, each of the documents referred to in Section 5.1
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hereof, (ii) the Banks and the Agent in connection with enforcement (whether in
the context of a civil action, adversary proceeding, bankruptcy or otherwise,
but excluding any negotiated workout) of this Agreement, the other Loan
Documents, and such other instruments and documents, including, without
limitation, reasonable attorneys' fees (including "in-house" counsel), audit
charges, appraisal fees, search fees and filing fees, and (iii) the Agent in
connection with any negotiated workout of this Agreement, the other Loan
Documents, and such other instruments and documents, including, without
limitation, reasonable attorneys' fees, audit charges, appraisal fees, search
fees and filing fees. The Company agrees to be responsible for payment of the
amounts referred to in this Section 10.6 whether or not any Loans are made
hereunder.
(b) The Company further agrees to indemnify and
save harmless the Banks (without reduction or abatement for any participations
sold to Participants), and the Agent and each of their respective officers,
directors, employees, agents, attorneys-in-fact and Affiliates from and against
any and all actions, causes of action, suits, investigations, proceedings,
losses, liabilities and damages and expenses (including, without limitation,
attorneys' fees) in connection therewith, whether or not such Person is a party
to any such proceeding, action, suit, or investigation (herein called the
"Indemnified Liabilities") incurred by the Banks, or the Agent or any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates as a result of, or arising out of or relating to any of the
transactions contemplated hereby or by the other Loan Documents, except for any
Indemnified Liabilities arising on account of the gross negligence or willful
misconduct of the Person seeking indemnity under this Section 10.6(b);
provided, however, that, if and to the extent such agreement to indemnify may
be unenforceable for any reason the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which
shall be permissible under applicable law. The agreements in this Section
10.6(b) shall survive the payment of the Notes and related obligations.
SECTION 10.7 WAIVER OF JURY TRIAL AND SETOFF. EACH OF THE
COMPANY, THE AGENT AND THE BANKS HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION
IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY INSTRUMENT OR DOCUMENT DELIVERED
PURSUANT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN THE COMPANY AND ANY OF THE BANKS OR
THE AGENT, BETWEEN ANY BANKS, AND BETWEEN THE AGENT AND THE BANKS; AND THE
COMPANY HEREBY WAIVES THE RIGHT TO INTERPOSE ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM AGAINST THE BANKS AND THE AGENT, OR ANY OF THEM, IN CONNECTION WITH
ANY SUCH LITIGATION, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, COUNTERCLAIM OR
CROSS-CLAIM; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE PRECLUDED FROM
ASSERTING ANY SUCH CROSS-CLAIM OR COUNTERCLAIM THAT, PURSUANT TO APPLICABLE
PROCEDURAL LAWS, COULD NOT BE RAISED IN A SEPARATE PROCEEDING.
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SECTION 10.8 Captions. The captions of the various sections
and paragraphs of this Agreement have been inserted only for the purpose of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
SECTION 10.9 Setoff by Banks.
(a) The Company hereby acknowledges a setoff right
(to the extent given by applicable law) in favor of the Agent and the Banks for
Indebtedness to the Agent and the Banks upon any and all moneys, securities and
other property of the Company and/or its Subsidiaries and the proceeds thereof,
now or hereafter held or received by or in transit to, the Agent or any of the
Banks from or for any of them, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and also upon any and all deposits
(general or special) and credits of the Company and/or its Subsidiaries with,
and any and all claims of the Company and/or its Subsidiaries against, the
Agent or the Banks, at any time existing. Upon the occurrence of any Event of
Default, the Agent and the Banks are hereby authorized at any time and from
time to time, without notice, to setoff, appropriate and apply any or all items
hereinabove referred to against all Indebtedness to the Agent and the Banks,
whether under this Agreement, the Notes, the Multiyear Agreement, the Letter of
Credit Agreement or otherwise, and whether now existing or hereafter arising.
The Agent and the Banks agree that any setoff shall be applied ratably based
upon the Indebtedness outstanding under this Agreement, the Multiyear Agreement
and the Letter of Credit Agreement. The Agent and each Bank agrees to notify
the Company, no later than five (5) Business Days after any such setoff and
application is made by the Agent or such Bank, as the case may be, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.
(b) Each holder of a Note agrees that if, through
the exercise of a right of setoff, counterclaim or otherwise, it shall obtain
payment with respect to any Note that results in its receiving more than its
pro rata share of the aggregate payments or reductions of all Revolving Credit
Notes or Term Loan Notes (based on such holder's outstanding Loans), it shall
forthwith purchase from such other holders a participation in all of the Notes
held by such other holders so that the amount of all unpaid Notes and
participations therein held by all holders shall be pro rata (based on such
holder's outstanding Loans in the case of Revolving Credit Notes or Term Loan
Notes, as applicable).
(c) Each Bank agrees that if and to the extent
that any amount received by any Bank from the Company or any other obligor is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or judicially required to be repaid to a trustee, receiver or any other person
under any applicable creditors' remedy proceeding, including without limitation
any bankruptcy proceeding, the other Banks hereto
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shall purchase from the Bank from which said amount is recovered an additional
participation in such amount equal to such Bank's pro rata share of that amount
(based on such holder's outstanding Loans in the case of recovered amounts
previously credited against Revolving Credit Notes or Term Loan Notes, as
applicable). The amount invalidated, declared to be fraudulent or
preferential, set aside or judicially required to be repaid to a trustee,
receiver or any other person under any applicable creditors' remedy proceeding
shall be deemed to be an amount immediately due and owing from the Company.
(d) The Company expressly acknowledges the
foregoing arrangements in Sections 10.9(b) and (c) and agrees that any holder
of a participation in a Note so acquired may exercise any and all rights of
setoff, counterclaim or otherwise with respect to any and all moneys owing by
such holder to the Company or its Subsidiaries as fully as if such holder were
a holder of a Note in the amount of such participation. If all or any portion
of any such excess payment described in Section 10.9(b) is thereafter recovered
from the holder which received the same, the purchase provided for in Section
10.9(b) shall be rescinded to the extent of such recovery, without interest.
SECTION 10.10 Limitation of Liability. TO THE FULLEST EXTENT
PERMITTED BY LAW, NO CLAIM MAY BE MADE BY THE COMPANY AGAINST THE AGENT, ANY
BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF ANY
OF THEM FOR ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES IN RESPECT OF ANY CLAIM ARISING FROM OR RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION, OR
EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF
CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY). TO THE FULLEST EXTENT
PERMITTED BY LAW, THE COMPANY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM PRESENTLY EXISTS OR
ARISES HEREAFTER AND WHETHER OR NOT SUCH CLAIM IS KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
SECTION 10.11 Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of the Company, the Agent, and the Banks
and their respective successors and assigns, and all subsequent holders of the
Notes, except that the obligations of the Banks to make Loans hereunder shall
not inure to the benefit of any successors or assigns of the Company.
SECTION 10.12 Counterparts. This Agreement may be executed
by the parties hereto individually or in any combination, in one or more
counterparts, each of which shall be an original and all of which shall
together constitute one and the same agreement.
SECTION 10.13 Interest.
(a) Usury Limitation. It is the intention of the
parties hereto to conform strictly to the usury laws now in force in the
appropriate controlling jurisdiction. Accordingly, if the
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transactions contemplated hereby would be usurious, under any controlling law,
then, in that event, notwithstanding anything to the contrary in this
Agreement, the Notes or any other instrument or agreement entered into in
connection therewith, it is agreed as follows: (i) the aggregate of all
charges which constitute interest under the laws of the controlling
jurisdiction that are contracted for, chargeable or receivable under this
Agreement or under any of the other aforesaid instruments or agreements or
otherwise in connection with the Notes ("Interest") shall under no
circumstances exceed the maximum amount of interest permitted by law (the
"Maximum Amount"), and any Interest in excess of the Maximum Amount shall be
canceled automatically and shall not be payable under this Agreement, the Notes
or the aforesaid instruments or agreements and, if theretofore paid, shall be
either refunded to the Company or credited ratably on the principal of the
Notes; and (ii) in the event that the Maturity of the Notes is accelerated
either automatically or by reason of an election of the Required Banks
resulting from any Event of Default under this Agreement or otherwise, or in
the event of any voluntary or mandatory prepayment by the Company permitted or
required by this Agreement, the Notes or any of the other aforesaid instruments
or agreements, then Interest may never include more than the Maximum Amount,
and excess Interest, if any, shall be cancelled automatically as of the date of
such acceleration or prepayment and, if theretofore paid, shall be either
refunded to the Company or credited ratably on the principal of the Notes;
provided, that, nothing contained in this Section 10.13 shall be deemed to
imply that the laws of any State other than the State of California shall
govern this Agreement or the Notes.
(b) Recapture. If, at any time, Interest would
exceed the Maximum Amount but for the foregoing limitation, Interest shall
remain at the Maximum Amount, notwithstanding any subsequent reduction of
Interest, until the total amount of Interest equals the amount of Interest that
would have accrued if Interest had not been limited to the Maximum Amount, but
nothing in this paragraph shall affect or extend the Maturity of any of the
Notes.
If, at Maturity or final payment of any of the Notes, the
total amount of Interest paid is less than the total amount of Interest that
would have accrued had Interest not been limited to the Maximum Amount, the
Company agrees, to the full extent permitted by law, to pay to the Banks an
amount equal to the positive difference, if any, derived by subtracting (i) the
amount of Interest that accrued on the Notes pursuant to the provisions of
Section 10.13(a) hereof from (ii) the lesser of (A) the amount of Interest that
would have accrued on such Notes if the Maximum Amount had at all times been in
effect, and (B) the amount of Interest that would have accrued if Interest on
such Notes, not limited to the Maximum Amount, had at all times been in effect.
SECTION 10.14 Attorneys' Fees. As used in this Agreement,
"attorneys' fees" shall include, without limitation,
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all reasonable fees of counsel (including, without limitation, "in-house"
counsel to the Agent or any Bank) arising from such services (including,
without limitation, appeals) and all reasonably incurred expenses, costs,
charges and other fees of such counsel, and all such fees shall constitute
Indebtedness of the Company to the Agent and the Banks under this Agreement.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: paralegal fees, costs and expenses; accountants' fees,
costs and expenses; court costs and expenses; photocopying and duplicating
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel, lodging and
food paid or incurred in connection with the performance of such legal
services. Without prejudice to the survival of any other agreement of the
Company hereunder, the agreements and obligations of the Company contained in
Sections 2.6, 2.9 and 10.6(a) shall survive the payment in full of the Notes
and other amounts hereunder and under the Loan Documents.
SECTION 10.15 Severability. Any provision of this Agreement
prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, or modified to conform with such
laws, without invalidating the remaining provisions of this Agreement, and any
such prohibition in any jurisdiction shall not invalidate such provisions in
any other jurisdiction.
SECTION 10.16 Confidentiality. The Agent, Bank, Participant
and Assignee or other transferee is hereby authorized to deliver copies of any
financial statements and any other information relating to the business,
operations or financial condition of the Company or any Subsidiary thereof that
may be furnished to it hereunder or otherwise (including without limitation any
information developed by or on behalf of the Agent or any Bank in connection
with audits performed pursuant to Section 6.6 hereof), to any regulatory or
administrative body or agency having jurisdiction over such Agent, Bank,
Participant or Assignee or to any Person that shall, or shall have any right or
obligation to, succeed to all or any part of the interest of such Agent, Bank,
Participant or Assignee in, this Agreement, the other Loan Documents and any
security herein or therein provided for or otherwise securing the Notes.
Except as provided above, the Agent and the Banks agree that from the date
hereof, they will not, without the prior written consent of the Company, submit
or disclose to or file with any Person other than a Bank or a Participant or a
Person that may become a Bank or a Participant, any confidential or non-public
information relating to the Company, except: (a) disclosure required by
subpoena or similar process or applicable law or regulations; (b) disclosure to
counsel, auditors or other professional advisors to the Agent or Banks provided
that such affiliates shall agree to keep such information confidential as set
forth herein; (c) disclosure in connection with any litigation or dispute
involving the Company, any Subsidiary thereof, Foothill Group and the Agent or
any Bank; (d) disclosure of information which was in the possession of the
Agent or any Bank or their affiliates prior to the Company
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furnishing it to the Agent or such Bank; (e) disclosure of information which
was received by the Agent or any Bank to the banks party to the Multiyear
Agreement or Letter of Credit Agreement provided that such parties shall agree
to keep such information confidential as set forth herein; or (f) disclosure of
information which was received by the Agent or any Bank, without restriction as
to its disclosure or use, from a person who, to the Agent's or Bank's knowledge
or reasonable belief, was not prohibited from disclosing it by any duty of
confidentiality.
SECTION 10.17 Loss, Theft, etc. of Loan Notes. Upon receipt
by the Company of (a) an affidavit of an authorized officer of any Bank setting
forth the fact of loss, theft, or destruction of any Note and of its ownership
of the Note at the time of such loss, theft, or destruction or (b) a mutilated
Note, such affidavit or mutilated Note shall be accepted as satisfactory
evidence thereof and no further indemnity shall be required as a condition to
the execution and delivery of a new Note of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note without expense to the holder thereof,
provided that such Bank agrees in writing to indemnify the Company.
SECTION 10.18 Entire Agreement. This Agreement and the Loan
Documents constitute the entire agreement among the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect
to the subject matter hereof is superseded by this Agreement and the other Loan
Documents.
SECTION 10.19 Relief From Bankruptcy Stay. The Company
agrees that, in the event that the Company or any Subsidiary thereof shall (a)
file with any bankruptcy court of competent jurisdiction or be the subject of
any petition under the United States Bankruptcy Code, as amended, (b) be the
subject of any order for relief issued under the United States Bankruptcy Code,
(c) file or be the subject of any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency, or other relief for debtors, (d) have sought or
consented to or acquiesced in the appointment of any trustee, receiver,
conservator, or liquidator, or (e) be the subject of any order, judgment, or
decree entered by any court of competent jurisdiction approving a petition
filed against such party for any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or
relief for debtors, the Agent and the Banks shall thereupon be entitled and the
Company irrevocably consents and agrees to cause each such Subsidiary to
consent to immediate and unconditional relief from any automatic stay imposed
by Section 362 of the United States Bankruptcy Code, or otherwise, on or
against the exercise of the rights and remedies otherwise available to the
Agent and the Banks as provided for herein, in the Notes and in the other Loan
Documents and as otherwise provided by law, and the Company hereby irrevocably
waives and
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agrees to cause each such Subsidiary to waive any right to object to such
relief and will not contest, and will cause any such Subsidiary not to contest,
any motion by the Agent or the Banks seeking relief from the automatic stay and
the Company will cooperate and will cause each such Subsidiary to cooperate
with the Agent and the Banks, in any manner requested by the Agent or the
Banks, in their efforts to obtain relief from any such stay or other
prohibition.
ARTICLE XI
AGENCY
The Company and the Banks agree with the Agent as follows:
SECTION 11.1 Appointment and Actions.
(a) Each Bank hereby irrevocably designates and
appoints Bank of America National Trust and Savings Association as the Agent of
such Bank under the Loan Documents (including any additional documents referred
to therein as "Loan Documents"), and each such Bank hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions
hereof and thereof and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms hereof and thereof, together with
such other powers as are reasonably incidental thereof. Notwithstanding any
provision to the contrary in this Agreement or any of the other Loan Documents,
the Agent shall not have any duties or responsibilities except those expressly
set forth herein or therein, nor any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against
the Agent.
(b) The Agent may execute any of its duties 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.
(c) Neither of 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 the Agent or any
of its officers, directors, employees, agents, attorney-in-fact or Affiliates
under or in connection with any of the Loan Documents (except for the Agent's
own gross negligence or willful misconduct and the gross negligence or willful
misconduct of any of the Agent's officers, directors, employees, agents,
attorney-in-fact or Affiliates), or (ii) responsible in any manner to any Bank
or Participant for any recitals, statements, representations or warranties made
by the Company, any Subsidiary thereof, or Foothill Group contained herein or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or
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in connection with any of the Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any of the Loan
Documents or for any failure of any of the Company, any Subsidiary thereof, or
Foothill Group to perform any obligations under any of the Loan Documents. The
Agent shall not be under any obligation to any Bank to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of any of the Loan Documents, or to inspect the properties, books or
records of the Company, any Subsidiary thereof, or Foothill Group.
(d) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any 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 Company and Foothill Group),
independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent.
(e) The Agent shall be fully justified in failing
or refusing to take any action under any of the Loan Documents unless it first
shall receive such advice or concurrence of the Banks as it deems appropriate
or as may be required by the specific terms of this Agreement or the other Loan
Documents or be indemnified to its satisfaction by the Banks against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. In all cases, the Agent shall be protected
fully in acting, or in refraining from acting, under any of the Loan Documents
in accordance with a request of the Required Banks (or all of the Banks if
specifically required by the terms of this Agreement or the other Loan
Documents), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks and all future holders of the Notes
and all Participants.
(f) The Agent shall not be deemed to have
knowledge or notice of any change in the Company's commercial paper rating or
the occurrence of any Default or Event of Default or any default under any
document, agreement or instrument delivered in connection herewith, or of the
occurrence of any default under the Multiyear Agreement and/or the Letter of
Credit Agreement, unless the Agent shall have actual knowledge thereof or shall
have received notice from any Bank or the Company describing such event, act or
condition, Default or Event of Default and stating that such notice is a notice
required by Section 6.9 hereof. In the event that the Agent has such actual
knowledge or receives such a notice, the Agent shall give notice thereof to the
Banks. The Agent shall take such action with respect to such event, act or
condition or Default or Event of Default as reasonably shall be directed by the
Required Banks (or
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<PAGE> 182
all of the Banks if specifically required by the terms of this Agreement or the
other Loan Documents) in writing; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
event, act or condition, Default or Event of Default as the Agent shall deem
advisable in the best interests of the Banks.
(g) Until such time as the Agent shall have been
notified in writing duly executed on behalf of any Bank by an officer thereof
duly authorized to take such action that such Bank has sold all or a portion of
the Loans made by, or the Commitment of, such Bank, the Agent may treat such
Bank as the owner or holder of such Bank's share of the Loans or Aggregate
Commitment, as applicable, in accordance with the amounts thereof advanced by
such Bank.
(h) At any time or times, in order to comply with
any legal requirement in any jurisdiction, the Agent may appoint another bank
or trust company or one or more other Persons, either to act as co-agent or
co-agents, jointly with the Agent, or to act as separate agent or agents on
behalf of the Banks with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which, in the discretion of the Agent, may include
provisions for the protection of such co-agent or separate agent similar to the
provisions of this Article XI).
(i) The Company and the Banks acknowledge and
consent to the Agent acting as Agent under the Multiyear Agreement and the
Letter of Credit Agreement and waive any conflict or potential conflict that
may occur as a result of its acting in such capacity.
SECTION 11.2 Independent Credit Decisions. Each Bank
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates have made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of the Company, its Subsidiary and
Foothill Group shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or the other Banks, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company, its
Subsidiary, Foothill Group and made its own decision to enter into this
Agreement. Each Bank also represents that it will continue, independently and
without reliance upon either the Agent or the other Banks, and based on such
documents and information as it shall deem appropriate at the time, to make its
own credit analysis, appraisals and decisions in taking or not taking action
hereunder and under the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
prospects, financial
- 81 -
<PAGE> 183
and other condition and creditworthiness of the Company and its Subsidiaries.
Except for notices, reports and other documents expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, prospects, financial and other
condition or creditworthiness of the Company, any Subsidiary thereof, or
Foothill Group that may come into the possession of the Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
SECTION 11.3 Indemnification of Agent. Each Bank agrees to
indemnify the Agent (to the extent not reimbursed by the Company), ratably
(according to such Bank's Loans or, if no Loans are then outstanding, according
to such Bank's Percentage, in either case as of the time of the action,
inaction or other event giving rise to the liability to be indemnified), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that at any time (including without limitation at any time following
the payment of any of the Notes) may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement, the
other Loan Documents or the transactions contemplated hereby or thereby or any
action taken or omitted to be taken by the Agent under or in connection with
any of the foregoing; provided that no Bank shall be liable to the Agent for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this Section 11.3 shall survive the payment of the Notes and
related obligations.
SECTION 11.4 Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Company. Upon any
such resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof, or an Affiliate of such bank, having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed
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 under this
Agreement and the other Loan Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
- 82 -
<PAGE> 184
ARTICLE XII
PARTICIPATION; SYNDICATIONS AND TRANSFERS
SECTION 12.1 Participations.
(a) Each Bank may grant participations to other
commercial banks of such Bank's choosing in all or any portion of its rights
and/or obligations hereunder, under such Bank's Commitment and the Loans. As
between the Company or the Agent and such Bank, no Bank shall be relieved of
its Commitment or any of its obligations hereunder as a result of the granting
of any participation. No Bank shall transfer or grant any participating
interest under which the participant shall have rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in Section 10.2. The Company
hereby acknowledges and agrees that each Participant may rely on, and possess
rights under, any opinions, certificates, or other instruments delivered under
or in connection with this Agreement or the other Loan Documents; provided,
however, that the Company shall only be required to deliver information and
data required pursuant to this Agreement to the Bank granting a participation
(in whole or in part) in its Commitment, the Loans, the Notes and other rights;
and provided, further, that no Participant shall be entitled to any payment
from the Company in an amount greater than that which the applicable
originating Bank would have been entitled to under this Agreement.
(b) Each Bank may furnish to Participants and
Assignees (including, without limitation, prospective Participants and
Assignees) any information concerning the Company or its Subsidiaries received
by such Bank from time to time pursuant to this Agreement; provided, however,
that each Participant and Assignee to whom any such information is delivered
shall agree not to use or to disclose to any other Person such information
except as provided in Section 10.16.
SECTION 12.2 Syndications and Transfers.
(a) Subject to the provisions of this Section
12.2, any Bank may execute an assignment and acceptance substantially in the
form of Exhibit G hereto, with appropriate insertions (herein individually
called an "Assignment" and collectively called the "Assignments"), whereby
such Bank (herein individually called an "Assignor" and collectively called the
"Assignors") shall assign, without recourse and without representation or
warranty except as specifically set forth in said Assignment, to one or more
commercial banks (herein individually called an "Assignee" and collectively
called "Assignees") all or any part of the Assignor's rights and benefits, and
delegate all or any part of the Assignor's obligations, under this Agreement,
its Commitment, the Loans and the Notes. Notwithstanding the foregoing, any
Bank may execute an assignment with the Federal Reserve.
- 83 -
<PAGE> 185
(b) Upon execution, delivery and acceptance of
each Assignment and subject to the payment by the Assignor of a $2,500
assignment fee to the Agent, from and after the effective date specified
therein, which effective date shall be at least five (5) Business Days after
the execution thereof, the Company, the Agent, and the Banks agree that, to the
extent of any such Assignment,
(i) the Assignee shall, in addition to any
rights, benefits and obligations hereunder held by it
immediately prior to such effective date, have the rights,
benefits and obligations of a Bank under this Agreement, the
Assignor's Commitment, the applicable Loans, and the
applicable Notes as it would have if it were a Bank hereunder
to the extent that the same have been assigned and delegated
to it pursuant to such Assignment; and
(ii) the Assignor shall, to the extent that
rights, benefits and obligations hereunder have been assigned
and delegated by it pursuant to such Assignment, relinquish
its rights and benefits and be released from its obligations
under this Agreement (and, in the case of an Assignment
covering all or the remaining portion of the Assignor's
rights, benefits and obligations under this Agreement, the
Assignor shall cease to be a Bank hereunder), except that in
all cases the Assignor shall remain entitled to the rights and
benefits arising under Sections 2.6, 2.9, 3.4, and 10.6, and
shall remain liable with respect to any of its obligations
arising under Section 10.13 and Article XI, with respect to
any matters arising prior to the effective date of any such
Assignment; provided, however, that:
(A) the Agent and each Bank and the
Company shall be entitled to continue to deal solely
and directly with the Assignor in connection with the
interests so assigned and delegated to the Assignee
until written notice of such Assignment, together
with addresses and related information with respect
to the Assignee, shall have been given to the Agent
and each Bank and the Company by the Assignor and the
Assignee, and
(B) except with the prior consent
of the Agent and the Company in their sole
discretion, no Bank may effect any Assignment if
either (I) such Bank would continue to be a Bank
thereafter and would have a Commitment of less than
$5,000,000 or (II) the proposed Assignee thereafter
would have a Commitment of less than $5,000,000.
- 84 -
<PAGE> 186
(c) Upon its receipt of an Assignment, completed
and executed by the Assignor and an Assignee in substantially the form of
Exhibit G hereto, together with the Note or Notes subject to such Assignment,
the Agent shall accept such Assignment and forward a photostatic copy thereof
to the Company. Within five (5) Business Days after its receipt of a
photostatic copy of such Assignment, the Company shall execute and deliver to
the Agent, a new Note or Notes payable to the order of the Assignee in an
amount equal to the Commitment assumed by it pursuant to such Assignment and as
shown on Exhibit A as amended as provided in (d) below. Such new Note or Notes
shall be dated the effective date of such Assignment, shall be payable to the
order of the Assignee and shall constitute Note(s) under this Agreement. Such
new Note or Notes shall be in replacement and substitution for, and not in
payment of, the Notes delivered to the Agent by the Assignor. The Agent shall
deliver such new Note or Notes to the payee or payees thereof and shall mark
the Note or Notes previously held by the Assignor as "replaced" and shall
deliver the same to the Company.
(d) Within five (5) Business Days after each
Assignment has been accepted by the Agent in accordance with the terms hereof,
the Company and the Agent shall revise Exhibit A hereto to set forth (i) the
Commitment of each Assignee and such Assignee's name and address and (ii) the
Commitment, if any, retained by the Assignor, and the appropriate official of
each of the Company and the Agent shall initial each such revision.
THIS AGREEMENT CONTAINS A WAIVER OF TRIAL BY JURY. SEE
SECTION 10.7 HEREOF.
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<PAGE> 187
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed and delivered this Agreement as of the
date first above written.
FOOTHILL CAPITAL CORPORATION
By: __________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, solely as Agent
By: __________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: __________________________
Title:________________________
By: __________________________
Title:________________________
(Signatures continue)
- 86 -
<PAGE> 1
EXHIBIT 10.36
[LOGO]
NATIONAL BANK OF CANADA
New York Branch
125 West 55th Street, New York, NY 10019-5366 Telephone (212) 632-8500
Fax (212) 632-8616 o Swift Des. BND CUS 33A o Telex 177782 NATBK CAN
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
May 24, 1994
ATTN: Kent Dahl, Vice President and Treasurer
INTEREST RATE SWAP CONFIRMATION
Dear Sir:
The purpose of this letter agreement is to confirm the terms and conditions of
the Swap Transaction entered into between us on the Trade Date specified below
(the "Swap Transaction"). This letter agreement constitutes a "Confirmation"
as referred to in the Master Agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swap Dealers Association, Inc.) are incorporated
into this Confirmation. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will
govern.
1. This Confirmation supplements, forms part of, and is subject to, the
Master Agreement dated as of February 23, 1994, as amended and
supplemented from time to time (the "Agreement"), between you
("Counterparty") and us ("NBC"). All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.
2. The terms of the particular Swap Transaction to which this Confirmation
relates are as follows:
Notional Amount: USD $6,000,000.00
Trade Date: May 24, 1994
Effective Date: July 1, 1994
<PAGE> 2
Termination Date: January 31, 1995
Adjusted in accordance with the Modified Following
Business Day Convention
Fixed Amounts
Fixed Rate Payer: NBC
Fixed Rate: 5.50%
Fixed Rate Day Count Fraction: 30/360
Fixed Rate Payment Dates: August 1, 1994
January 31, 1995
Floating Amounts
Floating Rate Payer: Counterparty
Initial Floating Rate: To Be Set
Floating Rate Day Count Fraction: ACT/360
Floating Rate Payment Dates: August 1, 1994
January 31, 1995
Floating Rate Option: USD - CP - H.15
Designated Maturity: 30 days
Reset Dates: Each Business Day comprised
in a Calculation Period
Method of Averaging: Unweighted
Compounding: Applicable
Compounding Dates: Last business day of each
month starting August 31,
1994
Account Details
Payments to Fixed Rate Payer: National Bank of Canada
New York
ABA 026-005487
Payments to Floating Rate Payer: Chemical Bank New York
ABA 021-000128
A/C Foothill Capital
Corporation
A/C # 323-266-193
Please Confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
2
<PAGE> 3
National Bank of Canada
By: PIERRETTE LACROIX
---------------------------------------
Name: Pierrette Lacroix
Title: S.V.P. and Treasurer
By: L. TOMAC
---------------------------------------
Name: Lina Tomac
Title: V.P. Treasury Operations
Confirmed as of the date first written:
Foothill Capital Corporation
By: KENT DAHL
--------------------------------
Name: Kent Dahl
Title: Vice President and Treasurer
3
<PAGE> 4
(Multicurrency-Cross Border)
[LOGO]
INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.
MASTER AGREEMENT
dated as of February 23, 1994
NATIONAL BANK OF CANADA and FOOTHILL CAPITAL CORPORATION have entered and/or
anticipate entering into one or more transactions (each a "Transaction") that
are or will be governed by this Master Agreement, which includes the schedule
(the "Schedule"), and the documents and other confirming evidence (each a
"Confirmation") exchanged between the parties confirming those Transactions.
Accordingly, the parties agree as follows:--
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this
Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this
"Agreement"), and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement. in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been
effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
Copyright(c) by International Swap Dealers Association, Inc.
<PAGE> 5
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been payable
by one party exceeds the aggregate amount that would otherwise have been
payable by the other party, replaced by an obligation upon the party by whom
the larger aggregate amount would have been payable to pay to the other party
the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in
the same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be
made without any deduction or withholding for or on account
of any Tax unless such deduction or withholding is required
by any applicable law, as modified by the practice of any
relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that party
("X") will:--
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full
amount required to be deducted or withheld (including
the full amount required to be deducted or withheld
from any additional amount paid by X to Y under this
Section 2(d)) promptly upon the earlier of
determining that such deduction or withholding is
required or receiving notice that such amount has
been assessed against Y;
(3) promptly forward to Y an official receipt (or
a certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to
Y, in addition to the payment to which Y is otherwise
entitled under this Agreement, such additional amount
as is necessary to ensure that the net amount
actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y)
will equal the full amount Y would have received had
no such deduction or withholding been required.
However, X will not be required to pay any additional
amount to Y to the extent that it would not be
required to be paid but for:--
(A) the failure by Y to comply with or
perform any agreement contained in Section
4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made
by Y pursuant to Section 3(f) to be accurate
and true unless such failure would not have
occurred but for (I) any action taken by a
taxing authority, or brought in a court of
competent jurisdiction, on or after the date
on which a Transaction is entered into
(regardless of whether such action is taken
or brought with respect to a party to this
Agreement) or (II) a Change in Tax Law.
2
<PAGE> 6
(ii) Liability. If:--
(1) X is required by any applicable law, as
modified by the practice of any relevant governmental
revenue authority, to make any deduction or
withholding in respect of which X would not be
required to pay an additional amount to Y under
Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is
assessed directly against X,
then, except to the extent Y has satisfied or then satisfies
the liability resulting from such Tax, Y will promptly pay
to X the amount of such liability (including any related
liability for interest, but including any related liability
for penalties only if Y has failed to comply with or perform
any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to Section 6(c), be required
to pay interest (before as well as after judgment) on the overdue amount to the
other party on demand in the same currency as such overdue amount, for the
period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in
the performance of any obligation required to be settled by delivery, it will
compensate the other party on demand if and to the extent provided for in the
relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:--
(a) Basic Representations.
(i) Status. It is duly organised and validly existing
under the laws of the jurisdiction of its organisation or
incorporation and, if relevant under such laws. in good
standing;
(ii) Powers. It has the power to execute this Agreement
and any other documentation relating to this Agreement to
which it is a party, to deliver this Agreement and any other
documentation relating to this Agreement that it is required
by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken
all necessary action to authorise such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery
and performance do not violate or conflict with any law
applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other agency
of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of
its assets;
(iv) Consents. All governmental and other consents that
are required to have been obtained by it with respect to this
Agreement or any Credit Support Document to which it is a
party have been obtained and are in full force and effect and
all conditions of any such consents have been complied with;
and
(v) Obligations Binding. Its obligations under this
Agreement and any Credit Support Document to which it is a
party constitute its legal, valid and binding obligations,
enforceable in accordance with their respective terms (subject
to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).
3
<PAGE> 7
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
(f) Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
4. Agreements
Each party agrees with the other that, so long as either party has or
may have any obligation under this Agreement or under any Credit Support
Document to which it is a party:--
(a) Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing
in order to allow such other party or its Credit Support Provider
to make a payment under this Agreement or any applicable Credit
Support Document without any deduction or withholding for or on
account of any Tax or with such deduction or withholding at a
reduced rate (so long as the completion, execution or submission
of such form or document would not materially prejudice the legal or
commercial position of the party in receipt of such demand), with any
such form or document to be accurate and completed in a manner
reasonably satisfactory to such other party and to be executed
and to be delivered with any reasonably required certification,
in each cpecified in the Schedule or such Confirmation or, if
none is specified. as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this Agreement
or any Credit Support Document to which it is a party and will use all
reasonable efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp
Tax levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated,
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organised, managed and controlled, or considered to have its seat, or in which
a branch or office through which it is acting for the purpose of this Agreement
is located ("Stamp Tax Jurisdiction") and will indemnify the other party
against any Stamp Tax levied or imposed upon the other party or in respect of
the other party's execution or performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider
of such party to comply with or perform any agreement or
obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure is
continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of
this Agreement (in either case other than in accordance with
its terms) prior to the satisfaction of all obligations of
such party under each Transaction to which such Credit Support
Document relates without the written consent of the other
party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a
representation under Section 3(e) or (f)) made or repeated or deemed
to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support
Document proves to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or
repeated;
(v) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination of,
a Specified Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice requirement or
grace period) or (3) disaffirms, disclaims, repudiates or rejects, in
whole or in part, a Specified Transaction (or such action is taken by
any person or entity appointed or empowered to operate it or act on
its behalf);
(vi) Cross Default. If "Cross Default" is specified in the
Schedule as applying to the party, the occurrence or existence of (1)
a default, event of default or other similar condition or event
(however
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<PAGE> 9
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness
of any of them (individually or collectively) in an aggregate amount
of not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof
in an aggregate amount of not less than the applicable Threshold
Amount under such agreements or instruments (after giving effect to
any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding
or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making
of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case
within 30 days of the institution or presentation thereof; (5)
has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee custodian or
other similar official for it or for all or substantially all
its assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8) causes
or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in,
any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and at the time of such consolidation, amalgamation,
merger or transfer:--
(1) the resulting, surviving or transferee entity fails
to assume all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee entity
of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes an
Illegality if the event is specified in (i) below, a Tax Event if the event is
specified in (ii) below or a Tax Event Upon Merger if the event is specified in
(iii) below, and, if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to
make a payment or delivery or to receive a payment or delivery
in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of
such party to perform, any contingent or other obligation
which the party (or such Credit Support Provider) has under
any Credit Support Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority,
or brought in a court of competent jurisdiction, on or after the date
on which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on the
next succeeding Scheduled Payment Date (1) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax
under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
is required to be deducted or withheld for or on account of a Tax
(except in respect of interest under Section 2(e), 6(d)(ii) or 6(e))
and no additional amount is required to be paid in respect of such Tax
under Section 2(d)(i)(4) (other than by reason of Section
2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on
the next succeeding Scheduled Payment Date will either (1) be required
to pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) Additional Termination Event. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party
or Affected Parties shall be as specified for such Additional
Termination Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
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6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has occurred
and is then continuing, the other party (the "Non-defaulting Party") may, by
not more than 20 days notice to the Defaulting Party specifying the relevant
Event of Default, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all outstanding
Transactions. If, however, "Automatic Early Termination" is specified in the
Schedule as applying to a party, then an Early Termination Date in respect of
all outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section 5(a)(vii)
(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(4) or, to the
extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party
will, promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there arc two Affected Parties.
each party will use all reasonable efforts to reach agreement within
30 days after notice thereof is given under Section 6(b)(i) on action
to avoid that Termination Event.
(iv) Right to Terminate. If:--
(1) a transfer under Section 6(b)(ii) or an agreement
under Section 6(b)(iii), as the case may be, has not been
effected with respect to all Affected Transactions within 30
days after an Affected Party gives notice under Section
6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit
Event Upon Merger or an Additional Termination Event occurs,
or a Tax Event Upon Merger occurs and the Burdened Party is
not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following
the occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is
to be paid. In the absence of written confirmation from the source of
a quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect
of any Early Termination Date under Section 6(e) will be payable on
the day that notice of the amount payable is effective (in the case of
an Early Termination Date which is designated or occurs as a result of
an Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before as
well as after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs,
the following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either "Market Quotation" or "Loss", and a
payment method, either the "First Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the Schedule,
it will be deemed that "Market Quotation" or the "Second Method", as the case
may be, shall apply. The amount, if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be subject to any
Set-off.
(i) Events of Default. If the Early Termination Date results from an Event
of Default:--
(1) First Method and Market Quotation. If the First
Method and Market Quotation apply, the Defaulting Party will
pay to the Non-defaulting Party the excess, if a positive
number, of (A) the sum of the Settlement Amount (determined by
the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's Loss
in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second
Method and Market Quotation apply, an amount will be payable
equal to (A) the sum of the Settlement Amount (determined by
the
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Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party. If that amount is a positive number,
the Defaulting Party will pay it to the Non-defaulting Party;
if it is a negative number, the Non-defaulting Party will pay
the absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is
a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results
from a Termination Event:--
(1) One Affected Party. If there is one Affected Party,
the amount payable will be determined in accordance with
Section 6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party
and the party which is not the Affected Party, respectively,
and, if Loss applies and fewer than all the Transactions are
being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
(2) Two Affected Parties. If there are two Affected
Parties:--
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party
with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower
Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent of the
Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine
its Loss in respect of this Agreement (or, if fewer
than all the Transactions are being terminated, in
respect of all Terminated Transactions) and an amount
will be payable equal to one-half of the difference
between the Loss of the party with the higher Loss
("X") and the Loss of the party with the lower Loss
("Y").
If the amount payable is a positive number, Y will pay it to
X; if it is a negative number, X will pay the absolute value
of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and the loss of protection against future risks
and except as otherwise provided in this Agreement neither party will
be entitled to recover any additional damages as a consequence of such
losses.
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7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this
Agreement will be made in the relevant currency specified in this Agreement for
that payment (the "Contractual Currency"). To the extent permitted by
applicable law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in any
currency other than the Contractual Currency, except to the extent such tender
results in the actual receipt by the party to which payment is owed, acting in
a reasonable manner and in good faith in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the
amount in the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required
to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual Currency
payable in respect of this Agreement, the party receiving the payment will
refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this Agreement,
(ii) for the payment of any amount relating to any early termination in respect
of this Agreement or (iii) in respect of a judgment or order of another court
for the payment of any amount described, in (i) or (ii) above, the party
seeking recovery, after recovery in full of the aggregate amount to which such
party is entitled pursuant to the judgment or order, will be entitled to
receive immediately from the other party the amount of any shortfall of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency and will refund promptly to the other party any excess of
the Contractual Currency received by such party as a consequence of sums paid
in such other currency if such shortfall or such excess arises or results from
any variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such
party. The term "rate of exchange" includes, without limitation, any premiums
and costs of exchange payable in connection with the purchase of or conversion
into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law,
these indemnities constitute separate and independent obligations from the
other obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence granted
by the party to which any payment is owed and will not be affected by judgment
being obtained or claim or proof being made for any other sums payable in
respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
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9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No Amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging
system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies and privileges
provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed an
original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed to operate
as a waiver, and a single or partial exercise of any right, power or privilege
will not be presumed to preclude any subsequent or further exercise, of that
right, power or privilege or the exercise of any other right, power or
privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party arc the same as if it had entered into the
Transaction through its head or home office. This representation will be
deemed to be repeated by such party on each date on which a Transaction is
entered into.
(b) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction without the
prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. Expenses
A Defaulting- Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by reason of the enforcement
and protection of its rights under this Agreement or any Credit Support
Document
12
<PAGE> 16
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:-
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change
the address, telex or facsimile number or electronic messaging system details
at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevocably:-
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan
in New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any
13
<PAGE> 17
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to
service of process given in the manner provided for notices in Section 12.
Nothing in this Agreement will affect the right of either party to serve
process in any other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement:-
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"Applicable Rate" means:-
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate, and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is
specified as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
14
<PAGE> 18
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to such
recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority)
and "lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains) in
respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(1) or (3) or 6(c)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section 11. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have
15
<PAGE> 19
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such
documentation as such party and the Reference Market-maker may, in good faith,
agree. The party making the determination (or its agent) will request each
Reference Market-maker to provide its quotation to the extent reasonably
practicable as of the same day and time (without regard to different time
zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if
more than one quotation has the same highest value or lowest value, then one of
such quotations shall be disregarded. If fewer than three quotations are
provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default-Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-offer" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
16
<PAGE> 20
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party) and the other
party to this Agreement (or any Credit Support Provider of such other party or
any applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, xxxx transaction,
floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a
rate for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under
Section 2(a)(i) which was (or would have been but for Section 2(a)(iii))
required to be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market
17
<PAGE> 21
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding) such
Early Termination Date, at the Applicable Rate. Such amounts of interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
NATIONAL BANK OF CANADA FOOTHILL CAPITAL CORPORATION
.................................. ......................................
(Name of Party) (Name of Party)
By: JACQUES LATENDRESSE By: KENT W. DAHL
-------------------------- ---------------------------------
Name: Jacques Latendresse Name: Kent W. Dahl
Title: Vice-President Title: VP/Treasurer
Administration and Date: 5/20/94
Control, Treasury
Date:
By: FRANCOIS BOURASSA By;
-------------------------- ---------------------------------
Name: Francois Bourassa Name:
Title: Senior Legal Advisor, Title:
International and Financing
18
<PAGE> 22
SCHEDULE
to the
MASTER AGREEMENT
dated as of February 23, 1994 between
NATIONAL BANK OF CANADA AND FOOTHILL CAPITAL CORPORATION
("Party A") ("Party B")
PART I
TERMINATION PROVISIONS
In this Agreement:
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:
Section 5 (a)(v), N/A
Section 5(a)(vi), N/A
Section 5(a)(vii), N/A
Section 5(b)(iv), N/A
in relation to Party B for the purpose of:
Section 5(a)(v), N/A
Section 5(a)(vi), N/A
Section 5(a)(vii), N/A
Section 5(b)(iv), N/A
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
of this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A and to Party B, for such purpose:
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14
of this Agreement; and
"THRESHOLD AMOUNT", with respect to Party A, means USD $10,000,000 and
with respect to Party B, means USD $2,000,000. The Threshold Amount
as of any date includes the Canadian dollar equivalent of any
obligations stated in any other currency, currency unit or
combination, as reasonably determined by the other party as of that
date.
19
<PAGE> 23
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will
apply only to Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to either Party.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means the currency selected by the
non-Defaulting Party or the non-Affected Party, as the case may be, or
in circumstances where there are two Affected Parties, by Party A.
However, the Termination Currency shall be one of the currencies in
which payments in respect of at least one Terminated Transaction are
required to be made by the Confirmations if such currency is specified
and freely available.
(h) ADDITIONAL TERMINATION EVENT. The following shall constitute an
Additional Termination Event:
Party B fails to perform the covenant under Part 5(h) hereof other
than the observance or performance of a term or provision which would
constitute an event of default under the Credit Agreement, subject to
the last paragraph of Part 5(h).
For the purpose of the forgoing Termination Event, the Affected Party
shall be: Party B
PART 2
TAX REPRESENTATIONS
(a) PAYER TAX REPRESENTATION. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will make the following
representations: -
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account
of any Tax from any payment (other than interest under Sections 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
party under this Agreement. In making this representation, it may
rely on:
20
<PAGE> 24
(i) the accuracy of any representation made by the other party
pursuant to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement of the other party contained
in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement; and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement, provided that it shall not
be a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), Party A and
Party B make the representations specified below:
(i) The following representation will apply to Party A and to
Party B:
It is fully eligible for the benefits of the "Business
Profits" or "Industrial and Commercial Profits" provision, as
the case may be, the "Interest" provision or the "Other
Income" provision (if any) of the Specified Treaty with
respect to any payment described in such provisions and
received or to be received by it in connection with this
Agreement.
If such representation applies, then:
"SPECIFIED TREATY" means the Canada - United States Income Tax
Convention, 1980;
(ii) The following representation will apply to Party A and to
Party B in relation to Swap Transactions in which a party is
acting through an office in the Specified Jurisdiction:
Each payment received or to be received by it in connection
with this Agreement will be effectively connected with its
conduct of a trade or business in the Specified Jurisdiction.
21
<PAGE> 25
If such representation applies, then:
"SPECIFIED JURISDICTION" means with respect to Party A the
United States.
"SPECIFIED JURISDICTION" means with respect to Party B the
United States.
(iii) The following representation will apply to Party A in relation
to Swap Transactions in which it is acting through an office
in the United Kingdom:
(a) It is entering into each Transaction in the ordinary
course of its trade as, and is, either (1) a
recognized U.K. bank or (2) a recognized U.K. swaps
dealer (in either case (1) or (2), for purposes of
the United Kingdom Inland Revenue extra statutory
concession C17 on interest and currency swaps dated
March 14, 1989), and (B) it will bring into account
payments made and received in respect of each
Transaction in computing its income for United
Kingdom tax purposes.
(iv) OTHER PAYEE REPRESENTATION.
(a) Party A represents that it is a resident of Canada
for the purposes of the Canada - United States Income
Tax Convention, 1980.
(b) Party B represents that it is a resident of the
United States of America for the purpose of the
Canada - United States Income Tax Convention, 1980.
22
<PAGE> 26
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
<TABLE>
<CAPTION>
Party Date by Covered by
required to Form/Document/ which to be Section 3(d)
deliver document Certificate Delivered Representation
- - ---------------- ------------------ ----------- --------------
<S> <C> <C> <C>
Party A and Any document rea- As soon as Yes
Party B sonably requested reasonably
by the other party practicable
to enable such following a
other party to request by
make payment under the other
this Agreement party.
without any deduc-
tion or withholding
for or on account
of any Tax or to
reduce the rate at
which any such de-
duction or withhol-
ding is required to
be made.
Party B A certified Resolu- At signing of Yes
tion and Certifi- this Agreement.
cate of Incumbency
concerning the per-
son authorized to
sign this Agreement
and each confirma-
tion.
Certificate of Comp-
liance as defined in
Part 5(h)
If Party A Two duplicate exe- Upon execution Yes
is acting cuted originals of of this Agreement
through an U.S. Internal Reve- and each calendar
office nue Service Form year thereafter as
situated in 4224. requested by Party
the U.S.A. B.
</TABLE>
23
<PAGE> 27
<TABLE>
<CAPTION>
Party Date by Covered by
required to Form/Document/ which to be Section 3(d)
deliver document Certificate Delivered Representation
- - ---------------- ------------------ ----------- --------------
<S> <C> <C> <C>
If Party A Two duplicates Upon execution Yes
or Party B executed originals of this Agree-
is acting of U.S. Internal ment and each
through an Revenue Service four years after
office Form 1001. upon request by
situated Party B.
outside of
the U.S.A.
</TABLE>
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
Agreement:
Address for notices or communication to Party A:
NATIONAL BANK OF CANADA
600, rue de La Gauchetiere west
Montreal, Quebec H3B 4L8
Attention: Treasury Operations
Answerback: NABACAN
Telex: 05-560851
Facsimile No.: (514) 394-8219/8229
Address for notices or communication to Party B:
FOOTHILL CAPITAL CORPORATION
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025-3333
Attention: Kent Dahl, Vice President and
Treasurer
Facsimile No.: (310)478-2961
Telephone No.: (310)996-7105
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(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: N/A
Party B appoints as its Process Agent: N/A
(c) OFFICES. The provisions of Section 10(a) will apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this
Agreement:
Party A is a Multibranch Party and, if so, may act through the
following Offices:
MONTREAL TORONTO NEW YORK
TOKYO HONG KONG LONDON
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
With respect to Section 5(a)(ii) of the Agreement, if a party hereto
is designated as the Calculation Agent (as defined in the 1991 ISDA
Definitions) for any Swap Transaction, then Section 5(a)(ii) to the
contrary notwithstanding, Breach of Agreement does not include any
failure by that party to comply with its obligations as Calculation
Agent and the sole remedy of the other party for such failure shall be
the right, upon notice to the Calculation Agent, to designate itself
or a third party as a replacement as Calculation Agent.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document: Any
and all Security Agreement granted from time to time by Party B to
Party A, to guarantee the obligations of Party B towards Party A. In
relation to Party A: N/A.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A: N/A, and in relation to Party B any guarantor, from time to
time, of the obligations of Party B towards Party A.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
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(i) SERVICE OF PROCESS. Notwithstanding the terms of Section 13(c)
the parties do not consent to service of process by either telex,
facsimile transmission or electronic messaging system.
(j) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply.
(k) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
(l) "FACSIMILE TRANSMISSION". Notwithstanding Sections 9(b), 9(e)(i),
9(e)(ii), 12(a) and 12(b), Party B shall not send any document by
facsimile transmission.
PART 5
OTHER PROVISIONS
(a) DEFINITIONS. Reference is hereby made to the 1991 ISDA Definitions
(the "Definitions") as published by the International Swap Dealers
Association, Inc. or to any subsequent update being the then current
version of the Definitions. Any terms used and not otherwise defined
herein which are contained in the Definitions shall have the meaning
set forth therein.
(b) SET-OFF. Any amount (the "Early Termination Amount") payable to one
party (the Payee) by the other party (the Payer) under Section 6(e),
in circumstances where there is a Defaulting Party or one Affected
Party in the case where a Termination Event under Section 5(b)(iv) has
occurred, will, at the option of the party ("X") other than the
Defaulting Party or the Affected Party (and without prior notice to
the Defaulting Party or the Affected Party), be reduced by its set-off
against any amount(s) (the "Other Agreement Amount") payable (whether
at such time or in the future or upon the occurrence of a contingency)
by the Payee to the Payer (irrespective of the currency, place of
payment or booking office of the obligation) under any other
agreement(s) between the Payee and the Payer or instrument(s) or
undertaking(s) issued or executed by one party to, or in favor of, the
other party (and the Other Agreement Amount will be discharged
promptly and in all respects to the extent it is so set-off). X will
give notice to the other party of any set-off effected under this
Section 5(b).
For this purpose, either the Early Termination Amount or the
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Other Agreement Amount (or the relevant portion of such amounts) may
be converted by X into the currency in which the other is denominated
at the rate of exchange at which such party would be able, acting in a
reasonable manner and in good faith, to purchase the relevant amount
of such currency.
If an obligation is unascertained, X may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is
ascertained.
Nothing in this Section 5(b) shall be effective to create a charge or
other security interest. This Section 5(b) shall be without prejudice
and in addition to any right of set-off, combination of accounts, lien
or other right to which any party is at any time otherwise entitled
(whether by operation of law, contract or otherwise).
(c) ILLEGALITY. For purposes of Section 5(b)(i), the obligation of a
party to comply with any directive, direction or similar order of any
applicable governmental agency or authority (whether or not having the
force of law) which has the result referred to in Section 5(b)(i)
shall be deemed to be an "Illegality".
(d) EQUIVALENCY CLAUSE. For purposes of disclosure pursuant to the
Interest Act (Canada), the yearly rate of interest to which any rate
of interest payable under this Agreement, which is to be calculated on
any basis other than a full calendar year, is equivalent may be
determined by multiplying such rate by a fraction, the numerator of
which is the number of days in the calendar year in which the period
for which interest at such rate is payable ends and the denominator of
which is the number of days comprising such other basis.
(e) TRANSFER. Exception to the Transfer provisions of Section 7 is that
consent to transfer shall not be unreasonably withheld.
(f) INDEMNIFIABLE TAX. The following is added at the end of the
definition of "Indemnifiable Tax" in Section 14:
" Notwithstanding the foregoing, 'Indemnifiable Tax' also means
any Tax imposed in respect of a payment under this Agreement
by reason of a Change in Tax Law by a government or taxing
authority of a Relevant Jurisdiction of the party making such
payment, unless the other party is
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incorporated, organized, managed and controlled or considered
to have its seat in such jurisdiction, or is acting for
purposes of this Agreement through a branch or office located
in such jurisdiction."
(g) EVENT OF DEFAULT - CAPS, COLLARS, FLOORS AND OPTIONS. The condition
precedent in Section 2(a)(iii)(1) does not apply to a payment due to a
party if such party shall have satisfied in full all its payment
obligations under Section 2(a)(i) of this Agreement and shall at the
relevant time have no future payment obligations, whether absolute or
contingent, under Section 2(a)(i).
(h) LOAN AGREEMENT. For purposes of this Agreement, Party B hereby
covenants that, so long as any Transaction remains outstanding
hereunder, Party B will observe, perform and fulfill each and every
covenant, term, and provision ("Covenants") contained in the Amended
and Restated Loan Agreement Among Foothill Capital Corporation,
National Westminster Bank USA, as Documentation Agent, Bank of America
National Trust and Savings Association, as Administrative Agent, and
the Banks Signatory Thereto, dated as of June 30, 1993 (the "Credit
Agreement") as the same are in effect on the date of this Agreement
(including, without limitation, the effect of any waivers of any of
the provisions thereof to the date of this Agreement) and as the same
may be modified or waived hereafter (except by the termination of the
Credit Agreement), which Covenants, together with the definitions of
all defined terms used therein and all other sections of the Credit
Agreement to which reference is made in such Covenants, are by this
reference deemed incorporated in this Agreement as if the provisions
thereof were set forth in full in this Agreement. The provisions and
definitions of the Credit Agreement as incorporated by reference in
this Agreement shall continue to be binding on Party B after giving
effect to any consent or waiver with respect to such provisions or to
any amendment or modification thereof; provided that, for purposes of
this Agreement, such incorporated provisions and definitions shall
survive the expiration or termination of the Credit Agreement in the
form in which they were in effect immediately prior to such expiration
or termination.
From and after the expiration or termination of the Credit Agreement,
Party B shall provide to Party A, within 45 days after the end of each
fiscal quarter of Party B, a certificate executed by the senior
financial officer of Party B stating that Party B is in compliance
with the incorporated provisions, or if Party B is not in compliance,
stating what actions Party B intends to take to cure such non-
compliance.
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The non-performance of a covenant which would constitute a event of
default under the Credit Agreement shall constitute a Cross Default
under section 5(a)(vi) hereof.
(i) ENGLISH LANGUAGE. The parties hereto have requested that this
Agreement and the Schedule be drafted in the English language and that
all present and future Confirmations be drafted in the English
language. Les parties aux presentes ont requis que cette convention
et l'Annexe ainsi que toutes les presentes et futures confirmations
soient redigees en langue anglaise.
Please confirm your agreement to the terms of the foregoing Schedule by signing
below.
NATIONAL BANK OF CANADA FOOTHILL CAPITAL CORPORATION
By: JACQUES LATENDRESSE By: KENT DAHL
------------------------- ---------------------------
Name: Jacques Latendresse Name: Kent W. Dahl
Title: Vice-President Title: VP/Treasurer
Administration &
Control, Treasury
By: FRANCOIS BOURASSA By:
------------------------- ---------------------------
Name: Francois Bourassa Name:
Title: Senior Legal Advisor Title:
International &
Financing
29
