<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, 1995
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 16,708,958
(As of June 30, 1995)
</TABLE>
<PAGE> 2
THE FOOTHILL GROUP, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
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 13
Part II - Other Information
---------------------------
Items 1 to 6 .......................................................................................... 14 to 15
Signatures .......................................................................................... 16
</TABLE>
<PAGE> 3
The FOOTHILL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
ITEM 1
------------------------------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
1995 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Unaudited)
Cash and cash equivalents $ 3,545 $ 33,584
Equity, debt and partnership investments 35,411 38,301
Finance receivables:
Revolving loans 670,256 481,063
Term loans 246,251 178,293
------------------------------------------------------------------------------------------------------------
Finance receivables 916,507 659,356
Allowance for credit losses 23,150 17,260
------------------------------------------------------------------------------------------------------------
Finance receivables, net 893,357 642,096
Repossessed assets, net 556 556
Prepaid income taxes 17,727 10,463
Deferred fund and debt issuance costs, net 7,664 7,598
Property and equipment, at cost less accumulated depreciation and
amortization ($2,366 at June 30, 1995; $2,438 at December 31, 1994) 2,528 2,387
Other assets (principally monies due from loan participants) 9,191 3,205
------------------------------------------------------------------------------------------------------------
$969,979 $738,190
============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commercial paper $414,223 $214,897
Other short term borrowings 15,000 10,000
Senior notes payable 273,300 268,829
Accounts payable and accrued liabilities 28,371 21,504
Subordinated notes and debentures 48,650 50,550
------------------------------------------------------------------------------------------------------------
Total liabilities 779,544 565,780
------------------------------------------------------------------------------------------------------------
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, 16,708,958 shares
issued and outstanding (16,420,410 at December 31, 1994) 99,328 99,048
Unrealized gains, net of tax, on marketable debt and equity securities 14,858 15,001
Retained earnings 73,349 55,461
------------------------------------------------------------------------------------------------------------
Total stockholders' equity 190,435 172,410
------------------------------------------------------------------------------------------------------------
$969,979 $738,190
============================================================================================================
</TABLE>
See accompanying notes.
1
<PAGE> 4
THE FOOTHILL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- --------------------
1995 1994 1995 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and fees earned $32,100 $19,177 $58,958 $37,033
Interest expense 11,906 5,973 21,853 11,150
-----------------------------------------------------------------------------------------------------
Net interest revenue 20,194 13,204 37,105 25,883
Asset management fees 1,252 1,316 2,503 2,855
Gains from asset sales and managed partnerships 7,850 5,650 14,168 20,510
Provision for credit losses 6,287 2,513 9,825 4,928
General and administrative expenses 6,353 6,072 12,569 12,662
-----------------------------------------------------------------------------------------------------
Income before income taxes 16,656 11,585 31,382 31,658
Provision for income taxes 7,162 4,981 13,494 13,613
-----------------------------------------------------------------------------------------------------
Net income $ 9,494 $ 6,604 $17,888 $18,045
=====================================================================================================
Per share data (shares in thousands):
Primary earnings per common share $ 0.55 $ 0.39 $ 1.05 $ 1.06
=====================================================================================================
Fully diluted earnings per common share $ 0.54 $ 0.37 $ 1.02 $ 1.02
=====================================================================================================
Number of shares used in per share computations:
Primary 16,956 16,946 16,864 16,954
=====================================================================================================
Fully diluted 17,632 17,614 17,542 17,621
=====================================================================================================
</TABLE>
See accompanying notes.
2
<PAGE> 5
THE FOOTHILL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 17,888 $ 18,045
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit losses 9,825 4,928
Depreciation and amortization 475 294
Amortization of deferred fund and debt issuance costs 1,197 1,151
Increase in accounts payable and accrued liabilities 6,516 3,540
Other (12,490) (7,120)
----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 23,411 20,838
----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Net proceeds from investment sales and partnership distributions 6,111 1,160
Contributions made to partnerships and purchases of investments (2,581) (2,451)
Payments received from net finance receivables and sales of
repossessed assets 4,035,981 2,894,990
Disbursements made for net finance receivables and repossessed assets (4,297,067) (2,971,167)
Purchase of property and equipment (616) (222)
----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (258,172) (77,690)
----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net increase in deferred fund and debt issuance costs (1,264) (71)
Proceeds from commercial paper sales 1,670,801 513,867
Payments on commercial paper maturities (1,471,475) (461,039)
Proceeds from senior notes payable 35,000 --
Payments on senior notes payable and net bank borrowings (25,529) (11,363)
Payments on subordinated notes and debentures (1,900) (1,650)
Dividends paid per common share ($.14 in 1995, $.10 in 1994) (2,320) (1,655)
Dividends paid on preferred stock (135) (135)
Issuance of common stock 1,544 709
----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 204,722 38,663
----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (30,039) (18,189)
Cash and cash equivalents at beginning of period 33,584 50,907
----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 3,545 $ 32,718
==========================================================================================================
Cash paid during the period for:
Interest expense $ 21,715 $ 11,307
Income taxes $ 19,071 $ 12,361
==========================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 6
THE FOOTHILL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 1995
--------------------------------------------------------------------------------
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, 1995, have been included. Certain reclassifications have
been made to prior year amounts to conform to the 1995 presentation. The results
of operations for interim periods are not necessarily indicative of results for
the full year.
--------------------------------------------------------------------------------
NOTE 2. INCOME TAXES
--------------------------------------------------------------------------------
For both interim periods ended June 30, 1995 and 1994, the Company's
provision for income taxes was 43%, 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. The Company has 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, 1995
The Company has investments in two limited partnerships, 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 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'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 $2,503,000 and $2,855,000 for the six months ended June
30, 1995 and 1994, 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, 1995 and 1994 totaled $3,144,000 and $6,090,000, 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) 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. The Registrant will earn
income on these allocations 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, 1995, loans
outstanding which were purchased under these agreements by the Company amounted
to $40,303,000. Loan purchases under both of these agreements are subject to
Foothill Capital's normal due diligence and loan approval processes.
--------------------------------------------------------------------------------
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 and nonaccrual
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
and its managed partnerships. 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."
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)
for The Foothill Group, Inc.*:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------------- -----------------------------------------
1995 1994 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest and fees earned $ 32,100 14.80% $ 19,177 13.06% $ 58,958 14.52% $ 37,033 12.78%
Interest expense 11,906 5.49% 5,973 4.07% 21,853 5.38% 11,150 3.85%
------------------------------------------------------------------------------------------------------------------------------------
Net interest revenue 20,194 9.31% 13,204 8.99% 37,105 9.14% 25,883 8.93%
Asset management fees 1,252 0.58% 1,316 0.90% 2,503 0.62% 2,855 0.99%
Gains from asset sales and managed partnerships 7,850 3.62% 5,650 3.85% 14,168 3.49% 20,510 7.08%
Provision for credit losses 6,287 2.90% 2,513 1.71% 9,825 2.42% 4,928 1.70%
General and administrative expenses 6,353 2.93% 6,072 4.14% 12,569 3.10% 12,662 4.37%
------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 16,656 7.68% 11,585 7.89% 31,382 7.73% 31,658 10.93%
Provision for income taxes 7,162 3.30% 4,981 3.39% 13,494 3.32% 13,613 4.70%
------------------------------------------------------------------------------------------------------------------------------------
Net income $ 9,494 4.38% $ 6,604 4.50% $ 17,888 4.41% $ 18,045 6.23%
====================================================================================================================================
*Percentages are computed using average assets of continuing operations (excluding unrealized gains on investments) and have been
annualized.
SELECTED BALANCE SHEET DATA:
Total assets $969,979 $665,013 $969,979 $665,013
Average assets** 867,618 587,200 812,087 579,618
Average stockholders' equity** 172,784 146,456 167,553 143,178
Finance receivables 916,507 582,994 916,507 582,994
Average finance receivables** 826,486 538,621 759,866 531,010
====================================================================================================================================
Sources of funds employed:
Commercial paper $414,223 $201,111 $414,223 $201,111
Other short term borrowings 15,000 -- 15,000 --
Senior notes 273,300 226,042 273,300 226,042
Subordinated notes and debentures 48,650 52,075 48,650 52,075
Stockholders' equity 190,435 167,293 190,435 167,293
------------------------------------------------------------------------------------------------------------------------------------
Total funds employed $941,608 $646,521 $941,608 $646,521
====================================================================================================================================
</TABLE>
**Averages are for the three and six months ended, respectively. 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)
SELECTED FINANCIAL DATA FOR FOOTHILL CAPITAL CORPORATION (DOLLARS IN THOUSANDS):
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
----------------------------------- ------------------------------------
1995 1994 1995 1994
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA*:
Interest and fees earned $ 31,882 15.35% $ 18,861 13.67% $ 58,621 15.10% $ 36,388 26.68%
Interest expense 12,128 5.84% 6,218 4.51% 22,294 5.74% 11,643 8.54%
-----------------------------------------------------------------------------------------------------------------------
Net interest revenue 19,754 9.51% 12,643 9.16% 36,327 9.36% 24,745 18.14%
Gains from asset sales 6,167 2.97% 3,647 2.64% 10,795 2.78% 13,250 9.72%
Provision for credit losses 6,287 3.03% 2,513 1.82% 9,825 2.53% 4,928 3.61%
General and administrative expenses 5,535 2.67% 5,257 3.81% 10,886 2.80% 10,737 7.87%
-----------------------------------------------------------------------------------------------------------------------
Income before income taxes 14,099 6.78% 8,520 6.17% 26,411 6.81% 22,330 16.38%
Provision for income taxes 6,063 2.92% 3,664 2.66% 11,357 2.93% 9,602 7.04%
-----------------------------------------------------------------------------------------------------------------------
Net income $ 8,036 3.86% $ 4,856 3.51% $ 15,054 3.88% $ 12,728 9.34%
=======================================================================================================================
*Percentages are computed using average assets (excluding unrealized gains on investments) and have been annualized.
SELECTED BALANCE SHEET DATA:
Total assets $928,979 $625,954 $928,979 $625,954
Average assets** 830,716 551,780 776,476 545,509
Finance receivables 907,841 566,660 907,841 566,660
Average finance receivables** 817,332 530,229 751,713 523,000
=======================================================================================================================
Sources of funds employed:
Commercial paper $414,223 $201,111 $414,223 $201,111
Other short term borrowings 15,000 -- 15,000 --
Senior notes 273,300 223,650 273,300 223,650
Subordinated notes and debentures 56,400 61,575 56,400 61,575
Stockholders' equity 145,779 124,466 145,779 124,466
-----------------------------------------------------------------------------------------------------------------------
Total funds employed $904,702 $610,802 $904,702 $610,802
=======================================================================================================================
**Averages are for the three and six months ended, respectively. Average assets exclude unrealized gains on marketable debt and
equity securities.
SELECTED BALANCE SHEET DATA:
Nonperforming finance receivables
and repossessed assets*** $ 4,405 $ 14,072 $ 4,405 $ 14,072
Allowance for credit losses $ 22,847 $ 15,356 $ 22,847 $ 15,356
Actual writeoffs during the period $ 2,098 $ 1,613 $ 3,936 $ 3,428
Number of employees 144 112 144 112
=======================================================================================================================
</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 $257,151,000 between December 31, 1994
and June 30, 1995 from $659,356,000 to $916,507,000. This increase in
outstanding loans was primarily the result of new business plus additional
borrowings from existing clients at Foothill Capital, offset by normal loan
repayments, payoffs and liquidations during the six month period.
Included in finance receivables at June 30, 1995 and December 31, 1994
are purchased receivables totaling $40,380,000 and $35,388,000, respectively.
The Company does not amortize discounts on purchased receivables into income,
but does recognize interest income and discounts as paid on a cash basis.
These loans, including several which can be valued using market quotations, have
an estimated market value of $43,585,000 and $37,060,000, which is $3,205,000
and $1,672,000 more than the carrying value at June 30, 1995 and December 31,
1994, respectively.
--------------------------------------------------------------------------------
NET INCOME
--------------------------------------------------------------------------------
The Company recorded net income of $9,494,000 for the three months
ended June 30, 1995 compared to $6,604,000 for the three months ended June 30,
1994. For the six months ended June 30, 1995 and 1994, the Company recorded net
income of $17,888,000 and $18,045,000, respectively. The decrease in net income
for the six months ended June 30, 1995 as compared to the six months ended June
30, 1994 was primarily due to a decrease in gains from asset sales combined with
an increase in the provision for credit losses, offset by an increase in net
interest revenue. 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, 1995 compared to three months ended June 30, 1994:
Net interest revenue increased to $20,194,000 for the three months
ended June 30, 1995 from $13,204,000 for the same period in the previous year,
and increased as a percentage of average assets from 8.99% to 9.31%. For the
three months ended June 30, 1995, 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 relative to the prime interest
rate. Loan related fees were $3,772,000 and $2,436,000 for the three months
ended June 30, 1995 and 1994, respectively.
Six months ended June 30, 1995 compared to six months ended June 30, 1994:
Net interest revenue increased to $37,105,000 for the six months ended
June 30, 1995 from $25,883,000 for the same period in the previous year, and
increased as a percentage of average assets from 8.93% to 9.14%. For the six
months ended June 30, 1995, 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 relative to the prime interest rate. Loan related fees
were $7,592,000 and $5,147,000 for the six months ended June 30, 1995 and 1994,
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, 1995 and 1994, the Company recorded
asset management fees of $1,252,000 and $1,316,000, respectively. The decrease
for the three month period ended June 30, 1995 was due to a decrease in the
average level of assets managed by the Company as Foothill Fund and Foothill
Recovery Fund, two partnerships in which the Company was a managing general
partner, were fully liquidated on December 31, 1994.
For the six months ended June 30, 1995 and 1994, the Company recorded
asset management fees of $2,503,000 and $2,855,000, respectively. The decrease
for the six month period ended June 30, 1995 was due to a decrease in the
average level of assets managed by the Company as Foothill Fund and Foothill
Recovery Fund, two partnerships in which the Company was a managing general
partner, were fully liquidated on December 31, 1994.
--------------------------------------------------------------------------------
GAINS FROM ASSET SALES AND MANAGED PARTNERSHIPS
--------------------------------------------------------------------------------
Gains from asset sales are generated by 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, 1995 and 1994, the Company recorded
gains from asset sales and managed partnerships of $7,850,000 and $5,650,000,
respectively.
For the six months ended June 30, 1995 and 1994, the Company recorded
gains from asset sales and managed partnerships of $14,168,000 and $20,510,000,
respectively. The 1994 gains from asset sales were composed principally of
substantial gains from the sale of debt and equity positions in G. Heileman
Brewing Company, Inc.
--------------------------------------------------------------------------------
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 increased from $2,513,000 for the three
months ended June 30, 1994 to $6,287,000 for the three months ended June 30,
1995 The provision increased from $4,928,000 for the six months ended June 30,
1994 to $9,825,000 for the same period in 1995. As shown in the table below, the
increase in the provision was due principally to growth in the finance
receivable portfolio during in both the three and six month periods ending June
30, 1995. The general allowance for credit losses as a percentage of finance
receivables plus repossessed assets decreased from 2.67% at June 30, 1994 to
2.52% at June 30, 1995.
9
<PAGE> 12
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
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) 6/30/95 6/30/94 6/30/95 6/30/94
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Finance receivables plus repossessed assets $917,063 $583,230 $917,063 $583,230
Allowance for credit losses 23,150 15,556 23,150 15,556
Percent of such allowance to finance receivables plus repossessed assets 2.52% 2.67% 2.52% 2.67%
Actual writeoffs during the period, net of recoveries 2,098 1,613 3,936 3,428
Provision for credit losses charged to income during the period 6,287 2,513 9,825 4,928
Percent of provision for credit losses to net writeoffs during the 300% 156% 250% 144%
period
Percent of net writeoffs to finance receivables plus repossessed assets 0.23% 0.28% 0.43% 0.59%
Annualized percent of net writeoffs to finance receivables plus
repossessed assets 0.92% 1.11% 0.86% 1.18%
=======================================================================================================================
</TABLE>
--------------------------------------------------------------------------------
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 1.04% at December 31, 1994 to 0.48% at June 30, 1995:
<TABLE>
<CAPTION>
(Dollars in thousands) 6/30/95 12/31/94 6/30/94
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Finance receivables plus repossessed assets $917,063 $659,912 $583,230
Loans more than 60 days past due 3,849 6,335 13,836
Percent of above to finance receivables plus repossessed assets 0.42% 0.96% 2.37%
Repossessed assets, net 556 556 236
Percent of above to finance receivables plus repossessed assets 0.06% 0.08% 0.04%
--------------------------------------------------------------------------------------------------
Total nonperforming assets $ 4,405 $ 6,891 $ 14,072
==================================================================================================
Percent of above to finance receivables plus repossessed assets 0.48% 1.04% 2.41%
==================================================================================================
</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 June 30, 1994. Historically, such percentage of nonperforming assets has
generally ranged between 3% and 6% of finance receivables plus repossessed
assets and has fluctuated within this range from quarter to quarter. Due to the
Company's increased emphasis on revolving loans and its ability to resolve and
liquidate problem accounts, nonperforming assets are currently at 0.48% of
finance receivables plus repossessed assets. The Company expects continued
fluctuations in the amount of nonperforming assets. The Company's finance
receivable portfolio is well diversified within various industries and
geographic locations. This diversification should reduce the risk that
nonperforming assets will increase materially, however, no assurances can be
given that nonperforming assets will not increase above the historical 3% to 6%
range.
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.
10
<PAGE> 13
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
Effective January 1, 1995, the Company adopted FASB Statement No. 114,
"Accounting by Creditors for Impairment of a Loan." Under Statement No. 114,
loans are deemed impaired when, based on current information and events, it is
probable that a creditor will be unable to collect all amounts due according to
the contractual terms of the loan agreement. Impairment is measured based on the
present value of expected future cash flows to be received from the borrower, or
alternatively, the market price of the loan or the fair value of the collateral
if the loan is collateral dependent. The Company has historically ceased
recognizing interest on loans (even though borrowers are contractually current)
when it determines that the value of the collateral securing the loan may not be
adequate to cover the outstanding principal less any deferred and unearned
income. When a loan is placed on nonaccrual status, unpaid interest credited to
income in the current year is reversed. In addition, any interest or fee
payments received while on nonaccrual status are not currently recognized in
income. Generally, loans are restored to accrual status when all obligations are
brought current, clients maintain their performance in accordance with the
contractual terms for a reasonable period of time, and the value of the
collateral securing the obligation exceeds the net obligation owed by a
reasonable level. At June 30, 1995, these nonaccrual loans totaled $19,388,000.
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) 6/30/95 6/30/94 6/30/95 6/30/94
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Employee related $ 4,588 $ 4,569 $ 9,191 $ 9,562
Occupancy and office 630 529 1,228 1,069
Professional services 318 94 495 174
Data processing and communications 306 204 598 406
Credit and collection 16 248 124 665
Advertising 190 163 343 271
Insurance and bond premiums 110 118 219 235
Other 195 147 371 280
-----------------------------------------------------------------------------------------------------------------------
Total general and administrative expenses $ 6,353 $ 6,072 $ 12,569 $ 12,662
=======================================================================================================================
</TABLE>
General and administrative expenses increased from $6,072,000 for the
three months ended June 30, 1994 to $6,353,000 for the three months ended June
30, 1995. As a percent of average assets, general and administrative expenses
decreased from 4.14% to 2.93% for the three months ended June 30, 1994 and 1995,
respectively. The increase in general and administrative expenses for the three
month period ended June 30, 1995 over the comparable period in the preceding
year was due to increases in professional services, occupancy, and data
processing expenses, offset by a reduction in credit and collection expenses.
General and administrative expenses decreased from $12,662,000 for the
six months ended June 30, 1994 to $12,569,000 for the six months ended June 30,
1995. As a percent of average assets, general and administrative expenses
decreased from 4.37% to 3.10% for the six months ended June 30, 1994 and 1995,
respectively. The decreases in dollars for the six months ended June 30, 1995
over the comparable period in the preceding year were primarily due to decreases
in incentive compensation accrual levels and related expenses at Foothill
Capital and the Registrant and a decrease in credit and collection expenses
offset by increases in professional services, occupancy, and data processing
expense.
--------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES
--------------------------------------------------------------------------------
For the six months ended June 30, 1995 and 1994, the Company's
provision for income taxes was 43%, which is based on combined state and federal
statutory tax rates.
11
<PAGE> 14
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
--------------------------------------------------------------------------------
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 primarily through the issuance of commercial
paper and medium term debt. The primary source of Foothill Capital's short term
funding is commercial paper borrowings. During the six months ended June 30,
1995, commercial paper borrowings increased by $199,326,000 to $414,223,000.
Commercial paper borrowings are supported by two committed bank credit
facilities with 26 banks, which totaled $460,000,000 as of June 30, 1995. The
credit facilities consist of a $306,700,000 multi-year revolving credit facility
expiring on May 31, 1998, and a $153,300,000 revolving credit facility expiring
on May 29, 1996. The $153,300,000 revolving credit facility allows Foothill
Capital to convert outstanding borrowings into a one-year term loan prior to
maturity. As of June 30, 1995, Foothill Capital had $30,777,000 in availability
(total amount of credit facilities minus outstanding commercial paper and other
short term borrowings) under its bank credit facilities. As of August 1, 1995,
these credit facilities were increased from $460,000,000 to $500,000,000.
During the first six months of 1995, Foothill Capital issued privately
an aggregate total of $35,000,000 in senior variable notes with maturities
ranging from one to three years. In July, 1995, Foothill Capital issued
privately an aggregate of $65,000,000 in senior fixed rate notes with a two year
maturity. During 1994, Foothill Capital issued privately an aggregate total of
$60,000,000 in senior notes consisting of $35,000,000 of variable rate notes
with a maturity of one year, $5,000,000 of variable rate notes with a maturity
of two years, and $20,000,000 of fixed rate notes with a maturity of two and
one-half years. Proceeds from these debt issuances were primarily used to fund
growth in Foothill Capital's finance receivable portfolio as well as to repay
maturing debt.
Foothill Capital, in the normal course of its operations, uses interest
rate swap transactions to effectively convert its fixed rate debt obligations to
floating rate in order to match its mainly floating rate finance receivable
portfolio and hedge the Company's exposure to interest rate fluctuations. At
June 30, 1995, Foothill Capital maintained interest rate swap agreements with
notional amounts aggregating $255,000,000 with six major financial institutions
as counterparties. In July, 1995, Foothill Capital entered into additional swap
agreements with notional amounts totaling $65,000,000. At June 30, 1995, each
counterparty was rated A or better by one or more major credit rating agency.
Foothill Capital's commercial paper is rated "A-2" by Standard and
Poor's Ratings Group, "D-2" by Duff & Phelps Credit Rating Co. and "F-2" by
Fitch Investors Service, Inc. The Company's senior debt rating is "BBB" by
Standard and Poor's and "BBB+" by Duff & Phelps. In addition, Foothill Capital's
senior obligations are rated "BBB+" by Fitch.
The major cash outflows of the Registrant consist primarily of
expenditures for general and administrative costs, 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, 1994 Annual Report to Stockholders.
--------------------------------------------------------------------------------
PARTICIPATION IN HIGHLY LEVERAGED TRANSACTIONS
--------------------------------------------------------------------------------
Since its inception, the Registrant and Foothill Capital have been in
the commercial finance business. This business includes revolving credit 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.
12
<PAGE> 15
THE FOOTHILL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)
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 $100,000,000 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, 1995 was $30,326,000.
Foothill Capital's largest loan (net of participations) to any borrower and its
affiliates was $19,977,000 and $14,992,000 at June 30, 1995 and 1994,
respectively. Loans in this portfolio are made in numerous industries and
geographic locations 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 $35,411,000 and $38,301,000 at June 30, 1995 and
December 31, 1994, 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 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, before income taxes, for this portfolio as of June 30, 1995 and
December 31, 1994 was $24,452,000 and $26,454,000, respectively.
The Registrant is a general partner in two limited partnerships,
Foothill Partners, L.P. and Foothill Partners II, L.P. ("the Funds"). 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.
--------------------------------------------------------------------------------
COMPANY ENTERS MERGER AGREEMENT WITH NORWEST CORPORATION
--------------------------------------------------------------------------------
On May 15, 1995, the Company entered into a merger agreement with
Norwest Corporation ("Norwest"), a bank holding corporation formed under the
laws of the State of Delaware, pursuant to which the Company will be a wholly
owned subsidiary of Norwest. Under the terms of the Agreement each share of the
Company's Class A Common Stock will be exchanged for .92 shares of Norwest
Common Stock, and each share of the Company's Series A Preferred Stock will be
exchanged for 6.133272 shares of Norwest Common Stock. Based on the total number
of the Company's common and preferred shares outstanding and assuming the
exercise of all outstanding options, Norwest will issue a total of 16,415,890
shares representing a purchase price of approximately $445 million. The merger
agreement was also approved by the Company's Board of Directors on May 15, 1995,
subject to the receipt by the Board of a fairness opinion that the merger
consideration is fair to the Company's common and preferred shareholders from a
financial point of view. Completion of the merger is subject to certain
regulatory approvals and customary closing conditions. The merger agreement is
also subject to approval by an affirmative vote of a majority of the Company's
common and preferred stockholders. As a condition to the merger agreement, the
Company entered into a stock option agreement with Norwest pursuant to which
Norwest has the option to purchase up to 18.5% of the Company's authorized and
outstanding Class A Common Stock. Any newly issued Class A common stock could be
purchased under the option at the Company's closing price on May 15, 1995 if
certain triggering events occur, including entering into an acquisition
agreement with or the acquisition of 20% of the Company's outstanding Common
Stock by someone other than Norwest. The merger is expected to close in the
fourth quarter of 1995.
13
<PAGE> 16
PART II - OTHER INFORMATION
ITEMS 1 to 5 NOT APPLICABLE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10.39(a) - Amendment Number one dated February 1,
1995 to the Revolving Credit Agreement among Foothill
Capital Corporation, Bank of America NT&SA as agent and
other banks named in the loan agreement.
Exhibit 10.39(b) - Amendment Number Two dated May 31, 1995
to the Revolving Credit Agreement among Foothill Capital
Corporation, Bank of America NT&SA as agent and other banks
named in the loan agreement.
Exhibit 10.39(c) - Amendment Number Three dated June 30,
1995 to the Revolving Credit Agreement among Foothill
Capital Corporation, Bank of America NT&SA as agent and
other banks named in the loan agreement.
Exhibit 10.40(b) - Amendment Number Two dated May 31, 1995
to the Multiyear Credit Agreement among Foothill Capital
Corporation, Bank of America NT&SA as agent and other banks
named in the loan agreement.
Exhibit 10.40(c) - Amendment Number Three dated June 30,
1995 to the Multiyear Credit Agreement among Foothill
Capital Corporation, Bank of America NT&SA as agent and
other banks named in the loan agreement.
Exhibit 10.41(a) - First amendment dated December 28, 1994
to the Third Amended and Restated Letter of Credit and
Guaranty Agreement dated as of August 1, 1994 among
Foothill Capital Corporation, Union Bank as agent and
Issuing Bank.
Exhibit 10.41(b) - Second amendment dated June 30, 1995 to
the Third Amended and Restated Letter of Credit and
Guaranty Agreement dated as of August 1, 1994 among
Foothill Capital Corporation, Union Bank as agent and
Issuing Bank.
Exhibit 10.42(a) - First amendment dated February 1, 1995
to the Amended and Restated Letter of Credit and Guaranty
Agreement dated as of August 1, 1994 among Foothill Capital
Corporation, Bank of America NT&SA as Agent and Issuing
Bank and other banks named in the agreement.
Exhibit 10.42(b) - Second amendment dated June 30, 1995 to
the Amended and Restated Letter of Credit and Guaranty
Agreement dated as of August 1, 1994 among Foothill Capital
Corporation, Bank of America NT&SA as Agent and Issuing
Bank and other banks named in the agreement.
Exhibit 10.46 - Note agreement dated July 24, 1995 by and
between Foothill Capital Corporation and Principal Mutual
Life Insurance Company.
Exhibit 10.47 - Note agreement dated July 24, 1995 by and
between Foothill Capital Corporation and CIG & Co.
Exhibit 10.48 - Note agreement dated July 24, 1995 by and
between Foothill Capital Corporation and CIG & Co.
Exhibit 10.49 - ISDA Interest Rate Swap Agreement dated
July 20, 1995 by and between Foothill Capital Corporation
and NatWest Bank N.A.
14
<PAGE> 17
Exhibit 10.50 - ISDA Interest Swap Agreement dated July 20, 1995 by and
between Foothill Capital Corporation and The Industrial Bank of Japan,
Limited.
Exhibit 10.51 - ISDA Interest Rate Swap Agreement dated July 24, 1995
by and between Foothill Capital Corporation and ABN-AMRO Band N.V.
Exhibit 10.52 - Omnibus Amendment dated June 16, 1995 to Loan
Agreements dated January 23, 1990, May 8, 1991, January 31, 1992, April
29, 1992, November 1, 1992, October 1, 1993, and November 1, 1994 by
and between Foothill Capital Corporation and various lenders noted in
the amendment.
Exhibit 11 - Computation of Earnings per Common Share for three and six
months ended June 30, 1995 and 1994.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Item(s) Financial Statements
Date of Report Reported Filed
-------------- -------- --------------------
<S> <C> <C>
5/15/95 7 None
7/10/95 7 None
</TABLE>
15
<PAGE> 18
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 8, 1995 /s/ HENRY K. JORDAN
-----------------------------
Henry K. Jordan
Senior Vice President
Chief Financial Officer and
Corporate Secretary
Date: August 8, 1995 /s/ KEVIN D. GARY
-----------------------------
Kevin D. Gary
Vice President and Controller
16
<PAGE> 1
EXHIBIT 10.39(a)
AMENDMENT NO. ONE TO REVOLVING CREDIT AGREEMENT
This Amendment No. One (the "Amendment") dated as of February 1, 1995,
is among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"),
the banks that are signatories hereto (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.
RECITALS
A. The Banks, other than The Long-Term Credit Bank of Japan, Ltd.
("LTB"), NationsBank of Georgia, N.A. ("Nations") and Norwest Bank Minnesota,
N.A. ("Norwest"), and the Agent and the Company entered into a Revolving Credit
Agreement dated as of June 30, 1994 (the "Agreement").
B. LTB, Nations and Norwest have each agreed to become a Bank, LTB and
Nations each with a commitment amount of $3,333,333 and Norwest with a
commitment amount of $3,333,334, under the Agreement and the Company, the Agent
and the Banks have agreed to consent thereto, on the terms and conditions set
forth below;
C. The Banks, the Agent and the Company desire to amend the Agreement
to reflect LTB, Nations and Norwest becoming New Banks under the Agreement and
to amend certain other provisions of the Agreement.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 The definition of Applicable Margin is hereby amended in full to
read as follows:
"'Applicable Margin' means, during the applicable periods or
portions thereof, (a) unless an Event of Default has occurred and is
continuing, (i) 0.0% per annum with respect to Reference Rate Loans, and
(ii) 0.50% 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 three Rating Agencies, each percentage set forth in
clauses (a) and (b) above shall be increased by 0.25% per annum."
-1-
<PAGE> 2
2.2 Section 3.1(a) of the Agreement is hereby amended in full to read
as follows:
(a) The Company shall pay to the Agent for the account of the
applicable Banks annual commitment fee equal to 0.15% per annum on the average
daily unused portion of the Aggregate Commitment for the period from February
1, 1995 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 February 1,
1995 and on the Termination Date; provided, however, that the annual commitment
fee shall be increased to 0.25% 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 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.
2.3 Section 7.1 is hereby amended in full to read as follows:
"Section 7.1 Adjusted Consolidated Net Worth. Adjusted Consolidated Net
Worth shall not be less than $80,000,000 at any time."
2.4 Exhibit A to the Agreement is hereby amended in full by the attached
Exhibit A.
3. Waiver. The Agent, the Banks and the Company hereby waive the
requirement contained in Section 2.1(f) of the Agreement that any New Bank will
not become a Bank until the first Business Day of the next quarter after
executing and delivery of the Supplement For New Bank, and agree that LTB,
Nations and Norwest shall become Banks under the Agreement when this Amendment
becomes effective in accordance with Paragraph 5 of this Amendment.
4. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Agent and the Banks
that: (a) there is no event which is, or with notice or lapse of time or both
would be, a default under the Agreement, and (b) the representations and
warranties in the Agreement are true as of the date of this Amendment as if
made on the date of this Amendment, (c) this Amendment is within the Company's
powers, has been duly authorized, and does not conflict with any of the
Company's organizational papers, and (d) this Amendment does not conflict with
any law, agreement, or obligation by which the Company is bound.
5. Conditions. This Amendment will be effective when the Agent receives
the following items, in form and content acceptable to the Agent and the Banks:
5.1 This Amendment executed by the Agent, the Banks and the Company.
5.2 An executed Supplement For New Bank from LTB, Nations and Norwest.
5.3 A Revolving Credit Note executed by the Company for each of LTB,
Nations and Norwest.
-2-
<PAGE> 3
5.4 All the conditions contained in Section 5.4 of the Agreement
relating to New Banks have been complied with.
6. Effect of Amendment. Except as provided in this Amendment,
all of the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
FOOTHILL CAPITAL CORPORATION
By: /s/ Kent W. Dahl
------------------------------------
Title: Senior Vice President/Treasurer
---------------------------------
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:
---------------------------------
CHEMICAL BANK
By:
------------------------------------
Title:
---------------------------------
(signatures continue)
-3-
<PAGE> 1
EXHIBIT 10.39(b)
AMENDMENT NO. TWO TO REVOLVING CREDIT AGREEMENT
This Amendment No. Two (the "Amendment") dated as of May 31, 1995, is
among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"), the
banks that are signatories hereto (collectively, the "Banks" and individually,
a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association ("BOA"), as Agent (the "Agent") for the Banks.
RECITALS
A. The Banks, the Agent and the Company entered into a Revolving Credit
Agreement dated as of June 30, 1994, as amended by Amendment No. One dated as
of February 1, 1995 (the "Agreement").
B. The Banks, the Agent and the Company desire to further amend the
Agreement on the terms and conditions set forth herein.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 The definition of "Aggregate Commitment" in Section 1.1
of the agreement is amended in full to read:
"Aggregate Commitment' means, as of any date,
$153,333,333, 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. The Commitments of the Banks shall be as set forth in Exhibit A
to Amendment No. Two hereto, as the same may be amended from time to
time as herein provided."
2.2 In the definition of "Applicable Margin" in Section
1.1 of the Agreement, clause (a)(ii) is amended by substituting "0.45%" for
"0.50%" appearing therein.
2.3 The definition of "Initial Term" in Section 1.1 of the
Agreement is amended in full to read:
"'Initial Term' means, with respect to the Revolving Credit
Commitment of any Bank, the period from and including May 31, 1995, to
and including May 29, 1996."
2.4 The definition of "Renewal Reply Date" in Section 1.1
of the Agreement is amended in full to read:
-1-
<PAGE> 2
"`Renewal Reply Date' means May 1, 1996 (or if May 1 in
such year is not a Business Day, the next succeeding Business Day)."
2.5 The definition of "Renewal Request Date" in Section 1.1
of the Agreement is amended in full to read:
"`Renewal Request Date' means April 1, 1996 (or if
April 1 in such year is not a Business Day, the next succeeding
Business Day)."
2.6 Section 2.1(d)(ii) of the Agreement is amended by
substituting the date "May 15" for the date "June 15" in each case where such
date appears therein.
2.7 Section 3.1 of the Agreement is hereby amended in
full to read:
"3.1 Fees Payable to the Banks.
(a) The Company shall pay to the Agent for
the account of the applicable Banks an annual commitment fee equal to
0.15% per annum on the average daily unused portion of the Aggregate
Commitment for the period from May 31, 1995, 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 May 31, 1995, and on the
Termination Date; provided, however, that the annual commitment fee
shall be increased to 0.23% 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
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) 0.10% 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) 0.20% 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) 0.30% per annum for each day on which
the aggregate principal amount of Loans outstanding exceeds 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 May 31, 1995, 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.''
2.8 Section 3.2 of the Agreement is amended in full to read:
-2-
<PAGE> 3
"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 May 31, 1995."
2.9 Section 6.1(f) of the Agreement is amended in full to read:
"(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 $2,000,000,
(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 $10,000,000 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 obligors 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 $2,500,000 as of the end of such
fiscal quarter or fiscal year."
2.10 Section 7.1 of the Agreement is amended in full to read:
"7.1 Adjustable Consolidated Net Worth. Adjusted Consolidated
Net Worth shall not be less than $90,000,000 at any time."
2.11 Section 7.2(a) of the Agreement is amended in full to read:
"(a) Outstanding Senior Indebtedness (other than Guaranties)
shall not exceed an amount equal to 400% of the sum of (i) Adjusted
Consolidated Net Worth, plus (ii) outstanding Subordinated Debt."
2.12 Section 7.4 of the Agreement is amended in full to read:
"7.4 Purchased Receivables. The Net Amount of Purchased
Receivables shall not exceed the lesser of (a) $100,000,000, or (b) 65% of the
sum of Adjusted Consolidated Net Worth plus Subordinated Debt."
2.13 In Section 8.2(a)(vii)(B) of the Agreement, "80%" is substituted
for "60%" appearing therein.
2.14 In Section 8.3(a)(i)(A) of the Agreement, the date "January 1,
1995" is substituted for the date "January 1, 1995" appearing therein.
-3-
<PAGE> 4
2.15 The last three lines of Section 8.3(a)(i) of the
Agreement, immediately preceding the semi-colon (;), are amended to read:
"exceeds $26,712,000 plus 50% (or, in the case of a
deficit, minus 100%) of Consolidated Net Income for the Computation
Period;"
2.16 Section 8.5(a)(i) of the Agreement is amended to read:
"(i) The Company may make cash acquisitions of secured
commercial finance or leasing portfolios or companies in an amount, in
any fiscal year, up to 10% of Consolidated Assets as of the end of the
previous fiscal year;"
2.17 Section 8.8(b)(iii) of the Agreement is amended to read:
"(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, to the
extent such payments are otherwise permitted under the provisions of
Section 8.3, the Company may make optional prepayments of all, or any
portion of, the Foothill Group Subordinated Debt; and"
2.18 Exhibit A to the Agreement is hereby amended in full by
the attached Exhibit A.
3. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Agent and the Banks that:
(a) there is no Default or Event of Default, (b) the representations and
warranties in the Loan Documents are true as of the date of this Amendment
as if made on the date of this Amendment, (c) this Amendment is within the
Company's powers, has been duly authorized, and does not conflict with any of
the Company's organizational papers, and (d) this Amendment does not conflict
with any law, agreement, or obligation by which the Company is bound.
4. Conditions. This Amendment will be effective when the Agent
receives the following items, in form and content acceptable to the Agent and
the Banks:
4.1 This Amendment executed by the Agent, the Banks and the
Company.
4.2 Certified copies of the resolutions or other
determinations of the Board of Directors of the Company, approving this
Amendment and the other documents and instruments to be executed and delivered
in connection herewith, together with a certificate of an Authorized
Representative certifying on behalf of the Company the names and true
signatures of the officers of the Company authorized to execute the Amendment
and other documents delivered in connection therewith.
- 4 -
<PAGE> 5
5. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of California, without regard to
conflict of laws principles.
6. Effect of Amendment. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
FOOTHILL CAPITAL CORPORATION
By: Kent W. Dahl
------------------------------------
Title: Senior Vice President/Treasurer
--------------------------------
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:
---------------------------------
CHEMICAL BANK
By:
------------------------------------
Title:
---------------------------------
(Signatures continue)
- 5 -
<PAGE> 1
EXHIBIT 10.39(c)
AMENDMENT NO. THREE TO REVOLVING CREDIT AGREEMENT
This Amendment No. Three (the "Amendment") dated as of June 30, 1995,
is among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"),
the banks that are signatories hereto (collectively, the "Banks" and
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association ("BOA"), as Agent (the "Agent") for
the Banks.
RECITALS
A. The Banks, the Agent and the Company entered into a Revolving
Credit Agreement dated as of June 30, 1994, as amended by Amendment No. One
dated as of February 1, 1995 and by Amendment No. Two dated as of May 31, 1995
(the "Agreement").
B. The Banks, the Agent and the Company desire to further amend
the Agreement on the terms and conditions set forth herein.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 In Section 7.2(b) of the Agreement, "85%" is
substituted for "125%" appearing therein.
2.2 The last three lines of Section 8.3(a)(i) of the
Agreement, immediately preceding the semi-colon (;), are amended to read:
"exceeds $17,500,000 plus 50% (or, in the case of a
deficit, minus 100%) of Consolidated Net Income for the Computation
Period;"
3. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Agent and the Banks that:
(a) there is no Default or Event of Default, (b) the representations and
warranties in the Loan Documents are true as of the date of this Amendment as
if made on the date of this Amendment, (c) this Amendment is within the
Company's powers, has been duly authorized, and does not conflict with any of
the Company's organizational papers, and (d) this Amendment does not conflict
with any law, agreement, or obligation by which the Company is bound.
4. Conditions. This Amendment will be effective when the Agent
receives the following items, in form and content acceptable to the Agent and
the Banks:
-1-
<PAGE> 2
4.1 This Amendment executed by the Agent, the Banks and
the Company.
4.2 Certified copies of the resolutions or other
determinations of the Board of Directors of the Company, approving this
Amendment and the other documents and instruments to be executed and delivered
in connection herewith, together with a certificate of an Authorized
Representative certifying on behalf of the Company the names and true
signatures of the officers of the Company authorized to execute the Amendment
and other documents delivered in connection therewith.
5. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of California, without
regard to conflict of laws principles.
6. Effect of Amendment. Except as provided in this Amendment,
all of the terms and conditions of the Agreement shall remain in full force
and effect.
7. Execution in Counterparts. This Amendment may be executed in
counterparts each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
FOOTHILL CAPITAL CORPORATION
By: Kent W. Dahl
-----------------------------------
Title: Senior Vice President/Treasurer
--------------------------------
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:
-----------------------------------
(Signatures continue) Title:
--------------------------------
- 2 -
<PAGE> 1
Exhibit 10.40(b)
AMENDMENT NO. TWO TO MULTIYEAR REVOLVING CREDIT AGREEMENT
This Amendment No. Two (the "Amendment") dated as of May 31, 1995, is
among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"), the
banks that are signatories hereto (collectively, the "Banks" and individually,
a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association ("BOA"), as Agent (the "Agent") for the Banks.
RECITALS
A. The Banks, the Agent and the Company entered into a Multiyear
Revolving Credit Agreement dated as of June 30, 1994, as amended by Amendment
No. One dated as of February 1, 1995 (the "Agreement").
B. The Banks, the Agent and the Company desire to further amend the
Agreement on the terms and conditions set forth herein.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 The definition of "Aggregate Commitment" in Section 1.1 of
the Agreement is amended in full to read:
"'Aggregate Commitment' means, as of any date, $306,666,667, 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. The Commitments of
the Banks shall be as set forth in Exhibit A to Amendment No. Two
hereto, as the same may be amended from time to time as herein
provided."
2.2 In the definition of "Applicable Margin" in Section 1.1 of
the Agreement, clause (a)(ii) is amended by substituting "0.45%" for "0.50%
appearing therein.
2.3 The definition of "Renewal Reply Date" in Section 1.1 of
the Agreement is amended in full to read:
"'Renewal Reply Date' means May 1, 1996, and May 1, 1997,
respectively (or if May 1 in such year is not a Business Day, the next
succeeding Business Day)."
2.4 The definition of "Renewal Request Date" in Section 1.1 of
the Agreement is amended in full to read:
-1-
<PAGE> 2
"`Renewal Request Date' means March 1, 1996, and March
1, 1997, respectively (or if March 1 in such year is not a Business
Day, the next succeeding Business Day)."
2.5 Section 2.1(d)(ii) of the Agreement is amended by
substituting the date "June 1" for the date "July 1" and the date "May 15" for
the date "June 15", in each case where such dates appear therein.
2.6 Section 3.1 of the Agreement is hereby amended in full
to read:
"3.1 Fees Payable to the Banks.
(a) The Company shall pay to the Agent for the
account of the applicable Banks an annual commitment fee equal to 0.20%
per annum on the average daily unused portion of the Aggregate
Commitment for the period from May 31, 1995, 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 May 31, 1995, and on the
Termination Date; provided, however, that the annual commitment fee
shall be increased to 0.28% 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
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) 0.10% 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) 0.20% 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) 0.30% per annum
for each day on which the aggregate principal amount of Loans
outstanding exceeds 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 May 31, 1995, 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."
2.7 Section 3.2 of the Agreement is hereby amended in full
to read:
"3.2 Agency Fee. The Company shall pay an agency
fee to the Agent as provided in the agency fee letter dated as of
May 31, 1995."
2.8 Section 6.1(f) of the Agreement is amended in full to
read:
-2-
<PAGE> 3
"(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 $2,000,000, (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 $10,000,000 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 obligors
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
$2,500,000 as of the end of such fiscal quarter or fiscal year."
2.9 Section 7.1 of the Agreement is amended in full to read:
"7.1 Adjustable Consolidated Net Worth. Adjusted
Consolidated Net Worth shall not be less than $90,000,000 at any time."
2,10 Section 7.2(a) of the Agreement is amended in full to read:
"(a) Outstanding Senior Indebtedness (other than
Guaranties) shall not exceed an amount equal to 400% of the sum of (i)
Adjusted Consolidated Net Worth, plus (ii) outstanding Subordinated
Debt."
2.11 Section 7.4 of the Agreement is amended in full to read:
"7.4 Purchased Receivables. The Net Amount of
Purchased Receivables shall not exceed the lesser of (a) $100,000,000,
or (b) 65% of the sum of Adjusted Consolidated Net Worth plus
Subordinated Debt."
2.12 In Section 8.2(a)(vii)(B) of the Agreement, "80%" is
substituted for "60%" appearing therein.
2.13 In Section 8.3(a)(i)(A) of the Agreement, the date
"January 1, 1995" is substituted for the date "January 1, 1994" appearing
therein.
2.14 The last three lines of Section 8.3(a)(i) of the
Agreement, immediately preceding the semi-colon (;), are amended to read:
"exceeds $26,712,000 plus 50% (or, in the case of a
deficit, minus 100%) of Consolidated Net Income for the Computation
Period;"
2.15 Section 8.5(a)(i) of the Agreement is amended to read:
-3-
<PAGE> 4
"(i) The Company may make cash acquisitions of
secured commercial finance or leasing portfolios or companies in an
amount, in any fiscal year, up to 10% of Consolidated Assets as of the
end of the previous fiscal year;"
2.16 Section 8.8(b)(iii) of the Agreement is amended to read:
"(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, to the
extent such payments are otherwise permitted under the provisions of
Section 8.3, the Company may make optional prepayments of all, or any
portion of, the Foothill Group Subordinated Debt; and"
2.17 Exhibit A to the Agreement is hereby amended in full by
the attached Exhibit A.
3. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Agent and the Banks
that: (a) there is no Default or Event of Default, (b) the representations and
warranties in the Loan Documents are true as of the date of this Amendment as
if made on the date of this Amendment, (c) this Amendment is within the
Company's powers, has been duly authorized, and does not conflict with any of
the Company's organizational papers, and (d) this Amendment does not conflict
with any law, agreement, or obligation by which the Company is bound.
4. Conditions. This Amendment will be effective when the Agent
receives the following items, in form and content acceptable to the Agent and
the Banks:
4.1 This Amendment executed by the Agent, the Banks and the
Company.
4.2 Certified copies of the resolutions or other
determinations of the Board of Directors of the Company, approving this
Amendment and the other documents and instruments to be executed and delivered
in connection herewith, together with a certificate of an Authorized
Representative certifying on behalf of the Company the names and true
signatures of the officers of the Company authorized to execute the Amendment
and other documents delivered in connection therewith.
5. Governing Law. This amendment shall be governed by, and
construed in accordance with, the laws of the State of California, without
regard to conflict of laws principles.
6. Effect of Amendment. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.
-4-
<PAGE> 5
This Amendment is executed as of the date stated at the beginning of
this Amendment.
FOOTHILL CAPITAL CORPORATION
By: Kent W. Dahl
------------------------------------
Title: Senior Vice President/Treasurer
---------------------------------
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:
---------------------------------
CHEMICAL BANK
By:
------------------------------------
Title:
---------------------------------
NATIONAL WESTMINSTER BANK USA
By:
------------------------------------
Title:
---------------------------------
(Signatures continue)
-5-
<PAGE> 1
EXHIBIT 10.40(c)
AMENDMENT NO. THREE TO MULTIYEAR REVOLVING CREDIT AGREEMENT
This Amendment No. Three (the "Amendment") dated as of June 30, 1995,
is among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"),
the banks that are signatories hereto (collectively, the "Banks" and
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association ("BOA"), as Agent (the "Agent") for
the Banks.
RECITALS
A. The Banks, the Agent and the Company entered into a Multiyear
Revolving Credit Agreement dated as of June 30, 1994, as amended by Amendment
No. One dated as of February 1, 1995 and by Amendment No. Two dated as of May
31, 1995 (the "Agreement").
B. The Banks, the Agent and the Company desire to further amend the
Agreement on the terms and conditions set forth herein.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 In Section 7.2(b) of the Agreement, "85%" is substituted
for "125%" appearing therein.
2.2 The last three lines of Section 8.3(a)(i) of the
Agreement, immediately preceding the semi-colon (;), are amended to read:
"exceeds $17,500,000 plus 50% (or, in the case of a
deficit, minus 100%) of Consolidated Net Income for the
Computation Period;"
3. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Agent and the Banks that:
(a) there is no Default or Event of Default, (b) the representations and
warranties in the Loan Documents are true as of the date of this Amendment as
if made on the date of this Amendment, (c) this Amendment is within the
Company's powers, has been duly authorized, and does not conflict with any of
the Company's organizational papers, and (d) this Amendment does not conflict
with any law, agreement, or obligation by which the Company is bound.
4. Conditions. This Amendment will be effective when the Agent
receives the following items, in form and content acceptable to the Agent and
the Banks:
-1-
<PAGE> 2
4.1 This Amendment executed by the Agent, the Banks and the
Company.
4.2 Certified copies of the resolutions or other
determinations of the Board of Directors of the Company, approving this
Amendment and the other documents and instruments to be executed and delivered
in connection herewith, together with a certificate of an Authorized
Representative certifying on behalf of the Company the names and true
signatures of the officers of the Company authorized to execute the Amendment
and other documents delivered in connection therewith.
5. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of California, without regard to
conflicts of laws principles.
6. Effect of Amendment. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and effect.
7. Execution in Counterparts. This Amendment may be executed in
counterparts each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
FOOTHILL CAPITAL CORPORATION
By: Kent W. Dahl
------------------------------------
Title: Senior Vice President/Treasurer
---------------------------------
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:
----------------------------------
(Signatures continue)
-2-
<PAGE> 1
EXHIBIT - 10.41(a)
EXECUTION COPY
FIRST AMENDMENT
TO THIRD AMENDED AND RESTATED
LETTER OF CREDIT AND GUARANTY AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LETTER OF CREDIT AND
GUARANTY AGREEMENT (this "Amendment") dated as of December 28, 1994 is among:
(i) FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"),
(ii) The banks listed on the signature pages of this Amendment under
the heading "Banks" (currently only Union Bank but to be referred to herein as
the "Initial Banks"), and
(iii) UNION BANK, a California banking corporation, ("Union"), as
agent for the Banks and the Issuing Bank (the "Agent") hereunder.
PRELIMINARY STATEMENTS
(1) Foothill, the Initial Banks and the Agent are parties to a
Third Amended and Restated Letter of Credit and Guaranty Agreement dated as of
August 1, 1994 (the "Agreement").
(2) Foothill has requested Union (currently the Issuing Bank and
the only Bank under the Agreement) and the Agent to amend the Agreement to
increase the "Letter of Credit Commitment" thereunder to $15,000,000. Union and
the Agent are willing to effect such amendment upon the terms and subject to
the conditions set forth below.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein,
capitalized terms used in this Amendment shall have the respective meanings
given to those terms in the Agreement.
SECTION 2. Agreement Amendment. The Agreement is amended as follows:
(a) Section 1.01 is amended by changing the amount
"$10,000,000" appearing in the definition of "Letter of Credit
Commitment" to "$15,000,000".
(b) Section 2.01 is amended by changing the amount
"$10,000,000" appearing therein to "$15,000,000".
<PAGE> 2
(c) The signature page is amended by changing the amount
"$10,000,000" appearing next to the name of Union under the heading
"BANKS" to "$15,000,000".
SECTION 3. Representations and Warranties. Foothill hereby represents
and warrants to Union and the Agent as follows:
(a) Each of the representations and warranties set forth in
Article V of the Agreement is true and correct on the date hereof and,
after giving effect to the amendments effected hereby on the Effective
Date (as defined below), will be true and correct on the Effective Date.
(b) No Event of Default or Potential Default has occurred and is
continuing or exists under the Agreement on the date hereof and, after
giving effect to the amendments effected hereby on the Effective Date,
no Event of Default or Potential Default will have occurred and be
continuing or will exist under the Agreement on the Effective Date.
(For the purposes of the foregoing representations and warranties, the term
"Loan Documents" as used in Article V of the Agreement and elsewhere in the
Agreement shall be deemed to include this Amendment prior to the Effective
Date.).
SECTION 4. Effectiveness. The amendments set forth in Section 2 above
shall become effective on December , 1994 (the "Effective Date"), subject to
receipt by the Agent of each of the following on or prior to the Effective
Date:
(a) Counterparts of this Amendment, duly executed by Foothill,
the Agent and Union; and
(b) A certificate of the secretary of Foothill certifying (i)
the corporate action taken by Foothill to authorize the execution,
delivery and performance of this Amendment and (ii) the incumbency of
the officers of Foothill authorized to execute this Amendment on
behalf of Foothill.
On and after the Effective Date, all references in the Agreement or the other
Loan Documents to the Agreement shall mean the Agreement as amended hereby, and
the term "Loan Documents" shall include this Amendment. Except as amended
hereby, the Agreement and the other Loan Documents remain in full force and
effect and are hereby ratified and confirmed.
SECTION 6. Miscellaneous.
(a) Foothill shall pay all reasonable costs and expenses of the
Agent in connection with the execution
2
<PAGE> 3
and delivery of this Amendment and the other documents and agreements
delivered hereunder, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent and with respect to
advising the Agent as to its rights hereunder and thereunder.
(b) This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
(c) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
FOOTHILL CAPITAL CORPORATION
By: /s/ Kent W. Dahl
--------------------------------------
Name: Kent W. Dahl
Title: Senior Vice President/Treasurer
UNION BANK, as Agent
By: /s/ Donald H. Rubin
--------------------------------------
Name: Donald H. Rubin
Title: Vice President
BANKS
UNION BANK, as Issuing Bank and
as a Bank
By: /s/ Donald H. Rubin
--------------------------------------
Name: Donald H. Rubin
Title: Vice President
3
<PAGE> 1
EXHIBIT 10.41(b)
EXECUTION VERSION
SECOND AMENDMENT
TO THIRD AMENDED AND RESTATED
LETTER OF CREDIT AND GUARANTY AGREEMENT
THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LETTER OF CREDIT
AND GUARANTY AGREEMENT (this "Amendment") dated as of June 30, 1995 is among:
(i) FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"),
(ii) The banks listed on the signature pages of this Amendment under
the heading "Banks" (currently only Union Bank but to be referred to herein as
the "Initial Banks"), and
(iii) UNION BANK, a California Banking corporation, ("Union"), as agent
for the Banks and the Issuing Bank (the "Agent") hereunder.
PRELIMINARY STATEMENTS
(1) Foothill, the Initial Banks and the Agent are parties to a Third
Amended and Restated Letter of Credit and Guaranty Agreement dated as of August
1, 1994, as amended by that certain First Amendment to Third Amended and
Restated Letter of Credit and Guaranty Agreement dated as of December 28, 1994
(the "Agreement").
(2) Foothill has requested Union (currently the Issuing Bank and the
only Bank under the Agreement) and the Agent to further amend the Agreement.
Union and the Agent are willing to effect such amendment upon the terms and
subject to the conditions set forth below.
AGREEMENT
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein,
capitalized terms used in this Amendment shall have the respective meanings
given to those terms in the Agreement.
SECTION 2. Agreement Amendment. The Agreement is amended as follows:
(a) The definitions of "Extension Requests," "May Extension Request" and
"November Extension Request" set forth in Section 1.01 are deleted.
<PAGE> 2
(b) Section 1.01 is amended by the addition alphabetically of a new
definition "Extension Request" to read as follows:
"EXTENSION REQUEST" shall have the meaning assigned to that
term in Section 2.08 hereof.
(c) The definition of "Termination Date" set forth in Section 1.01
is amended by deleting the date "June 30, 1995" appearing therein and
substituting for such date the date "June 28, 1996."
(d) Section 2.04 is amended in its entirety to read as follows:
SECTION 2.04. FEES.
(a) ISSUING BANK FEE. Foothill agrees to pay to the
Issuing Bank, for its own account, a fee on the average daily undrawn
balance of outstanding Letters of Credit, commencing June 30, 1995, at
a rate of 0.125% per annum, payable monthly in arrears on or prior to
the seventh Business Day after the end of each month in each year.
(b) COMMITMENT FEE. Foothill agrees to pay to each Bank a
commitment fee on the average daily unused portion of such Bank's
Commitment from the New Effective Date, in the case of each Initial
Bank, and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Bank, in the case of each
other Bank, until the Termination Date, at the rate of 0.15% per annum,
payable monthly in arrears on or prior to the seventh Business Day
after the end of each month in each year and on the Termination Date.
For purposes of this Agreement, the unused portion of any Bank's
commitment at any time shall be the excess of such Bank's Commitment
over such Bank's Percentage of the undrawn balance of then outstanding
Letters of Credit.
(c) USAGE FEE. Foothill agrees to pay to each Bank a usage
fee on such Bank's Percentage of the average daily undrawn balance of
outstanding Letters of Credit, from the date hereof, in the case of
each Initial Bank, and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Bank, in the
case of each other Bank, until the Termination Date, at the rate of
0.70% per annum, payable monthly in arrears on or prior to the seventh
Business Day after the end of each month in each year and on the
Termination Date.
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<PAGE> 3
(d) Letter of Credit Fees. Foothill agrees with the
Issuing Bank and the Banks that the letter of credit fees, payable by
each Account Party with respect to each Letter of Credit issued for the
account of such Account Party and guaranteed by Foothill under Article
III hereof, shall be:
(i) In the case of each Letter of Credit which is a
standby letter of credit, in an amount equal to $300 assessed
on the date of Issuance of such Letter of Credit;
(ii) in the case of any Letter of Credit which is a
commercial documentary letter of credit, in an amount equal to
the greater of (A) $125, (B) 1/8 of 1% of the maximum amount
available to be drawn under such Letter of Credit assessed on
the date of issuance of such Letter of Credit (the
determination of such maximum amount to assume compliance with
all conditions for drawing) or (C) such amount agreed to in
writing by such Account Party, Foothill and the Issuing Bank;
and
(iii) in the case of each Letter of Credit which is a
commercial documentary letter of credit, in an amount, for
each draw requested thereunder by the beneficiary thereof,
assessed on the date of each drawing, equal to the greater of
(A) $125, (B) 1/8 of 1% of the amount of such requested draw
(the determination of such amount to assume compliance with
all conditions for drawing) or (C) such amount agreed to in
writing by such Account Party, Foothill and the Issuing Bank.
The letter of credit fees in each case in this Section 2.04(d) shall
be payable to and for the account of the Issuing Bank monthly in
arrears on or prior to the seventh Business Day after the end of each
month in each year and on the Termination Date.
(e) Section 2.08 is amended in its entirety to read as follows:
SECTION 2.08. Extension of Termination Date. On or before
April 1, 1996 and each April 1 thereafter (each such April 1 being
herein referred to as an "Extension Request Date"), Foothill may
request that the Agent extend the Termination Date by 364 days (an
"Extension Request"). Foothill shall make each Extension Request by
delivering to the Agent a written Extension Request, in form and
substance satisfactory to the Agent. The Agent will promptly notify
each Bank
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<PAGE> 4
of such Extension Request. Each Bank may, in its sole discretion, so
agree to extend the Termination Date by delivering a notice to the
Agent in the form of Exhibit A hereto by the next succeeding June 1 (an
"Extension Reply Date"). If, by the Extension Reply Date, Banks then
holding more than 25% of the Commitments of the Banks have failed to
consent to the Extension Request, the Agent shall notify the Banks and
Foothill of this fact, and each Bank which had consented to the
Extension Request shall have until the next succeeding June 15 to
withdraw its consent. 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 Extension Request
shall be delivered only to Banks which, on such future Extension
Request Date, have continuing Commitments. The Agent and Banks shall be
under no obligation whatsoever to extend the Termination Date. No
Extension Request shall be permitted after April 1, 1996 unless an
Extension Request has been made on or prior to each previous Extension
Request Date and each such Extension Request was consented to by at
least one Bank (and such Bank did not subsequently withdraw its consent
as permitted in this Paragraph 2.08).
(f) Section 6.01(f) is amended in its entirety to read as follows:
(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 Foothill and within 90 days after the close of the
fiscal year of Foothill, Foothill 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 $2,000,000, (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 $10,000,000 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 obligors
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
$2,500,000 as of the end of such fiscal quarter or fiscal year.
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<PAGE> 5
(g) Section 7.01 is amended in its entirety to read as follows:
SECTION 7.01. Adjusted Consolidated Net Worth. Adjusted
Consolidated Net Worth shall not be less than $90,000,000 at any time.
(h) Section 7.02(a) is amended in its entirety to read as follows:
(a) Outstanding Senior Indebtedness (other than Guaranties)
shall not exceed an amount equal to 400% of the sum of (i) Adjusted
Consolidated Net Worth, plus (ii) outstanding Subordinated Debt.
(i) In Section 7.02(b), "85%" is substituted for "125%" appearing
therein.
(j) Section 7.04 is amended in its entirety to read as follows:
SECTION 7.04. Purchased Receivables. The Net Amount of
Purchased Receivables shall not exceed the lesser of (i) $100,000,000
or (ii) 65% of the sum of Adjusted Consolidated Net Worth plus
Subordinated Debt.
(k) In clause (vii) (B) of Section 8.02(a), "80%" is substituted
for "60%" appearing therein.
(l) In clause (i)(A) of Section 8.03(a), the date "January 1, 1995"
is substituted for the date "January 1, 1994" appearing therein.
(m) The last three lines of clause (i) of Section 8.03(a) which
appear immediately preceding the semi-colon (;), are amended to read as
follows:
exceeds $17,500,000 plus 50% (or, in the case of a deficit, minus 100%)
of Consolidated Net Income for the Computation Period;
(n) Clause (i) of Section 8.05(a) is amended to read as follows:
(i) Foothill may make cash acquisitions of secured commercial
finance, leasing portfolios or companies in an amount, in any fiscal
year, up to 10% of Consolidated Assets as of the end of the previous
fiscal year;
(o) Clause (iii) of Section 8.08(b) is amended to read as follows:
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<PAGE> 6
(iii) subject to the provisions of the Foothill Group
Subordination Agreement, Foothill may make regularly scheduled
payments on account of the Foothill Group Subordinated Debt
and, to the extent such payments are otherwise permitted under
the provisions of Section 8.3, Foothill may make optional
prepayments of all, or any portion of, the Foothill Group
Subordinated Debt; and
SECTION 3. Representations and Warranties. Foothill hereby
represents and warrants to Union and the Agent as follows:
(a) Each of the representations and warranties set forth
in Article V of the Agreement is true and correct on the date hereof
and, after giving effect to the amendments effected hereby on the
Effective Date (as defined below), will be true and correct on the
Effective Date.
(b) No Event of Default or Potential Default has occurred
and is continuing or exists under the Agreement on the date hereof and,
after giving effect to the amendments effected hereby on the Effective
Date, no Event of Default or Potential Default will have occurred and
be continuing or will exist under the Agreement on the Effective Date.
(c) This Amendment is within Foothill's powers, has been
duly authorized and does not conflict with Foothill's organizational
papers.
(d) This Amendment does not conflict with any law,
agreement, or obligation by which Foothill is bound.
For the purposes of the foregoing representations and warranties, the term
"Loan Documents" as used in Article V of the Agreement and elsewhere in the
Agreement shall be deemed to include this Amendment prior to the Effective
Date.
SECTION 4. Effectiveness. The amendments set forth in
Section 2 above shall become effective on June 30, 1995 (the "Effective Date"),
subject to receipt by the Agent of each of the following on or prior to the
Effective Date:
(a) Counterparts of this amendment, duly executed by
Foothill, the Agent and Union; and
(b) A certificate of the secretary of Foothill certifying
(i) the corporate action taken by Foothill to authorize the execution,
delivery and performance of this Amendment and (ii) the incumbency of
the officers of Foothill authorized to execute this Amendment on behalf
of Foothill.
On and after the Effective Date, all references in the Agreement or the other
Loan Documents to the Agreement shall mean the
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<PAGE> 7
Agreement as amended hereby, and the term "Loan Documents" shall include this
Amendment. Except as amended hereby, the Agreement and the other Loan Documents
remain in full force and effect and are hereby ratified and confirmed.
SECTION 5. Miscellaneous.
(a) Foothill shall pay all reasonable costs and expenses of
the Agent in connection with the execution and delivery of this
Amendment and the other documents and agreements delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent and with respect to advising the
Agent as to its rights hereunder and thereunder.
(b) This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(c) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of California.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
FOOTHILL CAPITAL CORPORATION
By: /s/ HENRY K. JORDAN
-----------------------------------
Name: HENRY K. JORDAN
-----------------------------
Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
----------------------------
UNION BANK, as Agent
By: /s/ DONALD H. RUBIN
-----------------------------------
Name: DONALD H. RUBIN
-----------------------------
Title: VICE PRESIDENT
----------------------------
BANKS
UNION BANK, as Issuing Bank and
as a Bank
By: /s/ DONALD H. RUBIN
-----------------------------------
Name: DONALD H. RUBIN
-----------------------------
Title: VICE PRESIDENT
----------------------------
8
<PAGE> 1
EXHIBIT 10.42(a)
FIRST AMENDMENT
This FIRST AMENDMENT (the "Amendment") is dated as of
February 1, 1995 among FOOTHILL CAPITAL CORPORATION (the "Company"), the Banks
party to the Letter of Credit Agreement as defined and referred to below, and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent (the "Agent")
for such Banks and the Issuing Bank under such Letter of Credit Agreement.
PRELIMINARY STATEMENTS. 1. The Company has entered into the
Amended and Restated Letter of Credit and Guaranty Agreement dated as of
August 1, 1994 (the "Letter of Credit Agreement", the terms defined therein
being used herein as therein defined unless otherwise defined herein) with the
Issuing Bank, the Banks party thereto and the Agent;
2. NBD Bank, N.A. ("NBD") has agreed to become a Bank with a
commitment amount of $5,000,000 under the Letter of Credit Agreement, and the
Issuing Bank has agreed to allow NBD to join the Letter of Credit Agreement,
and the Company, the Agent and the other Banks have agreed to consent thereto,
each on the terms and conditions set forth below;
3. The Long-Term Credit Bank of Japan, Ltd. ("LTCB") has
agreed to become a Bank with a commitment amount of $5,000,000 under the
Letter of Credit Agreement, and the Issuing Bank has agreed to allow LTCB to
join the Letter of Credit Agreement, and the Company, the Agent and the other
Banks have agreed to consent thereto, each on the terms and conditions set
forth below;
4. The Industrial Bank of Japan, Limited ("IBJ") has agreed
to become a Bank with a commitment amount of $5,000,000 under the Letter of
Credit Agreement, and the Issuing Bank has agreed to allow IBJ to join the
Letter of Credit Agreement, and the Company, the Agent and the other Banks
have agreed to consent thereto, each on the terms and conditions set forth
below; and
5. Harris Trust and Savings Bank ("Harris") has agreed to
increase its commitment amount to $10,000,000 from its current level of
$5,000,000 under the Letter of Credit Agreement, and the Issuing Bank has
agreed to allow Harris to increase its commitment under the Letter of Credit
Agreement, and the Company, the Agent and the other Banks have agreed to
consent thereto, each on the terms and conditions set forth below.
<PAGE> 2
6. The Company, the Banks and the Agent have agreed to
amend the Letter of Credit Agreement to set forth the default interest rate
provided for in the Application and Agreement, on the terms and conditions set
forth below.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments to Letter of Credit Agreement. The
Letter of Credit Agreement is, effective as of the date hereof and subject to
the satisfaction of the conditions set forth in Section 4 hereof, hereby
amended as follows:
(a) The definition of "Credit Commitment" set forth in
Section 1.01 is amended by deleting the figure "$80,000,000" therein
and substituting for such figure the figure "$100,000,000".
(b) Section 2.06 is amended to add subsection (g) to
read as follows:
(g) The Company shall pay interest on any
amount not paid when due under this Agreement from the due date until
paid in full at a rate per annum equal to the Reference Rate plus three
percent (3%). Payment shall be made to the Agent as otherwise provided
in Section 2.06(a) hereof.
(c) The Letter of Credit Agreement and the signature
pages thereof are amended by adding NBD, LTCB and IBJ as Banks and
adding commitment amounts of $5,000,000 set opposite each of the names
of NBD, LTCB and IBJ on such signature pages.
(d) The Letter of Credit Agreement and the signature
pages thereof are amended by changing the commitment amount of Harris
to $10,000,000.
SECTION 2. Assumption and Release. (a) Effective as of the
date hereof and subject to the satisfaction of the conditions set forth in
Section 4 hereof, NBD, LTCB, IBJ and Harris (collectively, the "Purchasing
Banks") each shall be deemed to purchase and assume, and Bank of America
National Trust and Savings Association ("BOA") as well as National Westminster
Bank USA ("NatWest") as well as The Bank of New York ("BNY") as well as The
Bank of Nova Scotia ("BNS") as well as First Bank National Association ("FBNA")
as well as First Interstate Bank of California ("FIB") as well as Harris Trust
and Savings Bank ("Harris") as well as Mellon Bank, N.A. ("Mellon") as well as
National Bank of Canada ("NBC") as well as PNC Bank, National Association
("PNC") as well as Sanwa Bank California ("Sanwa") as well as Shawmut Bank
Connecticut, N.A. ("Shawmut") and United States National Bank of Oregon
("USNBO") shall each be deemed to sell and assign to the Purchasing Banks, 5%
of the amount of the undivided interest and participation deemed owned by each
of BOA, NatWest, BNY, BNS, FBNA, FIB, Harris, Mellon, NBC, PNC, Sanwa, Shawmut
and
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<PAGE> 3
USNBO as of the date hereof, pursuant to Section 2.03 of the Letter of Credit
Agreement, in (i) each of the Letters of Credit listed on Schedule A to this
Amendment (the "Designated Letters of Credit"), and (ii) all Letter of Credit
Liability relating to each such Designated Letter of Credit, with the result
that the Purchasing Banks shall be deemed to have irrevocably and
unconditionally purchased and received an undivided interest and participation,
to the extent of the Purchasing Bank's Percentage in effect under and as
defined in the Letter of Credit Agreement as amended hereby, in each Designated
Letter of Credit and all Letter of Credit Liability relating thereto and shall
have all the obligations and rights pertaining to such undivided interests and
participations set forth in the Letter of Credit Agreement, including, without
limitation, Section 2.03 thereof.
SECTION 3. Representations and Warranties. The Company
represents and warrants to the Issuing Bank, the Banks and the Agent that
the obligations of the Company under the Letter of Credit Agreement, as
amended by this Amendment, constitute and will constitute "Superior
Indebtedness" within the meaning ascribed to such terms in the Foothill Group
Subordination Agreement and are entitled to the benefits of said Foothill Group
Subordination Agreement as Superior Indebtedness. The Company confirms that all
of the representations and warranties contained in Article V of the Letter of
Credit Agreement are correct on and as of the date of this Amendment. The
Company also confirms that no event has occurred and is continuing which would
constitute an Event of Default or Default.
SECTION 4. Conditions of Effectiveness. This
Amendment shall become effective as of the date hereof when:
(a) counterparts hereof shall have been executed by the
Company, the Issuing Bank, the Banks and the Agent;
(b) a certificate of the Company signed by the Secretary of the
Company shall have been delivered to the Agent certifying as to (A) the
corporate action taken by the Company relative to this Amendment and
(B) the incumbency of the officers of the Company authorized to sign on
its behalf this Amendment and any other documents, instruments or
certificates required hereby, together with the true signatures of such
officers; and
SECTION 5. Consent with respect to Assumption; Reference to
and Effect of the Letter of Credit Agreement. (a) Without limiting the effect
of any other provision of this Amendment, the Company, the Agent and each of
the Banks consent to the addition of NBD, LTCB, IBJ and the increase in the
commitment of Harris as set forth in Section 2 hereof.
(b) NBD, LTCB, IBJ and Harris, each individually, (i) confirms
that it has received a copy of the Letter of Credit Agreement and such other
Loan
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<PAGE> 4
Documents and other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into the Letter of Credit
Agreement and this Amendment; (ii) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Letter
of Credit Agreement and the other Loan Documents as are delegated to the Agent
by the terms thereof and (iii) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Letter of Credit
Agreement are required to be performed by it as a Bank.
(c) On and after the date of, and upon the effectiveness of,
this Amendment, each reference in the Letter of Credit Agreement to "this
Agreement", "hereunder," "hereof" or words of like import referring to the
Letter of Credit Agreement shall mean and be a reference to the Letter of
Credit Agreement as amended by this Amendment.
(d) Except as specifically amended above, the Letter of Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
SECTION 6. Costs, Expenses and Taxes. The Company agrees to
pay all reasonable costs and expenses of the Agent in connection with the
preparation, execution and delivery of this Amendment and the other instruments
and documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel (including in-house
counsel) for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities hereunder and thereunder.
SECTION 7. Execution in Counterparts. This Amendment may be
executed in counterparts, each of which when so executed and delivered shall
be deemed to be an original and both of which taken together shall constitute
but one and the same instrument.
SECTION 8. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of California.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed or caused
this Amendment to be executed as of the date first above written.
FOOTHILL CAPITAL CORPORATION
By: /s/ D.C. WILTON
-------------------------
Title: Executive Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Agent
By:
--------------------------
Title:
BANKS
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as issuing Bank and as a Bank
By:
--------------------------
Title:
By:
--------------------------
Title:
NATIONAL WESTMINSTER BANK USA
By:
--------------------------
Title:
THE BANK OF NEW YORK
By:
--------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------
Title:
5
<PAGE> 1
EXHIBIT 10.42(b)
AMENDMENT NO. TWO TO AMENDED AND RESTATED
LETTER OF CREDIT AND GUARANTY AGREEMENT
This Amendment No. Two (the "Amendment") dated as of June 30, 1995, is
among FOOTHILL CAPITAL CORPORATION, a California corporation ("Company"), the
banks party to the Letter of Credit Agreement as defined and referred to below
(collectively, the "Banks" and individually, a "Bank") and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, as
Agent (the "Agent") for the Banks and the Issuing Bank under such Letter of
Credit Agreement.
RECITALS
A. The Company has entered into the Amended and Restated Letter of
Credit and Guaranty Agreement dated as of August 1, 1994, as amended by
Amendment No. One dated as of February 1, 1995 (the "Letter of Credit
Agreement"), with the Issuing Bank, the Banks party thereto and the Agent.
B. The Mitsubishi Trust and Banking Corporation ("Mitsubishi") has
agreed to become a Bank with a commitment amount of $5,000,000 under the Letter
of Credit Agreement, and the Issuing Bank had agreed to allow Mitsubishi to
join the Letter of Credit Agreement, and the Company, the Agent and the other
Banks have agreed to consent thereto, each on the terms and conditions set
forth below.
C. The Banks, the Agent and the Company desire to further amend
the Letter of Credit Agreement on the terms and conditions set forth herein.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Letter of Credit
Agreement.
2. Amendments. The Letter of Credit Agreement is hereby amended
as follows:
2.1 The definition of "Credit Commitment" set forth in
Section 1.01 is amended by deleting the figure "$100,000,000" therein and
substituting for such figure the figure "$145,000,000."
2.2 The definition of "Termination Date" set forth in
Section 1.01 is amended by deleting the date "July 30, 1995" therein and
substituting for such date the date "June 28, 1996."
2.3 Section 2.04 is amended in its entirety to read:
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<PAGE> 2
"SECTION 2.04. Fees.
(a) Issuing Bank Fee. The Company agrees to pay to
the Issuing Bank, for its own account, a fee on the average daily
undrawn balance of outstanding Letters of Credit and Shipside Bonds,
commencing June 30, 1995, at the rate of 0.125% per annum, payable
monthly in arrears on or prior to the seventh Business Day after the
end of each month in each year.
(b) Commitment Fee. The Company agrees to pay to
each Bank a commitment fee on the average daily unused portion of such
Bank's commitment, from the date hereof in the case of each Initial
Bank and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Bank in the case of each other
Bank, until the Termination Date, at the rate of 0.15% per annum,
payable monthly in arrears on or prior to the seventh Business Day
after the end of each month in each year and on the Termination Date.
For purposes of this Agreement, the unused portion of any Bank's
Commitment at any time shall be the excess of such Bank's Commitment
over such Bank's Percentage of the undrawn balance of then outstanding
Letters of Credit and Shipside Bonds.
(c) Usage Fee. The Company agrees to pay to each Bank a
usage fee on such Bank's Percentage of the average daily undrawn
balance of outstanding Letters of Credit and Shipside Bonds, from the
date hereof, in the case of each Initial Bank, and from the effective
date specified in the Assignment and Acceptance pursuant to which it
became a Bank, in the case of each other Bank, at the rate of 0.70% per
annum, payable monthly in arrears on or prior to the seventh Business
Day after the end of each month in each year.
(d) Letter of Credit Fees. The Company agrees with the
Issuing Bank and the Banks that the letter of credit fee, payable by
each Account Party with respect to each Letter of Credit issued for the
account of such Account Party and guaranteed by the Company under
Article III hereof, shall be:
(i) in the case of each Letter of Credit which is a
standby letter of credit, in an amount equal to $300 assessed on
the date of Issuance of such Letter of Credit, and
(ii) in the case of each Letter of Credit which is a
commercial documentary letter of credit, in an amount equal to
the greatest of (A) $125, (B) 1/8 of 1% of the maximum amount
available to be drawn under such Letter of Credit assessed on
the date of Issuance of such Letter of Credit (the
determination of such maximum amount to assume compliance with
all conditions for drawing) or (C) such amount agreed to in
writing by such Account Party, the Company and the Issuing
Bank, and
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<PAGE> 3
(iii) in the case of each Letter of Credit, which is
a commercial documentary letter of credit, in an amount, for
each draw requested thereunder by the beneficiary thereof,
assessed on the date of each drawing, equal to the greatest of
(A) $125, (B) 1/8 of 1% of the amount of such requested draw
(the determination of such amount to assume compliance with all
conditions for drawing) or (C) such amount agreed to in writing
by such Account Party, the Company and the Issuing Bank,
in each case under clauses (i), (ii) and (iii) of this Section 2.04(e),
payable to and for the account of the Issuing Bank monthly in arrears
on or prior to the seventh Business Day after the end of each month in
each year.
(e) Shipside Bond Fee. The Company agrees with the
Issuing Bank and the Banks that the shipside bond fee, payable by each
Account Party with respect to each Shipside Bond issued for the account
of such Account Party and guaranteed by the Company under Article III
hereof, shall be:
(i) a fee in the amount of the greater of (A) 1/4 of
1% of the amount of such Shipside Bond or (B) $50, assessed for
the initial 21 days,
(ii) for Shipside Bonds having a duration beyond 21
days, a fee in the amount of the greater of (A) 1% of the
amount of such Shipside Bond or (B) $50 per calendar quarter,
and
(iii) such processing fees as may be charged by a
foreign office of the Issuing Bank for the Issuance of a
Shipside Bond,
in each case under clauses (i), (ii) and (iii) of this Section 2.04(e),
payable to and for the account of the Issuing Bank monthly in arrears
on or prior to the seventh Business Day after the end of each month in
each year."
2.4 Section 2.08 is amended by substituting (i) the date
"April 1, 1996" for the date "May 1, 1995", (ii) the date "April 1" for the
date "May 1", (iii) the date "June 1" for the date "July 1", and (iv) the date
"June 15" for the date "July 15", in each case where such dates appear therein.
2.5 Section 6.01(a) is amended by substituting the phase
"Agent and the Banks" for the phrase "the Banks" appearing therein.
2.6 Section 6.01(f) is amended in full to read:
"(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
-3-
<PAGE> 4
report (i) describing items included in the Net Amount of Finance
Receivables and reports on Non-Performing Assets, in any case in excess
of $2,000,000, (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 $10,000,000 closed during such fiscal quarter, including a
designation as to the type of Finance Receivable and a net description
of the collateral, (v) identifying the ten largest obligors 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
$2,500,000 as of the end of such fiscal quarter or fiscal year."
2.7 Section 7.01 is amended in full to read:
"7.01 Adjustable Consolidated Net Worth. Adjusted
Consolidated Net Worth shall not be less than $90,000,000 at any time."
2.8 Section 7.02(a) is amended in full to read:
"(a) Outstanding Senior Indebtedness (other than
Guaranties) shall not exceed an amount equal to 400% of the sum of (i)
Adjusted Consolidated Net Worth, plus (ii) outstanding Subordinated
Debt."
2.9 In Section 7.02(b), "85%" is substituted for "125%"
appearing therein.
2.10 Section 7.04 is amended in full to read:
"7.04 Purchased Receivables. The Net Amount of
Purchased Receivables shall not exceed the lesser of (a) $100,000,000,
or (b) 65% of the sum of Adjusted Consolidated Net Worth plus
Subordinated Debt."
2.11 In Section 8.02(a)(vii)(B), "80%" is substituted for
"60%" appearing therein.
2.12 In Section 8.03(a)(i)(A), the date "January 1, 1995" is
substituted for the date "January 1, 1994" appearing therein.
2.13 The last three lines of Section 8.03(a)(i), immediately
preceding the semi-colon (;), are amended to read:
"exceeds $17,500,000 plus 50% (or, in the case of a
deficit, minus 100%) of Consolidated Net Income for the Computation
Period;"
2.14 Section 8.05(a)(i) is amended to read:
-4-
<PAGE> 5
"(i) The Company may make cash acquisitions of
secured commercial finance or leasing portfolios or companies in an
amount, in any fiscal year, up to 10% of Consolidated Assets as of the
end of the previous fiscal year;"
2.15 Section 8.08(b)(iii) is amended to read:
"(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, to the
extent such payments are otherwise permitted under the provisions of
Section 8.3, the Company may make optional prepayments of all, or any
portion of, the Foothill Group subordinated Debt; and"
2.16 The Letter of Credit Agreement and the signature pages
thereof are amended by changing the commitment amount of each Bank to the
amount set opposite each of the names of the Banks on the signature pages of
this Amendment.
3. Assumption and Release. Effective as of the date hereof and
subject to the satisfaction of the conditions set forth in Section 5 hereof,
Mitsubishi (the "Purchasing Bank") shall be deemed to purchase and assume, and
Bank of America National Trust and Savings Association ("BOA") as well as
National Westminster Bank USA ("NatWest") as well as The Bank of New York
("BNY") as well as The Bank of Nova Scotia ("BNS") as well as First Bank
National Association ("FBNA") as well as First Interstate Bank of California
("FIB") as well as Harris Trust and Savings Bank ("Harris") as well as Mellon
Bank, N.A. ("Mellon") as well as National Bank of Canada ("NBC") as well as PNC
Bank, National Association ("PNC") as well as Sanwa Bank California ("Sanwa")
as well as Shawmut Bank Connecticut, N.A. ("Shawmut") as well as United States
National Bank of Oregon ("USNBO") as well as NBD Bank ("NBD") as well as The
Long-Term Credit Bank of Japan, Ltd. ("LTCB") and as well as The Industrial
Bank of Japan, Limited ("IBJ") shall each be deemed to sell and assign to the
Purchasing Bank, 3.45% of the amount of the undivided interest and
participation deemed owned by each of BOA, NatWest, BNY, BNS, FBNA, FIB,
Harris, Mellon, NBC, PNC, Sanwa, Shawmut, USNBO, NBD, LTCB and IBJ as of the
date hereof, pursuant to Section 2.03 of the Letter of Credit Agreement, in
(i) each of the Letters of Credit listed on Schedule A to this Amendment (the
"Designated Letters of Credit"), and (ii) all Letter of Credit Liability
relating to each such Designated Letter of Credit, with the result that the
Purchasing Bank shall be deemed to have irrevocably and unconditionally
purchased and received an undivided interest and participation, to the extent
of the Purchasing Bank's Percentage in effect under and as defined in the
Letter of Credit Agreement as amended hereby, in each Designated Letter of
Credit and all Letter of Credit Liability relating thereto and shall have all
the obligations and rights pertaining to such undivided interests and
participations set forth in the Letter of Credit Agreement, including without
limitation, Section 2.03 thereof.
4. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Agent and the Banks
that: (a) there is no Default or Event of Default, (b) the representations and
warranties in the Loan Documents are true as of the date of this Amendment as
if made on the date of this
-5-
<PAGE> 6
Amendment, (c) this Amendment is within the Company's powers, has been duly
authorized, and does not conflict with any of the Company's organizational
papers, and (d) this Amendment does not conflict with any law, agreement, or
obligation by which the Company is bound.
5. Conditions. This Amendment will be effective when the Agent
receives the following items, in form and content acceptable to the Agent and
the Banks:
5.1 This Amendment executed by the Agent, the Banks and the
Company.
5.2 Certified copies of the resolutions or other
determinations of the Board of Directors of the Company, approving this
Amendment and the other documents and instruments to be executed and delivered
in connection herewith, together with a certificate of an Authorized
Representative certifying on behalf of the Company the names and true
signatures of the officers of the Company authorized to execute the Amendment
and other documents delivered in connection therewith.
6. Consent With Respect to Assumption. Without limiting
the effect of any other provision of this Amendment, the Company, the Agent,
and each of the Banks consent to the addition of Mitsubishi as set forth in
Section 2 hereof. Mitsubishi (i) confirms that it has received a copy of the
Letter of Credit Agreement and such other Loan Documents and other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into the Letter of Credit Agreement and this Amendment;
(ii) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Letter of Credit Agreement and
other Loan Documents as are delegated to the Agent by the terms thereof and
(iii) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Letter of Credit Agreement are required
to be performed by it as a Bank.
7. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of California, without
regard to conflict of laws principles.
8. Effect of Amendment. Except as provided in this
Amendment, all of the terms and conditions of this Agreement shall remain in
full force and effect.
9. Execution in Counterparts. This Amendment may be
executed in counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
-6-
<PAGE> 7
This Amendment is executed as of the date stated at the beginning of
this Amendment.
FOOTHILL CAPITAL CORPORATION
By: /s/ Kent W. Dahl
----------------------------------
Title: Senior Vice President/Treasurer
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, solely as Agent
By:
-----------------------------------
Title:
--------------------------------
Commitment BANK OF AMERICA NATIONAL TRUST AND
$20,000,000 SAVINGS ASSOCIATION, as Issuing Bank
and as a Bank
By:
-----------------------------------
Title:
--------------------------------
Commitment FIRST BANK NATIONAL ASSOCIATION
$10,000,000
By:
-----------------------------------
Title:
--------------------------------
Commitment HARRIS TRUST AND SAVINGS BANK
$10,000,000
By:
-----------------------------------
Title:
--------------------------------
(Signatures continue)
-7-
<PAGE> 1
EXHIBIT 10.46
FOOTHILL CAPITAL CORPORATION
% Senior Note,
Due July 24, 1997
No. R-1 July 24, 1995
$50,000,000 PPN 34511 = BU 4
FOOTHILL CAPITAL CORPORATION, a California corporation (the "Company"),
for value received, hereby promises to pay to
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
or registered assigns
on the twenty-fourth day of July, 1997
the principal amount of
FIFTY MILLION DOLLARS ($50,000,000)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of % per annum from the date hereof until maturity, payable
semi-annually on the twenty-fourth day of each January and July in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium (if any) and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of % per annum after the due date whether by acceleration or otherwise,
until paid.
Both the principal hereof and interest hereon are payable at the
principal office of the Company in Los Angeles, California in coin or currency
of the United States of America which at the time of payment shall be legal
tender for the payment of public and private debts. If any amount of principal,
premium (if any) or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable
on the immediately preceding Business Day. "Business Day" means any day other
than a Saturday, Sunday or other day on which banks in Los Angeles, California
or New York, New York are required by law to close or are customarily closed.
This Note is one of the Company's $65,000,000 aggregate principal
amount 6.53% Senior Notes, due July 24, 1997 (the "Notes") issued or to be
issued under and pursuant to the terms and provisions of the separate and
several Note Agreements, each dated as of July 1, 1995 (collectively, the "Note
Agreements"), entered into by the Company with the original Purchasers therein
referred to and this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding under the Note
<PAGE> 2
Agreements to all the benefits provided for thereby or referred to therein.
Reference is hereby made to the Note Agreements for a statement of such rights
and benefits.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium (if any) set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium (if any) and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
THIS NOTE AND SAID NOTE AGREEMENTS ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
FOOTHILL CAPITAL CORPORATION
By /s/ HENRY K. JORDAN
-----------------------------
Its Senior Vice President and
Chief Financial Officer
-2-
<PAGE> 1
EXHIBIT 10.47
FOOTHILL CAPITAL CORPORATION
6.53% Senior Note,
Due July 24, 1997
No. R-3
July 24, 1995
$7,500,000 PPN 34511 = BU 4
FOOTHILL CAPITAL CORPORATION, a California corporation (the "Company"),
for value received, hereby promises to pay to
CIG & CO.
or registered assigns
on the twenty-fourth day of July, 1997
the principal amount of
SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 6.53% per annum from the date hereof until maturity, payable
semi-annually on the twenty-fourth day of each January and July in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium (if any) and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 8.53% per annum after the due date whether by acceleration or otherwise,
until paid.
Both the principal hereof and interest hereon are payable at the
principal office of the Company in Los Angeles, California in coin or currency
of the United States of America which at the time of payment shall be legal
tender for the payment of public and private debts. If any amount of principal,
premium (if any) or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable
on the immediately preceding Business Day. "Business Day" means any day other
than a Saturday, Sunday or other day on which banks in Los Angeles, California
or New York, New York are required by law to close or are customarily closed.
This Note is one of the Company's $65,000,000 aggregate principal
amount 6.53% Senior Notes, due July 24, 1997 (the "Notes") issued or to be
issued under and pursuant to the terms and provisions of the separate and
several Note Agreements, each dated as of July 1, 1995 (collectively, the "Note
Agreements"), entered into by the Company with the original Purchasers therein
referred to and this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding under the Note
<PAGE> 2
Agreements to all the benefits provided for thereby or referred to therein.
Reference is hereby made to the Note Agreements for a statement of such rights
and benefits.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium (if any) set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium (if any) and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
THIS NOTE AND SAID NOTE AGREEMENTS ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
FOOTHILL CAPITAL CORPORATION
BY /s/ D. C. WILTON
----------------------------------
Its Executive Vice President
-2-
<PAGE> 1
EXHIBIT 10.48
FOOTHILL CAPITAL CORPORATION
6.53% Senior Note,
Due July 24, 1997
No. R-4 July 24, 1995
$7,500,000 PPN 34511 = BU 4
FOOTHILL CAPITAL CORPORATION, a California corporation (the "Company"), for
value received, hereby promises to pay to
CIG & CO.
or registered assigns
on the twenty-fourth day of July, 1997
the principal amount of
SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 6.53% per annum from the date hereof until maturity, payable
semi-annually on the twenty-fourth day of each January and July in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium (if any) and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 8.53% per annum after the due date whether by acceleration or otherwise,
until paid.
Both the principal hereof and interest hereon are payable at the
principal office of the Company in Los Angeles, California in coin or currency
of the United States of America which at the time of payment shall be legal
tender for the payment of public and private debts. If any amount of principal,
premium (if any) or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable
on the immediately preceding Business Day. "Business Day" means any day other
than a Saturday, Sunday or other day on which banks in Los Angeles, California
or New York, New York are required by law to close or are customarily closed.
This Note is one of the Company's $65,000,000 aggregate principal
amount 6.53% Senior Notes, due July 24, 1997 (the "Notes") issued or to be
issued under and pursuant to the terms and provisions of the separate and
several Note Agreements, each dated as of July 1, 1995 (collectively, the "Note
Agreements"), entered into by the Company with the original Purchasers therein
referred to and this Note and the holder hereof are entitled
<PAGE> 2
equally and ratably with the holders of all other Notes outstanding under the
Note Agreements to all the benefits provided for thereby or referred to
therein. Reference is hereby made to the Note Agreements for a statement of
such rights and benefits.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium (if any) set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium (if any) and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
THIS NOTE AND SAID NOTE AGREEMENTS ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
FOOTHILL CAPITAL CORPORATION
By /s/ D.C. WILTON
-----------------------------
Its Executive Vice President
-2-
<PAGE> 1
EXHIBIT 10.49
[LOGO] NATWEST BANK N.A.
-------------------------------------------------------------------------------
CONFIRMATION
SWAP TRANSACTION
Dated as of July 20, 1995
Foothill Capital Corporation
11111 Santa Monica Blvd.
Suite 1500
Los Angeles, CA 90025
Attention: Paz Hernandez
Telephone: (310) 996-7114
Facsimile: (310) 575-3435
Reference Number: TR-0317
Dear Sirs:
The purpose of this letter agreement is to confirm the terms and
conditions of the Swap Transaction entered into between NatWest Bank N.A.
("NW") and Foothill Capital Corporation (the "Company") on the Trade Date
specified below (the "Swap Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
THIS FACSIMILE TRANSMISSION WILL BE THE ONLY WRITTEN COMMUNICATION
REGARDING THIS TRANSACTION EXCHANGED BETWEEN US, UNLESS YOU REQUEST THAT WE
SIGN HARD COPY VERSIONS OF THIS CONFIRMATION. PLEASE CONTACT THE INDIVIDUAL
INDICATED IN THE LAST PARAGRAPH OF THIS LETTER TO RECEIVE SUCH COPIES.
The definitions and provisions contained in the 1991 ISDA Definitions
(as published by the International Swap and Derivatives Association, Inc.) are
incorporated into this Confirmation. For these purposes, all references in
those Definitions to a "Swap Transaction" shall be deemed to apply to the
Transaction referred to herein. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will
govern.
1. This Confirmation supplements, forms a part of, and is subject
to, ISDA Master Agreement dated as of March 12, 1992 as amended and
supplemented from time to time (the "Agreement"), between NW and the Company.
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:
1
<PAGE> 2
<TABLE>
<S> <C>
Notional Amount: $15,000,000
Trade Date: July 20, 1995
Effective Date: July 24, 1995
Termination Date: July 24, 1997 subject to adjustment in
accordance with the Modified Following Business
Day Convention
Fixed Amounts:
--------------
Fixed Rate Payer: NW
Fixed Rate: 6.05% per annum
Fixed Rate Day
Count Fraction: 30/360
Fixed Rate Payer
Payment Dates: Each January 24 and July 24 in each year
commencing on January 24, 1996 and ending on the
Termination Date subject to adjustment in
accordance with the Modified Following Business
Day convention
Floating Amounts:
-----------------
Floating Rate Payer: Company
Floating Rate for Initial
Calculation Period: To be determined
Floating Rate Option: USD-CP-H.15
Designated Maturity: One Month
Floating Rate Day Count
Fraction: Actual/360
Floating Rate Payer
Payment Dates: Each January 24 and July 24 in each year
commencing on January 24, 1996 and ending on the
Termination Date subject to adjustment in
accordance with the Modified Following Business
Day convention
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
Reset Dates: Each Business Day
Method of Averaging: Unweighted
Compounding: Applicable on the 24th day of each month
commencing August 24, 1995 subject to adjustment
in accordance with the Modified Following
Business Day convention
Business Days: New York
Calculation Agent: NW
Payments to NW Account:
Account Number: ABA # 021000322
Depository: Federal Reserve Bank of New York
Address: New York, New York, USA
Favor of: NatWest Bank N.A.
Account No. 2212582406
Attention: Capital Market Operations
Payment to Company Account:
Account Number: 323-266193
ABA # 021000128
Depository: Chemical Bank
Address: New York, NY
Favor of: Foothill Capital Corporation
Attention: Paz Hernandez
</TABLE>
3. Additional Representation and Warranties of the Company.
(1) Company represents and warrants that it is an "eligible swap
participant" as such term is defined in Section 35.1(b)(2) of the Regulations
(17 CFR Part 35) promulgated under the Commodity Exchange Act, as amended and
it has entered into this Agreement (including each Transactions) in conjunction
with its line of business (including financial intermediation services) or the
financing of its business.
(ii) it is not relying upon any advice (whether written or oral) of the
other party to this Agreement, other than the representations expressly set
forth in this Agreement and in any Confirmation;
(iii) it has made and will make its own decisions regarding the
entering into of any Transaction under this Agreement based upon its own
judgment and upon advice from such professional advisors as it has deemed
necessary to consult;
3
<PAGE> 4
(iv) it understands the terms, conditions and risks of each
Transaction and is willing to assume (financially and otherwise) those risks.
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 by facsimile to the attention of Douglas J. Maietta
(201-547-2884).
Very truly yours,
NATWEST BANK N.A.
By: /s/ DOUGLAS J. MAIETTA
----------------------------------
Name: Douglas J. Maietta
Title: Vice President
Accepted and confirmed as
of the date first written:
FOOTHILL CAPITAL CORPORATION
By: /s/ KENT W. DAHL
----------------------------------
Name: Kent W. Dahl
Title: Senior Vice President/Treasurer
4
<PAGE> 1
EXHIBIT 10.50
[IBJ LOGO]
THE INDUSTRIAL BANK OF JAPAN, LIMITED
360 SOUTH GRAND AVENUE, SUITE 1500, LOS ANGELES, CA 90071
TELEPHONE (213) 898-7841 FACSIMILE: (213) 480-5840
July 20, 1995
Foothill Capital Corporation
11111 Santa Monica Blvd., Suite 1500
Los Angeles, CA 90025-3333
Facsimile: 310-575-3435
Attn: Paz Hernandez
Re: LBJ Reference No. SP11043881
This Confirmation amends and supersedes our previous Confirmation Dated July
20, 1995.
The purpose of this letter agreement is to set forth the terms and conditions
of the Transaction entered into between us on the Trade Date specified below
(the "Transaction"). This letter agreement constitutes a "Conformation" as
referred to in the Master Agreement specified below.
The definitions and the provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
("ISDA")), without regard to subsequent amendments or revisions thereto, are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation shall
govern.
Any reference to "Swap Transaction" in the 1991 ISDA Definitions is deemed to
be a reference to a "Transaction" for the purpose of interpreting this
Confirmation; and any reference to "Transaction" in the Agreement specified
below or this Confirmation is deemed to be a reference to "Swap Transaction"
for the purpose of interpreting the 1991 ISDA Definitions.
1. This Confirmation supplements, forms a part of, and is subject to, the
Master Agreement dated as of July 12, 1994, as amended from time to time, (the
"Agreement") between you and us. All provisions contained or incorporated by
reference in the Agreement shall govern this Confirmation except as expressly
modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
<TABLE>
<S> <C>
Type of Transaction: Swap Transaction
Notional Amount: USD 25,000,000
Trade Date: July 20, 1995
Effective Date: July 24, 1995
Termination Date: July 24, 1997
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Fixed Amounts:
Fixed Rate Payer: The Industrial Bank of Japan, Limited, Los Angeles
Agency ("IBJLA")
Fixed Rate Payer Payment Dates: January 24 and July 24 in each year, commencing
January 24, 1996 to and including the Termination
Date, subject to adjustment in accordance with the
Modified Following Business Day Convention.
Fixed Rate: 6.072%
Fixed Rate Day Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Foothill Capital Corporation Los Angeles
("Foothill")
Floating Rate Payer Payment Dates: January 24 and July 24 in each year, commencing
January 24, 1996 to and including the Termination
Date, subject to adjustment in accordance with the
Modified Following Business Day Convention.
Floating Rate Option: USD-CP-H.15
Floating Rate for the initial Calculation
Period: To be determined
Designated Maturity: 1 month
Floating Rate Day Count Fraction: Actual/360
Reset Dates: Each Business Day of each Calculation Period
Business Days: New York
Flat Compounding: Applicable
Compounding Dates: The 24th of each month, subject to adjustment in
accordance with the Modified Following Business
Day Convention.
Method of Averaging: Unweighted Average
Rate Cut-off Date: One New York Business Day prior to the Payment
Date:
Calculation Agent: IBJLA
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
3. Account Details:
Payments to IBJLA: Bankers Trust Company, NY
P/O IBJLA, A/C #04-201-571
Payments to Foothill: Chemical Bank ABA #021000128
A/C 323266193 P/O Foothill Capital Corp.
</TABLE>
4. Offices:
For this Transaction the office of IBJLA is its Los Angeles office.
For this Transaction the office of Foothill is its Los Angeles office.
5. Other Provisions:
Non-Reliance. In connection with this Transaction:
(i) Foothill and IBJLA are not relying upon any advice (whether
written or oral) of the other party to the Agreement, other than the
representations expressly set forth in the Agreement and in this
Confirmation;
(ii) Foothill and IBJLA have made and will make Their own
decisions regarding the entering into of any Transaction under the
Agreement based upon its own judgment and upon advice from such
professional advisors as it has deemed necessary to consult;
(iii) Foothill and IBJLA understands the terms, conditions and
risks of each Transaction and is willing to assume (financially and
otherwise) those risks; and
(iv) Foothill and IBJLA are entering into the Transaction
evidenced hereby as principal (and not as agent or in any other
capacity).
Please confirm that the foregoing correctly sets forth the terms of our
agreement by (i) executing this copy of this Confirmation and sending the same
to us by return facsimile transmission at 213-891-9369 to the attention of
IBJLA Business Operations and (ii) executing both of the original copies of
this Confirmation which will be sent to you having been executed on behalf of
IBJLA and returning one original to us.
IBJLA is very pleased to have executed this transaction with you.
Best Regards, Accepted and confirmed as
of the date first written:
THE INDUSTRIAL BANK OF JAPAN, LIMITED FOOTHILL CAPITAL CORPORATION
LOS ANGELES AGENCY
By: /s/ MASATAKE YASHIRO By: /s/ D. C. WILTON
--------------------------------- -------------------------------
Name: Masatake Yashiro Name: D. C. Wilton
Title: General Manager Title: Executive Vice President
3
<PAGE> 1
EXHIBIT 10.51
AMENDED CONFIRMATION
-------------------------------------------------------------------------------
Date: July 24, 1995
To: FOOTHILL CAPITAL CORPORATION ("Foothill Capital")
11111 Santa Monica Blvd.
Suite 1500
Los Angeles, CA 90025-3333
Attn: Paz Hernandez
Fax number: (310) 575-3435
From: ABN AMRO Bank N.V., Chicago Branch ("ABN AMRO")
Fax number: (312) 904-5778
Re: Interest Rate Swap Transaction (Ref CTR/00003522/00015070)
--------------------------------------------------------------------------------
Ladies/Gentlemen:
This Confirmation supersedes all previous Confirmations with respect to the
Swap Transaction referred to herein.
The purpose of this letter agreement is to set forth 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 Interest Rate and Currency Exchange
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
("ISDA")), without regard to subsequent amendments or revisions thereto, are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions of this Confirmation, this Confirmation will
govern. Each party represents and warrants to the other that (i) it is duly
authorized to enter into this Swap Transaction and to perform its obligations
hereunder and (ii) the person executing this Confirmation is duly authorized to
execute and deliver it.
<PAGE> 2
ABN-AMRO
1. This Confirmation supplements, forms a part of, and is subject to the
Master Agreement dated as of February 21, 1995, as amended from time to time
(the "Agreement"), between you and us. 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:
<TABLE>
<S> <C>
Notional Amount: USD 25,000,000
Trade Date: July 20, 1995
Effective Date: July 24, 1995
Termination Date: July 24, 1997, subject to adjustment in accordance with the Modified
Following Business Day Convention
FIXED AMOUNTS:
Fixed Rate Payer: ABN AMRO
Fixed Rate Payer Payment Dates: The 24th day of each January and July, commencing on January 24, 1996,
to and including the Termination Date, subject to adjustment in accordance
with the Modified Following Business Day Convention
Fixed Rate: 6.07%
Fixed Rate Day Count Fraction: 30/360
FLOATING AMOUNTS;
Floating Rate Payer: Foothill Capital
Floating Rate Payer Payment Dates: The 24th day of each January, and July commencing on January 24, 1996,
to and including the Termination Date, subject to adjustment in accordance
with the Modified Following Business Day Convention.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Floating Rate Option: USD-CP-H.15
Designated Maturity: 1 month
Spread: none
Floating Rate
Day Count Fraction: Actual/360
Reset Dates: Each New York Banking day in each
Compounding Period
Method of Averaging: Unweighted
Compounding: Applicable
Compounding Dates: The 24th day of each month
Business Days: New York
Calculation Agent: ABN AMRO
</TABLE>
3. Offices:
(a) The Office of the Fixed Rate Payer for this Swap Transaction
is Chicago.
(b) The Office of the Floating Rate Payer for this Swap Transaction
is Los Angeles.
4. Account Details
Payments to ABN AMRO:
ABA No. 026009580 of ABN AMRO Bank N.V. New York Branch at the
Federal Reserve Bank of New York A/C 220080521100
Payments to Foothill Capital:
Chemical Bank, NA, New York, ABA No. 021000128, A/C 323-266193,
Credit: Foothill Capital Corporation, Re: Swap - Maturing 7/24/97
<PAGE> 4
5. Other Provisions:
Assignment: This Swap Transaction may be assigned only with prior
written consent
Netting: The parties hereto hereby agree that
subparagraph (ii) of Part 2(c) of the Agreement shall
not apply to any Swap Transaction
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within ten (10) Business Days by
either (i) returning via telecopier an executed copy of this Confirmation to
the attention of Dinesh Samtani (fax number: (312) 904-5772, or sending a telex
to Dinesh Samtani (telex no.: 62734, answerback: ABN UW) substantially to the
following effect: "We acknowledge receipt of your fax dated July 24, 1995 with
respect to a Swap Transaction between Foothill Capital and ABN AMRO Bank N.V.,
Chicago Branch with a Notional Amount of USD 25,000,000 and a Termination Date
of July 24, 1997 and confirm that such fax correctly sets forth the terms of
our agreement relating to the Swap Transaction described therein. Very truly
yours, ____________________, by (specify name and title of authorized
officer)." Failure to respond within such period shall not affect the validity
or enforceability of this Swap Transaction, and shall be deemed to be an
affirmation of the terms and conditions contained herein, absent manifest
error.
Yours sincerely,
ABN AMRO Bank N.V., Chicago Branch
<TABLE>
<S> <C>
By: PETER MATTEUCCI By: FRED GLATZ
------------------------------ -------------------------------
Name: Peter Matteucci Name: Fred Glatz
Title: Vice President Title: Assistant Vice President
</TABLE>
Confirmed as of the date first written:
FOOTHILL CAPITAL CORPORATION, LOS ANGELES
By: D.C. WILTON
-------------------------------
Name: D.C. Wilton
Title: Executive Vice President
<PAGE> 1
EXHIBIT 10.52
OMNIBUS AMENDMENT
THIS OMNIBUS AMENDMENT (the or this "Omnibus Amendment") dated as of
June 16, 1995 is among FOOTHILL CAPITAL CORPORATION, a California corporation
(the "Company"), and each of the institutions which is signatory to this
Omnibus Amendment.
RECITALS:
A. The Company currently has outstanding indebtedness evidenced by
promissory notes (collectively, the "Outstanding Notes") described as follows:
1. $41,000,000 original principal amount of 9.80% Senior Notes due
December 1, 1999 (the "9.80% Senior Notes") and originally issued pursuant to
the separate and several Note Agreements each dated as of January 23, 1990 as
supplemented or amended (collectively, the "January 23, 1990 Note Agreements");
2. $2,000,000 original principal amount of 10.10% Senior Notes due
April 30, 1996 (the "10.10% Senior Notes") and originally issued pursuant to
the separate and several Loan Agreements each dated as of May 8, 1991
(collectively, the "May 8, 1991 Loan Agreements");
3. $5,000,000 original principal amount of 8.98% Senior Notes due
January 15, 1996 (the "8.98% Senior Notes") and originally issued pursuant to
the separate and several Note Agreements each dated as of January 31, 1992
(collectively, the "January 31, 1992 Note Agreements");
4. $5,000,000 original principal amount of 9.44% Senior Notes due
January 15, 1997 (the "9.44% Senior Notes") and originally issued pursuant to
the January 31, 1992 Note Agreements;
5. $40,000,000 original principal amount of 9.25% Senior Notes due
March 31, 1999 (the "9.25% Senior Notes") and originally issued pursuant to the
separate and several Note Agreements each dated as of April 29, 1992
(collectively, the "April 29, 1992 Note Agreements");
6. $5,000,000 original principal amount of 6.77% Senior Notes, Series
A, due December 1, 1996 (the "6.77% Senior Notes") and originally issued
pursuant to the separate and several Note Agreements each dated as of
November 1, 1992 (collectively, the "November 1, 1992 Note Agreements");
<PAGE> 2
7. $23,000,000 original principal amount of 7.31% Senior Notes,
Series B, due December 1, 1997 (the "7.31% Senior Notes") and originally issued
pursuant to the November 1, 1992 Note Agreements;
8. $17,000,000 original principal amount of 7.93% Senior Notes,
Series C, due December 1, 1999 (the "7.93% Senior Notes") and originally
issued pursuant to the November 1, 1992 Note Agreements;
9. $15,000,000 original principal amount of 5.54% Senior Notes,
Series A, due November 15, 1996 (the "5.54% Senior Notes") and originally
issued pursuant to the separate and several Note Agreements each dated as of
October 1, 1993 (collectively, the "October 1, 1993 Note Agreements");
10. $5,000,000 original principal amount of 5.89% Senior Notes,
Series B, due November 15, 1997 (the "5.89% Senior Notes") and originally
issued pursuant to the October 1, 1993 Note Agreements;
11. $25,000,000 original principal amount of 6.23% Senior Notes,
Series C, due November 15, 1998 (the "6.23% Senior Notes") and originally
issued pursuant to the October 1, 1993 Note Agreements;
12. $15,000,000 original principal amount of 6.56% Senior Notes,
Series D, due November 15, 2000 (the "6.56% Senior Notes") and originally
issued pursuant to the October 1, 1993 Note Agreements;
13. $20,000,000 original principal amount of 8.06% Senior Notes due
May 15, 1997 (the "8.06% Senior Notes") and originally issued pursuant to a
Note Agreement dated as of November 1, 1994 (the "November 1, 1994 Note
Agreement");
14. $4,000,000 original principal amount of 10.60% Senior
Subordinated Notes due December 1, 1999 (the "10.60% Senior Subordinated
Notes") and originally issued pursuant to the January 23, 1990 Note Agreements;
15. $5,000,000 original principal amount of 11.26% Senior
Subordinated Notes due April 30, 2000 (the "11.26% Senior Subordinated Notes")
and originally issued pursuant to the May 8, 1991 Loan Agreements;
16. $8,000,000 original principal amount of 8.93% Senior
Subordinated Notes due December 1, 2002 (the "8.93% Senior Subordinated
Notes") and originally issued pursuant to the November 1, 1992 Note Agreements;
2
<PAGE> 3
17. $25,000 original principal amount of 7.46% Senior Subordinated
Notes due November 15, 1003 (the "7.46% Senior Subordinated Notes") and
originally issued pursuant to the October 1, 1993 Note Agreements;
18. $5,000,000 original principal amount of 11.82% Junior
Subordinated Notes due December 1, 1999 (the "11.82% Junior Subordinated
Notes") and originally issued pursuant to the January 23, 1990 Note
Agreements;
19. $5,000,000 original principal amount of 12.26% Junior
Subordinated Notes due April 30, 2000 (the "12.26% Junior Subordinated
Notes") and originally issued pursuant to the May 8, 1991 Loan Agreements;
20. $2,000,000 original principal amount of 9.93% Junior
Subordinated Notes due December 1, 2002 (the "9.93% Junior Subordinated
Notes") and originally issued pursuant to the November 1, 1992 Note Agreements.
The January 23, 1990 Note Agreements, the May 8, 1991 Loan Agreements,
the January 31, 1992 Note Agreements, the April 29, 1992 Note Agreements, the
November 1, 1992 Note Agreements, the October 1, 1993 Note Agreements and the
November 1, 1994 Note Agreements are hereinafter referred to collectively, as
the "Note Agreements".
B. The Note Agreements provide that they may be amended with the
consent of a certain percentage of the holders of the Outstanding Notes as
defined in each Note Agreement as follows:
1. The January 23, 1990 Note Agreements provide that they may be
amended with the consent of the holders of at least 66 2/3% of the aggregate
unpaid principal amount of the 9.80% Senior Notes and the holders of at least
66 2/3% of the aggregate unpaid principal amount of the 10.60% Senior
Subordinated Notes and the holders of at least 66 2/3% of the aggregate unpaid
principal amount of the 11.82% Junior Subordinated Notes;
2. The May 8, 1991 Loan Agreements provide that they may be
amended with the consent of the holders of at least 66 2/3% of the aggregate
unpaid principal amount of the 10.10% Senior Notes and the holders of at
least 66 2/3% of the aggregate unpaid amount of the 11.26% Senior Subordinated
Notes and the holders of at least 66 2/3% of the aggregate unpaid principal
amount of the 12.26% Junior Subordinated Notes;
3. The January 31, 1992 Note Agreements provide that they may be
amended with the consent of the holders of at least 66 2/3% of the aggregate
unpaid principal amount collectively, of the 8.98% Senior Notes and the 9.44%
Senior Notes;
3
<PAGE> 4
4. The April 29, 1992 Note Agreements provide that they may be
amended with the consent of the holders of at least 66 2/3% of the aggregate
unpaid principal amount of the 9.25% Senior Notes;
5. The November 1, 1992 Note Agreements provide that they may be
amended with the consent of the holders of at least 75% of the aggregate unpaid
principal amount, collectively, of the 6.77% Senior Notes, the 7.31% Senior
Notes and the 7.93% Senior Notes, and the holders of at least 66 2/3% of the
aggregate unpaid principal amount of the 8.93% Senior Subordinated Notes and
the holders of at least 66 2/3% of the aggregate unpaid principal amount of the
9.93% Junior Subordinated Notes;
6. The October 1, 1993 Note Agreements provide that they may be
amended with the consent of the holders of 66 2/3% of the aggregate unpaid
principal amount, collectively, of the 5.54% Senior Notes, the 5.89% Senior
Notes, the 6.23% Senior Notes and the 6.56% Senior Notes and the holders of at
least 66 2/3% of the aggregate unpaid principal amount of the 7.46% Senior
Subordinated Notes; and
7. The November 1, 1994 Note Agreement provides that it may be
amended with the consent of the holders of at least 66 2/3% of the aggregate
unpaid principal amount of the 8.06% Senior Notes.
C. The Company and the holders of the Outstanding Notes now desire
to amend each of the Note Agreements in the respects, but only in the respects,
hereinafter set forth.
NOW THEREFORE, the Company and the holders of the Notes signatory to
this Omnibus Amendment in consideration of the premises and the sum of ten
dollars received by the Company from such holders and other good and valuable
consideration, receipt whereof is hereby acknowledged, hereto mutually agree
that each of the Note Agreements shall be and is hereby amended in the
following respects:
SECTION 1 AMENDMENTS.
Section 1.1 Amendment to Limitations on Senior Indebtedness.
(a) Section 9.6A in each of the January 23, 1990 Note Agreements,
the May 8, 1991 Loan Agreements, the January 31, 1992 Note Agreements and the
April 29, 1992 Note Agreements is hereby amended in its entirety to read as
follows:
4
<PAGE> 5
"in the case of the Company, Senior Indebtedness (exclusive of
guarantees) not otherwise permitted under this Section, provided that the
aggregate amount thereof at any one time outstanding shall not exceed 400% of
the Senior Borrowing Base;"
(b) Section 7.6(a) in the November 1, 1992 Note Agreements is hereby
amended in its entirety to read as follows:
"in the case of the Company, Senior Indebtedness (including, without
limitation, reimbursement obligations with respect to guarantees and letters of
credit but otherwise excluding guarantees and letters of credit described in
Section 7.10(b)) not otherwise permitted under this Section 7.6, provided that
the aggregate amount thereof at any one time outstanding shall not exceed 400%
of the Senior Borrowing Base;"
(c) Section 7.6(a) in each of the October 1, 1993 Note Agreements
and the November 1, 1994 Note Agreement is hereby amended in its entirety to
read as follows:
"in the case of the Company, Senior Indebtedness (including, without
limitation, reimbursement obligations with respect to guarantees and letters of
credit but otherwise excluding guarantees and letters of credit described in
Section 7.9(b)) not otherwise permitted under this Section 7.6, provided that
the aggregate amount thereof at any one time outstanding shall not exceed 400%
of the Senior Borrowing Base;"
Section 1.2 Amendment to Limitations on Subordinated Indebtedness
(a) Section 9.6B in each of the January 23, 1990, the May 8, 1991
Loan Agreements, the January 31, 1992 Note Agreements and the April 29, 1992
Note Agreements as well as Section 7.6(b) in each of the November 1, 1992 Note
Agreements, the October 1, 1993 Note Agreements and the November 1, 1994 Note
Agreement is hereby amended in its entirety to read as follows:
"in the case of the Company, Subordinated Indebtedness, provided that
the aggregate amount thereof at any one time outstanding shall not exceed 85%
of Adjusted Consolidated Net Worth, and provided further that the aggregate
amount of Senior Subordinated Indebtedness at any one time outstanding shall
not exceed 60% of the sum of (1) Junior Subordinated Indebtedness and
(2) Adjusted Consolidated Net Worth;"
5
<PAGE> 6
Section 1.3 Amendment to Limitations on Dividends and Other
Restricted Payments
(a) Section 9.11A(1) in each of the January 23, 1990 Note
Agreements, the May 8, 1991 Loan Agreements, the January 31, 1992 Note
Agreements and the April 29, 1992 Note Agreements is hereby amended in its
entirety to read as follows:
"the sum of
(a) the aggregate amount of all dividends (other than
dividends payable solely in Common Shares of the Company) declared during the
period commencing January 1, 1995 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), plus
(c) the aggregate amount of all Investments (including
outstanding commitments to make or acquire Investments) by the Company and its
Restricted Subsidiaries (other that those specified in Subsections A to C.
inclusive, of Section 9.10) existing on the Computation Date
shall not exceed $17,500,000 plus 50% (or, in the case of a deficit, minus
100%) of Consolidated Net Income for the Computation Period, and"
(b) Section 7.11A(1) in the November 1, 1992 Note Agreements is
hereby amended in its entirety to read as follows:
"the sum of
(a) the aggregate amount of all dividends (other than
dividends payable solely in Common Shares of the Company) declared during the
period commencing January 1, 1995 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), plus
6
<PAGE> 7
(c) the aggregate amount of all Investments (including
outstanding commitments to make or acquire Investments) by the Company and its
Restricted Subsidiaries (other than those specified in subsections (a) to (c),
inclusive, of Section 7.10) existing on the Computation Date
shall not exceed $17,500,000 plus 50% (or, in the case of a deficit, minus
100%) of the Consolidated Net Income for the Computation Period;"
(c) Section 7.10(a) (1) in each of the October 1, 1993 Note
Agreements and the November 1, 1994 Note Agreement is hereby amended in its
entirety to read as follows:
"(1) the sum of
(a) the aggregate amount of all dividends (other than
dividends payable solely in Common Shares of the Company) declared during the
period commencing January 1, 1995 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), plus
(c) the aggregate amount of all Investments (including
outstanding commitments to make or acquire Investments) by the Company and its
Restricted Subsidiaries (other than those specified in subsections (a) to (c),
inclusive, of Section 7.9) existing on the Computation Date,
shall not exceed $17,500,000 plus 50% (or, in the case of a deficit, minus
100%) of Consolidated Net Income for the Computation Period;"
Section 1.4 Amendments to Minimum Adjusted Consolidated Net Worth
Section 9.12 of the January 23, 1990 Note Agreements, the May 8, 1991 Loan
Agreements, the January 31, 1992 Note Agreements and the April 29, 1992 Note
Agreements as well as Section 7.12 of the November 1, 1992 Note Agreements as
well as Section 7.11 of the October 1, 1993 Note Agreements and the November 1,
1994 Note Agreement is hereby amended in its entirety to read as follows:
"The Company will at all times maintain Adjusted Consolidated Net Worth
in an amount at least equal to $90,000,000."
7
<PAGE> 8
SECTION 2
Section 2.1 Successors and Assigns. This Omnibus Amendment shall be
binding on and shall inure to the benefit of, and shall be enforceable by, the
parties hereto and their respective permitted successors and assigns including
each successive holder of any outstanding Note whether or not an express
assignment to any such holder of rights under this Omnibus Amendment has been
made.
Section 2.2 Governing Law. This Omnibus Amendment shall be governed
by and construed in accordance with the laws of (a) the State of California as
it relates to the January 23, 1990 Note Agreements, the May 8, 1991 Loan
Agreements and the January 31, 1992 Note Agreements and (b) the State of New
York as it relates to the April 29, 1992 Note Agreements, the November 1, 1992
Note Agreements, the October 1, 1993 Note Agreements and the November 1, 1994
Note Agreement.
Section 2.3 Counterparts. This Omnibus Amendment may be executed in
any number of counterparts, each executed counterpart shall constitute an
original but all together shall constitute one and the same Omnibus Amendment.
Section 2.3 Headings. The headings of the sections of this Omnibus
Amendment are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions
hereof.
Section 2.5 References to Note Agreements. Any and all notices,
requests, certificates and other instruments executed and delivered
concurrently with or after the execution of this Omnibus Amendment may refer to
any Note Agreement without making specific reference to this Omnibus Amendment,
but nevertheless all such references shall be deemed to include this Omnibus
Amendment unless the context shall otherwise require.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Omnibus
Amendment to be executed and delivered, all as of the date first above written.
FOOTHILL CAPITAL CORPORATION
By /s/ HENRY K. JORDAN
-----------------------------------
Its Senior Vice President and
Chief Financial Officer
By /s/ KENT W. DAHL
------------------------------------
Its Senior Vice President/Treasurer
9
<PAGE> 1
EXHIBIT 11
THE FOOTHILL GROUP, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
Net income $ 9,494 $ 6,604 $17,888 $18,045
Less preferred stock dividends (68) (68) (135) (135)
----------------------------------------------------------------------------------------------
Net income for primary calculation $ 9,426 $ 6,536 $17,753 $17,910
==============================================================================================
Weighted average number of common shares outstanding 16,707 16,622 16,620 16,589
Effect of dilutive stock options 249 324 244 365
----------------------------------------------------------------------------------------------
Number of common shares used in computation 16,956 16,946 16,864 16,954
==============================================================================================
Primary earnings per common share $0.55 $0.39 $1.05 $1.06
==============================================================================================
Fully diluted:
Net income for fully diluted calculation $ 9,494 $ 6,604 $17,888 $18,045
==============================================================================================
Weighted average number of shares outstanding 16,707 16,622 16,620 16,589
Effect of dilutive stock options 258 325 255 365
Shares issued upon assumed conversion of convertible
preferred stock 667 667 667 667
----------------------------------------------------------------------------------------------
Number of shares used in computation 17,632 17,614 17,542 17,621
==============================================================================================
Fully diluted earnings per share $0.54 $0.37 $1.02 $1.02
==============================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, THE CONSOLIDATED STATEMENTS OF INCOME AND THE
CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,545
<SECURITIES> 35,411
<RECEIVABLES> 916,507
<ALLOWANCES> 23,150
<INVENTORY> 0
<CURRENT-ASSETS> 932,313
<PP&E> 4,894
<DEPRECIATION> 2,366
<TOTAL-ASSETS> 969,979
<CURRENT-LIABILITIES> 457,594
<BONDS> 321,950
<COMMON> 172,677
0
2,900
<OTHER-SE> 14,858
<TOTAL-LIABILITY-AND-EQUITY> 969,979
<SALES> 75,629
<TOTAL-REVENUES> 75,629
<CGS> 0
<TOTAL-COSTS> 12,569
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,825
<INTEREST-EXPENSE> 21,853
<INCOME-PRETAX> 31,382
<INCOME-TAX> 13,494
<INCOME-CONTINUING> 17,888
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,888
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.02
</TABLE>
