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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) December 22, 1999
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FIRSTCITY FINANCIAL CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Delaware 1-7614 76-0243729
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<S> <C> <C>
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION)
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6400 Imperial Drive, Waco, TX 76712
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (254) 751-1750
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On December 22, 1999, FirstCity Financial Corporation (the "Company")
completed several transactions that enhance the Company's liquidity position
through additional funding. The transactions are summarized below:
Senior Working Capital Revolving Line of Credit
The Company renewed and restructured its senior lending facility (the
"Senior Facility"). The Senior Facility was renewed at a maximum available
amount of $88 million. The restructured Senior Facility matures June 2001 and
carries pricing of Libor plus 4% on the outstanding indebtedness thereunder. The
Senior Facility provides for a facility fee of $500,000 if the loan is paid in
full before March 1, 2000, $1.65 million if paid in full before September 30,
2000, or $2.5 million if paid thereafter. Defaults at Harbor Financial Group,
Inc. and its subsidiaries do not constitute defaults under the Senior Facility.
The Senior Facility also requires the consent of the lenders prior to payment of
any common and preferred dividends. The Company will continue to evaluate its
liquidity on a quarterly basis to determine when and if it is appropriate to
obtain approval to pay the dividends in arrears on the Company's outstanding
preferred stock. Currently, there are approximately 1.2 million shares of
preferred stock outstanding with dividends currently in arrears of approximately
$642,000.
Subordinated Senior Notes
The Company issued $25 million in senior subordinated notes maturing in
December 2003. The notes bear interest at prime plus 3.75% in the first year and
provide for an increase of 1/2% in the rate each year thereafter. The redemption
price for the notes is equal to the principal amount of the notes plus any
accrued interest through December 31, 1999. The redemption price increases by 1%
of the principal amount on January 1, 2000 and each January 1 thereafter. In
conjunction with this financing, the Company issued a warrant for the purchase
425,000 shares of the Company's common stock at $2.3125 per share (the closing
price on December 21, 1999). The warrant for 250,000 shares of the Company's
common stock which was previously issued to the revolving lender was cancelled
in conjunction with this financing and the restructuring of the Senior Facility.
The Company also issued an option to the note holder allowing it to acquire an
additional warrant to acquire 1,975,000 shares of the Company's non-voting
common stock, which can be exercised after one year if the notes or any portion
thereof remains outstanding, but not prior thereto. In the event that the notes
are paid prior to the expiration of such one-year period through a transaction
involving the issuance of warrants, the note holder is entitled to retain
sufficient warrants to allow the note holder to acquire approximately 4.86% of
the Company's common stock. The Company has until May 15, 2000 to take the
necessary actions to authorize the issuance of the non-voting common stock
covered by the option.
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Consumer Automobile Securitization
FirstCity Funding, L.L.P., the Company's automobile finance business
unit, completed a securitization of $100 million of face value of automobile
receivables. The transaction was structured with $73.7 million in senior bonds,
$9.3 million in junior bonds with the balance held by the Company in a residual
interest. Additionally, the credit enhancement provider for the automobile
warehouse facility has reestablished funding with a maximum available funding
amount of $50 million. The Company continues to work with the credit enhancement
provider on its automobile securitizations to continue extensions of the waivers
and consents of trigger events occurring from the Company's failure to meet
certain financial covenants resulting from losses in the Company's discontinued
mortgage operations.
Certain statements in this report, including, but not limited to,
statements relating to the Company's strategic objectives and future
performance, which are not historical fact, may be deemed to be forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any statement that may
project, indicate or imply future results, performance or achievements, and may
contain the words "expect", "intend", "plan", "estimate", "believe", "will be",
"will continue", "will likely result", and similar expressions. Such statements
inherently are subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those projected. There are many
important factors that could cause the Company's actual results to differ
materially from those indicated in the forward-looking statements. Such factors
include, but are not limited to, uncertainties of any litigation that might
arise in a bankruptcy proceeding; the impact of certain covenants in loan
agreements of the Company and its subsidiaries; the continued availability of
the Company's credit facilities; the performance of the Company's subsidiaries
and affiliates; factors more fully discussed and identified under Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, risk factors and other risks identified in the Company's current
Annual Report on Form 10-K, filed March 31, 1999, and other Securities and
Exchange Commission filings. Many of these factors are beyond the Company's
control. In addition, it should be noted that past financial and operational
performance of the Company is not necessarily indicative of future financial and
operational performance. Given these risks and uncertainties, investors should
not place undue reliance on forward-looking statements. The forward-looking
statements in this report speak only as of the date of this report. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement to reflect any change in
the Company's expectations with regard thereto or any change in events,
conditions or circumstances on which any forward-looking statement is based.
ITEM 7. EXHIBITS
Exhibit number Description
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10.1 Amended and Restated Loan Agreement, dated December 20, 1999,
by and among FirstCity Financial Corporation, as Borrower, and
the Lenders named therein, as Lenders, and Bank of Scotland,
as Agent.
10.2 Subordinated Secured Senior Note Purchase Agreement, dated
December 20, 1999, between FirstCity Financial Corporation, as
Issuer, and IFA Corporation, as Purchaser.
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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 hereunto duly authorized.
FIRSTCITY FINANCIAL CORPORATION
By: /s/ Gary H. Miller
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Gary H. Miller
Senior Vice President and Chief Financial Officer
Date: December 27, 1999
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EXHIBIT INDEX
Exhibit number Description
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10.1 Amended and Restated Loan Agreement, dated December 20, 1999,
by and among FirstCity Financial Corporation, as Borrower, and
the Lenders named therein, as Lenders, and Bank of Scotland,
as Agent.
10.2 Subordinated Secured Senior Note Purchase Agreement, dated
December 20, 1999, between FirstCity Financial Corporation, as
Issuer, and IFA Corporation, as Purchaser.
AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
FIRSTCITY FINANCIAL CORPORATION
AS BORROWER,
THE LENDERS NAMED HEREIN,
AS LENDERS
AND
BANK OF SCOTLAND,
AS AGENT
DATED FOR REFERENCE PURPOSES ONLY
AS OF
DECEMBER 20, 1999
54892.0004
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TABLE OF CONTENTS
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PAGE
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1. DEFINITIONS AND TERMS....................................................2
1.1. DEFINITIONS...................................................2
1.2. GAAP ........................................................21
1.3. BORROWER ....................................................21
1.4. RULES OF CONSTRUCTION........................................21
2. LOANS - GENERAL TERMS...................................................22
2.1. CREDIT FACILITIES............................................22
2.2. MAXIMUM PRINCIPAL AMOUNT.....................................23
2.3. LENDER'S COMMITMENTS.........................................24
2.4. MATURITY DATE; TERMINATION OF LOANS..........................25
2.5. AUTHORIZED DISBURSEMENT OF PROCEEDS..........................25
2.6. USE OF PROCEEDS AND BORROWING PROCEDURE......................26
2.7. INTEREST RATE................................................27
2.8. CHANGE OF LAWS...............................................27
2.9. REGULATORY CHANGES...........................................28
2.10. ADVANCES PRIOR TO LIBOR RATE DETERMINATION...................28
2.11. EURODOLLAR ADVANCES AND CONVERSION...........................28
2.12. INTEREST PERIOD ELECTION.....................................29
2.13. FEES ........................................................29
2.14. USURY .......................................................30
3. PAYMENT TERMS...........................................................31
3.1. LOAN ACCOUNT; METHOD OF MAKING PAYMENTS......................31
3.2. INTEREST PAYMENTS............................................31
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3.3. PRINCIPAL PAYMENTS...........................................32
3.4. PLACE OF PAYMENT.............................................32
3.5. PAYMENT ON MATURITY AND PREPAYMENT...........................33
3.6. APPLICATION OF PAYMENTS......................................33
3.7. ADVANCES TO CONSTITUTE ONE LOAN..............................34
3.8. REAPPLICATION OF PAYMENTS....................................34
3.9. MONTHLY STATEMENTS...........................................35
3.10. TIME OF PAYMENT OF EXTRAORDINARY TRANSACTION PROCEEDS........35
4. ANCILLARY AGREEMENTS....................................................35
4.1. GUARANTIES ..................................................35
4.2. NOTE PLEDGE AGREEMENTS.......................................36
4.3. STOCK PLEDGE AGREEMENTS......................................36
4.4. SECURITY AGREEMENTS..........................................37
5. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS.......................37
5.1. GENERAL REPRESENTATIONS AND WARRANTIES.......................37
5.2. REPRESENTATIONS RELATING TO SENIOR SUBORDINATED DEBT.........47
5.3. REAFFIRMATION OF WARRANTIES AND REPRESENTATIONS..............48
5.4. SURVIVAL OF WARRANTIES AND REPRESENTATIONS...................48
6. COVENANTS AND CONTINUING AGREEMENTS.....................................48
6.1. FINANCIAL COVENANTS..........................................49
6.2. AFFIRMATIVE COVENANTS........................................49
6.3. NEGATIVE COVENANTS...........................................58
6.4. REQUIRED NOTICES.............................................65
6.5. PAYMENT OF CLAIMS............................................68
6.6. YEAR 2000 COMPLIANCE.........................................68
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7. DEFAULT.................................................................68
7.1. EVENTS OF DEFAULT............................................68
7.2. REMEDIES CUMULATIVE..........................................74
7.3. ACCELERATION.................................................74
7.4. REMEDIES ....................................................74
7.5. INJUNCTIVE RELIEF............................................74
7.6. ADVANCES DURING UNMATURED DEFAULT............................75
8. CONDITIONS PRECEDENT TO DISBURSEMENT....................................75
8.1. CHECKLIST ITEMS..............................................75
8.2. NECESSARY ACTIONS............................................75
8.3. CONDITIONS PRECEDENT.........................................75
9. GENERAL.................................................................76
9.1. COMPLIANCE WITH ERISA........................................76
9.2. COSTS .......................................................83
9.3. STATEMENT ...................................................83
9.4. NOTICES .....................................................83
9.5. AMENDMENTS AND WAIVERS.......................................85
9.6. NO IMPLIED WAIVER; REMEDIES CUMULATIVE.......................86
9.7. SEVERABILITY.................................................86
9.8. INCORPORATION OF OTHER AGREEMENTS............................87
9.9. ACCEPTANCE ..................................................87
9.10. KNOWLEDGE ...................................................87
9.11. WAIVER BY BORROWER...........................................88
9.12. GOVERNING LAW................................................88
9.13. WAIVER OF MARSHALING.........................................88
9.14. LIMITATION BY LAW............................................89
9.15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................89
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9.16. SERVICE OF PROCESS...........................................89
9.17. REPRESENTATION BY COUNSEL....................................89
9.18. RELEASE OF LENDERS AND AGENT.................................89
9.19. INVALIDATED PAYMENTS.........................................90
9.20. HEADINGS ....................................................90
9.21. COUNTERPARTS.................................................90
9.22. FAX EXECUTION................................................90
9.23. NO THIRD PARTY BENEFICIARIES.................................90
9.24. DOMICILE OF LOANS............................................91
9.25. ENTIRE AGREEMENT.............................................91
9.26. CONSTRUCTION.................................................91
9.27. SUCCESSORS AND ASSIGNS; PARTICIPATION; ASSIGNMENTS...........91
9.28. TEXAS LANGUAGE...............................................96
9.29. WAIVER OF TRIAL BY JURY......................................96
9.30. WAIVER OF CLAIMS.............................................96
9.31. MISCELLANEOUS................................................96
10. AGENCY AND INTER-LENDER PROVISIONS......................................97
10.1. APPOINTMENT..................................................97
10.2. GENERAL NATURE OF AGENT'S DUTIES.............................98
10.3. EXERCISE OF POWERS...........................................98
10.4. GENERAL EXCULPATORY PROVISIONS..............................102
10.5. ADMINISTRATION BY AGENT.....................................103
10.6. LENDER NOT RELYING ON AGENT OR OTHER LENDERS................105
10.7. INDEMNIFICATION.............................................105
10.8. AGENT IN ITS INDIVIDUAL CAPACITY............................107
10.9. HOLDERS OF NOTES............................................107
10.10. SUCCESSOR AGENT.............................................107
10.11. ADDITIONAL AGENTS...........................................108
10.12. CALCULATIONS................................................108
10.13. FUNDING BY AGENT; DEFAULTING LENDERS........................109
10.14. SHARING OF COLLECTIONS......................................110
10.15. SET-OFF ....................................................111
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "AGREEMENT"), dated
for reference purposes only as of December 20, 1999 by and among lenders party
hereto from time to time ("LENDERS"), FirstCity Financial Corporation, a
Delaware corporation ("BORROWER"), with its principal place of business at 6400
Imperial Drive, P.O. Box 8216, Waco, Texas 76714, and Bank of Scotland
("AGENT"), acting through its branch in New York, New York, a foreign banking
corporation incorporated under the laws of Scotland with its principal place of
business at 565 Fifth Avenue, New York, New York 10017, as administrative agent,
managing agent and collateral agent on behalf of Lenders.
RECITALS:
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A. Borrower and Bank of Scotland, acting through its branch in New
York, New York, ("BOS-NY") have entered into that certain Loan Agreement dated
as of April 8, 1998, as amended by First Amendment to Loan Agreement dated as of
July 20, 1998 by and between Borrower and BOS-NY, as amended by Second Amendment
to Loan Agreement dated as of August 12, 1998 by and among Borrower, BOS-NY,
Bank of America (as defined herein) and Agent, as amended by Third Amendment to
Loan Agreement dated as of September 29, 1998 by and among Borrower, BOS-NY,
Bank of America and Agent, as amended by Fourth Amendment to Loan Agreement
dated as of November 17, 1998 by and among Borrower, BOS-NY, Bank of America and
Agent, as amended by Fifth Amendment to Loan Agreement dated as of February 17,
1999 by and among Borrower, BOS-NY, Bank of America and Agent, as amended by
Sixth Amendment to Loan Agreement dated as of April 30, 1999 by and among
Borrower, BOS-NY, Bank of America and Agent, as amended by Seventh Amendment to
Loan Agreement dated as of June 30, 1999, by and among Borrower, BOS-NY, Bank of
America and Agent, as amended by Eighth Amendment to Loan Agreement dated as of
July 30, 1999, by and among Borrower, BOS-NY, Bank of America and Agent, as
amended by Ninth Amendment to Loan Agreement dated as of August 6, 1999 by and
among Borrower, BOS-NY, Bank of America and Agent, as amended by Tenth Amendment
to Loan Agreement dated as of August 11, 1999 by and among Borrower, BOS-NY,
Bank of America and Agent, as amended by Eleventh Amendment dated as of August
23, 1999 by and among Borrower, BOS-NY, Bank of America and Agent and as amended
by Twelfth Amendment dated as of December 8, 1999 by and among Borrower, BOS-NY,
Bank of America and Agent (collectively, the "EXISTING LOAN AGREEMENT") pursuant
to which BOS-NY, Bank of America have agreed to provide Borrower with a
revolving credit facility.
B. BOS-NY wishes to assign all of its rights and obligations under
the Existing Loan Agreement and Other Agreements to BOS-Edinburgh (as defined
herein) and BOS-Edinburgh wishes to assume all of BOS-NY's rights and
obligations under the Existing Loan Agreement and Other Agreements.
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C. The parties have agreed to amend and restate the Existing Loan
Agreement in its entirety to amend the commitments of and agreements among the
parties and to set forth their mutual agreements herein.
NOW THEREFORE, in consideration of any loan, advance, extension of
credit and/or other financial accommodation at any time made by the Agent and/or
the Lenders to or for the benefit of Borrower, and of the promises set forth
herein, the parties hereto amend and restate the Existing Loan Agreement in its
entirety and agree as follows:
1 DEFINITIONS AND TERMS.
1.1 Definitions. The following words, terms and/or phrases shall have
the meanings set forth thereafter and such meanings shall be applicable to the
singular and plural form thereof, giving effect to the numerical difference.
(a) "ADVANCE": any loan of monies made by Lenders to Borrower
pursuant to the terms of Section 2.1.
(b) "AFFILIATE": any Person (i) in which Borrower and/or any
Parent, individually, jointly and/or severally, now or at any time or
times hereafter, has or have an equity or other ownership interest
equal to or in excess of twenty-five percent (25%) of the total equity
of or other ownership interest in such Person; and/or (ii) which
directly or indirectly through one or more intermediaries controls or
is controlled by, or is under common control with Borrower; and/or
(iii) any officer or director of Borrower or any Primary Obligor. For
purposes of this definition, "CONTROL" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of Stock, by contract or otherwise, and in any case shall
include direct or indirect ownership (beneficially or of record) of, or
direct or indirect power to vote, 25% or more of the outstanding shares
of any class of capital stock of such Person (or in the case of a
Person that is not a corporation, 25% or more of any class of equity
interest). Notwithstanding the foregoing, none of the Harbor Debtors
shall be deemed to be an Affiliate for the purposes of this Agreement.
(c) "AGENT": Bank of Scotland, acting through its branch in
New York, New York, a foreign banking corporation incorporated under
the laws of Scotland with its principal place of business at 565 Fifth
Avenue, New York, New York 10017, as managing agent, administrative
agent and collateral agent on behalf of Lenders.
(d) "AGREEMENT": this Amended and Restated Loan Agreement,
together with all Modifications hereto or hereof.
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(e) "AND/OR": one or the other or both, or any one or more or
all, of the things or Persons in connection with which the conjunction
is used.
(f) "ASSETS": any and all real, personal and intangible
property of a Person, including, without limitation, accounts, chattel
paper, contract rights, letters of credit, instruments and documents,
equipment, general intangibles, inventory, leases, options, licenses,
and real property, whether now existing or hereafter acquired or
arising.
(g) "BANK OF AMERICA": Bank of America, N.A., a national
banking association.
(h) "BORROWER": FirstCity Financial Corporation, together with
its permitted successors and assigns.
(i) "BORROWER'S LIABILITIES": all obligations and liabilities
of Borrower to Lenders and/or Agent under the terms of this Agreement,
the Security Agreement, the Note Pledge Agreements, the Stock Pledge
Agreements and the other Loan Documents, and all extensions and
renewals or refinancing thereof, whether such obligation or liability
is direct or indirect, secured or unsecured, joint or several, absolute
or contingent, due or to become due, whether for payment or
performance, whether heretofore arising, now existing or hereafter
arising, however evidenced, created, incurred, acquired or owing and
whether now contemplated or hereafter arising. Without limitation of
the foregoing, such liability and obligations include the principal
amount of Loans, interest, fees, indemnities or expenses under this
Agreement and all other Loan Documents, and all extensions, renewals
and refinancing thereof, whether or not such Loans were made in
compliance with the terms and conditions of this Agreement or in excess
of the obligation of Lenders to lend. Borrower's Liabilities shall
remain Borrower's Liabilities, notwithstanding any assignment or
transfer or any subsequent assignment or transfer of any of the
Borrower's Liabilities or any interest therein.
(j) "BORROWER'S OBLIGATIONS": all terms, conditions,
warranties, representations, agreements, undertakings, covenants and
provisions (other than Borrower's Liabilities) to be performed,
discharged, kept, observed or complied with by Borrower to or for the
benefit of Lenders and/or Agent, under the terms of this Agreement and
all other Loan Documents, and all extensions and renewals or
refinancing thereof, whether such obligation is direct or indirect,
secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether heretofore arising, now existing or hereafter
arising, however evidenced, created, incurred, acquired or owing and
whether now contemplated or hereafter arising. Borrower's Obligations
shall remain Borrower's Obligations, notwithstanding any assignment or
transfer or any subsequent assignment or transfer of any of the
Borrower's Obligations or any interest therein.
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(k) "BORROWING REQUEST": a request for an Advance setting
forth the information required pursuant to Section 2.6.
(l) "BOS-EDINBURGH": The Governor and Company of the Bank of
Scotland, a bank organized under the laws of Scotland by an Act of the
Scots Parliament in 1695, having its principal office at the Mound, in
Edinburgh, Scotland.
(m) "BUSINESS DAY": (i) For all purposes other than as covered
by clause (ii) hereof, any day, other than a Saturday, Sunday, a day
that is a legal holiday under the laws of the country of Scotland,
State of Illinois, and the State of Texas or any other day on which
banking institutions located in the country of Scotland, State of
Illinois, the State of New York or the State of Texas are authorized or
required by law or other governmental action to close; and (ii) with
respect to determinations in connection with, and payments of principal
and interest in Eurodollar Advances, any day which is a Business Day
described in clause (i) or which is also a day for trading by and
between banks in U.S. dollar deposits in the London Interbank
Eurodollar Market.
(n) "CAPITALIZED LEASE" at any time any lease which is, or is
required under GAAP to be, capitalized on the balance sheet of the
lessee at such time, and "CAPITALIZED LEASE OBLIGATION" of any Person
at any time shall mean the aggregate amount which is, or is required
under GAAP to be, reported as a liability on the balance sheet of such
Person at such time as lessee under a Capitalized Lease.
(o) "CHARGES": all national, Federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division,
agency, body or department thereof, including without limitation the
Pension Benefit Guaranty Corporation) taxes, levies, assessments,
charges, liens, claims or encumbrances upon and/or relating to
Borrower's Assets, the Secured Obligations, Borrower's business,
Borrower's ownership and/or use of any of its Assets, Borrower's income
and/or gross receipts and/or Borrower's ownership and/or use of any of
its material Assets.
(p) "CLOSING DATE". December 20, 1999, the date of delivery
and execution of this Agreement by Lenders, Agent and Borrower.
(q) "COMMITMENT": the commitment of each Lender to make Loans
to Borrower in accordance with the terms of Section 2.1 and the other
provisions hereof.
(r) "COMMITMENT PERCENTAGE": the meaning set forth in Section
2.3.
(s) "CONSOLIDATED GROUP": Borrower and those Affiliates of
Borrower required to file consolidated tax returns pursuant to Section
1502 of the Code, other than the Harbor Debtors.
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(t) "COSTS": any and all reasonable costs, expenses
(including, without limitation, the reasonable fees and expenses of any
counsel, accountants, appraisers or other professionals) incurred by
Agent and/or Lenders at any time, in connection with: (i) the
preparation, negotiation, execution and administration of this
Agreement, and all other Loan Documents; (ii) the preparation,
negotiation and execution of any amendment or modification of this
Agreement or the other Loan Documents; (iii) the custody, preservation,
use or operation of, or the sale of, collection from or other
realization upon the Pledged Property; (iv) the exercise or enforcement
of any of the rights of Agent and/or Lenders hereunder; (v) any failure
by Borrower to perform or observe any of the provisions hereunder; (vi)
any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent and/or Lenders, Borrower or any other Person) in
any way relating to this Agreement, the other Loan Documents, the
Secured Obligations, the Pledged Property, or, to the extent instituted
by any third party, Borrower's affairs or any Affiliate's affairs;
(vii) any attempt to enforce any rights of Agent and/or Lenders against
Borrower or any other Person which may be obligated to Agent and/or
Lenders by virtue of this Agreement or any other Loan Document; and
(viii) performing any of the obligations relating to or payment of any
of Borrower's Obligations hereunder in accordance with the terms
hereof. Notwithstanding anything to the contrary contained herein,
Costs shall not include any fees, cost, loss, expense, or damage
arising from any dispute, proceeding or claim by and between Agent and
any one or more of the Lenders, relating to the rights, duties,
liabilities and/or obligations of Agent hereunder or under any other
Loan Document.
(u) "DEFAULT RATE": interest at the rate of five percent (5%)
plus seven (7) day Libor Rate, or such Interest Period as Agent may
select.
(v) "DESIGNATED PERSON": any Person identified as a
"DESIGNATED PERSON" on a Borrower's Secretary's Certificate dated of
even date herewith, as amended or superseded from time to time.
(w) "DOLLARS": the lawful currency of the United States of
America.
(x) "EBITDA": for any period, net income (excluding
extraordinary and non-recurring items, including those which are
non-cash in nature) for such period plus (i) all interest expense, plus
(ii) income tax expenses, plus (iii) depreciation and amortization
(including amortization of any goodwill or other intangibles), minus or
plus (iv) without duplication, gains and losses attributable to any
sale of assets not in the ordinary course of business, plus or minus
(v) any other non-cash charges or gains which have been subtracted or
added in calculating such net income other than gains on
asset-securitizations and loan loss provision charges.
(y) "ENVIRONMENTAL LAWS": any Federal, state or local law,
rule, regulation, ordinance, order, code or statute applicable to
Borrower or its property,
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in each case as amended (whether now existing or hereafter enacted or
promulgated), controlling, governing or relating to the pollution or
contamination of the air, water or land or concerning hazardous,
special or toxic materials, wastes or substances, or any judicial or
administrative interpretation of such laws, rules or regulations,
including, without limitation, the Water Pollution Control Act (33
U.S.C.ss. 1251 et seq.), Resource Conservation and Recovery Act (42
U.S.C.ss. 6901 et seq.), Safe Drinking Water Act (42 U.S.C.ss.
3000(f) et seq.), Toxic Substances Control Act (15 U.S.C.ss. 2601 et
seq.), Clean Air Act (42 U.S.C.ss. 7401 et seq.), and Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C.ss.9601 et seq.).
(z) "EQUIPMENT LEASES": all leases or similar agreements
pursuant to which Borrower leases equipment.
(aa) "EURODOLLAR ADVANCE": any portion of the Loan for which
the interest rate is based on the Eurodollar Rate, whether or not any
Lender obtains Eurodollars equal to all or any portion of such
Eurodollar Advance.
(bb) "EURODOLLAR RATE": the variable rate equal to four
percent (4%) per annum plus the LIBOR Rate.
(cc) "EVENT OF DEFAULT": the definition ascribed to this term
in Section 7.1.
(dd) "EXCLUDED ENTITIES": the definition ascribed to this term
in Section 4.3.
(ee) "EXCLUDED NOTES": the definition ascribed to this term in
Section 4.2.
(ff) "EXTRAORDINARY TRANSACTION": (i) a sale, conveyance,
lease, or other transfer by Borrower, any Primary Obligor, or any
Secondary Obligor of all or substantially all of its assets, not in the
ordinary course of its business; (ii) a sale, conveyance, or other
transfer of any equity interests (including stock, partnership
interests, membership interests, trust interests, warrants, options or
debentures) in any Affiliate by Borrower, any Primary Obligor or any
Secondary Obligor; (iii) any sale, conveyance or other transfer of any
Indebtedness due to Borrower, any Primary Obligor or any Secondary
Obligor from any Affiliate, including but not limited to bonds, notes,
note purchase agreements or any other Indebtedness, howsoever
evidenced; (iv) the issuance of any securities of Borrower, any Primary
Obligor or any Secondary Obligor; (v) any transaction identified on
Schedule 1.1(ff), (vi) the dissolution of FC Capital or the liquidation
of its Assets; or (vii) any Indebtedness permitted by Agent and Lenders
(in their sole and exclusive discretion) to be incurred by Borrower,
any Primary Obligor or any Secondary Obligor, except for:
(A) indebtedness to be incurred by any Subsidiary
of FC Commercial (which shall only have
recourse to the purchasing entity) in
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connection with purchase money financing
(whether secured or unsecured) to parties
(other than Affiliates),
(B) Indebtedness incurred under existing facilities
identified on Schedule 5.1(t), incurred in the
ordinary course of business;
(C) The FC Holdings Line of Credit;
(D) The FC Consumer Lending Line of Credit;
(E) The Senior Subordinated Debt or any refinancing
thereof permitted pursuant to the terms hereof.
(gg) "EXTRAORDINARY TRANSACTION PROCEEDS": the consideration
paid with respect to any Extraordinary Transaction or the proceeds of
any loan received from any Extraordinary Transaction, minus only
amounts for necessary and commercially reasonable expenses incurred
with respect to such Extraordinary Transaction and approved by Lenders,
which approval shall not be unreasonably withheld, which may include
attorney's fees and payment of any indebtedness secured to by assets
being conveyed payable to any independent third party lender to secure
a release of a lien or security interest on such assets being conveyed.
(hh) "FEDERAL FUNDS EFFECTIVE RATE": for any day shall mean
the rate per annum (rounded upward to the nearest 1/100 of 1%)
determined by Agent (which determination shall be conclusive) to be the
rate per annum announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates
on overnight Federal funds transactions arranged by Federal funds
brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank (or any successor) in substantially the same
manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the "Federal Funds Effective Rate" as of the
date of this Agreement; provided that if ------------- such Federal
Reserve Bank (or its successor) does not announce such rate on any day,
the "Federal Funds Effective Rate" for such day shall be the Federal
Funds Effective Rate for the last day on which such rate was announced.
(ii) "FC CAPITAL": FC Capital Corp., a New York corporation.
(jj) "FC COMMERCIAL": FirstCity Commercial Corporation, a
Texas corporation.
(kk) "FC CONSUMER LENDING": FirstCity Consumer Lending
Corporation, a Texas corporation.
(LL) "FC CONSUMER LENDING LINE OF CREDIT": means a line of
credit or loan facility, to be approved in writing by Lenders which
approval shall not be unreasonably withheld, to be made available by a
Person to FC Consumer Lending
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and/or its Subsidiaries in an amount not to exceed the lesser of (a)
30% of the book value of auto residuals, or (b) $25,000,000 which
will be secured by the Assets of FC Consumer Lending, except for
equity interests in FirstCity Funding L.P. or FirstCity Consumer
Finance Corporation.
(MM) "FC FINANCIAL": FirstCity Financial Corporation, a
Delaware corporation.
(NN) "FC HOLDINGS": FirstCity Holdings Corporation, a Texas
corporation.
(OO) "FC HOLDINGS LINE OF CREDIT": means a line of credit or
loan facility, to be approved in writing by Lenders which approval
shall not be unreasonably withheld, to be made available by a Person to
FC Commercial, FC International and/or FC Holdings in an amount not to
exceed $17,000,000 in the aggregate, to be used for the purpose of
funding investments in entities formed to acquire asset portfolios or
to service asset portfolios and which line of credit or loan facility
will be secured by first priority security interests in the assets of
FC International and in the equity interests or assets acquired with
proceeds of the line of credit or loan facility.
(pp) "FC INTERNATIONAL": FirstCity International Corporation,
a Texas corporation.
(qq) "FC SERVICING": FirstCity Servicing Corporation, a Texas
corporation.
(rr) "FEE AGREEMENTS": any partnership agreement, management
agreement, consulting agreement, or other agreement pursuant to which
Borrower, any Primary Obligor or any Secondary Obligor is to be paid
fees, distributions, allocations, expense reimbursements,
consideration, salary or other compensation in consideration for
providing management, personnel or services, in any form whatsoever,
from any Affiliate or from any other Person. Services to be rendered
under Fee Agreements may include, but not be limited to consulting,
collecting revenues, paying operating expenses not paid directly by
others, and providing clerical and bookkeeping services.
(ss) "FINANCIALS": those financial statements of Borrower
and/or any other Loan Party, heretofore, concurrently herewith or
hereafter delivered by or on behalf of Borrower and/or any other Loan
Party to Agent for the benefit of Lenders, including but not limited to
those financial statements and reports delivered by Borrower to Agent
pursuant to Section 6.2(c).
(tt) "GAAP": generally accepted accounting principles applied
in the preparation of the financial statements of a Person with such
changes thereto as: (i) shall be consistent with the then-effective
principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors and successors, and (ii) shall be concurred
in by the independent certified public accountants of recognized
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standing acceptable to Agent reviewing such financial statements of
such Person; provided that KPMG LLP shall be deemed to be acceptable to
Agent and Lenders as independent certified public accountants of
recognized standing for the purposes of applying GAAP.
(uu) "GOVERNMENTAL AUTHORITY": any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand
jury or arbitrator, in each case whether foreign or domestic.
(vv) "GUARANTIES": the meaning set forth in Section 4.1.
(ww) "GUARANTORS": collectively, (i) FC Commercial, (ii) FC
Consumer Lending, (iii) FC International, (iv) FC Servicing, (v) FC
Capital, and (vi) FC Holdings, and each other Person who has guaranteed
all or any portion of the Secured Obligations.
(xx) "GUARANTY EQUIVALENT": any agreement, document or
instrument pursuant to which a Person directly or indirectly
guarantees, becomes surety for, endorses, assumes, agrees to indemnify
the obligee of any other Person against, or otherwise agrees, becomes
or remains liable (contingently or otherwise) for, such obligation,
other than by endorsements of instruments in the ordinary course of
business. Without limitation, a Guaranty Equivalent shall be deemed to
exist if a Person agrees, becomes or remains liable (contingently or
otherwise), directly or indirectly: (i) to purchase or assume, or to
supply funds for the payment, purchase or satisfaction of, an
obligation; (ii) to make any loan, advance, capital contribution or
other investment in, or a purchase or lease of any property or services
from, a Person; (iii) to maintain the solvency of such Person; (iv) to
enable such Person to meet any other financial condition; (v) to enable
such Person to satisfy any obligation or to make any payment; (vi) to
assure the holder of an obligation against loss; (vii) to purchase or
lease property or services from such Person regardless of the
non-delivery of or failure to furnish of such property or services; or
(viii) in respect of any other transaction the effect of which is to
assure the payment or performance (or payment of damages or other
remedy in the event of nonpayment or nonperformance) of any obligation.
(yy) "HARBOR DEBTORS": collectively, (i) Harbor Financial
Mortgage Corp., (ii) NAF, Inc. (f/k/a New America Financial, Inc.),
(iii) Hamilton Financial Services Corp., (iv) Community National
Mortgage Corp., (v) CalCap, Inc. and (vi) Harbor Financial Group, Inc.
(zz) "HARBOR PROCEEDINGS": The jointly administered Chapter 11
bankruptcy cases, bearing Case No. 99-37255-SAF-11, styled as In Re
Harbor Financial Group, Inc., et al., pending in the United States
Bankruptcy Court for the Northern District of Texas, Dallas Division,
as converted to a Chapter 7 proceeding
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on December 14, 1999, under which the Harbor Debtors are operating as
debtors-in-possession.
(aaa) "INDEBTEDNESS": with respect to any Person, at a
particular time (without duplication): (i) all obligations on account
of money borrowed by, or credit extended to or on behalf of, or for or
on account of deposits with or advances to, such Person, except for
inter-affiliate transactions entered into in the ordinary course of
business on arms-length terms by and among Borrower and any Affiliate
or by and among the Affiliates which are accounted for in book entries
in the books and records of the applicable Persons and which is not
evidenced by a note or other instrument; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments;
(iii) all obligations of such Person for the deferred purchase price of
property or services other than trade payables incurred in the ordinary
course of business and on terms customary in the trade and not more
than sixty (60) days past due; (iv) all obligations secured by a Lien
on property owned by such Person (whether or not assumed); and all
obligations of such Person under Capitalized Leases (without regard to
any limitation of the rights and remedies of the holder of such Lien or
the lessor under such Capitalized Lease to repossession or sale of such
property); (v) the face amount of all letters of credit issued for the
account of such Person and, without duplication, the unreimbursed
amount of all drafts drawn thereunder, and all other obligations of
such Person associated with such letters of credit or draws thereon;
(vi) all obligations of such Person in respect of acceptances or
similar obligations issued for the account of such Person; (vii) all
obligations of such Person under a product financing or similar
arrangement; (viii) all obligations of such Person under any interest
rate or currency protection agreement, interest rate or currency
future, interest rate or currency option, interest rate or currency
swap or cap or other interest rate or currency hedge agreement; and
(ix) all obligations and liabilities with respect to unfunded vested
benefits under any "EMPLOYEE BENEFIT PLAN" or with respect to
withdrawal liabilities incurred under ERISA by Borrower or any ERISA
Affiliate to a "MULTIEMPLOYER PLAN", as such terms are defined under
the Employee Retirement Income Security Act of 1974.
(bbb) "INDEBTEDNESS INSTRUMENT": any note, mortgage,
indenture, chattel mortgage, deed of trust, loan agreement,
hypothecation agreement, pledge agreement, security agreement,
financing statement or other document, instrument or agreement
evidencing or securing the payment of or otherwise relating to the
borrowing of monies. Indebtedness Instruments shall include, but not be
limited to the Loan Documents.
(ccc) "INTEREST PERIOD": with respect to any Eurodollar
Advance, the period commencing on the date such Eurodollar Advance is
made or continued as a Eurodollar Advance, as the case may be, or the
date on which a Prime Rate Advance is converted into such Eurodollar
Advance as applicable, and ending one (1) week or one (1) month
thereafter, as Borrower may elect in the applicable Borrowing Request
(or as Borrower shall be deemed to have elected, as applicable);
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provided that any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Business Day. No Interest Period shall terminate after the end of the
Maturity Date.
(ddd) "INTEREST RATE": the Prime Interest Rate or the
Eurodollar Rate, as determined in accordance with the provisions of
Article 2.
(eee) "LENDERS" and "LENDER": collectively those lender
parties hereto from time to time, and individually any of the Lenders
listed on the signature pages hereof, subject to the provisions of
Section 9.27 pertaining to Persons becoming or ceasing to be Lenders.
Any reference to "Lenders" shall be deemed to mean all, or any one or
more Lenders, unless context clearly provides otherwise. As of the date
hereof, the Lenders are BOS-Edinburgh and Bank of America.
(fff) "LIBOR BREAKAGE FEE": a fee equal to all losses
(excluding loss of anticipated profits) costs, or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain the requested Eurodollar
Advance, when, as a result of such failure on the part of Borrower or
prepayment by Borrower (including, without limitation, any mandatory
prepayment of principal and any prepayment resulting from the
liabilities being declared due and payable in accordance with their
terms hereof), interest on such Eurodollar Advance is not based on the
applicable Eurodollar Rate for the requested Interest Period
(ggg) "LIBOR RATE": for each Interest Period, a rate of
interest, per annum, equal to: (i) the rate of interest determined by
Agent at which deposits in U.S. Dollars for the relevant Interest
Period are offered based on information presented on the Telerate
Screen as of 11:00 A.M. (London time) on the applicable Interest Rate
Determination Date; provided that if more than one (1) offered rate
appears on the Telerate Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by Agent) will be the
rate used; provided further that if Telerate ceases to provide LIBOR
quotations, such rate shall be the average rate of interest determined
by Agent at which deposits in U.S. Dollars are offered for the relevant
Interest Period by banks or other financial institutions selected by
Agent to banks in London interbank markets as of 11:00 A.M. (London
time) on the applicable Interest Rate Determination Date, multiplied by
(ii) the Libor Rate Reserve Percentage. The LIBOR Rate shall be
adjusted automatically as of the effective date of each change in the
LIBOR Rate Reserve Percentage. The LIBOR Rate shall be calculated in
accordance with the foregoing whether or not Agent is actually required
to hold reserves in connection with its eurocurrency funding or, if
required to hold such reserves, is required to hold reserves at the
LIBOR Rate Reserve Percentage.
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(hhh) "LIBOR RATE RESERVE PERCENTAGE": for any day shall mean
the percentage (expressed as a decimal, rounded upward to the nearest
1/100 of 1%), as determined in good faith by Agent (which determination
shall be conclusive), which is in effect on such day as prescribed by
the Board of Governors of the Federal Reserve System (or any successor)
representing the maximum reserve requirement (including, without
limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities") of a member bank in such system
(iii) "LIEN": any mortgage, deed of trust, pledge, lien,
hypothecation, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, including but not
limited to any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the
effect of, security.
(jjj) "LOAN": any and all loans, advances, extensions of
credit and/or other financial accommodations of any kind or nature made
by Lenders at any time to, for the benefit or at the request of
Borrower pursuant to this Agreement and/or any of the other Loan
Documents.
(kkk) "LOAN DOCUMENTS": this Agreement and the Other
Agreements.
(lll) "LOAN PARTY": Borrower and every other Person who is a
party to any one or more of the Loan Documents other than Agent and
Lenders. Notwithstanding the foregoing, the Harbor Debtors shall not be
deemed to be Loan Parties for the purposes of this Agreement.
(mmm) "MAJORITY LENDERS": means Lenders which have made Loans
constituting 51% in principal amount of Loans outstanding on such date,
or if no Loans are outstanding, Lenders who have Commitments to make
Loans constituting, in the aggregate, at least 51% of the total
Commitments hereunder. So long as there are only two unaffiliated
Lenders, the term "MAJORITY LENDERS" shall mean both Lenders.
(nnn) "MATERIAL ADVERSE EFFECT": any effect that (i) is
material and adverse to the financial condition, results of operations,
business or prospects of Borrower and/or any of its Subsidiaries, any
Primary Obligor or Secondary Obligor or (ii) materially impairs the
ability of Borrower and/or any of its Subsidiaries, any Primary or
Secondary Obligor to perform its/their respective obligations under any
Loan Document.
(ooo) "MATURITY DATE": June 30, 2001, or such earlier date as
all of Borrower's Obligations and Borrower's Liabilities shall be due
and payable by acceleration or otherwise.
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(ppp) "MAXIMUM PRINCIPAL AMOUNT": the meaning set forth in
Section 2.2(a).
(qqq) "MODIFICATIONS": any extension, renewal, substitution,
replacement, restatement, reaffirmation, substitute, supplement,
amendment or modification of any agreement, certificate, document,
instrument or other writing, whether or not contemplated in the
original agreement, document or instrument.
(rrr) "MONTHLY REPORT": those reports delivered to Agent in
accordance with Section 6.2(c)(iii).
(sss) "NOTE" or "NOTES": those certain revolving promissory
notes of Borrower executed and delivered under this Agreement and all
Modifications thereto or thereof. As of the date hereof, the Notes
include the Tranche A Notes and the Tranche B Note.
(ttt) "NOTE PLEDGE AGREEMENT": any one or more of those
certain note pledge agreements or amended and restated note pledge
agreements dated even date herewith granted by Borrower, FC Commercial
and FC Consumer Lending to secure the Secured Obligations, pursuant to
which such Loan Party has pledged to Agent (as secured party for the
benefit of Lenders) certain promissory notes, together with all
Modifications thereto and thereof.
(uuu) "ORGANIC DOCUMENTS": with respect to any Person, its
articles or certificate of incorporation, by-laws, shareholder's
agreement, certificate of partnership, certificate of limited
partnership, partnership agreement, articles of organization, operating
agreement, or similar documents or agreements governing its management
and the rights and privileges of its equity owners, and all
Modifications thereto or thereof.
(vvv) "OTHER AGREEMENTS": the Notes, the Note Pledge
Agreements, the Stock Pledge Agreements, together with all other
agreements, instruments and documents evidencing or securing the Loans
or the transactions contemplated herein, including, without limitation,
bond agreements, loan agreements, security agreements, guaranties,
mortgages, deeds of trust, notes, applications and agreements for
letters of credit, letters of credit, advances of credit, bankers
acceptances, pledges, powers of attorney, consents, assignments,
collateral assignments, contracts, notices, leases, financing
statements and all other written matter heretofore, now and/or from
time to time hereafter executed by and/or on behalf of Borrower and/or
any other Loan Party and delivered to Lenders, Agent, or any one or
more of them, or issued by Lenders or Agent, or any one or more of
them, upon the application and/or other request of, and on behalf of,
Borrower.
(www) "PARENT": any Person, now or at any time or times
hereafter, owning or controlling (alone or with Borrower, any
Subsidiary and/or any other Person) at least a majority of the issued
and outstanding Stock or other ownership interest of
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Borrower or any Subsidiary (hereinafter defined). For purposes of
this definition, "CONTROL" shall have the same meaning ascribed to
this term in Section 1.1(b). Notwithstanding the forgoing, no Person
shall be a Parent which is not a Parent of Borrower or a 51% or more
owned subsidiary, directly or indirectly, of Borrower.
(xxx) "PARTICIPANT": the definition ascribed to this term in
Section 9.27(b).
(yyy) "PERMITTED LIENS": (i) any liens created pursuant to the
Loan Documents in favor of Agent for the benefit of Lenders and Agent
to secure the Secured Obligations; (ii) liens pursuant to the Senior
Subordinated Debt Documents (as in effect on the Closing Date) in favor
of Senior Subordinated Debt Lender to secure the Senior Subordinated
Debt, subject to the Subordination Agreement; (iii) liens for Charges
which are not yet due and payable or which are expressly permitted
pursuant to the terms hereof, or claims and unfunded liabilities under
ERISA not yet due and payable or which are being contested in good
faith; (iv) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits
which are not overdue or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case
of any such contest any proceedings commenced for the enforcement of
such lien shall have been duly suspended and such provision for the
payment of such lien has been made on the books of the applicable
Borrower (or the applicable Affiliate) as may be required by GAAP; (v)
liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with
progress payments or advance payments due under contracts with the
United States Government or any agency thereof entered into in the
ordinary course of business; (vi) any liens securing Indebtedness of
Borrower (or any Affiliate) to any Persons in an aggregate amount less
than $200,000; (vii) Charges relating to Assets of First B and First X
(as defined on Schedule 1.1(oooo)); (viii) as to any Affiliate, other
than Borrower or a Primary Obligor, purchase money liens in connection
with the acquisition of Assets so long as such liens encumber only the
Assets acquired, (ix) as to any Affiliate, other than Borrower or a
Primary Obligor, liens relating to Indebtedness incurred in connection
with warehousing assets or the securitization of Assets, so long as
such liens encumber only the Assets warehoused or securitized; and (x)
those liens disclosed on Schedule 5.1(g), (xi) those liens granted
pursuant to the FC Holdings Line of Credit and the FC Consumer Lending
Line of Credit.
(zzz) "PERSON": any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution,
entity, party or government (whether national, Federal, state, county,
city, municipal or otherwise, including without limitation any
instrumentality, division, agency, body or department thereof).
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(aaaa) "PLEDGED ENTITIES": those entities whose shareholders,
partners, members or other equity owners have pledged an equity
interest in such entity to secure the Secured Obligations.
(bbbb) "PLEDGED NOTES": those certain promissory notes
identified on Schedule 4.2(b), which have been pledged to Agent
pursuant to a Note Pledge Agreement.
(cccc) "PLEDGED PROPERTY": any and all other property (real,
personal or intangible) pledged by Borrower or any other Loan Party to
secure payment and performance of the Secured Obligations, including
but not limited to: (i) any and all Collateral, as defined in the
Security Agreements; (ii) any and all interests pledged pursuant to the
Note Pledge Agreements; and (iii) any and all interests pledged
pursuant to the Stock Pledge Agreements.
(dddd) "PRIMARY OBLIGORS": collectively, (i) FC Consumer
Lending, (ii) FC Capital, (iii) FC Commercial and (iv) FC Servicing.
(eeee) "PRIME INTEREST RATE": an interest rate equal to the
higher of: (i) the Federal Funds Effective Rate plus one and one-half
of one percent (1.5%) per annum, or (ii) the Prime Rate plus one
percent (1%) per annum.
(ffff) "PRIME RATE": the prime rate of interest quoted from
time to time by Agent as its base rate on corporate loans at large U.S.
money center commercial banks on such day; provided that in the event
the Agent ceases quoting a prime rate, Prime Rate shall mean the per
annum rate of interest quoted as the Bank Prime Loan Rate for the most
recent weekday for which such rate is quoted in Statistical Release
H.15 (519) published from time to time by the Board of Governors of the
Federal Reserve System; provided further that in the event that both of
the aforesaid indices cease to be published or to quote rates of the
aforesaid types, the Prime Rate shall be determined from a comparable
index chosen by Agent in good faith. The Prime Rate shall change
effective on the date of the publication of any change in the
applicable index by which the Prime Rate is determined. The Prime Rate
is a designated rate and is used herein for ease of determination
notwithstanding that Agent is not a Lender hereunder.
(gggg) "PRIME RATE ADVANCE": all or any portion of the Loan
which is not a Eurodollar Advance.
(hhhh) "PRO RATA": for each Lender shall mean in proportion to
its Commitment Percentage.
(iiii) "PURCHASING LENDER": the meaning set forth in Section
9.27(c).
(jjjj) "RECORDS": all books, records, computer records,
computer software, ledger cards, programs and other computer materials,
customer and supplier lists,
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invoices, orders and other property and general intangibles at any
time evidencing or relating to the Assets.
(kkkk) "REGISTER": the meaning set forth in Section 9.27(d).
(llll) "REO AFFILIATE" those entities described on Schedule
1.1(llll).
(mmmm) "REQUIRED LENDERS": the meaning set forth in Section
10.3(d).
(nnnn) "SEC": the Securities and Exchange Commission.
(oooo) "SECONDARY OBLIGORS": Those entities identified on
Schedule 1.1(oooo).
(pppp) "SECURED OBLIGATIONS": all of Borrower's Liabilities,
Borrower's Obligations and all other obligations and liabilities of
Borrower or any other Loan Party to Lenders and/or Agent under the
terms of this Agreement, the Security Agreement, the Guaranties, the
Note Pledge Agreements, the Stock Pledge Agreements and the other Loan
Documents, and all extensions and renewals or refinancing thereof,
whether such obligation or liability is direct or indirect, otherwise
secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether for payment or performance, whether heretofore
arising, now existing or hereafter arising, however evidenced, created,
incurred, acquired or owing and whether now contemplated or hereafter
arising. Without limitation of the foregoing, such liability and
obligations include the principal amount of Loans, interest, fees,
indemnities or expenses under this Agreement or any other Loan
Document, and all extensions, renewals and refinancing thereof, whether
or not such Loans were made in compliance with the terms and conditions
of this Agreement or in excess of the obligation of the Lenders to
lend. Secured Obligations shall remain Secured Obligations,
notwithstanding any assignment or transfer or any subsequent assignment
or transfer of any of the Secured Obligations or any interest therein.
(qqqq) "SECURITIES": shall have the meaning ascribed to that
term in the Securities Act of 1934.
(rrrr) "SECURITIES LAWS": all applicable Federal and state
securities laws and regulations promulgated pursuant thereto.
(ssss) "SECURITY AGREEMENTS": collectively those certain
amended and restated security agreements dated even date herewith and
all Modifications thereto granted by Borrower, FC Commercial, FC
Consumer Lending, FC Servicing, FC Capital, FC International and FC
Holdings to secure all Secured Obligations.
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(tttt) "SENIOR SUBORDINATED DEBT": shall mean Indebtedness of
Borrower pursuant to the Senior Subordinated Debt Agreement and the
other Senior Subordinated Debt Documents.
(uuuu) "SENIOR SUBORDINATED DEBT AGREEMENT": shall have the
meaning set forth in Section 5.2.
(vvvv) "SENIOR SUBORDINATED DEBT DOCUMENTS": shall have the
meaning set forth in Section 5.2.
(wwww) "SENIOR SUBORDINATED DEBT LENDER": shall have the
meaning set forth in Section 5.2.
(xxxx) "STOCK": all shares, interests, participations or other
equivalents (however designated) of or in a corporation, whether voting
or non-voting, including, but not limited to, common stock, warrants,
preferred stock, convertible debentures and all agreements, instruments
and documents convertible, in whole or in part, into any one or more or
all of the foregoing.
(yyyy) "STOCK PLEDGE AGREEMENT": any one or more of those
certain stock pledge agreements, partnership pledge agreements,
membership interest pledge agreements, amended and restated stock
pledge agreements, amended and restated partnership pledge agreements
and/or amended and restated membership interest pledge agreements
granted by Borrower and other Loan Parties, dated for reference
purposes only as of the date hereof pursuant to which such Loan Party
has pledged to Agent Stock or other equity interests in the Pledged
Entities, to secure all Secured Obligations, together with all
Modifications thereto and hereto.
(zzzz) "SUBORDINATION AGREEMENT": that certain Inter-Creditor
and Subordination Agreement by and among Borrower, Senior Subordinated
Debt Lenders, Lenders and Agent.
(aaaaa) "SUBSIDIARY": any Person at least a majority of whose
issued and outstanding Stock or other ownership interests now or at any
time hereafter is owned by Borrower, any Primary Obligor or any
Secondary Obligor, as applicable.
(bbbbb) "TANGIBLE NET WORTH": as determined at any time, the
total of shareholders' equity (including capital (both common and
preferred) stock, additional paid-in capital and retained earnings
after deducting treasury stock of a Person, less the sum of the total
amount of any intangible assets, which, for purposes of this
definition, shall include, without limitation, general intangibles and,
if applicable, all accounts receivable not incurred in the ordinary
course of business from any Affiliate of such Person or any loans to
directors or officers of any Affiliate of such Person, unamortized
deferred charges and good will, all as determined in accordance with
GAAP.
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(ccccc) "TOTAL COMMITMENT": The maximum total aggregate
commitment of all Lenders to make Loans pursuant to the terms hereof,
determined in accordance with Section 2.3(a).
(ddddd) "TRANCHE A COMMITMENT": the Commitment of Lenders to
make Tranche A Loans, as further described in Section 2.3(a), as may be
reduced pursuant to the terms of Section 2.3(b).
(eeeee) "TRANCHE A LOANS": Loans to be made by Lenders to
Borrower, made pursuant to Section 2.1(a).
(fffff) "TRANCHE A NOTES": those certain revolving promissory
notes of Borrower executed and delivered under this Agreement, payable
to the order of the respective Lenders on or before the Maturity Date,
evidencing Tranche A Loans made by Lenders to Borrower pursuant to
Section 2.1(a), and all Modifications thereto or thereof.
(ggggg) "TRANCHE B COMMITMENT": the Commitment of
BOS-Edinburgh to make Tranche B Loans, as further described in Section
2.3(a).
(hhhhh) "TRANCHE B LOANS": Loans to be made by BOS-Edinburgh
to Borrower, made pursuant to Section 2.1(b).
(iiiii) "TRANCHE B NOTE": that certain revolving promissory
note made by Borrower payable to the order of BOS-Edinburgh, on or
before the Maturity Date, evidencing Tranche B Loans made by
BOS-Edinburgh pursuant to Section 2.1(b), and all Modifications thereto
or thereof.
(jjjjj) "TRANSFER EFFECTIVE DATE": the effective date of a
transfer of a Lender's interest in its Commitment, the Loans hereunder
or a portion thereof, to another Lender in compliance with Section
9.27(c).
(kkkkk) "TRANSFER SUPPLEMENT": the meaning set forth in
Section 9.27(c)(iii).
(lllll) "TRANSFEROR LENDER": any Lender who sells, assigns or
transfers all or any portion of or interest in its Commitments or Loans
hereunder pursuant to Section 9.27.
(mmmmm) "TRANSFEROR LENDER NOTES": the meaning set forth in
Section 9.27(c).
(nnnnn) "UNMATURED DEFAULT": any event or condition which,
with the passage of time or the giving of notice or both, would
constitute an Event of Default hereunder.
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1.2 GAAP. Except as otherwise defined in this Agreement or the other
Loan Documents, all accounting terms used herein shall have the meaning ascribed
to that term in accordance with GAAP.
1.3 Borrower. Whenever the context so requires, the use of "IT" in
reference to Borrower shall mean Borrower as defined above.
1.4 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice
versa; reference to any gender includes each other gender;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
provided that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Agreement;
(d) reference to any agreement, document or instrument means
such agreement, document or instrument together with all Modifications
thereto or thereof.
(e) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section
hereof or such Schedule or Exhibit hereto;
(f) the words "INCLUDING" (and with correlative meaning
"INCLUDE") means including, without limiting the generality of any
description preceding such term;
(g) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means "to
but excluding;"
(h) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time; and
(i) The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
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2 LOANS - GENERAL TERMS
2.1. Credit Facilities.
(a) Tranche A Loans. Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set
forth, each Lender, severally and not jointly, agrees to make Tranche A
Loans to Borrower at any time or from time to time after the date
hereof to but not including the Maturity Date. The Commitment of all
Lenders to make Tranche A Loans shall be the amount set forth in
Section 2.3. A Lender shall have no obligation at any time to make any
Tranche A Loans in excess of such Lender's Commitment set forth in
Section 2.3. Subject to the terms hereof, Borrower may borrow, repay
and reborrow the Tranche A Loans; provided that, at no time shall the
outstanding principal balance of the Tranche A Loans exceed $66,000,000
nor shall the unpaid principal balance of the Tranche A Loans exceed
the other limitations set forth herein. The obligation of Borrower to
repay the unpaid principal balance of the Tranche A Loans made to it by
each Lender and to pay interest thereon is further evidenced, in part,
by the Tranche A Notes.
(b) Tranche B Loans. Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set
forth, BOS-Edinburgh agrees to make Tranche B Loans to Borrower from
time to time after the date hereof to but not including the Maturity
Date. The Commitment of BOS-Edinburgh to make Tranche B Loans shall be
the amount set forth in Section 2.3. BOS-Edinburgh shall have no
obligation at any time to make any Tranche B Loans in excess of the
Commitment for Tranche B Loans set forth in Section 2.3 or in excess of
the amounts set forth in Section 2.2(a). Subject to the terms hereof,
Borrower may borrow, repay and reborrow the Tranche B Loans; provided
that, at no time shall the outstanding principal balance of the Tranche
B Loans exceed the amounts set forth in Section 2.2(a). The obligation
of Borrower to repay the unpaid principal balance of the Tranche B
Loans made to it by Lenders and to pay interest thereon is further
evidenced, in part, by the Tranche B Notes.
2.2. Maximum Principal Amount.
(a) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, but subject to the limitations set forth
in other provisions of this Agreement, the principal portion of
Borrower's Liabilities outstanding shall not exceed the following
amounts (the "MAXIMUM PRINCIPAL AMOUNT"):
(i) the unpaid principal balance of the Tranche A
Loans shall not exceed, at any time, an amount
equal to $66,000,000; and
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(ii) the unpaid principal balance of the Tranche B
Loans shall not exceed
$ 11,000,000 on the Closing Date,
$ 12,500,000 at any time before February 1, 2000,
$ 16,000,000 at any time before March 1, 2000,
$ 19,500,000 at any time before April 1, 2000,
$ 22,000,000 at any time before May 1, 2000
(iii) The Maximum Principal Amount and Lenders'
Commitments shall be reduced by mandatory
prepayments of principal in accordance with
Section 3.3. The unpaid principal balance plus
all accrued but unpaid interest, fees and all
other Secured Obligations shall be due and
payable in full on the Maturity Date.
(b) In the event that the outstanding principal balance of the
Tranche A Loans or Tranche B Loans exceed the Maximum Principal Amount
thereof (individually and not in the aggregate) determined in
accordance with Section 2.2(a), Borrower shall pay the amount of such
excess to Agent for, in the case of the Tranche A Loans the ratable
benefit of Lenders and, in the case of the Tranche B Loan, for the
benefit of BOS-Edinburgh, without notice or demand, and any amount not
so paid shall bear interest at the Default Rate until paid. This is an
absolute obligation to pay to Agent the amount of the unpaid principal
balance of the Loans in excess of said Maximum Principal Amount,
regardless of the cause of such excess.
(c) Tranche A Loans must be funded in the amount of Lenders'
Commitments prior to any disbursement of Tranche B Loans. It is
anticipated that the Tranche A Loans will be fully funded on the date
of the execution of this Agreement.
2.3. Lender's Commitments.
(a) On the date hereof the Total Commitment of Lenders is
$88,000,000 described as follows:
(i) The Tranche A Commitment, as of the date hereof
is $66,000,000, of which BOS-Edinburgh's
Commitment is $33,000,000 and Bank of America's
Commitment is $33,000,000.
(ii) Subject to Section 2.2(a)(ii), the Tranche B
Commitment is $22,000,000 of which
BOS-Edinburgh's Commitment is $22,000,000 and
Bank of America's Commitment is $0.
(iii) On the date hereof, BOS-Edinburgh's Commitment
Percentage with respect to Tranche A Loans is
50% and BOS-Edinburgh's Commitment Percentage
with respect to Tranche B Loans is 100%.
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(iv) On the date hereof, Bank of America's
Commitment Percentage relating to Tranche A
Loans is 50% and Bank of America's Commitment
Percentage with respect to Tranche B Loans is
0%.
(v) The Commitment Percentage of each Lender may be
adjusted if a transfer occurs in accordance
with Section 9.27. Lenders' Commitments are
subject to the mandatory reductions set forth
in Section 2.3(b).
(b) The payment of Extraordinary Transaction Proceeds to Agent
pursuant to the provisions hereof shall permanently reduce the Lenders'
Commitments. Following payment of Extraordinary Transaction Proceeds,
the Lender's Commitments shall be permanently reduced and the amounts
so applied may not be reborrowed.
2.4. Maturity Date; Termination of Loans.
(a) Lenders' respective obligations to make any Advance to
Borrower pursuant to the provisions hereof shall be in effect until the Maturity
Date, unless sooner terminated by Lenders upon the occurrence of an Event of
Default, an Unmatured Default, or pursuant to the terms hereof.
(b) Upon payment in full of the Tranche A Loans,
BOS-Edinburgh's Commitment to make the Tranche B Loans shall terminate.
2.5. Authorized Disbursement of Proceeds. Borrower hereby authorizes
and directs each Lender and Agent to disburse, for and on behalf of Borrower and
for Borrower's account, the proceeds of any Loans to such Person as Borrower or
any Designated Person shall direct. In addition to Advances of Loan proceeds
made pursuant to a Borrowing Request made by a Borrower from time to time,
Borrower hereby irrevocably authorizes each Lender and Agent to disburse
proceeds of the Loans to pay: (a) interest which is accrued but unpaid and which
is due and payable pursuant to the terms hereof and of the Notes until the Loans
are paid in full; and (b) for any and all Costs. The execution of this Agreement
by Borrower shall, and hereby does, constitute an irrevocable direction and
authorization to each Lender and Agent so to disburse such funds described in
this Section and to treat such Advances as money loaned pursuant to this
Agreement and as indebtedness evidenced by the Notes. No further direction or
authorization from Borrower shall be necessary for Lenders to make such
Advances, and all such Advances shall satisfy, to the extent so disbursed, the
obligations of Borrower hereunder and shall be evidenced by the Notes.
Notwithstanding anything to the contrary contained herein, Lenders are under no
duty or obligation to make such
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Advances and failure to make such Advances shall not be deemed to be a default
by Lenders or impair any of Lenders' rights or remedies hereunder.
2.6. Use of Proceeds and Borrowing Procedure.
(a) Use of Proceeds. The Loans shall be used solely to fund
the working capital requirements of Borrower and its Subsidiaries;
provided that, no portion of the Loans proceeds shall be used to make
capital contributions, loans, gifts to or pay the obligations of FC
Commercial, FC Capital, any Harbor Debtor or any Subsidiary of any such
entity. Nothing contained in this Section 2.6(a) shall be deemed to
prohibit Borrower from making capital contributions, loans, gifts or
other payments to such entities from funds which are generated from the
operations of Borrower or its Subsidiaries or other sources.
(b) Borrowing Request. In order to request an Advance,
Borrower shall hand deliver or telecopy to Agent a duly completed
Borrowing Request not later than 10:00 a.m. New York time: (i) at least
three (3) Business Days before a proposed Eurodollar Advance and (ii)
at least one (1) Business Day before a proposed Prime Rate Advance.
Each Borrowing Request shall be irrevocable and shall specify: (1) the
amount of such Advance; (2) the number and location of the account to
which funds are to be disbursed; (3) the date such Advance is to be
made (which shall be a Business Day); and (4) the information required
pursuant to Sections 2.11 and 2.12.
(c) If Borrower in respect of an outstanding Eurodollar
Advance shall not have delivered a Borrowing Request in accordance with
Section 2.6(b) not later than 10 a.m. New York time at least three (3)
Business Days prior to the end of the Interest Period then in effect
for such Eurodollar Advance and requesting that such Eurodollar Advance
be refinanced, then, (unless Borrower has notified the Agent not fewer
than three (3) Business Days prior to the end of such Interest Period,
that such Eurodollar Advance is to be repaid at the end of such
Interest Period), Borrower shall be deemed to have delivered a
Borrowing Request requesting that such Advance be refinanced with a new
Advance of equivalent amount, and such new Advance shall bear interest
at the LIBOR Rate applicable for a seven (7) day Interest Period.
(d) Pro Rata Treatment of Loans. Each borrowing of a Tranche A
Loan shall be made from each Lender pro rata in accordance with its
Commitment Percentage, determined in accordance with Section 2.3. Each
borrowing of a Tranche B Loan shall be made from BOS-Edinburgh.
(e) Failure to Loan. The failure of any Lender to make a Loan
shall not relieve any other Lender of its obligation to fund any Loan
hereunder, but neither Agent nor any other Lender shall be responsible
for the failure of any other Lender to make a Loan.
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2.7. Interest Rate. Except as provided in Section 2.9, the unpaid
principal balance of the Loans shall bear interest at the Eurodollar Rate and
Borrower shall not have the right to select the Prime Interest Rate without
Lenders' prior written approval, which approval may be withheld in Lenders' sole
and exclusive discretion; provided that Lenders hereby approve the use of the
Prime Rate for Advances made on the Closing Date for a maximum period of three
(3) days after the Closing Date. Interest on all Prime Rate Advances, if
applicable, shall be computed on a 365-day year for the actual number of days
elapsed. Interest on all Eurodollar Advances shall be computed on a 360 day year
for the actual number of days elapsed. After the occurrence of an Event of
Default and during the continuation thereof, all Loans shall bear interest at
the Default Rate. The unpaid principal balance of each Advance shall bear
interest at the Interest Rate applicable thereto, determined by Agent in
accordance with the provisions hereof, which determination shall be binding upon
Borrower, absent manifest error.
2.8. Change of Laws. If Agent or any Lender shall determine at any
time after the date hereof that the adoption of any law, rule or regulation
regarding capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by Agent or any Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any such authority, central bank
or comparable agency, has or would have the effect of reducing the rate of
return on Agent's or any Lender's capital as a consequence of its obligations
hereunder to a level below that which Agent or the applicable Lender could have
achieved but for such adoption, change or compliance (taking into consideration
Agent's or such Lender's policies with respect to capital adequacy) by an amount
deemed by Agent or such Lender to be material, Agent or such Lender, as
applicable, shall give notice thereof to Borrower of such determination (and any
Lender giving such notice shall notify Agent), in which event Borrower shall pay
to Agent for the benefit of the applicable Lender upon demand such amount or
amounts, in addition to the amounts payable under any other provision of this
Agreement or the Other Agreements, as will compensate Agent or such Lender, as
applicable, for such reduction. Determinations by Agent or such Lender for
purposes of this Section of the additional amount or amounts required to
compensate Agent or such Lender with respect to the foregoing shall be
conclusive in the absence of manifest error. In determining such amount or
amounts, Agent or such Lender may use any reasonable averaging or attribution
methods. Notwithstanding the foregoing, no amounts shall be payable by Borrower
to Agent or such Lender under the terms of this Section 2.8 if the Secured
Obligations are paid in full on or before ten (10) days after the date on which
Agent or such Lender, as applicable, shall have notified Borrower that amounts
will be due under this Section 2.8. In the event of a prepayment pursuant to
this Section 2.8, any LIBOR Breakage Fee otherwise payable pursuant to the terms
of this Article 2 shall be waived by Agent and Lenders and shall not be due or
payable.
2.9. Regulatory Changes. Notwithstanding any other provision herein
contained to the contrary, in the event that any regulatory change shall, in the
reasonable determination of Agent or any Lender, make it unlawful for Agent or
any Lender to make
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or to maintain any Eurodollar Advance or impose additional restrictions on
Eurodollar Advances by Agent or any Lender, then, the obligation of Agent or
such Lender to make or maintain any such Eurodollar Advance shall be terminated
and all outstanding Eurodollar Advances shall automatically be converted to
Prime Rate Advances. Lenders shall, as promptly as practicable following any
such determination, give Borrower a notice thereof that sets forth the basis for
any such determination. After such determination and while such determination is
in effect, Lenders shall not be required to make further Eurodollar Advances.
2.10. Advances Prior to LIBOR Rate Determination. Anything herein to
the contrary notwithstanding, after notice but prior to making any requested
Eurodollar Advance if, for any reason whatsoever, LIBOR Rates are not then being
quoted for the requested Interest Period and in an amount approximating the
amount of such Eurodollar Advance, Agent shall give Borrower prompt notice
thereof and such Eurodollar Advance shall be deemed to be a Eurodollar Advance
bearing interest at the Eurodollar Rate then in effect based upon the next
shortest available Interest Period (but in no event longer than one month), as
determined by Agent.
2.11. Eurodollar Advances and Conversion. Provided no Event of
Default or Unmatured Default has occurred and is continuing, Borrower shall have
the option, subject to the other provisions of this Agreement, to: (i) request
that any Advance or any portion of an Advance in a minimum amount of $100,000
and in multiples of $100,000, shall be deemed to be a Eurodollar Advance by
giving telephonic notice to Agent at least three Business Days prior to the day
any Eurodollar Advance is to be made hereunder specifying the applicable
Interest Period; provided that Borrower gives Agent written confirmation by
facsimile of its telephonic notice on the same Business Day as such telephone
notice is given with respect to such Eurodollar Advance, and (ii) convert on any
Business Day, all or any portion of the outstanding principal amount of any
Advance or any portion of an Advance, in a minimum amount of $100,000 and in
multiples of $100,000, from one type of interest rate advance to another type of
interest rate advance by giving at least three (3) Business Days prior
telephonic notice to Agent thereof; provided that Borrower gives Agent written
confirmation of its telephonic notice by facsimile on the same Business Day that
such telephonic notice is given with respect to such conversion hereunder.
Notwithstanding the foregoing: (y) no Eurodollar Advance may be converted into a
Prime Rate Advance pursuant to this Section, except effective on the last day of
the Interest Period applicable thereto, and (z) Borrower shall have no more than
two (2) Eurodollar Advances with different Interest Periods at any one time.
2.12. Interest Period Election. Borrower may, by prior telephonic
notice to Agent, elect the Interest Period(s) to be applicable to all or any
portion of any Eurodollar Advance upon the expiration of the Interest Period
then applicable to such Eurodollar Advance; provided that such notice is given
to Agent at least three (3) Business Days prior to the expiration of the then
Interest Period and that Borrower gives written confirmation by facsimile of its
telephonic notice on the same Business Day that such telephonic notice is given.
In the event Borrower does not make such an election with respect to all or any
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portion of a Eurodollar Advance for which the Interest Period is expiring, then,
upon the expiration of such Interest Period, the portion of such Eurodollar
Advance for which no such election has been made shall automatically convert to
a Prime Rate Advance.
2.13. Fees.
(a) Facility Fee. In the event the Secured Obligations are
paid in full and Lenders' Commitments are cancelled (the "CANCELLATION DATE"),
Borrower shall pay to Agent, for the ratable benefit of Lenders, a Facility Fee
to be allocated among Lenders' pro rata in accordance with their respective
Commitment Percentages relating to the Tranche A Loans. The amount of the
Facility Fee is dependent upon the date of the Cancellation Date and shall be
paid in accordance with the following schedule:
If the Cancellation Date is: Facility Fee shall be:
---------------------------- ----------------------
on or before February 29, 2000 $500,000
on or before September 29, 2000 $1,650,000
at any time thereafter $2,500,000
The Facility Fee shall be payable on the earlier of (i) the payment in full of
the Secured Obligations and the termination of the Tranche A Commitments, or
(ii) September 30, 2000. For greater certainty and not in limitation of the
foregoing, in the event the Secured Obligations have not been paid in full on or
before September 30, 2000 for any reason whatsoever, Borrower shall pay to
Agent, for the ratable benefit of the Lenders, a Facility Fee equal to
$2,500,000 on September 30, 2000.
(b) Unused Commitment. Borrower shall pay to Agent for the
ratable benefit of the Lenders, an unused commitment fee in an amount equal to
.125% (on an annual basis, based on the number of days elapsed on a 365-day
year) of the difference between Total Commitment determined in accordance with
Section 2.3 and the daily outstanding principal balance of the Loan. Such fee
shall be payable quarterly in arrears on the last Business Day of each calendar
quarter. Upon the permanent reduction of the Total Commitments in accordance
with Section 2.3, the unused commitment fee shall be based upon the reduced
Total Commitment.
(c) Agent's Fees. At Closing, Agent shall be paid a servicing
fee, for its sole benefit, equal to $50,000.00 for services provided hereunder.
(d) LIBOR Breakage Fee. In the event of any prepayment of an
Advance prior to the end of the then applicable Interest Period (by acceleration
or otherwise) or in the event any Advance is not made after delivery of a
Borrowing Request in accordance with the terms hereof, for any reason
whatsoever, Borrower shall pay to Agent, for the ratable benefit of the Lenders,
an amount equal to the LIBOR Breakage Fee.
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(e) Interest on Fees. Any fee payable under this Section 2.13
which not paid when due shall bear interest at the Default Rate.
2.14. Usury. The provisions of this Section shall govern and control
over any irreconcilably inconsistent provision contained in this Agreement or in
any other document evidencing or securing the Loan. None of Lenders or Agent
shall be entitled to receive, collect, or apply as interest hereon (for purposes
of this Section, the word "interest" shall be deemed to include any sums treated
as interest under applicable law governing matters of usury and unlawful
interest), any amount in excess of the Highest Lawful Rate (hereinafter defined)
and, in the event Lenders or Agent ever receives, collects, or applies as
interest any such excess, such amount which would be excessive interest shall be
deemed a partial prepayment of principal and shall be treated hereunder as such;
and, if the principal of this Agreement is paid in full, any remaining excess
shall forthwith be paid to Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, Borrower, Lenders and Agent shall, to the maximum extent permitted under
applicable law; (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest; (ii) exclude voluntary prepayments and the
effects thereof, and (iii) spread the total amount of interest throughout the
entire contemplated term of this Agreement, provided, that if this Agreement is
paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence hereof
exceeds the Highest Lawful Rate, Lenders and/or Agent shall refund to Borrower
the amount of such excess and, in such event, Lenders and/or Agent shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the Highest Lawful Rate. "Highest Lawful Rate"
shall mean the maximum rate of interest which Lenders and/or Agent is allowed to
contract for, charge, take, reserve or receive under applicable law after taking
into account, to the extent required by applicable law, any and all relevant
payments or charges hereunder.
3 PAYMENT TERMS
3.1 Loan Account; Method of Making Payments. Agent shall maintain a
Loan Account on its books in which shall be recorded: (i) all Loans made by
Lenders to Borrower pursuant to this Agreement; (ii) all payments made by
Borrower on all Loans; and (iii) all other appropriate debits and credits as
provided in this Agreement, including, without limitation, all fees, charges,
expenses and interest. All entries in the Loan Account shall be made in
accordance with Agent's customary accounting practices, in effect from time to
time. The failure of Agent to record any of the foregoing shall not in any way
limit Borrower's Liabilities or Borrower's Obligations under this Agreement.
3.2 Interest Payments.
(a) Accrued interest on all Prime Rate Advances shall be
payable monthly, in arrears, on the last Business Day of each month
during the term hereof, without notice or demand.
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(b) Accrued interest on any Eurodollar Advance shall not be
due and payable monthly, but, instead, shall be payable in arrears on
the last day, of the Interest Period applicable thereto.
3.3 Principal Payments. Borrower promises to pay to the order of
Agent, for the ratable benefit of Lenders, all mandatory principal payments at
the following times and in the following amounts:
(a) The unpaid principal balance, plus all accrued but unpaid
interest, shall be due and payable to Agent, for the ratable benefit of
Lenders, in full on the Maturity Date, without notice or demand. Said
amount shall be due and payable, notwithstanding any seemingly
contradictory provisions in this Agreement.
(b) In the event of a principal payment on any Pledged Note in
an amount in excess, in the aggregate, of $250,000, Borrower and the
applicable Loan Party shall give immediate notice thereof to Agent and
Borrower shall pay to Agent, for the ratable benefit of Lenders,
principal in an amount equal to the amount of such principal payment on
said Pledged Note; provided that the parties hereby acknowledge that
such principal payment shall not reduce the Total Commitment.
(c) If at any time the outstanding principal amount exceeds
the Maximum Principal Amount of the Tranche A Loan or the Tranche B
Loan, as applicable, determined in accordance with Section 2.2,
Borrower shall pay principal in an amount necessary to reduce the then
outstanding principal amount to an amount less than the Maximum
Principal Amount of the applicable Loan and said payment shall be
applied to the Tranche A Loan or the Tranche B Loan, as applicable, to
reduce such Loan to an amount below the Maximum Principal Amount
thereof determined in accordance with Section 2.2.
(d) Borrower shall pay to Agent, for the benefit of Lenders,
100% of all Extraordinary Transaction Proceeds, to be applied to the
Secured Obligations in the order of priority determined in accordance
with Section 3.6. Upon payment of said Extraordinary Transaction
proceeds, the Total Commitment shall be reduced.
(e) Upon payment in full of the Tranche A Loans, the Tranche B
Loans shall be payable in full.
3.4 Place of Payment. All payments to Agent hereunder and under the
Other Agreements shall be payable in immediately available funds on or before
noon New York time at the place designated on Exhibit A, or such place or places
as Agent may designate in writing to Borrower. All of such payments to Persons
other than Agent shall be payable at such place or places as Agent may designate
in writing to Borrower. Borrower's Liabilities and the other Secured Obligations
will be payable as set forth in the Notes, this Agreement, and the Other
Agreements.
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3.5 Payment on Maturity and Prepayment.
(a) Payment on Maturity. On the Maturity Date, whether by
acceleration or otherwise, Borrower shall pay to Agent, for the ratable benefit
of Lenders, in full, in cash or other immediately available funds, the
outstanding amount of the Loans.
(b) Prepayment. Each Prime Rate Advance may be repaid at any
time, without premium or penalty by Borrower giving telephonic notice to Agent
of such prepayment no later than 10:00 a.m. New York time on the date of such
prepayment, confirmed in writing by facsimile of its telephonic notice on the
same day. Each Eurodollar Advance may be prepaid on the last day of the Interest
Period applicable thereto, but only by Borrower giving telephonic notice to
Agent of such prepayment at least three (3) Business Days prior to the day of
such prepayment, such notice confirmed in writing by facsimile on the day of the
telephonic notice. Prepayment of any Eurodollar Advance during an Interest
Period is expressly prohibited. In the event of an attempted prepayment of any
Eurodollar Advance during any Interest Period, Agent, at Borrower's option,
shall either: (i) hold such funds in a non-interest bearing cash collateral
account to secure the Secured Obligations and to apply such funds to the Secured
Obligations on the last day of the Interest Period, or (ii) apply such funds to
the Secured Obligations, in which event Borrower shall pay to Agent, for the
ratable benefit of the applicable Lenders, a LIBOR Breakage Fee immediately upon
demand therefor, and any amount not so paid shall bear interest at the Default
Rate.
3.6 Application of Payments. Agent shall apply payments made to
Agent, for the benefit of Lenders, in the following order of priority:
(a) Payments from Extraordinary Transaction Proceeds. Payments
from Extraordinary Transaction Proceeds shall be applied: (i) first to Costs,
including the payment of any costs and expenses incurred by Agent and/or Lenders
to enforce any rights hereunder or under the other Loan Documents; (ii) then to
accrued but unpaid interest and other fees and expenses then due and payable
hereunder; and (iii) then pro-rata to the unpaid principal amount of the Tranche
A and Tranche B Loans, based on the respective principal amounts then
outstanding.
(b) Payments in the Ordinary Course of Business. Payments
which are not made from Extraordinary Transaction Proceeds shall be applied: (i)
first to Costs, including the payment of any costs and expenses incurred by
Agent and/or Lenders to enforce any rights hereunder or under the other Loan
Documents; (ii) then to accrued but unpaid interest and other fees and expenses
then due and payable hereunder; (iii) then to the unpaid principal balance of
the Tranche B Loans, and (iv) then pro-rata to the unpaid principal amount of
the Tranche A Loans.
(c) Notwithstanding the foregoing, (i) Agent shall, to the
extent possible, not allocate payments in a manner which would create a LIBOR
Breakage Fee or other fee or penalty payable by Borrower which would not
otherwise be imposed and (ii) Lenders may elect to allocate payments in any
other order of priority as Lenders shall in their sole
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and exclusive discretion elect to Secured Obligations which are then due and
owing, in any order of priority as Lenders shall elect. Borrower (y) irrevocably
waives the right to direct the application of payments and collections received
by Agent from or on behalf of Borrower, and (z) agrees that Agent shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections against the Loans or any other Secured Obligations then due and
payable in such manner as Agent may deem appropriate, notwithstanding any entry
by Agent upon any of its books and records.
3.7 Advances to Constitute One Loan. All Advances, loans, including
Tranche A Loans and Tranche B Loans, and any other financial accommodations
provided pursuant to the terms hereof by Lenders to Borrower shall constitute
one loan and all indebtedness and obligations of Borrower to Lenders and/or
Agent under this Agreement, the Other Agreements or otherwise shall constitute
one general obligation secured by the Collateral.
3.8 Reapplication of Payments. To the extent that Agent receives any
payment on account of the Secured Obligations, and any such payment(s) and/or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
federal law, common law or equitable cause, then, to the extent of such
payment(s) or proceeds received, the Secured Obligations or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment(s) and/or proceeds had not been received by Agent and applied
on account of the Secured Obligations.
3.9 Monthly Statements. All Advances to Borrower and all other debits
and credits provided for in this Agreement shall be evidenced by entries made by
each Lender and Agent in its internal data control systems showing the date,
amount and reason for each such debit or credit. Until such time as each Lender
and Agent shall have rendered to Borrower written statements of account as
provided herein, the balance in the Loan Account, as set forth on each Lender's
and Agent's respective most recent statements, shall be rebuttably presumptive
evidence of the amounts due and owing to each Lender and/or Agent by Borrower.
At each Lender's and Agent's option, each Lender and Agent shall render a
monthly statement to Borrower setting forth the balance of the Loan Account,
including principal, interest, costs, penalties, charges and other fees. Each
such statement shall be subject to subsequent adjustment by each Lender and
Agent and each Lender's and Agent's right to reapply payments in accordance with
Section 3.8, but shall, as to statements of principal and interest then due or
having been paid, absent manifest errors or omissions, be presumed correct and
binding upon Borrower and shall constitute an account statement unless, within
thirty (30) days after receipt of any statement from any Lender and/or Agent,
Borrower shall deliver to the appropriate Lender and/or Agent written objection
thereto, specifying the error or errors, if any, contained in such statement.
3.10 Time of Payment of Extraordinary Transaction Proceeds. Any
payment of Extraordinary Transaction Proceeds due pursuant to the terms of
Section 3.3(d) shall be made on the date of closing of such transaction and
Borrower shall direct the applicable
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purchaser and/or lender to make payment by wire transfer of immediately
available funds directly to Agent. No portion of the consideration paid for such
transfer shall be made in kind, in securities, or by delivery of promissory note
or other form of indebtedness or obligation, without, in each instance the prior
written consent of Lenders, which consent may be withheld by Lenders in their
sole and exclusive discretion.
4 ANCILLARY AGREEMENTS
4.1 Guaranties. Borrower shall cause each Guarantor to execute and
deliver to Agent an unlimited guaranty of payment and performance of all the
Secured Obligations, or an amendment, restatement and ratification thereof, as
applicable (the "Guarantees"). Schedule 4.1 sets forth a true, accurate and
complete schedule of all Guarantees caused to be delivered by Borrower to Lender
concurrently herewith.
4.2 Note Pledge Agreements. Borrower shall execute and deliver to
Agent and shall cause certain Primary Obligors to execute and deliver to Agent a
note pledge agreement or an amendment and restatement of its Note Pledge
Agreement executed and delivered in accordance with the Existing Loan Agreement.
Notwithstanding the foregoing, Borrower shall not be required to pledge or to
require any other Person to pledge: (i) promissory notes made by Borrower or any
Primary Obligor payable to the order to an Affiliate which is a general partner
of a limited partnership which note had been made to satisfy the capital
adequacy requirements imposed upon the general partner of a limited partnership
under the Code, or (ii) those notes identified on Schedule 4.2(a) (those notes
referred to in subsection (i), and (ii) above are collectively referred to as
"EXCLUDED NOTES"). Schedule 4.2(b) is a true, accurate and complete schedule of
each Note Pledge Agreement, setting forth the name of the pledgor thereunder,
and identifying the Pledged Notes pledged pursuant thereto, including the maker
of the note, the payee of the note, the date of the note, the face amount of the
note and the unpaid principal balance thereof on the Closing Date. Schedule
4.2(b) shall be amended from time to time upon Agent's request; provided that
any such future amendment of Schedule 4.2(b) shall not be deemed to amend or
limit any representation or warranty by Borrower under this Agreement relating
to any Pledged Note.
4.3 Stock Pledge Agreements. Those Persons identified on Schedule
4.3(a) (as may be amended from time to time with the prior written consent of
Agent in accordance with Section 5.1(e)(iv)) shall be referred to herein as
"EXCLUDED ENTITIES" and neither Borrower nor any Affiliate of a Borrower shall
be obligated to pledge its Stock, partnership interests, membership interests or
other equity interest in such Excluded Entity. Borrower shall execute and
deliver to Agent a stock pledge agreement or an amendment and restatement of
Borrower's Stock Pledge Agreement, pursuant to which Borrower shall pledge or
ratify, amend and restate its pledge, as applicable, to Agent all of the Stock,
shares, membership interests, partnership interest, venture interest and all
other equity interests, in any form whatsoever, of each and every Person in
which Borrower owns an equity interest (other than the Excluded Entities),
whether now existing or hereafter arising. Borrower shall cause each Primary
Obligor, each Secondary Obligor and each other
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Affiliate, as Agent shall reasonably request to execute and deliver to Agent an
amendment and restatement of its Stock Pledge Agreement, pursuant to which each
such Person shall ratify, amend and restate its pledge to Agent all of the
Stock, shares, membership interests, partnership interest, venture interest and
all other equity interests, in any form whatsoever, of each and every Person in
which such Person owns an equity interest (other than the Excluded Entities),
whether now existing or hereafter arising. Schedule 4.3(b) sets forth a true,
accurate and complete list of all Stock Pledge Agreements delivered in
connection with this Agreement, the name of the Pledgor, the identity of each
entity pledged pursuant thereto and a detailed description of the equity
interest pledged pursuant thereto.
4.4 Security Agreements. Borrower, FC Commercial, FC Consumer
Lending, FC Servicing, FC Capital, FC International and FC Holdings shall
deliver to Agent security agreements pursuant to which each shall grant a
security interest in all of its Assets (excluding those Assets specifically
identified in a schedule to the applicable Security Agreement) to secure the
Secured Obligations or an amendment, restatement and ratification thereof, as
applicable. Schedule 4.4 sets forth all Security Agreements, or amendments,
restatements and ratifications thereof, as applicable, delivered by Loan Parties
pursuant to the terms hereof.
5 GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS
5.1 General Representations and Warranties. Subject to the limitation
set forth in Section 5.5 and those matters disclosed on Schedule 5.1, except as
disclosed in writing to Lenders and Agent concurrently herewith, Borrower
warrants and represents to and covenants with Lenders and Agent that:
(a) Organization.
(i) Borrower is and at all times hereafter shall be
a corporation, duly organized and existing and
in good standing under the laws of the State of
Delaware and qualified or licensed to do
business and in good standing in all states in
which the laws thereof require Borrower to be
so qualified and/or licensed and in which the
failure to so qualify could have a Material
Adverse Effect, including, without limitation,
the State of Texas. Schedule 5.1(a)(i)
identifies each jurisdiction in which Borrower
has qualified or been licensed to do business
and describes the nature and current status of
any such qualification or license.
(ii) Each Primary Obligor and each Secondary Obligor
is and at all times hereafter shall be a
corporation or a limited partnership, duly
organized and existing and in good standing
under the laws of the state of its organization
and qualified or licensed to do business and in
good standing in all states in which the laws
thereof require each Primary Obligor and each
Secondary
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Obligor to be so qualified and/or licensed and
in which the failure to so qualify could have a
Material Adverse Effect. Schedule 5.1(a)(ii)
identifies each jurisdiction in which each
Primary Obligor and each Secondary Obligor has
qualified or been licensed to do business and
describes the nature and current status of any
such qualification or license.
(b) Entity Power.
(i) Borrower has the right, power and capacity and
is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and
the Other Agreements, to which it is a party.
(ii) Each Primary Obligor and each Secondary Obligor
has the right, power and capacity and is duly
authorized and empowered to enter into,
execute, deliver and perform those Loan
Documents to which it is a party.
(c) Violation of Organic Documents.
(i) The execution, delivery and/or performance by
Borrower of this Agreement and the Other
Agreements to which it is a party, shall not,
by the lapse of time, the giving of notice or
otherwise, constitute a violation of any
applicable law or a breach of any provision
contained in the Organic Documents of Borrower,
or contained in any agreement, instrument or
document to which Borrower, is now or hereafter
a party or by which it or any of its Assets is
or may become bound.
(ii) The execution, delivery and/or performance by
each Primary Obligor and each Secondary Obligor
of the Other Agreements to which it is a party,
shall not, by the lapse of time, the giving of
notice or otherwise, constitute a violation of
any applicable law or a breach of any provision
contained in the Organic Documents of such
Primary Obligor or such Secondary Obligor, or
contained in any agreement, instrument or
document to which such Primary Obligor or such
Secondary Obligor is now or hereafter a party
or by which it or any of its Assets is or may
become bound.
(d) Enforceability.
(i) This Agreement and the Other Agreements to
which the Borrower is a party, are and will be
the legal, valid and binding agreements of
Borrower, enforceable in accordance
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with their respective terms, except as
enforcement thereof may be subject to the
effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws
affecting creditors' rights generally, and to
general principles of equity (regardless of
whether such enforcement is sought in a
proceeding in equity or at law); and
(ii) Those Other Agreements to which each other Loan
Party is a party are and will be the legal,
valid and binding agreements of such Loan
Party, enforceable in accordance with their
respective terms, except as enforcement thereof
may be subject to the effect of applicable
bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors'
rights generally, and to general principles of
equity (regardless of whether such enforcement
is sought in a proceeding in equity or at law);
(e) Ownership
(i) Schedule 5.1(e) sets forth all classes of stock
of Borrower, the shareholders thereof (other
than members of the general public), addresses
of each shareholder, number of shares owned and
how the shares are held;
(ii) Schedule 5.1(e) (as may be amended from time to
time) sets forth all classes of stock and/or
partnership interests of each Primary Obligor
and each Secondary Obligor, the shareholders
and/or portions thereof, and the addresses,
number of shares and/or partnership interests
owned and how the shares are held.
(iii) Schedule 5.1(e) (as may be amended from time to
time) sets forth all options, warrants and
other rights to acquire Stock or other equity
interests of Borrower, any Primary Obligor, any
Secondary Obligor, and any other Pledged
Entity, the nature of such option, warrant or
right and the conditions for the exercise
thereof. Lenders hereby expressly consent to
the transfer, issuance or conveyance of Stock
and/or other equity interests of any Person in
accordance with such options, warrants and
rights.
(iv) Borrower shall deliver to Agent notice within
(10) Business Days after Borrower or any other
Loan Party acquires the Stock, partnership
interest or other equity interest in any Person
Borrower shall also amend Schedule 5.1(e), and
promptly deliver such amended schedule to the
Agent. Unless
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Majority Lenders elect not to require Borrower
or such other Loan Party to pledge its equity
interest in such Person, Borrower and/or the
applicable Loan Party: (A) shall grant to Agent
a perfected first security interest in its
equity interest in such Person, (B) shall
deliver a Stock Pledge Agreement or such other
pledge agreement in form and substance
acceptable to Agent, (C) shall amend the
applicable Schedules of the applicable Stock
Pledge Agreement, (D) shall execute and deliver
to the Pledged Entity a notice of lien, (E)
shall execute any and all financing statements
required by Agent to perfect its security
interest, (F) shall deliver the original Stock
certificates or other evidence of ownership to
Agent, together with an assignment separate
from certificate therefor, and (G) shall take
such other action to effect and perfect such
security interest as Agent shall reasonably
require. In the event Agent elects not to
require a pledge of such equity interests,
Borrower shall amend Schedule 4.3(b).
(f) Fictitious Names.
(i) Each of the fictitious names, if any, used by
Borrower during the five (5) year period
preceding the date of this Agreement is set
forth on Schedule 5.1(f) attached hereto (as
amended from time to time) and none of such
fictitious names are registered trademarks or
tradenames with the U.S. Patent and Trademark
Office, except as set forth in Schedule 5.1(f);
(ii) Each of the fictitious names, if any, used by
each Primary Obligor and each Secondary Obligor
during the five (5) year period preceding the
date of this Agreement is set forth on Schedule
5.1(f) attached hereto (as amended from time to
time), and none of such fictitious names are
registered trademarks or tradenames with the
U.S. Patent and Trademark Office; provided
that, variations on the corporate name of
Primary Obligors and Secondary Obligors in
states where used solely for qualifying to do
business therein shall and have been excluded
from such schedule, with Lender's consent and
approval.
(g) Title. Schedule 5.1(g) is a true, accurate and complete
list of all Liens, relating to the Pledged Property on the date hereof.
At all times following acquisition thereof: (i) First X and First B
shall own fee title to its real estate subject to no liens other than
the Permitted Liens, and (ii) Borrower and each other Primary Obligor
and Secondary Obligor shall have good, indefeasible and merchantable
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title to and ownership of all of its Assets, free and clear of all
Liens, except the Permitted Liens.
(h) Financial Warranty. Except as set forth on Schedule
5.1(h), Borrower: (i) is now, and at all times hereafter shall be
paying its debts as they mature, (ii) now owns, and shall at all times
hereafter own, property which, at a fair valuation, is greater than the
sum of its debt, and (iii) now has, and shall have at all times
hereafter, capital sufficient to carry on its business and transactions
and all businesses and transactions in which it is about to engage.
Except as set forth on Schedule 5.1(h), each Primary Obligor and
Secondary Obligor: (i) are each now, and at all times hereafter shall
be paying their respective debts as they mature, and (ii) each now has,
and shall have at all times hereafter, capital sufficient to carry on
its business and transactions and all businesses and transactions in
which it is about to engage.
(i) Proceedings. Except as set forth on Schedule 5.1(i), there
are no actions or proceedings which are pending or threatened against
Borrower, any Primary Obligor or any Secondary Obligor which could
reasonably be expected to have a Material Adverse Effect.
(j) Government Contracts. Except as set forth on Schedule
5.1(j), neither Borrower, nor any Primary Obligor or any Secondary
Obligor has any government contracts.
(k) Adequate Licenses. Borrower, Primary Obligor and Secondary
Obligor possesses adequate Assets, licenses, patents, copyrights,
trademarks and tradenames to continue to conduct its business as
previously conducted by it and as contemplated in the foreseeable
future except such licenses, patents, copyrights, trademarks and trade
names the failure of which to obtain could not be reasonably expected
to have a Material Adverse Effect.
(l) Government Permits; Consents.
(i) Borrower and each Primary Obligor and Secondary
Obligor has been and is in good standing with
respect to all governmental permits,
certificates, consents and franchises necessary
to continue to conduct its business as
previously conducted prior to the date hereof
and to own or lease and operate its properties
as now owned or leased by it. None of said
permits, certificates, consents or franchises
contain any term, provision, condition or
limitation more burdensome than such as are
generally applicable to Persons engaged in the
same or similar business as the applicable Loan
Party.
(ii) Except for those consents set forth on Schedule
5.1(l), neither Borrower, nor any other Loan
Party requires the approval,
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consent, waiver, order or other authorization
by any other Person (including but not limited
to shareholders, partners, members, equity
owners, holders of Indebtedness Instruments, or
any owner of any lien upon the Assets of any
one or more of them or their Affiliates) for
the execution and delivery of, and the
consummation of the transactions contemplated
by, this Agreement and the other Loan
Documents, including but not limited to the
borrowing of the Loan, the pledge of the
Pledged Property, and the payment and
performance of all Secured Obligations.
Borrower and each other Loan Party has received
the consents described on Schedule 5.1(l) and
has delivered a copy thereof to Agent, which
consents are in full force and effect,
unmodified and unamended on the date hereof.
(m) Charge; Restrictions. Neither Borrower, nor any Primary
Obligor nor any Secondary Obligor is a party to (nor are any of its
Assets otherwise subject to) any contract or agreement or subject to
any Charge (other than Charges owed by First X or First B) restriction,
judgment, decree or order materially and adversely affecting its
business, property, assets, operations or condition, financial or
otherwise other than ad valorem taxes not yet due and payable.
(n) Compliance with Laws. Neither Borrower, nor any Primary
Obligor nor any Secondary Obligor is, or will be during the term
hereof, in violation of any applicable statute, regulation, order or
ordinance of the United States of America, of any state, city, town,
municipality, county or of any other jurisdiction, or of any agency
thereof, including the Federal Reserve Board, in any respect, which
has, had, or could reasonably be expected to have, a Material Adverse
Effect.
(o) Compliance with Indebtedness Instruments. Other than those
defaults set forth on Schedule 5.1(o) (as said Schedule 5.1(o) may be
amended from time to time), Borrower is and at no time during the term
hereof shall be in default under any Indebtedness Instrument. Other
than those defaults set forth on Schedule 5.1(o) (as said Schedule
5.1(o) may be amended from time to time), no Primary Obligor or any
Secondary Obligor is, on the date hereof, in default under any
Indebtedness Instrument.
(p) Financials. The Financials heretofore delivered by
Borrower, or any other Loan Party to Agent, fairly and accurately
present the Assets, liabilities and financial conditions and results of
operations of Borrower, and such other Persons described therein as of
and for the periods ending on such dates and have been prepared in
accordance with GAAP and such principles have been applied on a basis
consistently followed in all material respects throughout the periods
involved.
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(q) Tax Returns. Borrower and each other member of the
Consolidated Group has filed or caused to be filed all tax returns
which are required to be filed, and has paid all Charges shown to be
due and payable on said returns or on any assessments made against it
or any of its property, and all other Charges imposed on it or any of
its properties by any Governmental Authority, except for ad valorem
taxes.
(r) No Material Adverse Change. Except as set forth in
Schedule 5.1, Since September 30, 1999, no event or circumstance has
occurred that had, has or could reasonably be expected to have a
Material Adverse Effect.
(s) No Indebtedness. Except as disclosed in the most recent
Financials heretofore delivered by Borrower and in Schedule 5.1(h),
Schedule 5.1(s), Schedule 5.1(t), Schedule 5.1(u), and Schedule 6.3(l),
neither Borrower nor any other Loan Party has any Indebtedness (except
for Indebtedness arising in the ordinary course of its business since
the dates reflected in the Financials that is not Indebtedness for
borrowed money), has guaranteed or entered into any Guaranty Equivalent
(other than as a result of the endorsement of any instrument of items
of payment for deposit or collection in the ordinary course of business
or as otherwise expressly permitted pursuant to the terms hereof) the
obligations of any Person.
(t) Affiliate Indebtedness. Attached hereto as Schedule 5.1(t)
(as amended from time to time) is a true, accurate, and complete
schedule of all Indebtedness, other than the Pledged Notes and Excluded
Notes, owing by Borrower, any Primary Obligor, any Secondary Obligor or
any other Affiliate thereof setting forth: (i) the date such
indebtedness was incurred; (ii) the original principal amount thereof
and the outstanding principal balance thereof as of the date hereof;
(iii) the interest rate payable thereon; (iv) whether such indebtedness
is evidenced by a note or other writing and whether any security has
been granted to secure payment thereof; (v) the payment terms thereof;
(vi) the maturity date thereof; and (vii) whether there has been any
notice of default , or to Borrower's knowledge, any default thereunder.
(u) Affiliate Notes. Attached hereto as Schedule 5.1(u) is a
true, accurate and complete schedule of all promissory notes made by
any Affiliate payable to the order of a Borrower, a Primary Obligor or
a Secondary Obligor, other than the Pledged Notes and the Excluded
Notes. If at any time after the date hereof, any Affiliate borrows
money or otherwise incurs Indebtedness from Borrower, a Primary Obligor
or a Secondary Obligor, Borrower shall immediately (i) give Agent
notice thereof, (ii) deliver a copy of such note to Agent, (iii)
prepare a Schedule 5.1(u)(iii) (other than the Pledged Notes and the
Excluded Notes) (as amended from time to time) setting forth the maker
and holder of such note, the principal amount thereof and the payment
terms thereof, and (iv) if requested by Agent, cause the holder of such
note to pledge such note to Agent pursuant to a Note Pledge Agreement,
in form and substance acceptable to Agent, in its sole and exclusive
discretion.
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(v) No Liability on Lenders or Agent. The execution, delivery
and performance by Borrower and each other Loan Party of this Agreement
and/or the Other Agreements will not, except to the extent caused by
independent actions of Lenders and/or Agent, impose on or subject any
of the Lenders or the Agent to any liability, whether fixed or
contingent, in respect of any Environmental Law relating to the
operation of Borrower's business. None of the Lenders' or the Agent's
exercise of any of the rights or remedies described in this Agreement
or in any of the Other Agreements shall constitute a breach of any
provision contained in any agreement, instrument or document concerning
the assignment or license of, or the payment of royalties for, any
patents, patent rights, tradenames, trademarks, trade secrets,
know-how, copyrights or any other form of intellectual property now or
at any time or times hereafter protected as such by any applicable law.
(w) Affiliates. Schedule 5.1(w) attached hereto is a true,
accurate and complete schedule of Borrower's Affiliates, together with
a description of Borrower's relationship to each such Affiliate.
(x) Real Property; Environmental Issues. Neither Borrower nor
any Primary Obligor nor any Secondary Obligor, other than First X and
First B, now owns or at no time in the last five (5) years has owned,
any real property. Neither Borrower nor any Primary Obligor nor any
Secondary Obligor has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other
Governmental Authority concerning any action or omission resulting in
the releasing, or otherwise disposing of hazardous waste or hazardous
substances into the environment with respect to any real property.
(y) Investment Company Act and Public Utility Holding Company
Act. Neither Borrower nor any Primary Obligor or any Secondary Obligor
nor the entering into of any Loan Documents, nor the issuance of the
Notes are subject to any of the provisions of the Investment Company
Act of 1940, as amended. Neither Borrower, nor any Primary Obligor or
any Secondary Obligor is a "holding company" as defined in the Public
Utility Holding Company Act of 1935, as amended, or subject to any
other federal or state statute or regulation limiting its ability to
incur Indebtedness for money borrowed.
(z) Disclosure. Neither this Agreement nor any other Loan
Document nor any statement, list, certificate or other document or
information, nor any schedules to this Agreement or any other Loan
Document, delivered or to be delivered to Lenders or Agent, contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make statements contained
herein or therein, in light of the circumstances in which they are
made, not misleading. Copies of all documents delivered to Lenders
and/or Agent pursuant to Article 5 or any other provision of this
Agreement are true, correct and complete copies thereof and include all
Modifications thereto.
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(aa) Qualification.
(i) Solely by reason of (and without regard to any
other activities of Lenders and/or Agent in any
state in which Assets are located) the entering
into, performance and enforcement of this
Agreement, the Notes and the other Loan
Documents by Lenders and/or Agent will not
constitute doing business by Lenders and/or
Agent in any of such states or result in any
liability of Lenders and/or Agent for taxes or
other governmental charges; and qualification
by Lenders and/or Agent to do business in such
jurisdiction is not necessary in connection
with, and the failure to so qualify will not
affect, the enforcement of, or exercise of any
rights or remedies under, any of such
documents.
(ii) No "business activity," "doing business" or
similar report or notice is required to be
filed by the Lenders and/or Agent in any such
jurisdiction in connection with the Loans or
the transactions contemplated by this Agreement
or any other Loan Document, and the failure to
file any such report or notice will not affect
the enforcement of, or the exercise of any
rights or remedies under, this Agreement or any
of the other Loan Documents.
(bb) SEC Filings. The Borrower has filed and made available to
the Agent and Lenders each form, registration statement, schedule,
report, proxy statement and document required to be filed by Borrower
with the SEC since January 1, 1995 (collectively, the "SEC REPORTS").
Except as set forth on Schedule 5.1(bb), the SEC Reports (i) at the
time filed, complied in all material respects with the applicable
requirements of the Securities Laws and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required
to be stated in the SEC Reports or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Borrower is the only Loan Party required to
file pursuant to the Exchange Act. Since January 1, 1995, Borrower has
made all filings with the SEC in a timely manner as required by law and
no event has occurred that requires an additional filing or any
amendment to a prior filing, which has not been made or filed.
(cc) Assets of Affiliate Entities. No entity listed on
Schedule 5.1 (cc) has Assets with a fair market value of greater than
$100,000. The fair market value of all Assets of all the entities
listed on Schedule 5.1 (cc), in the aggregate, have a total fair market
value of less than $500,000.
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5.2 Representations Relating to Senior Subordinated Debt.
Concurrently herewith Borrower has entered into that certain Subordinated
Secured Senior Note Purchase Agreement by and among Borrower and each of the
Purchasers (as defined therein) referred to therein (the "SENIOR SUBORDINATED
DEBT AGREEMENT") with IFA Incorporated and other lenders, if any, named therein,
if any, (such lenders, together with their permitted successors and assigns
collectively, the "SENIOR SUBORDINATED DEBT LENDER") pursuant to which Borrower
shall obtain $25,000,000 of Indebtedness (the "SENIOR SUBORDINATED DEBT").
Attached hereto as Schedule 5.2 is a complete and accurate schedule of all
material documents, instruments and agreements executed, delivered or caused to
be delivered by Borrower or any other Person to Senior Subordinated Lender to
evidence, guaranty or secure the Senior Subordinated Debt (the "SENIOR
SUBORDINATED DEBT DOCUMENTS"). Borrower hereby represents and warrants to
Lenders and Agent that concurrently herewith Borrower has delivered or caused to
be delivered to Agent a true, accurate and complete copy of the Senior
Subordinated Debt Agreement and all Senior Subordinated Debt Documents. Neither
the Senior Subordinated Debt Agreement nor any other Senior Subordinated Debt
Document has been amended, modified or supplemented, nor have any of the
provisions thereof been waived. The Subordinated Debt Agreement has been duly
executed and delivered by Borrower and is in full force and effect. Each of the
representations and warranties of Borrower and each other party thereto,
contained in the Senior Subordinated Debt Agreement and the other Senior
Subordinated Debt Documents, is true and correct, and, to the extent made by
Borrower, Agent and each Lender shall be entitled to rely on such
representations and warranties with the same force and effect as if they were
set forth in this Agreement in full and made to Agent and each Lender directly.
The provisions of the Senior Subordinated Debt Documents, including but not
limited to all representations, warranties and covenants of the parties thereto,
are legal, valid and binding obligations of Borrower and all such other parties,
respectively, enforceable in accordance with the terms thereof.
5.3 Reaffirmation of Warranties and Representations. Each request for
an Advance made by Borrower pursuant to this Agreement or the Other Agreements
shall constitute (i) an automatic warranty and representation by Borrower to
Lenders and Agent that there does not then exist an Event of Default or an
Unmatured Default, and (ii) a reaffirmation as of the date of said Borrowing
Request that each and every warranty and representation of Borrower contained in
this Article 5 and other sections of this Agreement and in the Other Agreements,
including without limitation the representations set forth in the Stock Pledge
Agreements and Note Pledge Agreements, is true and correct in all material
respects, except where such representation or warranty specifically relates to
an earlier date.
5.4 Survival of Warranties and Representations. Borrower covenants,
warrants and represents to Lenders and Agent that all representations and
warranties of Borrower contained in this Agreement and the Other Agreements
shall be true on the date hereof, and shall survive the execution, delivery and
acceptance hereof and thereof by the parties thereto and the closing of the
transactions described herein and therein or related hereto or thereto.
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Unless expressly limited by the terms of this Article 5, each representation and
warranty shall be deemed to be remade concurrently with each Advance hereunder.
5.5 Exclusion of Harbor Debtors. Notwithstanding anything to the
contrary contained in Section 5.1, none of the representations, warranties,
covenants or agreements set forth in Section 5.1 shall be deemed to be
representations, warranties, covenants or agreements with respect to or by any
Harbor Debtor.
6 COVENANTS AND CONTINUING AGREEMENTS.
6.1 Financial Covenants. Borrower and all other members of the
Consolidated Group, on a consolidated basis, shall, at all times during the term
hereof, measured quarterly:
(a) maintain a ratio of Indebtedness to Tangible Net Worth
equal to or less than 5 to 1 for the period ending September 30, 1999
and a ratio of Indebtedness to Tangible Net Worth equal to or less than
4 to 1 for each period thereafter;
(b) maintain Tangible Net Worth equal to or greater than
$50,000,000 for the period ending September 30, 1999 and, for each
period thereafter;
(c) maintain a Tangible Net Worth equal or greater than
$50,000,000 plus fifty percent (50%) of the cumulative positive net
income for that period measured at the end of such period, provided
that, in any event, a Tangible Net Worth equal or greater than
$50,000,000 must always be maintained; and
(d) maintain a ratio of EBITDA to interest coverage equal to
1.7 to 1 measured on a trailing three month basis commencing December
31, 1999.
All covenants set forth herein shall be measured quarterly, upon receipt of the
statements delivered to Agent pursuant to Section 6.2(c)(iii) or the annual
consolidated financial statements delivered in accordance with Section
6.2(c)(i), if available.
6.2 Affirmative Covenants. Borrower warrants and represents to and
covenants with Agent and Lenders that Borrower shall, and shall cause each
Primary Obligor and each Secondary Obligor to, unless Majority Lenders otherwise
consents thereto in writing, do all of the following during the term hereof:
(a) Representation and Warranties. Subject to Borrower's right
to cure set forth in Section 7.1(e), to the extent any representation
or warranty contained herein refers to an event or state of facts which
exists on the date hereof and shall exist during the term hereof or at
the time of each Advance hereunder, said representation or warranty
shall be deemed to be an affirmative covenant by Borrower to take all
actions, omit to take such actions or cause such actions to be taken
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which shall be necessary or desirable to cause such representation or
warranty to be true and accurate at all times during the term hereof.
To the extent any representation, warranty or covenant herein
(including the negative covenants set forth in Section 6.3) relates to
any other Person (including but not limited to a Primary Obligor, a
Secondary Obligor, any Pledged Entity or any other Loan Party) it shall
be deemed to be a covenant of Borrower to cause such Person to comply
with or otherwise perform such representation, warranty or covenant,
whether or not Borrower has the legal, corporate or other ability to
cause such compliance or performance.
(b) Corporate Existence. Borrower, Primary Obligors and
Secondary Obligors shall preserve and maintain their respective
corporate existence, rights, privileges and franchises in the
jurisdiction of their respective incorporation or organization, and
qualify and remain qualified to do business in each other jurisdiction
in which such qualification is necessary in view of their respective
business or operations, except such jurisdictions where failure to
qualify would not have, or could not reasonably be expected to have a
Material Adverse Effect.
(c) Records; Reports. Borrower covenants with Lenders and
Agent that Borrower shall keep Records and prepare financial statements
and shall cause to be furnished to Agent (with sufficient copies for
all Lenders) the following (all of the foregoing and following which
comprise financial statements are to be kept and prepared in accordance
with GAAP applied on a basis consistent with the Financials unless
Borrower's independent certified public accountants concur in any
changes therein and such changes are consistent with then applicable
GAAP).
(i) Annual:
A. As soon as available but not later
than ninety (90) days after the
close of each fiscal year of
Borrower, an audited consolidated
balance sheet of Borrower and the
other members of the Consolidated
Group as at the end of such year,
the related statement of operations
(including income statement) for
such year and a reconciliation of
capital for such year, all certified
on an unqualified basis by a firm of
independent certified public
accountants selected by Borrower and
acceptable to Agent, in Agent's sole
and absolute discretion.
B. As soon as available but not later
than ninety (90) days after the
close of each fiscal year of
Borrower, an unaudited consolidating
balance sheet of Borrower and the
other members of the Consolidated
Group as at the end of such year
prepared on a consolidating basis,
the related
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statements of operations (including
income statement) for such year and
a reconciliation of capital for such
year, prepared by the chief
financial officer of Borrower.
(ii) Concurrently with the delivery of the financial
statements described in Section (i) above for
fiscal years ending after December 31, 1998:
(A) a certificate of the aforesaid independent
certified public accountants certifying to
Agent that based upon their examination of the
affairs of Borrower and the other members of
the Consolidated Group (excluding the Harbor
Debtors), performed in connection with the
preparation of said financial statements, they
are not aware of the occurrence or existence of
any condition or event which constitutes an
Event of Default or Unmatured Default, or, if
they are aware thereof, the nature thereof, and
(B) a reliance letter executed by an authorized
partner of the aforesaid independent certified
public accountants, in form and substance
reasonably acceptable to Agent, and
acknowledging that Agent and Lenders may rely
on such financial statements in connection with
this Agreement notwithstanding that Agent and
Lenders are not in privity with such
independent certified public accountants in
connection with such financial statements.
(iii) As soon as available but not later than thirty
(30) days after the end of each calendar month
hereafter, a consolidated and consolidating
balance sheet of Borrower and the other members
of the Consolidated Group as at the end of, and
the related statement of operations for, the
portion of such Person's fiscal year then
elapsed, all certified by the chief financial
officer of such Person's to be prepared in
accordance with GAAP and to present fairly the
financial position and results of operations of
such Person for such period.
(iv) Concurrently with delivery to its stockholders
copies of all financial and other information
delivered by Borrower to such Persons,
including without limitation, its proxy
statements and annual reports to stockholders.
Within two (2) Business Days after delivery to
the SEC by Borrower, which in all cases shall
be on a timely basis in accordance with the
applicable document and the Securities Laws,
copies of all reports and other filings filed
by Borrower with the SEC, including without
limitation, all reports on Forms 10K, 10Q or 8K
promulgated under the Securities Exchange Act
of 1934, as amended, and all registration
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statements filed under the Securities Act of
1933, as amended.
(v) Concurrently with delivery of the Financials
required pursuant to Sections 6.2(c)(i) and
(iii) hereof, a certificate executed by the
President, Treasurer or Chief Financial Officer
of Borrower that (A) no Event of Default or
Unmatured Default has occurred and is
continuing under this Agreement (including but
not limited to compliance with the covenants
set forth in Section 6.1) and that (B) no event
of default and no event or condition which,
with the passage of time or the giving of
notice or both, would constitute an event of
default has occurred and is continuing under
any other Indebtedness Instrument ("OTHER
INDEBTEDNESS INSTRUMENT UNMATURED DEFAULT") or
if an Event of Default or Unmatured Default has
occurred under this Agreement or an event of
default or Other Indebtedness Instrument
Unmatured Default has occurred under any other
Indebtedness Instrument, setting forth the
details of such event and the action which
Borrower proposes to take with respect thereto.
(vi) Bi-weekly, a statement of income and expense of
FC Capital, including proceeds from the
liquidation of assets, in form and detail
reasonably acceptable to Lenders.
(vii) Such other data and information (financial and
otherwise) as Agent and/or any Lender, from
time to time, reasonably may request bearing
upon or related to Borrower's or any Primary
Obligor's or any Secondary Obligor's financial
condition and/or results of operations.
(d) Insurance. Borrower, Primary Obligors and Secondary
Obligors at their sole cost and expense, shall keep and maintain: (i)
policies of insurance against all hazards and risks ordinarily insured
against by other owners or users of properties in similar business or
as reasonably requested in writing by Agent; and (ii) public liability
insurance relating to such Person's ownership and use of its Assets.
All such policies of insurance shall be in form, with insurers and in
such amounts as may be satisfactory to Agent. Borrower shall deliver to
Agent the original (or certified) copy of each policy of insurance, and
evidence of payment of all premiums for each such policy. Such policies
of insurance (except those of public liability) shall contain an
endorsement, in form and substance acceptable to Agent, showing losses
payable to Agent for the ratable benefit of Lenders. Such endorsement
or an independent instrument furnished to Agent, shall provide that all
insurance companies will give Agent at least thirty (30) days prior
written notice before any such policy or policies of insurance shall be
altered or canceled and that
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no act or default of Borrower or any other Person shall affect the
right of Agent for the ratable benefit of Lenders, to recover under
such policy or policies of insurance in case of loss or damage. Upon
request by Agent and upon the occurrence of an Event of Default or
Unmatured Default, Borrower hereby directs all insurers under such
policies of insurance (except those of public liability) to pay all
proceeds payable thereunder directly to Agent. Upon request by Agent
and upon the occurrence of an Event of Default or Unmatured Default,
Borrower, irrevocably, appoints Agent (and all officers, employees or
agents designated by Agent) as Borrower's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of
Borrower on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of
insurance. In the event Borrower at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required
above or to pay any premium in whole or in part relating thereto,
then Agent, without waiving or releasing any of Borrower's
Obligations or any Event of Default or Unmatured Default hereunder,
may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Agent
deems advisable. All sums so disbursed by Agent, including reasonable
attorneys' fees, court costs, expenses and other charges relating
thereto, shall be part of Borrower's Liabilities, payable by Borrower
to Agent on demand. Agent shall also be named as an additional
insured with respect to Borrower's liability insurance.
(e) Payment of Charges. Other than Charges payable by First X
or First B, Borrower, each Primary Obligor and each Secondary Obligor
shall pay promptly, when due, all Charges and Borrower, each Primary
Obligor and each Secondary Obligor shall not permit the Charges to
arise or to remain unpaid, and will promptly discharge the same. In the
event Borrower, any Primary Obligor or any Secondary Obligor, at any
time or times hereafter, shall fail to pay the Charges or to obtain
such discharges as required herein, Borrower shall so advise Agent
thereof in writing. Agent may, without waiving or releasing any of
Borrower's Obligations or any Event of Default or Unmatured Default
hereunder, in its sole and absolute discretion, at any time or times
thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which Agent
deems advisable. All sums so paid by Agent and any expenses, including
reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be part of Borrower's Liabilities, payable by
Borrower to Agent on demand. Notwithstanding the foregoing, Borrower,
any Primary Obligor or any Secondary Obligor may permit or suffer the
Charges to attach to its Assets and may dispute, without prior payment
thereof, the Charges, on the conditions that: (i) Borrower or the
applicable Primary Obligor or Secondary Obligor, in good faith, shall
be contesting the same in an appropriate proceeding diligently pursued;
(ii) enforcement thereof against any assets of Borrower or the
applicable Primary
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<PAGE>
Obligor or Secondary Obligor shall be stayed; and (iii) appropriate
reserves therefor shall have been established on the Records of
Borrower or the applicable Primary Obligor or Secondary Obligor in
accordance with GAAP.
(f) Pay Debts. Except as disclosed in Schedule 5.1(h) and
Charges payable by First X and First B, Borrower and each Primary
Obligor and Secondary Obligor shall pay or discharge or otherwise
satisfy all Indebtedness at or before maturity or before the same
becomes delinquent; provided that neither Borrower, nor any Primary
Obligor or any Secondary Obligor shall be required to pay any
Indebtedness while the same is being contested by it in good faith and
by appropriate proceedings so long as Borrower or the applicable
Primary Obligor or Secondary Obligor shall have set aside on its books
reserves in accordance with GAAP with respect thereto and title to any
property of Borrower or the applicable Primary Obligor or Secondary
Obligor is not jeopardized.
(g) Compliance with Laws. Borrower and each Primary Obligor
and Secondary Obligor shall comply with all laws, rules, regulations
and governmental orders (federal, state and local), including all
Environmental Laws, having applicability to it or to the business or
businesses at any time conducted by it, where the failure to so comply
would have, or could reasonably be expected to have, a Material Adverse
Effect.
(h) Perform Obligations. Borrower and each Primary Obligor and
Secondary Obligor shall duly and punctually pay and perform each of its
obligations under this Agreement and the Other Agreements in accordance
with the terms hereof and thereof.
(i) Payment of Dividends from Subsidiaries. To the extent
necessary to enable it to make payments of the Secured Obligations in
accordance with the terms hereof, Borrower shall cause dividends to be
paid to it by its Subsidiaries (whether in existence as of the date
hereof or hereafter formed or acquired) in amounts which are sufficient
to enable Borrower to satisfy its payment obligations under the terms
hereof; provided that Borrower shall not be required to take any action
which would result in a Subsidiary paying dividends to the extent not
permitted by applicable law and regulation and/or restrictions existing
under agreements in effect on the Closing Date if Borrower receives an
opinion of outside counsel (in form and substance satisfactory to
Lenders and Agent) as to the existence of the relevant restriction no
later than the applicable payment date or the Maturity Date, whether by
acceleration or otherwise.
(j) Stay, Extension and Usury Laws. Borrower covenants (to the
extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law or other law which would
prohibit or forgive it from paying all or any portion of the principal
of, premium, if any, or interest on the Notes, wherever enacted, now or
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<PAGE>
at any time hereafter in force, or which may affect the covenants or
the performance of its obligations under the Notes, and Borrower (to
the extent it may lawfully do so) hereby expressly waives all benefits
or advantages of any such law.
(k) Investigation and Confidentiality.
(i) Borrower shall permit Agent, Lenders and
each of their respective representatives reasonable access
during normal business hours to its properties and
personnel, and shall disclose and make available to Agent
and Lenders all books, papers and records relating to the
assets, stock ownership, properties, operations,
obligations, and liabilities of Borrower and its
Subsidiaries, including, but not limited to, all books of
account (including the general ledger), tax records,
minute books of meetings of boards of directors (and any
committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements,
filings with any regulatory authority, accountants' work
papers (other than those that are the property of its
independent outside auditors), litigation files, loan
files, plans affecting employees, and any other business
or prospects in which the Lenders may have a reasonable
interest in connection with the Loans, provided that such
access shall be reasonably related to the transactions
contemplated hereby and not unduly interfere with normal
operations, and provided further that in the event that
any of the foregoing are in the control of any third
party, Borrower shall use its reasonable best efforts to
cause such third party to provide access to such materials
to the Agent and Lenders who shall request the same. In
the event that Borrower is prohibited by law from
providing any of the access referred to in the preceding
sentence to the Agent and Lenders, it shall use its
reasonable best efforts to obtain promptly waivers thereof
so as to permit such access. Borrower shall make its
directors, officers, employees and agents and authorized
representatives (including counsel and independent public
accountants) and its Subsidiaries available to confer with
Agent and Lenders and their respective representatives,
provided that such access shall be reasonably related to
the transactions contemplated hereby and not unduly
interfere with normal operations.
(ii) All information furnished to the Agent and
Lenders by the Borrower previously in connection with the
transactions contemplated by this Agreement or pursuant
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<PAGE>
hereto shall be treated as the sole property of the Agent
and Lenders and the Agent and Lenders covenant, severally
and not jointly and each as to itself only, that it shall
use its best efforts to keep confidential all such
information and shall not directly or indirectly use such
information for any purpose other than in connection with
the transactions contemplated hereby. The obligation to
keep such information confidential shall continue for five
years from the date hereof, but shall not apply to (i) any
information which any of the Agent or Lenders can
establish by convincing evidence (x) was already in its
possession prior to the disclosure thereof by Borrower;
(y) was then generally known to the public; or (z) became
known to the public through no fault of any of the Agent
and/or Lenders; or (ii) disclosures pursuant to a legal
requirement or in accordance with an order of a court of
competent jurisdiction.
(l) Approvals and Consents. In the event that any approval,
consent or non-objection need be obtained by Borrower, any Primary
Obligor and/or any Secondary Obligor from, or a notice or other filing
need be filed by Borrower, any Primary Obligor and/or any Secondary
Obligor, with, any Governmental Authority in connection with the
execution, delivery and performance of this Agreement or any Loan
Document by Borrower, any Primary Obligor and/or any Secondary Obligor,
the Borrower shall take and cause the Primary Obligors and Secondary
Obligors to take, as applicable, all actions reasonably necessary to
obtain any such approval, consent or non-objection or file such notice
or other filing as promptly as practicable, and the Lenders agree to
cooperate with Borrower in obtaining or filing the same.
(m) FC Capital Guaranty. Borrower shall cause FC Capital, no
later than three Business Days after the aggregate outstanding
principal amounts under the Nomura Facility and the Lehman Facility
have been paid in full, to execute and deliver to Agent a guarantee
agreement in respect of Borrower's obligations under this Agreement and
the Notes substantially in the form of the Guaranties and otherwise
satisfactory to the Lenders and Agent in form and substance except that
FC Capital's guarantee of the principal amount of the Notes shall not
exceed $12,000,000. As used herein: "Lehman Facility" means that
certain Master Agreement Governing the Purchase and Sale of Mortgage
Loans dated as of 3/30/98 between Lehman Commercial Paper Inc. and FC
Capital; and "Nomura Facility" shall mean, individually and
collectively, the agreement between FC Capital and Nomura Securities
(Bermuda) with respect to the FC Securitization 1998-1 Retained I/O &
Servicing Asset and the agreement between FC Capital and Nomura
Securities (Bermuda) with respect to the FC Securitization 1998-2
Retained I/O & Servicing Asset.
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6.3 Negative Covenants. Borrower warrants and represents to and
covenants with Lenders and Agent that neither Borrower, nor any Primary Obligor
nor any Secondary Obligor, as the case may be, shall, without Majority Lender's
prior written consent, which Majority Lender's may or may not give in its sole
and absolute discretion, concurrently or hereafter do any of the following:
(a) Sell or Encumber Assets. Neither Borrower, nor any Primary
Obligor nor any Secondary Obligor shall assign, sell or transfer any of
its Assets to any Person, other than in the ordinary course of
business. Neither Borrower, nor any Primary Obligor or any Secondary
Obligor shall assume, create, incur, or permit, grant, or suffer a Lien
upon any of its Assets, except (i) the Permitted Liens, and (ii)
Charges payable by First X and First B.
(b) Attachment. Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall permit or suffer any levy, attachment or
restraint to be made affecting any of its Assets.
(c) Receiver. Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall permit or suffer any receiver, trustee or
assignee for the benefit of creditors, or any other custodian to be
appointed to take possession of all or any of its Assets, other than a
custodian pursuant to a voluntary custodial agreement entered into to
perfect a security interest permitted hereby.
(d) Amend Organic Documents; Business Objectives. Neither
Borrower, nor any Primary Obligor or any Secondary Obligor shall make
any change: (i) in its Organic Documents or capital structure; or (ii)
in any of its business objectives, purposes and operations, including
by undertaking additional business activities. Neither Borrower, nor
any Primary Obligor nor any Secondary Obligor shall engage in any
business not of the same general type as those conducted by them on the
date hereof.
(e) Mergers and Acquisitions.
(i) Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall merge or
consolidate with any Person.
(ii) National Auto Funding Corporation, a Texas
corporation and Affiliate of Borrower, will not
merge, consolidate or acquire the Assets of any
Person, shall not commence any new business
venture and shall use the proceeds of any sale
or other disposition of its Assets to pay the
Eligible Note made by it to Borrower.
(f) Stock Transfers.
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(i) Except as disclosed in Schedule 5.1(e), as
amended from time to time with Majority
Lenders' consent, and except as permitted
pursuant to Section 6.3(f)(ii), neither any
Primary Obligor, any Secondary Obligor nor any
Pledged Entity shall grant any option, warrant
or other right to purchase any equity interest
in such Person, without in each case the prior
written consent of Majority Lenders, which
consent shall not be unreasonably withheld.
(ii) Notwithstanding anything to the contrary
contained herein, Borrower shall have the right
to register on Form S-3, and publicly offer and
sell equity Securities of Borrower under the
following terms and conditions: (w) Borrower
shall deliver notice to Agent, within
twenty-four (24) hours of the filing with the
SEC; (x) Borrower shall fully and timely comply
with all Securities Laws and with all terms and
provisions of the underwriting agreement
pursuant to which such Securities are offered
for sale; (y) the prospectus and all other
selling materials used by Borrower in such
offering shall not contain any misstatement of
material fact or omit to state any fact which
would render the statements contained therein
false or misleading, and (z) Borrower shall pay
the proceeds of such offering to Agent, in
accordance with the terms hereof.
(g) Adverse Transactions.
(i) Neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall enter into any
transaction which materially and adversely
affects its ability to perform its obligations
under the Loan Documents or to pay any other
Indebtedness.
(ii) Neither Borrower, nor any other Loan Party
shall make capital contributions, loans or
gifts to, investments in or enter into any
Guaranty Equivalent with respect to the
obligations of any entity identified on
Schedule 5.1(cc) at any time during the term
hereof.
(h) Investments.
(i) Subject to the further limitations set forth in
Sections 6.3(h) (ii), (iii) and (iv), after the
date hereof, neither Borrower, nor any Primary
Obligor nor any Secondary Obligor shall make
any investment in the Securities or obligations
or any Person, except in the ordinary course of
business.
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(ii) After the date hereof, neither Borrower nor any
Primary Obligor nor any Secondary Obligor shall
invest (either directly or indirectly through
an Affiliate) in: (A) the Securities of any
Person organized under the laws of any country
or governmental body outside of the United
States, (B) in the Securities of any Person
which owns assets located outside of the United
States (other than commercial paper and other
debt securities of any Lender or the Agent), or
(C) in any assets located outside of the United
States (other than commercial paper and other
debt securities of any Lender or the Agent);
provided that, nothing contained in this
Section 6.3(h)(ii) shall be deemed to prohibit
any such investment by FC International.
(iii) After the date hereof, without Lenders' prior
written consent, which consent may be withheld
in Lenders sole and exclusive discretion,
neither Borrower nor any Primary Obligor nor
any Secondary Obligor will invest in any Person
or any asset not specifically contemplated in
Borrower's business plan delivered to Lenders
and dated October, 1999 (the "OCTOBER BUSINESS
PLAN").
(iv) After the date hereof, Borrower will only
invest in FC Commercial and/or FC Servicing in
a manner specifically contemplated in the
October Business Plan. As used in Sections
6.3(h)(ii), (iii) and (iv) "invest" shall
include, but not be limited to (y)
contributions to the capital of a Person, and
(z) making loans or other financial
accommodations to a Person.
(v) Neither Borrower, nor any Primary Obligor, nor
any Secondary Obligor, nor any Subsidiary
thereof shall make any investment in any one or
more of the Harbor Debtors or FC Capital.
(i) Dividends; Payment of Fees, etc. Neither Borrower, nor any
Primary Obligor nor any Secondary Obligor shall: (i) pay any dividends
or make any distributions of property or assets with respect to its
Stock, including, but not limited to, dividends with respect to its
equity interests, including any preferred Stock; (ii) pay any
director's fees or any salaries to any director or shareholder unless
such shareholder or director is directly and actively employed by a
Borrower or any Primary Obligor or Secondary Obligor; provided that,
Borrower may compensate outside directors in an amount not to exceed
$20,000.00 per year.
(j) Fee Agreements. Attached hereto as Schedule 6.3(j) (as
amended from time to time) is a true, accurate and complete schedule of
all Fee Agreements
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to which Borrower or any Primary Obligor or Secondary Obligor is a
party. Lenders hereby expressly consent to the performance by
Borrower and said Primary Obligors and Secondary Obligors of said Fee
Agreements, that are in effect on the date hereof. Within ten (10)
Business Days after Borrower, any Primary Obligor or any Secondary
Obligor has entered into any new Fee Agreement or shall have modified
in any material respect any existing Fee Agreement, Borrower shall
give Agent notice thereof and amend Schedule 6.3(j), if applicable,
and shall, upon request by Agent, deliver a copy of any new or
amended Fee Agreement to Agent. Borrower shall not enter into any
other transactions with any Affiliate, including, without limitation,
agreements for the purchase, sale or exchange of property or the
rendering of any services to or by any Affiliate, or enter into,
assume or suffer to exist any employment, management, administration,
advisory or consulting contract with any Affiliate or, in each of the
foregoing cases, with any officer, director or partner of any
Affiliate (or a spouse or other relative of any of them) unless (a)
such transaction is otherwise not in violation of this Agreement or
any other Loan Document and (b) is in the ordinary course of its
business and is upon fair and reasonable terms no less favorable to
it than it would obtain in a comparable arm's-length transaction with
a Person not an Affiliate; and (c) the consideration payable pursuant
to such transaction or series of similar transactions with such
Affiliates or its Subsidiaries is not greater than $50,000 in the
aggregate in any one calendar year.
(k) Indebtedness.
(i) Neither Borrower nor any Primary Obligor shall
contract, create, incur, assume or suffer to
exist any Indebtedness; except for (A)
Indebtedness to Lenders and Agent pursuant to
this Agreement and the other Loan Documents;
(B) Indebtedness to the Senior Subordinated
Debt Lender incurred on the Closing Date
pursuant to the Senior Subordinated Debt
Agreement and the other Senior Subordinated
Debt Documents (as in effect on the Closing
Date); provided that the aggregate principal
amount of Senior Subordinated Debt shall not
exceed $25,000,000; (C) Indebtedness existing
on the Closing Date and reflected on the
Financials of Borrower delivered on the Closing
Date; (D) Indebtedness disclosed on Schedules
5.1(s), (t), and (u); (E) the FC Holdings Line
of Credit and the FC Consumer Lending Line of
Credit, if approved in writing by Lenders,
which approval shall not be unreasonably
withheld; and (F) unsecured trade payables
incurred in the ordinary course of business.
(ii) Borrower shall have the right, from time to
time, to refinance the Senior Subordinated Debt
in an aggregate principal amount not to exceed
$25,000,000, with an institutional lender (or a
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non-institutional lender reasonably acceptable
to Agent) on financial terms no more onerous
than those provided for in the Senior
Subordinated Debt Documents, with a maturity
date no earlier than December 31, 2003;
provided that the substitute lenders enter into
a subordination and inter-creditor agreement in
substantially the form of the Subordination
Agreement, with only such modifications as
Lenders shall approve in their sole discretion.
(l) Loan; Guaranty Debt. Neither Borrower nor any Primary
Obligor nor Secondary Obligor shall make any loan to any Person, except
for loans made by Borrower pursuant to Pledged Notes and the Excluded
Notes. Except as set forth on Schedule 6.3(l), neither Borrower, nor
any Primary Obligor nor any Secondary Obligor shall enter into any
Guaranty Equivalents.
(m) Pay Indebtedness. Except in the ordinary course of
business, neither Borrower, nor any Primary Obligor nor any Secondary
Obligor shall defease, prepay, repay, purchase, redeem or otherwise
acquire any of its Indebtedness for borrowed money.
(n) Issue Power of Attorney. Except pursuant to this Agreement
and the Other Agreements, neither Borrower, nor any Primary Obligor nor
any Secondary Obligor shall issue any power of attorney or other
contract or agreement giving any Person power or control over the
day-to-day operations of Borrower's, any Primary Obligor's or any
Secondary Obligor's business, other than in connection with Permitted
Liens or Indebtedness expressly permitted pursuant to the terms of this
Agreement; provided that FC International and FC Holdings shall have
the right to grant powers-of-attorney necessary to consummate
transactions out side of the United States, in the ordinary course of
its business to acquire assets in transactions subject to the
following: if the person to whom such power of attorney is granted is
not the chairman or president of FC Commercial or the senior vice
president of FC Commercial (whether or not acting in that capacity) or
Robert J. Ketron, then the amount of all equity investments by FC
Holdings or FC International in such transaction may not exceed
$3,000,000.
(o) Amendment of Credit Agreements. Neither Borrower, nor any
Primary Obligor or any Secondary Obligor, shall amend, modify or extend
any note, credit agreement, security agreement or other document,
instrument or agreement evidencing or securing Indebtedness of such
entity, including, but not limited to, in the case of Borrower, any of
the Senior Subordinated Debt Documents without in each case Majority
Lenders' prior written consent, which consent may be withheld in
Majority Lenders' sole and exclusive discretion; provided that Borrower
may extend existing credit facilities under financial terms no more
onerous than those provided for in the applicable existing credit
facility, including interest rate, costs, and fees payable to the
provider of such facility.
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(p) Use of Proceeds. Loan proceeds shall be used only for
those purposes permitted in Section 2.6(a). No Loan proceeds shall be
loaned to, contributed as capital to, used to pay the debts or
obligations of or otherwise expended (either directly or indirectly) by
Borrower, nor shall Borrower permit any Subsidiary or other Affiliate
(other than members of the Harbor Debtors) to make loans to, contribute
capital to, pay the debts or obligations of or otherwise expend monies
(either directly or indirectly) for the benefit of or on behalf of any
one or more of the Harbor Debtors.
(q) Payments for Consent. The Borrower, Primary Obligors and
Secondary Obligors shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest fee or otherwise, to
any Lender as an inducement to any consent, waiver or amendment of any
of the terms or provisions of any Loan Document unless such
consideration is paid to all Lenders. Except as expressly permitted
pursuant to the Subordination Agreement, neither the Borrower, nor any
Primary Obligors, Secondary Obligors nor any Subsidiary thereof shall
defease, prepay, repay, purchase or redeem any Senior Subordinated
Debt.
(r) Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries. Borrower shall not, and shall not permit any of
its Subsidiaries (whether in existence as of the date of initial
issuance of the Notes or thereafter formed or acquired) to, create,
assume or otherwise cause or suffer to exist or to become effective any
consensual encumbrance or restriction on the ability of any such
Subsidiary to:
(i) pay any dividends or make any other
distribution on its Stock or other equity interests to
Borrower or any of its Subsidiaries;
(ii) make payments in respect to any
Indebtedness owed to Borrower or any other Subsidiary of a
Borrower; or
(iii) make loans or advances to a Borrower or
any of its Subsidiaries or to guarantee Indebtedness of a
Borrower or any other Subsidiary of a Borrower;
other than, in the case of (i), (ii) and (iii),
(1) restrictions existing under
agreements in effect on the date of initial
issuance of the Notes;
(2) consensual encumbrances or
restrictions binding upon any Person at the
time such Person becomes a Subsidiary of a
Borrower so long as such encumbrances or
restrictions (i) are not created, incurred or
assumed in contemplation of such Person
becoming a Subsidiary
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and (ii) do not encumber or restrict Borrower
or any other Subsidiary of Borrower;
(3) restrictions with respect to a
Subsidiary imposed pursuant to an agreement
which has been entered into for the sale or
disposition of all or substantially all the
assets (which term may include the capital
stock) of such Subsidiary;
(4) restrictions on the transfer of
assets which are subject to Liens; and
(5) restrictions existing under any
agreement which refinances or replaces any of
the agreements containing the restrictions in
clauses (1) and (2), provided that the terms
and conditions of any such restrictions are not
materially less favorable to the Lenders than
those under the agreement evidencing or
relating to the Indebtedness refinanced.
(s) Senior Subordinated Debt Payments. Neither Borrower, nor
any Primary Obligor, nor any Secondary Obligor nor any Subsidiary
thereof shall make any payment of or with respect to the principal of
or premium (if any) with respect to the Senior Subordinated Debt and
neither Borrower, nor any Primary Obligor, nor any Secondary Obligor
nor any Subsidiary thereof shall acquire any of the Senior Subordinated
Debt for cash or property.
6.4 Required Notices.
(a) Borrower shall notify Agent and amend Schedule 5.1(t)
within two (2) Business Days after: (i) Borrower makes any additional
loans or advances to any Primary Obligor or Secondary Obligor, whether
or not evidenced by a writing signed by the obligor thereof; or (ii)
Borrower received any payment of principal on any Pledged Note;
provided that nothing in this Section 6.4(a) shall be deemed to permit
any use of proceeds of the Loans other than as expressly permitted
pursuant to Section 2.6(a).
(b) In addition to those notices required elsewhere in this
Agreement, in the Stock Pledge Agreement, in the Note Pledge Agreement
or any other Loan Document to which Borrower is a party, Borrower shall
notify Agent promptly after obtaining knowledge of:
(i) except as otherwise previously disclosed, any
event or occurrence which Borrower has
determined has caused a material loss or
decline in value of Borrower's, any Primary
Obligor's, or any Secondary Obligor's Assets
due to casualty or any other adverse occurrence
and the estimated (or actual, if available)
amount of such loss or decline;
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(ii) the institution of any suit or administrative
proceeding which, if determined adversely to
Borrower, any Primary Obligor or any Secondary
Obligor or any Pledged Entity, is reasonably
likely to or could reasonably be expected to
materially adversely affect the operations,
financial condition or business of any obligor
of a Pledged Note or have a Material Adverse
Effect;
(iii) Borrower, any Primary Obligor or any Secondary
Obligor or any Pledged Entity becoming subject
to any Charge, restriction, judgment, decree or
order which could reasonably be expected to
have a Material Adverse Effect.
(iv) the commencement of any lockout, strike or
walkout relating to any labor contract to which
Borrower, any Primary Obligor or any Secondary
Obligor is a party;
(v) except as otherwise previously disclosed, any
event or occurrence which Borrower, any Primary
Obligor or any Secondary Obligor or any Pledged
Entity has determined will have or could
reasonably be expected to have a Material
Adverse Effect on the ability of any obligor of
a Pledged Note to repay such Pledged Note;
(vi) the occurrence of a default by Borrower, any
Primary Obligor or any Secondary Obligor or any
Pledged Entity under any agreement, document or
instrument to which it is a party which could
reasonably be expected to have a Material
Adverse Effect or materially and adversely
affect the Pledged Entity's business,
operations, Assets, condition (financial or
otherwise) or ability to perform its respective
obligations under the Loan Documents;
(vii) the filing of a petition under any section or
chapter of the United States Bankruptcy Code or
any similar law or regulation shall be filed by
or against Borrower, any Primary Obligor,
Secondary Obligor, or any Pledged Entity or any
such Person shall make an assignment for the
benefit of its creditors or if any case or
proceeding is filed by or against any such
Person for its dissolution or liquidation;
(viii) the making of an application for the
appointment of a receiver, trustee or custodian
for any of the assets of Borrower, any Primary
Obligor, or any Secondary Obligor, other than
voluntary custodial relationships entered into
to perfect security interests;
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(ix) as soon as possible and in any event within
five (5) days after Borrower shall have
obtained knowledge of the occurrence of an
Event of Default or Unmatured Default, the
written statement of the chief financial
officer of Borrower setting forth the details
of such event and the action which Borrower
proposes to take with respect thereto;
(x) the exercise by any holder of any option,
warrant or right to purchase any equity
interest in Borrower, any Primary Obligor, any
Secondary Obligor or any other Pledged Entity,
other than the exercise of rights disclosed in
Section 5.1(e);
(xi) the breach of the covenants set forth in
Section 6.2(i);
(xii) the issuance or sale of any Securities by
Borrower, any Primary Obligor or any Secondary
Obligor, whether or not permitted pursuant to
the terms hereof; and
(xiii) the occurrence of an Event of Default or
Unmatured Default under the Senior Subordinated
Debt Documents. Borrower shall immediately
forward to Agent copies of any notices sent to
it by any Senior Subordinated Debt Lender, or
any representative thereof, in connection with
such Event of Default or Unmatured Default,
provided however, that notwithstanding the
foregoing, Borrower shall not pay interest at a
default rate under the Senior Subordinated Debt
Documents without the prior written consent of
Majority Lenders.
6.5 Payment of Claims. Upon the occurrence of an Event of Default or
an Unmatured Default, Agent, in its sole and absolute discretion, without
waiving or releasing any of Borrower's Liabilities or Borrower's Obligations or
any Event of Default, may at any time or times hereafter, but shall be under no
obligation to, pay, acquire and/or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person against the Assets
of Borrower, or any Primary Obligor, or any Secondary Obligor. All sums paid by
Agent in respect thereof and all reasonable Costs relating thereto incurred by
Agent or for which Agent becomes obligated on account thereof shall be part of
Borrower's Liabilities payable by a Borrower to Agent on demand and any amount
not paid on demand shall bear interest at the Default Rate.
6.6 Year 2000 Compliance.
(a) The computer and management information systems of the
Borrower, the Primary Obligors and the Secondary Obligors are adequate
for the conduct of their business as presently conducted and as
proposed to be conducted and there are no material requirements for
systems integration, upgrade or replacement, and
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there are no facilities or software inadequacies that could
reasonably be expected to have a material adverse effect on the
business of Borrower, any Primary Obligor, or any Secondary Obligor.
(b) The Borrower, the Primary Obligors and the Secondary
Obligors are Year 2000 Compliant and shall remain Year 2000 Compliant
at all times hereafter. As used in the preceding sentence, "YEAR 2000
COMPLIANT" means the ability of the software and other information
processing capabilities of such Person to correctly interpret and
process all data in whatever form so as to avoid errors that may
otherwise occur because of the inability of software or other
information processing capabilities to recognize accurately the year
2000 or subsequent dates.
(c) Any reprogramming required to permit the proper
functioning of the computer and management information systems of the
Borrower and its Subsidiaries during and following the year 2000 has
been completed as of the date hereof. The cost of such reprogramming
did not and is not expected to have a Material Adverse Effect.
7 DEFAULT
7.1 Events of Default. The occurrence of any one of the following
events shall constitute a default ("EVENT OF DEFAULT") under this Agreement:
(a) If Borrower fails or neglects to perform, keep or observe
any of Borrower's Obligations or if Borrower fails or neglects to cause
any Primary Obligor, Secondary Obligor or any other Loan Party (for any
reason whatsoever) to keep or observe any covenant with respect to such
Person set forth herein and the same is not cured within five (5) days
after the earlier of (i) Agent or any Lender gives Borrower notice of
such default or (ii) Borrower obtains knowledge of such default;
provided that a breach of any of the provisions, terms, conditions or
covenants contained in Sections 6.2(d), 6.2(i), 6.3 and 6.4 shall
automatically be an Event of Default without any notice or cure period;
(b) If any representation, warranty or material statement,
report or certificate made or delivered by any Loan Party, or any of
its directors, officers, authorized employees or agents, to Agent is
not true and correct; if Borrower fails or neglects to perform, keep or
observe any of Borrower's Obligations or if Borrower fails or neglects
to cause any Primary Obligor, Secondary Obligor or any other Loan Party
(for any reason whatsoever) to keep or observe any covenant with
respect to such Person set forth herein and the same is not cured
within five (5) days after Agent gives Borrower notice of such default;
provided that a breach of any of the provisions, terms, conditions or
covenants contained in Sections 6.2(d), 6.3 and 6.4 shall automatically
be an Event of Default without any notice or cure period;
(c) If Borrower fails to pay any of the Secured Obligations,
when due and payable or declared due and payable;
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(d) If Borrower shall default under the terms of any
Indebtedness Instrument (including the Senior Subordinated Debt
Agreement) other than the Loan Documents;
(e) Except as provided in any other section of this Section
7.1, if any Subsidiary of Borrower (other than any one or more of the
Harbor Debtors) shall default under the terms of any Indebtedness
Instrument and such default is not cured within ten (10) days after the
occurrence thereof; provided that such cure period shall not apply if:
(i) a default occurs by such Subsidiary under the terms of any other
Indebtedness Instrument securing or evidencing a different borrowing,
or (ii) if any other Subsidiary defaults under the terms of any
Indebtedness Instrument during such ten (10) day cure period.
Notwithstanding the foregoing, if any two or more such Persons are
obligated for the same Indebtedness and a default occurs thereunder, it
shall be deemed to be a default by a single Person for the purposes of
this Section 7.1(e);
(f) If there is a Trigger Event, a Sequential Trigger Event, a
Termination Event, a Default, an Event of Default and/or any other
occurrence having a similar result as any of the foregoing, as
applicable, as defined in and/or under the terms of any one or more of
the agreements listed on Schedule 7.1(f) attached hereto;
(g) If Borrower fails or neglects to perform, keep or observe
any of Borrower's Obligations or to cause any Primary Obligor or
Secondary Obligor to keep or observe any representation, warranty or
covenant, contained in Section 6.2(e) and the same is not cured within
ten (10) days after Agent gives Borrower notice of such default;
(h) A breach of the representation, warranty and covenant set
forth in Section 6.2(i);
(i) If any of Borrower's Assets or the assets of any Primary
Obligor, or Secondary Obligor or any portion thereof are attached,
seized, subjected to a writ of distress warrant, or are levied upon
other than Charges payable by First X or First B, or come within the
possession of any receiver, trustee, custodian or assignee for the
benefit of creditors, other than a custodian pursuant to a voluntary
custodial agreement entered into to perfect a security interest;
(j) If a petition under any section or chapter of the United
States Bankruptcy Code or any similar law or regulation shall be filed
by Borrower, any Primary Obligor or any Secondary Obligor (other than
the Harbor Debtors), or if Borrower, any Primary Obligor or any
Secondary Obligor shall make an assignment for the benefit of its
creditors or if any case or proceeding is filed by Borrower, any
Primary Obligor (other than the Harbor Debtors) or any Secondary
Obligor for its dissolution or liquidation;
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(k) If Borrower, any Primary Obligor, or any Secondary Obligor
(other than the Harbor Debtors) is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of
its business affairs or if a petition under any section or chapter of
the United States Bankruptcy Code or any similar law or regulation is
filed against Borrower, any Primary Obligor, any Secondary Obligor
(other than the Harbor Debtors) or any Pledged Entity or if any case or
proceeding is filed against Borrower, any Primary Obligor or any
Secondary Obligor (other than the Harbor Debtors) for its dissolution
or liquidation;
(l) If an application is made by Borrower, any Primary
Obligor, any Secondary Obligor or any Pledged Entity (other than the
Harbor Debtors) for the appointment of a receiver, trustee or custodian
for any of its assets other than a custodian pursuant to a voluntary
custodial agreement entered into to perfect a security interest;
(m) If an application is made by any Person other than a Loan
Party for the appointment of a receiver, trustee, or custodian for any
of the Assets of Borrower, any Primary Obligor or any Secondary Obligor
or any Pledged Entity (other than the Harbor Debtors);
(n) Except as expressly permitted pursuant to Section 6.2(e),
(i) if a notice of any Charge is filed of record with respect to all or
any of Borrower's, any Primary Obligor's, or any Secondary Obligor's
Assets (other than the Harbor Debtors), or (ii) if any Charge becomes a
lien or encumbrance upon any of Borrower's, any Primary Obligor's or
any Secondary Obligor's Assets (other than the Assets of any Harbor
Debtor);
(o) The occurrence of a default under any agreement,
instrument and/or document executed and delivered by any Guarantor to
Agent, which is not cured within the time, if any, specified therefor
in such agreement, instrument or document or if any Loan Document shall
fail to grant to Agent, as secured party, the lien or other security
interest (if any) intended to be created thereby or if any Loan Party
thereto shall assert that it is not liable with respect thereto; or if
any Guarantor shall assert that it is not liable as a guarantor or
otherwise under its guarantee agreement executed in connection
herewith;
(p) The occurrence of a default under any of the Other
Agreements, which is not cured within the time, if any, specified
therefor in such Other Agreement;
(q) Except as expressly permitted pursuant to the terms
hereof, if Borrower, any Primary Obligor, any Secondary Obligor or any
Pledged Entity issues to or transfers to any Person any Stock of
Borrower, any Primary Obligor, any Secondary Obligor or any Pledged
Entity;
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(r) If any final non-appealable judgment for the payment of
money in excess of $100,000 (after giving effect to any amount covered
by insurance as to which the insurer shall not have denied or
questioned its obligation to pay) shall be rendered against Borrower,
any Primary Obligor, or any Secondary Obligor; or final judgment for
the payment of money in excess of $100,000 shall be rendered against
Borrower, any Primary Obligor, or any Secondary Obligor and the same
shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed or diligently contested in
good faith by appropriate proceedings;
(s) If Borrower or any ERISA Affiliate (1) shall effect a
complete or partial withdrawal (as defined in ERISA Sections 4203 or
4205) from a Multiemployer Plan, if such withdrawal could subject
either Borrower or any ERISA Affiliate to liability; (2) shall fail to
pay when due an amount that is payable by it to the PBGC or to an
Employee Benefit Plan; (3) has instituted against it by a fiduciary of
any Multiemployer Plan an action to enforce ERISA Section 515 and such
proceedings shall not have been dismissed within thirty (30) days
thereafter; (4) has imposed against it any tax under Code Section
4980B(a); (5) has assessed against it by the Secretary of Labor a civil
penalty with respect to any Employee Benefit Plan under ERISA Section
502(c) or 502(l); (6) shall apply for a waiver of the minimum funding
standards of the Code; or (7) shall permit any other event or condition
to occur or exist with respect to an Employee Benefit Plan that could
subject either Borrower or any ERISA Affiliate to liability;
(t) Except as set forth in Section 7.1(d) or (e), a default by
Borrower, any Primary Obligor, or any Secondary Obligor shall occur
under any agreement, document or instrument (other than this Agreement
or any of the other Loan Documents) now or hereafter existing, to which
Borrower, any Primary Obligor, or any Secondary Obligor is a party and
the effect of such default could have a material adverse effect on the
financial conditions or business operations of such Loan Party;
(u) If Borrower, any Primary Obligor, or any Secondary Obligor
dissolves, liquidates (other than with respect to a Secondary Obligor
upon the disposition of all of its Assets in the ordinary course of its
business), or fails to maintain its corporate existence, without the
prior written consent of Majority Lenders;
(v) Notwithstanding anything herein to the contrary,
including, but not limited to the terms of Section 7.1(e), if any
lender to Borrower, any Primary Obligor, any Secondary Obligor, or to
any Subsidiary thereof, (i) accelerates any loan to Borrower, any
Primary Obligor, any Secondary Obligor, or to any subsidiary thereof as
a result of the Harbor Proceedings or any default by any Harbor Debtor
to such lender or any other event of default arising under the terms of
any Indebtedness Instrument to which any Harbor Debtor is a party or
(ii) terminates any
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agreement to forbear or waive any default by a Harbor Debtor or any
other event of default arising under the terms of any Indebtedness
Instrument;
(w) If any proceeding is commenced against Borrower in which
the amount claimed is greater than $1,000,000 and such proceeding is
not dismissed with prejudice with no judgment having been entered
against or other relief granted against Borrower within thirty (30)
days after the filing date thereof;
(x) The Occurrence of a Change in Control. For purposes
hereof, a Change in Control shall mean the occurrence of any of the
following events after the Closing: (i) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act)), directly, or indirectly, of more than fifty percent
(50%) of the aggregate voting power of all classes of Capital Stock of
Borrower entitled to vote generally in an election of directors; (ii)
Borrower is merged with or into another corporation or another
corporation is merged with or into Borrower with the effect that
immediately after such transaction the stockholders of Borrower
immediately prior to such transaction hold less than a majority in
interest of the total voting power entitled to vote in the election of
directors, managers or trustees of the entity surviving the
transaction; (iii) all or substantially all of the assets of Borrower
or its Subsidiaries are sold to any person or persons (as an entirety
in one transaction or a series of related transactions); or (iv) the
voluntary or involuntary dissolution, liquidation or winding up of
Borrower. For purposes of this Section 7.1(x) "Capital Stock" of any
Person means any and all shares, interests, participations or other
equivalents in the equity (however designated) of such Person and any
rights (other than debt securities convertible into an equity
interest), warrants or options to acquire an equity interest in such
Person; and
(y) Management. If James Sartain ceases to be employed
full-time with Borrower and responsible for the day to day management
of Borrower. Such occurrence shall be an Event of Default without
notice or cure period, unless Borrower employs a replacement officer of
the Borrower having the duties of Mr. Sartain acceptable to Lenders in
their reasonable discretion within thirty (30) days after Mr. Sartain
ceases to be employed.
(z) Warehouse Line/Substitute Line. If, on or before January
5, 2000 the Borrower has not provided evidence to Lenders, satisfactory
to Lenders in their sole discretion, that simultaneously (i) the
available commitment to lend under the FCAR Receivables LLC Retail
Automobile Installment Loan Agreement Financing Facility dated as of
March 30, 1999 (the "MBIA WAREHOUSE LINE"), exceeds Forty Million
Dollars ($40,000,000) or a substitute line of credit of like amount
acceptable to Lenders in their sole discretion is in effect (the
"SUBSTITUTE LINE"), and (ii) the Warehouse Line, or such Substitute
Line, as applicable, has a stated maturity of no earlier than December
15, 2000.
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7.2 Remedies Cumulative. All of Lenders' and Agent's rights and
remedies under this Agreement and the Other Agreements are cumulative and
non-exclusive.
7.3 Acceleration. Upon the occurrence of an Event of Default or any
Unmatured Default and during the continuation thereof, or the filing of a
petition under any section or chapter of the United States Bankruptcy Code or
similar law or regulation shall be filed by or against Borrower, any Primary
Obligor, Secondary Obligor, or any Pledged Entity or any such Person shall make
an assignment for the benefit of its creditors, or if any case or proceeding is
filed by or against any such Person for its dissolution or liquidation, without
notice to or demand of Borrower, Lenders shall have no further obligation to and
may then forthwith cease advancing monies, extending credit or issuing letters
of credit to or for the benefit of Borrower under this Agreement and/or the
Other Agreements. Upon the occurrence of an Event of Default, or the filing of
any case against or by Borrower, any Primary Obligor, any Secondary Obligor or
any Pledged Entity for its dissolution or liquidation, Agent (with the consent
of the Required Lenders) shall have the right to declare all Secured Obligations
to be immediately due and payable, without notice to or demand of Borrower, and
thereupon all Secured Obligations shall be immediately due and payable; provided
that if an Event of Default described in Section 7.1(k) with respect to Borrower
occurs or exists, all of the Borrower's Liabilities shall automatically, without
notice of any kind, be immediately due and payable and all obligations of
Lenders to Borrower hereunder to make Advances shall be automatically
terminated.
7.4 Remedies. Upon the occurrence of an Event of Default and the
continuation thereof, Agent and each Lender, in its sole and absolute
discretion, may exercise any and all rights and remedies that it may have under
the other Loan Documents, at law or in equity.
7.5 Injunctive Relief. Borrower recognizes that upon the occurrence of
an Event of Default, no remedy of law will provide adequate relief to any of the
Lenders or Agent, and agrees that Agent and each Lender shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
7.6 Advances During Unmatured Default. Upon the occurrence of any
Unmatured Default or Event of Default (other than Unmatured Defaults under
Section 7.1(e)), Lenders shall not be obligated to make any Advances; provided
that, nothing contained herein shall prohibit any Lender from making any
Advances.
8 CONDITIONS PRECEDENT TO DISBURSEMENT
8.1 Checklist Items. The obligation of Lenders to make the Loan to
Borrower is subject to the condition precedent that, in addition to satisfaction
of the conditions set forth in Sections 8.2 and 8.3, Agent shall have received,
prior to Closing Date all documents, instruments, agreements, notes, evidences
of Borrower's authority, and all other instruments as Agent may reasonably
request, including but not limited to all items on the documentation checklist,
delivered by Agent to Borrower prior to the date hereof.
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8.2 Necessary Actions. The obligation of Lenders to make the Loan to
Borrower is subject to the further condition precedent that all proceedings
taken in connection with the transactions contemplated by this Agreement, and
all instruments, authorizations and other documents applicable thereto, shall be
reasonably satisfactory in form and substance to Lenders.
8.3 Conditions Precedent. In addition to the foregoing, prior to the
Closing Date and prior to any Lender making an Advance hereunder, all of the
following shall have been satisfied in a manner satisfactory to Lenders:
(a) since September 30, 1999, other than any events or
circumstances that have been publicly disclosed in writing prior to the
date hereof and the Harbor Proceedings, no change in the condition or
operations, financial or otherwise, of Borrower or any other Loan Party
shall have occurred which change, in the sole credit judgment of Agent,
may have a material adverse effect on Borrower or any other Loan Party;
(b) except as disclosed in Schedule 5.1(i), no litigation
shall be outstanding or have been instituted or threatened which
Majority Lenders determine to be reasonably likely to have a Material
Adverse Effect;
(c) all of the representations and warranties of Borrower set
forth in this Agreement and each of the Other Agreements to which
Borrower or any other Loan Party is a party shall be true and correct
on the date of the contemplated Loan to the same extent as originally
made on such date;
(d) except as disclosed in Schedule 5.1(o), no Event of
Default or Unmatured Default shall exist or be continuing;
(e) the corporate structure and capital structure of Borrower,
the Primary Obligors and the Secondary Obligors and the terms,
conditions, amounts and holders of all equity, debt and other
Indebtedness, obligations and liabilities of Borrower and each Primary
Obligor and each Secondary Obligor shall be satisfactory to Agent and
Lenders. Agent shall have received true and complete copies (in each
case certified as to authenticity on the Closing Date on behalf of the
Borrower) of the Senior Subordinated Debt Agreement and all other
Senior Subordinated Debt Agreements. Each Senior Subordinated Debt
Agreement shall be in a form and substance acceptable to Agent and
Lenders, in their sole and exclusive discretion; and
(f) Senior Subordinated Debt Lender shall have entered into
the Subordination Agreement in form and substance acceptable to
Majority Lenders in their sole and exclusive discretion.
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9 GENERAL
9.1 Compliance with ERISA.
(a) Representations and Warranties. Borrower hereby represents
and warrants that:
(i) Schedule 9.1 hereto describes the Employee
Benefit Plans to which Borrower or any of its
ERISA Affiliates may have obligations;
(ii) each Employee Benefit Plan of Borrower or any
of its ERISA Affiliates is in compliance in all
material respects with its terms and with the
applicable provisions of ERISA, the Code and
all other statutes and regulations applicable
thereto and each such Employee Benefit Plan
that is intended to be qualified under Section
401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified,
and each trust related to any such Employee
Benefit Plan has been determined to be exempt
from federal income tax under Section 501(a) of
the Code;
(iii) neither Borrower nor any of its ERISA
Affiliates maintains or contributes to any
Employee Benefit Plan with an actuarial present
value of projected benefit obligations that
exceeds the fair market value of net assets
available for such benefits, calculated on the
basis of the actuarial assumptions specified in
the most recent actuarial valuation for such
Employee Benefit Plan, and no such Employee
Benefit Plan provides for subsidized early
retirement benefits that could materially
adversely affect the funded status of such
Employee Benefit Plan or Employee Benefit Plans
in the event of a reduction in force or plant
closing;
(iv) with respect to each Employee Benefit Plan that
is a "defined benefit plan," as defined in
Section 3(35) of ERISA, the assets of each such
Employee Benefit Plan are equal to or greater
than the accrued benefits of the participants
and beneficiaries thereunder, as determined
pursuant to the actuarial methods and
assumptions utilized by the PBGC in the event
of a plan termination;
(v) neither Borrower nor any of its ERISA
Affiliates sponsors, maintains, participates in
or contributes to any employee welfare benefit
plan within the meaning of Section 3(1) of
ERISA that provides benefits to employees after
termination of employment other than as
required by Section 601 of ERISA; as such,
neither Borrower nor any of its ERISA
Affiliates are
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currently or will in the future be subject to
the accounting recognition and disclosure
standards of Statement of Financial Accounting
Standards No. 106 (FASB 106);
(vi) neither Borrower nor any of its ERISA
Affiliates has breached any of the
responsibilities, obligations, or duties
imposed on them by ERISA or the regulations
promulgated thereunder with respect to any
Employee Benefit Plan;
(vii) neither Borrower nor any ERISA Affiliate has
(i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) made or
expects to make a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer Plan;
(viii) at the date hereof, the aggregate potential
withdrawal liability payment, as determined in
accordance with Title IV of ERISA, of Borrower
and any ERISA Affiliates with respect to all
Employee Benefit Plans that are Multiemployer
Plans does not exceed $50,000 and, to the best
of Borrower's and its ERISA Affiliate's
knowledge, no Multiemployer Plan is in
reorganization or insolvent within the meaning
of Sections 4241 or 4245 of ERISA.
(ix) neither Borrower nor any ERISA Affiliate has
failed to make a required installment or any
other required payment under Section 412 of the
Code on or before the due date for such
installment or other payment;
(x) neither Borrower nor any ERISA Affiliate is
required to provide security to an Employee
Benefit Plan under Section 401(a)(29) of the
Code due to an Employee Benefit Plan amendment
that results in an increase in current
liability for the plan year;
(xi) no liability to the PBGC has been, or is
expected by Borrower or any ERISA Affiliate to
be, incurred by Borrower or any ERISA
Affiliate, other than the payment of premiums,
and there are no premium payments that have
became due and which are unpaid;
(xii) no events have occurred in connection with any
Employee Benefit Plan that might constitute
grounds for the termination of any such
Employee Benefit Plan by the PBGC or for the
appointment by any United States District Court
of a trustee to administer any such Employee
Benefit Plan;
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(xiii) no Reportable Event has, in the case of any
Employee Benefit Plan maintained by Borrower or
an ERISA Affiliate other than a Multiemployer
Plan, occurred and is continuing, or to the
best of Borrower's knowledge, has occurred and
is continuing in the case of any such Employee
Benefit Plan that is a Multiemployer Plan;
(xiv) no Employee Benefit Plan maintained by Borrower
or an ERISA Affiliate had an Accumulated
Funding Deficiency, whether or not waived, as
of the last day of the most recent fiscal year
of such Employee Benefit Plan or, in the case
of any Multiemployer Plan, as of the most
recent fiscal year of such Multiemployer Plan
for which the annual reports of such
Multiemployer Plan's actuaries and auditors
have been received; and
(xv) neither Borrower nor any ERISA Affiliate has
engaged in a Prohibited Transaction prior to
the date hereof, and the execution, delivery,
and carrying out of this Agreement will not
involve any non-exempt Prohibited Transactions
(within the meaning of Part 4 of Subtitle B of
Title I of ERISA) or any transaction in
connection with which a tax could be imposed
pursuant to Section 4975 of the Code.
(b) ERISA Reports. Borrower shall:
(i) as soon as possible, and in any event within
fifteen (15) Business Days, after Borrower or
an ERISA Affiliate knows or has reason to know
that, regarding any Employee Benefit Plan with
respect to Borrower or an ERISA Affiliate, a
Prohibited Transaction or a Reportable Event
has occurred (whether or not the requirement
for notice, if applicable, of such Reportable
Event has been waived by the PBGC), deliver to
Agent a certificate of a responsible officer of
a Borrower setting forth the details of such
Prohibited Transaction or Reportable Event, the
action that Borrower proposes to take with
respect thereto, and, when known, any action
taken or threatened by the Internal Revenue
Service, Department of Labor, or PBGC;
(ii) upon request of the Agent made from time to
time, deliver to the Agent a copy of the most
recent actuarial report, funding waiver
request, and annual report filed with respect
to any Employee Benefit Plan maintained by
Borrower or an ERISA Affiliate;
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(iii) upon request of the Agent made from time to
time, deliver to the Agent a copy of any
Employee Benefit Plan sponsored, contributed
to, participated in or maintained by Borrower
or any ERISA Affiliate; and
(iv) as soon as possible, and in any event within
ten (10) Business Days, after it knows or has
reason to know that any of the following have
occurred with respect to any Employee Benefit
Plan maintained, or contributed to, by Borrower
or an ERISA Affiliate, deliver to the Agent a
certificate of a responsible officer of a
Borrower setting forth the details of the
events described in (a) through (l) and the
action that Borrower or any ERISA Affiliate
proposes to take with respect thereto, together
with a copy of any notice or filing from the
PBGC or other agency of the United States
government with respect to such of the events
described in (a) through (l): (a) any Employee
Benefit Plan has been terminated; (b) the Plan
Sponsor intends to terminate any Employee
Benefit Plan; (c) the PBGC has instituted or
will institute proceedings under Section 4042
of ERISA to terminate any such Employee Benefit
Plan or to appoint a trustee to administer such
Employee Benefit Plan, or Borrower or any ERISA
Affiliate receives a notice from a
Multiemployer Plan that such action has been
taken by the PBGC with respect to such
Multiemployer Plan; (d) Borrower or any ERISA
Affiliate withdraws from any Employee Benefit
Plan, or notice of any withdrawal liability is
received by Borrower or any ERISA Affiliate;
(e) any Employee Benefit Plan has received an
unfavorable determination letter from the
Internal Revenue Service regarding the
qualification of the Employee Benefit Plan
under Section 401(a) of the Code; (f) Borrower
or any ERISA Affiliate fails to make a required
installment or any other required payment under
Section 412 of the Code on or before the due
date for such installment or payment or has
applied for a waiver of the minimum funding
standard under Section 412 of the Code; (g) the
imposition of any tax under Code Section
4980B(a) or the assessment by the Secretary of
Labor of a civil penalty under Sections 502(c)
or 502(l) of ERISA; (h) there is a partial or
complete withdrawal (as described in ERISA
Section 4203 or 4205) by Borrower or any ERISA
Affiliate from a Multiemployer Plan; (i)
Borrower or any ERISA Affiliate is in "DEFAULT"
as defined in ERISA Section 4219(c)(5)) with
respect to payments to a Multiemployer Plan
required by reason of its complete or partial
withdrawal from such Employee Benefit Plan; (j)
a Multiemployer Plan is in "REORGANIZATION" or
is "INSOLVENT" (as described in Title IV of
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ERISA) or such Multiemployer Plan intends to
terminate or has terminated under Section 4041A
of ERISA; (k) the institution of a proceeding
by a fiduciary of a Multiemployer Plan against
Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA; or (1) Borrower or any
ERISA Affiliate has increased benefits under
any existing Employee Benefit Plan or commenced
contributions to an Employee Benefit Plan to
which Borrower or any ERISA Affiliate was not
previously contributing. For purposes of this
Section, Borrower shall be deemed to have
knowledge of all facts known by the Plan
Administrator of any Employee Benefit Plan of
which Borrower or any ERISA Affiliate is the
Plan Sponsor.
(c) Compliance with ERISA. Neither Borrower nor its ERISA
Affiliates will: (i) establish, maintain, or operate any Employee
Benefit Plan that is not in compliance in all material respects with
the provisions of ERISA, the Code, and all other applicable laws, and
the regulations and interpretations thereunder; (ii) allow to exist any
Accumulated Funding Deficiency with respect to any Employee Benefit
Plan, whether or not waived; (iii) terminate any Employee Benefit Plan
or withdraw or effect a partial or complete withdrawal (as described in
ERISA Section 4203 or 4205) from any Multiemployer Plan, if such
termination or withdrawal could subject Borrower or any ERISA Affiliate
to liability; (iv) fail to make any required installment or any other
payment required under Section 412 of the Code on or before the due
date for such installment or other payment; (v) amend any Employee
Benefit Plan so as to result in an increase in current liability for
the plan year such that Borrower or any ERISA Affiliate is required to
provide security to such Employee Benefit Plan under Section 401(a)(29)
of the Code; (vi) fail to make any contribution or payment to any
Multiemployer Plan which Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan; (vii) enter into any Prohibited Transaction for which a class
exemption is not available or a private exemption previously has not
been obtained from the Department of Labor; (viii) permit the
occurrence of any Reportable Event, or any other event or condition,
which could subject either Borrower or any ERISA Affiliate to
liability; or (ix) allow or permit to exist any other event or
condition known or that reasonably should be known to Borrower which
event or condition could subject either Borrower or any ERISA Affiliate
to liability.
(d) Definitions. For purposes of this Section 9.1, the
following definitions shall apply:
(i) "ACCUMULATED FUNDING DEFICIENCY" shall have the
meaning assigned to that term in Section 302 of
ERISA.
(ii) "CODE" shall mean the Internal Revenue Code of
1986, as amended.
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(iii) "EMPLOYEE BENEFIT PLAN" shall mean an employee
benefit plan within the meaning of Section 3(3)
of ERISA that is maintained, sponsored,
participated in or contributed to by Borrower
or any ERISA Affiliate.
(iv) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from
time to time, or any successor thereto.
(v) "ERISA AFFILIATE" shall mean any corporation,
trade or Business that is, along with Borrower,
a member of a controlled group of trades or
businesses, or a member of any group of
organizations, within the meaning of Sections
414(b), (c), (m) or (o) of the Code, and any
regulations thereunder.
(vi) "MULTIEMPLOYER PLAN" shall mean any plan
described in Section 3(37) or 4001(a)(3) of
ERISA to which contributions are or have been
made by Borrower or any ERISA Affiliate.
(vii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation or any governmental body succeeding
to its functions.
(viii) "PLAN ADMINISTRATOR" shall have the meaning
assigned to it in Section 3(16)(A) of ERISA.
(ix) "PLAN SPONSOR" shall have the meaning assigned
to it in Section 3(16)(B) of ERISA.
(x) "PROHIBITED TRANSACTION" shall mean a
transaction that is prohibited under Code
Section 4975 or ERISA Section 406 and not
exempt under Code Section 4975 or ERISA Section
408.
(xi) "REPORTABLE EVENT" shall mean (a) an event
described in Section 4043(c), 4068(a), or
4063(a) of ERISA or in the regulations
thereunder, (b) receipt of a notice of
withdrawal liability with respect to a
Multiemployer Plan pursuant to Section 4202 of
ERISA, (c) an event requiring Borrower or any
ERISA Affiliate to provide security for an
Employee Benefit Plan under Code Section
401(a)(29), (d) any failure to make payments
required by Code Section 412(m), (e) the
withdrawal of Borrower or any ERISA Affiliate
from an Employee Benefit Plan in which it is a
"SUBSTANTIAL EMPLOYER" as defined in Section
4001(a)(2) of ERISA, (f) the institution of
proceedings to terminate an Employee Benefit
Plan by the PBGC, or (g) the filing of a notice
to terminate an Employee Benefit Plan or the
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treatment of an amendment of an Employee
Benefit Plan as a termination under Section
4041 of ERISA.
9.2 Costs. Borrower hereby agrees that it shall reimburse any of
Lenders and Agent, as applicable, on demand, as part of Borrower's Obligations,
for any and all Costs and any amount not paid on demand shall bear interest at
the Default Rate.
9.3 Statement. Each statement of account by Agent delivered to
Borrower relating to the Secured Obligations shall be presumed correct and
accurate and shall constitute an account stated between Borrower and Agent
unless Agent subsequently corrects such statement of its own volition or, within
thirty (30) days after Borrower's receipt of said statement, Borrower delivers
to Agent, by registered or certified mail addressed to Agent at the address
specified in Section 9.4, written objection thereto specifying the error or
errors, if any, which Borrower asserts are contained in any such statement.
9.4 Notices. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing (which term, for
all purposes of this Agreement and the other Loan Documents, shall include
telecopy) and addressed to the party for whom such notices are intended at the
address set forth below. All notices shall be sent by personal delivery, Federal
Express or other over-night messenger service, first class registered or
certified mail, postage prepaid, return receipt requested, telecopy or by other
means at least as fast and reliable as first class mail. A written notice shall
be deemed to have been given to the recipient party on the earlier of (a) the
date it shall be delivered to the address required by this Agreement; (b) the
date delivery shall have been refused at the address required by this Agreement;
or (c) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undeliverable at the address
required by this Agreement. Any and all notices referred to in this Agreement,
or which a party hereto desires to give to any other party hereto, shall be
addressed as follows:
IF TO BORROWER: FirstCity Financial Corporation
6400 Imperial Drive
P.O. Box 8216
Waco, Texas 76714
Attn: Legal Department
Telecopy: 254-751-7648
IF TO AGENT: Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Attn: Loans Administration
Telecopy: 212-557-9460
WITH A COPY TO: Sachnoff & Weaver, Ltd.
Suite 2900
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30 South Wacker Drive
Chicago, Illinois 60606
Attn: Frank Ballantine, Esq. and
Cynthia Jared, Esq.
Telecopy: 312-207-6400
and to
Bank of Scotland
Chicago Representative Office
311 South Wacker Drive
Suite 1625
Chicago, Illinois 60606
Attn: Stephen Campbell
Telecopy: 312-939-9715
IF TO LENDER The Governor and Company of the Bank of
Scotland, a bank organized under the laws of
Scotland by an Act of the Scots Parliament
in 1695
The Mound
Edinburgh. Scotland
Attn: William Greeshields
and to
Bank of America, N.A.
901 Main Street, 66th Floor
Dallas, Texas 75202
Attn: Jay Wampler
Telecopy: 214-209-3533
WITH A COPY TO: Sachnoff & Weaver, Ltd.
Suite 2900
30 South Wacker Drive
Chicago, Illinois 60606
Attn: Frank Ballantine and
Cynthia Jared, Esq.
Telecopy: 312-207-6400
The above addresses may be changed by notice of such change, mailed as provided
herein, to the last address designated.
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9.5 Amendments and Waivers. This Agreement and the other Loan
Documents may not be modified, altered or amended except by an agreement in
writing signed by Borrower, each Lender and Agent, as applicable. Borrower
expressly agrees that for purposes of this Agreement and each and every other
Loan Document: (i) this Agreement and each and every other Loan Document shall
be a "credit agreement" under the Illinois Credit Agreements Act, 815 ILCS 160/1
et. seq. (the "ACT"); (ii) the Act applies to this transaction including, but
not limited to, the execution of this Agreement and each and every other Loan
Document; and (iii) any action on or in any way related to this Agreement and
each and every other Loan Document shall be governed by the Act. Borrower may
not sell, assign or transfer this Agreement or the Other Agreements or any
portion thereof, including, without limitation, any of Borrower's rights,
titles, interests, remedies, powers and/or duties hereunder or thereunder.
Borrower hereby consents to each Lender's and Agent's sale, assignment, transfer
or other disposition, at any time and from time to time hereafter, of this
Agreement or the Other Agreements, or of any portion thereof or participation
therein, including, without limitation, each Lender's and Agent's respective
rights, titles, interests, remedies, powers and/or duties.
9.6 No Implied Waiver; Remedies Cumulative. Any Lender's and/or
Agent's failure at any time or times hereafter to require strict performance by
Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect or diminish any right of Agent or either Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Agent or either Lender of an Event of Default or an Unmatured Default by
Borrower or any other Loan Party under this Agreement or the Other Agreements
shall not suspend, waive or affect any other Event of Default or Unmatured
Default by Borrower or any other Loan Party under this Agreement or the Other
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or the
Other Agreements and no Event of Default or Unmatured Default by Borrower or any
other Loan Party under this Agreement or the Other Agreements shall be deemed to
have been suspended or waived by any Lender or Agent unless such suspension or
waiver is by an instrument in writing signed by a respective officer of any
Lender or Agent and directed to Borrower or such applicable other Loan Party
specifying such suspension or waiver.
9.7 Severability. If any provision (in whole or in part) of this
Agreement or the other Loan Documents or the application thereof to any person
or circumstance is held invalid or unenforceable, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement or the other Loan Document, as the case may require, and
this Agreement and such other Loan Document shall be construed and enforced to
the maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein or therein, as the case
may be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful. If such modification, restriction or reformulation is not
reasonably possible, the remainder of
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this Agreement and the other Loan Documents and the application of such
provision to other persons or circumstances will not be affected thereby and the
provisions of this Agreement and the other Loan Documents shall be severable in
any such instance.
9.8 Incorporation of Other Loan Documents. The provisions of the
Other Agreements are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in this Agreement and except as otherwise provided
in the Other Agreements by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the Other Agreements or the other
Loan Documents, Majority Lenders shall have the right to elect, in its sole and
absolute discretion, which provision shall govern and control. Except to the
extent provided to the contrary in this Agreement and in the other Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
this Agreement or the Other Agreements shall in any way affect or impair the
powers, obligations, duties, rights and liabilities of Borrower, any Lender or
Agent in any way or respect relating to (a) any transaction or event occurring
prior to such termination or cancellation, and/or (b) any of the undertakings,
agreements, covenants, warranties and representations of Borrower contained in
this Agreement or the Other Agreements. All such undertakings, agreements,
covenants, warranties and representations shall survive such termination or
cancellation.
9.9 Acceptance. This Agreement and the other Loan Documents are
submitted by Borrower to Lenders and Agent (for Lenders' and Agent's acceptance
or rejection thereof) at Lenders' and Agent's respective principal places of
business as an offer by Borrower to borrow monies from Lenders now and from time
to time hereafter and shall not be binding upon Lenders and Agent or become
effective until and unless accepted by Lenders and Agent, in writing, at said
places of business. If so accepted by Lenders and Agent, this Agreement and the
other Loan Documents and the other Loan Documents shall be deemed to have been
made at said place of business. This Agreement and the other Loan Documents
shall be governed and controlled by the laws of the State of Illinois as to
interpretation, enforcement, validity, construction, effect and in all other
respects including, but not limited to, the legality of the interest rate and
other charges, but excluding choice of law provisions and perfection of security
interests which shall be governed and controlled by the laws of the relevant
jurisdiction.
9.10 Knowledge. As used herein the phrase "TO THE BEST OF BORROWER'S
KNOWLEDGE" or words of such import shall mean all knowledge, including, actual
knowledge and knowledge of matters which any reasonable person in such position
knew or should have known, of the respective officers, directors and managers of
Borrower.
9.11 Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS,
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CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY ANY OF THE LENDERS AND/OR THE AGENT ON WHICH BORROWER MAY IN ANY
WAY BE LIABLE; (B) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO AGENT'S TAKING
POSSESSION OR CONTROL OF, OR TO REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL
OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
ANY OF THE LENDERS AND/OR THE AGENT TO EXERCISE ANY OF ITS RESPECTIVE REMEDIES;
AND (C) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION
LAWS.
9.12 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE
BY LENDERS AND AGENT IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS. TO THE EXTENT PERMITTED BY APPLICABLE LAW
BORROWER HEREBY (a) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS OVER ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b)
IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW; AND (d) AGREES NOT TO INSTITUTE ANY LEGAL ACTION
OR PROCEEDING AGAINST ANY OF THE LENDERS OR THE AGENT OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED
IN COOK COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR ANY OF
THE LENDERS' OR AGENT'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY
LAW OR ANY OF THE LENDERS' OR THE AGENT'S RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
9.13 Waiver of Marshaling. All rights of marshaling of assets of
Borrower, including any such right with respect to the Pledged Property, are
hereby waived by Borrower.
9.14 Limitation by Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
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9.15 Survival of Representations and Warranties. All representations
and warranties contained in this Agreement or made in writing by Borrower in
connection herewith shall survive the execution and delivery of this Agreement
and repayment of the Secured Obligations. Any investigation by Lenders and/or
Agent shall not diminish in any respect whatsoever its rights to rely on such
representations and warranties.
9.16 Service of Process. Borrower hereby irrevocably appoints and
designates CT Corporation System, Inc., 208 S. LaSalle Street, Chicago, IL 60604
as its true and lawful attorney-in-fact and duly authorized agent for service of
legal process and agrees that service of such process upon such agent and
attorney-in- fact shall constitute personal service of such process upon
Borrower.
9.17 Representation by Counsel. Borrower hereby represents that it
has been represented by competent counsel of its choice in the negotiation and
execution of this Agreement and the other Loan Documents; that it has read and
fully understood the terms hereof; Borrower and its counsel have been afforded
an opportunity to review, negotiate and modify the terms of this Agreement, and
that it intends to be bound hereby. In accordance with the foregoing, the
general rule of construction to the effect that any ambiguities in a contract
are to be resolved against the party drafting the contract shall not be employed
in the construction and interpretation of this Agreement.
9.18 Release of Lenders and Agent. Borrower releases Lenders and
Agent from any and all causes of action or claims which Borrower may now or
hereafter have for any asserted loss or damage to Borrower claimed to be caused
by or arising from any act or omission to act on the part of any of the Lenders
and/or the Agent, their respective officers, agents or employees, except for
willful misconduct or gross negligence.
9.19 Invalidated Payments. To the extent that Agent or any Lender
receives any payment on account of the Secured Obligations, and any such
payment(s) and/or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated and/or
required to be repaid to a trustee, receiver or any other Person under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the extent of such payment(s) or proceeds received, the Secured Obligations or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment(s) and/or proceeds had not been received by
Agent or such Lender and applied on account of the Secured Obligations.
9.20 Headings. The descriptive headings of the various provisions of
this Agreement and the other Loan Documents are inserted for convenience of
reference only and shall not be deemed to affect the meaning or construction of
any of the provisions hereof.
9.21 Counterparts. This Agreement and the other Loan Documents may be
executed in any number of counterparts, and by the different parties hereto and
thereto on the same or separate counterparts, each of which when so executed and
delivered shall be
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deemed to be an original; all the counterparts for each such Loan Document shall
together constitute one and the same agreement.
9.22 Fax Execution. For purposes of negotiating and finalizing this
Agreement (including any subsequent amendments thereto), any signed document
transmitted by facsimile machine ("FAX") shall be treated in all manner and
respects as an original document. The signature of any party by FAX shall be
considered for these purposes as an original signature. Any such FAX document
shall be considered to have the same binding legal effect as an original
document' provided that upon request an original of the faxed document is mailed
by first class US Mail or personally delivered to the recipient. At the request
of any party hereto, any FAX document subject to this Agreement shall be
re-executed by all parties here to parties in an original form. The undersigned
parties hereby agree that they shall raise the use of the FAX or the fact that
any signature or document was transmitted or communicated through the use of a
FAX as a defense to the formation of this Agreement.
9.23 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Lenders, Agent, Borrower and its successors and assigns (except
as otherwise expressly provided herein) and nothing contained herein shall be
deemed to confer upon any Person other than Borrower and its successors and
assigns any right to insist on or to enforce the performance or observance of
any of the obligations contained herein. All conditions to the obligations of
the Lenders to make the Loans hereunder are imposed solely and exclusively for
the benefit of the Lenders and its respective successors and assigns and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms and no other Persons shall under any circumstances
be deemed to be a beneficiary of such conditions.
9.24 Domicile of Loans. Lenders may make, maintain or transfer any of
their Loans hereunder to, or for the account of, any of their respective branch
offices, subsidiaries or affiliates.
9.25 Entire Agreement. This Agreement and the other Loan Documents
constitute the entire agreement of Borrower, Lenders and Agent with respect to
the subject matter hereof and supersedes all prior and contemporaneous
negotiations, agreements, understandings and communications. No representation,
understanding, promise or condition concerning the subject matter hereof shall
be binding upon any of Lenders or Agent unless expressed herein or therein. No
course of dealing, course or performance, trade usage or parole evidence of any
nature, whether based on actions, omissions or circumstances occurring or
existing heretofore or hereafter, may be used in any way to alter or supplement
the terms hereof.
9.26 Construction. In this Agreement, unless the context otherwise
clearly requires, references to the plural include the singular, the singular
the plural, and the part the whole; the neuter case includes the masculine and
feminine cases; and "or" is not exclusive. In this Agreement, any references to
property (and similar terms) include an
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interest in such property (or other item referred to); "include," "includes,"
"including" and similar terms are not limiting; and "hereof," "herein,"
"hereunder" and similar terms refer to this Agreement as a whole and not to any
particular provision; and "expenses," "costs," "out-of-pocket expenses" and
similar terms include the charges of in-house counsel, auditors and other
professionals of the relevant Person to the extent that such amounts are
routinely identified and charged under such Person's cost accounting system.
Section and other references in this Agreement are to this Agreement unless
otherwise specified.
9.27 Successors and Assigns; Participation; Assignments.
(a) Transfer to BOS-Edinburgh; Successors and Assigns:
(i) BOS-NY hereby sells, assigns, transfers and
conveys all right, title and interest under the
Existing Loan Agreement to BOS-Edinburgh and
BOS-Edinburgh hereby accepts said assignment.
From and after the date hereof BOS-NY shall not
be deemed to be a Lender hereunder and
BOS-Edinburgh shall be deemed to be a Lender
hereunder. By execution of this Agreement
Agent, Borrower and each other Lender has
manifested its consent and acknowledgement to
said assignment and, notwithstanding anything
contained in Section 9.27 of the Existing
Agreement, agrees that no further
documentation, agreement or evidence of such
assignment shall be required.
(ii) This Agreement shall be binding upon and inure
to the benefit of Borrower, the Lenders, all
future holders of the Notes, Agent and their
respective successors and assigns; provided
that Borrower may not assign or transfer any of
its rights hereunder or interests herein
without the prior written consent of all the
Lenders. Any purported assignment without such
consents shall be void.
(b) Participations. Any Lender may, in accordance with
applicable law, at any time sell Participations to one or more
commercial banks or other Persons (each a "PARTICIPANT") in all or a
portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion
of its Commitments and the Loans owing to it and any Note held by it);
provided that:
(i) any such Lender's obligations under this
Agreement and the other Loan Documents shall
remain unchanged;
(ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of
such obligations;
(iii) the parties hereto shall continue to deal
solely and directly with such Lender in
connection with such Lender's rights and
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obligations under this Agreement and each of
the other Loan Documents;
(iv) the Participant accepting such Participation
shall be bound by the provisions of Sections
10.14 and 10.15; and
(v) any sale or transfer to a Participant which is
not a party hereto or an Affiliate of any
Lender hereto shall require the prior written
consent of each of Agent, Borrower, and the
Majority Lenders, which consent shall not be
unreasonably withheld or delayed.
Borrower agrees that any such Participant shall be entitled to the
benefits of Sections 2.8, 10.7, and 10.14 with respect to its
participation in the Commitments and Lenders' Loans hereunder
outstanding from time to time; provided that no such Participant shall
be entitled to receive any greater amount pursuant to such Sections
than the TRANSFEROR LENDER would have been entitled to receive in
respect of the amount of the participation transferred to such
Participant had no such transfer occurred.
(c) Assignments. Any Lender may, in accordance with applicable
law, at any time assign all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, all or any portion of its Commitments and Loans owing to it
and any Note held it) to any other Lender, any affiliate of any other
Lender or to one or more additional commercial banks or other
institutional Lenders (each a "PURCHASING LENDER"); provided that
(i) if a Lender makes such an assignment of less
than all of its then remaining rights and
obligations under this Agreement and the other
Loan Documents, such Transferor Lender shall
retain, after such assignment, a minimum
principal amount of $10,000,000 of the
Commitments and Loans then outstanding, and
such assignment shall be in a minimum aggregate
principal amount of $10,000,000 of the
Commitments and Loans then outstanding;
(ii) each such assignment shall be of a constant,
and not a varying, percentage of the Commitment
of the Transferor Lender and of all of the
Transferor Lender's rights and obligations
under this Agreement and the other Loan
Documents;
(iii) each such assignment shall be made pursuant to
a Transfer Supplement in substantially the form
attached hereto as Exhibit B, duly completed (a
"TRANSFER SUPPLEMENT"); and
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(iv) any transfer to a commercial bank or other
financial institution which is not a party
hereto or an Affiliate of a Lender hereto shall
require the prior written consent of each of
Agent and Borrower, which consent shall not be
unreasonably withheld or required of Borrower
if an Event of Default exists.
In order to effect any such assignment, the Transferor Lender and the
Purchasing Lender shall execute and deliver to Agent a duly completed
Transfer Supplement (including the consents required by clause (iv)
of the preceding sentence) with respect to such assignment, together
with any Note or Notes subject to such assignment (the "TRANSFEROR
LENDER NOTES") and a processing and recording fee of $5,000 payable
to Agent; and, upon receipt thereof, Agent shall accept such Transfer
Supplement. Upon receipt of the Purchase Price Receipt Notice
pursuant to such Transfer Supplement, Agent shall record such
acceptance in the Register. Upon such execution, delivery, acceptance
and recording, from and after the close of business at the Agent's
office in New York, New York, on the effective date specified in such
Transfer Supplement:
(w) the Purchasing Lender shall be a
party hereto and, to the extent
provided in such Transfer
Supplement, shall have the rights
and obligations of a Lender
hereunder;
(x) the Transferor Lender thereunder
shall be released from its
obligations under this Agreement to
the extent so transferred (and, in
the case of a Transfer Supplement
covering all or the remaining
portion of a Transferor Lender's
rights and obligations under this
Agreement, such Transferor Lender
shall cease to be a party to this
Agreement) from and after the
Transfer Effective Date; and
(y) On or prior to the Transfer
Effective Date specified in a
Transfer Supplement, Borrower shall
execute and deliver to the Agent
(for delivery to the Purchasing
Lender) new Notes evidencing such
Purchasing Lender's assigned
Commitments or Loans and (for
delivery to the Transferor Lender)
replacement Notes in the principal
amount of the Loans or Commitments
retained by the Transferor Lender
(such Notes to be in exchange for,
but not in payment of, those Notes
then held by such Transferor
Lender). Each such Note shall be
dated the date and be substantially
in the form of the predecessor Note.
The Agent shall mark the predecessor
Notes "exchanged" and deliver them
to the Borrower. Accrued interest
and accrued fees shall be
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paid to the Purchasing Lender at the
same time or times provided in the
predecessor Notes and this
Agreement.
(d) Register. The Agent shall maintain at its office a copy of
each Transfer Supplement delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing
to, each Lender from time to time. The entries in the Register shall be
conclusive absent manifest error and Borrower, Agent and the Lenders
may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Financial and Other Information. Borrower authorizes Agent
and each Lender to disclose to any Participant or Purchasing Lender
(each, a "TRANSFEREE") any and all financial and other information in
such Person's possession concerning Borrower and Affiliates which has
been or may be delivered to such Person by or on behalf of Borrower in
connection with this Agreement or any other Loan Document or such
Person's credit evaluation of Borrower and Affiliates. Prior to
disclosing such financial information and other information to
transferees or prospective transferees, as applicable, Agent and
Lenders shall require that the transferee or prospective transferee
enter into a confidentiality agreement pursuant to which such
transferee or prospective transferee shall covenant to keep
confidential all such information. At the request of any Lender,
Borrower, at Borrower's expense, shall provide to each transferee or
prospective transferee the conformed copies of documents referred to in
Section 4 of the form of Transfer Supplement.
(f) Assignments to Federal Reserve Bank. Any Lender may at any
time assign all or any portion of its rights under this Agreement,
including without limitation any Loans owing to it, and any Note held
by it to a Federal Reserve Bank. No such assignment shall relieve the
Transferor Lender from its obligations hereunder.
9.28 Texas Language.
(a) THIS WRITTEN AGREEMENT (TOGETHER WITH THE OTHER LOAN
DOCUMENTS ) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO
WITH RESPECT TO THE MATTERS COVERED HEREBY AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES.
(b) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
HERETO.
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9.29 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY LAW,
BORROWER AND LENDERS AND AGENT EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
OTHER AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO IN CONNECTION
HEREWITH. BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR LENDERS TO MAKE THE LOAN AND AGENT TO SERVE AS AGENT IN
CONNECTION THERETO.
9.30 Waiver of Claims. Borrower hereby acknowledges, agrees and
affirms that it possesses no claims, defenses, offsets, recoupment or
counterclaims of any kind or nature against or with respect to the enforcement
of the Existing Agreement or any other Loan Document or any amendments thereto
(collectively, the "CLAIMS"), nor does Borrower now have knowledge of any facts
that would or might give rise to any Claims. If facts now exist which would or
could give rise to any Claim against or with respect to the enforcement of the
Existing Agreement or any other Loan Document, as may have been amended by the
amendments thereto, Borrower hereby unconditionally, irrevocably and
unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.
9.31 Miscellaneous. Notwithstanding anything to the contrary herein,
Lenders hereby consent to Borrower, as sponsor, entering into a Sale and
Servicing Agreement, Servicing Assumption Agreement, Insurance Agreement and
Indemnification Agreement relating to the FirstCity Auto Receivables Trust
1999-2 Asset Backed Notes and Asset Backed Certificates issued in connection
with the securitization described in the Summary of Terms attached hereto as
Schedule 9.31 which sets forth the general terms of the securitization.
As part of and in connection with that consent, Lenders recognize that pursuant
to the Sale and Servicing Agreement, Servicing Assumption Agreement, Insurance
Agreement and Indemnification Agreement, Borrower, as sponsor, will be
responsible to purchase any nonconforming contract in the event that the seller,
the servicer, or the related originator fails to repurchase any contract which
is required to be repurchased under Article III of the Sale and Servicing
Agreement and the definitions section of the Sale and Servicing Agreement and
that the Borrower has additional responsibilities related to transfer of
servicing.
10 AGENCY AND INTER-LENDER PROVISIONS.
10.1 Appointment.
(a) Each Lender hereby irrevocably appoints Bank of Scotland,
acting through its branch in New York, New York, to act as agent for
such Lender under
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this Agreement and the other Loan Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on behalf of such
Lender under the provisions of this Agreement and the other Loan
Documents, and to exercise such powers and to perform such duties as
are expressly delegated to or required of Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental
thereto. Agent shall hold all Pledged Property and all payments of
principal, interest, fees, charges and Costs received pursuant to this
Agreement and the other Loan Documents for the benefit of Lenders, to
be distributed as provided herein.
(b) Bank of Scotland, acting through its branch in New York,
New York, hereby agrees to act as Agent on behalf of the Lenders on the
terms and conditions set forth in this Agreement and the other Loan
Documents, subject to its right to resign as provided in Section 10.10.
Each Lender hereby agrees that the rights and remedies granted to Agent
under the Loan Documents shall be exercised exclusively by Agent, and
that no Lender shall have any right individually to exercise any such
right or remedy, except to the extent expressly provided herein or
therein.
(c) The provisions of this Article 10 are solely for the
benefit of Agent and Lenders; Borrower shall not have any rights as a
third party beneficiary of any of the provisions hereof (other than
Section 10.10) nor shall Borrower have any obligations under this
Article 10 (except as provided in Section 10.7(b), 10.13, 10.14 and
10.15). Subject to the provisions of Section 10.2 relating to the
nature of Agent's duties, nothing contained in this Article 10 shall be
deemed to amend, modify or amend Agent's or Lenders' respective duties
and obligations set forth in any other Article of this Agreement, nor
shall Borrower be deemed to have waived its right to performance of
such duties and obligations by Lenders.
10.2 General Nature of Agent's Duties. Notwithstanding anything to the
contrary elsewhere in this Agreement or in any other Loan Document:
(a) Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan
Documents, and no implied duties or responsibilities on the part of
Agent shall be read into this Agreement or any Loan Document or shall
otherwise exist.
(b) The duties and responsibilities of Agent under this
Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and Agent shall not have a fiduciary
relationship in respect of any Lender.
(c) Agent is and shall be solely Agent of the Lenders. Agent
does not assume, and shall not at any time be deemed to have, any
relationship of agency or trust with or for, or any other duty or
responsibility to, Borrower or any other Person (except only for its
relationship as agent for, and its express duties and responsibilities
to, the Lenders as provided in this Agreement and the other Loan
Documents).
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(d) Agent shall be under no obligation to take any action
hereunder or under any other Loan Document if Agent believes in good
faith that taking such action may conflict with any law or any
provision of this Agreement or any other Loan Document, or may require
Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
10.3 Exercise of Powers.
(a) Agent shall take any action of the type specified in this
Agreement or any other Loan Document as being within Agent's rights,
powers or discretion in accordance with directions from the Majority
Lenders or the Required Lenders, if applicable, (or, to the extent this
Agreement or such Loan Document expressly requires the direction or
consent of some other Person or set of Persons, then instead in
accordance with the directions of such other Person or set of Persons).
In the absence of such directions, Agent shall have the authority (but
under no circumstances shall be obligated), in its sole discretion, to
take any such action, except to the extent this Agreement or such Loan
Document expressly requires the direction or consent of the Majority
Lenders, the Required Lenders, or some other Person or set of Persons
in which case Agent shall not take such action absent such direction or
consent.
(b) Agent shall have the right to request instructions from
the Lenders at any time. If Agent shall request instructions from the
Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any of the other Loan
Documents, Agent shall be entitled to refrain from such act or taking
such action unless and until Agent shall have received instructions
from the Required Lenders, and Agent shall not incur liability to any
Person by reason of so refraining.
(c) Any action or inaction pursuant to a direction, discretion
or consent from the Majority Lenders or the Required Lenders (if
applicable) shall be binding on all Lenders. Agent shall not have any
liability to any Person as a result of: (i) Agent acting or refraining
from acting in accordance with the directions of the Majority Lenders
or the Required Lenders, or other applicable Person or set of Persons;
(ii) subject to the provisions of Section 10.4(a), Agent refraining
from acting in the absence of instructions to act from the Majority
Lenders or the Required Lenders (if applicable), or other applicable
Person or set of Persons, whether or not Agent has discretionary power
to take such action; or (iii) subject to the provisions of Section
10.4(a), Agent taking discretionary action it is authorized to take
under this Section.
(d) Notwithstanding anything to the contrary contained herein,
Agent shall not do or take any of the following actions or grant any
consent described below, without, in each case, the prior consent of
Lenders which have made Loans constituting 100% in principal amount of
Loans outstanding on such date, or if no
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Loans are outstanding, Lenders which have Commitments to make Loans
constituting, in the aggregate, at least 100% of the total Commitments
hereunder ("REQUIRED LENDERS"):
(i) amend, consent to or permit the amendment of
any provision of this Agreement or any other
Loan Document, relating to the rate of
interest, fees, charges, reimbursement of
Costs, indemnification of Agent or Lenders
or other Borrower's Liabilities due or
accruing hereunder or under any other Loan
Document;
(ii) extend or permit the extension of the
Maturity Date or otherwise extend or defer
the time for payment of Borrower's
Liabilities, including, but not limited to
Costs, fees, interest and principal;
(iii) subordinate or release the lien on any asset
securing any Secured Obligations; provided
that Agent with the consent of a Majority
Lenders shall have the right to (A) release
liens as expressly required under this
Agreement or the other Loan Documents and
(B) release of liens on Pledged Property
having, in the aggregate, a fair market
value (in Majority Lenders' reasonable
determination) of less than $1,000,000;
(iv) amend or consent to the amendment of
covenants set forth in Section 6.1 of this
Agreement;
(v) except as provided in Section 10.3(d)(iii),
grant any consent or waive any negative
covenant set forth in Sections 6.3(a),
6.3(b), 6.3(c), 6.3(e), 6.3(f), 6.3(k),
6.3(l);
(vi) waive any Unmatured Default or Event of
Default under Section 7.1(c), (d), (h), (i),
(j), (k) or (l);
(vii) increase the aggregate Commitment hereunder
or increase the Maximum Principal Amount set
forth in Section 2.2(a);
(viii) Declare a default and accelerate the Secured
Obligations pursuant to Section 7.3; or
(ix) Amend any provision of this Section 10.3(d).
(e) Except as expressly required pursuant to Section 10.3(d),
if Agent is required pursuant to the terms hereof to obtain the
approval or consent of Lenders for any act or action (including the
failure to act) or if Agent requests the approval, consent or
instruction of Lenders for any act or action (including the failure to
act),
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the approval, consent or instruction of the Majority Lenders shall be
required or sufficient. Agent shall be entitled to rely upon the
consent, approval and/or instruction of the Majority Lenders,
notwithstanding that other Lenders may have given Agent contrary
directions, objected to such action or course of action, or, directed
Agent to take or not to take a contrary action.
(f) Agent is hereby authorized on behalf of all of Lenders,
without the necessity of any notice to or further consent from any
Lender, from time to time prior to an Event of Default, to take any
action with respect to any Pledged Property or Loan Document which may
be necessary to perfect and maintain perfected the security interest in
and liens upon the Pledged Property granted pursuant to any of the Loan
Documents.
(g) Lenders hereby authorize Agent to release any lien granted
to or held by Agent upon any Pledged Property upon termination of this
Agreement and the Commitments and payment and satisfaction of all of
the Secured Obligations (other than the Contingent Secured Obligations,
as defined in the Security Agreement) at any time arising under or in
respect of this Agreement and the other Loan Documents or the
transactions contemplated hereby or thereby. Upon request by Agent at
any time, Lenders will confirm in writing Agent's authority to release
particular types or items of Pledged Property pursuant to this Section.
(h) Upon the release of any lien in accordance with Section
10.3(g), and upon at least five (5) Business Days' prior written
request by Borrower, Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence
the release of such liens; provided that (i) Agent shall not be
required to execute any such document on terms which, in Agent's
reasonable opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such
liens without recourse or warranty and (ii) such release shall not in
any manner discharge, affect or impair the Secured Obligations
(including the Contingent Secured Obligations) or any liens upon (or
obligations of Borrower in respect of) all interests retained by
Borrower, including (without limitation) the proceeds of the sale, all
of which shall continue to constitute part of the Pledged Property. In
the event of any sale or transfer of Pledged Property, or any
foreclosure with respect to any of the Pledged Property, Agent shall be
authorized to deduct all of the Costs incurred by Agent from the
proceeds of any such sale, transfer or foreclosure.
(i) Subject to the provisions of Section 10.4(a), Agent shall
have no obligation whatsoever to Lenders, or to any other Person to
assure that: (i) the Pledged Property exists; (ii) the Pledged Property
is owned by Borrower, any other Loan Party or any other Person; (iii)
the Pledged Property is cared for, protected or insured; (iv) the liens
granted to Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or
are entitled to any particular priority; or (v) to exercise or to
continue exercising at all or in any
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manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to Agent in this
Section 10.3, or in any of the other Loan Documents. It is understood
and agreed by Lenders that in respect of the Pledged Property, or any
act, omission or event related thereto, Agent may act in any manner it
may deem appropriate, in its sole discretion, given Agent's own
interest in the Pledged Property as one of Lenders and that Agent shall
have no duty or liability whatsoever to Lenders, except for Agent's
gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(j) In addition to Agent's right to take actions on its own
accord as permitted under this Agreement but subject to the provisions
of Section 10.3(d)(viii), Agent shall take such action with respect to
an Unmatured Default or Event of Default as shall be directed by the
Majority Lenders; provided that until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Unmatured
Default or Event of Default as it shall deem advisable.
(k) Agent shall not be required to deliver to any Lender,
originals or copies of any documents, instruments, notices,
communications or other information, other than the Financials,
received by Agent from the Required Lenders, any Lender, or any other
Person under or in connection with this Agreement or any other Loan
Document, except (i) as specifically provided in this Agreement or any
other Loan Document and (ii) as specifically requested from time to
time in writing by any Lender with respect to a specific document,
instrument, notice or other written communication received by and in
the possession of Agent at the time of receipt of such request and then
only in accordance with such specific request.
10.4 General Exculpatory Provisions. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) Agent shall not be liable for any action taken or omitted
to be taken by it under or in connection with this Agreement or any
other Loan Document, unless caused by its own gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Agent shall not be responsible for: (i) the execution,
delivery, effectiveness, enforceability, genuineness, validity or
adequacy of this Agreement or any other Loan Document; (ii) any
recital, representation, warranty, document, certificate, report or
statement in, provided for in, or received under or in connection with,
this Agreement or any other Loan Document; (iii) any failure of
Borrower or any Lender to perform any of their respective obligations
under this Agreement or any other Loan Document; (iv) the existence,
validity, enforceability, perfection, recordation, priority, adequacy
or value, now or hereafter, of any lien or other direct or indirect
security afforded or purported to be afforded by any of the
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Loan Documents or otherwise from time to time; or (v) caring for,
protecting, insuring, or paying any taxes, charges or assessments with
respect to any Collateral.
(c) Agent shall not be under any obligation to ascertain,
inquire or give any notice relating to: (i) the performance or
observance of any of the terms or conditions of this Agreement or any
other Loan Document on the part of Borrower; (ii) the business,
operations, condition (financial or otherwise) or prospects of Borrower
or any other Person; or (iii) the existence of any Event of Default or
Unmatured Default.
10.5 Administration by Agent.
(a) Subject to the provisions of Section 10.13, Agent shall
remit payments received by Agent from Borrower or any other Person of,
except as provided in Section 10.15, principal, interest and the unused
commitment fee payable pursuant to Section 2.13(b), after deducting all
Costs and other funds then due and owing by Borrower and/or Lenders to
Agent with respect to this Agreement and the other Loan Documents, to
each Lender, in accordance with its Commitment Percentage, as amended
or supplemented from time to time pursuant to Section 9.27. The
processing fee payable pursuant to Section 9.27(c) shall be retained by
Agent for its own benefit. Payments received on or before 11:00 a.m.
New York time, in immediately available funds, shall be wire
transferred to Lenders on the same Business Day. Payments received
after 11:00 a.m. New York time, in immediately available funds, shall
be wire transferred to the Lenders on the next business day. Payments
received in funds other than immediately available funds will be wire
transferred to Lenders upon such becoming available.
(b) Agent may rely upon any notice or other communication of
any nature (written or oral, including but not limited to telephone
conversations, whether or not such notice or other communication is
made in a manner permitted or required by this Agreement or any other
Loan Document) purportedly made by or on behalf of the proper party or
parties, and Agent shall not have any duty to verify the identity or
authority of any Person giving such notice or other communication.
(c) Agent may consult with legal counsel (including, without
limitation, in-house counsel for Agent in-house or other counsel for
Lender, or in-house or other counsel for Borrower), independent public
accountants and any other experts selected by it from time to time, and
Agent shall not be liable for any action taken or omitted to be taken
in good faith by it in accordance with the advice of such counsel,
accountants or experts.
(d) Agent may conclusively rely upon the truth of the
statements and the correctness of the opinions expressed in any
certificates or opinions furnished to Agent in accordance with the
requirements of this Agreement or any other Loan Document. Whenever
Agent shall deem it necessary or desirable that a matter be
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proved or established with respect to Borrower or any Lender, such
matter may be established by a certificate of Borrower or such Lender,
as the case may be, and Agent may conclusively rely upon such
certificate (unless other evidence with respect to such matter is
specifically required in this Agreement or another Loan Document).
(e) Agent may fail or refuse to take any action unless it
shall be indemnified to its satisfaction from time to time against any
and all amounts, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature which may be imposed on, incurred by or asserted against
Agent by reason of taking or continuing to take any such action.
(f) Agent may perform any of its duties under this Agreement
or any other Loan Document by or through agents, employees or
attorneys-in-fact. Agent shall not be responsible for the negligence or
misconduct of any agents, employees or attorneys-in fact selected by it
with reasonable care.
(g) Agent shall not be deemed to have any knowledge or notice
of the occurrence of any Event of Default or Unmatured Default unless
Agent has received notice from a Lender or from Borrower referring to
this Agreement, describing such Event of Default or Unmatured Default,
and stating that such notice is a "notice of default". If Agent
receives such a notice, Agent shall give prompt notice thereof to each
Lender.
10.6 Lender Not Relying on Agent or Other Lenders.
(a) Independently and without reliance upon Agent or any other
Lender, each Lender, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the
financial or other condition and affairs of Borrower in connection with
the taking or not taking of any action in connection herewith, and (ii)
its own appraisal of the creditworthiness of Borrower. Except as
expressly provided in this Agreement, neither Agent nor any other
Lender shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender, with any credit or other
information with respect thereto, whether coming into its possession
before the making of any Loan or Advance or at any time or times
thereafter.
(b) Agent shall not be responsible to any Lender, for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Agreement, the Notes or other Loan Documents or the financial or
other condition of Borrower. Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Notes or any of
the other Loan Documents, or the
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financial condition of Borrower, or the existence or possible existence
of any Unmatured Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
10.7 Indemnification.
(a) Each Lender agrees to reimburse and indemnify Agent and
its directors, officers, employees and agents (to the extent not
reimbursed by Borrower and without limitation of the obligations of
Borrower to do so), Pro Rata, from and against any and all amounts,
losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
(including, without limitation, the fees and disbursements of counsel
for Agent or such other Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not Agent or any Lender or such other Person shall be designated a
party thereto) that may at any time be imposed on, incurred by or
asserted against Agent or such other Person as a result of, or arising
out of, or in any way related to or by reason of, this Agreement, any
other Loan Document, any transaction from time to time contemplated
hereby or thereby, or any transaction financed in whole or in part or
directly or indirectly with the proceeds of any Loan; PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH AMOUNTS, LOSSES,
LIABILITIES, CLAIMS, DAMAGES, EXPENSES, OBLIGATIONS, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS OR DISBURSEMENTS RESULTING FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT OR SUCH OTHER PERSON,
AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION.
(b) Borrower hereby agrees to reimburse and indemnify each of
Agent, Lenders, Participants and their respective agents, employees and
assigns ("INDEMNIFIED PARTIES") from and against any and all losses,
liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnified Party in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnified Party shall be designated a
party thereto) that may at any time be imposed on, asserted against or
incurred by such Indemnified Party as a result of, or arising out of,
or in any way related to or by reason of, this Agreement or any other
Loan Document, any transaction from
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time to time contemplated hereby or thereby, or any transaction
financed in whole or in part or directly or indirectly with the
proceeds of any Loan (and without in any way limiting the generality of
the foregoing, including any violation or breach of any Environmental
Law or any other law by Borrower or any other Loan Party; any
environmental claim arising out of the management, use, control,
ownership or operation of property by any of such Persons, including
all on-site and off-site activities involving Hazardous Materials; any
grant of Pledged Property; or any exercise by Agent or any Lender of
any of its rights or remedies under this Agreement or any other Loan
Document); BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES,
EXPENSES, OBLIGATIONS, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS OR
DISBURSEMENTS RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PARTY, AS FINALLY DETERMINED BY A COURT
OF COMPETENT JURISDICTION. If and to the extent that the foregoing
obligations of Borrower under this subsection (b), or any other
indemnification obligation of Borrower hereunder or under any other
Loan Document, are unenforceable for any reason, Borrower hereby agrees
to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
Notwithstanding anything to the contrary contained herein, Borrower
shall not be liable to indemnify any Indemnified Party for any fees,
cost, loss, expense, or damage arising from any dispute, proceeding or
claim by and between Agent and any one or more of the Lenders relating
to the rights, duties, liabilities and/or obligations of Agent
hereunder or under any other Loan Document.
10.8 Agent in its Individual Capacity. With respect to its Commitment
and the portion of the Secured Obligations owing to it, Agent shall have the
same rights and powers under this Agreement and each other Loan Document as any
other Lender and may exercise the same as though it were not Agent, and the
terms "Lenders," "holders of Notes" and like terms shall include Agent in its
individual capacity as such. Agent and its affiliates may, without liability to
account, make loans to, issue letters of credit to, accept deposits from,
acquire debt or equity interests in, enter into interest rate hedging agreements
with, act as trustee under indentures of, and engage in any other business with,
Borrower and any stockholder, subsidiary or affiliate of Borrower, as though
Agent were not Agent hereunder.
10.9 Holders of Notes. Agent may deem and treat the Lender which is
payee of a Note as the owner and holder of such Note for all purposes hereof
unless and until a Transfer Supplement with respect to the assignment or
transfer thereof shall have been filed with Agent in accordance with Section
9.27. Any authority, direction or consent of any
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Person who at the time of giving such authority, direction or consent is shown
in the Register as being a Lender shall be conclusive and binding on each
present and subsequent holder, transferee or assignee of any Note or Notes
payable to such Lender or of any Note or Notes issued in exchange therefor.
10.10 Successor Agent. Agent may resign at any time by giving thirty
(30) days' prior written notice thereof to Lenders and to Borrower. In the event
of a material breach of its duties hereunder, Agent may be removed by the
Required Lenders for cause by giving thirty (30) days' prior written notice
thereof to Agent, the other Lenders and to Borrower. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed and consented to, and
shall have accepted such appointment, within 30 days after such notice of
resignation or removal, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent. Each successor Agent shall be a commercial bank or
trust company organized under the laws of the United States of America or any
State thereof and having a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance by a successor Agent of its appointment as
Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the properties, rights, powers, privileges and duties of the
former Agent, without further act, deed or conveyance. Upon the effective date
of resignation or removal of a retiring Agent, such Agent shall be discharged
from its duties under this Agreement and the other Loan Documents, but the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted by it while it was Agent under this Agreement. If and so long as no
successor Agent shall have been appointed, then any notice or other
communication required or permitted to be given by Agent shall be sufficiently
given if given by the Majority Lenders, all notices or other communications
required or permitted to be given to Agent shall be given to each Lender, and
all payments to be made to Agent shall be made directly to Borrower or Lender
for whose account such payment is made.
10.11 Additional Agents. If Agent shall from time to time deem it
necessary or advisable, for its own protection in the performance of its duties
hereunder or in the interest of the Lenders, Agent and Borrower shall execute
and deliver a supplemental agreement and all other instruments and agreements
necessary or advisable, in the opinion of Agent, to constitute another
commercial bank or trust company, or one or more other Persons approved by
Agent, to act as co-Agent or agent with respect to any part of the Pledged
Property, with such powers of Agent as may be provided in such supplemental
agreement, and to vest in such bank, trust company or Person as such co-Agent or
separate agent, as the case may be, any properties, rights, powers, privileges
and duties of Agent under this Agreement or any other Loan Document.
10.12 Calculations. Agent shall not be liable for any calculation,
apportionment or distribution of payments made by it in good faith. If such
calculation, apportionment or distribution is subsequently determined to have
been made in error, the sole recourse of any Lender to whom payment was due but
not made shall be: (i) to recover from the other Lenders any payment in excess
of the amount to which such Lender(s) are determined to
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be entitled or, (ii) if the amount due was not paid by Borrower, to recover such
amount from Borrower.
10.13 Funding by Agent; Defaulting Lenders.
(a) Unless Agent shall have been notified in writing by any
Lender not later than the close of business on the day before the day
on which Loans are requested by Borrower to be made that such Lender
will not make its ratable share of such Loans, Agent may assume that
such Lender will make its ratable share of the Loans, and in reliance
upon such assumption Agent may (but in no circumstances shall be
required to) make available to Borrower a corresponding amount. If and
to the extent that any Lender fails to make such payment to Agent on
such date and is required to do so, such Lender shall pay such amount
plus any costs, expenses or losses resulting from such Lender's failure
to make such payment on demand (or, if such Lender fails to pay such
amount on demand, Borrower shall pay such amount on demand), together
with interest, for Agent's own account, for each day from and including
the date of Agent's payment to and including the date of repayment to
Agent (before and after judgment) at the rate or rates per annum
applicable to such Loans plus any cost, expense or loss resulting from
such Lender's failure to make such payment. All payments to Agent under
this Section shall be made to Agent at the address for payment set
forth above in funds immediately available, without set-off,
withholding, counterclaim or other deduction of any nature.
(b) The failure of any Lender to make the Loans to be made by
it as part of any Advance shall not relieve any other Lender of its
obligation hereunder to make its Loans on the date of such Advance, but
neither Agent nor any other Lender shall be responsible for the failure
of any other Lender to make Loans to be made by such other Lender on
the date of any Advance.
(c) Notwithstanding anything contained herein to the contrary,
so long as any Lender has defaulted in its obligation to make Loans or
has rejected its Commitment, without a right to do so, Agent shall not
be obligated to transfer to such Lender any payment made by Borrower to
Agent for the benefit of such Lender, and, such Lender shall not be
entitled to the sharing of any payments. Amounts payable to such Lender
pursuant to the terms hereof shall instead be paid to Agent. Agent may
hold and, in its discretion, provided Borrower is in full satisfaction
of all conditions precedent to disbursement herein, re-lend to Borrower
for the account of such Lender the amount of all such payments received
by it for the account of such Lender. For purposes of voting or
consenting to matters with respect to the Loan Documents, such
defaulting Lender shall be deemed not to be a "Lender" and such
Lender's percentages and proportionate share shall be deemed to be zero
(0) and each other Lender's percentage and proportionate share shall be
deemed to be increased pro rata based on its percentages and
proportionate share theretofore existing. This Section 10.13(c) shall
remain effective with respect to such defaulting Lender until (y) the
Secured Obligations shall have been declared or
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shall have become immediately due and payable or (z) each of the
Majority Lenders, Agent and Borrower shall have waived such Lender's
default in writing.
(d) No Commitment of any Lender shall be increased or
otherwise affected, and performance by Borrower shall not be excused by
the operation of this Section 10.13. Any payments of principal or
interest which would, but for this Section 10.13, be paid to any
Lender, shall in Agent's sole and exclusive discretion: (i) be
re-loaned to Borrower for the account of such defaulting Lender,
provided Borrower is in full satisfaction of all conditions precedent
to disbursement herein, (ii) be paid to Lenders who shall not be in
default under their respective Commitments and who shall not have
rejected any Commitment for application to the Loans without a right to
do so, or (iii) be used to provide cash collateral in such manner and
order as shall be determined by Agent.
10.14 Sharing of Collections. Lenders hereby agree among themselves
that if any Lender shall receive (by voluntary payment, realization upon
security, set-off or from any other source) any amount on account of the Secured
Obligations (including, without limitation, principal, interest thereon, or any
other Secured Obligation contemplated by this Agreement or the other Loan
Documents to be made by Borrower ratably to all Lenders) in greater proportion
than any such amount received by any other Lender, then the Lender receiving
such proportionately greater payment shall notify each other Lender and Agent of
such receipt, and equitable adjustment will be made in the manner stated in this
Section so that, in effect, all such excess amounts will be shared ratably among
all of the Lenders after payment to Agent of all amounts due to Agent hereunder.
The Lender receiving such excess amount shall purchase (which it shall be deemed
to have done simultaneously upon the receipt of such excess amount) for cash
from the other Lenders a participation in the applicable Secured Obligations
owed to such other Lenders in such amount as shall result in a ratable sharing
by all Lenders of such excess amount (and to such extent the receiving Lender
shall be a Participant). If all or any portion of such excess amount is
thereafter recovered from the Lender making such purchase, such purchase shall
be rescinded and the purchase price restored to the extent of such recovery,
together with interest or other amounts, if any, required by law to be paid by
the Lender making such purchase. Borrower hereby consents to and confirms the
foregoing arrangements. Each Participant shall be bound by this Section as fully
as if it were a Lender hereunder.
10.15 Set-Off. Borrower hereby agrees that if any Secured Obligation of
Borrower shall be due and payable (by acceleration or otherwise), after the
occurrence of an Event of Default and during the continuation thereof, Agent and
each Lender shall have the right, without notice to Borrower, to set-off against
and to appropriate and apply to such Secured Obligation any obligation of any
nature owing to Borrower by the Agent or such Lender, including but not limited
to all deposits (whether time or demand, general or special, provisionally
credited or finally credited, whether or not evidenced by a certificate of
deposit) now or hereafter maintained by Borrower with Agent or such Lender. Such
right shall be absolute and unconditional in all circumstances and, without
limitation, shall exist whether or not Agent or such Lender or any other Person
shall have given notice or made
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any demand to Borrower or any other Person, whether such obligation owed to
Borrower is contingent, absolute, matured or unmatured (it being agreed that
Agent or such Lender may deem such obligation to be then due and payable at the
time of such setoff), and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to Agent,
any Lender or any other Person. Borrower hereby agrees that, to the fullest
extent permitted by law, any Participant shall have the rights of set-off as a
Lender as provided in this Section 10.15 (regardless of whether such Participant
would otherwise be deemed in privity with or a direct creditor of Borrower). The
rights provided by this Section 10.15 are in addition to any other rights of
set-off and banker's lien and all other rights and remedies which Agent or any
Lender (or any such Participant, branch, subsidiary or affiliate) may otherwise
have under this Agreement, any other Loan Document, at law or in equity, or
otherwise, and nothing in this Agreement or any Loan Documents shall be deemed a
waiver or prohibition of or restriction on the rights of set-off or bankers'
lien of any such Person.
The remainder of this page is left intentionally blank
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IN WITNESS WHEREOF, this Amended and Restated Loan Agreement, dated for
reference purposes only as of December 20, 1999 has been duly executed by the
undersigned.
BORROWER:
---------
FIRSTCITY FINANCIAL CORPORATION
a Delaware corporation
By:
----------------------------------------
Title:
-------------------------------------
AGENT:
------
BANK OF SCOTLAND, acting through its
branch in New York, New York
By:
----------------------------------------
Title:
-------------------------------------
LENDERS:
--------
The Governor and Company of the Bank of
Scotland, a bank organized under the laws of
Scotland by an Act of the Scots Parliament
in 1695.
By:
----------------------------------------
Title:
-------------------------------------
BANK OF AMERICA, N.A.
By:
----------------------------------------
Title:
-------------------------------------
SIGNITURE PAGE CONTINUED
------------------------
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BOS-NY
------
Bank of Scotland, acting through its branch
in New York, New York, solely for the
purpose of effecting the transfer set forth
in Section 9.27 (a)(i).
By:
----------------------------------------
Title:
-------------------------------------
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SCHEDULE OF EXHIBITS AND SCHEDULES
----------------------------------
Schedule 1.1(ff) Specific Extraordinary Transactions
Schedule 1.1(llll) REO Affiliates
Schedule 1.1 (oooo) Schedule of Secondary Obligors
Schedule 4.1 Schedule of Guarantees
Schedule 4.2(a) Schedule of Excluded Notes
Schedule 4.2(b) Schedule of Note Pledge Agreements and Pledged Notes
Schedule 4.3(a) Schedule of Excluded Entities
Schedule 4.3(b) Schedule of Stock Pledge Agreements
Schedule 4.4 Schedule of Security Agreements
Schedule 5.1 Exceptions to Representations and Warranties
Schedule 5.1(a)(i) Organization of Borrower
Schedule 5.1(a)(ii) Organization of Primary and Secondary Obligors
Schedule 5.1(e) Schedule of Shareholders, Stock and Options
Schedule 5.1(f) Schedule of Fictitious Names
Schedule 5.1(g) Schedule of Permitted Liens
Schedule 5.1(h) Schedule of Debts for Purpose of Financial Warranty
Schedule 5.1(i) Schedule of Proceedings
Schedule 5.1(j) Schedule of Government Contracts
Schedule 5.1(l) Required Consents
Schedule 5.1(o) Defaults
Schedule 5.1(s) Schedule of Other Indebtedness
Schedule 5.1(t) Schedule of Affiliate Indebtedness
Schedule 5.1(u) Affiliate Notes
<PAGE>
Schedule 5.1(u)(iii) Schedule of Future Affiliate Notes (to be delivered
post-closing as they arise)
Schedule 5.1(w) Schedule of Affiliates
Schedule 5.1(bb) SEC Report Exceptions
Schedule 5.1(cc) Limited Asset Affiliates
Schedule 5.2 Senior Subordinated Debt Documents
Schedule 6.3(j) Fee Agreements
Schedule 6.3(l) Guaranty Equivalents
Schedule 7.1(f) Cross Default Agreements
Schedule 9.1 ERISA Matters
Schedule 9.31 Miscellaneous
Exhibits
- --------
Exhibit A Wire Transfer Instructions to Agent
Exhibit B Form of Transfer Supplement
================================================================================
SUBORDINATED SECURED SENIOR NOTE
PURCHASE AGREEMENT
BETWEEN
FIRSTCITY FINANCIAL CORPORATION,
AS ISSUER
AND
IFA INCORPORATED,
AS PURCHASER
DECEMBER 20, 1999
================================================================================
54892.0004
<PAGE>
TABLE OF CONTENTS*
------------------
<TABLE>
<S> <C>
1. DEFINITIONS AND TERMS....................................................................................1
1.1 Definitions.....................................................................................1
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1.2 GAAP...........................................................................................13
----
1.3 Company........................................................................................13
-------
1.4 Rules of Construction..........................................................................14
---------------------
2. ISSUE AND SALE OF SECURITIES............................................................................15
2.1 Authorization and Issuance of the Notes, the Warrants and the Option...........................15
--------------------------------------------------------------------
2.2 Initial Sale and Purchase......................................................................15
-------------------------
2.3 [Intentionally deleted]........................................................................15
-----------------------
2.4 [Intentionally deleted]........................................................................15
-----------------------
2.5 The Closing....................................................................................15
-----------
2.6 Payments.......................................................................................16
--------
3. CONDITIONS AND AGREEMENTS...............................................................................16
3.1 Conditions to Purchase of Securities...........................................................16
------------------------------------
3.2 Taxes..........................................................................................19
-----
3.3 Maximum Lawful Rate............................................................................20
-------------------
3.4 Change of Laws.................................................................................21
--------------
4. ANCILLARY AGREEMENTS....................................................................................21
4.1 Guarantees.....................................................................................21
----------
4.2 Note Pledge Agreements.........................................................................21
----------------------
4.3 Stock Pledge Agreements........................................................................22
-----------------------
4.4 Security Agreements............................................................................22
-------------------
5. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS.......................................................22
5.1 General Representations and Warranties.........................................................22
5.2 Survival of Warranties and Representations.....................................................30
5.3 Exclusion of Harbor Debtors....................................................................31
6. COVENANTS AND CONTINUING AGREEMENTS.....................................................................31
6.1 Financial Covenants............................................................................31
-------------------
6.2 Affirmative Covenants..........................................................................31
---------------------
6.3 Negative Covenants.............................................................................38
------------------
6.4 Required Notices...............................................................................44
----------------
6.5 Year 2000 Compliance...........................................................................45
--------------------
- --------
* The headings contained in this Table of Contents are for purposes of
reference and convenience only and shall not limit or otherwise affect the
meaning of this Agreement.
Table continued...
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<S> <C>
7. DEFAULT.................................................................................................46
7.1 Events of Default..............................................................................46
-----------------
7.2 Remedies Cumulative............................................................................49
-------------------
7.3 Acceleration...................................................................................50
------------
7.4 Remedies.......................................................................................50
--------
7.5 Injunctive Relief..............................................................................50
-----------------
7.6 [Intentionally deleted]........................................................................50
7.7 Subordination..................................................................................50
-------------
8. GENERAL.................................................................................................50
8.1 Compliance with ERISA..........................................................................50
---------------------
8.2 Costs..........................................................................................56
-----
8.3 Statement......................................................................................56
---------
8.4 Notices........................................................................................56
-------
8.5 Amendments and Waivers.........................................................................56
----------------------
8.6 No Implied Waiver; Remedies Cumulative.........................................................57
--------------------------------------
8.7 Severability...................................................................................57
------------
8.8 Incorporation of Other Agreements..............................................................57
---------------------------------
8.9 Acceptance.....................................................................................58
----------
8.10 Knowledge......................................................................................58
---------
8.11 Waiver by the Company..........................................................................58
---------------------
8.12 Governing Law..................................................................................58
-------------
8.13 Waiver of Marshalling..........................................................................59
---------------------
8.14 Limitation by Law..............................................................................59
-----------------
8.15 Survival of Representations, Warranties and Covenants..........................................59
-----------------------------------------------------
8.16 Service of Process.............................................................................59
------------------
8.17 Representation by Counsel......................................................................59
-------------------------
8.18 Release of the Purchasers......................................................................60
-------------------------
8.19 Invalidated Payments...........................................................................60
--------------------
8.20 Headings.......................................................................................60
--------
8.21 Counterparts...................................................................................60
------------
8.22 Fax Execution..................................................................................60
-------------
8.23 No Third Party Beneficiaries...................................................................61
----------------------------
8.24 Domicile of Note...............................................................................61
----------------
8.25 Entire Agreement...............................................................................61
----------------
8.26 Construction...................................................................................61
------------
8.27 Successors and Assigns.........................................................................62
----------------------
8.28 Texas Language.................................................................................62
--------------
8.29 Waiver of Trial by Jury........................................................................63
-----------------------
8.30 Waiver of Claims...............................................................................63
----------------
8.31 No Agency or Partnership.......................................................................63
------------------------
8.32 Application of Payments........................................................................64
-----------------------
Table continued...
ii
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<S> <C>
9. INDEMNIFICATION; SET OFF................................................................................64
9.1 Indemnification................................................................................64
9.2 Set-Off........................................................................................64
10. AGENT...................................................................................................65
10.1 Appointment....................................................................................65
-----------
10.2 Nature of Duties..................................................................................65
----------------
10.3 Lack of Reliance..................................................................................66
----------------
10.4 Certain Rights....................................................................................67
--------------
10.5 Reliance..........................................................................................67
--------
10.6 Indemnification...................................................................................67
---------------
10.7 Collateral Agent, Individually....................................................................67
------------------------------
10.8 Holders of Notes..................................................................................68
----------------
10.9 Resignation.......................................................................................68
-----------
10.10 Reimbursement....................................................................................68
-------------
</TABLE>
Exhibit A Name and Address of the Purchasers
Exhibit B Form of Note
Exhibit C Form of Warrant
Exhibit D Form of Option
iii
<PAGE>
SUBORDINATED SECURED SENIOR NOTE PURCHASE AGREEMENT
$25,000,000 Principal Amount of Subordinated Secured Senior Notes
due 2003 of FirstCity Financial Corporation
SUBORDINATED SECURED SENIOR NOTE PURCHASE AGREEMENT, dated as of
December 20, 1999, by and among FIRSTCITY FINANCIAL CORPORATION, a Delaware
corporation (the "Company"), and IFA Incorporated, an Illinois corporation
("IFA"), as Collateral Agent and Purchaser.
WHEREAS
The Company desires to issue and sell and the other parties to this
Agreement desire to purchase up to $25,000,000 in aggregate principal amount of
the Company's Subordinated Secured Senior Notes due 2003 (the "Notes") on the
terms and conditions set forth in this Agreement; and
In order to induce such other parties to purchase the Notes to be
issued pursuant to this Agreement, the Company has agreed to issue to such
parties (i) warrants to purchase an aggregate of 425,000 shares of voting common
stock, par value $0.01 per share, of the Company (the "Voting Common Stock"),
and (ii) an option to acquire warrants to purchase an aggregate of 1,975,000
shares of Non-Voting Common Stock of the Company (the Non-Voting Common Stock,
together with the Voting Common Stock, the "Common Stock"), in each case subject
to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereto, in consideration of the premises
and their mutual covenants and agreements herein set forth and intending to be
legally bound hereby, covenant and agree as follows:
1. DEFINITIONS AND TERMS
1.1 Definitions. The following words, terms and/or phrases shall have
the meanings set forth thereafter and such meanings shall be applicable to the
singular and plural form thereof, giving effect to the numerical difference:
"Affiliate": any Person (i) in which the Company and/or any
Parent, individually, jointly and/or severally, now or at any time or
times hereafter, has or have an equity or other ownership interest
equal to or in excess of twenty-five percent (25%) of the total equity
of or other ownership interest in such Person; and/or (ii) which
directly or indirectly through one or more intermediaries controls or
is controlled by, or is under common control with the Company; and/or
(iii) any officer or director of the Company or any Affiliated Entity.
For purposes of this definition, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of Stock, by contract or otherwise, and in any case shall
include direct
1
<PAGE>
or indirect ownership (beneficially or of record) of, or direct or
indirect power to vote, 25% or more of the outstanding shares of any
class of capital stock of such Person (or in the case of a Person that
is not a corporation, 25% or more of any class of equity interest).
Notwithstanding the foregoing, none of the Harbor Debtors shall be
deemed to be an Affiliate for the purposes of this Agreement.
"Affiliated Entity": each Guarantor, Primary Obligor and
Secondary Obligor.
"Agreement": this Subordinated Secured Senior Note Purchase
Agreement, together with all Modifications hereto.
"and/or": one or the other or both, or any one or more or all,
of the things or Persons in connection with which the conjunction is
used.
"Assets": any and all real, personal and intangible property
of a Person, including, without limitation, accounts, chattel paper,
contract rights, letters of credit, instruments and documents,
equipment, general intangibles, inventory, leases, options, licenses,
and real property, whether now existing or hereafter acquired or
arising.
"Business Day": any day, other than a Saturday, Sunday, a day
that is a legal holiday under the laws of the State of Illinois, the
State of New York or the State of Texas or any other day on which
banking institutions located in the State of Illinois, the State of New
York or the State of Texas are authorized or required by law or other
governmental action to close.
"Capitalized Lease": at any time any lease which is, or is
required under GAAP to be, capitalized on the balance sheet of the
lessee at such time, and "Capitalized Lease Obligation" of any Person
at any time shall mean the aggregate amount which is, or is required
under GAAP to be, reported as a liability on the balance sheet of such
Person at such time as lessee under a Capitalized Lease.
"Charges": all Federal, state, county, city, municipal and/or
other governmental (or any instrumentality, division, agency, body or
department thereof, including without limitation the Pension Benefit
Guaranty Corporation) taxes, levies, assessments, charges upon and/or
relating to the Company's Assets, the Company's Obligations, the
Company's business, the Company's ownership and/or use of any of its
Assets, the Company's income and/or gross receipts and/or the Company's
ownership and/or use of any of its material Assets.
"Closing": the meaning assigned to that term in Section 2.5
hereof.
"Closing Date": December 20, 1999.
2
<PAGE>
"Closing Date Exceptions Schedule": the meaning assigned to
that term in the introductory paragraph to Section 5.1 hereof. "Code":
the Internal Revenue Code of 1986, as amended.
"Collateral Agent": IFA, its successors and assigns.
"Common Stock": the meaning set forth in the Recitals to this
Agreement.
"Company's Liabilities": all obligations and liabilities of
the Company to the Purchasers under the terms of this Agreement and the
Other Agreements, and all extensions and renewals or refinancing
thereof, whether such obligation or liability is direct or indirect,
secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether for payment or performance, whether heretofore
arising, now existing or hereafter arising, however evidenced, created,
incurred, acquired or owing and whether now contemplated or hereafter
arising. Without limitation of the foregoing, such liability and
obligations include the principal amount of the Notes, interest, fees,
indemnities or expenses under this Agreement and all Other Agreements,
and all extensions, renewals and refinancing thereof, whether or not
such Notes were made in compliance with the terms and conditions of
this Agreement. The Company's Liabilities shall remain the Company's
Liabilities, notwithstanding any assignment or transfer or any
subsequent assignment or transfer of any of the Company's Liabilities
or any interest therein.
"Company's Obligations": all terms, conditions, warranties,
representations, agreements, undertakings, covenants and provisions
(other than the Company's Liabilities) to be performed, discharged,
kept, observed or complied with by the Company to or for the benefit of
the Purchasers under the terms of this Agreement and all Other
Agreements, and all extensions and renewals or refinancing thereof,
whether such obligation is direct or indirect, secured or unsecured,
joint or several, absolute or contingent, due or to become due, whether
heretofore arising, now existing or hereafter arising, however
evidenced, created, incurred, acquired or owing and whether now
contemplated or hereafter arising. The Company's Obligations shall
remain the Company's Obligations, notwithstanding any assignment or
transfer or any subsequent assignment or transfer of any of the
Company's Obligations or any interest therein.
"Consolidated Group": the Company and those Affiliates of the
Company required to file consolidated tax returns pursuant to Section
1502 of the Code, other than the Harbor Debtors.
"Costs": any and all reasonable costs and expenses (including,
without limitation, the reasonable fees and expenses of any counsel,
accountants, appraisers or other professionals) incurred by a Purchaser
or the Collateral Agent at any time, in connection with: (i) the
preparation, negotiation, execution and administration of this
Agreement and all Other Agreements; (ii) the preparation, negotiation
and execution of any amendment or
3
<PAGE>
modification of this Agreement or the Other Agreements; (iii) the
custody, preservation, use or operation of, or the sale of, collection
from or other realization upon the Pledged Property; (iv) the exercise
or enforcement of any of the rights of the Purchasers hereunder; (v)
any failure by the Company to perform or observe any of the provisions
hereunder; (vi) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by one or more Purchasers, the Company or
any other Person) in any way relating to this Agreement, the Other
Agreements, the Secured Obligations, the Pledged Property, or, to the
extent instituted by any third party, the Company's affairs or any
Affiliate's affairs; (vii) any attempt to enforce any rights of the
Purchasers against the Company or any other Person which may be
obligated to the Purchasers by virtue of this Agreement or the Other
Agreements; and (viii) performing any of the obligations relating to or
payment of any of the Secured Obligations hereunder in accordance with
the terms hereof. Notwithstanding anything to the contrary contained
herein, Costs shall not include any fees, cost, loss, expense or damage
arising from any dispute, proceeding or claim by, between or among (A)
any one or more of the Purchasers and (B) any other Purchaser or
Purchasers, relative to the rights, duties and/or liabilities of any
such Person herein or under any of the Other Agreements.
"Default Rate": interest at the rate of the greater of (i) 14%
per annum or (ii) the rate which Citibank N.A. announces from time to
time as its prime lending rate as in effect from time to time, plus 6%
per annum.
"Environmental Laws": any Federal, state or local law, rule,
regulation, ordinance, order, code or statute applicable to the Company
or its property, in each case as amended (whether now existing or
hereafter enacted or promulgated), controlling, governing or relating
to the pollution or contamination of the air, water or land or
concerning hazardous, special or toxic materials, wastes or substances,
or any judicial or administrative interpretation of such laws, rules or
regulations, including, without limitation, the Water Pollution Control
Act (33 U.S.C. ss. 1251 et seq.), Resource Conservation and Recovery
Act (42 U.S.C. ss. 6901 et seq.), Safe Drinking Water Act (42 U.S.C.
ss. 3000(f) et seq.), Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), Clean Air Act (42 U.S.C. ss. 7401 et seq.), and Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
ss. 9601 et seq.).
"Event of Default": the meaning assigned to that term in
Section 7.1 hereof.
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Excluded Entities": the meaning assigned to that term in
Section 4.3 hereof.
"Excluded Notes": the meaning assigned to that term in Section
4.2 hereof.
"FC Capital": FC Capital Corp., a New York corporation.
4
<PAGE>
"FC Commercial": FirstCity Commercial Corporation, a Texas
corporation.
"FC Commercial Line of Credit": a line of credit or loan
facility, approved in writing by the Lenders or the Majority
Noteholders (such approval not to be unreasonably withheld), to be made
available by a Person to FC Commercial, FC International and/or FC
Holdings in an amount not to exceed $17,000,000 in the aggregate to be
used for the purpose of funding investments in entities formed to
acquire asset portfolios or to service asset portfolios and which line
of credit or loan facility will be secured by first priority security
interests in the assets of FC International and in the equity interests
acquired with the proceeds of the line of credit or loan facility.
"FC Consumer Lending": FirstCity Consumer Lending Corporation,
a Texas corporation.
"FC Consumer Lending Line of Credit": a line of credit or loan
facility, approved in writing by the Lenders or the Majority
Noteholders (such approval not to be unreasonably withheld), to be made
available by a Person to FC Consumer Lending and/or its Subsidiaries in
an amount not to exceed the lesser of (a) 30% of the book value of auto
residuals, or (b) $25,000,000 which will be secured by the Assets of FC
Consumer Lending, except for equity interests in FirstCity Funding L.P.
or FirstCity Consumer Finance Corporation.
"FC Financial": FirstCity Financial Corporation, a Delaware
corporation.
"FC Holdings": FirstCity Holdings Corporation, a Texas
corporation.
"FC International": FirstCity International Corporation, a
Texas corporation.
"FC Servicing": FirstCity Servicing Corporation, a Texas
corporation.
"Fee Agreements": any partnership agreement, management
agreement, consulting agreement, or other agreements pursuant to which
the Company or any Affiliated Entity is to be paid fees, distributions,
allocations, expense reimbursements, consideration, salary or other
compensation in consideration for providing management, personnel or
services, in any form whatsoever, from any Affiliate or from any other
Person. Services to be rendered under Fee Agreements may include, but
not be limited to, consulting, collecting revenues, paying operating
expenses not paid directly by others, and providing clerical and
bookkeeping services.
"Financials": those financial statements of the Company,
heretofore, concurrently herewith or hereafter delivered by or on
behalf of the Company to the Purchasers, including but not limited to
those financial statements and reports delivered by the Company to the
Purchasers pursuant to Section 6.2(c).
5
<PAGE>
"First B": the meaning assigned to such term in the Loan
Agreement.
"First X": the meaning assigned to such term in the Loan
Agreement.
"GAAP": generally accepted accounting principles applied in
the preparation of the financial statements of a Person with such
changes thereto as: (i) shall be consistent with the then-effective
principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors and successors, and (ii) shall be concurred
in by the independent certified public accountants of recognized
standing acceptable to the Purchasers reviewing such financial
statements of such Person; provided that KPMG LLP shall be deemed to be
acceptable to the Purchasers as independent certified public
accountants of recognized standing for the purposes of applying GAAP.
"Governmental Authority": any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand
jury or arbitrator, in each case whether foreign or domestic.
"Guaranty" or "Guarantees": any one or more of the guarantees
of payment and performance, dated as of the date hereof, granted by the
Guarantors to guaranty repayment of the Secured Obligations, together
with all Modifications thereto.
"Guarantors": collectively and jointly and severally, (i) FC
Commercial, (ii) FC Consumer Lending, (iii) FC International, (iv) FC
Servicing, (v) FC Capital and (vi) FC Holdings and each other Person
who has guaranteed all or any portion of the Secured Obligations.
"Guaranty Equivalent": any agreement, document or instrument
pursuant to which a Person directly or indirectly guarantees, becomes
surety for, endorses, assumes, agrees to indemnify the obligee of any
other Person against, or otherwise agrees, becomes or remains liable
(contingently or otherwise) for, such obligation, other than by
endorsements of instruments in the ordinary course of business. Without
limitation, a Guaranty Equivalent shall be deemed to exist if a Person
agrees, becomes or remains liable (contingently or otherwise), directly
or indirectly: (i) to purchase or assume, or to supply funds for the
payment, purchase or satisfaction of, an obligation; (ii) to make any
loan, advance, capital contribution or other investment in, or a
purchase or lease of any property or services from, a Person; (iii) to
maintain the solvency of such Person; (iv) to enable such Person to
meet any other financial condition; (v) to enable such Person to
satisfy any obligation or to make any payment; (vi) to assure the
holder of an obligation against loss; (vii) to purchase or lease
property or services from such Person regardless of the non-delivery of
or failure to furnish of such property or services; or (viii) in
respect of any other transaction the effect of which is to assure the
payment or performance (or payment of damages or other remedy in the
event of nonpayment or nonperformance) of any obligation.
6
<PAGE>
"Harbor Debtors": collectively, (i) Harbor Financial Mortgage
Corp., (ii) NAF, Inc. (f/k/a New America Financial, Inc.), (iii)
Hamilton Financial Services Corp., (iv) Community National Mortgage
Corp., (v) CalCap, Inc. and (vi) Harbor Financial Group, Inc.
"Harbor Proceedings": The jointly administered Chapter 11
bankruptcy cases, bearing Case No. 99-37255-SAF-11, styled as In Re
Harbor Financial Group, Inc., et al., pending in the United States
Bankruptcy Court for the Northern District of Texas, Dallas Division,
under which the Harbor Debtors are operating as debtors-in-possession,
including any conversion of such Chapter 11 cases to Chapter 7
"HSR Act": means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (or any successor statute in effect from time
to time), and the rules and regulations of the Federal Trade Commission
promulgated thereunder.
"IFA": the meaning assigned to that term in the introductory
paragraph to this Agreement.
"Indebtedness": with respect to any Person, at a particular
time (without duplication): (i) all obligations on account of money
borrowed by, or credit extended to or on behalf of, or for or on
account of deposits with or advances to, such Person, except for
inter-affiliate transactions entered into in the ordinary course of
business on arms-length terms by and among FC Financial and any
Affiliate or by and among the Affiliates which are accounted for in
book entries in the books and records of the applicable persons and
which is not evidenced by a note or other instrument; (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
similar instruments; (iii) all obligations of such Person for the
deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business and on terms
customary in the trade and not more than sixty (60) days past due; (iv)
all obligations secured by a Lien on property owned by such Person
(whether or not assumed); and all obligations of such Person under
Capitalized Leases (without regard to any limitation of the rights and
remedies of the holder of such Lien or the lessor under such
Capitalized Lease to repossession or sale of such property); (v) the
face amount of all letters of credit issued for the account of such
Person and, without duplication, the unreimbursed amount of all drafts
drawn thereunder, and all other obligations of such Person associated
with such letters of credit or draws thereon; (vi) all obligations of
such Person in respect of acceptances or similar obligations issued for
the account of such Person; (vii) all obligations of such Person under
a product financing or similar arrangement; (viii) all obligations of
such Person under any interest rate or currency protection agreement,
interest rate or currency future, interest rate or currency option,
interest rate or currency swap or cap or other interest rate or
currency hedge agreement; and (ix) all obligations and liabilities with
respect to unfunded vested benefits under any "employee benefit plan"
or with respect to withdrawal liabilities incurred under ERISA by the
Company or any ERISA Affiliate to a "multiemployer plan", as such terms
are defined under the Employee Retirement Income Security Act of 1974.
7
<PAGE>
"Indebtedness Instrument": any note, mortgage, indenture,
chattel mortgage, deed of trust, loan agreement, hypothecation
agreement, pledge agreement, security agreement, financing statement or
other document, instrument or agreement evidencing or securing the
payment of or otherwise relating to the borrowing of monies.
Indebtedness Instruments shall include, but not be limited to, the
Senior Note, the Loan Agreement, the Notes, this Agreement and the
Other Agreements (other than the Warrants and the Option).
"Initial Closing": the meaning assigned to that term in
Section 2.5 hereof.
"Initial Closing Date": the Closing Date.
"Initial Notes": the meaning assigned to that term in Section
2.1 hereof.
"Initial Securities": the meaning assigned to that term in
Section 2.1 hereof.
"Initial Warrants": the meaning assigned to that term in
Section 2.1 hereof.
"Issue Price": $25,000,000
"Lenders" and "Lender": (x) Bank of Scotland, acting through
its branch in New York, New York, with its principal place of business
at 565 Fifth Avenue, New York, New York 10017, as managing agent,
administrative agent and collateral agent on behalf of the lenders from
time to time party to the Loan Agreement, and (y) individually and
collectively, the lenders from time to time party to the Loan
Agreement, subject to the provisions contained therein pertaining to
Persons becoming or ceasing to be Lenders. Any reference to "Lenders"
shall be deemed to mean all, or any one or more Lenders, unless the
context clearly provides otherwise.
"Lien": any mortgage, deed of trust, pledge, lien,
hypothecation, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, including but not
limited to any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the
effect of, security.
"Loan Agreement": the amended and restated Loan Agreement
dated as of the date hereof by and among the Company and the Lenders
and all documents and instruments entered into in connection therewith,
including without limitation the Senior Notes, each as in effect on the
Closing Date, together with all Modifications thereto to the extent
permitted by the terms of the Subordination Agreement.
"Loan Documents": the meaning assigned in Section 9.2 hereof.
8
<PAGE>
"Loan Party": the Company and every other Person (other than
IFA, any other Purchaser or any other holder of a Note, a Warrant or
the Option) who is a party to this Agreement or any one or more of the
Other Agreements.
"Majority Noteholders": the holders of two-thirds in aggregate
principal amount of the Notes at the relevant time.
"Material Adverse Effect": any effect that (i) is material and
adverse to the financial condition, results of operations, business or
prospects of the Company and/or its Subsidiaries or any Affiliated
Entity or (ii) materially impairs the ability of the Company or any
Affiliated Entity to perform its obligations under this Agreement or
any Other Agreement.
"Modifications": any extension, renewal, substitution,
replacement, restatement, reaffirmation, substitute, supplement,
amendment or modification of any agreement, certificate, document,
instrument or other writing, whether or not contemplated in the
original agreement, document or instrument.
"National Auto Funding": means National Auto Funding
Corporation, a Texas corporation.
"Net Proceeds": all proceeds of Indebtedness received by the
Company after deduction of all fees and expenses paid or to be paid in
connection with the issuance of such Indebtedness.
"Non-Voting Common Stock": common stock of the Company, par
value $0.01 per share, having the attributes required by Section
6.02(o).
"Notes": the Subordinated Secured Senior Notes due 2003, to be
substantially in the form of the note attached hereto as Exhibit B, in
the original, aggregate principal amount of $25,000,000, issued by the
Company to the Purchasers pursuant to this Agreement, together with all
Modifications thereto.
"Note Pledge Agreements": the note pledge agreement, dated as
of the date hereof, granted by the Company and other Loan Parties to
secure the Secured Obligations, pursuant to which such Loan Party has
pledged to the Purchasers certain promissory notes made by such Loan
Party payable to the order of the Company, together with all
Modifications thereto.
"Option": the meaning assigned to that term in Section 2.1
hereof.
"Option Warrants": the meaning assigned to that term in
Section 2.1 hereof.
"Option Securities": the Option Warrants.
9
<PAGE>
"Organic Documents": with respect to any Person, its articles
or certificate of incorporation, by-laws, shareholder's agreement,
certificate of partnership, certificate of limited partnership,
partnership agreement, articles of organization, operating agreement,
or similar documents or agreements governing its management and the
rights and privileges of its equity owners, together with all
Modifications thereto.
"Other Agreements": the Notes, the Warrants, the Option, the
Note Pledge Agreement, the Partnership Pledge Agreement, the Stock
Pledge Agreement, the Security Agreement and the Guaranty, together
with all other agreements, instruments and documents from time to time
evidencing or securing the Notes or the transactions contemplated
herein or therein, together with all Modifications thereto.
"Parent": any Person, now or at any time or times hereafter,
owning or controlling (alone or with the Company, any Subsidiary and/or
any other Person) at least a majority of the issued and outstanding
Stock or other ownership interest of the Company or any Subsidiary
(hereinafter defined). For purposes of this definition, "control" shall
have the meaning assigned to this term in the definition of Affiliate
in Section 1.1. Notwithstanding the foregoing, no Person shall be a
Parent which is not a Parent of the Company or a 50.1% (or more) owned
subsidiary (directly or indirectly) of the Company.
"Partnership Pledge Agreement": the partnership interest
pledge agreement, dated as of the date hereof, granted by the Company
and other Loan Parties to secure the Secured Obligations, pursuant to
which such Loan Parties have pledged to the Purchasers certain
partnership interests in the Pledged Entities to secure the Secured
Obligations.
"Permitted Liens": (i) any liens created in connection with
the Senior Debt but only to the extent such Senior Debt is permitted
under the Subordination Agreement; (ii) liens for Charges which are not
yet due and payable or which are expressly permitted pursuant to the
terms hereof, or claims and unfunded liabilities under ERISA not yet
due and payable or which are being contested in good faith; (iii) liens
arising in connection with worker's compensation, unemployment
insurance, old age pensions and social security benefits which are not
overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest any
proceedings commenced for the enforcement of such lien shall have been
duly suspended and such provision for the payment of such lien has been
made on the books of the Company (or the applicable Affiliate) as may
be required by GAAP; (iv) liens incurred in the ordinary course of
business to secure the performance of statutory obligations arising in
connection with progress payments or advance payments due under
contracts with the United States Government or any agency thereof
entered into in the ordinary course of business; (v) any liens securing
Indebtedness of the Company (or any Affiliate) to any Persons in an
aggregate amount less than $200,000; (vi) Charges relating to Assets of
First B and First X; (vii) as to any Affiliate other than the Company
or a Primary Obligor, purchase money liens in connection with the
acquisition of Assets so long as such Liens encumber only the Assets
acquired, (viii) as to any Affiliate
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other than the Company or a Primary Obligor, Liens relating to
Indebtedness incurred in connection with warehousing assets or the
securitization of Assets, so long as such Liens encumber only the
assets warehoused or securitized, (ix) those Liens disclosed on
Schedule 5.1(g), (x) Liens securing the Notes, (xi) Liens only on
property of Secondary Obligors, and (xii) Liens granted pursuant to,
and as security for, the FC Commercial Line of Credit and the FC
Consumer Lending Line of Credit.
"Person": any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party or
government (whether national, Federal, state, county, city, municipal
or otherwise, including without limitation any instrumentality,
division, agency, body or department thereof).
"Pledge Agreements": individually and collectively, the Note
Pledge Agreement, the Stock Pledge Agreement and the Partnership Pledge
Agreement.
"Pledged Entities": those entities whose shareholders,
partners, members or other equity owners have pledged an equity
interest in such entity to secure the Secured Obligations.
"Pledged Notes": those certain promissory notes identified on
Schedule 4.2(b), which have been pledged to the Purchasers pursuant to
the Note Pledge Agreements.
"Pledged Property": any and all other property (real, personal
or intangible) pledged by the Company or any other Loan Party to secure
payment and performance of the Secured Obligations, including but not
limited to: (i) any and all Collateral, as defined in the Security
Agreements; (ii) any and all interests pledged pursuant to the Note
Pledge Agreements; and (iii) any and all interests pledged pursuant to
the Stock Pledge Agreements.
"Primary Obligors": collectively, (i) FC Capital, (ii) FC
Commercial, (iii) FC Servicing and (iv) FC Consumer Lending.
"Purchaser" or "Purchasers": IFA Incorporated, in its capacity
as Purchaser hereunder, and its permitted successors and assigns as
provided herein. For avoidance of doubt, each registered holder of a
Note shall constitute a Purchaser.
"Records": all books, records, computer records, computer
software, ledger cards, programs and other computer materials, customer
and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to a Person's Assets or
liabilities.
"REO Affiliate": the meaning provided for such term in the
Loan Agreement.
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"SEC": the Securities and Exchange Commission.
"Secondary Obligors": the meaning provided for such term in
the Loan Agreement.
"Secured Obligations": all of the Company's Liabilities, the
Company's Obligations and all other obligations and liabilities of the
Company or any other Loan Party to the Purchasers under the terms of
this Agreement and the Other Agreements, together with all
Modifications thereof, whether such obligation or liability is direct
or indirect, otherwise secured or unsecured, joint or several, absolute
or contingent, due or to become due, whether for payment or
performance, whether heretofore arising, now existing or hereafter
arising, however evidenced, created, incurred, acquired or owing and
whether now contemplated or hereafter arising. Without limitation of
the foregoing, such liability and obligations include the principal
amount of the Notes, interest, fees, indemnities or expenses under this
Agreement or any Other Agreement. Secured Obligations shall remain
Secured Obligations, notwithstanding any assignment or transfer or any
subsequent assignment or transfer of any of the Secured Obligations or
any interest therein. Notwithstanding the foregoing, the Company's
obligations under the Warrants and the Option shall not be secured by
any collateral at any time when the Company's obligations under this
Agreement and the Notes are no longer secured by collateral.
"Securities": the Initial Securities and the Option
Securities.
"Securities Act": the Securities Act of 1933, as amended.
"Securities Laws": the Securities Act, the Exchange Act and
all other applicable Federal and state securities laws and regulations
promulgated pursuant thereto.
"Security Agreements": the security agreement dated as of the
date hereof executed by the Company, FC Consumer Lending, FC
Commercial, FC Servicing, FC Capital, FC International and FC Holdings
to secure the Secured Obligations, together with all Modifications
thereto.
"Senior Debt": all obligations and liabilities of the Company
to the Lenders under the Loan Agreement.
"Senior Notes": the revolving notes of the Company issued
under the Loan Agreement as in effect on the Closing Date, together
with all Modifications thereto to the extent permitted by the terms of
the Subordination Agreement.
"Stock": all shares, interests, participations or other
equivalents (however designated) of or in a corporation, whether voting
or non-voting, including, but not limited to, common stock, warrants,
preferred stock, convertible debentures and all agreements,
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instruments and documents convertible, in whole or in part, into any
one or more or all of the foregoing.
"Stock Pledge Agreements": the stock pledge agreement, dated
as of the date hereof, granted by the Company and other Loan Parties to
secure the Secured Obligations, pursuant to which such Loan Party has
pledged to the Purchasers Stock or other equity interests in the
Pledged Entities to secure the Secured Obligations, together with all
Modifications thereto.
"Subordination Agreement": the meaning assigned to such term
in Section 3.1(e) hereof.
"Subsidiary": any Person at least a majority of whose issued
and outstanding Stock or other ownership interests now or at any time
hereafter is owned (directly or indirectly) by the Company, including
without limitation any Affiliated Entity.
"Tangible Net Worth": as determined at any time, the total of
shareholders' equity (including capital (both common and preferred)
stock, additional paid-in capital and retained earnings after deducting
treasury stock) of a Person, less the sum of the total amount of any
intangible assets, which, for purposes of this definition, shall
include, without limitation, general intangibles and, if applicable,
all accounts receivable from any Affiliate of such Person not incurred
in the ordinary course of business or any loan to any director or
officer of any Affiliate of such Person, unamortized deferred charges
and goodwill, all as determined in accordance with GAAP.
"Underlying Common Stock": (i) the Common Stock issued or
issuable upon exercise of the Warrants and (ii) any equity securities
issued or issuable with respect to the securities referred to in clause
(i) above by way of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or
other reorganization. Any Person who holds a Warrant will be deemed to
be the holder of the Underlying Common Stock obtainable upon exercise
of the Warrant, regardless of any restriction on the exercise of the
Warrant for purposes of the preemptive or other rights specifically
provided for in this Agreement. Notwithstanding the foregoing, a
Warrant shall not entitle the holder thereof to any voting rights or
other rights as a stockholder of the Company.
"Unmatured Default": any event or condition which, with the
passage of time or the giving of notice or both, would constitute an
Event of Default hereunder.
"Voting Common Stock": the meaning set forth in the Recitals
to this Agreement.
"Warrants": the Initial Warrants (substantially in the form of
the warrant attached hereto as Exhibit C) and/or the Option Warrants
(substantially in the form provided for by the Option) and/or any other
Warrants issued by the Company pursuant to, or in connection
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with, this Agreement, the Option or any other Warrant, in each case
together with all Modifications thereto.
1.2 GAAP. Except as otherwise defined in this Agreement or the Other
Agreements, all accounting terms used herein shall have the meaning ascribed to
that term in accordance with GAAP.
1.3 Company. Whenever the context so requires, the use of "it" in
reference to the Company shall mean the Company as defined above.
1.4 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice
versa; reference to any gender includes each other gender;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
provided that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Agreement;
(d) reference to any agreement, document or instrument means
such agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof, and reference to any note
includes any note issued pursuant to any Other Agreements in extension
or renewal thereof and in substitution or replacement therefor;
(e) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section
hereof or such Schedule or Exhibit hereto;
(f) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(g) with respect to the determination of any period of time,
the word "from" means "from and including" and the word "to" means "to
but excluding;"
(h) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to
time; and
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(i) the Article and Section headings herein are for
convenience only and shall not affect the construction hereof; and
(j) any requirement herein that a document, agreement, amount
or other item be "satisfactory" or "acceptable" (or words of similar
import) to the Majority Noteholders or to all Noteholders shall be
construed (unless specifically stated otherwise) to require that the
same be satisfactory to the Majority Noteholders or all Noteholders (as
the case may be) in its or their absolute and sole discretion, and any
reference herein to any consent or waiver by the Majority Noteholders
or all Noteholders (and words of similar import) shall be construed
(unless specifically stated otherwise) to entitle the Majority
Noteholders or all Noteholders (as the case may be) to grant or
withhold such consent or waiver in its or their absolute and sole
discretion.
2. ISSUE AND SALE OF SECURITIES
2.1 Authorization and Issuance of the Notes, the Warrants and the
Option. The Company has duly authorized the initial issuance and sale to the
Purchasers of (i) $25,000,000 in aggregate principal amount of Notes (the
"Initial Notes"), (ii) warrants evidencing the Purchasers' rights to acquire an
aggregate of 425,000 shares of Voting Common Stock (the "Initial Warrants"), and
(iii) an option (the "Option" and, together with the Initial Notes and the
Initial Warrants, the "Initial Securities") to acquire the Option Warrants (as
hereafter defined). In addition, the Company has duly authorized the subsequent
issuance to the Purchasers of warrants evidencing the Purchasers' rights to
acquire an aggregate of 1,975,000 shares of Non-Voting Common Stock (the "Option
Warrants") upon exercise of the Option.
2.2 Initial Sale and Purchase. Subject to the terms and conditions and
in reliance upon the representations, warranties and agreements set forth
herein, at the Initial Closing, the Company shall sell to each Purchaser, and
each Purchaser shall purchase from the Company, (i) the amount of Initial Notes
and (ii) the number of Initial Warrants set forth opposite such Purchaser's name
on Exhibit A hereto.
2.3 [Intentionally deleted]
2.4 [Intentionally deleted].
2.5 The Closing. Delivery of and payment for the Initial Securities
(the "Initial Closing" or "Closing") shall be made at the offices of Sachnoff &
Weaver, Ltd., 30 South Wacker Drive, Suite 2900, Chicago, Illinois 60606,
commencing at 9:00 a.m., local time, on December 20, 1999, or at such other
place or on such other date and at such other time as may be mutually agreeable
to the Company and the Purchasers.
Delivery of the Initial Securities shall be made to the
Purchasers against payment of the full Issue Price, less any amounts payable
pursuant to Section 3.1(h) hereof to the extent then
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able to be determined by the Purchasers, by wire transfer of immediately
available funds to or at the direction of the Company in the manner agreed to by
the Company and the Purchasers. The Notes shall be issued in such name or names
and in such permitted denomination or denominations as a Purchaser may request
in writing not less than two Business Days before the Closing Date; in the
absence of such a request from a Purchaser, a single Note will be issued in the
Purchaser's name. The Initial Warrants shall be registered in such name or names
as a Purchaser may request in writing not less than two Business Days before the
Closing Date; in the absence of such a request from a Purchaser, a single
Warrant will be registered in the Purchaser's name. The Option shall be issued
in such name or names as a Purchaser may request in writing not less than two
Business Days before the Closing Date; in the absence of such a request from a
Purchaser, a single Option will be issued in IFA's name.
2.6 Payments. All payments to a Purchaser under this Agreement and the
Other Agreements shall be payable in lawful currency of the United States of
America in immediately available funds on or before noon New York time on the
due date at the address or such place or places, or by wire transfer of funds to
such account, as the Purchaser may designate in writing to the Company. Any and
all payments which may be received by or tendered to a Purchaser by the Company
or any other Person at any time or from time to time and which relate to the
Notes held by it shall be applied in the following order of priority: (i) Costs;
(ii) accrued but unpaid interest, premiums and late payment fees; and (iii)
principal.
3. CONDITIONS AND AGREEMENTS
3.1 Conditions to Purchase of Securities. The obligations of each
Purchaser, acting severally and not jointly and as to itself only, to purchase
and pay for the Securities set forth opposite its name on Exhibit A hereto
pursuant to Section 2.2 hereof is subject to the satisfaction prior to or at the
Closing of the following conditions:
(a) Representations True. The representations and warranties
contained in this Agreement and the Other Agreements shall be true and
correct in all material respects at and as of the Closing Date as
though then made, except where such representations and warranties
speak as of a different date and except to the extent of changes caused
by the transactions expressly contemplated or permitted herein. The
representations and warranties of the Company contained in the Loan
Agreement shall be true and correct in all material respects at and as
of the Closing Date, except where such representations and warranties
speak as of a different date.
(b) Corporate Action. All corporate action necessary to
authorize the execution and delivery of this Agreement and each Other
Agreement and the consummation of the transactions contemplated hereby
and thereby shall have been taken by the Company and each Affiliated
Entity.
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(c) Senior Loans Made. The loans to be made by the Lenders on
the Closing Date under the Loan Agrement shall have been made.
(d) No Litigation. Except as previously disclosed in writing
to the Purchasers and the Lenders, there shall be no litigation
outstanding or instituted or threatened against the Company or any
Affiliated Entity which the Purchaser determines in its sole and
absolute discretion to be material.
(e) Loan Agreement; Subordination Agreement. The Company and
the Lenders shall have entered into the Loan Agreement providing for
loans to the Company in the aggregate original principal amount not
greater than $88,000,000, and the Loan Agreement will be in full force
and effect as of the Closing Date and will not have been amended or
modified. The Lenders, the Company and the Purchasers shall have
entered into a subordination agreement in form and substance
satisfactory to the Purchaser and the Lenders in their sole and
absolute discretion (the "Subordination Agreement").
(f) [Intentionally deleted]
(g) Closing Documents. The Company shall have delivered to the
Purchaser all of the following documents in form and substance
satisfactory to the Purchaser:
(i) one or more Notes (as designated by the Purchaser
pursuant to Section 2.5) sufficient to evidence the Notes to
be issued and sold by the Company and purchased by the
Purchaser, duly completed and executed by the Company;
(ii) one or more Warrants (as designated by the
Purchaser pursuant to Section 2.5) sufficient to evidence the
Warrants to be issued and sold by the Company and purchased by
the Purchaser on the Closing Date, duly completed and executed
by the Company, together with the Option (substantially in the
form of the option attached hereto as Exhibit D), duly
completed and executed by the Company;
(iii) a counterpart of this Agreement duly executed
and delivered by the Company and a counterpart of each Other
Agreement (other than the Notes and the Warrants) duly
executed and delivered by the Company and the applicable
Affiliated Entity, as applicable;
(iv) a certificate of the secretary or the assistant
secretary of the Company and each Affiliated Entity,
certifying the names and true signatures of the officers of
the Company and such Affiliated Entity authorized to sign this
Agreement and the Other Agreements, as applicable, to be
delivered by the Company hereunder;
(v) certificate dated the Closing Date from an
officer of the Company stating that the conditions specified
in Section 3.1(a) through (g) have been fully satisfied;
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(vi) certified copies of the resolutions duly adopted
by the Company's board of directors authorizing the execution,
delivery and performance of this Agreement and each of the
Other Agreements, instruments and documents contemplated
hereby to which the Company is a party and the consummation of
all transactions contemplated by this Agreement and the Other
Agreements;
(vii) certified copies of the resolutions duly
adopted by the board of directors of each Affiliated Entity
authorizing the execution, delivery and performance of each
Other Agreement to which it is a party and the consummation of
all transactions contemplated by each such Other Agreement;
(viii) certified copies of the Organic Documents of
the Company, each Affiliated Entity and each other Affiliate
of the Company as may be requested by the Purchaser, each as
in effect at the Closing;
(ix) certificates of good standing dated not more
than 10 days prior to the Closing Date for the Company and
each Affiliated Entity issued by their respective
jurisdictions of formation and the jurisdictions listed on
Schedule 5.1(a)(i) and (ii) hereof;
(x) solvency certificates for the Company and each
Affiliated Entity;
(xi) copies of the Loan Agreement and the Senior
Notes, with all exhibits and schedules thereto and all
collateral or related agreements, instruments or documents
entered into or delivered in connection therewith, each as in
effect at the Closing;
(xii) the opinion to the Purchasers, dated the
Closing Date, of Patton Boggs, LLP, counsel to the Company, in
form and substance satisfactory to the Purchaser in its sole
and absolute discretion, with respect to matters which are
customary for transactions of the type contemplated hereby,
including without limitation usury matters and the validity of
the security interests created by the Guarantees, the Note
Pledge Agreements, the Stock Pledge Agreements and the
Security Agreements;
(xiii) the opinion to the Company, dated the Closing
Date, in form and substance satisfactory to the Purchaser in
its sole and absolute discretion, of PriceWaterhouse Coopers
LLP to the effect that there is "substantial authority" within
the meaning of Treasury Regulation 1.6662-4(d) to support the
conclusion that consummation of the transactions contemplated
hereby, including without limitation the exercise of the
Warrants in accordance with their terms (and subject to the
restrictions set forth in Section D of the Third Article of
the Company's Certificate of Incorporation), will not result
in a change in ownership of the Company for purposes of
Section 382 of the Code or other material adverse consequences
to the Company under the Code;
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(xiv) liability, business interruption and casualty
insurance naming the Purchasers as loss payee (as their
interests may appear);
(xv) the financing statements required to be filed by
the Company and each Affiliated Entity pursuant to any of the
Note Pledge Agreements, the Stock Pledge Agreements and the
Security Agreements;
(xvi) estoppel certificates from each Affiliated
Entity which has issued a Pledged Note; and
(xvii) all consents listed as required on Schedule
5.1(l) shall have been received;
(xviii) the document labeled "Exceptions to
Representations and Warranties" referred to in the
introductory paragraph to Section 5.1 shall have been received
(if the Company intends to deliver any such document);
(xix) such other documents relating to the
transactions contemplated by this Agreement or the Loan
Agreement as the Purchaser or its counsel may reasonably
request.
(h) Purchasers' Fees and Expenses. On the Closing Date, the
Company shall have paid the fees and expenses of the Purchasers payable
by the Company pursuant to Section 8.2 hereof (and the Company hereby
authorizes a Purchaser to deduct from the aggregate purchase price of
the Securities purchased by it all or a portion of such Purchaser's pro
rata portion of all such amounts).
(i) Legal Investment. On the Closing Date, the Purchasers'
purchase of the Securities shall not be prohibited by any applicable
law, rule or regulation of any Governmental Authority (including,
without limitation, Regulations T, U or X of the Board of Governors of
the Federal Reserve System) as a result of the promulgation or
enactment thereof or any changes therein, or change in the
interpretation thereof by any Governmental Authority, subsequent to the
date of this Agreement.
(j) Actions and Documents Satisfactory. All corporate and
other proceedings taken or required to be taken in connection with the
transactions contemplated hereby and by the Other Agreements to be
consummated at or prior to the Closing and all documents incident
thereto will be reasonably satisfactory in form and substance to each
Purchaser and its counsel.
(k) Waiver. Any condition specified in this Section 3.1 may be
waived if consented to by a Purchaser, provided that no such waiver
will be effective against a Purchaser unless it is set forth in a
writing executed by the Purchaser.
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3.2 Taxes. Any and all payments by the Company hereunder or under the
Other Agreements which are made to or for the benefit of a Purchaser shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings and penalties,
interests and all other liabilities with respect thereto (collectively,
"Taxes"), excluding, taxes imposed on the Purchaser's income or capital and
franchise taxes imposed on it by the jurisdiction under the laws of which it is
organized or any political subdivision thereof (all such nonexcluded Taxes being
hereinafter referred to as "Covered Taxes"). If the Company shall be required by
law to deduct any Covered Taxes from or in respect of any sum payable hereunder
or under any Other Agreements to or for the benefit of a Purchaser, the sum
payable shall be increased as may be necessary so that after making all required
deductions of Covered Taxes (including deductions of Covered Taxes applicable to
additional sums payable under this paragraph), the Purchaser receives an amount
equal to the sum it would have received had no such deductions been made. The
Company shall make such deductions and the Company shall pay the full amount so
deducted to the relevant taxation authority or other authority in accordance
with applicable law. In addition, the Company agrees to pay any present or
future stamp, documentary, excise, privilege, intangible or similar levies that
arise at any time or from time to time from any payment made under any and all
Other Agreements or from the execution or delivery by the Company or from the
filing or recording or maintenance of, or otherwise with respect to the exercise
by a Purchaser of its rights under any and all Other Agreements (collectively,
"Other Taxes"). The Company will indemnify each Purchaser for the full amount of
Covered Taxes imposed on or with respect to amounts payable hereunder and Other
Taxes, and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. Payment of this indemnification shall be made
within thirty (30) days from the date a Purchaser provides the Company with a
certificate certifying and setting forth in reasonable detail the calculation
thereof as to the amount and type of such Taxes. Any such certificates submitted
by a Purchaser in good faith to the Company shall, absent manifest error, be
final, conclusive and binding on all parties. The obligations of the Company
under this Section 3.2 shall survive the payment of the Notes and the
termination of this Agreement. Within thirty (30) days after the Company having
received a receipt for payment of Covered Taxes or Other Taxes, the Company
shall furnish to the applicable Purchaser, the original or certified copy of the
receipt evidencing payment thereof.
3.3 Maximum Lawful Rate. The provisions of this Section shall govern
and control over any irreconcilably inconsistent provision contained in this
Agreement, the Other Agreements or in any other document evidencing or securing
the Notes. No Purchaser shall be entitled to receive, collect, or apply as
interest hereon (for purposes of this Section, the word "interest" shall be
deemed to include any sums treated as interest under applicable law governing
matters of usury and unlawful interest) any amount in excess of the Highest
Lawful Rate (as hereinafter defined) and, in the event a Purchaser ever
receives, collects, or applies as interest any such excess, such amount which
would be excessive interest shall be deemed a partial prepayment of principal
and shall be treated hereunder as such; and, if the principal of the Notes is
paid in full, any remaining excess shall forthwith be paid to the Company. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and each Purchaser
shall, to the maximum extent permitted under applicable law, (i) characterize
any non-principal payment as an
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expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) spread the total amount of
interest throughout the entire contemplated term of the Notes, provided, that if
the Note is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence
hereof exceeds the Highest Lawful Rate, each Purchaser shall refund to the
Company the amount of such excess and, in such event, the Purchaser shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the Highest Lawful Rate. "Highest Lawful Rate"
shall mean the maximum rate of interest which the Purchasers are allowed to
contract for, charge, take, reserve or receive under applicable law after taking
into account, to the extent required by applicable law, any and all relevant
payments or charges hereunder.
3.4 Change of Laws. If any Purchaser shall determine at any time after
the date hereof that the adoption of any law, rule or regulation regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof or compliance by a Purchaser with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any such authority has or would have the effect of reducing the
rate of return on the Purchaser's capital as a consequence of its obligations
hereunder to a level below that which the Purchaser could have achieved but for
such adoption, change or compliance (taking into consideration the Purchaser's
policies with respect to capital adequacy) by an amount deemed by such Purchaser
to be material, the Purchaser shall give notice thereof to the Company of such
determination, in which event the Company shall pay to such Purchaser upon
demand such amount or amounts, in addition to the amounts payable under any
other provision of this Agreement or the Other Agreements, as will compensate
such Purchaser for such reduction. Determinations by a Purchaser for purposes of
this Section of the additional amount or amounts required to compensate it with
respect to the foregoing shall be conclusive in the absence of manifest error.
In determining such amount or amounts, a Purchaser may use any reasonable
averaging or attribution methods. Notwithstanding the foregoing, no amounts
shall be payable by the Company to a Purchaser under the terms of this Section
3.4 if the Secured Obligations are paid in full in accordance with their terms
on or before ten (10) days after the date on which a Purchaser shall have
notified the Company that amounts will be due under this Section 3.4.
4. ANCILLARY AGREEMENTS
4.1 Guarantees. The Company shall cause each Guarantor to execute and
deliver to the Purchasers a Guaranty. Schedule 4.1 sets forth a true, accurate
and complete schedule of all Guarantees to be delivered by or on behalf of the
Company to the Purchasers on the Initial Closing Date.
4.2 Note Pledge Agreements. The Company shall execute and deliver to
the Purchasers and shall cause certain Primary Obligors to execute and deliver
to the Purchasers the Note Pledge Agreements. Notwithstanding the foregoing, the
Company shall not be required to pledge or to require any other Person to
pledge: (i) promissory notes made by the Company or any Primary Obligor payable
to the order of an Affiliate which is a general partner of a limited partnership
and
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which has been made to satisfy the capital adequacy requirements imposed upon
the general partner of a limited partnership under the Code or (ii) those notes
identified on Schedule 4.2(a) (the notes referred to in clauses (i) and (ii) are
collectively referred to as the "Excluded Notes"). Schedule 4.2(b) is a true,
accurate and complete schedule of each Note Pledge Agreement to be delivered by
or on behalf of the Company to the Purchasers on the Initial Closing Date,
setting forth the name of the pledgor thereunder and identifying the Pledged
Notes pledged pursuant thereto, including the maker of the note, the payee of
the note, the date of the note, the face amount of the note and the unpaid
principal balance thereof on the Initial Closing Date. Schedule 4.2(b) shall be
amended from time to time upon the request of Majority Noteholders, provided
that any such future amendment of Schedule 4.2(b) shall not be deemed to amend
or limit any representation or warranty by the Company under this Agreement
relating to any Pledged Note.
4.3 Stock Pledge Agreements. The Company shall execute and deliver to
the Purchasers a Stock Pledge Agreement, pursuant to which the Company shall
pledge to the Purchasers all of the Stock, shares, membership interests,
partnership interests, venture interests and all other equity interests, in any
form whatsoever, of each and every Person in which the Company owns an equity
interest (other than the entities identified on Schedule 4.3(a) (as may be
amended from time to time with the prior written consent of Majority Noteholders
in accordance with Section 5.1(e)(iv)) (the "Excluded Entities"), whether now
existing or hereafter arising. The Company also shall cause each Primary
Obligor, each Secondary Obligor and each other Affiliate, as Majority
Noteholders shall reasonably request, to execute and deliver to the Purchasers a
Stock Pledge Agreement, pursuant to which each such Person shall pledge to the
Purchasers all of the Stock, shares, membership interests, partnership
interests, venture interests and all other equity interests, in any form
whatsoever, of each and every Person in which such Person owns an equity
interest (other than the Excluded Entities), whether now existing or hereafter
arising. Schedule 4.3(b) sets forth a true, accurate and complete list of all
Stock Pledge Agreements to be delivered by or on behalf of the Company to the
Purchasers on the Initial Closing Date, setting forth the name of the pledgor,
the identity of each entity pledged pursuant thereto and a detailed description
of the equity interest pledged pursuant thereto. All shares of Stock to be
pledged pursuant to the Stock Pledge Agreement are represented by stock
certificates; none are uncertificated.
4.4 Security Agreements. The Company, FC Commercial, FC Consumer
Lending, FC Servicing, FC Capital, FC International and FC Holdings shall have
executed and delivered the Security Agreement to the Purchasers.
5. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS
5.1 General Representations and Warranties. Except as set forth in the
Company's quarterly report on Form 10-Q for the quarter ended September 30, 1999
or as disclosed in writing to the Purchasers on the Closing Date in a document
labeled "Exceptions to Representations and Warranties" (the "Closing Date
Exceptions Schedule"), the Company warrants and represents to and covenants with
the Purchasers that:
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(a) Organization.
(i) The Company is and at all times hereafter shall
be a corporation, duly organized and existing and in good standing
under the laws of the State of Delaware and qualified or licensed to do
business and in good standing in all states in which the laws thereof
require the Company to be so qualified and/or licensed and in which the
failure to so qualify could have a Material Adverse Effect. Schedule
5.1(a)(i) identifies each jurisdiction in which the Company has
qualified or been licensed to do business and describes the nature and
current status of any such qualification or license.
(ii) Each Affiliated Entity is and at all times
hereafter shall be a corporation or a limited partnership, duly
organized and existing and in good standing under the laws of the state
of its organization and qualified or licensed to do business and in
good standing in all states in which the laws thereof require each
Affiliated Entity to be so qualified and/or licensed and in which the
failure to so qualify could have a Material Adverse Effect. Schedule
5.1(a)(ii) identifies each jurisdiction in which each Affiliated Entity
has qualified or been licensed to do business and describes the nature
and current status of any such qualification or license.
(b) Entity Power.
(i) The Company has the right, power and capacity and
is duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and the Other Agreements to which it is a party.
(ii) Each Affiliated Entity has the right, power and
capacity and is duly authorized and empowered to enter into, execute,
deliver and perform those Other Agreements to which it is a party.
(c) Violation of Organizational Documents.
(i) The execution, delivery and/or performance by the
Company of this Agreement and the Other Agreements to which it is a
party do not, by the lapse of time, the giving of notice or otherwise,
constitute a violation of any applicable law or a breach of any
provision contained in the Organic Documents of the Company, or
contained in any agreement, instrument or document to which the Company
is now or hereafter a party or by which it or any of its Assets is or
may become bound.
(ii) The execution, delivery and/or performance by
each Affiliated Entity of the Other Agreements to which it is a party
do not, by the lapse of time, the giving of notice or otherwise,
constitute a violation of any applicable law or a breach of any
provision contained in the Organic Documents of such Affiliated Entity,
or contained in any agreement,
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instrument or document to which such Affiliated Entity is now or
hereafter a party or by which it or any of its Assets is or may become
bound.
(d) Enforceability.
(i) This Agreement and the Other Agreements to which
the Company is a party are the legal, valid and binding agreements of
the Company, enforceable in accordance with their respective terms,
except as enforcement thereof may be subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and to general
principles of equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law); and
(ii) The Other Agreements to which an Affiliated
Entity is a party are the legal, valid and binding agreements of such
Affiliated Entity, enforceable in accordance with their respective
terms, except as enforcement thereof may be subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and to general
principles of equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law);
(e) Ownership
(i) Schedule 5.1(e) sets forth all classes of stock
of the Company, the shareholders thereof (other than members of the
general public), addresses of each shareholder, number of shares owned
and how the shares are held;
(ii) Schedule 5.1(e) (as may be amended from time to
time) sets forth all classes of stock and/or partnership interests of
each Affiliated Entity, the shareholders and/or portions thereof, and
the addresses, number of shares and/or partnership interests owned and
how the shares are held.
(iii) Schedule 5.1(e) (as may be amended from time to
time) sets forth all options, warrants and other rights to acquire
Stock or other equity interests of the Company, any Affiliated Entity
and any Pledged Entity, the nature of such option, warrant or right and
the conditions for the exercise thereof. Each Purchaser hereby
expressly consents to the issuance of Stock and/or other equity
interests of any Person in accordance with such options, warrants and
rights.
(iv) The Company shall deliver to the Purchasers
notice within (10) Business Days after the Company or any other Loan
Party acquires the Stock, partnership interest or other equity interest
in any Person, after the date hereof. The Company shall also amend
Schedule 5.1(e) and promptly deliver such amended schedule to each
Purchaser. Unless Majority Noteholders elect not to require the Company
or an Affiliated Entity to pledge its equity interest in such Person,
the Company and/or such Affiliated Entity: (A) shall grant
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to the Purchasers a perfected security interest in its equity interest
in such Person, junior only to that of the Lenders under the Loan
Agreement, (B) shall deliver a Stock Pledge Agreement or such other
pledge agreement in form and substance acceptable to Majority
Noteholders, (C) shall amend the applicable Schedules of the applicable
Stock Pledge Agreement, (D) shall execute and deliver to the Pledged
Entity a notice of lien, (E) shall execute any and all financing
statements required by the Majority Noteholders to perfect any granted
security interest, (F) except as otherwise provided by the
Subordination Agreement, shall deliver the original Stock certificates
or other evidence of ownership to Majority Noteholders (or, if
consented to by the Majority Noteholders, to the Lenders on behalf of
the Purchasers), together with an assignment separate from certificate
therefor, and (G) shall take such other action to effect and perfect
such security interest as the Majority Noteholders shall reasonably
require. In the event Majority Noteholders elect not to require a
pledge of such equity interests, the Company shall amend Schedule 4.3.
(f) Fictitious Names.
(i) Each of the fictitious names, if any, used by the
Company during the five (5) year period preceding the date of this
Agreement is set forth on Schedule 5.1(f) attached hereto (as amended
from time to time) and none of such fictitious names are registered
trademarks or tradenames with the U.S. Patent and Trademark Office,
except as set forth in Schedule 5.1(f);
(ii) Each of the fictitious names, if any, used by
each Affiliated Entity during the five (5) year period preceding the
date of this Agreement is set forth on Schedule 5.1(f) attached hereto
(as amended from time to time), and none of such fictitious names are
registered trademarks or tradenames with the U.S. Patent and Trademark
Office, provided that, variations on the corporate name of Affiliated
Entities in states where used solely for qualifying to do business
therein shall and have been excluded from such schedule, with the
Purchasers' consent and approval.
(g) Title. Schedule 5.1(g) is a true, accurate and complete
list of all Liens relating to the Pledged Property on the date hereof.
At all times following acquisition thereof: (i) First X and First B
shall own fee title to its real estate subject to no liens other than
the Permitted Liens, and (ii) the Company and each Affiliated Entity
shall have good, indefeasible and merchantable title to and ownership
of all of its Assets, free and clear of all Liens, except the Permitted
Liens.
(h) Financial Warranty. The Company: (i) is now paying, and at
all times hereafter shall pay, its debts as they mature, except as set
forth in Schedule 5.1(h) to the Loan Agreement, (ii) now owns, and
shall at all times hereafter own, property which, at a fair valuation,
is greater than the sum of its debt and (iii) now has, and shall at all
times hereafter have, capital sufficient to carry on its business and
transactions and all businesses and transactions in which it is about
to engage. Except as set forth on Schedule 5.1(h), each
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Affiliated Entity: (i) is each now paying, and at all times hereafter
shall pay, its respective debts as they mature and (ii) each now has,
and shall at all times hereafter have, capital sufficient to carry on
its business and transactions and all businesses and transactions in
which it is about to engage.
(i) Proceedings. Except as set forth on the Closing Date
Exceptions Schedule, there are no actions or proceedings which are
pending or threatened against the Company or any Affiliated Entity
which have had or could reasonably be expected to have a Material
Adverse Effect.
(j) Government Contracts. Except as set forth on Schedule
5.1(j), neither the Company nor any Affiliated Entity has any
government contracts.
(k) Adequate Licenses. The Company and each Affiliated Entity
possesses adequate Assets, licenses, patents, copyrights, trademarks
and tradenames to continue to conduct its business as previously
conducted by it and as contemplated in the foreseeable future, except
such licenses, patents, copyrights, trademarks and trade names the
failure of which to obtain could not be reasonably expected to have a
Material Adverse Effect.
(l) Government Permits; Consents.
(i) The Company and each Affiliated Entity has been
and is in good standing with respect to all governmental permits,
certificates, consents and franchises necessary to continue to conduct
its business as previously conducted prior to the date hereof and to
own or lease and operate its properties as now owned or leased by it.
None of said permits, certificates, consents or franchises contain any
term, provision, condition or limitation more burdensome than such as
are generally applicable to Persons engaged in the same or similar
business as the applicable Loan Party.
(ii) Except for those consents set forth on Schedule
5.1(l), no approval, consent, waiver, order or other authorization of
any Governmental Authority or any other Person (including without
limitation shareholders, partners, members, equity owners, holders of
Indebtedness Instruments or any owner or holder of a Lien upon the
Assets of any one or more of them or any of their Affiliates) is
required by or on behalf of the Company or any Affiliated Entity in
connection with the execution, delivery and performance of this
Agreement and each of the Other Agreements. The Company and each
Affiliated Entity has received the consents described on Schedule
5.1(l) and has delivered a copy thereof to the Purchasers, which
consents are in full force and effect, unmodified and unamended on the
date hereof.
(m) Charge; Restrictions. Neither the Company nor any
Affiliated Entity is a party to (nor are any of its Assets otherwise
subject to) any contract or agreement or subject to any Charge (other
than Charges owed by First X or First B), restriction, judgment, decree
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or order materially and adversely affecting its business, property,
assets, operations or condition, financial or otherwise, other than ad
valorem taxes not yet due and payable.
(n) Compliance with Laws. Neither the Company nor any
Affiliated Entity is in violation of any applicable statute,
regulation, order or ordinance of the United States of America, of any
state, city, town, municipality, county or of any other jurisdiction,
or of any agency thereof, including the Federal Reserve Board, in any
respect which has, had, or could reasonably be expected to have, a
Material Adverse Effect.
(o) Compliance with Indebtedness Instruments. Other than those
defaults set forth on Schedule 5.1(o) (as said Schedule may be amended
from time to time), neither the Company nor any Affiliated Entity is in
default under any Indebtedness Instrument.
(p) Financials. The Financials heretofore delivered by the
Company or any Affiliated Entity to the Purchasers fairly and
accurately present the Assets, liabilities, financial condition and
results of operations of the Company and any such Affiliated Entity as
of and for the periods ended on the indicated dates and have been
prepared in accordance with GAAP applied on a basis consistently
followed in all material respects throughout the periods involved.
(q) Tax Returns. The Company and each other member of the
Consolidated Group has filed or caused to be filed all tax returns
which are required to be filed, and has paid all Charges shown to be
due and payable on said returns or on any assessments made against it
or any of its property, and all other Charges imposed on it or any of
its properties by any Governmental Authority except for ad valorem
taxes.
(r) No Material Adverse Change. Since September 30, 1999, no
event or circumstance has occurred that has, had or could reasonably be
expected to have a Material Adverse Effect other than as set forth in
the Company's quarterly report on Form 10-Q for the quarter ended
September 30, 1999.
(s) No Indebtedness. Except as disclosed in the most recent
Financials heretofore delivered by the Company to the Purchasers and in
Schedule 5.1(h), Schedule 5.1(s), Schedule 5.1(t), Schedule 5.1(u), and
Schedule 6.3(l), none of the Company or any other Loan Party has any
Indebtedness (except for Indebtedness arising in the ordinary course of
its business since the dates reflected in the Financials that is not
Indebtedness for borrowed money), has guaranteed or entered into any
Guaranty Equivalent (other than as a result of the endorsement of any
instrument of items of payment for deposit or collection in the
ordinary course of business or as otherwise expressly permitted
pursuant to the terms hereof) the obligations of any Person.
(t) Affiliate Indebtedness. Attached hereto as Schedule 5.1(t)
(as amended from time to time) is a true, accurate and complete
schedule of all Indebtedness, other than the Pledged Notes and the
Excluded Notes, owing by any one or more of the Company, any
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Affiliated Entity or any other Affiliate of the Company setting forth:
(i) the date such Indebtedness was incurred; (ii) the original
principal amount thereof and the outstanding principal balance thereof
as of the date hereof; (iii) the interest rate payable thereon; (iv)
whether such Indebtedness is evidenced by a note or other writing and
whether any security has been granted to secure payment thereof; (v)
the payment terms thereof; (vi) the maturity date thereof; and (vii)
whether there has been any notice of default, or to the Company's
knowledge, any default thereunder.
(u) Affiliate Notes. Attached hereto as Schedule 5.1(u) is a
true, accurate and complete schedule of all promissory notes made by
any Affiliate payable to the order of the Company or an Affiliated
Entity, other than the Pledged Notes and the Excluded Notes. If at any
time after the date hereof any Affiliate borrows money or otherwise
incurs Indebtedness from the Company or an Affiliated Entity, the
Company shall immediately (i) give the Purchasers notice thereof, (ii)
deliver a copy of such note to the Majority Noteholders (or, if
consented to by the Majority Noteholders, to the Lenders on behalf of
the Purchasers), (iii) prepare a Schedule 5.1(u)(iii) (as amended from
time to time) setting forth the maker and holder of such note, the
principal amount thereof and the payment terms thereof and (iv) if
requested by Majority Noteholders, cause the holders of such note to
pledge such note to the Purchasers pursuant to a Note Pledge Agreement,
in form and substance acceptable to Majority Noteholders, in their sole
and absolute discretion.
(v) No Liability on the Purchasers. The execution, delivery
and performance by the Company and each other Affiliated Entity of this
Agreement and/or the Other Agreements will not, except to the extent
caused by independent actions of the Purchasers, impose on or subject a
Purchaser to any liability, whether fixed or contingent, in respect of
any Environmental Law relating to the operation of the Company's
business. A Purchaser's exercise of any of the rights or remedies
described in this Agreement or in any of the Other Agreements shall not
constitute a breach of any provision contained in any agreement,
instrument or document concerning the assignment or license of, or the
payment of royalties for, any patents, patent rights, tradenames,
trademarks, trade secrets, know-how, copyrights or any other form of
intellectual property now or at any time or times hereafter protected
as such by any applicable law.
(w) Affiliates. Schedule 5.1(w) attached hereto is a true,
accurate and complete schedule of the Company's Affiliates, together
with a description of the Company's relationship to each such
Affiliate.
(x) Real Property; Environmental Issues. Neither the Company
nor any Affiliated Entity, other than First X and First B, now owns or
at no time in the last five (5) years has owned, any real property.
Neither the Company nor any Affiliated Entity has received a summons,
citation, notice or directive from the Environmental Protection Agency
or any other Governmental Authority concerning any action or omission
resulting in the releasing,
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or otherwise disposing of hazardous waste or hazardous substances into
the environment with respect to any real property.
(y) SEC Filings. The Company has filed and made available to
the Purchasers each form, registration statement, schedule, report,
proxy statement and document required to be filed by the Company with
the SEC since January 1, 1995 (collectively, the "SEC Reports"). Except
as set forth on Schedule 5.1(y), the SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of
the Securities Laws and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in
the SEC Reports or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. None of the Affiliated Entities is subject to the reporting
requirements of the Exchange Act. Since January 1, 1995, the Company
has made all filings with the SEC in a timely manner as required by law
and no event has occurred that requires an additional filing or any
amendment to a prior filing which has not been made or filed.
(z) Investment Company Act and Public Utility Holding Company
Act. Neither the Company nor any Affiliated Entity nor the entering
into of this Agreement or the Other Agreements, nor the issuance of the
Notes and the Warrants is subject to any of the provisions of the
Investment Company Act of 1940, as amended. Neither the Company nor any
Affiliated Entity is a "holding company" as defined in the Public
Utility Holding Company Act of 1935, as amended, or subject to any
other federal or state statute or regulation limiting its ability to
incur or guarantee Indebtedness for money borrowed.
(aa) Loan Agreement. Concurrently herewith the Company has
entered into the Loan Agreement with the Lenders. Attached hereto as
Schedule 5.1(aa) is a complete and accurate schedule of all material
documents, instruments and agreements executed, delivered or caused to
be delivered by the Company or any other Person to the Lenders to
evidence, guaranty or secure the Senior Debt and which comprise the
Loan Agreement. The Company hereby represents and warrants to the
Purchasers that concurrently herewith the Company has delivered or
caused to be delivered to the Purchasers a true, accurate and complete
copy of the Loan Agreement and that such agreement has not been
amended, modified or supplemented, nor have any of the provisions
thereof been waived. The Loan Agreement has been duly executed and
delivered by the Company and is in full force and effect. Each of the
representations and warranties of the Company contained in the Loan
Agreement is true and correct and the Purchasers shall be entitled to
rely on such representations and warranties with the same force and
effect as if they were set forth in this Agreement in full and made to
the Purchasers directly. The provisions of the Loan Agreement,
including but not limited to all representations, warranties and
covenants of the Company and the Affiliated Entitities which are a
party thereto, are legal, valid and binding obligations of the Company
and such Affiliated Entities, enforceable in accordance with the terms
thereof.
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(bb) [Intentionally deleted.]
(cc) Status of Securities and Underlying Common Stock. When
delivered to the Purchasers at the Closing against payment therefor as
provided herein, the Securities will be duly authorized and validly
issued and will not be issued in violation of the preemptive rights of
any Person. Shares of Underlying Common Stock issued by the Company
upon exercise of the Warrants in accordance with their terms will be
duly authorized, validly issued and non-assessable at the time of
issuance and will not be issued in violation of the preemptive rights
of any Person.
(dd) Qualification.
(i) Solely by reason of (and without regard to any
other activities of a Purchaser in any state in which Assets
are located) the entering into, performance and enforcement of
this Agreement and the Other Agreements by a Purchaser will
not constitute doing business by the Purchaser in any of such
states or result in any liability of the Purchaser for taxes
or other governmental charges; and qualification by the
Purchaser to do business in such jurisdiction is not necessary
in connection with, and the failure to so qualify will not
affect, the enforcement of, or exercise of any rights or
remedies under, any of such documents.
(ii) No "business activity," "doing business" or
similar report or notice is required to be filed by any
Purchaser in any such jurisdiction in connection with this
Agreement or any Other Agreement or the transactions
contemplated hereby and thereby, and the failure to file any
such report or notice will not affect the enforcement of, or
the exercise of any rights or remedies under, this Agreement
or any of the Loan Documents.
(ee) Disclosure. Neither this Agreement nor any Other
Agreement nor any statement, list, certificate or other document or
information, nor any schedules to this Agreement or any Other
Agreement, delivered or to be delivered to the Purchasers, contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make statements contained
herein or therein, in light of the circumstances in which they are
made, not misleading. Copies of all documents delivered to a Purchaser
or Purchasers pursuant to Article 5 or any other provision of this
Agreement are true, correct and complete copies thereof and include all
Modifications thereto.
(ff) Assets of Affiliate Entities. No entity listed on
Schedule 5.1(cc) has Assets with a fair market value of greater than
$100,000. The fair market value of all Assets of all the entities
listed on Schedule 5.1(cc), in the aggregate, is less than $500,000.
5.2 Survival of Warranties and Representations. The Company covenants,
warrants and represents to the Purchasers that all representations and
warranties of the Company contained in this
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Agreement and the Other Agreements shall be true on the date hereof and shall
survive the execution, delivery and acceptance hereof and thereof by the parties
thereto and the closing of the transactions described herein and therein or
related hereto or thereto.
5.3 Exclusion of Harbor Debtors. Notwithstanding anything to the
contrary contained in Section 5.1, none of the representations, warranties,
covenants or agreements set forth in Section 5.1 shall be deemed to be
representations, warranties, covenants or agreements with respect to or by any
Harbor Debtor.
6. COVENANTS AND CONTINUING AGREEMENTS
6.1 Financial Covenants. The Company and all other members of the
Consolidated Group, on a consolidated basis, shall, at all times during the term
hereof, measured quarterly:
(a) maintain a ratio of Indebtedness to Tangible Net Worth
equal to or less than 5.5 to 1 for the period ending September 30, 1999
and a ratio of Indebtedness to Tangible Net Worth equal to or less than
4.5 to 1 for each period thereafter;
(b) maintain a Tangible Net Worth equal to or greater than
$45,000,000 for the period ending September 30, 1999 and for each
period thereafter;
(c) maintain a Tangible Net Worth equal to or greater than
$45,000,000 plus fifty percent (50%) of the cumulative positive net
income for the immediately preceding quarter ( measured at the end of
such period), provided that, in any event, a Tangible Net Worth equal
to or greater than $45,000,000 must always be maintained;
(d) maintain a ratio of EBITDA to interest coverage equal to
1.5 to 1 measured on a trailing three month basis commencing December
31, 1999.
All covenants set forth in this Section 6.1 shall be measured
quarterly as at the end of each fiscal quarter of the Company, upon receipt of
the statements delivered to the Purchasers pursuant to Section 6.2(c)(iii) or
the annual consolidated financial statements delivered in accordance with
Section 6.2(c)(i), if available. In the event that the Company does not deliver
a quarterly statement as and when required by Section 6.2(c)(iii) or an annual
statement as and when required by Section 6.2(c)(i), the Company shall be deemed
to be in default of this Section for purposes of Section 7.1(a).
6.2 Affirmative Covenants. The Company warrants and represents to and
covenants with the Purchasers that the Company shall, and shall cause each
Affiliated Entity to, do all of the following during the term hereof:
(a) Representation and Warranties. Subject to the Company's
right to cure set forth in Section 7.1(e), to the extent any
representation or warranty contained herein refers
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to an event or state of facts which exists on the date hereof and shall
exist during the term hereof, said representation or warranty shall be
deemed to be an affirmative covenant by the Company to take all
actions, omit to take such actions or cause such actions to be taken
which shall be necessary or desirable to cause such representation or
warranty to be true and accurate at all times during the term hereof.
To the extent any representation, warranty or covenant herein
(including the negative covenants set forth in Section 6.3) relates to
any other Person (including but not limited to any Affiliated Entity or
any Pledged Entity) it shall be deemed to be a covenant of the Company
to cause such Person to comply with or otherwise perform such
representation, warranty or covenant, whether or not the Company has
the legal, corporate or other ability to cause such compliance or
performance.
(b) Corporate Existence. The Company and the Affiliated
Entities shall preserve and maintain their respective corporate
existence, rights, privileges and franchises in the jurisdiction of
their respective incorporation or organization, and qualify and remain
qualified to do business in each other jurisdiction in which such
qualification is necessary in view of their respective business or
operations, except such jurisdictions where failure to qualify would
not have or could not reasonably be expected to have a Material Adverse
Effect.
(c) Records; Reports. The Company shall keep Records and
prepare financial statements and shall cause to be furnished to the
Purchasers the following (all of the foregoing and following which
comprise financial statements are to be kept and prepared in accordance
with GAAP applied on a basis consistent with the Financials unless the
Company's independent certified public accountants concur in any
changes therein and such changes are consistent with then applicable
GAAP).
(i) (a) As soon as available but not later than
ninety (90) days after the close of each fiscal year of the
Company, an audited consolidated balance sheet of the Company
and the other members of the Consolidated Group as at the end
of such year, the related statement of operations for such
year and a reconciliation of capital for such year, all
certified on an unqualified basis by a firm of independent
certified public accountants selected by the Company and
acceptable to Majority Noteholders in their sole and absolute
discretion.
(b) As soon as available but not later than ninety
(90) days after the close of each fiscal year of the Company,
an unaudited consolidating balance sheet of the Company and
the other members of the Consolidated Group as at the end of
such year prepared on a consolidating basis, the related
statements of operations for such year and a reconciliation of
capital for such year, prepared and certified by the chief
financial officer of the Company.
(ii) Concurrently with the delivery of the financial
statements described in Section (i) above for fiscal years
ending after December 31, 1998: (A) a certificate
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of the aforesaid independent certified public accountants
certifying to the Purchasers that based upon their examination
of the affairs of the Company and the other members of the
Consolidated Group (excluding the Harbor Debtors), performed
in connection with the preparation of said financial
statements, they are not aware of the occurrence or existence
of any condition or event which constitutes an Event of
Default or Unmatured Default, or, if they are aware thereof,
the nature thereof, and (B) a reliance letter executed by an
authorized partner of the aforesaid independent certified
public accountants, in form and substance reasonably
acceptable to Majority Noteholders and acknowledging that the
Purchasers may rely on such financial statements in connection
with this Agreement notwithstanding that the Purchasers are
not in privity with such independent certified public
accountants in connection with such financial statements.
(iii) As soon as available but not later than thirty
(30) days after the end of each calendar month hereafter, a
consolidated and consolidating balance sheet of the Company
and the other members of the Consolidated Group as at the end
of, and the related statement of operations for, the portion
of such Person's fiscal year then elapsed, all certified by
the chief financial officer of such Person to be prepared in
accordance with GAAP and to present fairly the financial
position and results of operations of such Person for such
period.
(iv) Concurrently with delivery to its stockholders
copies of all financial and other information delivered by the
Company to such Persons, including without limitation, its
proxy statements and annual reports to stockholders. Within
two (2) Business Days after delivery to the SEC by the
Company, which in all cases shall be on a timely basis in
accordance with the applicable document and the Securities
Laws, copies of all reports and other filings filed by the
Company with the SEC, including without limitation all reports
on Forms 10-K, 10-Q or 8-K filed under the Exchange Act and
all registration statements filed under the Securities Act.
(v) Concurrently with delivery of the Financials
required pursuant to Sections 6.2(c)(i) and (iii) hereof, a
certificate executed by the President, Treasurer or Chief
Financial Officer of the Company that no Event of Default or
Unmatured Default (or comparable event or default, to the
extent a different term is used in any Indebtedness Instrument
other than this Agreement to describe a like situation or
event) has occurred and is continuing under the terms and
provisions of any Indebtedness Instrument (including but not
limited to compliance with the covenants set forth in Section
6.1) or if an Event of Default or Unmatured Default (or
comparable event or default, however called) has occurred,
setting forth the details of such event and the action which
the Company proposes to take with respect thereto.
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(vi) Every two weeks, a statement of income and
expense of FC Capital, including a statement of proceeds from
the liquidation of assets, in form and detail reasonably
acceptable to the Majority Noteholders.
(vii) Such other data and information (financial and
otherwise) as a Purchaser, from time to time, reasonably may
request bearing upon or related to the Company's or any
Affiliated Entity's financial condition and/or results of
operations.
(d) Insurance. The Company and the Affiliated Entities, at
their sole cost and expense, shall keep and maintain: (i) policies of
insurance against all hazards and risks ordinarily insured against by
other owners or users of properties in similar business or as
reasonably requested in writing by Majority Noteholders; and (ii)
public liability insurance relating to such Person's ownership and use
of its Assets. All such policies of insurance shall be in form, with
insurers and in such amounts as may be satisfactory to Majority
Noteholders. The Company shall deliver to Majority Noteholders the
original (or certified) copy of each policy of insurance, and evidence
of payment of all premiums for each such policy. Such policies of
insurance (except those of public liability) shall contain an
endorsement, in form and substance acceptable to Majority Noteholders,
showing losses payable to the Purchasers. Such endorsement or an
independent instrument furnished to Majority Noteholders shall provide
that all insurance companies will give Majority Noteholders at least
thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or
default of the Company or any other Person shall affect the right of
the Purchasers to recover under such policy or policies of insurance in
case of loss or damage. Upon request by the Majority Noteholders and
upon the occurrence of an Event of Default or Unmatured Default, the
Company hereby directs all insurers under such policies of insurance
(except those of public liability) to pay all proceeds payable
thereunder directly to the Purchasers as their interests shall appear.
Upon request by the Majority Noteholders and upon the occurrence of an
Event of Default or Unmatured Default, the Company irrevocably appoints
Majority Noteholders (and all officers, employees or agents designated
by Majority Noteholders) as the Company's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of the
Company on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of
insurance. In the event the Company at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance
required above or to pay any premium in whole or in part relating
thereto, then a Purchaser, without waiving or releasing any of the
Company's Obligations or any of the Company's Liabilities or any Event
of Default or Unmatured Default hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premium and take any
other action with respect thereto which the Purchaser deems advisable.
All sums so disbursed by the Purchasers, including reasonable
attorneys' fees, court costs, expenses and other charges relating
thereto, shall be part of the Company's Liabilities, payable by the
Company to the Purchasers on demand.
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The Purchasers shall also have been named as an additional insured with
respect to the Company's liability insurance.
(e) Payment of Charges. Other than Charges payable by First X
or First B, the Company and each Affiliated Entity shall pay promptly,
when due, all Charges, and the Company and each Affiliated Entity shall
not permit any Charges to arise or to remain unpaid, and will promptly
discharge the same. In the event the Company or any Affiliated Entity,
at any time or times hereafter, shall fail to pay the Charges or to
obtain such discharges as required herein, the Company shall so advise
the Purchasers thereof in writing. Any one or more Purchasers may,
without waiving or releasing any of the Company's Obligations or any of
the Company's Liabilities or any Event of Default or Unmatured Default
hereunder, in its sole and absolute discretion, at any time or times
thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which the
Majority Noteholders deem advisable. All sums so paid by the Purchasers
and any expenses, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be part of the
Company's Liabilities, payable by the Company to the Purchasers on
demand. Notwithstanding the foregoing, the Company or any Affiliated
Entity may permit or suffer Charges to arise and remain unpaid and may
dispute, without prior payment thereof, such Charges, on the conditions
that: (i) the Company or the applicable Affiliated Entity, in good
faith, shall be contesting the same in an appropriate proceeding
diligently pursued; (ii) enforcement thereof against any assets of the
Company or the applicable Affiliated Entity shall be stayed; and (iii)
appropriate reserves therefor shall have been established on the
Records of the Company or the applicable Affiliated Entity in
accordance with GAAP.
(f) Pay Debts. Except as disclosed in Schedule 5.1(h) and
Charges payable by First X and First B, the Company and each Affiliated
Entity shall pay or discharge or otherwise satisfy all Indebtedness at
or before maturity or before the same becomes delinquent, provided that
neither the Company nor any Affiliated Entity shall be required to pay
any Indebtedness while the same is being contested by it in good faith
and by appropriate proceedings so long as the Company or the applicable
Affiliated Entity shall have set aside on its books reserves in
accordance with GAAP with respect thereto and title to any property of
the Company or the applicable Affiliated Entity is not jeopardized.
(g) Compliance with Laws. The Company and each Affiliated
Entity shall comply with all laws, rules, regulations and governmental
orders (federal, state and local), including all Environmental Laws,
having applicability to it or to the business or businesses at any time
conducted by it, where the failure to so comply would have, or could
reasonably be expected to have, a Material Adverse Effect.
(h) Perform Obligations. The Company and each Affiliated
Entity shall duly and punctually pay and perform each of its
obligations under this Agreement and the Other Agreements in accordance
with the terms hereof and thereof.
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(i) [intentionally deleted]
(j) Payment of Dividends from Subsidiaries. To the extent
necessary to enable it to make payments on the Notes in accordance with
their terms, the Company shall cause dividends to be paid to it by its
Subsidiaries (whether in existence as of the date of issuance of the
Notes or thereafter formed or acquired) in amounts which are sufficient
to enable the Company to satisfy its payment obligations under the
Notes, provided that the Company shall not be required to take any
action which would result in a Subsidiary paying dividends to the
extent not permitted by applicable law and regulation and/or
restrictions existing under agreements in effect on the date of initial
issuance of the Notes if the Company receives an opinion of outside
counsel (in form and substance satisfactory to Majority Noteholders) as
to the existence of the relevant restriction no later than the
applicable interest payment date or the date of maturity of the Notes,
whether by acceleration or otherwise.
(k) Stay, Extension and Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time
insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Company from paying all or any
portion of the principal of, premium, if any, or interest on the Notes,
wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of its obligations under the
Notes, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantages of any such law.
(l) Investigation and Confidentiality.
(i) The Company shall permit each Purchaser and its
representatives reasonable access during normal business hours
to its properties and personnel, and shall disclose and make
available to each Purchaser all books, papers and records
relating to the assets, stock ownership, properties,
operations, obligations and liabilities of the Company and its
Subsidiaries, including, but not limited to, all books of
account (including the general ledger), tax records, minute
books of meetings of boards of directors (and any committees
thereof) and shareholders, organizational documents, bylaws,
material contracts and agreements, filings with any regulatory
authority, accountants' work papers (other than those that are
the property of its independent outside auditors), litigation
files, loan files, plans affecting employees, and any other
business activities or prospects in which the Purchaser may
have a reasonable interest in connection with an investment in
the Securities or the Underlying Common Stock, provided that
such access shall be reasonably related to the transactions
contemplated hereby and not unduly interfere with normal
operations, and provided further that in the event that any of
the foregoing are in the control of any third party, the
Company shall use its reasonable best efforts to cause such
third party to provide access to such materials to the
Purchaser who shall request the same. In the event that the
Company is prohibited by law from providing
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any of the access referred to in the preceding sentence to a
Purchaser, it shall use its reasonable best efforts to obtain
promptly waivers thereof so as to permit such access. The
Company shall make the directors, officers, employees and
agents and authorized representatives (including counsel and
independent public accountants) of the Company and its
Subsidiaries available to confer with each Purchaser and its
representatives, provided that such access shall be reasonably
related to the transactions contemplated hereby and not unduly
interfere with normal operations.
(ii) All information furnished to a Purchaser by the
Company previously in connection with the transactions
contemplated by this Agreement or pursuant hereto shall be
treated as the sole property of the Company and the Purchaser
covenants, severally and not jointly and as to itself only,
that it shall use its best efforts to keep confidential all
such information and shall not directly or indirectly use such
information for any purpose other than in connection with the
transactions contemplated hereby or any other financial
accommodations that may from time to time be extended by the
Purchaser or any affiliate of the Purchaser to the Company or
any Affiliate thereof. The obligation to keep such information
confidential shall continue for five years from the date
hereof but shall not apply to (i) any information which the
Purchaser can establish by convincing evidence (x) was already
in its possession prior to the disclosure thereof by the
Company; (y) was then generally known to the public; or (z)
became known to the public through no fault of the Purchaser;
or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction.
(m) Applications.
(i) As soon as practicable after the receipt from any
holder of the Warrants (the "Notice Giver") of notice of an
intent to exercise a number of Warrants sufficient to require
a filing under the HSR Act, but in any event no later than the
tenth Business Day after receipt of such notice, the Company
will (i) prepare and file with the Antitrust Division of the
U.S. Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") the Notification and Report Form
(accompanied by all documentary attachments contemplated
thereby) required by the HSR Act, (ii) upon the request of any
Notice Giver, request early termination of the waiting period
imposed by the HSR Act, (iii) coordinate and cooperate with
the Notice Giver in responding to formal and informal requests
for additional information and documentary material from the
DOJ and the FTC in connection with such filing, (iv) use its
reasonable best efforts to take, or cause to be taken, all
reasonable action and to do, or cause to be done, all things
reasonably necessary and appropriate to permit the issuance to
the Notice Giver of the shares of Common Stock issuable upon
exercise of the Warrants with respect to which any filing is
required under the HSR Act and (v) [intentionally deleted].
The Notice Giver agrees to provide to the Company all
reasonable cooperation in connection with the making
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<PAGE>
of such filings under the HSR Act, provided, however, that
neither the Company nor any such Notice Giver shall be
required in connection with any such filing to enter into any
agreement, or take or refrain from taking any action, as a
condition to obtaining any approval required under the HSR Act
if, in the judgment of such party, such condition could have a
material adverse effect on such party or its business.
(ii) In the event that any other approval, consent or
non-objection need be obtained by the Company, any Primary
Obligor and/or any Secondary Obligor from, or a notice or
other filing need be filed by the Company, any Primary Obligor
and/or any Secondary Obligor with, any Governmental Authority
in connection with (i) the execution, delivery and performance
of this Agreement or any Other Agreement by the Company or any
Primary Obligor and/or any Secondary Obligor (ii) the
Company's issuance of Common Stock upon exercise of the
Warrants, the Company shall take and shall cause the Primary
Obligors and Secondary Obligors to take, as applicable, all
actions reasonably necessary to obtain any such approval,
consent or non-objection or file such notice or other filing
as promptly as practicable, and each Purchaser agrees to
cooperate with the Company in obtaining or filing the same.
The Company shall provide copies of any notice, application or
other document required to be filed pursuant to this Section
6.2(m) (excluding any confidential information) to the
holder(s) seeking to exercise a Warrant or Warrants for review
not less than three Business Days prior to the making of such
filing and shall keep such holder apprised of the status of
such filing and the consideration thereof by the relevant
Governmental Authority.
(n) Rule 144 and Rule 144A Reporting. With a view to making
available to holders of the Securities and the Underlying Common Stock
the benefits of certain rules and regulations of the SEC which may
permit the sale thereof to the public without registration, the Company
agrees at all times to:
(i) make and keep public information available, as
those terms are understood and defined in Rules 144 and 144A
under the Securities Act (or any successors thereto); and
(ii) use its reasonable best efforts to file with the
SEC in a timely manner all documents required to be filed by
the Company under the Securities Laws.
(o) Non-Voting Stock. No later than May 15, 2000, the Company
shall have amended its certificate of incorporation to provide for, in
manner and substance satisfactory to the Majority Noteholders, a single
class of non-voting common stock (and any other provisions required to
be included in such certificate pursuant to the Warrants or the Option)
with such terms, provisons and rights (including as to convertibility)
as shall be satisfactory to the Majority Noteholders.
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6.3 Negative Covenants. The Company warrants and represents to and
covenants with the Purchasers that neither the Company, nor any Affiliated
Entity, as the case may be, shall, without the prior written consent of Majority
Noteholders, which they may or may not give in their sole and absolute
discretion, concurrently or hereafter do any of the following:
(a) Sell or Encumber Assets. Neither the Company, nor any
Affiliated Entity shall assign, sell or transfer any of its Assets to
any Person, other than in the ordinary course of business, nor permit,
grant, or suffer a Lien upon any of its Assets, except (i) the
Permitted Liens and (ii) Charges payable by First X and First B.
(b) Attachment. Neither the Company nor any Affiliated Entity
shall permit or suffer any levy, attachment or restraint to be made
affecting any of its Assets.
(c) Receiver. Neither the Company nor any Affiliated Entity
shall permit or suffer any receiver, trustee or assignee for the
benefit of creditors, or any other custodian to be appointed to take
possession of all or any of its Assets, other than a custodian pursuant
to a voluntary custodial agreement entered into to perfect a security
interest permitted hereby.
(d) Amend Organic Documents; Business Objectives. Neither the
Company nor any Affiliated Entity shall make any change: (i) in its
Organic Documents or capital structure other than, in the case of the
Company, as required by Section 6.2(o); or (ii) in any of its business
objectives, purposes and operations, including by undertaking
additional business activities. Neither the Company nor any Affiliated
Entity shall engage in any business not of the same general type as
those conducted by it on the date hereof.
(e) Mergers and Acquisitions.
(i) Neither the Company nor any Affiliated Entity
shall merge or consolidate with any Person.
(ii) National Auto Funding shall remain inactive and
(without the Majority Noteholders's consent) will not merge,
consolidate or acquire the Assets of any Person, shall not
commence any new business venture and shall use the proceeds
of any sale or other disposition of its Assets to pay its
Pledged Notes.
(f) Stock Transfers.
(i) Except as contemplated herein and as disclosed in
Schedule 5.1(e), as amended from time to time with the consent
of Majority Noteholders, and except as permitted pursuant to
Section 6.3(f)(ii), neither the Company nor any Affiliated
Entity shall grant any option, warrant or other right to
purchase any equity interest in such Person, without in each
case the prior written consent of Majority Noteholders, which
consent shall not be unreasonably withheld.
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(ii) Notwithstanding anything to the contrary
contained herein, the Company shall have the right to register
on Form S-3, and publicly offer and sell equity securities of
the Company under the following terms and conditions: (w) the
Company shall deliver notice to the Purchasers, within
twenty-four (24) hours of the filing with the SEC; (x) the
Company shall fully and timely comply with all Securities Laws
and with all terms and provisions of the underwriting
agreement pursuant to which such Securities are offered for
sale; (y) the prospectus and all other selling materials used
by the Company in such offering shall not contain any
misstatement of material fact or omit to state any fact which
would render the statements contained therein false or
misleading; and (z) the Company shall pay the proceeds of such
offering to the Lenders, in accordance with the terms in the
Loan Agreement (if any indebtedness shall then be outstanding
thereunder), and thereafter to the holders of the Notes in
accordance with the terms of this Agreement and the Other
Agreements, provided that nothing contained in this Agreement
shall affect the Company's obligations under the Warrants or
the Option.
(g) Adverse Transactions.
Neither the Company nor any Affiliated Entity shall
enter into any transaction which materially and adversely
affects its ability to perform its obligations under this
Agreement and the Other Agreements or to pay any other
Indebtedness. Neither the Company nor any other Loan Party
shall make any capital contribution, loan or gift to, or
investment in, or enter into any Guaranty Equivalent with
respect to the obligations of, any entity identified on
Schedule 5.1(cc) to the Loan Agreement at any time while any
of the Secured Obligations remain unpaid.
(h) Investments.
(i) Subject to the further limitations set forth in
Section 6.3(h)(ii), (iii) and (iv), after the date hereof,
neither the Company nor any Affiliated Entity shall make any
investment in the securities or obligations of any Person,
except in the ordinary course of business.
(ii) After the date hereof, neither the Company nor
any Affiliated Entity shall invest (either directly or
indirectly through an Affiliate) in: (A) the securities of any
Person organized under the laws of any country or governmental
body outside of the United States (other than commercial paper
and other debt securities of a Lender), (B) in the securities
of any Person which owns assets located outside of the United
States (other than commercial paper and other debt securities
of a Lender), or (C) in any assets located outside of the
United States, provided that nothing contained in this Section
6.3(h)(ii) shall be deemed to prohibit any such investment by
FC International.
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(iii) After the date hereof, without Lenders' or the
Majority Noteholders' prior written consent, which consent may
be withheld in the Lenders' (or the Majority Shareholders', as
the case may be) sole and exclusive discretion, neither the
Company nor any the Affiliated Entity will invest in any
Person or any asset not specifically contemplated in the
Company's business plan delivered to the Purchasers and dated
October 1999 ( the "October Business Plan"), except with the
prior written consent of Majority Noteholders.
(iv) After the date hereof, FC Financial will only
invest in FC Commercial and/or FC Servicing in a manner
specifically contemplated in the October Business Plan. As
used in Sections 6.3(h)(ii), (iii) and (iv), "invest" shall
include, but not be limited to, (y) contributions to the
capital of a Person and (z) making loans or other financial
accommodations to a Person.
(v) Neither the Company nor any Affiliated Entity or
other Subsidiary of the Company or any Affiliated Entity shall
make any investment in any one or more of the Harbor Debtors
or FC Capital.
(i) Dividends; Payment of Fees, etc. The Company shall not
make any distributions or pay any dividends of property or assets with
respect to its Stock, including, but not limited to, any preferred
stock. Neither the Company nor any Affiliated Entity shall pay any
director's fees or any salaries to any director or shareholder unless
such shareholder or director is directly and actively employed by the
Company or any Affiliated Entity, provided that the Company may
compensate outside directors in an amount not to exceed $20,000 per
director per year.
(j) Fee Agreements. Attached hereto as Schedule 6.3(j) (as
amended from time to time) is a true, accurate and complete schedule of
all Fee Agreements to which the Company or any Affiliated Entity is a
party. The Purchasers hereby expressly consent to the performance by
the Company and said Affiliated Entities of said Fee Agreements, as in
effect on the date hereof. Within ten (10) Business Days after the
Company or any Affiliated Entity has entered into any new Fee Agreement
or shall have modified in any material respect any existing Fee
Agreement, the Company shall give Majority Noteholders notice thereof
and amend Schedule 6.3(j), if applicable, and shall, upon request by
Majority Noteholders, deliver a copy of any new or amended Fee
Agreement to the Purchasers. The Company shall not enter into any other
transactions with any Affiliate, including, without limitation,
agreements for the purchase, sale or exchange of property or the
rendering of any services to or by any Affiliate, or enter into, assume
or suffer to exist any employment, management, administration, advisory
or consulting contract with any Affiliate or, in each of the foregoing
cases, with any officer, director or partner of any Affiliate (or a
spouse or other relative of any of them) unless such transaction (a) is
otherwise not in violation of this Agreement or any other Loan
Document, (b) is in the ordinary course of its business and is upon
fair and reasonable terms no less favorable to it than it would obtain
in a comparable arms-length
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transaction with a Person not an Affiliate, and (c) the consideration
payable pursuant to such transaction or series of similar transactions
with such Affiliates or its Subsidiaries is not greater than $50,000 in
the aggregate in any one calender year.
(k) Indebtedness. Neither the Company nor any Primary Obligor
shall contract, create, incur, assume or suffer to exist any
Indebtedness, except for (i) the Senior Debt; (ii) Indebtedness
existing on the Initial Closing Date and reflected on the Financials of
the Company delivered on such date; (iii) Indebtedness disclosed on
Schedules 5.1(s), (t) and (u); (iv) unsecured trade payables incurred
in the ordinary course of business; (v) the Indebtedness evidenced by
the Notes; (vi) subordinated Indebtedness permitted to be incurred by
the Company pursuant to the Loan Agreement and this Agreement (by
consent of the Majority Noteholders or otherwise) if the Net Proceeds
thereof are immediately applied in full to redeem Notes (on a pro rata
basis) pursuant to Section III of the Notes and (vi) the FC Commercial
Line of Credit and the FC Consumer Lending Line of Credit, if approved
in writing by Lenders or Majority Noteholders, which approval shall not
be unreasonably withheld.
(l) Loan; Guaranty Debt. Neither the Company nor any Primary
Obligor or Secondary Obligor shall make any loan to any Person except
for Loans made by the Company pursuant to Pledged Notes and except for
the Excluded Notes. Attached hereto as Schedule 6.3(l) is a true,
accurate and complete schedule of all Guaranty Equivalents entered into
by the Company and any Affiliated Entity on the date hereof. Except for
those Guaranty Equivalents disclosed on Schedule 6.3(l), neither the
Company nor any Affiliated Entity shall enter into any Guaranty
Equivalents.
(m) Pay Indebtedness. Except for the Senior Debt or in the
ordinary course of business, neither the Company nor any Affiliated
Entity shall defease, prepay, repay, purchase, redeem or otherwise
acquire any of its Indebtedness for borrowed money other than
Indebtedness evidenced by the Notes.
(n) Issue Power of Attorney. Except pursuant to this Agreement
and the Other Agreements, neither the Company nor any Affiliated Entity
shall issue any power of attorney or other contract or agreement giving
any Person power or control over the day-to-day operations of the
Company's or any Affiliated Entity's business, other than in connection
with Permitted Liens or Indebtedness expressly permitted pursuant to
the terms of this Agreement; provided, however, that FC International
and FC Holdings shall have the right to grant powers-of-attorney
necessary to consummate transactions outside the United States, in the
ordinary course of its business, to acquire assets in transactions
subject to the following: if the person to whom such power of attorney
is granted is not the chairman or president of FC Commercial or the
senior vice president of FC Commercial (whether or not acting in such
capacity) or Robert J. Ketron, then the amount of all equity
investments by FC Holdings or FC International in such transaction may
not exceed $3,000,000.
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(o) Amendment of Credit Agreements. Neither the Company nor
any Affiliated Entity shall amend, modify or extend any note, credit
agreement, security agreement or other document, instrument or
agreement evidencing or securing Indebtedness of such entity, without
in each case the prior written consent of Majority Noteholders, which
consent may be withheld in their sole and absolute discretion; provided
that Borrower may extend existing credit facilities under financial
terms no more onerous than those provided for in the applicable
existing credit facility, including interest rate, costs and fees
payable to the provider of such facility.
(p) Use of Proceeds. The Company shall not use proceeds from
the issuance of the Initial Notes for any purpose other than to pay
Costs and to reduce the outstanding borrowings of the Company to the
Lenders in connection with the execution of the Loan Agreement. No
proceeds from the issuance of the Initial Notes shall be loaned to,
contributed as capital to, used to pay the debts or obligations of or
otherwise expended (either directly or indirectly) by the Company to,
nor shall the Company permit any Subsidiary or other Affiliate (other
than members of the Harbor Debtors) to make loans to, contribute
capital to, pay the debts or obligations of or otherwise expend monies
(either directly or indirectly) to, for the benefit of or on behalf of
any one or more of the Harbor Debtors.
(q) Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries. The Company shall not, and shall not permit any
of its Subsidiaries (whether in existence as of the date of initial
issuance of the Notes or thereafter formed or acquired) to, create,
assume or otherwise cause or suffer to exist or to become effective any
consensual encumbrance or restriction on the ability of any such
Subsidiary to:
(i) pay any dividends or make any other distribution
on its Stock or other equity interests to the Company or any
of its Subsidiaries;
(ii) make payments in respect to any Indebtedness
owed to the Company or any other Subsidiary of the Company; or
(iii) make loans or advances to the Company or any
Subsidiary or to guarantee Indebtedness of the Company or any
other Subsidiary of the Company;
other than, in the case of (i), (ii) and (iii),
(1) restrictions existing under agreements
in effect on the date of initial issuance of the
Notes;
(2) consensual encumbrances or restrictions
binding upon any Person at the time such Person
becomes a Subsidiary of the Company so long as such
encumbrances or restrictions (i) are not created,
incurred or assumed
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in contemplation of such Person becoming a Subsidiary
and (ii) do not encumber or restrict the Company or
any other Subsidiary of the Company;
(3) restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has
been entered into for the sale or disposition of all
or substantially all the assets (which term may
include the capital stock) of such Subsidiary;
(4) restrictions on the transfer of assets
which are subject to Liens; and
(5) restrictions existing under any
agreement which refinances or replaces any of the
agreements containing the restrictions in clauses (1)
and (2), provided that the terms and conditions of
any such restrictions are not materially less
favorable to the Purchasers than those under the
agreement evidencing or relating to the Indebtedness
refinanced.
(r) Repurchase of Notes. The Company shall not, and shall not
permit any of its Subsidiaries to, purchase any Notes other than
pursuant to a repurchase offer made to each holder pro rata in
accordance with the aggregate principal amount of Notes held by such
holder.
(s) Transactions with Affiliates. Neither the Company nor any
Subsidiary shall enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of any asset or the
rendering of any service, with any Affiliate (other than the Company or
a Subsidiary of the Company) unless such transaction (a) is otherwise
not in violation of this Agreement and the Other Agreements and (b) is
in the ordinary course of its business and is upon fair and reasonable
terms no less favorable to it than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate, provided that
the requirements of this clause (b) shall not apply to any transaction
pursuant to agreements in effect on the date of initial issuance of the
Notes.
(t) Payments for Consent. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, pay or cause
to be paid any consideration, whether by way of interest, fee or
otherwise, to any holder of Notes as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Notes
unless such consideration is paid to all holders of Notes that provide
such consent or so waive or agree to amend.
(u) FC Capital Guaranty. The Company shall cause FC Capital,
no later than three Business Days after the aggregate outstanding principal
amounts under the Nomura Facility and the Lehman Facility have been paid in
full, to execute and deliver to the Purchasers a guarantee agreement in respect
of the Company's obligations under this Agreement and the Senior Notes
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substantially in the form of the Guaranty and otherwise satisfactory to the
Majority Noteholders in form and substance except that FC Capital's guarantee of
the principal amount of the Notes shall not exceed $12,000,000. As used herein:
"Lehman Facility" means that certain Master Agreement Governing the Purchase and
Sale of Mortgage Loans dated as of 3/30/98 between Lehman Commercial Paper Inc.
and FC Capital; and "Nomura Facility" shall mean, individually and collective,
the agreement between FC Capital and Nomura Securities (Bermuda) with respect to
the FC Securitization 1998-1 Retained I/O & Servicing Asset and the agreement
between FC Capital and Nomura Securities (Bermuda) with respect to the FC
Securitization 1998-2 Retained I/O & Servicing Asset.
6.4 Required Notices.
(a) The Company shall notify the Purchasers and amend Schedule
5.1(t) within two Business Days that (i) the Company makes any additional loans
or advances to any Affiliated Entity, whether or not evidenced by a writing
signed by the obligor thereof, to the extent such loans or advances are
permitted by this Agreement, or (ii) the Company receives any payment of
principal on any Pledged Note.
(b) In addition to those notices required elsewhere in this
Agreement, the Company shall notify the Purchasers promptly after obtaining
knowledge of:
(i) except as otherwise previously disclosed to the
Purchasers, any event or occurrence which the Company has determined
has caused a material loss or decline in value of the Company's or any
Affiliated Entity's Assets due to casualty or any other adverse
occurrence and the estimated (or actual, if available) amount of such
loss or decline;
(ii) the institution of any suit or administrative proceeding
which, if determined adversely to the Company or any Affiliated Entity,
could reasonably be expected to have a Material Adverse Effect;
(iii) the Company or any Affiliated Entity becomes subject to
any Charge, Lien, restriction, judgment, decree or order which could
reasonably be expected to have a Material Adverse Effect;
(iv) the commencement of any lockout, strike or walkout
relating to any labor contract to which the Company or any Affiliated
Entity is a party;
(v) except as otherwise previously disclosed to the
Purchasers, any event or occurrence which the Company or any Affiliated
Entity has determined will have or could reasonably be expected to have
a material adverse affect on the ability of any obligor of a Pledged
Note to repay such Pledged Note;
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(vi) the occurrence of a default by the Company or any
Affiliated Entity under any agreement, document or instrument to which
it is a party which could reasonably be expected to have a Material
Adverse Effect;
(vii) a petition under any section or chapter of the United
States Bankruptcy Code or any similar law or regulation shall be filed
by or against the Company or any Affiliated Entity or any such Person
shall make an assignment for the benefit of its creditors, or any case
or proceeding is filed by or against any such Person for its
dissolution or liquidation;
(viii) the making of an application for the appointment of a
receiver, trustee or custodian for any of the assets of the Company or
any Affiliated Entity, other than voluntary custodial relationships
entered into to perfect security interests;
(ix) as soon as possible and in any event within five (5) days
after the Company shall have obtained knowledge of the occurrence of an
Event of Default or Unmatured Default, the written statement of the
chief financial officer of the Company setting forth the details of
such event and the action which the Company proposes to take with
respect thereto;
(x) the exercise by any holder of an option, warrant or right
to purchase any equity interest in the Company or any Affiliated
Entity, other than the exercise of rights disclosed in Section 5.1(e);
(xi) the breach of the covenants set forth in Section 6.2(i);
and
(xii) any event or occurrence requiring the Company or any
Affiliated Entity to deliver a notice to the Lenders under the Loan
Agreement.
6.5 Year 2000 Compliance.
(a) The computer and management information systems of the
Company and the Affiliated Entities are adequate for the conduct of
their business as presently conducted and as proposed to be conducted
and there are no material requirements for systems integration, upgrade
or replacement, and there are no facilities or software inadequacies
that could reasonably be expected to have a material adverse effect on
the business of the Company and Affiliated Entities.
(b) The Company and the Affiliated Entities are Year 2000
Compliant and shall remain Year 2000 Compliant at all times hereafter.
As used in the preceding sentence, "Year 2000 Compliant" means the
ability of the software and other information processing capabilities
of such Person to correctly interpret and process all data in whatever
form so as to avoid errors that may otherwise occur because of the
inability of software or other information processing capabilities to
recognize accurately the year 2000 or subsequent dates.
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(c) Any reprogramming required to permit the proper
functioning of the computer and management information systems of the
Company and its Subsidiaries during and following the year 2000 has
been completed and the cost of such reprogramming is not expected to
have a Material Adverse Effect.
7. DEFAULT
7.1 Events of Default. The occurrence of any one of the following
events shall constitute a default ("Event of Default") under this Agreement:
(a) If the Company fails or neglects to perform, keep or
observe any of the Company's Obligations or if the Company fails or
neglects to cause any Affiliated Entity (for any reason whatsoever) to
keep or observe any covenant with respect to such Person set forth
herein or in any Other Agreement (except as otherwise specifically
addressed in this Section 7.1) and the same is not cured within five
(5) days after the earlier of (i) Majority Noteholders give the Company
notice of such default or (ii) the Company obtains knowledge of such
default, provided that a breach of any of the provisions, terms,
conditions or covenants contained in Sections 6.2(d), 6.2(o), 6.3 and
6.4 hereof and Section 3.2(b) and Section 3.3 of the Notes shall
automatically be an Event of Default without any notice or cure period;
(b) If any representation, warranty or material statement,
report or certificate made or delivered by any Loan Party, or any of
its directors, officers, authorized employees or agents, to the
Purchasers pursuant to this Agreement or any Other Agreement (except as
otherwise specifically addressed in this Section 7.1) is not true and
correct and the same is not cured within five (5) days after the
Majority Noteholders give the Company notice of such default; provided
that a breach of any of the provisions, terms, conditions or covenants
contained in Sections 6.2(d), 6.3 and 6.4 hereof and Section 3.2(b) and
Section 3.3 of the Notes shall automatically be an Event of Default
without any notice or cure period;
(c) If the Company fails to pay any of the Secured Obligations
when due and payable or declared due and payable;
(d) If an Event of Default or Unmatured Default (however
called) with respect to the Company shall exist under the terms of any
Indebtedness Instrument (including without limitation the Loan
Agreement) other than this Agreement and the Other Agreements;
(e) Except as provided in any other section of this Section
7.1, if an Event of Default or Unmatured Default (however called) with
respect to any Subsidiary of the Company (other than any one or more of
the Harbor Debtors) shall exist under the terms of any Indebtedness
Instrument and such default is not cured within ten (10) days after the
occurrence thereof, provided that such cure period shall not apply if:
(i) a default occurs by
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such Subsidiary under the terms of any other Indebtedness Instrument
securing or evidencing a different borrowing or (ii) if any other
Subsidiary defaults under the terms of any Indebtedness Instrument
during such ten (10) day cure period. Notwithstanding the foregoing, if
any two or more such Persons are obligated for the same Indebtedness
and a default occurs thereunder, it shall be deemed to be a default by
a single Person for the purposes of this Section 7.1(e);
(f) If there is a Trigger Event, a Sequential Trigger Event, a
Termination Event, a Default, an Event of Default and/or any other
occurrence having a similar result as any of the foregoing, as
applicable, as defined in and/or under the terms of any one or more of
the agreements listed on Schedule 7.1(f) attached hereto;
(g) If the Company fails or neglects to perform, keep or
observe any of the Company's Obligations or to cause any Affiliated
Entity to keep or observe any representation, warranty or covenant
contained in Section 6.2(e) and the same is not cured within ten (10)
days after the Majority Noteholders give the Company notice of such
default;
(h) If any of the Company's Assets or the assets of any
Affiliated Entity or any portion thereof are attached, seized,
subjected to a writ of distress warrant or are levied upon other than
Charges payable by First X or First B, or come within the possession of
any receiver, trustee, custodian or assignee for the benefit of
creditors, other than a custodian pursuant to a voluntary custodial
agreement entered into to perfect a security interest;
(i) If a petition under any section or chapter of the United
States Bankruptcy Code or any similar law or regulation shall be filed
by the Company or any Affiliated Entity, or if the Company or any
Affiliated Entity shall make an assignment for the benefit of its
creditors or if any case or proceeding is filed by the Company or any
Affiliated Entity for its dissolution or liquidation;
(j) If the Company or any Affiliated Entity is enjoined,
restrained or in any way prevented by court order from conducting all
or any material part of its business affairs; or if a petition under
any section or chapter of the United States Bankruptcy Code or any
similar law or regulation is filed against the Company or any
Affiliated Entity and is not discharged for a period of 60 days; or if
any case or proceeding is filed against the Company or any Affiliated
Entity for its dissolution or liquidation;
(k) If an application is made by the Company or any Affiliated
Entity for the appointment of a receiver, trustee or custodian for any
of its assets other than a custodian pursuant to a voluntary custodial
agreement entered into to perfect a security interest;
(l) If an application is made by any Person other than the
Company for the appointment of a receiver, trustee or custodian for any
of the Assets of the Company, any
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Affiliated Entity or any Pledged Entity (other than the Harbor Debtors)
and such application is not discharged for 60 days;
(m) Except as expressly permitted pursuant to Section 6.2(e),
(i) if a notice of any Charge is filed of record with respect to all or
any of the Company's or any Affiliated Entity's Assets or (ii) if any
Charge becomes a Lien upon any of the Company's or any Affiliated
Entity's Assets;
(n) The occurrence of a default under any agreement,
instrument and/or document executed and delivered by any Guarantor to
the Purchasers, which is not cured within the time, if any, specified
therefor in such agreement, instrument or document, or if this
Agreement or any Other Agreement shall fail to grant to the Purchasers,
as secured parties, the lien or other security interest (if any)
intended to be created thereby or if any Loan Party thereto shall
assert that it is not liable with respect thereto; or if any Guarantor
shall assert that it is not liable as a guarantor or otherwise under
its guarantee agreement executed in connection herewith;
(o) The occurrence of a default under any Other Agreement,
which is not cured within the time, if any, specified therefor in such
Other Agreement;
(p) Except as expressly permitted pursuant to the terms
hereof, if the Company or any Affiliated Entity issues to or transfers
to any Person any Stock of the Company or any Affiliated Entity;
(q) If any final non-appealable judgment for the payment of
money in excess of $100,000 (after giving effect to any amount covered
by insurance as to which the insurer shall not have denied or
questioned its obligation to pay) shall be rendered against the Company
or any Affiliated Entity; or final judgment for the payment of money in
excess of $100,000 shall be rendered against the Company or any
Affiliated Entity and the same shall remain undischarged for a period
of thirty (30) days during which execution shall not be effectively
stayed or diligently contested in good faith by appropriate
proceedings;
(r) If the Company or any ERISA Affiliate (as defined in
Section 8.1(d)) (1) shall effect a complete or partial withdrawal (as
defined in ERISA (as defined in Section 8.1(d)) Sections 4203 or 4205)
from a Multiemployer Plan (as defined in Section 8.1(d)), if such
withdrawal could subject either the Company or any ERISA Affiliate to
liability; (2) shall fail to pay when due an amount that is payable by
it to the PBGC (as defined in Section 8.1(d)) or to an Employee Benefit
Plan (as defined in Section 8.1(d)); (3) has instituted against it by a
fiduciary of any Multiemployer Plan an action to enforce ERISA Section
515 and such proceedings shall not have been dismissed within thirty
(30) days thereafter; (4) has imposed against it any tax under Code
Section 4980B(a); (5) has assessed against it by the Secretary of Labor
a civil penalty with respect to any Employee Benefit Plan under ERISA
Section 502(c) or 502(l); (6) shall apply for a waiver of the minimum
funding standards of
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the Code; or (7) shall permit any other event or condition to occur or
exist with respect to an Employee Benefit Plan that could subject
either the Company or any ERISA Affiliate to liability;
(s) Except as set forth in Section 7.1(d) or (e), a default by
the Company or any Affiliated Entity shall occur under any agreement,
document or instrument (other than this Agreement or any of the Other
Agreements) now or hereafter existing, to which the Company or any
Affiliated Entity is a party and the effect of such default could
reasonably be expected to have a Material Adverse Effect;
(t) If the Company or any Affiliated Entity dissolves,
liquidates (other than with respect to a Secondary Obligor upon the
disposition of all of its Assets in the ordinary course of its
business) or fails to maintain its corporate existence;
(u) Notwithstanding anything herein to the contrary,
including, but not limited to the terms of Section 7.1(e), if any
lender to the Company or any Affiliated Entity, or to any Subsidiary of
any of the foregoing, (i) accelerates the maturity of any loan to the
Company, any Affiliated Entity or any Subsidiary of any of the
foregoing as a result of the Harbor Proceedings or any default by any
Harbor Debtor to such lender or any other event of default (however
called) arising under the terms of any Indebtedness Instrument to which
any Harbor Debtor is a party or (ii) terminates any agreement to
forbear or waive any default by a Harbor Debtor or any other event of
default (however called) arising under the terms of any Indebtedness
Instrument; or
(v) If any proceeding is commenced against the Company in
which the amount claimed is greater than $1,000,000 and such proceeding
is not dismissed with prejudice with no judgment having been entered
against or other relief granted against the Company within 30 days
after the filing date; or
(w) If, at any time within 30 days after James Sartain is not
employed full-time with the Company or is no longer responsible for the
day-to-day management of the Company, a replacement chosen by the
Company (and reasonably satisfactory to the Majority Noteholders) is
not employed full-time with the Company and responsible for the
Company's day-to-day management.
(x) If, on or before January 5, 2000, the Company has not
provided evidence to the Purchasers, satisfactory to the Majority
Noteholders in their sole discretion, that simultaneously (i) the
available commitment to lend under the FCAR Receivables LLC Retail
Automobile Installment Loan Agreement Financing Facility dated as of
March 30, 1999 (the "MBIA Warehouse Line") exceeds $40,000,000, or a
substitute line of credit of like amount acceptable to the Majority
Noteholders in their sole discretion is in effect (the "Substitute
Line"), and (ii) the MBIA Warehouse Line, or such Substitute Line, as
applicable, has a stated maturity of no earlier than December 15, 2000.
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7.2 Remedies Cumulative. All of the Purchaser's rights and remedies
under this Agreement and the Other Agreements are cumulative and non-exclusive.
7.3 Acceleration. Upon the occurrence of an Event of Default, other
than in the case of an Event Default specified in Sections 7.1(h), (i), or (k),
at any time thereafter during the continuance of such Event of Default, the
Majority Noteholders may, by written notice to the Company, declare the Notes to
be forthwith due and payable, whereupon the Notes and all other Secured
Obligations shall become forthwith due and payable both as to unpaid principal
and accrued interest without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Company, anything
contained herein to the contrary notwithstanding. If an Event of Default
specified in Sections 7.1(h), (i), or (k) occurs, the unpaid principal of and
accrued interest on the Notes and all other Secured Obligations shall become and
be immediately due and payable without any declaration or any other act on the
part of the Majority Noteholders or any Purchaser.
7.4 Remedies. Upon the occurrence of an Event of Default and the
continuation thereof, the Majority Noteholders (or the Collateral Agent on
behalf of all Purchasers) in their or its sole and absolute discretion may
exercise any and all rights and remedies that it may have under this Agreement
and the Other Agreements, at law or in equity.
7.5 Injunctive Relief. The Company recognizes that upon the occurrence
of an Event of Default, no remedy of law will provide adequate relief to a
Purchaser, and agrees that a Purchaser shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
7.6 [Intentionally deleted]
7.7 Subordination. This Agreement (including without limitation,
exercise of the rights set forth in Sections 7.3, 7.4 and 7.5 hereof) and the
Notes are subordinated in the right of payment to the prior payment in full of
all principal, premium and interest due on the Senior Debt in accordance with
the Subordination Agreement. In the event of any liquidation, dissolution or
winding up of the Company, receivership, insolvency, bankruptcy or
reorganization, all principal, premium and interest owing on the Senior Debt
shall first be paid in full before any payment is made upon the indebtedness
evidenced by the Notes or any other amounts payable under this Agreement or any
of the Other Agreements.
8. GENERAL
8.1 Compliance with ERISA.
(a) Representations and Warranties. The Company hereby
represents and warrants that:
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(i) Schedule 8.1 hereto describes the Employee
Benefit Plans to which the Company or any of its ERISA
Affiliates may have obligations;
(ii) each Employee Benefit Plan of the Company or any
of its ERISA Affiliates is in compliance in all material
respects with its terms and with the applicable provisions of
ERISA, the Code and all other statutes and regulations
applicable thereto and each such Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so
qualified, and each trust related to any such Employee Benefit
Plan has been determined to be exempt from federal income tax
under Section 501(a) of the Code;
(iii) neither the Company nor any of its ERISA
Affiliates maintains or contributes to any Employee Benefit
Plan with an actuarial present value of projected benefit
obligations that exceeds the fair market value of net assets
available for such benefits, calculated on the basis of the
actuarial assumptions specified in the most recent actuarial
valuation for such Employee Benefit Plan, and no such Employee
Benefit Plan provides for subsidized early retirement benefits
that could materially adversely affect the funded status of
such Employee Benefit Plan or Employee Benefit Plans in the
event of a reduction in force or plant closing;
(iv) with respect to each Employee Benefit Plan that
is a "defined benefit plan," as defined in Section 3(35) of
ERISA, the assets of each such Employee Benefit Plan are equal
to or greater than the accrued benefits of the participants
and beneficiaries thereunder, as determined pursuant to the
actuarial methods and assumptions utilized by the PBGC in the
event of a plan termination;
(v) neither the Company nor any of its ERISA
Affiliates sponsors, maintains, participates in or contributes
to any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA that provides benefits to employees
after termination of employment other than as required by
Section 601 of ERISA; as such, neither the Company nor any of
its ERISA Affiliates are currently or will in the future be
subject to the accounting recognition and disclosure standards
of Statement of Financial Accounting Standards No. 106 (FASB
106);
(vi) neither the Company nor any of its ERISA
Affiliates has breached any of the responsibilities,
obligations, or duties imposed on them by ERISA or the
regulations promulgated thereunder with respect to any
Employee Benefit Plan;
(vii) neither the Company nor any ERISA Affiliate has
(i) failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made or expects to make a complete
or partial withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer Plan;
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(viii) at the date hereof, the aggregate potential
withdrawal liability payment, as determined in accordance with
Title IV of ERISA, of the Company and any ERISA Affiliates
with respect to all Employee Benefit Plans that are
Multiemployer Plans does not exceed $50,000 and, to the best
of the Company's and its ERISA Affiliate's knowledge, no
Multiemployer Plan is in reorganization or insolvent within
the meaning of Sections 4241 or 4245 of ERISA;
(ix) neither the Company nor any ERISA Affiliate has
failed to make a required installment or any other required
payment under Section 412 of the Code on or before the due
date for such installment or other payment;
(x) neither the Company nor any ERISA Affiliate is
required to provide security to an Employee Benefit Plan under
Section 401(a)(29) of the Code due to an Employee Benefit Plan
amendment that results in an increase in current liability for
the plan year;
(xi) no liability to the PBGC has been, or is
expected by the Company or any ERISA Affiliate to be, incurred
by the Company or any ERISA Affiliate, other than the payment
of premiums, and there are no premium payments that have
became due and which are unpaid;
(xii) no events have occurred in connection with any
Employee Benefit Plan that might constitute grounds for the
termination of any such Employee Benefit Plan by the PBGC or
for the appointment by any United States District Court of a
trustee to administer any such Employee Benefit Plan;
(xiii) no Reportable Event has, in the case of any
Employee Benefit Plan maintained by the Company or an ERISA
Affiliate other than a Multiemployer Plan, occurred and is
continuing, or to the best of the Company's knowledge, has
occurred and is continuing in the case of any such Employee
Benefit Plan that is a Multiemployer Plan;
(xiv) no Employee Benefit Plan maintained by the
Company or an ERISA Affiliate had an Accumulated Funding
Deficiency, whether or not waived, as of the last day of the
most recent fiscal year of such Employee Benefit Plan or, in
the case of any Multiemployer Plan, as of the most recent
fiscal year of such Multiemployer Plan for which the annual
reports of such Multiemployer Plan's actuaries and auditors
have been received; and
(xv) neither the Company nor any ERISA Affiliate has
engaged in a Prohibited Transaction prior to the date hereof,
and the execution, delivery, and carrying out of this
Agreement will not involve any non-exempt Prohibited
Transactions (within the meaning of Part 4 of Subtitle B of
Title I of ERISA) or any
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transaction in connection with which a tax could be imposed
pursuant to Section 4975 of the Code.
(b) ERISA Reports. The Company shall:
(i) as soon as possible, and in any event within
fifteen (15) Business Days, after the Company or an ERISA
Affiliate knows or has reason to know that, regarding any
Employee Benefit Plan with respect to the Company or an ERISA
Affiliate, a Prohibited Transaction or a Reportable Event has
occurred (whether or not the requirement for notice, if
applicable, of such Reportable Event has been waived by the
PBGC), deliver to each Purchaser a certificate of a
responsible officer of the Company setting forth the details
of such Prohibited Transaction or Reportable Event, the action
that the Company proposes to take with respect thereto, and,
when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor, or the PBGC;
(ii) upon request of a Purchaser made from time to
time, deliver to the Purchaser a copy of the most recent
actuarial report, funding waiver request, and annual report
filed with respect to any Employee Benefit Plan maintained by
the Company or an ERISA Affiliate;
(iii) upon request of a Purchaser made from time to
time, deliver to the Purchaser a copy of any Employee Benefit
Plan sponsored, contributed to, participated in or maintained
by the Company or any ERISA Affiliate; and
(iv) as soon as possible, and in any event within ten
(10) Business Days, after it knows or has reason to know that
any of the following have occurred with respect to any
Employee Benefit Plan maintained, or contributed to, by the
Company or an ERISA Affiliate, deliver to each Purchaser a
certificate of a responsible officer of the Company setting
forth the details of the events described in (a) through (l)
and the action that the Company or any ERISA Affiliate
proposes to take with respect thereto, together with a copy of
any notice or filing from the PBGC or other agency of the
United States government with respect to such of the events
described in (a) through (l): (a) any Employee Benefit Plan
has been terminated; (b) the Plan Sponsor intends to terminate
any Employee Benefit Plan; (c) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate
any such Employee Benefit Plan or to appoint a trustee to
administer such Employee Benefit Plan, or the Company or any
ERISA Affiliate receives a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to
such Multiemployer Plan; (d) the Company or any ERISA
Affiliate withdraws from any Employee Benefit Plan, or notice
of any withdrawal liability is received by the Company or any
ERISA Affiliate; (e) any Employee Benefit Plan has received an
unfavorable determination letter from the Internal Revenue
Service regarding the qualification of the Employee
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Benefit Plan under Section 401(a) of the Code; (f) the Company
or any ERISA Affiliate fails to make a required installment or
any other required payment under Section 412 of the Code on or
before the due date for such installment or payment or has
applied for a waiver of the minimum funding standard under
Section 412 of the Code; (g) the imposition of any tax under
Code Section 4980B(a) or the assessment by the Secretary of
Labor of a civil penalty under Sections 502(c) or 502(l) of
ERISA; (h) there is a partial or complete withdrawal (as
described in ERISA Section 4203 or 4205) by the Company or any
ERISA Affiliate from a Multiemployer Plan; (i) the Company or
any ERISA Affiliate is in "default" as defined in ERISA
Section 4219(c)(5)) with respect to payments to a
Multiemployer Plan required by reason of its complete or
partial withdrawal from such Employee Benefit Plan; (j) a
Multiemployer Plan is in "reorganization" or is "insolvent"
(as described in Title IV of ERISA) or such Multiemployer Plan
intends to terminate or has terminated under Section 4041A of
ERISA; (k) the institution of a proceeding by a fiduciary of a
Multiemployer Plan against the Company or any ERISA Affiliate
to enforce Section 515 of ERISA; or (1) the Company or any
ERISA Affiliate has increased benefits under any existing
Employee Benefit Plan or commenced contributions to an
Employee Benefit Plan to which the Company or any ERISA
Affiliate was not previously contributing. For purposes of
this Section, the Company shall be deemed to have knowledge of
all facts known by the Plan Administrator of any Employee
Benefit Plan of which the Company or any ERISA Affiliate is
the Plan Sponsor.
(c) Compliance with ERISA. The Company and its ERISA
Affiliates will not (i) establish, maintain, or operate any Employee
Benefit Plan that is not in compliance in all material respects with
the provisions of ERISA, the Code, and all other applicable laws, and
the regulations and interpretations thereunder; (ii) allow to exist any
Accumulated Funding Deficiency with respect to any Employee Benefit
Plan, whether or not waived; (iii) terminate any Employee Benefit Plan
or withdraw or effect a partial or complete withdrawal (as described in
ERISA Section 4203 or 4205) from any Multiemployer Plan, if such
termination or withdrawal could subject the Company or any ERISA
Affiliate to liability; (iv) fail to make any required installment or
any other payment required under Section 412 of the Code on or before
the due date for such installment or other payment; (v) amend any
Employee Benefit Plan so as to result in an increase in current
liability for the plan year such that the Company or any ERISA
Affiliate is required to provide security to such Employee Benefit Plan
under Section 401(a)(29) of the Code; (vi) fail to make any
contribution or payment to any Multiemployer Plan which the Company or
any ERISA Affiliate may be required to make under any agreement
relating to such Multiemployer Plan; (vii) enter into any Prohibited
Transaction for which a class exemption is not available or a private
exemption previously has not been obtained from the Department of
Labor; (viii) permit the occurrence of any Reportable Event, or any
other event or condition, which could subject either the Company or any
ERISA Affiliate to liability; or (ix) allow or permit to exist any
other event
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or condition known or that reasonably should be known to the Company
which event or condition could subject either the Company or any ERISA
Affiliate to liability.
(d) Definitions. For purposes of this Section 8.1, the
following definitions shall apply:
(i) "Accumulated Funding Deficiency" shall have the
meaning assigned to that term in Section 302 of ERISA.
(ii) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(iii) "Employee Benefit Plan" shall mean an employee
benefit plan within the meaning of Section 3(3) of ERISA that
is maintained, sponsored, participated in or contributed to by
the Company or any ERISA Affiliate.
(iv) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time, or
any successor thereto.
(v) "ERISA Affiliate" shall mean any corporation,
trade or Business that is, along with the Company, a member of
a controlled group of trades or businesses, or a member of any
group of organizations, within the meaning of Sections 414(b),
(c), (m) or (o) of the Code, and any regulations thereunder.
(vi) "Multiemployer Plan" shall mean any plan
described in Section 3(37) or 4001(a)(3) of ERISA to which
contributions are or have been made by the Company or any
ERISA Affiliate.
(vii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation or any governmental body succeeding to its
functions.
(viii) "Plan Administrator" shall have the meaning
assigned to it in Section 3(16)(A) of ERISA.
(ix) "Plan Sponsor" shall have the meaning assigned
to it in Section 3(16)(B) of ERISA.
(x) "Prohibited Transaction" shall mean a transaction
that is prohibited under Code Section 4975 or ERISA Section
406 and not exempt under Code Section 4975 or ERISA Section
408.
(xi) "Reportable Event" shall mean (a) an event
described in Section 4043(c), 4068(a), or 4063(a) of ERISA or
in the regulations thereunder, (b) receipt of a notice of
withdrawal liability with respect to a Multiemployer Plan
pursuant to Section 4202
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of ERISA, (c) an event requiring the Company or any ERISA
Affiliate to provide security for an Employee Benefit Plan
under Code Section 401(a)(29), (d) any failure to make
payments required by Code Section 412(m), (e) the withdrawal
of the Company or any ERISA Affiliate from an Employee Benefit
Plan in which it is a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (f) the institution of
proceedings to terminate an Employee Benefit Plan by the PBGC,
or (g) the filing of a notice to terminate an Employee Benefit
Plan or the treatment of an amendment of an Employee Benefit
Plan as a termination under Section 4041 of ERISA.
8.2 Costs. The Company hereby agrees that it shall reimburse each
Purchaser and the Collateral Agent on demand, as part of the Company's
Obligations, for any and all Costs, and any amount not paid within two weeks
after demand shall bear interest at the Default Rate.
8.3 Statement. Each statement of account by a Purchaser delivered to
the Company relating to the Company's Liabilities shall be presumed correct and
accurate and shall constitute an account stated between the Company and the
Purchaser unless the Purchaser subsequently corrects such statement of its own
volition or, within thirty (30) days after the Company's receipt of said
statement, the Company delivers to the Purchaser, by registered or certified
mail addressed to the Purchaser at the address specified in Section 8.4, written
objection thereto specifying the error or errors, if any, which the Company
asserts are contained in any such statement.
8.4 Notices. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing (which term, for
all purposes of this Agreement and the Other Agreements, shall include telecopy)
and addressed to the party for whom such notices are intended at the address set
forth below. All notices shall be sent by personal delivery, Federal Express or
other over-night messenger service, first class registered or certified mail,
postage prepaid, return receipt requested or by other means at least as fast and
reliable as first class mail. A written notice shall be deemed to have been
given to the recipient party on the earlier of (a) the date it shall be
delivered to the address required by this Agreement; (b) the date delivery shall
have been refused at the address required by this Agreement; or (c) with respect
to notices sent by mail, the date as of which the postal service shall have
indicated such notice to be undeliverable at the address required by this
Agreement. Any and all notices referred to in this Agreement, or which either
party desires to give to the other, shall be addressed as follows:
(i) if to any Purchaser, initially at the address set
forth below its name on Exhibit A hereto, and thereafter at
such other address, notice of which is given in accordance
with this Section 8.4; and
(ii) if to the Company, initially at FirstCity
Financial Corporation, 6400 Imperial Drive, P.O. Box 8216,
Waco, Texas 76714, Attn: Chief Executive Officer, and
thereafter at such other address notice of which is given in
accordance with this Section 8.4.
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8.5 Amendments and Waivers. Except as otherwise expressly provided
herein or in any Other Agreement, this Agreement and the Other Agreements may
not be modified, altered, amended or waived except by an agreement in writing
signed by the Company and Majority Noteholders, provided that no such
modification, alteration, amendment or waiver shall, unless signed by each
holder of a Note affected thereby, (i) reduce the principal of any Note; (ii)
reduce the interest rate payable pursuant to any Note; (iii) postpone the date
fixed for any payment of principal of or interest on any Note, (iv) make any
Note payable in money other than that stated herein and in such Note, (v)
release any guarantor of a Note or release all or substantially all of the
collateral for the Note, (vi) modify the provisions of this Section 8.5 in a
manner materially adverse to the holder of a Note or (vii) change the definition
of "Majority Noteholders".
8.6 No Implied Waiver; Remedies Cumulative. A Purchaser's failure at
any time or times hereafter to require strict performance by the Company of any
provision of this Agreement or any Other Agreement shall not waive, affect or
diminish any right of the Purchaser thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by the Majority Noteholders or
any Purchaser of an Event of Default or an Unmatured Default by the Company
under this Agreement or any Other Agreement shall not suspend, waive or affect
any other Event of Default or Unmatured Default by the Company under this
Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of the
Company contained in this Agreement or the Other Agreements and no Event of
Default or Unmatured Default by the Company under this Agreement or the Other
Agreements shall be deemed to have been suspended or waived by the Majority
Noteholders or any Purchaser unless such suspension or waiver is by an
instrument in writing signed by the Majority Noteholders or (in the case of any
of the same (if any) which may be suspended or waived by an individual
Purchaser) the relevant Purchaser and directed to the Company specifying such
suspension or waiver.
8.7 Severability. If any provision (in whole or in part) of this
Agreement or the Other Agreements or the application thereof to any person or
circumstance is held invalid or unenforceable, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement or the Other Agreements, as the case may require, and this
Agreement and such Other Agreements shall be construed and enforced to the
maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein or therein, as the case
may be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful. If such modification, restriction or reformulation is not
reasonably possible, the remainder of this Agreement and the Other Agreements
and the application of such provision to other persons or circumstances will not
be affected thereby and the provisions of this Agreement and the Other
Agreements shall be severable in any such instance.
8.8 Incorporation of Other Agreements. Except as otherwise provided in
this Agreement and except as otherwise provided in the Other Agreements by
specific reference to the applicable
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provision of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in the Other Agreements to
which any Purchaser is party, the Majority Noteholders shall have the right to
elect, in their sole and absolute discretion, which provision shall govern and
control. Except to the extent provided to the contrary in this Agreement or in
the Other Agreements to which the Purchasers are party, no termination or
cancellation (regardless of cause or procedure) of this Agreement or the Other
Agreements shall in any way affect or impair the powers, obligations, duties,
rights and liabilities of the Company or a Purchaser in any way or respect
relating to (a) any transaction or event occurring prior to such termination or
cancellation, and/or (b) any of the undertakings, agreements, covenants,
warranties and representations of the Company contained in this Agreement or the
Other Agreements. All such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation.
8.9 Acceptance. This Agreement and the Other Agreements are submitted
by the Company to each Purchaser (for the Purchaser's acceptance or rejection
thereof) at the Purchaser's principal place of business as an offer by the
Company to borrow monies from the Purchaser and shall not be binding upon the
Purchaser or become effective until and unless accepted by the Purchaser, in
writing, at said place of business. If so accepted by the Purchaser, this
Agreement and the Other Agreements shall be deemed to have been made at said
place of business. THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS,
including, but not limited to, the legality of the interest rate and other
charges, but excluding choice of law provisions and perfection of security
interests, which shall be governed and controlled by the laws of the relevant
jurisdiction.
8.10 Knowledge. As used herein the phrase "to the best of the Company's
knowledge" or words of such import shall mean all knowledge, including, actual
knowledge and knowledge of matters which any reasonable person in such position
knew or should have known, of the respective officers, directors and managers of
the Company.
8.11 Waiver by the Company. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, THE COMPANY WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
NOTES, COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER AND GUARANTEES AT ANY TIME HELD BY ANY OF THE PURCHASERS ON WHICH
THE COMPANY MAY IN ANY WAY BE LIABLE; (B) ALL RIGHTS TO NOTICE AND A HEARING
PRIOR TO A PURCHASER'S TAKING POSSESSION OR CONTROL OF, OR TO BANK REPLEVY,
ATTACHMENT OR LEVY UPON THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING ANY PURCHASER
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TO EXERCISE ANY OF ITS RESPECTIVE REMEDIES; AND (C) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION LAWS.
8.12 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE BY
THE PURCHASERS IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS. TO THE EXTENT PERMITTED BY APPLICABLE LAW
THE COMPANY HEREBY (a) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS OVER ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b)
IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW; AND (d) AGREES NOT TO INSTITUTE ANY LEGAL ACTION
OR PROCEEDING AGAINST THE PURCHASERS OR ANY OF THEIR RESPECTIVE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED
IN COOK COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR A
PURCHASER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR
PURCHASER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR THE
COMPANY'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
8.13 Waiver of Marshalling. All rights of marshalling of assets of the
Company, including any such right with respect to the Pledged Property, are
hereby waived by the Company.
8.14 Limitation by Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
8.15 Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants contained in this Agreement or made in
writing by the Company in connection herewith shall survive the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby, including without limitation repayment of the Secured Obligations. Any
investigation by a Purchaser shall not diminish in any respect whatsoever its
rights to rely on such representations and warranties.
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8.16 Service of Process. The Company hereby irrevocably appoints and
designates CT Corporation System, Inc., 208 S. LaSalle Street, Chicago, Illinois
60604 as its true and lawful attorney-in-fact and duly authorized agent for
service of legal process and agrees that service of such process upon such agent
and attorney-in-fact shall constitute personal service of such process upon the
Company.
8.17 Representation by Counsel. The Company hereby represents that it
has been represented by competent counsel of its choice in the negotiation and
execution of this Agreement and the Other Agreements; that it has read and fully
understood the terms hereof and thereof; the Company and its counsel have been
afforded an opportunity to review, negotiate and modify the terms of this
Agreement and the Other Agreements, and that it intends to be bound hereby and
thereby. In accordance with the foregoing, the general rule of construction to
the effect that any ambiguities in a contract are to be resolved against the
party drafting the contract shall not be employed in the construction and
interpretation of this Agreement and the Other Agreements.
8.18 Release of the Purchasers. THE COMPANY RELEASES EACH PURCHASER
FROM ANY AND ALL CAUSES OF ACTION OR CLAIMS WHICH THE COMPANY MAY NOW OR
HEREAFTER HAVE FOR ANY ASSERTED LOSS OR DAMAGE TO THE COMPANY CLAIMED TO BE
CAUSED BY OR ARISING FROM ANY ACT OR OMISSION TO ACT ON THE PART OF THE
PURCHASER, ITS OFFICERS, AGENTS OR EMPLOYEES, EXCEPT FOR WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION.
8.19 Invalidated Payments. To the extent that a Purchaser receives any
payment on account of the Secured Obligations and any such payment(s) and/or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
federal law, common law or equitable cause, then, to the extent of such
payment(s) or proceeds received, the Secured Obligations or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment(s) and/or proceeds had not been received by the Purchaser and
applied on account of the Secured Obligations.
8.20 Headings. The descriptive headings of the various provisions of
this Agreement and the Other Agreements are inserted for convenience of
reference only and shall not be deemed to affect the meaning or construction of
any of the provisions hereof or thereof.
8.21 Counterparts. This Agreement and the Other Agreements may be
executed in any number of counterparts, and by the different parties hereto and
thereto on the same or separate counterparts, each of which when so executed and
delivered shall be deemed to be an original; all the counterparts for each such
document shall together constitute one and the same agreement.
8.22 Fax Execution. For purposes of negotiating and finalizing this
Agreement and the Other Agreements (including any subsequent Modifications
hereto or thereto), any signed document
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transmitted by facsimile machine ("FAX") shall be treated in all manner and
respects as an original document. The signature of any party by FAX shall be
considered for these purposes as an original signature. Any such FAX document
shall be considered to have the same binding legal effect as an original
document. At the request of either party, any FAX document subject to this
Agreement shall be re-executed by both parties in an original form but no such
request shall in any way alter the binding nature of the faxed signature. The
undersigned parties hereby agree that neither shall raise the use of the FAX or
the fact that any signature or document was transmitted or communicated through
the use of a FAX as a defense to the formation of this Agreement or any Other
Agreement.
8.23 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Purchasers, the Company and their respective successors and
assigns (except as otherwise expressly provided herein) and nothing contained
herein shall be deemed to confer upon any Person other than the Company and the
Purchasers and their respective successors and assigns any right to insist on or
to enforce the performance or observance of any of the obligations contained
herein. All conditions to the obligations of the Purchasers hereunder are
imposed solely and exclusively for the benefit of the Purchasers and their
respective successors and assigns and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms and no
other Persons shall under any circumstances be deemed to be a beneficiary of
such conditions.
8.24 Domicile of Note. A Purchaser may make, maintain or transfer the
Notes acquired by it hereunder to, or for the account of, any branch office,
Subsidiary or Affiliate of the Purchaser.
8.25 Entire Agreement. This Agreement and the Other Agreements
constitute the entire agreement of the Company and the Purchasers with respect
to the subject matter hereof and supersede all prior and contemporaneous
negotiations, agreements, understandings and communications. No representation,
understanding, promise or condition concerning the subject matter hereof shall
be binding upon the Purchasers unless expressed herein or therein. No course of
dealing, course or performance, trade usage or parole evidence of any nature,
whether based on actions, omissions or circumstances occurring or existing
heretofore or hereafter, may be used in any way to alter or supplement the terms
hereof.
8.26 Construction.
(a) In this Agreement, unless the context otherwise clearly
requires, references to the plural include the singular, the singular the
plural, and the part the whole; the neuter case includes the masculine and
feminine cases; and "or" is not exclusive. In this Agreement, any references to
property (and similar terms) include an interest in such property (or other item
referred to); "include," "includes," "including" and similar terms are not
limiting; and "hereof," "herein," "hereunder" and similar terms refer to this
Agreement as a whole and not to any particular provision; and "expenses,"
"costs," "out-of-pocket expenses" and similar terms include the charges of
in-house counsel, auditors and other professionals of the relevant Person to the
extent that such amounts are routinely identified and charged under such
Person's cost accounting system. Section and other references in this Agreement
are to this Agreement unless otherwise specified.
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(b) The Company expressly agrees that for purposes of this
Agreement and each and every Other Agreement: (i) this Agreement and each and
every Other Agreement shall be a "credit agreement" under the Illinois Credit
Agreements Act, 815 ILCS 160/1 et. seq. (the "Act"); (ii) the Act applies to
this transaction including, but not limited to, the execution of this Agreement
and each and every Other Agreement; and (iii) any action on or in any way
related to this Agreement and each and every Other Agreement shall be governed
by the Act.
(c) Whenever a schedule is referred to herein as "attached
hereto" (or like language) and the same information is included on an identical
or substantially identical schedule to the Loan Agreement, said schedule need
not be attached hereto but shall be deemed to refer to the identical or
substantially identical schedule attached to the Loan Agreement on the Closing
Date (as such schedule shall from time to time be amended with the consent of
the Majority Noteholders).
(d) Notwithstanding anything to the contrary contained herein
or in any of the Loan Documents, unless the Company or a Purchaser otherwise
requests with respect to any specific exhibit, exhibits to this Agreement shall
not be required to be attached to the execution or any other copy of this
Agreement, and any references in this Agreement or the other Loan Documents to
such exhibits as "Exhibits hereto," "Exhibits to this Agreement" or words of
similar effect shall be deemed to refer to such document as executed by the
relevant parties and delivered on the Closing Date.
8.27 Successors and Assigns. (a) This Agreement shall be binding upon
and shall inure to the benefit of the Company, the Purchasers, all future
holders of Notes and their respective successors and assigns, provided that the
Company may not sell, assign or transfer this Agreement or the Other Agreements
or any portion thereof, including, without limitation, the Company's rights,
titles, interests, remedies, powers and/or duties hereunder or thereunder. The
Company hereby consents to a Purchaser's sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of this Agreement or
the Other Agreements, or of any portion thereof or participation therein,
including, without limitation, the Purchaser's rights, titles, interests,
remedies, powers and/or duties; provided that no such sale, assignment, transfer
or other disposition shall be made (at any time when no Event of Default exists)
to a financial institution (other than an Affiliate of IFA) that is a direct
competitor of the Company without the Company's prior written consent. Without
limitation of the foregoing, a Purchaser (and any successive assignee or
transferee) from time to time may assign or otherwise transfer all or any
portion of its rights or obligations under this Agreement and any Other
Agreement (including all or any portion of any commitment to extend credit), or
any Secured Obligations, to any other Person, and such Secured Obligations
(including any Secured Obligations resulting from extension of credit by such
other Person under or in connection with this Agreement and the Other
Agreements) shall be and remain Secured Obligations entitled to the benefit of
this Agreement and the Other Agreements, and to the extent of its interest in
such Secured Obligations such other Person shall be vested with all the benefits
in respect thereof granted to the Purchasers pursuant to this Agreement and the
Other Agreements or otherwise.
(b) References in this Agreement to "Purchasers" or to more
than one Purchaser shall be deemed to refer to the sole Purchaser whenever there
is only one.
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(c) If there at any time is more than one Purchaser party to
this Agreement or otherwise bound by the provisions of this Agreement, the
obligations of the Purchasers shall be several and not joint and each Purchaser
shall (except in decisions requiring the vote or consent of Majority
Noteholders) be deemed to be acting severally and not jointly and as to itself
only.
(d) The Company authorizes each Purchaser to disclose to any
Person to whom such Purchaser proposes to sell, assign, transfer or other
dispose of said Purchaser's rights (each such Person, a "transferee") under this
Agreement or its Note, in whole or in part, any and all financial and other
information in such Purchaser's possession concerning the Company and its
Affiliates which has been or may be delivered to such Purchaser by or on behalf
of the Company in connection with this Agreement or any other Loan Document or
such Purchaser's credit evaluation of the Company and its Affiliates. Prior to
disclosing such financial information and other information to transferees or
prospective transferees, as applicable, such Purchaser shall require that the
transferee or prospective transferee enter into a confidentiality agreement
pursuant to which such transferee or prospective transferee shall covenant to
keep confidential all such information.
8.28 Texas Language.
(A) THIS WRITTEN AGREEMENT (TOGETHER WITH THE OTHER LOAN
DOCUMENTS) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE MATTERS COVERED HEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES HERETO.
8.29 Waiver of Trial by Jury.
(a) TO THE EXTENT PERMITTED BY LAW, THE COMPANY AND THE
PURCHASERS EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER AGREEMENTS OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE COMPANY, ANY OTHER LOAN PARTY, ANY PURCHASER, ANY SUBSEQUENT
HOLDER OF A NOTE OR ANY LENDER IN CONNECTION HEREWITH OR IN CONNECTION WITH ANY
OTHER AGREEMENT. THE COMPANY HEREBY EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE PURCHASERS TO ACQUIRE THE NOTES.
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(b) The provisions of this Section 8.29 shall also apply with
respect to any disputes between or among any or all of the Purchasers, whether
the Company is a party to such dispute or not.
8.30 Waiver of Claims. The Company hereby acknowledges, agrees and
affirms that it possesses no claims, defenses, offsets, recoupments or
counterclaims of any kind or nature against or with respect to the enforcement
of this Agreement or any Other Agreement or any Modifications hereof or thereof
(collectively, the "Claims"), nor does the Company now have knowledge of any
facts that would or might give rise to any Claims. If facts now exist which
would or could give rise to any Claim against or with respect to the enforcement
of this Agreement or any Other Agreement, the Company hereby unconditionally,
irrevocably and unequivocally waives and fully releases any and all such Claims
as if such Claims were the subject of a lawsuit, adjudicated to final judgment
from which no appeal could be taken and therein dismissed with prejudice.
8.31 No Agency or Partnership.
(a) Each Purchaser hereby acknowledges that, notwithstanding
that certain provisions of this Agreement provide that certain actions may not
be taken without, or that certain actions may only be taken with, the consent of
the Majority Noteholders, none of the Majority Noteholders shall have any
obligation (fiduciary or otherwise) to any Purchaser in taking or not taking (or
as a result of taking or not taking) any such action or giving or not giving (or
as a result of giving or not giving) any such consent.
(b) Without limiting the generality of the foregoing, no
action taken by the Majority Noteholders or any of them shall constitute the
Majority Noteholders or any of them as an agent of any Purchaser, nor shall
anything contained herein be construed to create a partnership between or among
any of the Purchasers or otherwise constitute any Purchaser a partner of any
other Purchaser.
(c) Each Purchaser hereby acknowledges that Bank of Scotland,
an Affiliate of IFA, is a Lender and, as such (among other things), a holder of
Senior Debt.
8.32 Application of Payments. Monies received in payment of the Notes
(by application of collateral proceeds or otherwise) shall (after deducting all
fees, if any, payable to the Collateral Agent in respect thereof and all
unreimbursed expenses of the Collateral Agent if any) be applied to all Notes on
a pro rata basis based on the principal amount of each such Note then
outstanding.
8.33 Assignment of UCCs. If the Senior Debt is at any time paid in full
while any of the Secured Obligations are outstanding, the Company hereby
authorizes and directs (to the extent permitted by applicable law) the Lenders
to assign (to the extent permitted by applicable law) to the Collateral Agent
(or to such other Person designated by the Majority Noteholders) any and all
UCC- 1 and other financing statements that list any Loan Party as a debtor and
the Lenders or any of them
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as secured party, which financing statement(s) has been filed by such Lender or
Lenders in connection with the Loan Agreement or any document related thereto.
9. INDEMNIFICATION; SET OFF
9.1 Indemnification. THE COMPANY HEREBY AGREES TO REIMBURSE AND
INDEMNIFY EACH PURCHASER AND ITS RESPECTIVE AGENTS, EMPLOYEES AND ASSIGNS
(COLLECTIVELY, THE "INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, EXPENSES, OBLIGATIONS, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, THE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH
INDEMNIFIED PARTY IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR
JUDICIAL PROCEEDING COMMENCED OR THREATENED, WHETHER OR NOT SUCH INDEMNIFIED
PARTY SHALL BE DESIGNATED A PARTY THERETO) THAT MAY AT ANY TIME BE IMPOSED ON,
ASSERTED AGAINST OR INCURRED BY SUCH INDEMNIFIED PARTY AS A RESULT OF, OR
ARISING OUT OF, OR IN ANY WAY RELATED TO OR BY REASON OF, THIS AGREEMENT OR ANY
OTHER AGREEMENT, ANY TRANSACTION FROM TIME TO TIME CONTEMPLATED HEREBY OR
THEREBY, OR ANY TRANSACTION FINANCED IN WHOLE OR IN PART OR DIRECTLY OR
INDIRECTLY WITH THE PROCEEDS OF ANY NOTE (AND WITHOUT IN ANY WAY LIMITING THE
GENERALITY OF THE FOREGOING, INCLUDING ANY VIOLATION OR BREACH OF ANY
ENVIRONMENTAL LAW OR ANY OTHER LAW BY THE COMPANY OR ANY OTHER LOAN PARTY; ANY
ENVIRONMENTAL CLAIM ARISING OUT OF THE MANAGEMENT, USE, CONTROL, OWNERSHIP OR
OPERATION OF PROPERTY BY ANY OF SUCH PERSONS, INCLUDING ALL ON-SITE AND OFF-SITE
ACTIVITIES INVOLVING HAZARDOUS MATERIALS; ANY GRANT OF PLEDGED PROPERTY; OR ANY
EXERCISE BY A PURCHASER OF ANY OF ITS RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR
ANY OTHER AGREEMENT), BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES, EXPENSES, OBLIGATIONS, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS OR
DISBURSEMENTS RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SUCH INDEMNIFIED PARTY, AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING OBLIGATIONS OF THE COMPANY
UNDER THIS SECTION 9.1, OR ANY OTHER INDEMNIFICATION OBLIGATION OF THE COMPANY
HEREUNDER OR UNDER ANY OTHER AGREEMENT, ARE UNENFORCEABLE FOR ANY REASON, THE
COMPANY HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND
SATISFACTION OF SUCH OBLIGATIONS WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.
9.2 Set-Off. The Company hereby agrees that if any Secured Obligation
shall be due and payable (by acceleration or otherwise) after the occurrence of
an Event of Default and during the
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continuation thereof, a Purchaser shall have the right, without notice to the
Company, to set-off against and to appropriate and apply to such Secured
Obligation any obligation of any nature owing to the Company, including but not
limited to all deposits (whether time or demand, general or special,
provisionally credited or finally credited, whether or not evidenced by a
certificate of deposit) now or hereafter maintained by the Company with a
Purchaser. Such right shall be absolute and unconditional in all circumstances
and, without limitation, shall exist whether or not a Purchaser or any other
Person shall have given notice or made any demand to the Company or any other
Person, whether such obligation owed to the Company is contingent, absolute,
matured or unmatured (it being agreed that a Purchaser may deem such obligation
to be then due and payable at the time of such setoff), and regardless of the
existence or adequacy of any collateral, guaranty or any other security, right
or remedy available to a Purchaser or any other Person. The rights provided by
this Section 9.2 are in addition to any other rights of set-off and bankers'
lien and all other rights and remedies which a Purchaser may otherwise have
under this Agreement, any Other Agreement, at law or in equity or otherwise, and
nothing in this Agreement or any Other Agreement or any document, certificate or
agreement related hereto or thereto (the foregoing, including this Agreement and
the
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Other Agreements, the "Loan Documents") shall be deemed a waiver or prohibition
of or restriction on the rights of set-off or bankers' lien of any such Person.
10. AGENT
10.1 Appointment. The Purchasers hereby irrevocably appoint IFA to act
as their collateral agent (in such capacity, the "Collateral Agent") under the
Guaranties, the Security Agreements and the Pledge Agreement and under any other
Loan Document pursuant to which IFA is designated as acting as collateral agent
and in respect of which IFA has agreed to act in that capacity (each of the
foregoing agreements, a "Collateral Agent Document"). Each Purchaser hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Collateral Agent to take such
action on its behalf under the provisions of the Collateral Agent Documents and
any other instruments and agreements referred to therein and to exercise such
powers thereunder as are specifically delegated to or required of it by the
terms thereof and such other powers as are reasonably incidental thereto. The
Collateral Agent may perform any of its duties under any of the Loan Documents
by or through its agents or employees.
10.2 Nature of Duties. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in the Collateral Agent
Documents. Neither the Collateral Agent nor any of its officers, directors,
employees or agents shall be liable to any Bank for any action taken or omitted
by it under any of the Loan Documents, or in connection therewith unless caused
by its or their gross negligence or willful misconduct. Nothing in the Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of the Loan Documents except as
expressly set forth therein. The duties of the Collateral Agent under the
Collateral Agent Documents shall be mechanical and administrative in nature and
the Collateral Agent shall not have by reason of its duties under the Collateral
Agent Documents a fiduciary relationship in respect of any Purchaser.
10.3 Lack of Reliance. Independently and without reliance on the
Collateral Agent, each Purchaser to the extent it deems appropriate has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of the Loan Parties in connection with the purchase of its
Note and the continuance of the obligations of the Company thereunder and the
taking or not taking of any action in connection herewith or therewith, (ii) its
own appraisal of the credit worthiness of the Loan Parties and (iii) its own
independent investigation and appraisal of the Pledged Property; and the
Collateral Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Purchaser with any credit or other information
with respect thereto, whether coming into its possession before the date hereof
or at any time or times thereafter. The Collateral Agent shall not be
responsible to any Bank for any recitals, statements, representations or
warranties herein or in any certificate or other document delivered in
connection herewith or for the authorization, execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, or
sufficiency of any of the Loan Documents, the financial condition of the Loan
Parties or the condition of any of the Pledged Property, or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of any
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of the Loan Documents, the financial condition of the Loan Parties or the
existence or possible existence of any Event of Default or Unmatured Default.
10.4 Certain Rights. If the Collateral Agent requests instructions from
the Purchasers or Majority Noteholders with respect to any interpretation, act
or action (including failure to act in connection with any Loan Document) the
Collateral Agent shall be entitled to refrain from such act or taking such
actions unless and until it shall have received instructions from the Purchasers
or the Majority Noteholders, as the case may be; and the Collateral Agent shall
not incur liability to any Person by so refraining. Without limiting the
foregoing, no Purchaser shall have any right of action whatsoever against the
Collateral Agent as a result of the Collateral Agent acting or refraining from
acting under any of the Loan Documents in accordance with the instructions of
the Majority Noteholders or all Purchasers if the Collateral Agent determines in
its sole discretion to seek such instructions. The Collateral Agent shall be
fully justified in failing or refusing to take any action under any Loan
Document unless, if it requests, it shall first be indemnified to its
satisfaction by the Purchasers against any and all liability and expense which
may be incurred by it by reason of taking, continuing to take or not taking any
such action.
10.5 Reliance. The Collateral Agent shall be entitled to rely upon any
written notice or any telephone message believed by it to be genuine or correct
and to have been signed, sent or made by the proper Person, and, with respect to
all legal matters pertaining to the Loan Documents and its duties thereunder,
upon advice of counsel selected by it.
10.6 Indemnification. TO THE EXTENT THE COLLATERAL AGENT IS NOT
REIMBURSED OR INDEMNIFIED BY THE COMPANY, THE PURCHASERS WILL REIMBURSE AND/OR
INDEMNIFY THE COLLATERAL AGENT, IN PROPORTION TO THE OUTSTANDING PRINCIPAL
BALANCES OF THEIR NOTES, FOR AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
OR SUSTAINED BY OR ASSERTED AGAINST THE COLLATERAL AGENT, ACTING PURSUANT HERETO
OR ANY OF THE OTHER LOAN DOCUMENTS IN ITS CAPACITY PROVIDED FOR IN THIS SECTION
10, IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS,
PROVIDED, HOWEVER, THAT NO PURCHASER SHALL BE LIABLE FOR ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE COLLATERAL AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. The obligations of the Purchasers under this
Section 10 shall survive the termination of this Agreement and the payment in
full of the Notes.
10.7 Collateral Agent, Individually. With respect to any Note issued to
or held by it, the Collateral Agent shall have and may exercise the same rights
and powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Purchaser or holder of a Note.
The terms "Purchaser" or "holders of Notes" or any similar terms shall, unless
the
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context clearly otherwise indicates, not exclude the Collateral Agent in its
individual capacity as a Purchaser or holder of a Note. The Collateral Agent may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Loan Party or any of its Subsidiaries
as if it were not acting pursuant hereto, and may accept fees and other
consideration from any Loan Party or any of its Subsidiaries for services as
Collateral Agent in connection with the Loan Documents and for services
otherwise than as the Collateral Agent without having to account for the same to
the Purchasers.
10.8 Holders of Notes. The Collateral Agent may deem and treat the last
Person identified to it as a holder of Note as the owner thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof shall have been received by the Collateral Agent, and any request,
authority or consent of any such Person, who at the time of making such request
or of giving such authority or consent is so deemed by the Collateral Agent to
be the payee of any Note, shall be conclusive and binding on any subsequent
holder, transferee, assignee or payee of such Note or of any Note or Notes
issued in exchange therefor.
10.9 Resignation. The Collateral Agent may resign at any time from the
performance of all its functions and duties as Collateral Agent by giving 30
days prior written notice to the Company and each Purchaser. Such resignation
shall take effect upon the expiration of such 30 day period or upon the earlier
appointment of a successor. In case of the resignation of the Collateral Agent,
the Majority Noteholders may appoint a successor by a written instrument signed
by the Majority Noteholders. Any successor shall execute and deliver to the
Collateral Agent an instrument accepting such appointment, and thereupon such
successor, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trusts of the Collateral Agent hereunder
and with like effect as if originally named as "Collateral Agent" herein and
therein, and upon request (and at the expense of the Purchasers), the
predecessor Collateral Agent shall take all actions and execute all documents
necessary to give effect to the foregoing. In the event the Collateral Agent's
resignation becomes effective at a time when no successor has been named, all
powers specifically delegated to the Collateral Agent may be exercised by the
Majority Noteholders and the Majority Noteholders shall be entitled to all
rights of the Collateral Agent hereunder and under the other Loan Documents..
10.10 Reimbursement. Without limiting the provisions of Section 10, the
Purchasers and the Collateral Agent hereby agree that the Collateral Agent shall
not be obligated to make available to any Person any sum which the Collateral
Agent is expecting to receive for the account of that Person until the
Collateral Agent has determined that it has received that sum. The Collateral
Agent may, however, disburse funds prior to determining that the sums which the
Collateral Agent expects to receive have been finally and unconditionally paid
to the Collateral Agent, if the Collateral Agent wishes to do so. If and to the
extent that the Collateral Agent does disburse funds and it later becomes
apparent that the Collateral Agent did not then receive a payment in an amount
equal to the sum paid out, then any Person to whom the Collateral Agent made the
funds available shall, on demand from the Collateral Agent:
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(a) refund the Collateral Agent the sum paid to that Person;
and
(b) reimburse the Collateral Agent for the additional amount
certified by the Collateral Agent as being necessary to indemnify the
Collateral Agent against any funding or other cost, loss, expense or
liability sustained or incurred by the Collateral Agent as a result of
paying out the sums before receiving it.
11.1 Additional Item. Notwithstanding anything to the contrary herein,
Purchasers hereby consent to Company, as sponsor, entering into a Sale and
Servicing Agreement, Servicing Assumption Agreement, Insurance Agreement and
Indemnification Agreement relating to the FirstCity Auto Receivables Trust
1999-2 Asset Backed Notes and Asset Backed Certificates issued in connection
with the securitization described in the Summary of Terms attached as Schedule
9.31 to the Loan Agreement which sets forth the general terms of the
securitization.
As part of and in connection with that consent, Purchasers recognize
that pursuant to the Sale and Servicing Agreement, Servicing Assumption
Agreement, Insurance Agreement and Indemnification Agreement, Company, as
sponsor, will be responsible to purchase any nonconforming contract in the event
that the seller, the servicer, or the related originator fails to repurchase any
contract which is required to be repurchased under Article III of the Sale and
Servicing Agreement and the definitions section of the Sale and Servicing
Agreement and that the Company has additional responsibilities related to
transfer of servicing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
FIRSTCITY FINANCIAL CORPORATION
By:/s/ J. Bryan Baker
--------------------------------
J. Bryan Baker
Vice President and Treasurer
IFA INCORPORATED, in its individual
capacity as a Purchaser and as Collateral Agent
By: /s/ James Halley
--------------------------------
Name: James Halley
Title: President
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EXHIBIT A
Dollar Amount
Name and Address of Purchasers of Notes No. of Warrants
Initial Option
------- ------
IFA Incorporated $25,000,000 425,000 1,975,000
1901 North Roselle Rd (voting (non-
Schaumberg, IL 60195 shares) voting
Attn: President share)
FAX (847) 882-5003
<PAGE>
SCHEDULE OF EXHIBITS AND SCHEDULES**
Exhibit A Name and Address of the Purchasers
Exhibit B Form of Note
Exhibit C Form of Warrant
Exhibit D Form of Option
Schedule 1.1(cc) Specific Extraordinary Transactions
Schedule 1.1 (aaaa) Schedule of Secondary Obligors
Schedule 4.1 Schedule of Guarantees
Schedule 4.2(a) Schedule of Excluded Notes
Schedule 4.2(b) Schedule of Note Pledge Agreements and Pledged Notes
Schedule 4.3(a) Schedule of Excluded Entities
Schedule 4.3(b) Schedule of Stock Pledge Agreements
Schedule 4.4 Schedule of Security Agreements
Schedule 5.1(a)(i) Schedule of Jurisdictions in which the Company Has
Qualified to do Business
Schedule 5.1(a)(ii) Schedule of Jurisdictions in which
each Affiliated Entity has qualified to do
business.
Schedule 5.1(e) Schedule of Shareholders, Stock and Options
Schedule 5.1(f) Schedule of Fictitious Names
Schedule 5.1(g) Schedule of Certain Permitted Liens
Schedule 5.1(j) Schedule of Government Contracts
Schedule 5.1(l) Required Consents
Schedule 5.1(o) Defaults
Schedule 5.1(s) Schedule of Other Indebtedness
Schedule 5.1(t) Schedule of Affiliate Indebtedness
Schedule 5.1(u) Affiliate Notes
- --------
** Unless otherwise indicated (and as more fully provided in Section 8.26 of
this Agreement), the schedules attached to the Loan Agreement on the
Closing Date which have the same or substantially the same information as
those set forth above shall be deemed to have been attached to this
Agreement on the Closing as the above schedules.
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Schedule 5.1(u)(iii) Schedule of Future Affiliate Notes (to be delivered
post-closing as they arise)
Schedule 5.1(w) Schedule of Affiliates
Schedule 6.3(j) Fee Agreements
Schedule 6.3(l) Guaranty Equivalents
Schedule 7.1(f) Cross Default Agreements
Schedule 9.1 ERISA Matters
