<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF G
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-08916
GREEN TREE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-1807858
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1100 Landmark Towers
345 St. Peter Street, Saint Paul, Minnesota 55102-1639
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 293-3400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(TITLE OF EACH CLASS) (NAME OF EACH EXCHANGE ON WHICH REGISTERED)
--------------------- -------------------------------------------
Common Stock, $.01 par value New York Stock Exchange,
10 1/4% Senior Subordinated Pacific Stock Exchange
Notes due June 1, 2002 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by a check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
As of February 28, 1998, the aggregate market value of voting stock held by
nonaffiliates of registrant was approximately $2,954,737,000.
As of February 28, 1998, the shares outstanding of the issuer's class of
Common Stock were as follows:
Common Stock 133,988,860
DOCUMENTS INCORPORATED BY REFERENCE:
PART OF 10-K
DOCUMENT WHERE INCORPORATED
-------- ------------------
Proxy Statement for the 1998
Annual Meeting of Stockholders III
<PAGE>
PART I
------
ITEM 1. BUSINESS.
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General
- -------
Green Tree Financial Corporation ("Green Tree" or the "Company") is a
diversified financial services company with operations serving customers in the
consumer finance, commercial finance and insurance markets. Through its
principal offices in Saint Paul, Minnesota and service centers throughout the
United States, Green Tree serves all 50 states.
The Company originates a variety of fixed term financing transactions on either
a "direct" or "indirect" basis. Under an "indirect" financing transaction, a
dealer sells a product to a customer and enters into a sales contract with the
customer evidencing a monetary obligation and providing security for that
obligation. The Company purchases such sales contracts from dealers and
contractors in the ordinary course of its business. Under a "direct"
origination, the Company and borrower are direct parties to the loan
documentation which evidences the borrower's obligation to the Company.
References herein to the terms "contracts," "sales contracts" or "loans" may be
used to refer to either "direct" or "indirect" financing transactions as the
context requires. Reference herein to the term "finance volume" refers to the
dollar amount of loans originated by the Company in a given period. All direct
or indirect originations are written on forms provided or approved by the
Company and are originated or purchased on an individually approved basis in
accordance with Company underwriting guidelines.
The Company provides commercial revolving credit to dealers, manufacturers and
distributors of various consumer and commercial products and provides consumer
revolving credit through selected merchants and dealers. Pursuant to the terms
of such revolving credit agreements, the Company funds product inventory or
customer purchases. Typically inventory products secure the commercial
revolving credit transactions. Reference herein to the term "revolving credit"
may be used in reference to commercial finance, floorplan receivables, asset-
based receivables or retail credit.
Green Tree pools and securitizes substantially all of the contracts it
originates, retaining the servicing on the contracts. Such pools are structured
into asset-backed securities which are primarily sold in the public securities
markets. In the servicing contracts, the Company collects payments from the
borrower and remits principal and interest payments to the holder of the
contract or investor certificate backed by the contracts. References herein to
the term "managed finance receivables" refers to the total dollar amount of
loans serviced as of a certain point in time without regard to whether or not
the loans have been securitized.
The Company was originally incorporated under the laws of the State of Minnesota
in 1975. In 1995, the Company reincorporated under the laws of the State of
Delaware. Green Tree Financial Corporation's principal executive offices are
located at 1100 Landmark Towers, 345 Saint Peter Street, Saint Paul, Minnesota
55102-1639, and its telephone number is (612) 293-3400. Unless the context
otherwise requires, "Green Tree" or the "Company" means Green Tree Financial
Corporation and its subsidiaries.
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Consumer Financing Activities
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Manufactured Housing
"Manufactured housing" (MH) or a "manufactured home" is a structure,
transportable in one or more sections, which is designed to be a dwelling with
or without a permanent foundation. Since most manufactured homes are never
moved once the home has reached the homesite, the wheels and axles are removable
and have not been designed for continuous use. Manufactured housing does not
include either modular housing (which typically involves more sections, greater
assembly and a separate means of transporting the sections) or recreational
vehicles ("RV's") (which are either self-propelled vehicles or units towed by
passenger vehicles).
The majority of the Company's sales contracts for manufactured home purchases
are financed on a conventional basis, with a small number of units insured by
the FHA or partially guaranteed by the VA. With respect to manufactured
housing, the relative volume of conventional, FHA or VA contracts originated by
the Company depends on customer and dealer preferences as well as prevailing
market conditions. The Company has developed more cost effective conventional
manufactured housing lending programs and as a result, FHA and VA contracts
represented less than 1% of the Company's manufactured housing originations
during 1997. FHA and VA contracts constituted 5% of the Company's servicing
portfolio at December 31, 1997. Manufactured housing contracts are generally
subject to minimum down payments of at least 5% of the amount financed. The
Company offers manufactured housing contract terms of up to 30 years.
Through its regional service centers, the Company arranges to purchase MH
contracts from MH dealers located throughout the United States. The Company's
regional service center personnel contact dealers located in their region and
explain the Company's available financing plans, terms, prevailing rates, and
credit and financing policies. If the dealer wishes to utilize the Company's
available customer financing, the dealer must make an application for dealer
approval. Upon satisfactory results of the Company's investigation of the
dealer's creditworthiness and general business reputation, the Company and the
dealer execute a dealer agreement. The Company also originates manufactured
housing installment loan agreements directly with customers. For the year ended
December 31, 1997, the Company's manufactured housing contract originations
consisted of 79% purchased from dealers, and 21% directly originated by the
Company.
The dealer or the customer submits the customer's credit application and, with
respect to new manufactured homes, the purchase order to a central or regional
service center where Company personnel make an analysis of the creditworthiness
of such customer. If the application meets the Company's guidelines and credit
is approved, the Company generally purchases the contract after the manufactured
home is delivered and set up and the customer has moved in.
For manufactured housing contracts, the Company uses a proprietary automated
credit scoring system. The scoring system is statistically based, quantifying
information using variables obtained from customer credit applications and
credit reports. As of December 31, 1997, this credit scoring system has been
used in making credit determinations on over three million applications.
2
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Home Equity
The Company originates home equity loans through a system of retail satellite
offices and regional centers, and through a network of correspondent lenders.
As of December 31, 1997, the Company marketed home equity loan products directly
to consumers from 75 retail satellite offices and six regional centers located
throughout the United States. The satellite offices are responsible for
originating, processing, underwriting and funding the loan transaction.
Subsequently, loans are re-underwritten in the regional service center and on a
test basis by a third party to ensure compliance with policy. Upon completion
of the loan closing, the loan package is forwarded to the Company's loan
servicing center located in Tempe, Arizona. The servicing center is responsible
for handling customer service and loan functions, as well as performing document
handling, custodial and quality control functions.
During 1997, approximately 50% of the Company's home equity finance volume
resulted from the Company's marketing personnel working directly with consumers.
The remaining finance volume was the result of transactions between the Company
and correspondents, with a much smaller percentage of transactions occurring
between the Company and brokers. (The purchases from correspondents typically
occur on a monthly basis either on a flow or bulk basis from a network of
approximately 75 correspondents.) The Company re-underwrites each of the loan
documents forwarded from correspondents to ensure compliance with the Company's
underwriting, grading and pricing policies.
Typically, home equity loans are secured by first or second liens on site-built
homes. Homes used for collateral in securing home equity loans may be either
residential or investor owned one-to-four-family properties having a minimum
appraised value of $25,000. During 1997 and 1996, approximately 75% of the
loans originated were secured by first liens. The average loan to value for the
same period for the loans originated was approximately 85%. The majority of the
Company's home equity loans are fixed rate closed end loans. The Company
periodically purchases adjustable rate loans from its correspondent network.
Adjustable rate loans accounted for 15% of the Company's home equity finance
volume during 1997.
Home Improvement
The Company originates the majority of its home improvement loan contracts
indirectly through a network of home improvement contractors located throughout
the United States. The Company has a contractor approval process pursuant to
which the financial condition, business experience and qualifications of the
contractor are reviewed prior to his or her approval to sell contracts to the
Company.
The Company finances both conventional home improvement (HI) contracts and HI
contracts insured through the FHA Title I program. Such contracts are generally
secured by first, second or, to a lesser extent, third liens on the improved
real estate. The Company has also implemented an unsecured conventional HI
lending program for certain customers which generally allows for loan amounts
ranging from $2,500 to $15,000. Unsecured loans account for less than 10% of
the home improvement servicing portfolio.
Typically, the approved contractor submits the customer's credit application and
construction contract to the Company's centralized service center, where an
analysis of the creditworthiness of the customer is made using a proprietary
credit scoring system that was implemented by the
3
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Company in 1993. If it is determined that the application meets the Company's
underwriting guidelines and applicable FHA regulations (for FHA-insured
contracts) and the credit is approved, the Company purchases the contract from
the contractor generally when the customer verifies satisfactory completion of
the work.
During 1997, the Company launched a direct-to-consumer origination channel for
home improvement loans. Through a direct mail solicitation campaign, the
customer calls the Company's telemarketing center and the Company's sales
representative explains to the customer the available financing plans, terms and
rates depending on the customers needs. The majority of the loans are secured
by a second or third lien on the real estate of the customer. This direct
channel resulted in approximately 5% of the home improvement finance volume
during 1997.
The types of home improvements financed by the Company include exterior
renovations, such as windows, siding and roofing; pools and spas; kitchen and
bath remodeling; and room additions and garages. The Company may also, under
certain limited conditions, extend additional credit beyond the purchase price
of the home improvement for the purpose of debt consolidation.
Consumer Products
Green Tree provides consumer financing for the purchase of marine products
(including boats, boat trailers and outboard motors); motorcycles; recreational
vehicles; sport vehicles (including snowmobiles, personal watercraft and all-
terrain vehicles); pianos and organs; and horse and utility trailers.
The Company arranges to purchase certain contracts originated by dealers
throughout the United States. The Company's personnel contact dealers and
explain Green Tree's available financing plans, terms, prevailing rates and
credit and financing policies. If the dealer wishes to utilize the Company's
available customer financing, the dealer must complete an application for
approval.
The approved dealer submits the customer's credit application and purchase order
to the Company's central service center where an analysis of the
creditworthiness of the proposed buyer is made. If the application meets the
Company's guidelines and credit is approved, the Company purchases the contract
when the customer completes the purchase transaction with the dealer.
Revolving Credit Card
The Company began offering a private label retail credit program in 1996 and has
entered into program agreements with selected retailers to provide competitive
credit card services to the customers of such retailers. Green Tree chartered a
limited purpose credit card bank to conduct its credit card business. The bank,
Green Tree Retail Services Bank, is a state chartered bank located in Rapid
City, South Dakota. The Company has a retailer approval process pursuant to
which the financial condition, business experience and customer service
reputation are reviewed. The Company also underwrites the credit of individual
customers for approval utilizing a credit scoring system.
4
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On November 2, 1997, the Company chartered a Utah industrial loan company, Green
Tree Capital Bank, Inc. ("Capital Bank"). This entity has the authority to
engage generally in the banking business, including the acceptance of all types
of deposits, other than demand deposits. Consumer retail credit card business
was first conducted in the Capital Bank in January 1998.
Commercial Financing Activities
- -------------------------------
Commercial
Through its three regional lending centers, the Company extends credit generally
under revolving credit agreements with dealers, manufacturers and distributors
("Dealer") of various consumer and commercial products. "Floorplan Receivables"
represent the financing of product inventory for retail dealers of a variety of
consumer products. The products securing the Floorplan Receivables currently
include manufactured housing, recreational vehicles and marine products.
"Asset-Based Receivables" generally represent the financing of production and
inventory by manufacturers, such revolving credit arrangements being secured by
finished goods inventory, accounts receivable rising from the sale of such
inventory, certain work-in-process, raw materials and component parts, as well
as other assets of the borrower, and may include real estate.
The Company will provide floorplan financing for products for a particular
dealer or distributor, in most instances, only if the Company has also entered
into a floorplanning agreement with the manufacturer, distributor or other
vendor of such product. A Dealer requesting the establishment of a credit line
with Green Tree is required to submit an application and financial information.
Advances made for the purchase of inventory are most commonly arranged in the
following manner: the Dealer will contact the manufacturer and place a purchase
order for a shipment of inventory. If the manufacturer has been advised that
Green Tree is the Dealer's inventory financing source, the manufacturer will
contact Green Tree to obtain an approval number with respect to such purchase
order. Upon such request, the Company will determine whether (i) the
manufacturer is in compliance with its floorplan agreement, (ii) the Dealer is
in compliance with its program with Green Tree and (iii) such purchase order is
within the Dealer's credit limit. If all of such requirements are met, the
Company will issue an approval number to the manufacturer. The manufacturer
will then ship the inventory and directly submit its invoice for such purchase
order to Green Tree for payment. Interest or finance charges normally begin to
accrue on the Dealer's accounts as of the invoice date. The proceeds of the
loan being made by the Company to the Dealer are paid directly to the
manufacturer in satisfaction of the invoice price and are often funded a number
of days subsequent to the invoice date depending upon the Company's arrangements
with the manufacturer. Inventory inspections are frequently performed to
physically verify the collateral used to secure a Dealer's loan, check the
condition of the inventory, account for any missing inventory and collect any
funds due. Approximately two-thirds of Green Tree's MH dealers are participants
in this program.
5
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Asset-Based Receivables are credit facilities provided to certain manufacturers
and distributors which typically involve a revolving line of credit, for a
contractually committed period of time, pursuant to which the borrower may draw
the lesser of the maximum amount of such line of credit or a specifically
negotiated loan availability amount, subject to the availability of adequate
collateral. The loan availability amount is determined by multiplying an agreed
upon advance rate against the value of certain types of assets. In these
facilities, Green Tree will most typically lend against finished inventory and
eligible accounts receivable arising from the sale of such inventory which are
free and clear of other liens and otherwise in compliance with specified
standards. Certain Asset-Based Receivables may also be secured by real estate.
Equipment
The Company's equipment finance operations provide financing programs for
commercial borrowers, including truck and trailer financing for over the road
new and used class eight trucks/tractors and new and used trailers. In
addition, financing is provided on various types of new and used aircraft, from
small single engine pistons to multi-jet engine aircraft. Financing or lease
agreements for office automation equipment (e.g., telecommunication systems,
facsimile machines, copiers) and other equipment types, and fixed rate financing
for the land, building or equipment of franchise operations are also available.
Company sales personnel contact equipment dealers or vendors and provide an
explanation of the available financing plans offered, including terms,
prevailing interest rates, credit guidelines, residual purchase options, and
financing policies. The dealer or vendor submits an application for approval if
the dealer or vendor wishes to utilize Green Tree available financing for their
commercial customer.
Upon receipt of a customer's credit application and purchase order from the
dealer or vendor, the Company analyzes the creditworthiness of the applicant.
If the application meets the Company's guidelines and credit is approved, the
Company purchases the sales contract or lease equipment at the time the customer
accepts delivery of the product. Customer service, collection and other
administrative and support functions for the Company's equipment operations are
handled from the Company's offices in Saint Paul and Bloomington, Minnesota and
in Paramus, New Jersey.
Other Activities
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Insurance
Through certain subsidiaries, the Company markets physical damage insurance on
manufactured homes, certain consumer and equipment products and dealer inventory
which collateralize contracts and receivables serviced by the Company. The
Company also markets term mortgage and credit life insurance to its manufactured
housing, home improvement, home equity and equipment finance customers and
provides retail credit insurance to consumer cardholders. In addition, the
Company owns a reinsurance subsidiary which functions as a reinsurer for
policies written by selected other insurers covering individuals whose contracts
are serviced by the Company.
6
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The following table provides certain information with respect to new written
premiums (gross premiums on new or renewal policies issued less cancellations of
previous policies) on policies written by the Company. The Company acts as an
agent with respect to the sale of such policies and, in some cases, the Company
also acts as reinsurer of such policies.
<TABLE>
<CAPTION>
Year ended December 31
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1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Net written premiums:
Physical damage $109,623 $ 91,883 $82,438 $63,979 $48,172
Credit/Mortgage Insurance 13,534 12,125 10,154 7,240 5,683
-------------- -------------- -------------- -------------- --------------
Total $123,157 $104,008 $92,592 $71,219 $53,855
============== ============== ============== ============== ==============
</TABLE>
Managed Finance Receivables
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The Company services all of the fixed term and revolving credit receivables that
it originates or purchases from other originators, collecting loan payments,
taxes and insurance payments, where applicable, and other payments from
borrowers and remitting principal and interest payments to the holders of its
asset-backed securities.
The following table reflects the composition of the Company's managed finance
receivables at December 31, for the years indicated.
<TABLE>
<CAPTION>
December 31
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1997 1996 1995 1994 1993
---------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
(dollars in millions)
Fixed term $ 26,036 $ 18,965 $ 13,314 $ 9,653 $ 7,194
Revolving credit 1,921 1,108 574 168 --
---------------- -------------- -------------- -------------- --------------
Total $ 27,957 $ 20,073 $ 13,888 $ 9,821 $ 7,194
================ ============== ============== ============== ==============
Number of fixed term
contracts serviced 1,076,000 827,000 657,000 512,000 406,000
Number of revolving credit
accounts serviced 700,000 180,000 23,000 8,000 --
</TABLE>
Credit Quality
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The Company considers revolving credit receivables with any due and unpaid
balance and fixed term receivables with any due and unpaid balance of $25 or
more to be delinquent. Beginning in 1996, certain receivables for which the
obligor was in bankruptcy but was current under their court-approved bankruptcy
payment plan were generally not considered delinquent. Delinquent receivables
are subject to acceleration and repossession or foreclosure of the underlying
collateral.
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The following table provides certain information with respect to the 60-days-
and-over contractual dollar delinquency, loss experience and repossessed
collateral for the Company's managed finance receivables as of December 31, for
the years indicated.
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Delinquency (a)
Manufactured Housing 1.22% 1.19% .96%
Home Equity/Improvement .88% .85% .56%
Other Consumer 1.24% .94% .84%
------------- ------------- -------------
Total Consumer Lending 1.15% 1.13% .92%
Commercial Lending .55% .61% 1.81%
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Total 1.08% 1.08% .93%
============= ============= =============
Net Credit Losses (b)
Manufactured Housing 1.15% .76% .56%
Home Equity/Improvement .69% 1.12% .59%
Other Consumer 1.20% .52% .46%
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Total Consumer Lending 1.07% .77% .56%
Commercial Lending .75% .44% .04%
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Total 1.04% .74% .56%
============= ============= =============
Repossessed Collateral (c)
Manufactured Housing 1.04% .93% .65%
Home Equity/Improvement .71% .23% .09%
Other Consumer .69% .51% .35%
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Total Consumer Lending .95% .84% .60%
Commercial Lending 1.00% 1.26% .27%
------------- ------------- -------------
Total .95% .85% .58%
============= ============= =============
</TABLE>
(a) As a percentage of managed finance receivables at period end, excluding
receivables already in repossession or foreclosure.
(b) As a percentage of average managed finance receivables during the period,
net of recoveries.
(c) Includes receivables in the process of foreclosure and repossessed
collateral in process of liquidation as a percentage of managed receivables
at period end.
Prior to 1997, the Company reported delinquency information separately for fixed
term contracts and commercial and consumer revolving credit. Fixed term
contracts were based on the number of contracts delinquent and commercial and
consumer revolving credit was based on the dollar amount delinquent. In 1997,
the Company began reporting delinquencies based on dollars by product line. The
1996 and 1995 delinquency information has been restated for comparative
purposes. As of December 31, 1994 and 1993, the number of fixed term contracts
delinquent as a percentage of average fixed term contracts outstanding was .70%
and .77%, respectively. The commercial and consumer revolving credit
receivables were not significant in 1994 and 1993.
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Prior to 1997, the Company reported loss experience and repossessed collateral
information for its fixed term contracts. In 1997, the Company began reporting
this information on the basis of product line. Information for 1996 and 1995
has been restated for comparative purposes. Credit losses for fixed term
contracts in 1994 and 1993 were .63% and .85%, respectively. Losses related to
revolving credit during 1994 and 1993 were not significant. The number of
repossessed collateral units as a percentage of the total number of fixed term
contracts serviced as of December 31, 1994 and 1993 was .43% and .51%,
respectively. Repossessed collateral relating to revolving credit assets as of
these dates were not significant.
Finance Volume
- --------------
Consumer and commercial finance volume originated by the Company during each of
the past five years is indicated below:
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------------- ----------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Manufactured
Housing $ 5,479,290 $ 4,882,018 $4,159,836 $3,201,491 $2,449,121
Home Equity/Home
Improvement 3,476,229 1,493,720 626,986 465,523 169,443
Consumer/
Retail Credit 1,510,918 835,578 361,449 96,131 47,306
----------------- ----------------- --------------- ---------------- ----------------
Total Consumer $10,466,437 $ 7,211,316 $5,148,271 $3,763,145 $2,665,870
Commercial/
Equipment 5,181,362 3,343,000 1,742,704 302,419 136
----------------- ----------------- --------------- ---------------- ----------------
Total $15,647,799 $10,554,316 $6,890,975 $4,065,564 $2,666,006
================= ================= =============== ================ ================
</TABLE>
The Company believes that, in addition to an individual analysis of each
contract, it is important to achieve a geographic dispersion of contracts in
order to reduce the impact of regional economic conditions on the overall
performance of the Company's portfolio. Accordingly, the Company seeks to
maintain a portfolio of contracts dispersed throughout the United States. At
December 31, 1997, no state accounted for more than 10% of all contracts
serviced by the Company. In addition, no single contractor, dealer, or vendor
accounted for more than 5% of the total dollar volume of contracts originated by
the Company.
Securitized Asset Sales
- -----------------------
The Company regularly pools contracts for sale to investors. It is the
Company's policy to sell substantially all of the contracts it originates or
purchases through asset-backed securities.
Manufactured housing, home equity, home improvement, consumer and equipment
finance contracts and leases are pooled and sold by the Company through
securitized asset sales which have been either single class or
senior/subordinate pass-through structures. Under its securitized sale
structures, the Company has provided a variety of forms of credit enhancements.
While such credit enhancements generally take the form of corporate guarantees,
they have also
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included bank letters of credit, surety bonds, cash deposits or other equivalent
collateral. The Company analyzes the cash flows unique to each transaction, as
well as the marketability, earnings potential and risk transference of such
transactions when choosing the appropriate structure for each securitized loan
sale. The structure of each securitized sale depends, to a great extent, on
conditions of the fixed income markets at the time of sale as well as cost
considerations and availability and effectiveness of the various enhancement
methods. Customer principal and interest payments are deposited in separate bank
accounts as received by the Company and are held for monthly distribution to the
certificateholders.
In previous years Green Tree sold a substantial portion of its interest only
securities, representing net cash flows retained from the securitization of its
manufactured housing contracts, in the form of securitized Net Interest Margin
Certificates ("NIM Certificates") through public offerings. A subordinated
interest in those certificates was retained by the Company. As a result of
these transactions, certain net cash flows that formerly were retained by Green
Tree are now passed through to investors. Payments on the subordinated interests
retained do not commence until the senior certificateholders have been paid all
principal and interest due them under the terms of the transaction.
The Company securitizes a majority of its commercial finance and credit card
receivables through revolving trust structures which generally include the
issuance of senior/subordinate bonds with contractual terms to maturity. As
such, the principal balance of the bonds does not receive any paydowns until
such time as either the contractual revolving period has ended and the bonds
have entered an amortization period or an early amortization event has occurred.
Early amortization events as detailed in the various trusts include, among
others, asset quality tests, asset turn rate tests, requirements as to the
minimum required amount of receivables and/or cash maintained within the trust,
and the occurrence of an event of default with respect to the Company.
Information on the Company's securitized asset sales is as follows:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
(dollars in millions)
Contracts sold:
Manufactured Housing $ 5,370 $5,033 $4,020 $3,226 $2,303
Home Equity/Home
Improvement 3,020 1,324 579 544 43
Consumer/Equipment 1,627 1,556 -- -- --
------------- ------------ ------------ ------------ ------------
10,017 7,913 4,599 3,770 2,346
NIM Certificates -- -- 308 600 --
Floorplan/Asset-Based 74 500 428 -- --
Lease 508 -- -- -- --
Revolving Credit Card 150 -- -- -- --
------------- ------------ ------------ ------------ ------------
Total $10,749 $8,413 $5,335 $4,370 $2,346
============= ============ ============ ============ ============
</TABLE>
10
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Regulation
- ----------
The Company's operations are subject to supervision by various state authorities
(typically state mortgage lending, financial institutions, consumer credit and
insurance authorities) that generally require that the Company be licensed to
conduct its business. In many states, issuance of licenses is dependent upon a
finding of public convenience, and of financial responsibility, character and
fitness of the applicant. The Company is generally subject to state
regulations, examinations and reporting requirements, and licenses are revocable
for cause.
Contracts insured under the FHA Title I manufactured home and home improvement
lending programs are subject to compliance with detailed federal regulations
governing originations, servicing, and loss claim payments by the FHA to cover a
portion of losses due to default and repossessions or foreclosures. Other
governmental programs such as VA also contain similar detailed regulations
governing loan origination and servicing responsibilities.
The Federal Consumer Credit Protection Act ("FCCPA") requires, among other
things, a written disclosure showing the cost of credit to debtors when consumer
credit contracts are executed. The Federal Equal Credit Opportunity Act
requires certain disclosures to applicants for credit concerning information
that is used as a basis for denial of credit and prohibits discrimination
against applicants with respect to any aspect of a credit transaction on the
basis of sex, race, color, religion, national origin, age, marital status,
derivation of income from a public assistance program, or the good faith
exercise of a right under the FCCPA, of which it is a part. By virtue of a
Federal Trade Commission rule, consumer credit contracts must contain a
provision that the holder of the contract is subject to all claims and defenses
which the debtor could assert against the seller, but the debtor's recovery
under such provisions cannot exceed the amount paid under the contract.
The Company is also required to comply with other federal disclosure laws for
certain of its lending programs. The home equity lending program, the
combination land-and-home program, the land-in-lieu program and the home
improvement lending program are subject to the Federal Real Estate Settlement
and Procedures Act. In addition, the Company is subject to the reporting
requirements of the Home Mortgage Disclosure Act for its manufactured home,
purchase money mortgage and home improvement lending products.
The construction of manufactured housing is subject to compliance with
governmental regulation. Changes in such regulations may occur from time to
time and such changes may affect the cost of manufactured housing. The Company
cannot predict whether any regulatory changes will occur or what impact such
future changes would have on the manufactured housing industry.
The Company is subject to state usury laws. Generally, state law has been
preempted by federal law with respect to certain manufactured home, mortgage
lending and home improvement products, although certain states have enacted
legislation superseding federal law. To be eligible for the federal preemption,
the Company's contract form must comply with certain consumer protection
provisions. The Company offers its products within the limitations set by the
state usury laws and federal preemption of these laws.
11
<PAGE>
The Company has chartered both a limited purpose credit card bank, Green Tree
Retail Services Bank ("Retail Bank"), and a Utah industrial loan company, Green
Tree Capital Bank, Inc. ("Capital Bank"). Both Retail Bank and Capital Bank are
regulated by the Federal Deposit Insurance Corporation. Retail Bank is regulated
by the South Dakota Department of Banking and Capital Bank is regulated by the
Utah Department of Financial Institutions. The ownership of these entities does
not subject the Company to regulation by the Federal Reserve Board as a bank
holding company. Retail Bank is authorized only to engage in the credit card
business and may issue certificates of deposit in denominations of $100,000 or
greater. Capital Bank has the authority to engage generally in the banking
business and may accept all types of deposits, other than demand deposits if the
assets of the industrial loan company exceed $100 million. Generally state laws
relating to permissible interest rates and fees have been preempted by federal
law applicable to both Retail Bank and Capital Bank, although certain states
have enacted or may in the future enact legislation superseding federal law.
The regulatory procedures discussed above are subject to changes by the
regulatory authorities. There are no assurances that future regulatory changes
will not occur. These regulatory changes could place additional burdens on the
Company's programs.
Competition and Other Factors
- -----------------------------
The Company is affected by consumer demand for manufactured housing, home equity
financing, home improvements, consumer and equipment products, and consumer and
commercial revolving credit as well as its insurance products. Consumer and
commercial demand, in turn, are partially influenced by regional trends,
economic conditions and personal preferences. The Company competes primarily
with banks, finance companies, savings and loan associations, and credit unions.
The Company competes by offering superior service, prompt credit review and
integrated financing programs.
Prevailing interest rates are typically affected by economic conditions.
Changes in rates, however, generally do not inhibit the Company's ability to
compete for loan originations, although from time to time in particular
geographic areas, local competition may choose to offer more favorable rates.
In addition, in a falling interest rate environment the Company's servicing
portfolio is more susceptible to the refinancing initiatives of competitors,
although the Company has initiated programs to mitigate such activity.
The Company's business is generally subject to seasonal trends, reflecting the
general pattern of sales of manufactured housing and site-built homes. Sales
typically peak during the spring and summer seasons and decline to lower levels
from mid-November through January.
Employees
- ---------
As of December 31, 1997, the Company had 5,499 full-time and 322 part-time
employees and considers its employee relations to be satisfactory. None of its
employees are represented by a union.
12
<PAGE>
Executive Officers
- ------------------
Lawrence M. Coss, 59, Chairman and Chief Executive Officer of the Company since
April 1994; Chairman, President and Chief Executive Officer of the Company
(1987-1994); President and Chief Executive Officer of the Company 1975-1987);
Company founder; Director of the Company since 1975 (term expires in 1999).
Gregory D. Aplin, 50, Executive Vice President of the Company since November
1997; Senior Vice President of the Company (November 1993 to November 1997);
Vice President of the Company (May 1992-November 1993); President, Manufactured
Housing Division of the Company since March 1997.
Jerry W. Britton, 47, Executive Vice President of the Company since May 1995;
President, Commercial Lending Division of the Company since March 1997;
President-Eastern Division of ITT Commercial Finance Corp., Atlanta, Georgia
(1988-1995); Senior Vice President and Director of Marketing of ITT Commercial
Finance Corp. (1987-1988); Vice President of ITT Commercial Finance Corp. (1979-
1986).
Bruce A. Crittenden, 46, Executive Vice President of the Company since December
1996; Senior Vice President of the Company (August 1995-December 1996);
President, Retail/Mortgage Services and Home Improvement Divisions of the
Company since July 1997; President, Retail/Mortgage Services Division since
(March 1997-July 1997); Household International since November 1972--Managing
Director of HFC (1993-1995); Senior Vice President of HFC (1991 to 1993); Chief
Operating Officer of HRSI (1988-1991).
Edward L. Finn, 53, Executive Vice President and Chief Financial Officer of the
Company since July 1996; Ernst & Young (1970-June 1996)--Managing Partner of the
Minneapolis, Minnesota and Providence, Rhode Island offices (1985-1996).
Richard G. Evans, 49, Executive Vice President of the Company since 1996;
Executive Vice President and Secretary of the Company (December 1993 to May
1996); Senior Vice President, General Counsel and Secretary of the Company
(1988-1993); Vice President, General Counsel and Secretary of the Company (1985-
1988); Director of the Company since 1991 (nominee for term expiring in 2001).
Smith ("Jack") F. Brandom, III, 35, Senior Vice President of the Company since
November 1997; Vice President of the Company (March 1993-November 1997);
Executive Vice President, Manufactured Housing Division of the Company since May
1997; Vice President, Manufactured Housing Division (December 1993-May 1997);
National Performance Manager, Manufactured Housing Division (March 1993-December
1993); Security Pacific Corporation/Bank of America from February 1987 to
February 1993 --Regional Manager and Vice President, Manufacturer Relations and
Marketing.
James R. Breakey, 38, Senior Vice President and Chief Information Officer of the
Company since November 1997; Assistant Vice President of the Company (June 1997-
November 1997); CSC Consulting from September 1992 to June 1997.
13
<PAGE>
Barbara J. Didrikson, 43, Senior Vice President of the Company since November
1997; Vice President of the Company (December 1990-November 1997); Director of
Human Resources (June 1990-December 1990).
Joel H. Gottesman, 49, Senior Vice President, General Counsel and Secretary of
the Company since May 1996; Senior Vice President and General Counsel of the
Company (September 1995-May 1996); Briggs and Morgan Law Firm from 1983 to
September 1995--Shareholder, Board Member and Treasurer; Levitt, Palmer, Bowen,
Rotman & Share (merged with Briggs and Morgan) from 1974-1983--Partner.
Joseph E. Huguelet, III, 41, Senior Vice President with the Company since August
1997; President, Insurance Agency Division of the Company since August 1997;
Managing Director of PACCAR Financial Insurance Division (1992-1997). General
Manager of Mountain Commercial Division of Progressive Insurance Company (1987-
1992).
Phyllis A. Knight, 35, Senior Vice President and Treasurer of the Company since
November 1997; Vice President and Treasurer of the Company (December 1995 to
November 1997); Assistant Vice President and Assistant Controller of the Company
(September 1994-December 1995); KPMG Peat Marwick (1985-September 1994)--Senior
Manager (October 1988-September 1994).
Michael L. Newell, 46, Senior Vice President of the Company since December 1996;
Vice President of the Company (August 1995-December 1996); President, Consumer
Finance Division since March 1997; Vice President and National Operations
Manager of Access Financial Corp., Atlanta, Georgia (March 1994-August 1995);
Senior Vice President and Division Director of Bank of America Housing Services,
San Diego, California (September 1992-March 1994); Region Manager of Bank of
America Housing Services, Atlanta, Georgia (August 1991-September 1992).
Brent H. Peterson, 38, Senior Vice President of the Company since November 1997;
Senior Vice President and Chief Information Officer (December 1995-November
1997); Vice President of the Company (September 1992-December 1995).
Mark A. Shepherd, 38, Senior Vice President of the Company since November 1997;
Vice President of the Company (December 1995-November 1997); Executive Vice
President, Retail/Mortgage Services/Home Improvement Divisions since March 1997;
Household International (1982-October 1995)--Vice President Regional Sales
Manager (1995) Vice President Chief Marketing Officer of HHC (1993-1994); Vice
President Chief Collection Officer of HFC Central (1991-1992); Vice President
Chief Control Officer of HFC and HRSI (1988-1990).
Jeffrey A. Vanthournout, 42, Senior Vice President of the Company since October
1995; President, Equipment Finance Division since March 1997; Kenworth Truck
Co.--Director of Credit and Operations (February 1994-October 1995); Paccar
Financial (May 1990-February 1994); Heller Financial (December 1985-January
1994).
14
<PAGE>
Scott T. Young, 36, Senior Vice President and Controller since November 1997;
Vice President and Controller (July 1996-November 1997); Managing Director and
Controller of GMAC-Residential Funding Corp., Minneapolis, Minnesota (August
1991-July 1996); Senior Manager of Deloitte & Touche, Minneapolis, Minnesota
(July 1989-July 1991).
Lyle D. Zeller, 42, Senior Vice President of the Company since November 1993;
Vice President of the Company since August 1992; President, Home Improvement
Division of the Company (March 1997-July 1997).
Gary V. Busch, 39, Vice President of the Company since December 1997; Managing
Director of Secondary Markets of Access Financial Lending Corp. (April 1996-
December 1997); Vice President of Access Financial Corp. (February 1994-April
1996); Vice President and Assistant Treasurer of Security Pacific Housing
Services (1989-February 1994).
John A. Dolphin, 38, Vice President and Director of Investor Relations with the
Company since January 1996; Countrywide Credit Industries, Inc. (October 1992-
January 1996)--Vice President of Corporate Finance and Investor Relations (1994-
1996); Assistant Treasurer (1992-1994).
Item 2. Properties.
- --------------------
At December 31, 1997, the Company operated 51 manufactured housing regional
service centers and three commercial finance business centers. Such offices are
leased, typically for a term of three to five years, and range in size from
1,700 to 22,000 square feet. The Company also operates a central servicing
center in Rapid City, South Dakota. The lease on this facility is for a term of
five years with an option to purchase and consists of 137,000 square feet. The
Company's home improvement and consumer products divisions lease their main
office in Saint Paul, Minnesota. The lease is for a term of five years and
consists of 125,000 square feet. (See Note J of Notes to Consolidated Financial
Statements for annual rental obligations.) The Company's home equity business
has operations in 6 regional locations and 75 regional satellite offices with a
service center in Mesa, Arizona which opened in February, 1997. The Company's
equipment and leasing business is housed in leased facilities located in
Bloomington, Minnesota and Paramus, New Jersey. The square footage leased in
Bloomington and New Jersey is 22,000 square feet and 44,000 square feet,
respectively. The Company's insurance business and certain corporate functions
are housed in a leased facility in Eagan, Minnesota as of January, 1998. This
facility provides 83,000 square feet with a lease commitment of two years. In
1997, the Company purchased land in Scottsdale, Arizona. A new servicing center
having 140,000 square feet is targeted for completion in 1999. Executive,
certain corporate functions and various loan servicing operations are housed in
St. Paul, Minnesota, in a building owned by the Company.
15
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
- ---------------------------
The Company has been served with various lawsuits in United States District
Court for the District of Minnesota. These lawsuits were filed by certain
stockholders of the Company as purported class actions on behalf of persons or
entities who purchased common stock of the Company during the alleged class
periods. In addition to the Company, certain current and former officers and
directors of the Company are named as defendants in one or more of the lawsuits.
The Company and the other defendants intend to seek consolidation of each of the
lawsuits in the United States District Court for the District of Minnesota.
Plaintiffs in the lawsuits assert claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. In each case, plaintiffs allege that the
Company and the other defendants violated federal securities laws by, among
other things, making false and misleading statements about the current state and
future prospects of the Company (particularly with respect to prepayment
assumptions and performance of certain of the Company's loan portfolios) which
allegedly rendered the Company's financial statements false and misleading The
Company believes that the lawsuits are without merit and intends to defend such
lawsuits vigorously.
In addition, the nature of the Company's business is such that it is routinely a
party or subject to items of pending or threatened litigation. Although the
ultimate outcome of certain of these matters cannot be predicted, management
believes, based upon information currently available that the resolution of
these legal matters will not result in any material adverse effect on its
consolidated financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
None.
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related Stockholder
- --------------------------------------------------------------------------
Matters.
- --------
The Company's Common Stock is traded on the New York and Pacific Stock Exchanges
under the symbol "GNT". The following table sets forth, for the periods
indicated, the range of the high and low sale prices.
<TABLE>
<CAPTION>
1997 High Low
- ---------------- ------------------ ------------------
<S> <C> <C>
First quarter $41-7/8 $ 33-3/4
Second quarter 38-3/8 26-3/4
Third quarter 48-5/8 35-1/16
Fourth quarter 50-1/4 19
<CAPTION>
1996 High Low
---------------- ------------------ ------------------
<S> <C> <C>
First quarter $36 $ 23-1/4
Second quarter 35-1/8 30-3/8
Third quarter 39-1/4 30-1/8
Fourth quarter 41-7/8 36-5/8
</TABLE>
16
<PAGE>
On February 28, 1998, the Company had approximately 1,554 stockholders of record
of its Common Stock, including the nominee of The Depository Trust Company,
which held approximately 127,901,056 shares of Common Stock.
The Company has paid cash dividends since December 1986. The 1997 quarterly
dividend rate for the first two quarters was $.075 per share. In July 1997, the
Board of Directors approved a 16.7% increase in the quarterly dividend rate to
$0.0875 per share effective for the September 1997 dividend. The payment of
future dividends will depend on the Company's financial condition, prospects and
such other factors as the Board of Directors may deem relevant. Under a letter
of credit agreement, the Company is subject to restrictions limiting the payment
of dividends and Common Stock repurchases. At December 31, 1997, such payments
were limited to $106,239,000, which represents 50% of consolidated net earnings
for the most recently concluded four fiscal quarter periods less dividends paid.
Dividend payments for 1997 were $44,459,000 and were not impacted by such
limitations.
ITEM 6. SELECTED FINANCIAL DATA.
- ---------------------------------
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------------------------------
1997 1996(a) 1995 1994 1993
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands except per share data)
Revenue $1,091,460 $ 724,111 $ 711,320 $ 497,427 $ 366,680
Earnings before income
taxes 486,123 323,829 409,628 302,131 200,537
Net earnings 301,396 200,774 253,969 181,279 116,423
Earnings per common
share:
Diluted 2.15 1.43 1.81 1.31 .90
Cash dividends per
common share .33 .26 .20 .12 .09
At year-end:
Interest only
securities $1,363,200 $1,014,340 $ 764,617 $ 533,182 $ 843,489
Total assets 4,866,792 3,098,044 2,220,209 1,687,823 1,517,367
Total debt 1,866,311 762,529 383,546 309,319 515,004
Stockholders' equity 1,332,140 1,137,492 925,022 725,891 549,429
</TABLE>
(a) As more fully described in Note A of the Notes to Consolidated Financial
Statements, financial information in this Report has been restated to
correct the December 31, 1996 valuation of the Company's excess servicing
rights and the expense related to the Chief Executive Officers' stock
bonus plan.
17
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.
- ----------------------------------------------
Introduction
- ------------
Green Tree Financial Corporation is a diversified financial services Company
that provides financing for manufactured homes, home equity, home improvements,
consumer products and equipment and provides consumer and commercial revolving
credit. The Company's insurance agencies market physical damage, term mortgage
life insurance and other credit protection relating to the customers' contracts
it services.
Gain on sale of receivables represents the difference between the proceeds from
the sale, net of related transaction costs, and the allocated carrying amount of
the receivables sold. The allocated carrying amount is determined by allocating
the original amount of the receivables between the portion sold and any retained
interests (interest only securities and servicing rights), based on their
relative fair values at the time of sale. The initial unrealized gain on the
valuation of interest only securities, which represents the difference between
the allocated carrying amount and their fair market value at time of sale, is
recorded in stockholders' equity.
Interest only securities represent the right to receive certain cash flows which
exceed the amount of cash flows sold in the Company's securitized receivable
sales. Interest only securities generally represent the value of interest to be
collected on the underlying financial contracts of each securitization over the
sum of the interest to be paid on security classes sold, contractual servicing
fees and credit losses. Fair value is determined by discounting the projected
cash flows over the expected life of the finance receivables sold using
prepayment, default, loss and interest rate assumptions that the Company
believes market participants would use for similar financial instruments.
Servicing rights represent the value of contractually specified servicing fees
to be received in excess of adequate compensation for servicing. Fair value of
servicing rights is determined by discounting the projected cash flows over the
expected life of the finance receivables sold using prepayment, default, loss
and interest rate assumptions that the Company believes market participants
would use for similar financial instruments.
The Company's assumptions used in calculating the fair value of interest only
securities and servicing rights are subject to volatility that could materially
affect operating results. Prepayments resulting from competition, obligor
mobility, general and regional economic conditions, and prevailing interest
rates, as well as actual losses incurred, may vary from the performance the
Company projects.
The Company has provided the investors in pools of contracts with a variety of
forms of credit enhancements on its securitized sales. These credit
enhancements generally take the form of corporate guarantees, but have also
included letters of credit and surety bonds that provide limited recourse to the
Company, and letters of credit that, if drawn, are entitled to reimbursement
only from the future excess cash flows of the underlying transactions.
Furthermore, certain securitized sales structures may use cash reserve funds and
certain cash flows derived from the underlying pool of contracts as additional
credit enhancement.
18
<PAGE>
The Company records the amount to be remitted to the investors/owners of the
contracts or investor certificates for the activity related to the current
month, payable the next month, as "investor payable", which is shown separately
as a liability on the Company's balance sheet.
Results of Operations
- ---------------------
Summarized below are the net earnings and earnings per share (dollars are in
millions except per share amounts):
<TABLE>
<CAPTION>
1997 1996 1995
------------ -------------- ------------
<S> <C> <C> <C>
Net earnings $301.4 $200.8 $254.0
Diluted earnings per common share 2.15 1.43 1.81
</TABLE>
The following table shows, for the periods indicated, the percentage
relationships to income of certain income and expense items and the percentage
changes in such items from period to period.
<TABLE>
<CAPTION>
Period-to-period
increase (decrease)
As a percentage of income for ------------------------------
the year ended December 31 1997 to 1996 to
----------------------------------------------
1997 1996 1995 1996 1995
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Gain on sale of receivables 50.1% 53.8% 63.0% 40.3% (13.1)%
Interest 34.0 29.8 24.8 72.1 22.3
Service 10.0 10.1 7.5 49.1 36.8
Commissions and other 5.9 6.3 4.7 41.5 38.5
------------ ------------ ------------
Total income 100.0% 100.0% 100.0%
============ ============ ============
Expenses:
Interest 14.7% 9.7% 8.1% 129.7% 22.2%
Cost of servicing 8.1 7.3 5.5 67.4 35.4
General and administrative 32.6 38.3 28.8 28.3 35.1
Earnings before income taxes 44.5 44.7 57.6 50.1 (20.9)
Net earnings 27.6 27.7 35.7 50.1 (20.9)
</TABLE>
Gain on sale of receivables increased 40.3% and decreased 13.1% for the years
ended December 31, 1997 and 1996, respectively. Prior to giving effect to
writedowns of the Company's interest only securities of $190,000,000 in 1997 and
$200,000,000 in 1996, gain on sale of receivables increased 24.9% and 31.4%,
respectively, in 1997 and 1996. These increases resulted primarily from
increased receivable sales volumes of $2,336,000,000 or 27.8% in 1997 over 1996,
and $3,078,000,000 or 57.7% in 1996 over 1995. The increase in 1996 was
partially offset by a shift in the mix of receivables securitized to a greater
percentage of short-lived consumer/other receivables which result in smaller
average gains relative to longer-lived manufactured housing and home equity/home
improvement contracts. The 1997 writedown of interest only securities was
generally due to adverse prepayment experience. The 1996 writedown was the
result of adjustments necessary to fully consider the effects of partial
prepayments on projected future interest collections and the impact of changes
in projected future interest due to investors.
19
<PAGE>
Prevailing interest rates are typically affected by economic conditions.
Changes in interest rates generally do not inhibit the Company's ability to
compete, although from time to time, in particular geographic areas, local
competition may be able to offer more favorable rates. The Company's ability to
sell contracts is generally not affected by changes in interest rates, although
the amount of earnings derived from such sales may be affected.
In 1995 the Company sold a portion of its interest only securities, representing
net cash flows retained from the securitization of its manufactured housing
contracts, in the form of securitized Net Interest Margin Certificates ("NIM
Certificates") through a public offering. The Green Tree Securitized Net
Interest Margin Trust 1995-A sold certificates representing approximately 75% of
the estimated present value of future interest only cash flows derived from the
Company's sales of certain manufactured housing contracts in 1994 and 1995. The
subordinate interests retained by the Company continue to be recorded as part of
interest only securities.
The Company believes that its market share for financing new manufactured homes
increased in 1997 compared to 1996. During this same time period the
manufactured housing market experienced a decrease in new home shipments on a
unit basis as compared to the prior year. The Company's dollar volume of
manufactured housing contract originations rose 12.2% in 1997 over 1996 to
$5,479,290,000. In 1997 new manufactured housing contracts originated by the
Company increased 8.1% over 1996 while previously owned manufactured housing
contract originations rose 29.3% compared to 1996. The Company's manufactured
housing contracts originated in 1996 totaled $4,882,018,000, a 17.4% increase
when compared to 1995.
The dollar volume of fixed term home equity/home improvement contract
originations rose 133.2% in 1997 over 1996 to $3,476,229,000. This growth is
the result of the Company's continued expansion of its home equity retail
origination network. Consumer originations rose 8.2% to $963,981,000 in 1997.
Equipment and commercial fixed term loan and lease originations increased 245.8%
for 1997 over 1996 to $1,108,755,000. This significant growth primarily results
from the inclusion of 12 months of equipment lease originations in 1997 compared
to only one month of originations in 1996 following the acquisition of FINOVA
Acquisition I, Inc. effective December 1, 1996. The dollar volume of home
equity/home improvement contracts rose 138% during 1996 over 1995 to
$1,490,720,000. Consumer products and other contract originations rose 153% to
$1,192,579,000 in 1996. The overall growth in these originations resulted from
expanding the number of relationships with dealers and the growth in the
Company's home equity originations network.
The Company's revolving credit originations rose 55.6%, to $4,619,544,000 in
1997 compared to 1996. The 1996 volume reached $2,969,630,000 an 81.9% increase
over 1995.
Interest revenue which represents interest earned on unsold finance receivables,
yield on the Company's interest only securities and interest earned on custodial
trust cash and other investments grew 72.1% during 1997 over 1996. The primary
reason for this interest revenue growth resulted from finance receivables
during 1997 being higher on average than during 1996 due to higher production
levels and less frequent sales. Interest revenue increased 22.3% for the year
ended December 31, 1996 compared to 1995 as the result of both interest only
securities and finance receivable balances in 1996 exceeding those in 1995.
20
<PAGE>
Service revenue increased in 1997, 1996 and 1995 by 49.1%, 36.8% and 33.7%,
respectively. These increases resulted from the 42.8%, 38.8% and 36.5% growth
in the Company's total average servicing portfolio for 1997, 1996 and 1995,
respectively. In addition, the 1997 service revenue increase was higher than
1996 and 1995 as a result of the changes in the mix of products being serviced.
The Company expects service revenue to continue to increase as its portfolio
grows.
Commissions and other revenue, which includes commissions earned on new
insurance policies written and renewals on existing policies, as well as other
income from late fees, grew during 1997, 1996 and 1995 primarily as a result of
the increase in net written insurance premiums as the Company's contract
originations and servicing portfolio continue to grow.
Interest expense increased 129.7%, 22.2% and 37.7% in 1997, 1996 and 1995,
respectively. The Company maintained a significantly higher level of borrowings
to fund its increased loan originations and commercial finance portfolio.
Green Tree's dollar amount of cost of servicing has increased 67.4%, 35.4% and
26.9% for the years ended December 31, 1997, 1996 and 1995, respectively. The
Company's cost of servicing as a percentage of the serviced portfolio increased
in 1997 when compared to 1996 and 1995 as a result of the product mix change in
the portfolio towards products which require more servicing resources such as
revolving credit cards and equipment leases.
General and administrative expenses rose 28.3%, 35.1% and 67.1% in 1997, 1996
and 1995, respectively. The primary reasons for the 1997 increase were the
higher origination volume compared to 1996 and the additional expenses incurred
from the expansion of the Company's home equity business offset by the reduction
in the Chief Executive Officer's compensation. In both 1996 and 1995, the
increase in general and administrative expenses related to the compensation of
the Chief Executive Officer pursuant to the terms of an employment agreement,
the majority of such expense being paid in stock, coupled with increased
origination volumes. As a percentage of contract originations, general and
administrative expenses have remained relatively constant.
The Company's effective tax rate during 1997, 1996 and 1995 was 38%.
Inflation has not had a material effect on the Company's income or earnings over
the past three fiscal years.
Capital Resources and Liquidity
- -------------------------------
The Company's business requires continued access to the capital markets for the
warehousing and sale of contracts. To satisfy these needs, the Company employs
a variety of capital resources.
21
<PAGE>
Historically, the most important liquidity source for the Company has been its
ability to sell contracts in the secondary markets through loan securitizations.
Under certain securitized sales structures, the Company has provided a variety
of credit enhancements, which generally take the form of corporate guarantees,
but have also included bank letters of credit, surety bonds, cash deposits or
other equivalent collateral. The Company analyzes the cash flows unique to each
transaction, as well as the marketability and projected economic value of such
transactions when choosing the appropriate structure for each securitized loan
sale. The structure of each securitized sale depends, to a great extent, on
conditions of the fixed income markets at the time of sale as well as cost
considerations and availability and effectiveness of the various enhancement
methods. During 1997, the Company used a senior/subordinated structure for each
of its eight manufactured home loan sales and enhanced a portion of the
subordinated certificates sold with a corporate guarantee. During 1997, the
Company's home equity and home improvement loan sales included two separate but
cross-collateralized loan pools, both of which employed a senior/subordinated
structure with a limited guarantee on a portion of the subordinate certificates.
The Company's first quarter sale of consumer products and equipment finance
loans employed a multi-class credit tranched owner trust structure with floating
rate senior notes and limited corporate guarantee on the subordinate fixed rate
certificates. In the second and third quarters of 1997, the Company's sale of
consumer product, equipment finance, certain home equity and non lien home
improvement loans utilized a multi-class credit tranched grantor trust structure
issuing fixed rate certificates with a limited corporate guarantee on the most
subordinate class. Also during the third quarter, the Company sold
approximately $150.0 million of private-label credit card receivables and $74.4
million of floorplan receivables through two separate revolving trusts. In
addition, the Company completed, in the fourth quarter of 1997, a sale of
consumer product, equipment finance, certain home equity and non lien home
improvement loans which employed a multi-class credit tranched owner trust
structure with fixed and floating rate senior certificates and a limited
corporate guarantee on the most subordinate fixed rate certificates. The
Company also sold in the fourth quarter of 1997 approximately $551 million of
fixed rate notes backed by lease receivables.
Another liquidity source for the Company has been its ability to sell portions
of its interest only securities in the form of securitized NIM Certificates.
During 1995 the Company sold $308,000,000 of NIM Certificates. These
certificates represented approximately 75% of the estimated interest only cash
flows derived from the Company's sales of certain manufactured housing contracts
in 1995 and 1994. Net proceeds to the Company from these sales were used to
reduce short-term borrowings supporting ongoing loan originations.
Servicing fees and net interest payments collected consist of servicing fees
collected on the Company's serviced portfolio and cash received from the
Company's interest only securities. Servicing fees and net interest payments
collected increased during the years ended December 31, 1997 and 1996 and
decreased during 1995 as a result of the timing and size of the NIM Certificate
sales, the proceeds of which are shown separately on the Company's statements of
cash flows. Net interest payments collected on the transactions underlying the
NIM Certificates are remitted directly to the senior certificateholders.
Payments on the subordinated certificates will not commence until the senior
certificateholders have been paid in full.
22
<PAGE>
Net principal payments collected on sold loans have been positive in each of the
last three years as a result of an increase in the contract principal payments
collected by the Company as of the end of each year but not yet remitted to the
investors/owners of the contracts. These increases are a result of customer
payoffs and the growth of the Company's servicing portfolio.
Interest on unsold loans increased during 1997 primarily as a result of the
increase in the outstanding finance receivables. In 1996 interest on unsold
loans was relatively constant with 1995.
The Company's interest on cash and investments increased in 1997 over 1996 and
1995 as higher levels of custodial trust cash and investments were maintained
primarily as a result of the growth in the managed receivables portfolio.
Net cash used for operating activities increased in 1997 compared to 1996 as the
Company increased its purchase of loans and leases and the disbursements of
commercial and revolving credit card loans. Offsetting these uses of operating
funds were the increased number of securitization transactions relating to home
equity, consumer and equipment loans. In 1996 net cash provided by operating
activities increased compared to 1995 as the Company began securitizing its home
equity and consumer and equipment loans.
The 1997 net cash used for investing activities included the purchase of assets
associated with the opening of new home equity retail offices and the
acquisition and installment of new hardware and software systems. In 1996, net
cash used for investing activities included the acquisition of the net assets of
FINOVA Acquisition I, Inc. In 1995 net cash used for investing activities
included leasehold improvements to the Company's Rapid City servicing center.
Net cash provided by financing activities in 1997 resulted from borrowings on
credit facilities, the issuance of long-term debt and proceeds from the issuance
of Common Stock exceeding debt repayments, common stock repurchases and
dividends paid. The 1996 net cash provided by financing activities resulted
from borrowings on credit facilities and Common Stock issued exceeding repayment
on credit facilities and dividends paid. Cash used for financing activities in
1995 was a result of the common stock repurchases, the dividends paid and the
retirement of a portion of the senior subordinated debentures.
The Company repurchased 4,961,156 and 2,051,000 shares of its common stock for
$145,285,000 and $53,913,000 in 1997 and 1995, respectively. These shares are
currently held as treasury shares. In 1996 there were no common stock
repurchases made by the Company. Dividends paid by the Company increased 23.4%
in 1997 compared to 1996 as the Company's 1997 quarterly average dividend rate
increased 23.8% over the 1996 rate. The dividends paid by the Company in 1996
increased 29.7% over 1995 as the 1996 quarterly average dividend rate was 29.2%
higher when compared to 1995.
23
<PAGE>
As of December 31, 1997, the Company had a $1,500,000,000 unsecured bank credit
agreement. This credit facility included a $750,000,000 three-year committed
revolving line of credit which was scheduled to expire on April 28, 2000 and a
$750,000,000 364-day committed revolving line of credit which was scheduled to
expire on April 28, 1998. In addition, the Company had $2,800,000,000 in master
repurchase agreements, subject to the availability of eligible collateral, with
various investment banking firms for the purpose of financing its contract and
commercial finance loan production. At December 31, 1997, the Company had
$35,000,000 of borrowings outstanding under the unsecured bank credit agreement
and no borrowings outstanding under the repurchase agreements. The master
repurchase agreements generally provide for annual terms that are extended each
quarter by mutual agreement of the parties for an additional annual term based
upon receipt of updated quarterly financial information from the Company.
At December 31, 1997 the Company had a commercial paper program through which it
was authorized to issue up to $2 billion in notes of varying terms (not to
exceed 270 days) to meet its liquidity needs. This program was backed by the
bank credit agreement and master repurchase agreements referred to above. As of
December 31, 1997, the Company had issued and outstanding, net of interest
discount, $1,319,140,000 in notes under this program.
During the fourth quarter of 1997 and the first quarter of 1998 the Company's
senior unsecured debt ratings and short-term debt ratings were lowered by each
of the credit rating agencies which provide ratings on the Company's debt. As a
result of these ratings actions the Company has, in 1998, substantially
curtailed its issuance of commercial paper in favor of its master repurchase
agreements.
In addition, effective February 10, 1998, the Company has substantially
restructured its unsecured bank credit agreements reducing the aggregate
commitment to $750,000,000 and renegotiating significant terms and covenants in
lieu of a waiver of certain representations required of the Company for purposes
of utilizing the credit line. This waiver/amendment expires on April 28, 1998.
Certain of the Company's master repurchase agreements have been amended in 1998
primarily to include financing for a broader range of receivables originated by
the Company. Additionally, aggregate master repurchase lines have been increased
to $3.8 billion.
In addition, on February 13, 1998 the Company closed on a $500 million line of
credit secured by its interest only securities. This line of credit matures on
February 12, 2000, with an option to extend for an additional one year term.
The Company is in the process of renegotiating the terms of its bank credit
agreement and expects to close on a new facility prior to or coincident with the
expiration of its existing line on April 28, 1998. Additionally, the Company
has filed a Form S-3 shelf registration with the Securities and Exchange
Commission which would provide for the issuance of additional forms of capital
including a variety of forms of debt and equity. While no determination has
been made with respect to the amount or nature of any capital raising activity
which might be undertaken, it is likely that additional debt and/or equity in
some form will be raised in 1998.
24
<PAGE>
Market Risk
- -----------
Market risk is the risk of loss arising from adverse changes in market prices
and interest rates. The Company's market risk arises from interest rate risk
inherent in its financial instruments. The Company is not currently subject to
foreign currency exchange rate risk or commodity price risk. The Company has no
trading securities and does not make material use of off-balance sheet
derivative instruments to control interest rate risk. The following table shows
the Company's financial instruments that are sensitive to changes in interest
rates at December 31, 1997.
25
<PAGE>
<TABLE>
<CAPTION>
Expected Cash Flows
(dollars in thousands)
----------------------------------------------------------------------------------------
Weighted
Average
Discount Fair
Rate 1998 1999 2000 2001 2002 Thereafter Total Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest only securities 11.47% $456,948 $321,319 $235,263 $188,145 $156,280 $1,265,981 $2,623,936 $1,363,200
</TABLE>
<TABLE>
<CAPTION>
Maturities
(dollars in thousands)
----------------------------------------------------------------------------------------
Weighted
Average Fair
Note Rate 1998 1999 2000 2001 2002 Thereafter Total Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Senior/Senior
subordinated notes 8.78% $8,085 $12,087 $3,088 $1,595 $487,254 $1,795 $513,904 $520,018
</TABLE>
26
<PAGE>
Interest only securities do not have a stated maturity or amortization period.
The expected amount of the cash flow as well as the timing is dependent on the
performance of the underlying collateral supporting each securitization. The
actual cash flow of these instruments could vary substantially if the
performance is different from the Company's assumptions. The Company generally
develops its assumptions by analyzing past portfolio performance, current loan
characteristics, current market conditions and the expected effect of the
Company's initiatives to mitigate adverse performance. The approximate constant
prepayment rate ("CPR") assumptions used are as follows:
Manufactured housing 9.5% CPR
Home Equity/Home improvement 24.0% CPR
Consumer/Equipment 22.0% CPR
For the Company's Senior/Senior subordinated debt, the table presents the
weighted average interest rate and principal cash flows by expected maturity
date. There have been no significant changes in the Company's primary market
risk exposures or methods for managing those exposures since December 31, 1997.
The Company's finance receivables for lease, commercial finance and revolving
credit card have not been included in the market risk table given the short
duration of these receivables and management's belief that fair value
approximates carrying value. Loans held for sale have also been excluded from
this table as these are generally recent originations which will be converted
into securitized pools during 1998.
The Company's management actively monitors and manages its interest rate risk
exposure. Interest rate risk on the Company's managed portfolio is
substantially eliminated through the sale of asset-backed securities. The
Company's assets and securities are generally both fixed rate instruments.
Principal payments on the assets are passed through to investors in the
securities as received, thereby eliminating interest rate exposure that might
otherwise arise from maturities of debt instruments not matching maturities of
assets.
Interest rate risk on the Company's contract inventory is managed via frequent
sales in the asset-backed securities market, such sales often including forward
funding commitments for originations which are in process.
Year 2000
- ---------
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and is
developing an implementation plan to resolve the issue at a cost estimated to be
$7,000,000. The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Company's programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in
major system failure or miscalculations. The Company presently believes that,
with modifications to existing software and converting to new software, the Year
2000 issue will not pose significant operational problems for the Company's
computer systems as so modified and converted. However, if such modifications
and conversions are not completed timely, the Year 2000 issue may have a
material impact on the operations of the Company.
27
<PAGE>
Other Matters
- -------------
Certain information included in this Form 10-K and Annual Report may include
"forward-looking" information, as defined in the Private Securities Litigation
Reform Act of 1995 (the "Act"). Such forward-looking information may involve
risks or uncertainties which are described in the Cautionary Statements
contained in the Company's Form 8-K filed with the Securities and Exchange
Commission on July 12, 1996. Investors are specifically referred to the
Cautionary Statements for a discussion of factors which could affect the
Company's operations and financial performance. Factors referenced in the
Cautionary Statements include: prevailing economic conditions; ability to access
capital resources; short-term interest rate fluctuations; the level of defaults
and prepayments on loans made by the Company; competition; and regulatory
changes. Any forward-looking information is based upon management's reasonable
estimate of future results or trends. The Company does not undertake, and the
Act specifically relieves the Company from, any obligation to update any
forward-looking statements.
In 1998, the Company will adopt SFAS Statements No. 130 and 131. See Note M,
"Recent Accounting Pronouncements", in the notes to consolidated financial
statements.
28
<PAGE>
Item 8. Financial Statements and Supplementary Data.
- -----------------------------------------------------
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
FINANCIAL STATEMENTS FURNISHED PURSUANT TO
THE REQUIREMENTS OF FORM 10-K
AND
INDEPENDENT AUDITORS' REPORT
----------------------------
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
--------------------------------------------
29
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Green Tree Financial Corporation
Saint Paul, Minnesota:
We have audited the accompanying consolidated balance sheets of Green Tree
Financial Corporation and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Green Tree Financial
Corporation and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
As discussed in Note A to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," in 1997.
/s/ KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
January 27, 1998, except as to Note O which is as of February 13, 1998
30
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
December 31
---------------------------------------------
1997 1996
------------------- -------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 741,398,000 $ 442,071,000
Cash deposits, restricted 247,237,000 171,484,000
Other investments 25,294,000 11,925,000
Interest only securities 1,363,200,000 1,014,340,000
Finance receivables 1,971,024,000 1,219,983,000
Other receivables 235,705,000 85,503,000
Servicing rights 96,311,000 --
Property, furniture and fixtures 112,404,000 77,859,000
Goodwill 56,095,000 58,950,000
Other assets 18,124,000 15,929,000
------------------- -------------------
Total assets $4,866,792,000 $3,098,044,000
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $1,355,995,000 $ 472,181,000
Senior/Senior subordinated notes 510,316,000 290,348,000
Accounts payable and accrued liabilities 492,789,000 378,559,000
Investors payable 552,781,000 346,272,000
Deferred income taxes 622,771,000 473,192,000
------------------- -------------------
Total liabilities 3,534,652,000 1,960,552,000
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par; authorized 400,000,000
shares; issued 141,595,984
and 139,782,706 shares, respectively 1,416,000 1,398,000
Additional paid-in capital 435,570,000 373,573,000
Retained earnings 1,075,670,000 818,733,000
Minimum pension liability adjustments (3,142,000) (2,299,000)
Unrealized gain on securities
available for sale, net 21,824,000 --
------------------- -------------------
1,531,338,000 1,191,405,000
Less treasury stock, 7,012,156 and 2,051,000
shares at cost (199,198,000) (53,913,000)
------------------- -------------------
Total stockholders' equity 1,332,140,000 1,137,492,000
------------------- -------------------
Total liabilities and stockholders' equity $4,866,792,000 $3,098,044,000
=================== ===================
</TABLE>
See notes to consolidated financial statements.
31
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------
1997 1996 1995
-------------------- ------------------ ------------------
<S> <C> <C> <C>
REVENUES:
Gain on sale of receivables $ 546,828,000 $389,743,000 $448,702,000
Interest 370,569,000 215,315,000 175,990,000
Service 109,253,000 73,263,000 53,572,000
Commissions and other 64,810,000 45,790,000 33,056,000
-------------------- ------------------ ------------------
1,091,460,000 724,111,000 711,320,000
EXPENSES:
Interest 160,882,000 70,050,000 57,313,000
Cost of servicing 88,740,000 53,022,000 39,168,000
General and administrative 355,715,000 277,210,000 205,211,000
-------------------- ------------------ ------------------
605,337,000 400,282,000 301,692,000
-------------------- ------------------ ------------------
EARNINGS BEFORE INCOME
TAXES 486,123,000 323,829,000 409,628,000
INCOME TAXES 184,727,000 123,055,000 155,659,000
-------------------- ------------------ ------------------
NET EARNINGS $ 301,396,000 $200,774,000 $253,969,000
==================== ================== ==================
EARNINGS PER COMMON SHARE:
BASIC $2.20 $1.47 $1.86
DILUTED $2.15 $1.43 $1.81
</TABLE>
See notes to consolidated financial statements.
32
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
<TABLE>
<CAPTION>
Additional Unrealized
Common paid-in Treasury gain on
stock capital stock securities, net
-------------- --------------- -------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
BALANCES, December 31, 1994 $1,352 $296,732 $ -- $ --
Common stock issuance of 2,300,000 23 26,832 -- --
shares
Cost of 2,051,000 shares of treasury -- -- (53,913) --
stock acquired
Dividends on common stock -- -- -- --
Net earnings -- -- -- --
-------------- --------------- -------------- ----------------
BALANCES, December 31, 1995 1,375 323,564 (53,913) --
Common stock issuance of 2,300,000 23 50,009 -- --
shares
Minimum pension liability adjustments -- -- -- --
Dividends on common stock -- -- -- --
Net earnings -- -- -- --
-------------- --------------- -------------- ----------------
BALANCES, December 31, 1996 1,398 373,573 (53,913) --
Common stock issuance of 1,800,000 18 61,997 -- --
shares
Cost of 4,961,156 shares of treasury -- -- (145,285) --
stock acquired
Minimum pension liability adjustments -- -- -- --
Unrealized gain on securities, net -- -- -- 21,824
Dividends on common stock -- -- -- --
Net earnings -- -- -- --
-------------- --------------- -------------- ----------------
BALANCES, December 31, 1997 $1,416 $435,570 $(199,198) $21,824
============== =============== ============== ================
<CAPTION>
Minimum Total
pension Retained stockholders'
liability earnings equity
-------------- --------------- --------------
(dollars in thousands)
<S> <C> <C> <C>
BALANCES, December 31, 1994 $ -- $ 427,807 $ 725,891
Common stock issuance of 2,300,000
shares -- -- 26,855
Cost of 2,051,000 shares of treasury
stock acquired -- -- (53,913)
Dividends on common stock -- (27,780) (27,780)
Net earnings -- 253,969 253,969
-------------- --------------- --------------
BALANCES, December 31, 1995 -- 653,996 925,022
Common stock issuance of 2,300,000
shares -- -- 50,032
Minimum pension liability
adjustments (2,299) -- (2,299)
Dividends on common stock -- (36,037) (36,037)
Net earnings -- 200,774 200,774
-------------- --------------- --------------
BALANCES, December 31, 1996 (2,299) 818,733 1,137,492
Common stock issuance of 1,800,000
shares -- -- 62,015
Cost of 4,961,156 shares of treasury
stock acquired -- -- (145,285)
Minimum pension liability
adjustments (843) -- (843)
Unrealized gain on securities, net -- -- 21,824
Dividends on common stock -- (44,459) (44,459)
Net earnings -- 301,396 301,396
-------------- --------------- --------------
BALANCES, December 31, 1997 $(3,142) $1,075,670 $1,332,140
============== =============== ==============
</TABLE>
See notes to consolidated financial statements.
33
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------------------------------
1997 1996 1995
--------------------- -------------------- --------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Servicing fees and net interest
payments
collected on sold loans $ 419,537,000 $ 217,922,000 $ 159,535,000
Net proceeds from sale of net interest
margin certificates -- -- 302,312,000
Net principal payments collected on 152,302,000 77,810,000 40,571,000
sold loans
Interest on unsold loans 196,103,000 99,046,000 102,785,000
Interest on cash and investments 37,314,000 27,496,000 22,712,000
Commissions 32,461,000 26,340,000 18,616,000
Other (916,000) 3,784,000 484,000
--------------------- -------------------- --------------------
836,801,000 452,398,000 647,015,000
--------------------- -------------------- --------------------
Cash paid to employees and suppliers (398,022,000) (252,625,000) (171,935,000)
Interest paid on debt (156,487,000) (66,381,000) (55,214,000)
Income taxes paid (31,822,000) (44,182,000) (37,496,000)
--------------------- -------------------- --------------------
(586,331,000) (363,188,000) (264,645,000)
--------------------- -------------------- --------------------
NET CASH PROVIDED BY
OPERATIONS 250,470,000 89,210,000 382,370,000
Purchase of loans and leases (10,916,782,000) (7,564,745,000) (5,210,560,000)
Proceeds from sale of loans
and leases 10,378,121,000 7,864,008,000 4,562,468,000
Principal collections on unsold loans
and leases 390,397,000 144,716,000 120,989,000
Commercial and revolving credit loans (4,778,837,000) (2,868,508,000) (1,579,568,000)
disbursed
Principal collections on commercial
and revolving credit loans 3,982,865,000 2,289,916,000 1,187,431,000
Proceeds from sale of commercial
and revolving credit loans 224,400,000 499,115,000 426,304,000
Net cash deposits provided as credit
enhancements (75,753,000) (19,673,000) (13,254,000)
--------------------- -------------------- --------------------
NET CASH (USED FOR) PROVIDED
BY OPERATING ACTIVITIES (545,119,000) 434,039,000 (123,820,000)
--------------------- -------------------- --------------------
</TABLE>
(continued)
34
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
-----------------------------------------------------------------------
1997 1996 1995
------------------- ------------------- --------------------
<S> <C> <C> <C>
NET CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of subsidiary -- (620,566,000) --
Purchase of property, furniture and
fixtures (61,381,000) (31,231,000) (31,478,000)
Net (purchases) sales of investment
securities (13,369,000) 7,955,000 1,040,000
------------------- ------------------- --------------------
NET CASH USED FOR INVESTING
ACTIVITIES (74,750,000) (643,842,000) (30,438,000)
------------------- ------------------- --------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings on credit facilities 10,357,770,000 7,514,398,000 4,633,237,000
Repayments on credit facilities (9,473,955,000) (7,128,379,000) (4,539,575,000)
Issuance of long-term debt 220,000,000 -- --
Common stock issued 5,125,000 6,125,000 2,346,000
Common stock repurchased (145,285,000) -- (53,913,000)
Dividends paid (44,459,000) (36,037,000) (27,780,000)
Payments of debt -- -- (20,246,000)
------------------- ------------------- --------------------
NET CASH PROVIDED BY (USED
FOR) FINANCING ACTIVITIES 919,196,000 356,107,000 (5,931,000)
------------------- ------------------- --------------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 299,327,000 146,304,000 (160,189,000)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 442,071,000 295,767,000 455,956,000
------------------- ------------------- --------------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 741,398,000 $ 442,071,000 $ 295,767,000
=================== =================== ====================
</TABLE>
(continued)
35
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------
1997 1996 1995
------------------- ------------------ -------------------
<S> <C> <C> <C>
RECONCILIATION OF NET EARNINGS TO
NET CASH (USED FOR) PROVIDED BY
OPERATING ACTIVITIES:
Net earnings $ 301,396,000 $ 200,774,000 $ 253,969,000
Deferred income taxes 149,579,000 67,460,000 109,686,000
Valuation adjustment of interest only 190,000,000 200,000,000 --
securities
Depreciation and amortization 32,125,000 22,427,000 13,518,000
Net proceeds from sale of net interest
margin certificates -- -- 302,312,000
Net loan payments collected, less
interest only securities and servicing
rights recorded (309,026,000) (394,021,000) (331,882,000)
Amortization of servicing rights 15,372,000 -- --
Amortization of deferred service income -- (30,594,000) (14,689,000)
Accretion of yield on interest only
securities (125,831,000) (77,223,000) (51,267,000)
Net increase in cash deposits (75,753,000) (19,673,000) (13,254,000)
Purchase of loans and leases, net of sales (134,597,000) 443,978,000 (527,103,000)
and principal collections
Commercial and revolving loans
disbursed, net of sales and
principal collections (571,572,000) (79,477,000) 34,167,000
Net selling expenses on sale of loans 61,513,000 50,900,000 38,852,000
Increase in current income tax accruals 3,326,000 11,413,000 8,477,000
Increase in amounts payable to employees 16,183,000 9,041,000 54,951,000
and suppliers
Increase in other receivables (77,508,000) (178,000) --
Other (20,326,000) 29,212,000 (1,557,000)
------------------- ------------------ -------------------
NET CASH (USED FOR) PROVIDED
BY OPERATING ACTIVITIES $(545,119,000) $ 434,039,000 $(123,820,000)
=================== ================== ===================
</TABLE>
See notes to consolidated financial statements.
36
<PAGE>
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
--------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
- ---------------------
(a) Consolidation
-------------
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany profits,
transactions and balances have been eliminated. In certain cases, prior
year amounts have been reclassified to conform to the current year's
presentation.
(b) Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Material estimates that are particularly susceptible to
significant change relate to the valuation of the interest only securities.
(c) Restatement of 1996 Financial Statements
----------------------------------------
During the fourth quarter of 1997, the Company determined that its
processes for assessing the valuation of its excess servicing rights had
not fully considered the effects of partial prepayments on projected future
interest collections and the impact of changes in projected future interest
due to investors on a weighted average basis on bonds outstanding. In
consideration of these items, the Company has restated its previously
reported financial statements for 1996 as follows:
<TABLE>
<S> <C>
Decrease net gains on contract sales and excess servicing rights $200,000,000
Decrease in general and administrative expense and accrued liabilities $ 25,868,000
Decrease in earnings before income taxes $174,132,000
Decrease in provision for income taxes and deferred tax liability $ 66,170,000
Decrease in net earnings for 1996 and decrease in retained earnings
as of December 31, 1996 $107,962,000
Decrease in net earnings per common share $ 0.77
</TABLE>
37
<PAGE>
ADOPTION OF NEW ACCOUNTING STANDARDS
- ------------------------------------
(a) Accounting for Stock Based Compensation
---------------------------------------
On January 1, 1996, the Company adopted the pro forma disclosure provisions
of Statement of Financial Accounting Standards No. 123 (SFAS No. 123),
"Accounting for Stock-Based Compensation". The Company continues to apply
the accounting provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations.
(b) Accounting for Transfers and Servicing of Financial Assets and
--------------------------------------------------------------
Extinguishments of Liabilities
------------------------------
On January 1, 1997, the Company adopted Statement of Financial Accounting
Standards No. 125 (SFAS No. 125), "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities". SFAS No. 125
requires prospective implementation only; however, certain
reclassifications have been made to prior year's financial statements to
conform to the current year's presentation.
Among other provisions, SFAS No. 125 uses a "financial components" approach
relative to the recognition of financial assets and liabilities resulting
from the transfer of financial assets. SFAS No. 125 also provides guidance
relative to the classification and ongoing measurement of the financial
components retained in connection with financial asset sales. Such
components are recorded at allocated cost. The Company retains interest
only securities and servicing rights upon the sale of its financial assets
or receivables.
(c) Earnings Per Share
------------------
On December 31, 1997 the Company adopted Statement of Financial Accounting
Standards No. 128 (SFAS No. 128), "Earnings Per Share", which establishes
new standards for calculating and disclosing earnings per share. All prior
period earnings per share data has been restated to conform with the
provisions of SFAS No. 128, as shown in Note G, "Earnings Per Share".
(d) Disclosure of Information about Capital Structure
-------------------------------------------------
On December 31, 1997 the Company adopted Statement of Financial Accounting
Standards No. 129 (SFAS No. 129), "Disclosure of Information about Capital
Structure", which establishes standards for disclosing information about an
entity's capital structure. The statement has no effect on the Company's
current capital structure disclosures.
38
<PAGE>
REVENUE RECOGNITION
- -------------------
(a) Gain on Sale of Receivables
---------------------------
Effective January 1, 1997 the Company accounts for the sale of receivables
in accordance with SFAS No. 125. Gain on sale of receivables represents the
difference between the proceeds from the sale, net of related transaction
costs, and the allocated carrying amount of the receivables sold. The
allocated carrying amount is determined by allocating the original amount
of the receivables between the portion sold and any retained interests
(interest only securities and servicing rights), based on their relative
fair values at the date of sale. The initial unrealized gain on the
valuation of interest only securities which represents the difference
between the allocated carrying amount of the receivables and their fair
market value at time of sale is recorded in stockholders' equity. In
addition, gain on sale of receivables includes pointsreceived and premiums
paid.
The fair value of interest only securities and servicing rights as of the
sale date are determined by discounting the cash flows over the expected
life of the financial contracts using prepayment, default, loss and
interest rate assumptions that the Company believes market participants
would use for similar financial instruments.
(b) Interest
--------
Interest revenue generally represents interest earned on unsold finance
receivables, custodial trust cash and other investments. In addition, the
Company recognizes interest yield on its interest only securities.
(c) Service
-------
Service income represents the contractual servicing fees received less the
amortization of servicing rights. Servicing rights are amortized in
proportion to and over the period of estimated net future servicing fee
income.
(d) Commission and Other
--------------------
Commission and other income generally represents insurance commissions and
late fees.
CASH AND CASH EQUIVALENTS
- -------------------------
For purposes of the statements of cash flows, the Company considers all highly
liquid temporary investments purchased with a maturity of three months or less
to be cash equivalents. At December 31, 1997 and 1996, cash of approximately
$528,644,000 and $341,936,000, respectively, was held in trust for subsequent
payment to investors. In addition, cash of $247,237,000 and $171,484,000 is
restricted by the pooling and servicing agreements and approximately $3,261,000
and $3,101,000 is restricted and held by the Company's subsidiaries pursuant to
various government requirements at December 31, 1997 and 1996, respectively.
OTHER INVESTMENTS
- -----------------
Other investments consist of liquid investments with original maturities of no
more than three months. Investments are held in trust for FDIC requirements and
policy and claim reserves and a master repurchase agreement for the Company's
bank and insurance subsidiaries.
39
<PAGE>
INTEREST ONLY SECURITIES
- ------------------------
Effective January 1, 1997, the Company accounts for interest only securities in
accordance with SFAS No. 125 and SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Interest only securities represent
the right to receive certain cash flows which exceed the amount of cash flows
sold in the Company's securitized receivable sales. Interest only securities
generally represent the value of interest to be collected on the underlying
financial contracts of each securitization over the sum of the interest to be
paid to security classes sold, contractual servicing fees and credit losses.
The Company classifies its interest only securities as available for sale and
carries these securities at fair market value. Accordingly, unrealized gains
and losses are reported net of deferred income taxes, as a separate component of
stockholders' equity.
The Company monitors its interest only securities for other than temporary
impairment. Generally, other than temporary impairment is deemed to occur when
the present value of estimated future cash flows discounted at a risk free rate
using appropriate prepayment and default assumptions is less than the carrying
value of the interest only securities. If other than temporary impairment
occurs, the carrying value is reduced to fair value and a loss is recognized in
the statements of operations.
FINANCE RECEIVABLES
- -------------------
Finance receivables consist of lease, commercial finance and revolving credit
receivables and loans held for sale. Generally all lease receivables are direct
financing leases as defined in SFAS No. 13 "Accounting for Leases". The
carrying value of lease receivables represents the present value of both the
future minimum lease payments and related residual values. The Company's
commercial finance receivables generally represent dealer floorplan, asset-based
financing arrangements with dealers, manufacturers and other commercial entities
and commercial real estate loans. Revolving credit receivables consist of retail
credit card arrangements with merchants and dealers and their customers. Loans
held for sale generally consist of recent originations of manufactured housing,
home equity, home improvement and consumer and equipment contracts which will be
sold during the following quarter. Finance receivables are net of allowance for
expected losses.
OTHER RECEIVABLES
- -----------------
Other receivables consist of the Company's miscellaneous accounts receivable,
insurance related, interest and other production and servicing related
receivables.
SERVICING RIGHTS
- ----------------
Servicing rights are carried at allocated cost and amortized in proportion to
and over the estimated period of net servicing income.
GOODWILL
- --------
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over the expected periods
to be benefited, generally 20 years.
40
<PAGE>
DEPRECIATION
- ------------
Property, furniture and fixtures are carried at cost and are depreciated over
their estimated useful lives on a straight-line basis.
B. INTEREST ONLY SECURITIES
Effective January 1, 1997 the Company began accounting for its sales of
receivables, interest only securities and servicing rights in accordance with
SFAS No. 125 and SFAS No. 115.
The activity in interest only securities for 1997 is summarized as follows:
<TABLE>
<S> <C>
Balance at beginning of year $1,014,340,000
Transfer to servicing rights (30,755,000)
Additions 674,660,000
Yield on interest only securities 125,831,000
Net cash collected (266,077,000)
Realized loss on valuation of interest
only securities (190,000,000)
Unrealized gain on valuation of interest
only securities 35,201,000
--------------
Balance at end of year $1,363,200,000
==============
</TABLE>
In 1995 and previous years, the Company sold a substantial portion of its
interest only securities related to manufactured housing securitization
transactions between 1978 and 1995 in the form of securitized Net Interest
Margin Certificates. The Company retained a subordinated interest in the cash
flow of the interest only securities sold. These interests are included in
interest only securities and total $77,030,000 at December 31, 1997.
Generally interest only securities relate to the sale of closed end manufactured
housing, home equity, home improvement, consumer and equipment finance
receivables. The Company's interest only securities are subject to a
substantial amount of credit loss and prepayment risk related to the receivables
sold. In connection with the valuation of interest only securities the Company
has provided for approximately $899,981,000 of credit losses as of December 31,
1997. On a nondiscounted basis the amount of credit losses provided for in
connection with the valuation of the interest only securities is approximately
$1,321,260,000. These estimated losses if realized, would reduce the amount of
cash flows available to the interest only securities and are considered in the
company's valuation processes.
41
<PAGE>
The table below details information pertinent to the valuation of the interest
only securities as of December 31, 1997.
<TABLE>
<CAPTION>
Manufactured Home Equity / Consumer /
Housing Home Improvement Equipment Total
---------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C>
Interest only securities carrying amount $ 857,352,000 335,089,000 170,759,000 $ 1,363,200,000
Unpaid principal balance of sold receivables $17,558,224,000 4,251,590,000 2,467,478,000 $24,277,292,000
Weighted average customer interest rate on
sold receivables 10.49% 11.82% 11.33%
Approximate expected weighted average
constant prepayment rate as a percentage
of unpaid principal balance of sold
receivables (1) 9.5% 24.0% 22.0%
Approximate remaining expected non
discounted credit losses as a percentage
of unpaid principal balance of sold
receivables (1) 6.2% 4.3% 2.1%
</TABLE>
(1) Valuation of the Company's interest only securities is impacted not only by
the projected level of prepayments of principal and net credit losses, as
shown above, but also by the projected timing of such prepayments and net
credit losses. Should the timing of projected pre-payments of principal or
net credit losses differ materially from the timing projected by the
Company, such timing could have a material effect on the valuation of the
interest only securities.
42
<PAGE>
The weighted average interest rate used to discount expected future cash flows
of the interest only securities is 11.47% as of December 31, 1997.
Prior to the implementation of SFAS 125, the Company recorded "excess servicing
rights receivable" and "allowance for losses on loans sold" on its balance
sheet. Excess servicing rights receivable consisted of net excess cash
expected to be collected over the life of the loans sold. In initially valuing
its excess servicing rights receivable at the time of securitization, the
Company established an allowance for expected losses on loans sold. This
allowance represents the Company's best estimate of future credit losses likely
to be incurred over the entire life of the loans. As of December 31, 1996,
excess servicing rights receivable consisted of:
<TABLE>
<S> <C>
Gross cash flows receivable on loans sold $ 4,379,336,000
Less:
Prepayment reserve (2,221,016,000)
Deferred service income (281,301,000)
Discount to present value (505,297,000)
FHA insurance and other fees (8,813,000)
Subordinated interest in NIM certificates 145,307,000
---------------
1,508,216,000
Allowance for losses (493,876,000)
---------------
Net excess servicing rights receivable $ 1,014,340,000
===============
</TABLE>
During the years ended December 31, 1997, 1996 and 1995, the Company sold
$10,524,758,000, $7,913,357,000 and $4,599,087,000, respectively, of closed end
receivables in various securitized transactions.
The Company recorded a writedown of interest only securities carrying value of
$190 million in 1997 due to adverse prepayment experience. Additionally, the
Company recorded a $35 million unrealized gain at December 31, 1997. As further
discussed in Note A the Company recorded a $200 million writedown in 1996.
Writedowns are recorded as a reduction of "gain on sale of receivables" in the
consolidated statements of operations. Unrealized gains are recorded as a
component of stockholders' equity.
C. FINANCE RECEIVABLES
Finance receivables consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
<S> <C> <C>
Lease $ 191,572,000 $ 570,407,000
Commercial Finance 683,691,000 212,920,000
Revolving Credit Card 165,151,000 40,803,000
Loans Held For Sale 930,610,000 395,853,000
---------------------- ----------------------
Total $1,971,024,000 $1,219,983,000
====================== ======================
</TABLE>
43
<PAGE>
The allowance for doubtful accounts included in finance receivables at December
31 is as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
<S> <C> <C>
Lease $17,776,000 $13,334,000
Commercial Finance 875,000 687,000
Revolving Credit Card 1,149,000 239,000
---------------------- ----------------------
Total $19,800,000 $14,260,000
====================== ======================
</TABLE>
D. SERVICING RIGHTS
The activity in servicing rights for 1997 is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance at beginning of year $ --
Transfer from interest only securities 30,755,000
Additions 80,928,000
Amortization (15,372,000)
-------------------------
Balance at end of year $ 96,311,000
=========================
</TABLE>
Servicing rights are evaluated for impairment on an ongoing basis, stratified by
product type and origination period. To the extent the recorded amount exceeds
the fair value of those servicing rights, a valuation allowance is established
through a charge to earnings. Upon subsequent measurement of the fair value of
these servicing rights in future periods, if the fair value equals or exceeds
the carrying amount, any previously recorded valuation allowance would be deemed
unnecessary and, therefore, represent current period earnings only to the extent
of such previously recorded allowance. Fair value of servicing rights
approximated the carrying amount and no valuation allowance with respect to the
servicing rights was necessary at December 31, 1997.
E. PROPERTY, FURNITURE AND FIXTURES
Property, furniture and fixtures consist of:
<TABLE>
<CAPTION>
December 31
Estimated -----------------------------------------
useful life 1997 1996
---------------- ------------------ -----------------
<S> <C> <C> <C>
Cost:
Building 35 years $ 20,024,000 $ 20,648,000
Furniture and equipment 3-7 years 137,451,000 87,686,000
Leasehold improvements 3-10 years 17,829,000 11,779,000
Land and improvements 7,159,000 1,724,000
------------------ -----------------
182,463,000 121,837,000
Less accumulated depreciation (70,059,000) (43,978,000)
------------------ -----------------
$112,404,000 $ 77,859,000
================== =================
</TABLE>
Depreciation expense for 1997, 1996 and 1995 was $26,851,000, $17,932,000 and
$10,956,000, respectively.
44
<PAGE>
F. DEBT
In 1997 the Company had a $2,000,000,000 commercial paper program which was used
primarily for purposes of financing its loan production inventory prior to sale
of those receivables in the form of securitization. This program was backed by
both committed bank facilities and master repurchase agreements with various
investment banking firms. During the first quarter of 1998, the Company
substantially curtailed its issuance of commercial paper, as discussed in Note
O, "Subsequent Events".
As of December 31, 1997, the Company had both a one-year and three-year
unsecured revolving line of credit totaling $1,500,000,000 which were scheduled
to expire April 28, 1998 and April 28, 2000, respectively. The credit agreement
contained certain restrictive covenants which included maintenance of a minimum
net worth of $750 million and a debt to net worth ratio not to exceed 5 to 1. In
addition, the Company utilized master repurchase agreements that were in place
with a variety of investment banking firms totaling $2,800,000,000 at December
31, 1997 which were subject to the availability of eligible collateral. There
were no outstanding balances under these facilities as of December 31, 1997 and
1996. See Note O, "Subsequent Events", for new revolving line of credit
agreement information.
The Company has a $2,000,000 promissory note which contains a balloon payment
due on April 9, 2001, bearing interest at an annual rate of 2%.
The Company also has a $250,000,000 medium term note program under which it may
issue senior notes bearing either fixed or floating rates of interest with
maturities in excess of nine months. As of December 31, 1997, $246,650,000 of
notes were outstanding under this program. Interest on these notes is payable
semi-annually.
The Senior Subordinated Notes due June 1, 2002 were issued in connection with a
debt exchange completed in April 1992. The effective interest rate on these
notes is 10.8%. There is unamortized original issue discount of $3,588,000 and
$3,556,000 at December 31, 1997 and 1996, respectively. The Company must
maintain net worth of $80,000,000 or will be required, through the use of a
sinking fund, to redeem $25,000,000 on such contingent sinking fund payment
date. Interest on these notes is payable semi-annually.
Debt outstanding and its weighted average interest rates are as follows:
<TABLE>
<CAPTION>
December 31
--------------------------------------------------------------
1997 1996
------------------------------ ----------------------------
Amount Rate Amount Rate
-------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Commercial paper $1,319,140,000 6.08% $431,242,000 5.68%
Revolving line of credit 35,000,000 5.80 39,000,000 5.63
Promissory note 1,855,000 2.00 1,939,000 2.00
------------------- -------------------
Notes payable 1,355,995,000 472,181,000
------------------- -------------------
Medium term notes 246,650,000 6.62 26,650,000 7.27
Senior subordinated notes 263,666,000 10.80 263,698,000 10.80
------------------- -------------------
Senior/Senior subordinated notes 510,316,000 290,348,000
------------------- -------------------
Total $1,866,311,000 $762,529,000
=================== ===================
</TABLE>
45
<PAGE>
At December 31, 1997, aggregate maturities of debt, excluding commercial paper
and the revolving line of credit, for the following five years are $512,109,000,
payable as follows: $3,085,000 in 1998, $5,087,000 in 1999, $12,088,000 in
2000, $4,595,000 in 2001, and $487,254,000 in 2002.
G. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net earnings by the weighted
average number of shares of Common Stock outstanding during each year. Diluted
earnings per share is computed by dividing net earnings by the weighted average
number of shares of Common Stock and potential Common Stock outstanding during
each year. All share and per-share amounts have been restated to reflect the
two-for-one stock split the Company effected in October 1995. The following
table presents the earnings per share data as required by SFAS No. 128. Options
to purchase 628,548, 33,063 and 1,124,776 shares are excluded from the
computation of diluted earnings per common share because of their anti-dilutive
effect, as the exercise price of the option exceeds the average market price of
the Common Stock for the years ended December 31, 1997, 1996 and 1995,
respectively.
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------------------------------------
1997 1996 1995
----------------- ------------------- -------------------
<S> <C> <C> <C>
Net Earnings $301,396,000 $200,774,000 $253,969,000
================= =================== ===================
Weighted average Common Stock
outstanding 136,714,884 136,995,701 136,644,397
Effect of dilutive securities:
Options 3,539,558 3,566,129 3,445,259
----------------- ------------------- -------------------
Diluted Common Stock 140,254,442 140,561,830 140,089,656
================= =================== ===================
Earnings per common share:
Basic $ 2.20 $ 1.47 $ 1.86
Diluted $ 2.15 $ 1.43 $ 1.81
</TABLE>
H. STOCKHOLDERS' EQUITY
COMMON STOCK
- ------------
In May 1996, the Board of Directors and shareholders approved the authorization
of 250,000,000 additional shares of Common Stock for general corporate purposes,
including stock dividends, raising additional capital and issuances pursuant to
employee stock option plans and possible future acquisitions.
In September 1995, the Board of Directors declared a two-for-one stock split, in
the form of stock dividends, payable on October 15, 1995 to stockholders of
record as of September 30, 1995. All references in the consolidated financial
statements and notes with regard to number of shares, stock options and related
prices and per-share amounts have been restated to give retroactive effect to
the stock split.
In February 1995, the Company's Board of Directors approved and authorized the
repurchase of up to 7,000,000 shares of the Company's Common Stock. As of
December 31, 1997, the Company had repurchased the entire 7,000,000 shares.
46
<PAGE>
STOCK BONUS PLAN
- ----------------
The Company had a key executive compensation stock bonus plan. Shares issued
under this plan are pursuant to an employment agreement and the stock is valued
at $2.96875 per share which represents the closing market price of the stock on
the date of the employment agreement. Total shares issued under this plan
during 1997, 1996 and 1995 were 2,400,000, 1,998,745 and 1,349,216,
respectively. On January 27, 1998, 761,210 shares issued in 1997 were returned
to the Company in connection with the Company's recomputation of the bonus
amount for fiscal year 1996.
STOCK OPTION PLANS
- ------------------
The Company has two stock option plans: an employee stock option plan and an
outside director plan. In 1992, the Board of Directors approved a supplemental
stock option plan for its outside directors and in 1995, the Company's
stockholders approved an Employee Stock Incentive Plan.
In 1996, the Company's stockholders approved a chief executive plan. Two
million options were granted under this plan at an exercise price equal to the
fair market value of the Company's stock on February 9, 1996, of $30.875. The
term of the option, which commences in 1997, is for ten years, with a five-year
vesting schedule providing vesting of 20% per year for each full year of
service.
Options for 742,120 shares were available for future grant under these plans.
The Company's Board of Directors has reserved 13,833,752 shares for future
issuance under all plans as of December 31, 1997.
A summary of the stock option plan activity is as follows:
<TABLE>
<CAPTION>
Number of Weighted Average
Shares Exercise Price
--------------- ------------------------
<S> <C> <C>
Outstanding at December 31, 1994 5,146,468 $ 4.45
Granted 3,015,000 24.00
Exercised (1,794,936) 4.39
Expired (110,000) 24.00
---------------
Outstanding at December 31, 1995 6,256,532 13.60
Granted 5,632,500 32.02
Exercised (1,196,500) 4.69
Expired (620,500) 26.49
---------------
Outstanding at December 31, 1996 10,072,032 23.91
Granted 1,289,500 37.32
Exercised (528,500) 9.69
Expired (922,567) 28.13
---------------
Outstanding at December 31, 1997 9,910,465 25.98
===============
</TABLE>
47
<PAGE>
Of the 9,910,465 options outstanding at December 31, 1997, 9,778,465 options
relate to the employee and chief executive stock option plans and 132,000
options relate to the outside director plan. The exercise price per share
represents the market value of the Company's stock on the date of grant except
for certain options granted in 1996 and 1995. The option price per share on
850,000 options granted in 1996 represents approximately 77% of the market value
of the Company's stock on the date of grant and 370,000 options granted in 1995
represents approximately 79% of the market value of the Company's stock on the
date of grant.
A summary of stock options outstanding and exercisable at December 31, 1997 is
as follows:
Options Outstanding:
<TABLE>
<CAPTION>
Range of Number Remaining Weighted Average
Exercise Prices Outstanding Contractual Life Exercise Price
- ---------------- ------------------ --------------------- -----------------------
<S> <C> <C> <C>
$ 2.97-24.00 3,621,665 5.97 $14.77
25.00-30.62 1,602,300 8.58 29.23
30.87-30.87 2,020,000 8.11 30.87
31.25-38.37 2,558,500 8.89 35.40
38.62-47.00 108,000 9.12 39.49
- ---------------- ------------------ --------------------- -----------------------
$ 2.97-47.00 9,910,465 7.62 $25.98
Options Exercisable:
<CAPTION>
Range of Number Weighted Average
Exercise Prices Exercisable Exercise Price
- ---------------- ------------------ -----------------------
<S> <C> <C>
$ 2.97-24.00 2,496,398 $11.03
25.00-30.62 351,100 28.82
30.87-30.87 404,000 30.87
31.25-38.37 348,000 34.07
38.62-47.00 16,000 38.94
- ---------------- ------------------ -----------------------
$ 2.97-47.00 3,615,498 $17.32
</TABLE>
48
<PAGE>
The Company applies Accounting Principles Board Opinion No. 25, and related
interpretations in accounting for its stock incentive plans. Proceeds from
stock options exercised are credited to common stock and paid-in capital. There
are no charges or credits to expense with respect to the granting or exercise of
options that were issued at fair market value on their respective dates of
grant. Had compensation costs for the Company's stock-based compensation plans
been determined consistent with Statement of Financial Accounting Standards No.
123, the Company's net earnings and earnings per share would have been reduced
to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net Earnings As Reported $301,396,000 $200,774,000 $253,969,000
Pro Forma 281,645,000 190,185,000 250,805,000
Diluted Earnings
Per Share As Reported $2.15 $1.43 $1.81
Pro Forma 2.01 1.35 1.79
</TABLE>
The fair value for each option granted in 1997, 1996 and 1995 utilized in the
foregoing pro forma amounts is estimated on the date of grant using an option
pricing model. The model incorporates the following assumptions in 1997, 1996
and 1995: .8% dividend yield; 41.9%, 38.5% and 39.7% expected volatility,
respectively; risk-free interest rates ranging from 5.2% to 7.7%; and expected
option term beyond vesting of 2 years.
DIVIDENDS
- ---------
During 1997, 1996 and 1995 the Company declared and paid dividends of $.33, $.26
and $.20 per share, respectively, on its Common Stock. Under a letter of credit
agreement, the Company is subject to restrictions limiting the payment of
dividends and common stock repurchases. At December 31, 1997, such payments
were limited to $106,239,000 which represents 50% of consolidated net earnings
for the most recently concluded four fiscal quarter periods less dividends paid.
I. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Fair value estimates as of December 31, 1997 and 1996 are based on pertinent
information available to management as of the respective dates. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been revalued for purposes
of these financial statements subsequent to December 31, 1997 and 1996.
Therefore, current estimates of fair value may differ significantly from the
amounts presented herein. Fair value estimates, methods and assumptions are set
forth below for the Company's financial instruments.
CASH AND CASH EQUIVALENTS, CASH DEPOSITS AND OTHER INVESTMENTS
- --------------------------------------------------------------
The carrying amount of cash and cash equivalents, cash deposits and other
investments approximates fair value because they generally mature in 90 days or
less and do not present unanticipated credit concerns.
49
<PAGE>
INTEREST ONLY SECURITIES
- ------------------------
Fair value on interest only securities is calculated using prepayment, default
and interest rate assumptions on expected future cash flows that the Company
believes market participants would use for similar instruments, as shown in Note
B, "Interest Only Securities".
FINANCE RECEIVABLES
- -------------------
(a) Lease
-----
Lease receivables generally consist of a large number of individually small
finance leases with average remaining terms of less than 36 months. Fair
value approximates carrying value.
(b) Commercial Finance
-------------------
Commercial finance receivables consist primarily of loans which reprice
monthly, typically in accordance with the prime lending rate offered by
banks. Given this repricing structure, the Company estimates the fair value
of these receivables to approximate their carrying value.
(c) Revolving Credit Card
---------------------
Revolving credit card receivables consist of retail credit and the
applicable interest from credit card agreements applied to revolving credit.
The Company estimates the fair value of these receivables to approximate
their carrying value.
(d) Loans Held for Sale
--------------------
Loans held for sale are generally recent originations which will be sold
during the following quarter. Generally, the loans have origination rates in
excess of rates on the securities into which they will be pooled. Since
these loans have not been converted into securitized pools, the Company
estimates the fair value to be the carrying amount plus the cost of
origination.
NOTES PAYABLE
- -------------
Notes payable consist of short-term amounts payable under the Company's
commercial paper program, line of credit or repurchase agreements and are at a
rate which approximates market. As such, fair value approximates the carrying
amount.
SENIOR NOTES AND SENIOR SUBORDINATED NOTES
- ------------------------------------------
The fair value of the Company's senior notes is estimated based on their quoted
market price or on the current rates offered to the Company for debt of a
similar maturity. The Company's senior subordinated notes are valued at quoted
market prices.
50
<PAGE>
The carrying amounts and estimated fair values of the Company's financial assets
and liabilities are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
-------------------------------------- -----------------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
----------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Financial assets:
Cash and cash equivalents, cash
deposits and other investments $1,013,929 $1,013,929 $ 625,480 $ 625,480
Interest only securities 1,363,200 1,363,200 1,014,340 1,006,480
Finance receivables:
Lease 191,572 191,572 570,407 570,407
Commercial finance 683,691 683,691 212,920 212,920
Revolving credit 165,151 165,151 40,803 40,803
Loans held for sale 930,610 945,965 395,853 404,738
Financial liabilities:
Notes payable 1,355,995 1,355,995 472,181 472,181
Senior notes/senior subordinated
notes 510,316 520,018 290,348 331,580
</TABLE>
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. The
estimates do not reflect any premium or discount that could result from offering
for sale at one time, the Company's entire holdings of a particular financial
instrument. Fair value estimates are based on judgments regarding future loss
and prepayment experience, current economic conditions, specific risk
characteristics and other factors. Changes in market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
J. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
- -----------------
At December 31, 1997, aggregate minimum rental commitments under noncancelable
leases having terms of more than one year were $32,984,000, payable $10,425,000
(1998), $9,485,000 (1999), $7,116,000 (2000), $4,400,000 (2001) and $1,558,000
(2002). Total rental expense for the years ended December 31, 1997, 1996 and
1995 was $13,055,000, $8,664,000 and $6,101,000, respectively. These leases are
for office facilities and equipment and many contain either clauses for cost of
living increases and/or options to renew or terminate the lease.
CONTINGENT LIABILITY
- --------------------
The Company services all receivables securitized. In connection with certain
securitization transactions, the Company has provided guarantees in the amount
of $1.7 billion and $1.5 billion as of December 31, 1997 and 1996, respectively.
The Company believes it has adequately considered this guarantee in connection
with its presentation of its financial condition and no liability is necessary
to provide for exposure related to this guarantee.
51
<PAGE>
LITIGATION
- ----------
The Company has been served with various lawsuits in United States District
Court. These lawsuits were filed by certain stockholders of the Company as
purported class actions on behalf of persons or entities who purchased common
stock of the Company during the alleged class periods. In addition to the
Company, certain current and former officers and directors of the Company are
named as defendants in one or more of the lawsuits. The Company and the other
defendants intend to seek consolidation of each of the lawsuits in the United
States District Court for the District of Minnesota. Plaintiffs in the lawsuits
assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934. In each case, plaintiffs allege that the Company and the other defendants
violated federal securities laws by, among other things, making false and
misleading statements about the current state and future prospects of the
Company (particularly with respect to prepayment assumptions and performance of
certain of the Company's loan portfolios) which allegedly rendered the Company's
financial statements false and misleading. The Company believes that the
lawsuits are without merit and intends to defend such lawsuits vigorously.
In addition, the nature of the Company's business is such that it is routinely a
party or subject to items of pending or threatened litigation. Although the
ultimate outcome of certain of these matters cannot be predicted, management
believes, based upon information currently available that the resolution of
these legal matters will not result in any material adverse effect on its
consolidated financial condition.
K. BENEFIT PLANS
The Company has a qualified noncontributory defined benefit pension plan
covering substantially all of its employees over 21 years of age. The plan's
benefits are based on years of service and the employee's compensation. The
plan is funded annually based on the maximum amount that can be deducted for
federal income tax purposes. The assets of the plan are primarily invested in
common stock, corporate bonds and cash equivalents. In addition, the Company
maintains a nonqualified pension plan for certain key employees as designated by
the Board of Directors. The following table sets forth the plans' funded status
and amounts recognized in the Company's statement of financial position at
December 31.
<TABLE>
<CAPTION>
1997 1996
--------------------------------------- ---------------------------------------
Actuarial Present Value of Qualified Supplemental Qualified Supplemental
Benefit Obligations Plan Plan Plan Plan
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Vested benefit obligation $ (7,800,861) $(17,066,920) $ (6,851,740) $(13,029,105)
----------------- ----------------- ----------------- -----------------
Accumulated benefit obligation (11,112,689) (17,066,920) (8,340,969) (13,167,331)
----------------- ----------------- ----------------- -----------------
Projected benefit obligation (21,780,333) (51,101,268) (17,033,929) (22,840,557)
Plan assets at fair value 9,071,280 -- 7,074,888 --
----------------- ----------------- ----------------- -----------------
Excess of projected benefit
obligation over plan assets (12,709,053) (51,101,268) (9,959,041) (22,840,557)
Unrecognized net loss 7,753,539 35,395,087 7,089,685 13,381,065
Prior service cost (339,491) -- (375,599) --
Unrecognized net (asset)
obligation (44,600) 212,600 (59,140) 359,000
----------------- ----------------- ----------------- -----------------
Net pension liability recognized
in the consolidated balance sheet $ (5,339,605) $(15,493,581) $ (3,304,095) $ (9,100,492)
================= ================= ================= =================
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- -------------------- ------------------- -------------------
Net Periodic Pension Cost -
Qualified and Supplemental 1997 1996 1995
- --------------------------------- -------------------- ------------------- -------------------
<S> <C> <C> <C>
Service cost $ 4,854,946 $3,074,664 $1,105,952
Interest cost on projected
benefit obligation 3,949,924 1,944,237 622,688
Actual return on plan assets (1,304,116) (776,764) (816,479)
Net amortization and deferral 2,493,995 1,104,904 391,726
-------------------- ------------------- -------------------
Net periodic pension cost $ 9,994,749 $5,347,041 $1,303,887
==================== =================== ===================
</TABLE>
The preretirement discount rate, postretirement discount rate and rate of
increase in future compensation levels used for determining obligations as of
December 31, 1997 were 6.75%, 6.5% and 5.5% respectively, and for determining
expense at December 31, 1996 were 7.25%, 6.5% and 5.5% respectively.
Preretirement mortality table and postretirement mortality tables were used for
determining expense and obligations at December 31, 1997. The wage base under
Social Security was assumed to increase at 4.5% per year starting in 1997. The
maximum benefit and compensation contained in Sections 415(b) and 401(a)(17) of
the IRS Code are assumed to increase by 4.0% per year in the future. Total
pension expense for the plans in 1997, 1996 and 1995 was $14,064,000, $5,347,000
and $3,091,000, respectively.
The Company also has a 401(k) Retirement Savings Plan available to all eligible
employees. To be eligible for the plan, the employee must be at least 21 years
of age and have completed six months of employment at Green Tree during which
the employee worked at least 1,000 hours. Eligible employees may contribute to
the plan up to 15% of their earnings with a maximum of $9,500 for 1997 based on
the Internal Revenue Service annual contribution limit. The Company will match
50% of the employee contributions for an amount up to 6% of each employee's
earnings. Contributions are invested at the direction of the employee to one or
more funds. Company contributions vest after three years. Company
contributions to the plan were $2,498,000, $1,316,000 and $859,000 in 1997, 1996
and 1995, respectively.
53
<PAGE>
L. INCOME TAXES
Income taxes consist of the following:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------------------------------
1997 1996 1995
------------------- ------------------- -------------------
<S> <C> <C> <C>
Current:
Federal $ 32,574,000 $ 51,908,000 $ 43,883,000
State 2,574,000 3,687,000 2,090,000
------------------- ------------------- -------------------
35,148,000 55,595,000 45,973,000
Deferred:
Federal 129,717,000 56,201,000 92,870,000
State 19,862,000 11,259,000 16,816,000
------------------- ------------------- -------------------
149,579,000 67,460,000 109,686,000
------------------- ------------------- -------------------
$184,727,000 $123,055,000 $155,659,000
=================== =================== ===================
Deferred income taxes are provided for temporary differences between financial
statement carrying amounts and their respective tax basis. The tax effects of
temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at December 31, 1997 and 1996 are
presented below.
<CAPTION>
December 31
--------------------------------------------
1997 1996
------------------- -------------------
<S> <C> <C>
Deferred tax liabilities:
Interest only securities $737,238,000 $451,051,000
Other 45,282,000 50,602,000
------------------- -------------------
Gross deferred tax liabilities 782,520,000 501,653,000
------------------- -------------------
Deferred tax assets:
Net operating loss carryforward 135,180,000 20,347,000
Other 24,569,000 8,114,000
------------------- -------------------
Gross deferred tax assets 159,749,000 28,461,000
------------------- -------------------
Net deferred tax liability $622,771,000 $473,192,000
=================== ===================
</TABLE>
At December 31, 1997, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $386,000,000 which are available to
offset future federal taxable income and expire no earlier than 2003. No
valuation allowance was required as of December 31, 1997 or 1996 since it is
likely that the deferred tax asset will be realized against future income and
the reversal of deferred tax liabilities.
The effective tax rate for December 31, 1997, 1996 and 1995 is 38.0%. It is
comprised of the statutory federal income tax rate of 35.0% and a state tax
rate, net of federal benefit of 3.0%.
54
<PAGE>
M. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income", which the Company is required to adopt
effective January 1, 1998. This adoption requires information to be reported in
interim periods in the initial year and will have no financial impact to the
Company, but will require new disclosure information.
In June, 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information",
which the Company is required to adopt for the 1998 fiscal period. This
adoption does not require that segment information be reported in interim
periods in the initial year, but that segment information is disclosed in the
following year for comparability purposes. The segmentation disclosure
requirements are under review by the Company's management.
N. BUSINESS ACQUISITION
On December 1, 1996, the Company purchased the net assets of FINOVA Acquisition
I, Inc. for approximately $620,000,000. The business acquired under a stock
purchase agreement provides equipment leases, loans and related services to
manufacturers and dealers and their customers. Goodwill totaling $59,201,000,
was recorded as part of this acquisition. The December 1996 financial
operations of this leasing/loan business is included in the Company's December
31, 1996 financial statements.
O. SUBSEQUENT EVENTS
During the fourth quarter of 1997 and in early 1998 the Company's senior
unsecured debt ratings and short-term debt ratings were lowered by each of the
credit rating agencies which provide ratings on the Company's debt. As a result
of these ratings actions the Company has, in 1998, substantially curtailed its
issuance of commercial paper in favor of its master repurchase agreements.
In addition, effective February 10, 1998, the Company has substantially
restructured its unsecured bank credit agreements reducing the aggregate
commitment to $750,000,000 and renegotiating significant terms and covenants in
lieu of a waiver of certain representations required of the Company for purposes
of utilizing the credit line. This waiver/amendment expires on April 28, 1998.
Certain of the Company's master repurchase agreements have been amended in 1998
primarily to include financing for a broader range of receivables originated by
the Company. Additionally, aggregate master repurchase lines have been increased
to $3.8 billion.
In addition, on February 13, 1998 the Company closed on a $500 million line of
credit secured by its interest only securities. This line of credit matures on
February 12, 2000, with an option to extend for an additional one year term.
55
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (unaudited)
-------------------------------------------
<TABLE>
<CAPTION>
First Second Third Fourth
quarter quarter quarter quarter
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
(dollars in thousands except per-share amounts)
1997:
Income $267,155 $317,145 $348,260 $158,900
Net earnings (loss) 91,803 108,093 118,822 (17,322)
Diluted earnings (loss)
per share .65 .78 .85 (.12)
1996:
Income $168,118 $196,102 $219,665 $140,226
Net earnings (loss) 66,362 75,422 85,518 (26,528)
Diluted earnings (loss)
per share .48 .54 .61 (.19)
1995:
Income $128,199 $153,274 $174,374 $255,473
Net earnings 50,729 61,712 72,037 69,491
Diluted earnings per
share .36 .44 .51 .50
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
- ---------------------------------------------------------------
None.
56
<PAGE>
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- -------------------------------------------------------------
Pursuant to General Instruction G(3), reference is made to the information
contained in the Company's definitive proxy statement for its 1997 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission on or before May 1, 1998.
ITEM 11. EXECUTIVE COMPENSATION.
- ---------------------------------
Pursuant to General Instruction G(3), reference is made to the information
contained in the Company's definitive proxy statement for its 1997 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission on or before May 1, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -------------------------------------------------------------------------
Pursuant to General Instruction G(3), reference is made to the information
contained in the Company's definitive proxy statement for its 1997 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission on or before May 1, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ---------------------------------------------------------
None.
57
<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
- --------------------------------------------------------------------------
(a)(1) Financial statements
The following consolidated financial statements of Green Tree Financial
Corporation and subsidiaries are included in Part II, Item 8 of this report:
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Independent Auditors' Report 30
Consolidated Balance Sheets - December 31, 1997 and 1996 31
Consolidated Statements of Operations - years ended
December 31, 1997, 1996 and 1995 32
Consolidated Statements of Stockholders' Equity - years ended
December 31, 1997, 1996 and 1995 33
Consolidated Statements of Cash Flows - years ended
December 31, 1997, 1996 and 1995 34
Notes to Consolidated Financial Statements 37
Schedules other than those listed above are omitted because of the
absence of the conditions under which they are required or because the
information required is included in the consolidated financial statements
or notes thereto.
(3) Exhibits
Exhibit No.
-----------
3 (a) Certificate of Incorporation of Green Tree Financial
Corporation (incorporated by reference to the Company's
Registration Statement on Form S-1; File No. 33-60869).
3 (b) Certificate of Merger of Incorporation of Green Tree
Financial Corporation, as filed with the Delaware Secretary
of State on June 30, 1995 (incorporated by reference to the
Company's Registration Statement on Form S-1; File No. 33-
60869).
3 (c) Restated Bylaws of Green Tree Financial Corporation (filed
herewith).
4 (a) Indenture dated as of March 15, 1992 relating to
$287,500,000 of 10 1/4% Senior Subordinated Notes due June
1, 2002 (incorporated by reference to the Company's
Registration Statement on Form S-4; File No. 33-42249).
4 (b) Indenture dated as of September 1, 1992 relating to
$250,000,000 of Medium- Term Notes, Series A, Due Nine
Months or More From Date of Issue (incorporated by reference
to the Company's Registration Statement on Form S-3; File
No. 33-51804).
10 (a) Company's Key Executive Bonus Program (incorporated by
reference to the Company's Registration Statement on Form S-
1; File No. 2-82880).
</TABLE>
58
<PAGE>
10 (b) Employment Agreement, dated February 9, 1996 between the Company
and Lawrence Coss and related Noncompetition Agreement, dated
February 9, 1996 (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996; File No. 1-08916).
10 (c) Green Tree Financial Corporation 1987 Stock Option Plan
(incorporated by reference to the Company's Registration
Statement on Form S-4; File No. 33-42249).
10 (d) Green Tree Financial Corporation Key Executive Stock Bonus Plan
(incorporated by reference to the Company's Registration
Statement on Form S-4; File No. 33-42249).
10 (e) Master Repurchase Agreement dated as of September 1, 1995
between Merrill Lynch Mortgage Capital, Inc. and Green Tree
Financial Corporation (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December
31, 1995; File No. 1-08916); as amended by Amendment to the
Master Repurchase Agreement dated June 1, 1997 (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997; File No. 0-11652).
10 (f) Credit Agreements dated as of April 29, 1997 between Green Tree
Financial Corporation and The First National Bank of Chicago
(filed herewith); as amended by Amendments to the Credit
Agreements dated February 6, 1998 (filed herewith).
10 (g) Insurance and Indemnity Agreement dated as of February 13, 1992
among Green Tree Financial Corporation, MaHCS Guaranty
Corporation and Financial Security Assurance Inc. (incorporated
by reference to the Company's Annual report on Form 10-K for the
year ended December 31, 1991; File No. 0-11652); as amended by
Amended and Restated Insurance and Indemnity Agreement dated
March 11, 1994 (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1994; File No. 0-11652).
10 (h) Master Repurchase Agreement dated as of October 15, 1992 between
Green Tree Finance Corp.-Five and Lehman Commercial Paper, Inc.
(incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992; File No., 0-
11652); as amended by Amendment to the Master Repurchase
Agreement dated June 30, 1995 (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1995; File No. 0-11652).
59
<PAGE>
10 (i) 401(k) Plan Trust Agreement effective as of October 1, 1992
(incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992; File No. 0-
11652); as amended by Amendment to the Plan Agreement dated
November 23, 1994 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year then ended December 31,
1994; File No. 0-11652); as amended by Amendment to the Plan
Agreement dated August 22, 1996 (incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1996; File No. 1-08916); as amended
by Amendment to the Plan Agreement dated December 30, 1996
(incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996; File No. 1-
08916).
10 (j) Green Tree Financial Corporation Restated 1992 Supplemental
Stock Option Plan (filed herewith).
10 (k) Master Repurchase Agreement dated as of November 9, 1995 between
Salomon Brothers Holding Company and Green Tree Financial
Corporation (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995; File
No. 1-08916).
10 (l) Green Tree Financial Corporation 1995 Employee Stock Incentive
Plan (incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; File No. 1-
08916).
10 (m) Green Tree Financial Corporation Chief Executive Cash Bonus and
Stock Option Plan and related Stock Option Agreement, dated
February 9, 1996 (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996; File No. 1-08916).
10 (n) Green Tree Financial Corporation 1996 restated Supplemental
Pension Plan dated May 15, 1996 (filed herewith).
10 (o) Reverse Repurchase Agreement between the Company and Smith
Barney Mortgage Capital Group Inc., dated June 1, 1997
(incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997; File No.
1-08916).
12 Computation of Ratio of Earnings to Fixed Charges (filed
herewith).
21 Subsidiaries of the Registrant (filed herewith).
23 Consent of KPMG Peat Marwick LLP (filed herewith).
24 Powers of Attorney (filed herewith).
27 Financial Data Schedule (filed herewith).
60
<PAGE>
PURSUANT TO ITME 601(b) (4) OF REGULATION S-K, THERE HAS BEEN EXCLUDED FROM THE
EXHIBITS FILED PURSUANT TO THIS REPORT, INSTRUMENTS DEFINING THE RIGHTS OF
HOLDERS OF LONG-TERM DEBT OF THE COMPANY WHERE THE TOTAL AMOUNT OF THE
SECURITIES AUTHORIZED UNDER SUCH INSTRUMENTS DOES NOT EXCEED TEN PERCENT OF THE
TOTAL ASSETS OF THE COMPANY. THE COMPANY HEREBY AGREES TO FURNISH A COPY OF ANY
SUCH INSTRUMENTS TO THE COMMISSION UPON REQUEST.
(b) Reports on Form 8-K
The Company filed a Form 8-K on December 10, 1997, reporting under Item 5
thereof current developments related to the resignation of the Company's
President and Chief Operating Officer.
The Company filed a Form 8-K on January 27, 1998, reporting under Item 5
thereof current developments related to the Company's announcement of
fourth quarter and 1997 results and plans to restate 1996 earnings.
The Company filed a Form 8-K on February 18, 1998, reporting under Item 5
thereof current developments related to the Company's announcement of the
closing of new committed financing arrangements.
61
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, Green Tree Financial Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
GREEN TREE FINANCIAL CORPORATION
By: /s/Lawrence M. Coss By: /s/Edward L. Finn
--------------------- -------------------
Lawrence M .Coss Edward L. Finn
Chairman and Chief Executive Executive Vice President and
Officer (principal executive officer) Chief Financial Officer
(principal financial officer)
By: /s/Scott T. Young
-------------------
Scott T. Young
Senior Vice President and
Controller
(principal accounting officer)
Dated: March 20, 1998
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/Lawrence M. Coss
- ---------------------
Lawrence M. Coss, Director March 20, 1998
/s/Richard G. Evans
- ---------------------
Richard G. Evans, Director March 20, 1998
W. Max McGee, Director ) By: /s/Joel H. Gottesman
----------------------
) Joel H. Gottesman
Robert S. Nickoloff, Director ) Attorney-in-Fact
Dated: March 20, 1998
62
<PAGE>
GREEN TREE FINANCIAL CORPORATION
Securities and Exchange Commission
Form 10-K
(For the Fiscal Year Ended December 31, 1997)
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page No.
- ----------- ------- --------
<S> <C> <C>
12 Computation of Ratio of Earnings to Fixed Charges 64
21 Subsidiaries of Registrant 65
23 Consent of KPMG Peat Marwick LLP 68
24 Powers of Attorney 69
27 Financial Data Schedule 70
</TABLE>
<PAGE>
Exhibit 3(c)
RESTATED BYLAWS
---------------
OF
--
GREEN TREE FINANCIAL CORPORATION,
---------------------------------
A DELAWARE CORPORATION
----------------------
<PAGE>
CONTENTS
--------
Bylaw Provision Page Number
- --------------- -----------
Article I. OFFICES, CORPORATE SEAL 1
Section 1.01. Offices 1
Section 1.02. Corporate Seal 1
Article II. MEETINGS OF STOCKHOLDERS 1
Section 2.01. Place of Meeting 1
Section 2.02. Annual Meetings 1
Section 2.03. Special Meetings 1
Section 2.04. Record Date 2
Section 2.05. Notice of Meeting 2
Section 2.06. Quorum 2
Section 2.07. Adjourned Meetings 2
Section 2.08. Act of the Stockholders 2
Section 2.09. Voting 2
Section 2.10. Proxies 3
Section 2.11. Waiver of Notice 3
Section 2.12. List of Stockholders 3
Article III. DIRECTORS 3
Section 3.01. General Powers 3
Section 3.02. Number, Qualification and Term of Office 3
Section 3.03. Board Meetings 4
Section 3.04. Calling Meetings; Notice 4
Section 3.05. Waiver of Notice 4
Section 3.06. Quorum 4
Section 3.07. Conference Communications 5
Section 3.08. Vacancies 5
Section 3.09. Removal 5
Section 3.10. Committees 5
Section 3.11. Committee of Disinterested Persons 6
Section 3.12. Written Action 6
Section 3.13. Nomination of Director Candidates 6
Section 3.14. Determination of Contested Elections 6
Article IV. OFFICERS 7
Section 4.01. Number and Designation 7
Section 4.02. Chief Executive Officer 7
Section 4.03. Chief Financial Officer 7
Section 4.04. President 7
Section 4.05. Vice President 8
Section 4.06. Secretary 8
Section 4.07. Treasurer 8
Section 4.08. Authority and Duties 8
Section 4.09. Removal and Vacancies 8
Section 4.10. Compensation 8
<PAGE>
Article V. SHARES AND THEIR TRANSFER 8
Section 5.01. Certificates for Shares 8
Section 5.02. Transfer of Shares 9
Section 5.03. Loss of Certificates 9
Article VI. DIVIDENDS, RECORD DATE 9
Section 6.01. Dividends 9
Section 6.02. Record Date 9
Article VII. CORPORATE RECORDS 10
Section 7.01. Share Register 10
Section 7.02. Other Records 10
Article VIII. SECURITIES OF OTHER CORPORATIONS 10
Section 8.01. Voting Securities Held by the Corporation 10
Section 8.02. Purchase and Sale of Securities 10
Article IX. INDEMNIFICATION OF CERTAIN PERSONS 10
Section 9.01. Right to Indemnification 10
Section 9.02. Right of Indemnitee to Bring Suit 11
Section 9.03. Non-Exclusivity of Rights 11
Section 9.04. Insurance 11
Section 9.05. Indemnification of Directors, Officers,
Employees, and Agents of Subsidiaries
and Related Entities and Employees and
Agents of the Corporation 12
Section 9.06. Amendment 12
Article X. FISCAL YEAR 12
Article XI. AMENDMENTS 12
<PAGE>
ARTICLE I
OFFICES, CORPORATE SEAL
Section 1.01. Offices. The address of the registered office of the
Corporation and the name of its registered agent, if any, at the address of the
registered office shall be set forth in the Certificate of Incorporation or in
the latest statement filed with the Secretary of State. The Corporation may
have such other offices, within or without the State of Delaware, as the Board
of Directors shall, from time to time determine.
Section 1.02. Corporate Seal. The corporate seal shall be circular in
form and shall have inscribed thereon the name of the Corporation and the word
"Delaware" and the words "Corporate Seal". It shall not be necessary for the
Corporation to use the corporate seal on any document.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. Place of Meeting. Meetings of the stockholders of the
Corporation shall be held at such place, either within or without the state of
Delaware, as may be designated from time to time by the Board of Directors, or
if not so designated, then at the office of the Corporation required to be
maintained pursuant to Section 1.01 hereof.
Section 2.02. Annual Meetings. The Corporation shall hold meetings of the
stockholders on an annual basis on such day or date and at such time and place
as the Board of Directors shall determine by resolution. At annual meetings,
the stockholders shall elect qualified successors for directors whose terms are
expiring and may transact such other business as may be appropriate for
stockholders' action.
Section 2.03. Special Meetings. A special meeting of the stockholders for
any purposes may be called at any time by the Board of Directors. The
Corporation shall hold special meetings on the date and at the time and place
fixed by the Board of Directors. The business transacted at a special meeting
shall be limited to the purposes as stated in the notice of the meeting. Any
business transacted at a special meeting that is not included in the purposes
stated in the notice of meeting is voidable by or on behalf of the Corporation,
unless all stockholders have waived notice of the meeting.
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Section 2.04. Record Date. The Board of Directors shall fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty days nor less than ten days preceding the date
of any meeting of stockholders as the record date for the determination of the
stockholders entitled to notice of, and to vote at, such meeting. When a record
date is so fixed, only stockholders as of that date are entitled to notice of
and permitted to vote at that meeting of stockholders. In the absence of action
by the Board of Directors, such record date shall be the forty-fifth day prior
to a meeting, unless such forty-fifth day is not a business day in which event
the record date shall be the last business day immediately prior to such forty-
fifth day.
Section 2.05. Notice of Meeting. Except as otherwise specified in Section
2.07 or required by law, notice of each meeting of the stockholders stating the
date, time, and place and, in the case of a special meeting, the purpose or
purposes, shall be given at least ten days and not more than sixty days prior to
the meeting to every holder of shares entitled to vote at such meeting.
Section 2.06. Quorum. The holders of a majority of the voting power of
the shares entitled to vote at a meeting, whether present or in person or by
proxy, shall constitute a quorum for the transaction of business at any annual
or special meeting. If a quorum is present when a duly called or held meeting
is convened, the stockholders present may continue to transact business until
adjournment, even though the withdrawal of a number of stockholders originally
present leaves less than the proportion or number otherwise required for a
quorum.
Section 2.07. Adjourned Meetings. Those present at a meeting may adjourn
the meeting from time to time, whether or not a quorum is present. The
corporation shall not be required to give notice of the reconvened meeting to
the stockholders if the date, time, and place of the reconvened meeting is
announced at the meeting being adjourned; provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting. At reconvened meetings at which a quorum is present, any business may
be transacted which might have been transacted at the meeting as originally
noticed.
Section 2.08. Act of the Stockholders. At any meeting of stockholders,
the stockholders shall take action by the affirmative vote of the holders of a
majority of the voting power of the shares present and entitled to vote, except
to the extent otherwise required by Delaware General Corporation Law. In the
event the Corporation shall have outstanding a class or series of shares that
are entitled to vote as a class or series by Delaware General Corporation Law,
the Certificate of Incorporation, these Bylaws, or the terms of such shares, the
matter being voted upon must also receive the affirmative vote of the holders of
the same proportion of the shares of that class or series as is required
pursuant to the preceding sentence.
Section 2.09. Voting. At each meeting of the stockholders every
stockholder having the right to vote shall be entitled to vote either in person
or by proxy meeting the requirements of Section 2.10. Unless otherwise provided
in the Certificate of Incorporation or according to the terms of the shares,
each stockholder shall have one vote for each share having voting power
registered in such stockholder's name on the books of the Corporation. Holders
of shares entitled to vote may vote any portion of the shares in any way the
stockholder chooses. If a stockholder votes without designating the proportion
or number of shares voted in a particular way, the stockholder is deemed to have
voted all of the shares in that way. Jointly owned shares may be voted by any
joint owner unless the Corporation receives written
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notice from any one of them denying the authority of that person to vote the
shares. Upon the demand of any stockholder, the vote upon any question before
the meeting shall be by ballot.
Section 2.10. Proxies. A stockholder may cast or authorize the casting of
a vote by filing a written appointment of a proxy with an officer of the
Corporation at or before the meeting at which the appointment is to be
effective. No proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period. An appointment of a proxy
for shares held jointly by two or more stockholders is valid if signed by any
one of them, unless the Corporation receives from any one of those stockholders
written notice either denying the authority of that person to appoint a proxy or
appointing a different proxy. To be valid, all proxies must meet the
requirements of, and shall be governed by, Delaware General Corporation Law.
Section 2.11. Waiver Of Notice. Any stockholder may waive notice of any
regular or special meeting, either before, at, or after such meeting, orally or
in a writing signed by such stockholder or a representative entitled to vote the
share, of such stockholder. Attendance by a stockholder at any meeting of
stockholders is a waiver of notice of such meeting, except where the stockholder
objects at the beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened or objects before a vote on an
item of business because the item may not lawfully be considered at that meeting
and the stockholder does not participate in the consideration of the item at
that meeting.
Section 2.12. List of Stockholders. The Secretary shall prepare and make,
at least 10 days before every meeting of Stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not specified, at the place where the
meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
ARTICLE III
DIRECTORS
Section 3.01. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
Section 3.02. Number, Qualification and Term of Office. The number of
directors shall be less than three nor more than eleven and shall be established
by resolution of the Board of Directors. Directors need not be stockholders.
The number of directors may be increased beyond eleven or decreased below three
from time to time by a resolution adopted by the stockholders of at least 80% of
the shares of the corporation entitled to vote or, to the extent permitted by
law, by the Board of Directors. The directors shall be divided into three
classes, as equal in number as possible. Directors in the first class
(currently two directors) shall serve until the 1996 regular meeting of
stockholders; directors in the second class (currently two directors) shall
serve until the 1997 regular meeting of stockholders; and
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directors in the third class (currently two directors) shall serve until the
1998 regular meeting of stockholders. At each regular meeting of the
stockholders each director elected to succeed a director whose term has expired
shall hold office until the third succeeding regular meeting of the stockholders
after such director's election and until such directors successor has been duly
elected and qualified, or until the earlier death, resignation, removal or
disqualification of such director. In case of any increase or decrease in the
number of directors, the increase or decrease shall be distributed among the
several classes as equally as possible as shall be determined by the Board of
Directors or by the stockholders of at least 80% of the shares of the
corporation entitled to vote; provided that any increase shall first be applied
to the class of directors having the shortest unexpired term and any decrease
shall first be applied to the class of directors having the longest unexpired
term.
Notwithstanding the foregoing, whenever the holders of any one or more
series of Preferred Stock issued by the Corporation pursuant to Article 4 of the
Certificate of Incorporation of the Corporation shall have the right, voting
separately as a class or by series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of the
series of Preferred Stock applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Section 3.02 or Article III
unless expressly provided by the terms of the applicable series.
(a) Amendment. No provision of this Section 3.02 of Article III may
be amended or rescinded, except by the affirmative vote of the
stockholders of at least 80% of the outstanding shares of the
corporation entitled to vote, or by the Board of Directors, to the
extent permitted by law.
Section 3.03. Board Meetings The Board of Directors may hold meetings from
time to time at such time and place as the notice of such meeting may designate
or at the place announced if no notice is required. The Board of Directors
shall meet each year immediately after the annual meeting of the stockholders at
the same place. No notice of any kind to either old or new members of the Board
of Directors shall be necessary for such annual meeting or for any regular
meeting of the directors fixed from time to time by resolution of a majority of
the Board of Directors.
Section 3.04. Calling Meetings, Notice. Meetings of the Board of
Directors may be called by the Chief Executive Officer, by giving at least
twenty-four hours notice of the date, time and place thereof to each director by
mail, telephone, telegram or in person. If the date, time and place of a Board
of Directors meeting have been announced at a previous meeting of the Board of
Directors, no notice is required. Notice of an adjourned meeting need not be
given other than by announcement at the meeting at which adjournment is taken of
the date, time and place at which the meeting will be reconvened.
Section 3.05. Waiver of Notice. Any director may waive notice of any
meeting of the Board of Directors either before, at, or after such meeting
orally or in a writing signed by such director. A director, by the director's
attendance at any meeting of the Board of Directors, shall be deemed to have
waived notice of such meeting, except when the director objects at the beginning
of the meeting to the transaction of business because the meeting is not
lawfully called or convened and does not participate thereafter in the meeting.
Section 3.06. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting.
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Section 3.07. Conference Communications. Any or all directors may
participate in any meeting or conference of the Board of Directors, or of any
duly constituted committee thereof, by any means of communication through which
the directors may simultaneously hear each other during such meeting and
participation in a meeting pursuant to this Section shall constitute presence in
person at the meeting.
Section 3.08. Vacancies. Vacancies in the Board of Directors of this
Corporation occurring by reason of death, resignation, removal, or
disqualification shall be filled for the unexpired term by a majority of the
remaining directors, even though less than a quorum. Vacancies resulting from
newly created directorships may be filled by a majority vote of the remaining
directors. Each director elected to fill a vacancy shall hold office, subject
to provisions of these Bylaws, until a qualified successor is elected by the
stockholders at a regular or special meeting. The stockholders shall elect a
director to fill the remainder of any unexpired term for which a director has
been elected to fill a vacancy by the Board of Directors at their next regular
or special meeting. No provision of this Section 3.08 of Article III may be
amended or repealed except by the affirmative vote of the holders of at least
80% of the outstanding shares of the Corporation entitled to vote, or by the
Board of Directors, to the extent permitted by law.
Section 3.09. Removal. The affirmative vote of the stockholders holding
at least 80% of the shares entitled to vote at an election of directors may
remove any or all of the directors from office at any time with or without
cause. In the event that the Board of Directors or any one or more directors be
so removed, new directors shall be elected at the same meeting. A director
named by the Board of Directors to fill a vacancy may be removed from office at
any time, with or without cause, by the affirmative vote of the remaining
directors if the stockholders have not elected directors in the interim between
the time of the appointment to fill such vacancy and the time of the removal.
No provision of this Section may be amended or repealed except by the
affirmative vote of the holders of at least 80% of the outstanding shares of the
Corporation entitled to vote, or by the Board of Directors, to the extent
permitted by law.
Section 3.10. Committees. A resolution approved by the affirmative vote
of a majority of the whole Board of Directors may establish committees having
the authority of the Board of Directors in the management of the business of the
corporation to the extent provided in the resolution except for those powers
expressly reserved to the Board of Directors under Delaware law. No such
committee shall have this power or authority in reference to amending the
Certificate of Incorporation (except as otherwise permitted by law); adopting an
agreement of merger or consolidation under Sections 251 or 252 of the Delaware
General Corporation Law; recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets;
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution; or amending the bylaws of the Corporation. A
committee shall consist of one or more directors appointed by affirmative vote
of a majority of the whole Board of Directors. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the event of the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. A majority of
the members of the committee present at a meeting is a quorum for the
transactions of business, unless a larger or smaller proportion or number is
provided in the resolution establishing the committee.
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Section 3.11. Committee of Disinterested Persons. Pursuant to the
procedure set forth in Section 3.10, the Board of Directors may establish a
committee composed of two or more disinterested directors or other disinterested
persons to determine whether it is in the best interests of the Corporation to
pursue a particular legal right or remedy of the Corporation and whether to
cause the dismissal or discontinuance of a particular proceeding that seeks to
assert a right or remedy on behalf of the Corporation. The committee, once
established, is not subject to the direction or control of, or termination by,
the Board of Directors. The vacancy on the committee may be filled by a
majority of the remaining committee members. The good faith determinations of
the committee are binding upon the Corporation and its directors, officers and
stockholders. The committee shall terminate when it issues a written report of
its determination to the Board of Directors.
Section 3.12 Written Action. Any action which might be taken at a meeting
of the Board of Directors, or any duly constituted committee thereof, may be
taken without a meeting if done in writing and signed by all of the directors or
committee members, unless the Articles provide otherwise, and such action need
not be approved by the stockholders.
Section 3.13. Nomination of Director Candidates. Nominations of
candidates for election to the Board of Directors of the Corporation at any
annual meeting of the shareholders may be made only by or at the direction of
the Board of Directors or by a shareholder entitled to vote at such annual
meeting. All such nominations, except those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, such notice must be received at the
principal executive offices of the Corporation not less than sixty days prior to
the date of such annual meeting and must set forth (i) the name, age, business
address, residence address and the principal occupation or employment of each
nominee proposed in such notice, (ii) the name and address of the shareholder
giving the notice as the same appears in the Corporation's stock register, (iii)
the number of shares of capital stock of the Corporation which are beneficially
owned by each such nominee and by such shareholder and (iv) such other
information concerning each such nominee as would be required soliciting proxies
for the election of such nominee. Such notice must also include a signed
consent of each such nominee to serve as a director of the Corporation, if
elected.
If the officer of the Corporation presiding at an annual meeting of the
shareholders determines that a director nomination was not made in accordance
with the foregoing procedures, such nomination shall be void and shall be
disregarded for all purposes.
Section 3.14. Determination of Contested Elections. In the event that
there are more candidates for election to the Board of Directors at a meeting of
the shareholders than there are directors to be elected at such meeting (a
"Contested Election"), the vote for election of directors shall be by ballot and
the officer of the Corporation presiding at the meeting shall appoint two
persons, who need not be shareholders, to act as Inspectors of Election at such
meeting.
The Inspectors so appointed, before entering on the discharge of their
duties, shall take and subscribe on oath or affirmation faithfully to execute
the duties of Inspectors at such meeting with strict impartiality and according
to the best of their ability, and thereupon the Inspectors shall take charge of
the polls and after the balloting shall canvas the votes and determine in
accordance with law and make a certificate to the Corporation of the results of
the vote taken. No director or candidate for the office of director shall be
appointed an Inspector.
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The nominees for election to the Board of Directors in a Contested Election
who are certified by the Inspectors as having been elected shall be deemed to be
duly elected and qualified upon the expiration of three business days following
the date of such certification, provided that, in the event any court
proceedings are commenced which challenge the results of such Contested
Election, such nominees shall not be deemed to be duly elected and qualified
until all such court proceedings, including appeals, shall have been finally
concluded.
ARTICLE IV
OFFICERS
Section 4.01. Number and Designation. The Corporation shall have one or
more natural persons exercising the functions of the offices of Chief Executive
Officer and Chief Financial Officer. The Board of Directors may elect or
appoint such other officers or agents as it deems necessary for the operation
and management of the Corporation, with such powers, rights, duties, and
responsibilities as may be determined by the Board of Directors, including,
without limitation, a President, one or more Vice Presidents, a Secretary, a
Treasurer, and such assistant officers or other officers as may from time to
time be elected or appointed by the Board of Directors. Each such officer shall
have the powers, rights, duties and responsibilities set forth in these Bylaws
unless otherwise determined by the Board of Directors. Any number of offices
may be held by the same person.
Section 4.02. Chief Executive Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Chief Executive Officer: (a)
shall have general active management of the business of the Corporation, (b)
shall, when present, preside at all meetings of the stockholders, (c) shall see
that all orders and resolutions of the Board of Directors are carried into
effect; (d) shall sign and deliver in the name of the Corporation any deed,
mortgages, bonds, contracts or other instruments pertaining to the business of
the Corporation, except in cases in which the authority to sign and deliver is
required by law to be exercised by another person or is expressly delegated by
these Bylaws or the Board of Directors to some other officer or agent of the
Corporation; and (e) shall perform such other duties as from time to time may be
assigned by the Board of Directors.
Section 4.03. Chief Financial Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the Treasurer: (a) shall cause to
be kept accurate financial records, for the Corporation; (b) shall cause to be
deposited all monies, drafts, and checks in the name of and to the credit of the
Corporation in such banks, and depositories as the Board of Directors shall
designate from time to time; (c) shall cause to be endorsed for deposit all
notes, checks and drafts received by the Corporation as ordered by the Board of
Directors, making proper vouchers therefore; (d) shall cause to be disbursed
corporate funds and shall cause to be issued checks and drafts in the name of
the Corporation, as ordered by the Board of Directors; (e) shall render to the
Chief Executive Officer and the Board of Directors, whenever requested, an
account of all the transactions as Chief Financial Officer and of the financial
condition of the Corporation; and (f) shall perform such other duties as may be
prescribed by the Board of Directors or the Chief Executive Officer from time to
time.
Section 4.04. President. Unless otherwise determined by the Board of
Directors, the President shall be the Chief Executive Officer of the
Corporation. If an officer other than the President is designated Chief
Executive Officer, the President shall perform such duties as may from time to
time be assigned by the Board of Directors.
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Section 4.05. Vice President. Each Vice President shall perform such duties
as may be prescribed from time to time by these Bylaws or by the Board of
Directors.
Section 4.06. Secretary. Unless provided otherwise by a resolution
adopted by the Board of Directors, the Secretary: (a) shall attend all meetings
of the stockholders and Board of Directors, and shall record all the proceedings
of such meetings in the minute book of the Corporation; (b) shall give proper
notice of meetings of stockholders and Board of Directors and other notices
required by law or these Bylaws, and (c) shall perform such other duties as from
time to time may be assigned by the Board of Directors.
Section 4.07. Treasurer. Unless otherwise determined by the Board of
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time to
time be assigned by the Board of Directors.
Section 4.08. Authority and Duties. In addition to the foregoing
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of the
Corporation as may be determined from time to time by the Board of Directors.
Unless prohibited by a resolution of the Board of Directors, an officer elected
or appointed by the Board of Directors may, without specific approval of the
Board of Directors, delegate some or all of the duties and powers of an office
to other persons.
Section 4.09. Removal and Vacancies. The Board of Directors may remove
any officer from office at any time, with or without cause, by a resolution
approved by the affirmative vote of a majority of the directors present. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. A vacancy in an office of the Corporation by reason of
death, resignation, removal, disqualification, or otherwise may, or in the case
of a vacancy in the office of the Chief Executive Officer or Chief Financial
Officer shall, be filled for the unexpired term by the Board of Directors.
Section 4.10. Compensation. The officers of this Corporation shall
receive such compensation for their services as may be determined by or in
accordance with resolutions of the Board of Directors.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 5.01. Certificates for Shares. All shares of the Corporation
shall be certificated shares. Each holder of shares of the Corporation shall be
entitled to a certificate, to be in such form as shall be prescribed by the
Board of Directors, certifying the number of shares of the Corporation owned by
such stockholder. The certificates for such shares shall be numbered in the
order in which they shall be issued and shall be signed, in the name of the
Corporation, by the Chairman and Chief Executive Officer and by the Secretary or
an Assistant Secretary or by such officers as the Board of Directors may
designate. If the certificate is signed by a transfer agent or registrar, such
signatures of the corporate officers may be facsimiles, engraved or printed. A
certificate representing shares issued by this Corporation, if it is authorized
to issue shares of more than one class or series, shall set forth upon the face
or back of the certificate, or shall state that the Corporation will furnish to
any stockholder upon request and without charge, a full statement of the
designations, preferences, limitations, and relative rights of the shares of
each class or series authorized to be issued, so far as they have been
determined, and the authority of the
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Board of Directors to determine relative rights and preferences of subsequent
classes or series. Every certificate surrendered to the Corporation for exchange
or transfer shall be canceled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so canceled, except in cases provided for in Section 5.03.
Section 5.02. Transfer of Shares. Transfer of shares on the books of the
Corporation may be authorized only by the stockholder named in the certificate,
or the stockholder's legal representative, or the stockholder's duly authorized
attorney-in-fact, and upon surrender of the certificate or the certificates for
such shares. The Corporation may treat as the absolute owner of shares of the
Corporation the person or persons in whose name shares are registered on the
books of the Corporation. The Board of Directors may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect share transfers on its behalf.
Section 5.03. Loss of Certificates. Any stockholder claiming a
certificate for shares to be lost, stolen or destroyed shall make an affidavit
of that fact in such form as the Board of Directors shall require and shall, if
the Board of Directors so requires, give the Corporation a bond of indemnity in
form, in an amount, and with one or more securities satisfactory to the Board of
Directors, to indemnify the Corporation against any claim which may be made
against it on account of the reissue of such certificate, whereupon a new
certificate may be issued in the same tenor and for the same number of shares as
the one alleged to have been lost, stolen or destroyed.
ARTICLE VI
DIVIDENDS, RECORD DATE
Section 6.01. Dividends. The Board of Directors shall have the authority,
to declare dividends and other distributions upon shares to the extent permitted
by law.
Section 6.02. Record Date. The Board of Directors may fix a date not
exceeding sixty days nor less than ten days preceding the date fixed for the
payment of any dividend as the record date for the determination of the
stockholders entitled to receive payment of the dividend and, in such case, only
shareholders of record on the date so fixed shall be entitled to receive payment
of such dividend.
ARTICLE VII
CORPORATE RECORDS
Section 7.01. Share Register. The Corporation shall keep at the office of
its transfer agent a share register not more than one year old, containing the
names and addresses of the many stockholders and the number and classes of
shares held by each stockholder. The Corporation shall also keep at the office
of its transfer agent a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Records. The Corporation shall keep at the office
where its chief executive officer maintains his principal office originals or
copies of: (a) records of all proceeding of stockholders for the last three
years; (b) records of all proceedings of the Board of Directors for the last
three years; (c) the Articles of Incorporation and all amendments currently in
effect; (d) the Bylaws and all amendments currently in effect; (e) financial
statements; (f) reports made to stockholders generally within the last three
years; (g) a statement of the names and usual business addresses of the
directors and
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principal officers; (h) voting trust agreements described in Section 218 of the
Delaware General Corporation Law and (i) such other documents, instruments and
records required by Delaware General Corporation Law.
ARTICLE VIII
SECURITIES OF OTHER CORPORATIONS
Section 8.01. Voting Securities Held by the Corporation. The Chief
Executive Officer shall have full power and authority on behalf of the
Corporation (a) to attend any meeting of security holders of other corporation
in which the Corporation may hold securities and to vote such securities on
behalf of the Corporation; (b) to execute any proxy for such meeting on behalf
of the Corporation; or (c) to execute a written action in lieu of a meeting of
such other corporation on behalf of this Corporation. At such meeting, the
Chief Executive Officer shall possess and may exercise any and all rights and
powers incident to the ownership of such securities that the Corporation
possesses. The Board of Directors or the Chief Executive Officer may, from time
to time, confer or delegate such powers to one or one or more other persons.
Section 8.02. Purchase and Sale of Securities. The Chief Executive
Officer shall have full power and authority on behalf of the Corporation to
purchase, sell, transfer or encumber any and all securities of any other
corporation owned by the Corporation, and may execute and deliver such documents
as may be necessary to effectuate such purchase, sale, transfer or encumbrance.
The Board of Directors or the Chief Executive Officer may, from time to time,
confer or delegate such power to one or more other persons.
ARTICLE IX
INDEMNIFICATION OF CERTAIN PERSONS
Section 9.01. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another corporation or of
a partnership, joint venture, trust, or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in paragraph (b) hereof with respect to proceedings to
enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors of the Corporation. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to be paid by
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the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advancement of expenses");
provided, however, that, if the Delaware General Corporation Law requires, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Section or otherwise.
Section 9.02. Right of Indemnitee to Bring Suit. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation within
sixty days after a written claim has been received by the Corporation, except in
the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty days, the indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the indemnitee
to enforce a right to indemnification hereunder (but not in a suit brought by
the indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) any suit by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met the applicable standard of conduct set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Section or otherwise shall be on the
Corporation.
Section 9.03. Non-Exclusivity of Rights. The rights to indemnification
and to the advancement of expenses conferred in this Section shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of Incorporation, these bylaws,
agreement, vote of stockholders or disinterested directors, or otherwise.
Section 9.04. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee, or agent of the
Corporation or subsidiary or related entity against any expense, liability, or
loss, whether or not the Corporation would have the power to indemnity such
person against such expense, liability, or loss under the Delaware General
Corporation Law.
11
<PAGE>
Section 9.05. Indemnification of Directors, Officers, Employees, and
Agents of Subsidiaries and Related Entities and Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, and to the advancement
of expenses to any director, officer, employee, or agent of a subsidiary or
related entity of the Corporation or to any employee or agent of the Corporation
to the fullest extent of the provisions of this Section with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
Section 9.06. Amendment. Notwithstanding any other provisions of these
Bylaws, the Certificate of Incorporation of the Corporation or the fact that a
lesser percentage may be specified by law, by these Bylaws, or by the
Certificate of Incorporation of this Corporation, the affirmative vote of the
holders of at least 80% of the combined voting power of the then outstanding
voting stock, voting as a single class, shall be required to amend, alter, adopt
any provision inconsistent with, or repeal this Article IX.
ARTICLE X
FISCAL YEAR
Section 10.01. The fiscal year of the Corporation shall begin on the 1st
day of January of each year and end on the 31st day of December.
ARTICLE XI
AMENDMENTS
Section 11.01. These Bylaws may be amended at any meeting of the Board of
Directors if notice of such proposed amendment shall have been given in the
notice of such meeting. Such authority in the Board of Directors is subject to
(a) the limitations imposed by the Delaware General Corporation Law, as now
enacted or hereafter amended, or other applicable law and (b) the power of the
stockholders to change or repeal such Bylaws by a majority vote (except to the
extent a greater percentage of stockholders shall be required by these Bylaws or
by the Certificate of Incorporation) of the stockholders present or represented
at any meeting of stockholders called for such purpose.
(As amended on January 30, 1998)
12
<PAGE>
EXHIBIT 10(f)
================================================================================
$750,000,000 (364-day)
CREDIT AGREEMENT
AMONG
GREEN TREE FINANCIAL CORPORATION,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
DATED AS OF
April 29, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..........................................................1
ARTICLE II THE FACILITY.......................................................14
2.1. The Facility......................................................14
2.1.1. Description of Facility..................................14
2.1.2. Facility Amount..........................................14
2.1.3. Availability of Facility.................................14
2.2. Ratable Advances..................................................15
2.2.1. Ratable Advances.........................................15
2.2.2 Ratable Advance Rate Options.............................15
2.2.3. Method of Selecting Types and Interest
Periods for Ratable Advances.............................15
2.2.4. Conversion and Continuation of
Outstanding Ratable Advances.............................16
2.3. Competitive Bid Advances..........................................16
2.3.1. Competitive Bid Option...................................16
2.3.2. Competitive Bid Quote Request............................17
2.3.3. Invitation for Competitive Bid Quotes....................17
2.3.4. Submission and Contents of Competitive Bid Quotes........17
2.3.5. Notice to Borrower.......................................19
2.3.6. Acceptance and Notice by Borrower........................19
2.3.7. Allocation by Administrative Agent.......................19
2.4. [reserved]........................................................20
2.5. Availability of Funds.............................................20
2.6. Facility Fee; Utilization Fee; Reductions in
Aggregate Commitment..............................................20
2.7. Minimum Amount of Each Advance....................................21
2.8. Optional Principal Payments.......................................21
2.9. Mandatory Prepayments.............................................21
2.10. Changes in Interest Rate, etc.....................................21
2.11. Rates Applicable After Default....................................21
2.12. Method of Payment.................................................21
2.13. Notes; Telephonic Notices.........................................22
2.14. Interest Payment Dates; Interest and Fee Basis....................22
2.15. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions.............................................23
2.16. Lending Installations.............................................23
2.17. Non-Receipt of Funds by the Administrative Agent..................23
2.18. Taxes.............................................................23
2.19. Administrative Agent's Fees.......................................24
2.20. Extension of Facility Termination Date............................25
ARTICLE III CHANGE IN CIRCUMSTANCES...........................................25
3.1. Yield Protection..................................................25
3.2. Changes in Capital Adequacy Regulations...........................26
<PAGE>
3.3. Availability of Types of Advances.................................26
3.4. Funding Indemnification...........................................27
3.5. Lender Statements; Survival of Indemnity..........................27
ARTICLE IV CONDITIONS PRECEDENT...............................................27
4.1. Initial Loans.....................................................27
4.2. Each Future Advance...............................................29
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................29
5.1. Corporate Existence and Standing..................................29
5.2. Authorization and Validity........................................29
5.3. Compliance with Laws and Contracts................................30
5.4. Governmental Consents.............................................30
5.5. Financial Statements..............................................30
5.6. Material Adverse Change...........................................30
5.7. Taxes.............................................................31
5.8. Litigation and Contingent Obligations.............................31
5.9. Subsidiaries. ...................................................31
5.10. ERISA.............................................................31
5.11. Defaults..........................................................32
5.12. Federal Reserve Regulations.......................................32
5.13. Investment Company................................................32
5.14. Disclosure........................................................32
ARTICLE VI COVENANTS..........................................................32
6.1. Financial Reporting...............................................33
6.2. Use of Proceeds...................................................33
6.3. Notice of Default.................................................34
6.4. Conduct of Business...............................................34
6.5. Taxes.............................................................34
6.6. Compliance with Laws..............................................34
6.7. Maintenance of Properties.........................................34
6.8. Inspection........................................................34
6.9. Mergers, Sales of Assets, etc.....................................35
6.10. Liens.............................................................35
6.11. Inconsistent Agreements...........................................37
6.12. Financial Covenants...............................................38
6.12.1. Net Worth................................................38
6.12.2. Fixed Charge Coverage Ratio..............................38
6.12.3. Debt to Equity Ratio.....................................38
ARTICLE VII DEFAULTS.........................................................38
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...................39
8.1. Acceleration......................................................39
8.2. Amendments........................................................40
8.3. Preservation of Rights............................................40
<PAGE>
ARTICLE IX GENERAL PROVISIONS.................................................41
9.1. Survival of Representations.......................................41
9.2. Governmental Regulation...........................................41
9.3. Taxes.............................................................41
9.4. Headings..........................................................41
9.5. Entire Agreement..................................................41
9.6. Several Obligations; Benefits of this Agreement...................41
9.7. Expenses; Indemnification.........................................41
9.8. Numbers of Documents..............................................42
9.9. Accounting........................................................42
9.10. Severability of Provisions........................................42
9.11. Nonliability of Lenders...........................................42
9.12. CHOICE OF LAW.....................................................43
9.13. CONSENT TO JURISDICTION...........................................43
9.14. WAIVER OF JURY TRIAL..............................................43
9.15. Disclosure........................................................43
9.16. Counterparts......................................................43
ARTICLE X.....................................................................44
THE ADMINISTRATIVE AGENT......................................................44
10.1. Appointment.......................................................44
10.2. Powers............................................................44
10.3. General Immunity..................................................44
10.4. No Responsibility for Loans, Recitals, etc........................44
10.5. Action on Instructions of Lenders.................................44
10.6. Employment of Agents and Counsel..................................45
10.7. Reliance on Documents; Counsel....................................45
10.8. Administrative Agent's Reimbursement and Indemnification..........45
10.9. Notice of Default.................................................45
10.10. Rights as a Lender................................................45
10.11. Lender Credit Decision............................................46
10.12. Successor Administrative Agent....................................46
10.13. Co-Agents..........................................................47
ARTICLE XI SETOFF; RATABLE PAYMENTS...........................................47
11.1. Setoff............................................................47
11.2. Ratable Payments..................................................47
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.................47
12.1. Successors and Assigns............................................47
12.2. Participations....................................................48
12.2.1. Permitted Participants; Effect. ..................48
12.2.2. Voting Rights......................................48
12.2.3. Benefit of Setoff..................................48
12.3. Assignments.......................................................48
<PAGE>
12.3.1. Permitted Assignments..............................48
12.3.2. Effect; Effective Date.............................49
12.4. Dissemination of Information......................................49
12.5. Tax Treatment.....................................................49
ARTICLE XIII NOTICES..........................................................49
13.1. Giving Notice.....................................................49
13.2. Change of Address.................................................50
<PAGE>
EXHIBITS
Exhibit A -Note (Ratable Loan)
Exhibit B -Note (Competitive Bid Loan)
Exhibit C -Competitive Bid Quote Request
Exhibit D -Invitation for Competitive Bid Quotes
Exhibit E -Competitive Bid Quote
Exhibit F -[reserved]
Exhibit G-1 -Opinion of Counsel to the Borrower
Exhibit G-2 -Opinion of General Counsel of the Borrower
Exhibit H -Compliance Certificate
Exhibit I -Assignment Agreement
Exhibit J -Money Transfer Instructions
SCHEDULES
Schedule 5.3 -Approvals and Consents
Schedule 5.8 -Material Contingent Obligations
Schedule 5.9 -Subsidiaries
Schedule 5.10-ERISA
<PAGE>
CREDIT AGREEMENT
This Credit Agreement, dated as of April 29, 1997, is among GREEN TREE
FINANCIAL CORPORATION, a Delaware corporation, the Lenders and THE FIRST
NATIONAL BANK OF CHICAGO, individually and as Administrative Agent.
R E C I T A L S:
A. The Borrower has requested the Lenders to make financial accommodations
to it in the aggregate principal amount of $750,000,000, the proceeds of which
the Borrower will use for the general corporate needs, including commercial
paper backup, of the Borrower and its Subsidiaries.
B. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Administrative Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to SECTION 2.3.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 30 and not more than 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next
<PAGE>
succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.
"Adjusted EBIT" means, for any applicable computation period, the
Borrower's and Subsidiaries' Net Income on a consolidated basis, PLUS (a) income
and franchise taxes paid or accrued during such period and (b) Interest Expense,
MINUS (a) income derived from discontinued operations of the Borrower and its
Subsidiaries and (b) extraordinary gains of the Borrower and its Subsidiaries
resulting from changes in the application of Agreement Accounting Principles.
"Administrative Agent" means First Chicago in its capacity as
administrative agent for the Lenders pursuant to ARTICLE X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to ARTICLE X.
"Advance" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by some or all of the Lenders to the Borrower on the same
Borrowing Date, of the same Type (or on the same interest basis in the case of
Competitive Bid Advances) and, when applicable, for the same Interest Period and
includes a Competitive Bid Advance.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders hereunder. The initial Aggregate Commitment is $750,000,000.
"Agreement" means this Credit Agreement, as it may be amended, modified or
restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the Financial Statements; PROVIDED, HOWEVER, that for
purposes of all computations required to be made with respect to compliance by
the Borrower with SECTION 6.12, such term shall mean generally accepted
accounting principles as in effect on the date hereof, applied in a manner
consistent with those used in preparing the Financial Statements.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternate Base Rate Advance" means an Advance which bears interest at the
Alternate
<PAGE>
Base Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Alternate Base Rate Loan" means a Ratable Loan which bears interest at the
Alternate Base Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Applicable Eurodollar Margin" means 0.22%.
"Applicable Facility Fee Percentage" means 0.08%.
"Applicable Utilization Fee Percentage" means, on any date, subject to the
final sentence of this definition:
(a) In the event that the average daily aggregate principal amount of
the Ratable Loans outstanding during any calendar quarter is greater than
33_%, but less than or equal to 66_%, of the Aggregate Commitment as in
effect on the last day of such calendar quarter, the applicable of the
following percentages:
APPLICABLE UTILIZATION
DEBT RATING ON SUCH DATE FEE PERCENTAGE
------------------------ ----------------------
Level I Status .05%
Level II Status .0625%
Level III Status .10%
Level IV Status .10%
(b) In the event that the average daily aggregate principal amount of
the Ratable Loans outstanding during any calendar quarter is greater than
66_% of the Aggregate Commitment as in effect on the last day of such
calendar quarter, the applicable of the following percentages:
APPLICABLE UTILIZATION
DEBT RATING ON SUCH DATE FEE PERCENTAGE
------------------------ -----------------------
Level I Status .10%
Level II Status .125%
Level III Status .20%
Level IV Status .20%
Any change in the Applicable Utilization Fee Percentage shall be effective as of
the date of the change in the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.
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<PAGE>
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the president, chief financial officer or
treasurer of the Borrower, acting singly.
"Bankruptcy Code" means Title 11, United States Code, sections 1 ET SEQ.,
as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.
"Borrower" means Green Tree Financial Corporation, a Delaware corporation,
and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change" is defined in SECTION 3.2.
"Closing Transactions" is defined in SECTION 4.1(D).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below and as set
forth in any Notice of Assignment relating to any assignment which has become
effective pursuant to SECTION 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the
-4-
<PAGE>
Borrower at the same time and for the same Interest Period.
"Competitive Bid Borrowing Notice" is defined in SECTION 2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, or both, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form of
EXHIBIT B hereto, with appropriate insertions, duly executed and delivered to
the Administrative Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of EXHIBIT E hereto completed and delivered by a Lender to the
Administrative Agent in accordance with SECTION 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto completed and delivered by the
Borrower to the Administrative Agent in accordance with SECTION 2.3.2.
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.
"Consolidated Debt" means, at any time, the aggregate principal amount of
Indebtedness outstanding at such time of the Borrower and its Subsidiaries as
reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles.
"Consolidated Net Tangible Assets" means, at any time, (a) the total of all
assets reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles, at
their net book value (after deducting related depreciation, depletion,
amortization, allowance for doubtful accounts and all other valuation reserves
which, in accordance with Agreement Accounting Principles, should be set aside
in connection with the business conducted), but excluding goodwill, unamortized
debt discount and all other like segregated intangible assets, all as determined
in accordance with Agreement Accounting Principles, less (b) the aggregate of
the current liabilities of the Borrower and its Subsidiaries reflected on such
balance sheet, all as determined in accordance with Agreement Accounting
Principles. For purposes of this definition, "current liabilities" includes all
Indebtedness of the Borrower and its Subsidiaries and accruals of the Borrower
and its Subsidiaries, in each case
-5-
<PAGE>
payable on demand or due within one year of the date of the determination of
Consolidated Net Tangible Assets, all as reflected on such consolidated balance
sheet of the Borrower and its Subsidiaries, prepared in accordance with
Agreement Accounting Principles.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract or application for a Letter of Credit.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in SECTION 2.2.4.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes.
"Debt Rating" means the credit rating assigned to the Borrower's senior,
unsecured long term debt (without credit enhancement) as publicly announced by
Moody's or S&P, as the case may be.
"Debt to Equity Ratio" means, at any time, the ratio of (a) Consolidated
Debt to (b) Net Worth.
"Default" means an event described in ARTICLE VII.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means a Eurodollar Bid Rate Advance or a Eurodollar
Ratable Advance, or both, as the case may be.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Eurodollar Bid Rates pursuant to SECTION 2.3.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Administrative
Agent to be the rate of interest per annum for deposits in U.S. dollars for a
period equal to the relevant Eurodollar
-6-
<PAGE>
Interest Period quoted on Telerate Screen Page 3750 (or its successor if such
page number changes) at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Eurodollar Interest Period. If no quotation is
available on Telerate, the "Eurodollar Base Rate" shall mean the rate determined
by the Administrative Agent to be the rate at which deposits in U.S. dollars are
offered by First Chicago to first class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Eurodollar Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(a) the Eurodollar Base Rate and (b) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.
"Eurodollar Interest Period" means, with respect to a Eurodollar Ratable
Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or six
months commencing on a Business Day selected by the Borrower pursuant to this
Agreement. Such Eurodollar Interest Period shall end on (but exclude) the day
which corresponds numerically to such date one, two, three or six months
thereafter; PROVIDED, HOWEVER, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day; PROVIDED, HOWEVER, that if
said next succeeding Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid Rate
Loan, or both, as the case may be.
"Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Eurodollar Ratable Loan" means a Ratable Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance for
any date during the relevant Eurodollar Interest Period, the sum of (a) the
quotient of (i) the Eurodollar Base Rate applicable to such Eurodollar Interest
Period, divided by (ii) one MINUS the Reserve Requirement (expressed as a
decimal) applicable to such Eurodollar Interest Period, PLUS (b) the
-7-
<PAGE>
Applicable Eurodollar Margin for such date. The Eurodollar Rate shall be rounded
to the next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Existing Lien" is defined in SECTION 6.10(M).
"Extended Lien" is defined in SECTION 6.10(M).
"Facility Termination Date" means April 28, 1998, as such date may be
extended from time to time pursuant to SECTION 2.20.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"Financial Statements" is defined in SECTION 5.5.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fiscal Quarter" means each of the four quarterly accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period commencing on
January 1 and ending on December 31 of each year.
"Fixed Charge Coverage Ratio" means, for any applicable computation period,
the ratio of (a) Adjusted EBIT to (b) Interest Expense.
"Governmental Authority" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including, without limitation, any taxing
authority or political subdivision) or any instrumentality or officer thereof
(including, without limitation, any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by or subject to the control of any of the
foregoing.
"Indebtedness" of a Person means such Person's (a) obligations for borrowed
money, (b) obligations representing the deferred purchase price of Property or
services (other than accounts
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payable arising in the ordinary course of such Person's business payable on
terms customary in the trade), (c) obligations, whether or not assumed, secured
by Liens or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or similar instruments, (e) Capitalized Lease
Obligations, (f) Rate Hedging Obligations, (g) Contingent Obligations, (h)
obligations for which such Person is obligated pursuant to or in respect of a
Letter of Credit and (i) repurchase obligations or liabilities of such Person
with respect to accounts or notes receivable and chattel paper sold by such
Person.
"Interest Expense" means, for any applicable computation period, all
interest paid or accrued during such period by the Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with Agreement Accounting
Principles.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of EXHIBIT D hereto, completed and
delivered by the Administrative Agent to the Lenders in accordance with SECTION
2.3.3.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Level I Status" exists at any date if at such date the Debt Rating is A3
(or the equivalent) or higher by Moody's and A- (or the equivalent) or higher by
S&P.
"Level II Status" exists at any date if at such date (a) the Debt Rating is
Baal (or the equivalent) or higher by Moody's and BBB+ (or the equivalent) or
higher by S&P and (b) Level I Status does not exist.
"Level III Status" exists at any date if at such date (a) the Debt Rating
is Baa3 (or the equivalent) or higher by Moody's and BBB- (or the equivalent) or
higher by S&P and (b) neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if at such date (a) the Debt Rating is
either lower than Baa3 (or the equivalent) by Moody's or lower than BBB- (or the
equivalent) by S&P or (b) the Borrower's senior, unsecured and publicly-held
indebtedness is unrated by either Moody's or
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S&P.
"Lien" means any security interest, lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.
"Loan Documents" means this Agreement, the Notes and the other documents
and agreements contemplated hereby and executed by the Borrower in favor of the
Administrative Agent or any Lender.
"Majority Lenders" means Lenders in the aggregate having at least 66_% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66_% of the aggregate unpaid principal
amount of outstanding Advances.
"Margin Stock" has the meaning assigned to that term under Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, results of
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the ability of the Borrower or any Subsidiary to perform its obligations
under the Loan Documents, or (c) the validity or enforceability of any of the
Loan Documents or the rights or remedies of the Administrative Agent or the
Lenders thereunder.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Income" means, for any computation period, with respect to the
Borrower on a consolidated basis with its Subsidiaries (other than any
Subsidiary which is restricted from declaring or paying dividends or otherwise
advancing funds to its parent whether by contract or otherwise), cumulative net
income earned during such period as determined in accordance with Agreement
Accounting Principles.
"Net Worth" means, at any date, the consolidated common stockholders'
equity of the
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Borrower and its consolidated Subsidiaries determined in accordance with
Agreement Accounting Principles.
"Non-Excluded Taxes" is defined in SECTION 2.18(A).
"Notes" means, collectively, the Competitive Bid Notes and the Ratable
Notes; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in SECTION 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Administrative Agent or any indemnified party hereunder arising
under any of the Loan Documents.
"Participants" is defined in SECTION 12.2.1.
"Payment Date" means the last day of each of March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan, as defined in Section 3(2)
of ERISA, as to which the Borrower or any member of the Controlled Group may
have any liability.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.
"Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (a) acquires any going business or all or substantially all
of the assets of any firm, corporation or division or line of business thereof,
whether through purchase of assets, merger or otherwise, or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of
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the outstanding partnership interests of a partnership or equity interests in a
limited liability company.
"Purchasers" is defined in SECTION 12.3.1.
"Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, of the same Type and for the same Interest Period.
"Ratable Borrowing Notice" is defined in SECTION 2.2.3.
"Ratable Loan" means a Loan made by a Lender pursuant to SECTION 2.2.
"Ratable Note" means a promissory note in substantially the form of
EXHIBIT A hereto, duly executed and delivered to the Administrative Agent by the
Borrower for the account of each Lender and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buybacks, reversals, terminations or assignments of any of the
foregoing.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to depositary institutions.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by Persons other than banks,
brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by securities
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brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Risk-Based Capital Guidelines" is defined in SECTION 3.2.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group, other than a
Multiemployer Plan.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association,
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joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (a) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries, as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the Fiscal Quarter next preceding the date on which such
determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the Net Income of the Borrower and its Subsidiaries
for the 12-month period ending as of the end of the Fiscal Quarter next
preceding the date of determination.
"Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other member of the Controlled Group from such Plan during a plan year in
which the Borrower or any other member of the Controlled Group was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such Plan, the
filing of a notice of intent to terminate such Plan or the treatment of an
amendment of such Plan as a termination under Section 4041 of ERISA, (d) the
institution by the PBGC of proceedings to terminate such Plan or (e) any event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or appointment of a trustee to administer, such Plan.
"Transferee" is defined in SECTION 12.4.
"Type" means, with respect to any Advance, its nature as an Alternate
Base Rate Advance, Eurodollar Advance or Absolute Rate Advance.
"Unfunded Liability" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under a Single Employer Plan
exceeds the fair market value of assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE FACILITY
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2.1. THE FACILITY
2.1.1. DESCRIPTION OF FACILITY. The Lenders hereby establish
in favor of the Borrower a revolving credit facility pursuant to which, and upon
the terms and subject to the conditions herein set out:
(a) each Lender severally agrees to make Ratable Loans to the
Borrower in accordance with SECTION 2.2 in amounts not to exceed in the
aggregate at any one time outstanding the amount of its Commitment less
the amount of such Lender's pro-rata share of the outstanding principal
amount of all Competitive Bid Advances (regardless of which Lender or
Lenders made such Competitive Bid Advances) exclusive of Competitive
Bid Advances being repaid substantially contemporaneously with the
making of any such Ratable Loans; and
(b) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower, and make such Loans, in
accordance with SECTION 2.3.
2.1.2. FACILITY AMOUNT. In no event may the aggregate
principal amount of all outstanding Advances (including the Ratable Advances and
the Competitive Bid Advances) at any time exceed the Aggregate Commitment.
2.1.3. AVAILABILITY OF FACILITY. Subject to the terms of this
Agreement, from and including the date hereof to, but not including, the
Facility Termination Date, the Borrower may borrow, repay and reborrow Advances
hereunder. All outstanding Advances and all other unpaid Obligations shall be
due and payable in full by the Borrower on the Facility Termination Date and on
such date all remaining Commitments shall be deemed to have been reduced to
zero.
2.2. RATABLE ADVANCES
2.2.1. RATABLE ADVANCES. Each Ratable Advance hereunder shall
consist of borrowings made from the several Lenders ratably in proportion to the
amounts of their respective Commitments. The Borrower's obligation to pay the
principal of, and interest on, the Ratable Advances shall be evidenced by the
Ratable Notes. Although the Ratable Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding and, although the
stated amount of each Ratable Note shall be equal to the applicable Lender's
Commitment, each Ratable Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the Ratable Loans at the time evidenced thereby.
2.2.2 RATABLE ADVANCE RATE OPTIONS. The Ratable Advances may
be Alternate
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Base Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the Borrower in accordance with SECTION 2.2.3 or 2.2.4. No
Ratable Advance may mature after, or have an Interest Period which extends
beyond, the Facility Termination Date.
2.2.3. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR
RATABLE ADVANCES. The Borrower shall select the Type of each Ratable Advance
and, in the case of each Eurodollar Ratable Advance, the Eurodollar Interest
Period applicable to such Ratable Advance from time to time. The Borrower shall
give the Administrative Agent irrevocable notice (a "RATABLE BORROWING NOTICE")
not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Alternate
Base Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for an Alternate Base Rate Advance may be given not later than 30 minutes
after the time which the Borrower is required to reject one or more bids offered
in connection with an Absolute Rate Auction pursuant to SECTION 2.3.6 and a
Ratable Borrowing Notice for a Eurodollar Ratable Advance may be given not later
than 30 minutes after the time the Borrower is required to reject one or more
bids offered in connection with a Eurodollar Auction pursuant to SECTION 2.3.6.
A Ratable Borrowing Notice shall specify:
(a) the Borrowing Date, which shall be a Business Day, of such
Ratable Advance;
(b) the aggregate amount of such Ratable Advance, which, when
added to all outstanding Ratable Advances and Competitive Bid Advances
and after giving effect to the repayment of any such outstanding
Advances out of the proceeds of the requested Ratable Advance, shall
not exceed the Aggregate Commitment;
(c) the Type of Advance selected; and
(d) in the case of each Eurodollar Ratable Advance, the
Eurodollar Interest Period applicable thereto (which may not end after
the Facility Termination Date).
2.2.4. CONVERSION AND CONTINUATION OF OUTSTANDING RATABLE
ADVANCES. Alternate Base Rate Advances shall continue as Alternate Base Rate
Advances unless and until such Alternate Base Rate Advances are converted into
Eurodollar Ratable Advances. Each Eurodollar Ratable Advance shall continue as a
Eurodollar Ratable Advance until the end of the then applicable Eurodollar
Interest Period therefor, at which time such Eurodollar Ratable Advance shall be
automatically converted into an Alternate Base Rate Advance unless the Borrower
shall have given the Administrative Agent a Conversion/Continuation Notice
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Ratable Advance continue as a Eurodollar Ratable Advance for the same or another
Eurodollar Interest Period. Subject to the terms of SECTION 2.7, the Borrower
may elect from time to time to convert all or any part of a Ratable Advance of
any Type into any other Type or Types of Ratable Advances; PROVIDED that
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any conversion of any Eurodollar Ratable Advance shall be made on, and only on,
the last day of the Eurodollar Interest Period applicable thereto. The Borrower
shall give the Administrative Agent irrevocable notice (a
"CONVERSION/CONTINUATION NOTICE") of each conversion of a Ratable Advance or
continuation of a Eurodollar Ratable Advance not later than 10:00 a.m. (Chicago
time) at least three Business Days, in the case of a conversion into or
continuation of a Eurodollar Ratable Advance, prior to the date of the requested
conversion or continuation, specifying:
(b) the requested date, which shall be a Business Day, of such
conversion or continuation;
(c) the aggregate amount and Type of Ratable Advance which is
to be converted or continued; and
(d) the amount and Type(s) of Ratable Advance(s) into which
such Ratable Advance is to be converted or continued and, in the case
of a conversion into or continuation of an Eurodollar Ratable Advance,
the duration of the Eurodollar Interest Period applicable thereto.
2.3. COMPETITIVE BID ADVANCES
2.3.1. COMPETITIVE BID OPTION. In addition to Ratable Advances
pursuant to SECTION 2.2, but subject to the terms and conditions of this
Agreement (including, without limitation, the limitation set forth in SECTION
2.1.2 as to the maximum aggregate principal amount of all outstanding Advances
hereunder), prior to the Facility Termination Date the Borrower may, as set
forth in this SECTION 2.3, request the Lenders to make offers to make
Competitive Bid Advances to the Borrower. Each Lender may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this SECTION
2.3. The Borrower's obligation to pay the principal of, and interest on, the
Competitive Bid Advances shall be evidenced by the Competitive Bid Notes.
Although the Competitive Bid Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding.
2.3.2. COMPETITIVE BID QUOTE REQUEST. When the Borrower wishes
to request offers to make Competitive Bid Loans under this SECTION 2.3, it shall
transmit to the Administrative Agent by telecopy a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto so as to be received no later than
(a) 10:00 a.m. (Chicago time) at least five Business Days prior to the Borrowing
Date proposed therein, in the case of a Eurodollar Auction, or (b) 9:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction, specifying:
(a) the proposed Borrowing Date, which shall be a Business
Day, for the proposed Competitive Bid Advance;
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(b) the aggregate principal amount of such Competitive Bid
Advance;
(c) whether the Competitive Bid Quotes requested are to set
forth a Eurodollar Bid Rate, an Absolute Rate, or both; and
(d) the Interest Period applicable thereto (which may not end
after the Facility Termination Date).
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be given within five Business Days (or such other number of
days as the Borrower and the Administrative Agent may agree) of any other
Competitive Bid Quote Request. A Competitive Bid Quote Request that does not
conform substantially to the format of EXHIBIT C hereto shall be rejected, and
the Administrative Agent shall promptly notify the Borrower of such rejection by
telecopy.
2.3.3. INVITATION FOR COMPETITIVE BID QUOTES. Promptly and in
any event before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to SECTION 2.3.2,
the Administrative Agent shall send to each of the Lenders by telex or telecopy
an Invitation for Competitive Bid Quotes substantially in the form of EXHIBIT D
hereto, which shall constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to
which such Competitive Bid Quote Request relates in accordance with this SECTION
2.3.
2.3.4. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.
(b) Each Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid Quotes.
Each Competitive Bid Quote must comply with the requirements of this
SECTION 2.3.4 and must be submitted to the Administrative Agent by
telex or telecopy at its offices specified in or pursuant to ARTICLE
XIII not later than (i) 9:00 a.m. (Chicago time) at least three
Business Days prior to the proposed Borrowing Date, in the case of a
Eurodollar Auction or (ii) 9:00 a.m. (Chicago time) on the proposed
Borrowing Date, in the case of an Absolute Rate Auction (or, in either
case, upon reasonable prior notice to the Lenders, such earlier time
and date as the Borrower and the Administrative Agent may agree);
PROVIDED that Competitive Bid Quotes submitted by First Chicago may
only be submitted if the Administrative Agent or First Chicago notifies
the Borrower of the terms of the offer or offers contained therein not
later than 15 minutes prior to the latest time at which the relevant
Competitive Bid Quotes must be submitted by the other Lenders. Subject
to ARTICLES IV AND VIII, any Competitive Bid Quote so made shall be
irrevocable except with the written consent of the Administrative Agent
given on the instructions of the Borrower.
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(c) Each Competitive Bid Quote shall be in substantially the
form of EXHIBIT E hereto and shall in any case specify:
(i) the proposed Borrowing Date, which shall be the
same as that set forth in the applicable Invitation for
Competitive Bid Quotes;
(ii) the principal amount of the Competitive Bid Loan
for which each such offer is being made, which principal
amount a) may be greater than, less than or equal to the
Commitment of the quoting Lender, b) must be at least
$10,000,000 and an integral multiple of $5,000,000, and c) may
not exceed the principal amount of Competitive Bid Loans for
which offers were requested;
(iii) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each such Competitive Bid
Loan;
(iv) the minimum amount, if any, of the Competitive
Bid Loan which may be accepted by the Borrower;
(v) in the case of an Absolute Rate Auction, the
Absolute Rate offered for each such Competitive Bid Loan; and
(vi) the identity of the quoting Lender.
(d) The Administrative Agent shall reject any Competitive Bid
Quote that:
(i) is not substantially in the form of EXHIBIT E
hereto or does not specify all of the information required by
SECTION 2.3.4(B);
(ii) contains qualifying, conditional or similar
language, other than any such language contained in EXHIBIT E
hereto;
(iii) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bid Quotes; or
(iv) arrives after the time set forth in SECTION
2.3.4(A).
If any Competitive Bid Quote shall be rejected pursuant to this SECTION
2.3.4(C), then the Administrative Agent shall promptly notify the relevant
Lender of such rejection.
2.3.5. NOTICE TO BORROWER. The Administrative Agent shall
promptly notify the Borrower of the terms (a) of any Competitive Bid Quote
submitted by a Lender that is in
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accordance with SECTION 2.3.4 and (b) of any Competitive Bid Quote that amends,
modifies or is otherwise inconsistent with a previous Competitive Bid Quote
submitted by such Lender with respect to the same Competitive Bid Quote Request.
Any such subsequent Competitive Bid Quote shall be disregarded by the
Administrative Agent unless such subsequent Competitive Bid Quote specifically
states that it is submitted solely to correct a manifest error in such former
Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall
specify the aggregate principal amount of Competitive Bid Loans for which offers
have been received for each Interest Period specified in the related Competitive
Bid Quote Request and the respective principal amounts and Eurodollar Bid Rates
or Absolute Rates, as the case may be, so offered.
2.3.6. ACCEPTANCE AND NOTICE BY BORROWER. Not later than (a)
10:00 a.m. (Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (b) 10:00 a.m. (Chicago
time) on the proposed Borrowing Date, in the case of an Absolute Rate Auction
(or, in either case, upon reasonable prior notice to the Lenders, such earlier
time and date as the Borrower and the Administrative Agent may agree), the
Borrower shall notify the Administrative Agent of its acceptance or rejection of
the offers so notified to it pursuant to SECTION 2.3.5; PROVIDED, HOWEVER, that
the failure by the Borrower to give such notice to the Administrative Agent
shall be deemed to be a rejection of all such offers. In the case of acceptance,
such notice (a "COMPETITIVE BID BORROWING NOTICE") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Competitive Bid Quote in whole or in part (subject to
the terms of SECTION 2.3.4(B)(IV)); PROVIDED that:
(b) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request,
(c) acceptance of offers may only be made on the basis of
ascending Eurodollar Bid Rates or Absolute Rates, as the case may be,
and
(d) the Borrower may not accept any offer that is described in
SECTION 2.3.4(C) or that otherwise fails to comply with the
requirements of this Agreement.
2.3.7. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made
by two or more Lenders with the same Eurodollar Bid Rates or Absolute Rates, as
the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among such Lenders as
nearly as possible (in such multiples, not greater than $1,000,000, as the
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amount of such offers; PROVIDED, HOWEVER, that no Lender shall be
allocated a portion of any Competitive Bid Advance which is less than the
minimum amount which such Lender has indicated that it is willing to accept.
Allocations by the Administrative Agent of the amounts of Competitive Bid Loans
shall be
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conclusive in the absence of manifest error. The Administrative Agent shall
promptly, but in any event on the same Business Day, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount
of such Competitive Bid Advance allocated to each participating Lender.
2.4. [reserved]
2.5. Not later than noon (Chicago time) on each Borrowing Date, each
Lender (or in the case of a Competitive Bid Advance, each Lender making a
portion of such Advance) shall make available its Loan or Loans, in immediately
available funds in Chicago, to the Administrative Agent at its address specified
pursuant to ARTICLE XIII. The Administrative Agent shall, by 2:00 p.m. (Chicago
time) on such Borrowing Date, make the funds so received from the Lenders
available to the Borrower by crediting the principal amount thereof, in
immediately available funds, to the account of the Borrower maintained with
First Chicago.
2.6. FACILITY FEE; UTILIZATION FEE; REDUCTIONS IN AGGREGATE COMMITMENT.
(a) The Borrower agrees to pay to the Administrative Agent for
the ratable account of each Lender a facility fee equal to the
Applicable Facility Fee Percentage times such Lender's Commitment from
the date hereof to and including the Facility Termination Date, payable
in arrears on each Payment Date hereafter and on the Facility
Termination Date.
(b) The Borrower agrees to pay to the Administrative Agent for
the ratable account of each Lender a utilization fee equal to the
Applicable Utilization Fee Percentage times such Lender's average daily
principal amount of the Ratable Loans outstanding during each calendar
quarter from the date hereof to the Facility Termination Date, payable
in arrears on each Payment Date hereafter and on the Facility
Termination Date; PROVIDED, HOWEVER, that in the event the average
daily principal amount of the Ratable Loans outstanding during any
calendar quarter is less than or equal to 33_% of the Aggregate
Commitment as in effect on the last day of such quarter, no utilization
fee shall be payable with respect to such quarter.
(c) The Borrower may permanently reduce the Aggregat
Commitment in whole, or in part ratably among the Lenders in a minimum
aggregate amount of $25,000,000, or any integral multiple of $5,000,000
in excess thereof, upon at least three Business Days' written notice to
the Administrative Agent, which notice shall specify the amount of any
such reduction; PROVIDED, HOWEVER, that the amount of the Aggregate
Commitment may not be reduced below the aggregate principal amount of
the outstanding Advances. All accrued facility fees and utilization
fees shall be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
2.7. Each Advance shall be in the minimum amount of $10,000,000 (and in
any integral multiple of $5,000,000 if in excess thereof);
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PROVIDED, HOWEVER, that (a) any Alternate Base Rate Advance may be in the amount
of the unused Aggregate Commitment and (b) in no event shall more than six
Eurodollar Advances be permitted to be outstanding at any time.
2.8. The Borrower may from time to time pay, without penalty or
premium, all outstanding Ratable Advances or, in a minimum aggregate amount of
$10,000,000 or any integral multiple of $5,000,000 in excess thereof, any
portion of the outstanding Ratable Advances upon one Business Day's prior notice
to the Administrative Agent in the case of an Alternate Base Rate Advance and
upon three Business Days' prior notice to the Administrative Agent in the case
of a Eurodollar Advance. Any prepayment of a Eurodollar Advance prior to the
last day of the applicable Eurodollar Interest Period shall be subject to the
indemnity provisions of SECTION 3.4. Competitive Bid Advances may not be
voluntarily prepaid.
2.9. MANDATORY PREPAYMENTS. If at any time the aggregate principal
balance of the Loans exceeds the Aggregate Commitment, the Borrower shall repay
immediately its then outstanding Loans in such amount as may be necessary to
eliminate such excess.
2.10. CHANGES IN INTEREST RATE, ETC. Each Alternate Base Rate Advance
shall bear interest at the Alternate Base Rate from and including the date of
such Advance or the date on which such Advance was converted into an Alternate
Base Rate Advance to (but not including) the date on which such Alternate Base
Rate Advance is paid or converted to a Eurodollar Ratable Advance. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Ratable Advance and Absolute Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to, but not including, the last day of such Interest Period
at the interest rate determined as applicable to such Eurodollar Ratable Advance
or Absolute Rate Advance. No Interest Period may end after the Facility
Termination Date.
2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in SECTION 2.2.3 and 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Administrative Agent and the Majority Lenders) when any Default
or Unmatured Default has occurred and is continuing. During the continuance of a
Default, each Eurodollar Advance, Absolute Rate Advance and Alternate Base Rate
Advance shall bear interest (for the remainder of the applicable Interest Period
in the case of Eurodollar Advances and Absolute Rate Advances) at the rate
otherwise applicable plus two percent (2%) per annum.
2.12. METHOD OF PAYMENT. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent's
address specified pursuant to ARTICLE XIII, or at any other Lending Installation
of the Administrative Agent specified in writing by the Administrative Agent to
the Borrower, by noon (Chicago time) on the date when due and shall be applied
ratably
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by the Administrative Agent among the applicable Lenders. Each payment
delivered to the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in the same type
of funds that the Administrative Agent received at its address specified
pursuant to ARTICLE XIII or at any Lending Installation specified in a notice
received by the Administrative Agent from such Lender. The Administrative Agent
is hereby authorized to charge the account of the Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes due
hereunder.
2.13. NOTES; TELEPHONIC NOTICES. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note; PROVIDED, HOWEVER, that neither the failure to so
record nor any error in such recordation shall affect the Borrower's obligations
under such Note. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances, submit Competitive Bid Quotes and to transfer funds based
on telephonic notices made by any person or persons the Administrative Agent or
any Lender in good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.
2.14. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued
on each Alternate Base Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which an Alternate Base Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Alternate Base Rate Advance converted into a
Eurodollar Ratable Advance on a day other than a Payment Date shall be payable
on the date of conversion. Interest accrued on each Eurodollar Advance or
Absolute Rate Advance shall be payable on the last day of its applicable
Interest Period, on any date on which the Eurodollar Advance or Absolute Rate
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Advance or Absolute Rate Advance having an
Interest Period longer than three months shall also be payable on the last day
of each three-month interval during such Interest Period. Interest, facility and
utilization fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (Chicago time) at the place of payment. If any payment shall be received by
the Administrative Agent later than noon (Chicago time), such payment shall be
deemed to have been received on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest and utilization fees in connection with such payment. If any
payment shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest and utilization fees in connection with
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such payment.
2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Administrative Agent
will notify each Lender of the contents of each Aggregate Commitment reduction
notice, Ratable Borrowing Notice, Conversion/Continuation Notice, Invitation for
Competitive Quotes and repayment notice received by it hereunder. The
Administrative Agent will notify each Lender of the interest rate applicable to
each Eurodollar Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the Alternate Base Rate.
2.16. LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Administrative Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
2.17. NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
Agent of (a) in the case of a Lender, the proceeds of a Loan, or (b) in the case
of the Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If the Borrower has not in fact made such payment to the
Administrative Agent, the Lenders shall, on demand by the Administrative Agent,
repay to the Administrative Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to the
Federal Funds Effective Rate for each such day. If any Lender has not in fact
made such payment to the Administrative Agent, such Lender or the Borrower
shall, on demand by the Administrative Agent, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Administrative Agent until the date the Administrative Agent recovers
such amount at a rate per annum equal to (a) in the case of payment by a Lender,
the Federal Funds Effective Rate for each such day, or (b) in the case of
payment by the Borrower, the interest rate applicable to the relevant Loan.
2.18. TAXES.
(a) Any payments made by the Borrower under this Agreement
shall be made
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free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority, excluding net income taxes and franchise
taxes or any other tax based upon any income imposed on the
Administrative Agent or any Lender by the jurisdiction in which the
Administrative Agent or such Lender is incorporated or has its
principal place of business. If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings
("NON-EXCLUDED Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or
any such other amounts payable hereunder at the rates or in the
amounts specified in or pursuant to this Agreement; PROVIDED, HOWEVER,
that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the U.S.
or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this SECTION 2.18. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as
practicable thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by any Administrative
Agent or any Lender as a result of any such failure. The agreements in
this SECTION 2.18 shall survive the termination of this Agreement and
the payment of all other amounts payable hereunder.
(b) At least five Business Days prior to the first date on
which interest or fees are payable hereunder for the account of any
Lender, each Lender that is not incorporated under the laws of the
United States of America, or a state thereof, agrees that it will
deliver to each of the Borrower and the Administrative Agent two duly
completed copies of United States Internal Revenue Service Form 1001
or 4224, certifying in either case that such Lender is entitled to
receive payments under this Agreement and the Notes without deduction
or withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Administrative Agent two additional
copies of such form (or a successor form) on or before the date that
such form expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes obsolete or after
the occurrence of any event requiring a change in the most recent
forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the
Administrative Agent, in each case certifying that such Lender is
entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income
taxes, unless an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable
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or which would prevent such Lender from duly completing and delivering
any such form with respect to it and such Lender advises the Borrower
and the Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
2.19. ADMINISTRATIVE AGENT'S FEES. The Borrower shall pay to the
Administrative Agent those fees, in addition to the facility fees and
utilization fees referenced in SECTION 2.6(A) and 2.6(B), in the amounts and at
the times separately agreed to between the Administrative Agent and the
Borrower.
2.20. EXTENSION OF FACILITY TERMINATION DATE. The Borrower may request
an extension of the Facility Termination Date by submitting a request for an
extension to the Administrative Agent (an "Extension Request") no more than 60
days but no less than 40 days prior to the then effective Facility Termination
Date. The Extension Request must specify the new Facility Termination Date
requested by the Borrower and the date (which must be at least 30 days after the
Extension Request is delivered to the Administrative Agent) as of which the
Lenders must respond to the Extension Request (the "Extension Date"). The new
Facility Termination Date shall be no more than 364 days after the Extension
Date, including the Extension Date as one of the days in the calculation of the
days elapsed. Promptly upon receipt of an Extension Request, the Administrative
Agent shall notify each Lender of the contents thereof and shall request each
Lender to approve the Extension Request. Each Lender may, in its sole
discretion, elect to approve or deny such Extension Request. Failure of a Lender
to respond to an Extension Request by the Extension Date shall be deemed a
refusal to approve such Extension Request. Each Lender approving the Extension
Request shall deliver its written consent no later than the Extension Date. Any
consent delivered by a Lender to the Administrative Agent prior to the Extension
Date may be revoked prior to the Extension Date by the Lender giving written
notice of such revocation to the Administrative Agent before the Extension Date.
If the consent of each of the Lenders is received by the Administrative Agent
and remains in effect on the Extension Date, the Facility Termination Date
specified in the Extension Request shall become effective on the Extension Date
and the Administrative Agent shall promptly notify the Borrower and each Lender
of the new Facility Termination Date.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION. If, after the date hereof, the adoption of or
any change in any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof, or the compliance of any Lender therewith,
(a) subjects any Lender or any applicable Lending Installation
to any tax,
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duty, charge or withholding on or from payments due from the Borrower
(excluding taxation of the overall net income of any Lender or
applicable Lending Installation imposed by the jurisdiction in which
such Lender or Lending Installation is incorporated or has its
principal place of business), or changes the basis of taxation of
principal, interest or any other payments to any Lender or Lending
Installation in respect of its Loans or other amounts due it hereunder,
or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or
(c) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining Loans or reduces any amount
receivable by any Lender or any applicable Lending Installation in
connection with any Loans, or requires any Lender or any applicable
Lending Installation to make any payment calculated by reference to the
amount of Loans held, or interest received by it, by an amount deemed
material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (a) any change after the date
of this Agreement in the Risk-Based Capital Guidelines, or (b) any adoption of
or change in any law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means
(a) the risk-based capital guidelines in effect in the United States on the date
of this Agreement and (b) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory Practices
entitled "International Convergence of Capital Measurements and Capital
Standards" and any amendments to such regulations adopted prior to the date of
this Agreement. Notwithstanding the foregoing, no Lender shall be entitled to
demand compensation pursuant to this SECTION 3.2 if it shall not be the general
practice of such Lender to demand such
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compensation in similar circumstances under comparable provisions of comparable
credit agreements.
3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Majority Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available, or (b) the interest rate applicable to a Type of Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
then the Administrative Agent shall suspend the availability of the affected
Type of Advance until such circumstance no longer exists and require any
Eurodollar Advances of the affected Type to be repaid.
3.4. FUNDING INDEMINFICATION. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify the Administrative Agent and each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Advance.
3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Advances to reduce any liability of the Borrower to
such Lender under SECTIONS 3.1 and 3.2 or to avoid the unavailability of a Type
of Advance under SECTION 3.3, so long as such designation is not disadvantageous
to such Lender. Each Lender shall deliver a written statement of such Lender to
the Borrower (with a copy to the Administrative Agent) as to the amount due, if
any, under SECTION 3.1, 3.2 or 3.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Advance shall be calculated as though each Lender
funded its Eurodollar Advances through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. The amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of the written statement;
PROVIDED, HOWEVER, that no amount shall be payable by the Borrower pursuant to
SECTION 3.1, 3.2 or 3.4 with respect to any period commencing more than 120 days
before the delivery of the written statement contemplated by this SECTION 3.5.
The obligations of the Borrower under SECTIONS 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
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4.1. INITIAL LOANS. The Lenders shall not be required to make the initial
Advance hereunder unless the Borrower has furnished the following to the
Administrative Agent with sufficient copies for the Lenders and the other
conditions set forth below have been satisfied, in each case on or before April
30, 1997:
(a) CHARTER DOCUMENTS; GOOD STANDING CERTIFICATES. Copies of
the certificate of incorporation of the Borrower, together with all
amendments thereto, certified by the appropriate governmental officer
in its jurisdiction of incorporation, together with a good standing
certificate issued by the Secretary of State of the jurisdiction of its
incorporation and such other jurisdictions as shall be requested by the
Administrative Agent.
(b) BY-LAWS AND RESOLUTIONS. Copies, certified by the
Secretary or Assistant Secretary of the Borrower, of its by-laws and of
its Board of Directors' resolutions authorizing the execution, delivery
and performance of the Loan Documents to which the Borrower is a party.
(c) SECRETARY'S CERTIFICATE. An incumbency certificate,
executed by the Secretary or Assistant Secretary of the Borrower, which
shall identify by name and title and bear the signature of the officers
of the Borrower authorized to sign the Loan Documents and to make
borrowings hereunder, upon which certificate the Administrative Agent
and the Lenders shall be entitled to rely until informed of any change
in writing by the Borrower.
(d) OFFICER'S CERTIFICATE. A certificate, dated the date
hereof, signed by an Authorized Officer of the Borrower, in form and
substance satisfactory to the Administrative Agent, to the effect that:
(i) on such date (both before and after giving effect to the making of
any Loans hereunder), no Default or Unmatured Default has occurred and
is continuing; (ii) no injunction or temporary restraining order which
would prohibit the making of the Loans or the consummation of any of
the other transactions contemplated hereby (collectively, including the
making of the Loans, the "CLOSING TRANSACTIONS"), or other litigation
which could reasonably be expected to have a Material Adverse Effect is
pending or, to the best of such Person's knowledge, threatened; (iii)
each of the representations and warranties set forth in ARTICLE V of
this Agreement is true and correct on and as of such date; and (iv)
since December 31, 1996, no event or change has occurred that has
caused or evidences a Material Adverse Effect.
(e) LEGAL OPINIONS. A written opinion of each of (i) Briggs
and Morgan, counsel to the Borrower, substantially in the form of
EXHIBIT G-1 hereto, and (ii) Joel H. Gottesman, general counsel of the
Borrower, substantially in the form of EXHIBIT G-2 hereto, addressed to
the Administrative Agent and the Lenders.
(f) NOTES. Notes payable to the order of each of the Lenders
duly executed by the Borrower.
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(g) LOAN DOCUMENTS. Executed originals of this Agreement and
each of the Loan Documents, which shall be in full force and effect,
together with all schedules, exhibits, certificates, instruments,
opinions, documents and financial statements required to be delivered
pursuant hereto and thereto.
(h) LETTERS OF DIRECTION. Written money transfer instructions
with respect to the initial Advances and to future Advances in the form
of EXHIBIT J hereto addressed to the Administrative Agent and signed by
an Authorized Officer, together with such other related money transfer
authorizations as the Administrative Agent may have reasonably
requested.
(i) TERMINATION OF AGREEMENT. Evidence satisfactory to the
Administrative Agent that the Credit Agreement dated as of April 16,
1996 among the Borrower, First Chicago, individually and as
administrative agent, and the other financial institutions party
thereto has been, or is contemporaneously being, terminated and all
amounts due thereunder paid in full.
(j) OTHER. Such other documents as the Administrative Agent,
any Lender or their counsel may have reasonably requested.
4.2. EACH FUTURE ADVANCE. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default and none
would result from such Advance;
(b) The representations and warranties contained in ARTICLE V
(other than SECTION 5.6) are true and correct as of such Borrowing
Date;
(c) A Ratable Borrowing Notice or Competitive Bid Quote
Request shall have been properly submitted; and
(d) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Ratable Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in SECTION 4.2 have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that, both before
and after giving effect to the Closing Transactions:
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5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified and in good standing as a foreign corporation and is duly
authorized to conduct its business in each jurisdiction in which its business is
conducted or proposed to be conducted except where the failure to be so
qualified or authorized may not reasonably be expected to have a Material
Adverse Effect.
5.2. AUTHORIZATION AND VALIDITY. The Borrower has all requisite power and
authority (corporate and otherwise) and legal right to execute and deliver (or
file, as the case may be) each of the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.3. COMPLIANCE WITH LAWS AND CONTRACTS. The Borrower and its Subsidiaries
have complied in all material respects with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
their respective businesses or the ownership of their respective properties,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Neither the execution and delivery by the Borrower of
the Loan Documents, the application of the proceeds of the Loans or the
consummation of the Closing Transactions, nor compliance with the provisions of
the Loan Documents, or at the relevant time did, (a) violate any law, rule,
regulation (including Regulations G, T, U and X), order, writ, judgment,
injunction, decree or award binding on the Borrower or any Subsidiary or the
Borrower's or any Subsidiary's charter, articles or certificate of incorporation
or by-laws, (b) violate the provisions of or require the approval or consent of
any party to any indenture, instrument or agreement to which the Borrower or any
Subsidiary is a party or is subject, or by which it, or its respective property,
is bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than Liens permitted by, the Loan
Documents) in, of or on the property of the Borrower or any Subsidiary pursuant
to the terms of any such indenture, instrument or agreement, or (c) require any
consent of the stockholders of any Person, except for approvals or consents
which will be obtained on or before the initial Advance and are disclosed on
SCHEDULE 5.3, except for any violation of, or failure to obtain an approval or
consent required under, any such indenture, instrument or agreement that could
not reasonably be expected to have a Material Adverse Effect.
5.4. GOVERNMENTAL CONSENTS. No order, consent, approval, qualification,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any Governmental
Authority, any securities exchange or other Person is or at the relevant time
was required to authorize, or is or at the relevant time was required in
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connection with the execution, delivery, consummation or performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents, the application of the proceeds of the Loans or any other transaction
contemplated in the Loan Documents.
5.5. FINANCIAL STATEMENTS. The Borrower has heretofore furnished to each of
the Lenders the December 31, 1996 audited consolidated financial statements of
the Borrower and its Subsidiaries (the "FINANCIAL STATEMENTS"). Each of the
Financial Statements was prepared in accordance with Agreement Accounting
Principles and fairly presents the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such date and the
consolidated results of their operations for the period then ended.
5.6. MATERIAL ADVERSE CHANGE. No material adverse change in the business,
Property, condition (financial or otherwise), performance, prospects or results
of operations of the Borrower and its Subsidiaries taken as a whole has occurred
since December 31, 1996.
5.7. TAXES. The Borrower and its Subsidiaries have filed or caused to be
filed on a timely basis and in correct form all United States federal and
applicable foreign, state and local tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any Subsidiary, except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with Agreement Accounting
Principles and as to which no Lien prohibited by Section 6.10 exists. As of the
date hereof, the United States income tax returns of the Borrower on a
consolidated basis have been audited by the Internal Revenue Service through its
Fiscal Year ending December 31, [1991], and there are no pending audits or
investigations regarding the Borrower's or its Subsidiaries' federal, foreign,
state or local tax returns. No tax liens have been filed and no claims are being
asserted with respect to any such taxes which could reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with Agreement Accounting Principles.
5.8. LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, proceeding, inquiry or governmental investigation (including,
without limitation, by the Federal Trade Commission) pending or, to the
knowledge of any of their officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective properties which could reasonably
be expected to have a Material Adverse Effect or to prevent, enjoin or unduly
delay the making of the Loans under this Agreement. Neither the Borrower nor any
Subsidiary has any material contingent obligations except as set forth on
SCHEDULE 5.8.
5.9.SUBSIDIARIES. SCHEDULE 5.9 hereto contains an accurate list of all of
the existing Subsidiaries as of the date of this Agreement, setting forth their
respective jurisdictions of incorporation and the percentage of their capital
stock owned by the Borrower or other Subsidiaries.
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5.10. ERISA. Except as disclosed on SCHEDULE 5.10, neither the Borrower
nor any other member of the Controlled Group maintains any Single Employer
Plans, and no Single Employer Plan has any Unfunded Liability. Neither the
Borrower nor any other member of the Controlled Group maintains, or is obligated
to contribute to, any Multiemployer Plan or has incurred, or is reasonably
expected to incur, any withdrawal liability to any Multiemployer Plan. Each Plan
complies in all material respects with all applicable requirements of law and
regulations. Neither the Borrower nor any member of the Controlled Group has,
with respect to any Plan, failed to make any contribution or pay any amount
required under Section 412 of the Code or Section 302 of ERISA or the terms of
such Plan. There are no pending or, to the knowledge of the Borrower, threatened
claims, actions, investigations or lawsuits against any Plan, any fiduciary
thereof, or the Borrower or any member of the Controlled Group with respect to a
Plan. Neither the Borrower nor any member of the Controlled Group has engaged in
any prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) in connection with any Plan which would subject such Person to any
material liability. Within the last five years neither the Borrower nor any
member of the Controlled Group has engaged in a transaction which resulted in a
Single Employer Plan with an Unfunded Liability being transferred out of the
Controlled Group. No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which is subject to Title IV of ERISA.
5.11. DEFAULTS. No Default or Unmatured Default has occurred and is
continuing.
5.12. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation G, Regulation T, Regulation U or
Regulation X. Neither the making of any Advance hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, Regulation T, Regulation U or Regulation X.
5.13. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
the Borrower nor any Subsidiary is, or after giving effect to any Advance will
be, an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.14. DISCLOSURE. None of the (a) information, exhibits or reports
furnished or to be furnished by the Borrower or any Subsidiary to the
Administrative Agent or to any Lender in connection with the negotiation of the
Loan Documents, or (b) representations or warranties of the Borrower contained
in this Agreement, the other Loan Documents, or any other document, certificate
or written statement furnished to the Administrative Agent or the Lenders by or
on
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behalf of the Borrower for use in connection with the transactions
contemplated by this Agreement, contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. There is
no fact known to the Borrower (other than matters of a general economic nature)
that has had or could reasonably be expected to have a Material Adverse Effect
and that has not been disclosed herein or in such other documents, certificates
and statements furnished to the Lenders for use in connection with the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Majority Lenders shall
otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently applied,
and furnish to the Lenders:
(a) As soon as practicable and in any event within 90 days
after the close of each of its Fiscal Years, an unqualified audit
report certified by KPMG Peat Marwick or other independent certified
public accountants, acceptable to the Lenders, prepared in accordance
with Agreement Accounting Principles on a consolidated basis for itself
and its Subsidiaries, including balance sheets as of the end of such
period and related statements of income, retained earnings and cash
flows.
(b) As soon as practicable and in any event within 60 days
after the close of the first three Fiscal Quarters of each of its
Fiscal Years, for itself and its Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and consolidated
statements of income, retained earnings and cash flows for the period
from the beginning of such Fiscal Year to the end of such quarter, all
certified by its chief financial officer or treasurer and prepared in
accordance with Agreement Accounting Principles.
(c) concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of the chief financial officer or
treasurer of the Borrower, substantially in the form of EXHIBIT H
hereto, opining on or certifying such statements (i) certifying that no
Default or Unmatured Default has occurred or, if such Default or
Unmatured Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto and (ii) setting forth computations in reasonable
detail satisfactory to the Administrative Agent demonstrating
compliance with the covenants contained in SECTIONS 6.12.1, 6.12.2 and
6.12.3;
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(d) As soon as possible and in any event within ten days after
the Borrower knows that any Termination Event has occurred with respect
to any Plan, a statement, signed by the chief financial officer or
treasurer of the Borrower, describing said Termination Event and the
action which the Borrower proposes to take with respect thereto.
(e) Promptly upon the furnishing thereof to the shareholders
of the Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(f) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission.
(g) Such other information (including non-financial
information) as the Administrative Agent or any Lender may from time to
time reasonably request.
6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the general corporate needs,
including commercial paper backup, of the Borrower and its Subsidiaries. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any "margin stock" (as defined in
Regulation U) or to finance the Purchase of any Person which has not been
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.
6.3. NOTICE OF DEFAULT. The Borrower will give prompt notice in writing
to the Lenders of the occurrence of (a) any Default or Unmatured Default and (b)
of any other event or development, financial or other, relating specifically to
the Borrower or any of its Subsidiaries (and not of a general economic or
political nature) which could reasonably be expected to have a Material Adverse
Effect.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted, except where failure to
maintain such authority could not reasonably be expected to have a Material
Adverse Effect.
6.5. TAXES. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by applicable law and pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.
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6.6. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws (including ERISA), rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, the failure to comply with which could reasonably be expected to have a
Material Adverse Effect.
6.7. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.8. INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Lenders may
designate. The Borrower will keep or cause to be kept, and cause each Subsidiary
to keep or cause to be kept, appropriate records and books of account in which
complete entries are to be made reflecting its and their business and financial
transactions, such entries to be made in accordance with Agreement Accounting
Principles consistently applied.
6.9. MERGERS, SALES OF ASSETS, ETC.
(a) The Borrower will not consolidate with or merge into any
other corporation or convey, transfer or lease its Property
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or
into which the Borrower is merged or the Person which acquires
by conveyance or transfer, or which leases, the Property of
the Borrower substantially as an entirety shall be a
corporation organized and existing under the laws of the
United States of America or any state or the District of
Columbia and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to each other
party hereto, in form satisfactory to the Administrative
Agent, the due and punctual payment of the Obligations and the
performance or observance of every covenant of this Agreement
on the part of the Borrower to be performed or observed;
(ii) immediately after giving effect to such
transaction, no Default or Unmatured Default shall have
occurred and be continuing; and
(ii) the Borrower shall have delivered to the
Administrative Agent an officer's certificate and an opinion
of counsel, each stating that such consolidation, merger,
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conveyance, transfer or lease and such supplemental agreement
comply with this paragraph (a) and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
(b) Upon any consolidation by the Borrower with or merger by
the Borrower into any other corporation or any conveyance, transfer or
lease of the Property of the Borrower substantially as an entirety in
accordance with paragraph (a) above, the successor corporation formed
by such consolidation or into which the Borrower is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the
Borrower under the Loan Documents with the same effect as if such
successor corporation had been named as the Borrower herein.
6.10. LIENS. The Borrower will not, nor will it permit any Subsidiary
to, create, incur or assume any Lien on the Property of the Borrower or any
Subsidiary to secure any obligation incurred, issued, assumed or guaranteed by
the Borrower or any Subsidiary, except:
(a) any Lien existing on any Property or shares of stock of a
corporation at the time the corporation becomes a Subsidiary or merges
into or consolidates with the Borrower or any Subsidiary;
(b) any Lien existing on any Property at the time the Borrower
or any Subsidiary acquires such property; PROVIDED, HOWEVER, that such
Lien may not extend to any other Property owned by the Borrower or any
Subsidiary at the time (or after the time) such Lien is created,
incurred or assumed;
(c) any Lien securing Indebtedness incurred to finance all or
part of the purchase price or cost of construction of Property of the
Borrower or any Subsidiary; PROVIDED that (i) such Lien does not extend
to any other Property owned by the Borrower or any Subsidiary at the
time (or after the time) the Lien is created, incurred or assumed,
except that, in the case of a Lien incurred to finance construction on
real property, such Lien may extend to unimproved real property on
which the construction takes place and (ii) the Indebtedness secured by
such Lien may not be incurred more than 120 days after the later of the
acquisition, completion of construction or commencement of full
operation of the Property subject to such Lien;
(d) any Lien securing Indebtedness of any Subsidiary owing to
the Borrower or any other Subsidiary;
(e) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves shall have been set aside on its books in accordance with
Agreement Accounting Principles;
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(f) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more than 60
days past due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside
on its books;
(g) Liens arising out of pledges or deposits made in the
ordinary course of business in connection with worker's compensation
laws, unemployment insurance, old age pensions and other social
security or retirement benefits, and statutory obligations and other
similar obligations;
(h) any Lien arising out of a judgment, decree or court order,
so long as any appropriate legal proceeding that may have been
initiated for review shall not have been finally terminated or so long
as the period within which such proceeding may be initiated shall not
have expired or such Lien arises in connection with any other
proceeding or action at law or in equity; PROVIDED that no proceeding
to enforce such Lien has been commenced and the aggregate amount
secured by all such Liens shall not at any time exceed $10,000,000;
(i) any Lien on chattel paper, instruments or other rights to
payment of the Borrower or any Subsidiary, or cash deposited or
otherwise subjected to such Lien, (i) as a basis for the issuance of
Letters of Credit, to secure repurchase obligations arising in
connection with securities repurchase agreements entered into in the
ordinary course of business or in aid of other similar borrowing
arrangements, or (ii) arising in connection with the Borrower's
securitizations of such rights to payment conducted in the ordinary
course of business;
(j) any Lien on Property (or any receivables arising in
connection with the lease thereof) acquired by the Borrower or any
Subsidiary through repossession, foreclosure or like proceeding, or
securing Indebtedness incurred at the time of such acquisition or at
any time thereafter to finance all or part of the cost of maintenance,
improvement or construction relating thereto; PROVIDED that such Lien
does not apply to any other Property of the Borrower or any Subsidiary,
except that, in the case of any such Lien incurred to finance
construction on real property, such Lien may extend to unimproved real
property on which the construction takes place;
(k) any Lien incurred or deposit or pledge made or given in
the ordinary course of business in connection with, or to secure
payment of, indemnity, performance or other similar bonds;
(l) any encumbrance in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real
property, and landlord's liens under leases on the premises rented,
which do not materially detract from the value of such property or
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impair the use thereof in the business of the Borrower and its
Subsidiaries;
(m) any Lien (an "EXTENDED LIEN") extending, renewing or
replacing in whole or in part another Lien (an "EXISTING LIEN")
permitted by paragraphs (a) through (l) above; PROVIDED that (i) such
Extended Lien shall not extend beyond (A) the Property subject to such
Existing Lien and (B) improvements and construction on such Property,
and (ii) the principal amount of the Indebtedness secured by such
Extended Lien may not exceed the principal amount of the Indebtedness
secured by such Existing Lien; or
(n) any Lien securing Indebtedness of the Borrower or any
Subsidiary in a principal amount at any time outstanding that does not
exceed the amount, if any, by which (i) 5% of Consolidated Net Tangible
Assets exceeds (ii) the aggregate amount of all other Indebtedness of
the Borrower and its Subsidiaries outstanding at such time that is
secured by Liens on Property of the Borrower and its Subsidiaries,
other than Indebtedness secured by Liens permitted by paragraphs (a)
through (m) above.
6.11. INCONSISTENT AGREEMENTS. The Borrower shall not, nor shall it
permit any Subsidiary to, enter into any indenture, agreement, instrument or
other arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the granting of Liens to
secure the Obligations, the amending of the Loan Documents or the ability of any
Subsidiary to (i) pay dividends or make other distributions on its capital
stock, (ii) make loans or advances to the Borrower or (iii) repay loans or
advances from the Borrower or (b) contains any provision which would be violated
or breached by the making of Advances or by the performance by the Borrower of
any of its obligations under any Loan Document.
6.12. FINANCIAL COVENANTS. The Borrower on a consolidated basis with
its Subsidiaries shall:
6.12.1. NET WORTH. At all times after the date hereof, maintain a
minimum Net Worth of at least $750,000,000.
6.12.2. FIXED CHARGE COVERAGE RATIO. For the twelve-month period
ending on each Fiscal Quarter end, maintain a Fixed Charge Coverage
Ratio of not less than 1.25:1.0.
6.12.3. DEBT TO EQUITY RATIO. At all times after the date hereof,
maintain a Debt to Equity Ratio of not more than 5.0:1.0.
ARTICLE VII
DEFAULTS
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The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower to the Lenders or the Administrative Agent under or in
connection with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be false in any material respect on the date as of
which made.
7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any facility or utilization fee or obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, SECTION 6.3(A) or SECTIONS 6.9 through
6.12.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under SECTION 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within 30 days after written notice from
the Administrative Agent or any Lender.
7.5. The default by the Borrower or any of its Subsidiaries in the
performance of any term, provision or condition contained in any agreement or
agreements under which any Indebtedness aggregating an amount equal to or in
excess of $25,000,000 was created or is governed, or the occurrence of any other
event or existence of any other condition, the effect of any of which is to
cause, or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof.
7.6. The Borrower or any of its Subsidiaries shall (a) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (d) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (e)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this SECTION 7.6, (f) fail to contest in good faith any appointment
or proceeding described in SECTION 7.7 or (g) become unable to pay, not pay, or
admit in writing its inability to pay, its debts generally as they become due.
7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the
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Borrower or any of its Subsidiaries or any Substantial Portion of its Property,
or a proceeding described in SECTION 7.6(D) shall be instituted against the
Borrower or any of its Subsidiaries and such appointment continues undischarged
or such proceeding continues undismissed or unstayed for a period of 30
consecutive days.
7.8. For any period of 60 consecutive days there shall be outstanding
against the Borrower or any of its Subsidiaries any judgment(s) or order(s) for
the payment of money aggregating in excess of $25,000,000, which judgments or
orders have not been paid, bonded, otherwise discharged or stayed on appeal or
as to which any enforcement action has been commenced.
7.9. The Unfunded Liabilities of all Plans shall exceed in the
aggregate $10,000,000.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in SECTION 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part of
the Administrative Agent or any Lender. If any other Default occurs, the
Majority Lenders may (or the Administrative Agent, if so directed by the
Majority Lenders, shall) terminate or suspend the obligations of the Lenders to
make Loans hereunder, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which the Borrower
hereby expressly waives.
If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
SECTION 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Majority Lenders (in their sole discretion) shall so direct, the
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
8.2. AMENDMENTS. Subject to the provisions of this ARTICLE VIII, the
Majority Lenders (or the Administrative Agent with the consent in writing of the
Majority Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default or condition hereunder; PROVIDED, HOWEVER, that no such
supplemental agreement shall, without the consent of each Lender:
(a) Extend the final maturity of any Loan or Note or reduce
the principal
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amount thereof, or reduce the rate or extend the time of payment of
interest or fees (including facility fees and utilization fees)
thereon;
(b) Change the percentage specified in the definition of
Majority Lenders;
(c) Reduce the amount of or extend the date for the mandatory
prepayments required under SECTION 2.9, or increase the amount of the
Commitment of any Lender hereunder;
(d) Extend the Facility Termination Date;
(e) Amend this SECTION 8.2;
(f) Permit any assignment by the Borrower of its Obligations
or its rights hereunder (other than an assignment of such Obligations
or rights occurring by operation of law pursuant to a merger or
consolidation permitted pursuant to SECTION 6.9).
No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
SECTION 12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to SECTION 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive delivery of the Notes and the
making of the Loans herein contemplated.
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9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. TAXES. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Administrative Agent and the Lenders
and supersede all prior agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject matter thereof
other than the fee letter dated March 4, 1997 in favor of First Chicago.
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Administrative Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Administrative Agent for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Administrative Agent and the Lenders, which attorneys may be employees
of the Administrative Agent or the Lenders) paid or incurred by the
Administrative Agent or any Lender in connection with the collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify the
Administrative Agent and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby or the direct or indirect application or proposed application of the
proceeds of any Loan hereunder
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except to the extent that they arise out of the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of the Borrower
under this SECTION 9.7 shall survive the termination of this Agreement.
9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
9.9. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrower. Neither the Administrative Agent nor
any Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's business
or operations. The Borrower shall rely entirely upon its own judgment with
respect to its business, and any review, inspection or supervision of, or
information supplied to the Borrower by the Administrative Agent or the Lenders
is for the protection of the Administrative Agent and the Lenders and neither
the Borrower nor any other Person is entitled to rely thereon. The Borrower
agrees that neither the Administrative Agent nor any Lender shall have any
liability with respect to, and the Borrower hereby waives, releases and agrees
not to sue for, any special, indirect or consequential damages suffered by the
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN
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DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL
BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS; PROVIDED THAT SUCH PROCEEDINGS
MAY BE BROUGHT IN OTHER COURTS IF JURISDICTION MAY NOT BE OBTAINED IN A COURT IN
CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. DISCLOSURE. The Borrower and each Lender hereby (a) acknowledge
and agree that First Chicago and/or its Affiliates from time to time may hold
other investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates.
9.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Administrative Agent and the Lenders and each party has notified
the Administrative Agent that it has taken such action.
ARTICLE X
THE ADMINISTRATIVE AGENT
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10.1. APPOINTMENT. First Chicago is hereby appointed Administrative
Agent hereunder and under each other Loan Document, and each of the Lenders
authorizes the Administrative Agent to act as the agent of such Lender. The
Administrative Agent agrees to act as such upon the express conditions contained
in this ARTICLE X. The Administrative Agent shall not have a fiduciary
relationship in respect of the Borrower or any Lender by reason of this
Agreement.
10.2. POWERS. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder, except any action specifically provided by the Loan Documents
to be taken by the Administrative Agent.
10.3. GENERAL IMMUNITY. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower or any
Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except for
its or their own gross negligence or willful misconduct.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder, (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in ARTICLE IV,
except receipt of items required to be delivered to the Administrative Agent and
not waived at closing, or (d) the validity, effectiveness, sufficiency,
enforceability or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Administrative Agent shall have
no duty to disclose to the Lenders information that is not required to be
furnished by the Borrower to the Administrative Agent at such time, but is
voluntarily furnished by the Borrower to the Administrative Agent (either in its
capacity as Administrative Agent or in its individual capacity).
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Majority Lenders (or, to the extent required by
SECTION 8.2, all Lenders), and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Administrative Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any
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of its duties as Administrative Agent hereunder and under any other Loan
Document by or through employees, agents and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.
10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.
10.8. ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (a) for any amounts not reimbursed by the Borrower for which the
Administrative Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (b) for any other expenses incurred by the Administrative Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents, and (c) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any other document delivered
in connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents; PROVIDED
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Administrative Agent. The
obligations of the Lenders under this SECTION 10.8 shall survive payment of the
Obligations and termination of this Agreement.
10.9. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Administrative Agent has received written notice
from a Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders.
10.10. RIGHTS AS A LENDER. In the event the Administrative Agent is a
Lender, the Administrative Agent shall have the same rights and powers hereunder
and under any other Loan Document as any Lender and may exercise the same as
though it were not the Administrative Agent, and the term "Lender" or "Lenders"
shall, at any time when the Administrative Agent is a Lender, unless the context
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by
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this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. The Administrative Agent, in its individual
capacity, is not obligated to remain a Lender.
10.11. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower, such resignation to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative Agent gives notice
of its intention to resign. Upon any such resignation, the Majority Lenders
shall have the right to appoint, on behalf of the Lenders, a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty days after the resigning Administrative Agent's giving notice of
its intention to resign, then the resigning Administrative Agent may appoint, on
behalf of the Borrower and the Lenders, a successor Administrative Agent. If the
Administrative Agent has resigned and no successor Administrative Agent has been
appointed, the Lenders may perform all the duties of the Administrative Agent
hereunder and the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal directly with the
Lenders. No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment. Any such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $50,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Administrative Agent. Upon the effectiveness of the resignation
of the Administrative Agent, the resigning Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Administrative
Agent, the provisions of this ARTICLE X shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as the Administrative Agent hereunder and under the other Loan Documents.
10.13. CO-AGENTS. There shall be no rights, obligations or liabilities
imposed upon the Co-Agents identified on the signature pages of this Agreement
by virtue of their status as such.
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ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(whether general or special, time or demand, including all account balances,
whether provisional or final and whether or not collected or available) and any
other Indebtedness at any time held or owing by any Lender to or for the credit
or account of the Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations, or any part
hereof, shall then be due.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTION 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share of such
Loans, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the Borrower to a
Lender, other than Indebtedness evidenced by any of the Notes held by such
Lender, such amount shall be applied ratably to such other Indebtedness and to
the Indebtedness evidenced by such Notes.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or Obligations under the
Loan Documents (other than an assignment of such rights or Obligations occurring
by operation of law pursuant to a merger or consolidation permitted pursuant to
SECTION 6.9), and (b) any assignment by any Lender must be made in compliance
with SECTION 12.3. Notwithstanding CLAUSE (B) of this SECTION 12.1, any Lender
may at any time, without the consent of the Borrower or the Administrative
Agent, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Administrative Agent may treat the payee of any Note as the owner
thereof for
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all purposes hereof unless and until such payee complies with SECTION 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Administrative Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities
("PARTICIPANTS") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Note for all purposes under
the Loan Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan
Documents.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver which effects any of the
modifications referenced in clauses (a) through (f) of SECTION 8.2.
12.2.3. BENEFIT OF SENDOFF. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
SECTION 11.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents; PROVIDED that each Lender shall retain the right of
setoff provided in SECTION 11.1 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to
share with each Participant, and each Participant, by exercising the
right of setoff provided in SECTION 11.1, agrees to share with each
Lender, any amount received pursuant to the exercise of its right of
setoff, such amounts to be shared in accordance with SECTION 11.2 as if
each Participant were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities ("PURCHASERS") all
or any part of its rights and obligations under the Loan Documents;
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PROVIDED, HOWEVER, that in the case of an assignment to an entity which
is not a Lender or an Affiliate of a lender, such assignment shall be
in a minimum amount of $10,000,000. Such assignment shall be
substantially in the form of EXHIBIT I hereto or in such other form as
may be agreed to by the parties thereto. The consent of the
Administrative Agent and, so long as no Default is continuing, the
Borrower shall be required prior to an assignment becoming effective
with respect to a Purchaser which is not a Lender or an Affiliate
thereof. Such consent shall not be unreasonably withheld.
12.3.2. EFFECT; EFFECTIVE DATE. Upon (a) delivery to the
Administrative Agent of a notice of assignment, substantially in the
form attached as EXHIBIT I to EXHIBIT I hereto (a "NOTICE OF
ASSIGNMENT"), together with any consents required by SECTION 12.3.1,
and (b) payment of a $3,500 fee to the Administrative Agent for
processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. On and after
the effective date of such assignment, (a) such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as
if it were an original party hereto, and (b) the transferor Lender
shall be released with respect to the percentage of the Aggregate
Commitment and Loans assigned to such Purchaser without any further
consent or action by the Borrower, the Lenders or the Administrative
Agent. Upon the consummation of any assignment to a Purchaser pursuant
to this SECTION 12.3.2, the transferor Lender, the Administrative Agent
and the Borrower shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender and new Notes
or, as appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their Revolving Credit
Commitment, as adjusted pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries.
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 2.18.
ARTICLE XIII
NOTICES
13.1. GIVING NOTICE. Except as otherwise permitted by SECTION 2.15 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its
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signature hereto or at such other address as may be designated by such party in
a notice to the other parties. Any notice, if mailed and properly addressed with
first class postage prepaid, return receipt requested, shall be deemed given
three Business Days after deposit in the U.S. mail; any notice, if transmitted
by facsimile, shall be deemed given when transmitted; and any notice given by
overnight courier shall be deemed given when received by the addressee.
13.2. CHANGE OF ADDRESS. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
[signature pages follow]
<PAGE>
EXHIBIT I
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_________________________ (the "Assignor") and _______________________________
(the "Assignee") is dated as of ____________________, ____. The parties hereto
agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as it may be amended, supplemented, modified, renewed or extended from
time to time, is herein called the "Credit Agreement") described in Item 1 of
SCHEDULE 1 attached hereto. Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of SCHEDULE 1 of all outstanding rights and obligations
under the Credit Agreement relating to the Loans and the other Loan Documents.
The aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
SCHEDULE 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of SCHEDULE
1 or two Business Days (or such shorter period agreed to by the Administrative
Agent) after a Notice of Assignment substantially in the form of EXHIBIT I
attached hereto has been delivered to the Administrative Agent. Such Notice of
Assignment must include any consents required to be delivered to the
Administrative Agent pursuant to Section 12.3.1 of the Credit Agreement. In no
event will the Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date under SECTION 4 hereof are not
made on the proposed Effective Date. The Assignor will notify the Assignee of
the proposed Effective Date no later than the Business Day prior to the proposed
Effective Date. As of the Effective Date, (a) the Assignee shall have the rights
and obligations of a Lender under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder, and (b) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees
<PAGE>
with respect to the interest assigned hereby. The Assignee shall advance funds
directly to the Administrative Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby. [In consideration for the sale and assignment of Loans
hereunder, (a) the Assignee shall pay the Assignor, on the Effective Date, an
amount equal to the principal amount of the portion of all Alternate Base Rate
Loans assigned to the Assignee hereunder, and (b) with respect to each
Eurodollar Loan or Absolute Rate Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (i) on the last
day of the Interest Period therefor, (ii) on such earlier date agreed to by the
Assignor and the Assignee, or (iii) on the date on which any such Eurodollar
Loan or Absolute Rate Loan either becomes due (by acceleration or otherwise) or
is prepaid (the date as described in the foregoing clauses (i), (ii) or (iii)
being hereinafter referred to as the "Payment Date"), the Assignee shall pay the
Assignor an amount equal to the principal amount of the portion of such
Eurodollar Loan or Absolute Rate Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that the
Payment Date for such Eurodollar Loan or Absolute Rate Loan shall be the
Effective Date, they shall agree to the interest rate applicable to the portion
of such Loan assigned hereunder for the period from the Effective Date to the
end of the existing Interest Period applicable to such Eurodollar Loan or
Absolute Rate Loan (the "Agreed Interest Rate") and any interest received by the
Assignee in excess of the Agreed Interest Rate shall be remitted to the
Assignor. In the event interest for the period from the Effective Date to, but
not including, the Payment Date is not paid by the Borrower with respect to any
Eurodollar Loan or Absolute Rate Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period on
the portion of such Eurodollar Loan or Absolute Rate Loan sold by the Assignor
to the Assignee hereunder at the applicable rate provided by the Credit
Agreement. In the event a prepayment of any Eurodollar Loan or Absolute Rate
Loan which is existing on the Payment Date and assigned by the Assignor to the
Assignee hereunder occurs after the Payment Date but before the end of the
Interest Period applicable to such Eurodollar Loan or Absolute Rate Loan, the
Assignee shall remit to the Assignor the excess of the prepayment penalty paid
with respect to the portion of such Eurodollar Loan or Absolute Rate Loan
assigned to the Assignee hereunder over the amount which would have been paid if
such prepayment penalty was calculated based on the Agreed Interest Rate. The
Assignee will also promptly remit to the Assignor (x) any principal payments
received from the Administrative Agent with respect to Eurodollar Loans and
Absolute Rate Loans prior to the Payment Date, and (y) any amounts of interest
on Loans and fees received from the Administrative Agent which relate to the
portion of the Loans assigned to the Assignee hereunder for periods prior to the
Effective Date, in the case of Alternate Base Rate Loans, or the Payment Date,
in the case of Eurodollar Loans and Absolute Rate Loans, and not previously paid
by the Assignee to the Assignor.]* In the event that either party hereto
receives any payment to which the other party hereto is entitled under this
Assignment Agreement, then the party receiving such amount shall promptly remit
it to the other party hereto.
* Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
5. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE
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<PAGE>
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (a) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Document, [including,
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of any Borrower or any guarantor], (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of any Borrower
[or any guarantor], (d) the performance of or compliance with any of the terms
or provisions of any of the Loan Documents, (e) inspecting any of the Property,
books or records of any Borrower, [(f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans], or (g) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
* include bracketed language if applicable.
6. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (a) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (b) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (c) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, (d) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender, (e) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
SCHEDULE 1, (f) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (g)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes].*
* to be inserted if the Assignee is not incorporated under the laws
of the United States, or a state thereof.
7. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless
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<PAGE>
against any and all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment Agreement. The obligations of the
Assignee under this SECTION 7 shall survive the payment of all amounts hereunder
and the termination of this Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to and in accordance with Section 12.3 of the Credit
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person; PROVIDED that (a) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained, and (b) unless
the prior written consent of the Assignor is obtained, the Assignee is not
thereby released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under SECTIONS 4, 6
and 7 hereof.
9. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of SCHEDULE 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
11. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
12. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to SCHEDULE 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
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<PAGE>
By:
---------------------------
Title:
------------------------
[NAME OF ASSIGNEE]
By:
---------------------------
Title:
------------------------
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<PAGE>
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
That certain $750,000,000 (364-day) Credit Agreement, dated as
of April 29, 1997, among Green Tree Financial Corporation, the
financial institutions named therein and The First National
Bank of Chicago, as Administrative Agent.
2. Date of Assignment Agreement:
3. Amounts (As of Date of Item 2 above): -------
(a) Total of Commitments (Loans)*
under Credit Agreement $
-------
(b) Assignee's percentage of the
(Loans)* Commitments purchased
under the Assignment Agreement** -------%
4. Assignee's aggregate (Loan amount)*
Commitment amount purchased hereunder: $-------
5. Proposed Effective Date:
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
---------------------------- ---------------------------
Title: Title:
------------------------- ------------------------
* If a Commitment has been terminated, insert outstanding Loans in
place of Commitment
** Percentage taken to 10 decimal places
<PAGE>
ATTACHMENT TO SCHEDULE 1 TO ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<PAGE>
EXHIBIT I
TO ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
----------------, ------
To: Green Tree Financial Corporation
500 Landmark Towers
345 St. Peter Street
St. Paul, MN 55102
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to the Credit Agreement (the "Credit Agreement")
described in Item 1 of SCHEDULE 1 attached hereto. Capitalized terms used but
not otherwise defined herein have the meanings attributed to them in the Credit
Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to the Borrower and the Administrative Agent pursuant to Section
12.3.2 of the Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , ____ (the "Assignment"), pursuant to which, among other
things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the Assignor
the percentage interest specified in Item 3 of SCHEDULE 1 of all outstandings,
rights and obligations under the Credit Agreement relating to the facilities
listed in Item 3 of SCHEDULE 1, including, without limitation, such interest in
the Assignor's Commitment (if applicable) and the Loans owing to the Assignor
relating to such facilities. The effective date of the Assignment (the
"Effective Date") shall be the later of the date specified in Item 5 of SCHEDULE
1 or two Business Days (or such shorter period as agreed to by the
Administrative Agent) after this Notice of Assignment and any consents and fees
required by Sections 12.3.1 and 12.3.2 of the Credit Agreement have been
delivered to the Administrative Agent; PROVIDED that the Effective Date shall
not occur if any condition precedent agreed to by the Assignor and the Assignee
has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower
and the Administrative Agent notice of the assignment and delegation referred to
herein. The Assignor
<PAGE>
will confer with the Administrative Agent before the date specified in Item 5 of
SCHEDULE 1 to determine if the Assignment Agreement will become effective on
such date pursuant to SECTION 3 hereof and will confer with the Administrative
Agent to determine the Effective Date pursuant to SECTION 3 hereof if it occurs
thereafter. The Assignor shall notify the Administrative Agent if the Assignment
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Administrative Agent, the Assignor will give the
Administrative Agent written confirmation of the satisfaction of the conditions
precedent.
5. The Assignor or the Assignee shall pay to the Administrative Agent
on or before the Effective Date the processing fee of $3,500 required by Section
12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Administrative Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacement Notes,
to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee
each agree to deliver to the Administrative Agent the original Notes received by
it from the Borrower upon its receipt of new Notes in the appropriate amount.
7. The Assignee advises the Administrative Agent that notice and
payment instructions are set forth in the attachment to SCHEDULE 1.
8. Each party consenting to the Assignment in the space indicated below
hereby releases the Assignor from any obligations to it which have been assigned
to the Assignee. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
9. The Assignee authorizes the Administrative Agent to act as its agent
under the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Administrative Agent has no duty to supply information
with respect to the Borrower or the Loan Documents to the Assignee until the
Assignee becomes a party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
---------------------------- -------------------------------
Title: Title:
------------------------- ----------------------------
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<PAGE>
ACKNOWLEDGED AND CONSENTED TO ACKNOWLEDGED AND CONSENTED
BY THE FIRST NATIONAL BANK OF TO BY GREEN TREE FINANCIAL
CHICAGO, as Administrative Agent CORPORATION
By: By:
----------------------------- -------------------------------
Title: Title:
-------------------------- ----------------------------
[Attach photocopy of Schedule 1 to Assignment]
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<PAGE>
================================================================================
$750,000,000 (3-year)
CREDIT AGREEMENT
AMONG
GREEN TREE FINANCIAL CORPORATION,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
DATED AS OF
April 29, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS..........................................................1
ARTICLE II THE FACILITY.......................................................15
2.1. The Facility......................................................15
2.1.1. Description of Facility..................................15
2.1.2. Facility Amount..........................................16
2.1.3. Availability of Facility.................................16
2.2. Ratable Advances..................................................16
2.2.1. Ratable Advances.........................................16
2.2.2 Ratable Advance Rate Options.............................16
2.2.3. Method of Selecting Types and Interest
Periods for Ratable Advances.............................17
2.2.4. Conversion and Continuation of Outstanding
Ratable Advances.........................................17
2.3. Competitive Bid Advances..........................................18
2.3.1. Competitive Bid Option...................................18
2.3.2. Competitive Bid Quote Request............................18
2.3.3. Invitation for Competitive Bid Quotes....................19
2.3.4. Submission and Contents of Competitive Bid Quotes........19
2.3.5. Notice to Borrower.......................................20
2.3.6. Acceptance and Notice by Borrower........................21
2.3.7. Allocation by Administrative Agent.......................21
2.4. Swing Line Advances...............................................21
2.5. Availability of Funds.............................................23
2.6. Facility Fee; Utilization Fee; Reductions in
Aggregate Commitment..............................................24
2.7. Minimum Amount of Each Advance....................................24
2.8. Optional Principal Payments.......................................24
2.9. Mandatory Prepayments.............................................25
2.10. Changes in Interest Rate, etc.....................................25
2.11. Rates Applicable After Default....................................25
2.12. Method of Payment.................................................25
2.13. Notes; Telephonic Notices.........................................25
2.14. Interest Payment Dates; Interest and Fee Basis....................26
2.15. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions.............................26
2.16. Lending Installations.............................................26
2.17. Non-Receipt of Funds by the Administrative Agent..................27
2.18. Taxes.............................................................27
2.19. Administrative Agent's Fees.......................................28
ARTICLE III CHANGE IN CIRCUMSTANCES...........................................28
3.1. Yield Protection..................................................28
3.2. Changes in Capital Adequacy Regulations...........................29
3.3. Availability of Types of Advances.................................30
<PAGE>
3.4. Funding Indemnification...........................................30
3.5. Lender Statements; Survival of Indemnity..........................30
ARTICLE IV CONDITIONS PRECEDENT...............................................31
4.1. Initial Loans.....................................................31
4.2. Each Future Advance...............................................32
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................33
5.1. Corporate Existence and Standing..................................33
5.2. Authorization and Validity........................................33
5.3. Compliance with Laws and Contracts................................33
5.4. Governmental Consents.............................................34
5.5. Financial Statements..............................................34
5.6. Material Adverse Change...........................................34
5.7. Taxes.............................................................34
5.8. Litigation and Contingent Obligations.............................34
5.9. Subsidiaries. ...................................................35
5.10. ERISA.............................................................35
5.11. Defaults..........................................................35
5.12. Federal Reserve Regulations.......................................35
5.13. Investment Company................................................35
5.14. Disclosure........................................................35
ARTICLE VI COVENANTS..........................................................36
6.1. Financial Reporting...............................................36
6.2. Use of Proceeds...................................................37
6.3. Notice of Default.................................................37
6.4. Conduct of Business...............................................37
6.5. Taxes.............................................................37
6.6. Compliance with Laws..............................................37
6.7. Maintenance of Properties.........................................38
6.8. Inspection........................................................38
6.9. Mergers, Sales of Assets, etc.....................................38
6.10. Liens.............................................................39
6.11. Inconsistent Agreements...........................................41
6.12. Financial Covenants...............................................41
6.12.1. Net Worth................................................41
6.12.2. Fixed Charge Coverage Ratio..............................41
6.12.3. Debt to Equity Ratio.....................................41
ARTICLE VII DEFAULTS.........................................................41
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...................43
8.1. Acceleration......................................................43
8.2. Amendments........................................................43
8.3. Preservation of Rights............................................44
ARTICLE IX GENERAL PROVISIONS.................................................44
<PAGE>
9.1. Survival of Representations.......................................44
9.2. Governmental Regulation...........................................44
9.3. Taxes.............................................................44
9.4. Headings..........................................................44
9.5. Entire Agreement..................................................45
9.6. Several Obligations; Benefits of this Agreement...................45
9.7. Expenses; Indemnification.........................................45
9.8. Numbers of Documents..............................................45
9.9. Accounting........................................................45
9.10. Severability of Provisions........................................45
9.11. Nonliability of Lenders...........................................46
9.12. CHOICE OF LAW.....................................................46
9.13. CONSENT TO JURISDICTION...........................................46
9.14. WAIVER OF JURY TRIAL..............................................47
9.15. Disclosure........................................................47
9.16. Counterparts......................................................47
ARTICLE X.....................................................................47
THE ADMINISTRATIVE AGENT..................................................47
10.1. Appointment......................................................47
10.2. Powers...........................................................47
10.3. General Immunity.................................................47
10.4. No Responsibility for Loans, Recitals, etc.......................48
10.5. Action on Instructions of Lenders................................48
10.6. Employment of Agents and Counsel.................................48
10.7. Reliance on Documents; Counsel...................................48
10.8. Administrative Agent's Reimbursement and Indemnification.........48
10.9. Notice of Default................................................49
10.10. Rights as a Lender...............................................49
10.11. Lender Credit Decision...........................................49
10.12. Successor Administrative Agent...................................49
10.13. Co-Agents.........................................................50
ARTICLE XI SETOFF; RATABLE PAYMENTS...........................................50
11.1. Setoff...........................................................50
11.2. Ratable Payments.................................................50
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.................51
12.1. Successors and Assigns............................................51
12.2. Participations....................................................51
12.2.1. Permitted Participants; Effect. ........................51
12.2.2. Voting Rights............................................52
12.2.3. Benefit of Setoff........................................52
12.3. Assignments.......................................................52
12.3.1. Permitted Assignments....................................52
12.3.2. Effect; Effective Date...................................52
12.4. Dissemination of Information......................................53
<PAGE>
12.5. Tax Treatment.....................................................53
ARTICLE XIII NOTICES..........................................................53
13.1. Giving Notice.....................................................53
13.2. Change of Address.................................................53
<PAGE>
EXHIBITS
Exhibit A - Note (Ratable Loan)
Exhibit B - Note (Competitive Bid Loan)
Exhibit C - Competitive Bid Quote Request
Exhibit D - Invitation for Competitive Bid Quotes
Exhibit E - Competitive Bid Quote
Exhibit F - Note (Swing Line Loan)
Exhibit G-1 - Opinion of Counsel to the Borrower
Exhibit G-2 - Opinion of General Counsel of the Borrower
Exhibit H - Compliance Certificate
Exhibit I - Assignment Agreement
Exhibit J - Money Transfer Instructions
SCHEDULES
Schedule 5.3 - Approvals and Consents
Schedule 5.8 - Material Contingent Obligations
Schedule 5.9 - Subsidiaries
Schedule 5.10- ERISA
<PAGE>
CREDIT AGREEMENT
This Credit Agreement, dated as of April 29, 1997, is among GREEN TREE
FINANCIAL CORPORATION, a Delaware corporation, the Lenders and THE FIRST
NATIONAL BANK OF CHICAGO, individually and as Administrative Agent.
R E C I T A L S:
A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $750,000,000, the
proceeds of which the Borrower will use for the general corporate needs,
including commercial paper backup, of the Borrower and its Subsidiaries.
B. The Lenders are willing to extend such financial accommodations on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders and the Administrative Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to SECTION 2.3.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 30 and not more than 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next
<PAGE>
succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.
"Adjusted EBIT" means, for any applicable computation period, the
Borrower's and Subsidiaries' Net Income on a consolidated basis, PLUS (a) income
and franchise taxes paid or accrued during such period and (b) Interest Expense,
MINUS (a) income derived from discontinued operations of the Borrower and its
Subsidiaries and (b) extraordinary gains of the Borrower and its Subsidiaries
resulting from changes in the application of Agreement Accounting Principles.
"Administrative Agent" means First Chicago in its capacity as
administrative agent for the Lenders pursuant to ARTICLE X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to ARTICLE X.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the Borrower
on the same Borrowing Date, of the same Type (or on the same interest basis in
the case of Competitive Bid Advances) and, when applicable, for the same
Interest Period and includes a Competitive Bid Advance.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders hereunder. The initial Aggregate Commitment is $750,000,000.
"Agreement" means this Credit Agreement, as it may be amended, modified
or restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the Financial Statements; PROVIDED, HOWEVER, that for
purposes of all computations required to be made with respect to compliance by
the Borrower with SECTION 6.12, such term shall mean generally accepted
accounting principles as in effect on the date hereof, applied in a manner
consistent with those used in preparing the Financial Statements.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternate Base Rate Advance" means an Advance which bears interest at
the Alternate
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Base Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Alternate Base Rate Loan" means a Ratable Loan which bears interest at
the Alternate Base Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Alternate Swing Line Rate" means, with respect to a Swing Line Bank, a
rate agreed upon from time to time by the Borrower and such Swing Line Bank
pursuant to such supplemental agreements as may be entered into between the
Borrower and such Swing Line Bank from time to time governing the required
maintenance of minimum average daily qualifying balances with such Swing Line
Bank.
"Applicable Eurodollar Margin" means, on any date, subject to the
following sentence of this definition, the applicable of the following
percentages:
APPLICABLE
DEBT RATING ON SUCH DATE EURODOLLAR MARGIN
Level I Status .185%
Level II Status .20%
Level III Status .25%
Level IV Status .35%
Any change in the Applicable Eurodollar Margin shall be effective as of the date
of the change in the Debt Rating giving rise thereto and shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change.
"Applicable Facility Fee Percentage" means, on any date, subject to the
following sentence of this definition, the applicable of the following
percentages:
APPLICABLE FACILITY
DEBT RATING ON SUCH DATE FEE PERCENTAGE
Level I Status .09%
Level II Status .10%
Level III Status .15%
Level IV Status .20%
Any change in the Applicable Facility Fee Percentage shall be effective as of
the date of the change in the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.
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"Applicable Utilization Fee Percentage" means, on any date, subject to
the final sentence of this definition:
(a) In the event that the average daily aggregate principal
amount of the Ratable Loans and the Swing Line Loans outstanding during
any calendar quarter is greater than 33_%, but less than or equal to
66_%, of the Aggregate Commitment as in effect on the last day of such
calendar quarter, the applicable of the following percentages:
APPLICABLE UTILIZATION
DEBT RATING ON SUCH DATE FEE PERCENTAGE
Level I Status .05%
Level II Status .0625%
Level III Status .10%
Level IV Status .10%
(b) In the event that the average daily aggregate principal
amount of the Ratable Loans and the Swing Line Loans outstanding during
any calendar quarter is greater than 66_% of the Aggregate Commitment
as in effect on the last day of such calendar quarter, the applicable
of the following percentages:
APPLICABLE UTILIZATION
DEBT RATING ON SUCH DATE FEE PERCENTAGE
Level I Status .10%
Level II Status .125%
Level III Status .20%
Level IV Status .20%
Any change in the Applicable Utilization Fee Percentage shall be effective as of
the date of the change in the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the president, chief financial
officer or treasurer of the Borrower, acting singly.
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"Bankruptcy Code" means Title 11, United States Code, sections 1 ET
SEQ., as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.
"Borrower" means Green Tree Financial Corporation, a Delaware
corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (a) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of substantially all
of their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market, and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change" is defined in SECTION 3.2.
"Closing Transactions" is defined in SECTION 4.1(D).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below and
as set forth in any Notice of Assignment relating to any assignment which has
become effective pursuant to SECTION 12.3.2, as such amount may be modified from
time to time pursuant to the terms hereof.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.
"Competitive Bid Borrowing Notice" is defined in SECTION 2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, or both, as the case may be.
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"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the
form of EXHIBIT B hereto, with appropriate insertions, duly executed and
delivered to the Administrative Agent by the Borrower for the account of a
Lender and payable to the order of such Lender, including any amendment,
modification, renewal or replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in
the form of EXHIBIT E hereto completed and delivered by a Lender to the
Administrative Agent in accordance with SECTION 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto completed and delivered by the
Borrower to the Administrative Agent in accordance with SECTION 2.3.2.
"Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.
"Consolidated Debt" means, at any time, the aggregate principal amount
of Indebtedness outstanding at such time of the Borrower and its Subsidiaries as
reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles.
"Consolidated Net Tangible Assets" means, at any time, (a) the total of
all assets reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles, at
their net book value (after deducting related depreciation, depletion,
amortization, allowance for doubtful accounts and all other valuation reserves
which, in accordance with Agreement Accounting Principles, should be set aside
in connection with the business conducted), but excluding goodwill, unamortized
debt discount and all other like segregated intangible assets, all as determined
in accordance with Agreement Accounting Principles, less (b) the aggregate of
the current liabilities of the Borrower and its Subsidiaries reflected on such
balance sheet, all as determined in accordance with Agreement Accounting
Principles. For purposes of this definition, "current liabilities" includes all
Indebtedness of the Borrower and its Subsidiaries and accruals of the Borrower
and its Subsidiaries, in each case payable on demand or due within one year of
the date of the determination of Consolidated Net Tangible Assets, all as
reflected on such consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide
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funds for the payment of, or otherwise becomes or is contingently liable upon,
the obligation or liability of any other Person, or agrees to maintain the net
worth or working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss, including,
without limitation, any comfort letter, operating agreement or take-or-pay
contract or application for a Letter of Credit.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in SECTION 2.2.4.
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes.
"Debt Rating" means the credit rating assigned to the Borrower's
senior, unsecured long term debt (without credit enhancement) as publicly
announced by Moody's or S&P, as the case may be.
"Debt to Equity Ratio" means, at any time, the ratio of (a)
Consolidated Debt to (b) Net Worth.
"Default" means an event described in ARTICLE VII.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means a Eurodollar Bid Rate Advance or a
Eurodollar Ratable Advance, or both, as the case may be.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Eurodollar Bid Rates pursuant to SECTION 2.3.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the
Administrative Agent to be the rate of interest per annum for deposits in U.S.
dollars for a period equal to the relevant Eurodollar Interest Period quoted on
Telerate Screen Page 3750 (or its successor if such page number changes) at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Eurodollar Interest Period. If no quotation is available on Telerate,
the "Eurodollar Base Rate" shall mean the rate determined by the Administrative
Agent to be the rate at which deposits in U.S. dollars are offered by First
Chicago to first class banks in the London interbank
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market at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Eurodollar Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(a) the Eurodollar Base Rate and (b) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.
"Eurodollar Interest Period" means, with respect to a Eurodollar
Ratable Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or
six months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Such Eurodollar Interest Period shall end on (but exclude) the
day which corresponds numerically to such date one, two, three or six months
thereafter; PROVIDED, HOWEVER, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar Interest
Period shall end on the next succeeding Business Day; PROVIDED, HOWEVER, that if
said next succeeding Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid
Rate Loan, or both, as the case may be.
"Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Eurodollar Ratable Loan" means a Ratable Loan which bears interest at
a Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.
"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance
for any date during the relevant Eurodollar Interest Period, the sum of (a) the
quotient of (i) the Eurodollar Base Rate applicable to such Eurodollar Interest
Period, divided by (ii) one MINUS the Reserve Requirement (expressed as a
decimal) applicable to such Eurodollar Interest Period, PLUS (b) the Applicable
Eurodollar Margin for such date. The Eurodollar Rate shall be rounded to the
next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Existing Lien" is defined in SECTION 6.10(M).
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"Extended Lien" is defined in SECTION 6.10(M).
"Facility Termination Date" means April 29, 2000.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"Financial Statements" is defined in SECTION 5.5.
"First Bank" means First Bank National Association in its individual
capacity, and its successors.
"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.
"Fiscal Quarter" means each of the four quarterly accounting periods
comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period commencing on
January 1 and ending on December 31 of each year.
"Fixed Charge Coverage Ratio" means, for any applicable computation
period, the ratio of (a) Adjusted EBIT to (b) Interest Expense.
"Governmental Authority" means any government (foreign or domestic) or
any state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation, any
taxing authority or political subdivision) or any instrumentality or officer
thereof (including, without limitation, any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned or controlled by or subject to the control of any
of the foregoing.
"Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (d)
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obligations which are evidenced by notes, acceptances, or similar
instruments, (e) Capitalized Lease Obligations, (f) Rate Hedging Obligations,
(g) Contingent Obligations, (h) obligations for which such Person is obligated
pursuant to or in respect of a Letter of Credit and (i) repurchase obligations
or liabilities of such Person with respect to accounts or notes receivable and
chattel paper sold by such Person.
"Interest Expense" means, for any applicable computation period, all
interest paid or accrued during such period by the Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with Agreement Accounting
Principles.
"Interest Period" means a Eurodollar Interest Period or an Absolute
Rate Interest Period.
"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of EXHIBIT D hereto, completed
and delivered by the Administrative Agent to the Lenders in accordance with
SECTION 2.3.3.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Level I Status" exists at any date if at such date the Debt Rating is
A3 (or the equivalent) or higher by Moody's and A- (or the equivalent) or higher
by S&P.
"Level II Status" exists at any date if at such date (a) the Debt
Rating is Baal (or the equivalent) or higher by Moody's and BBB+ (or the
equivalent) or higher by S&P and (b) Level I Status does not exist.
"Level III Status" exists at any date if at such date (a) the Debt
Rating is Baa3 (or the equivalent) or higher by Moody's and BBB- (or the
equivalent) or higher by S&P and (b) neither Level I Status nor Level II Status
exists.
"Level IV Status" exists at any date if at such date (a) the Debt
Rating is either lower than Baa3 (or the equivalent) by Moody's or lower than
BBB- (or the equivalent) by S&P or (b) the Borrower's senior, unsecured and
publicly-held indebtedness is unrated by either Moody's or S&P.
"Lien" means any security interest, lien (statutory or other),
mortgage, pledge,
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hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.
"Loan Documents" means this Agreement, the Notes and the other
documents and agreements contemplated hereby and executed by the Borrower in
favor of the Administrative Agent or any Lender.
"Majority Lenders" means Lenders in the aggregate having at least 66_%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66_% of the aggregate unpaid principal
amount of outstanding Advances.
"Margin Stock" has the meaning assigned to that term under Regulation
U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, results of
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the ability of the Borrower or any Subsidiary to perform its obligations
under the Loan Documents, or (c) the validity or enforceability of any of the
Loan Documents or the rights or remedies of the Administrative Agent or the
Lenders thereunder.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, together with any Person succeeding thereto by merger,
consolidation or acquisition of all or substantially all of its assets,
including substantially all of its business of rating securities.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Income" means, for any computation period, with respect to the
Borrower on a consolidated basis with its Subsidiaries (other than any
Subsidiary which is restricted from declaring or paying dividends or otherwise
advancing funds to its parent whether by contract or otherwise), cumulative net
income earned during such period as determined in accordance with Agreement
Accounting Principles.
"Net Worth" means, at any date, the consolidated common stockholders'
equity of the Borrower and its consolidated Subsidiaries determined in
accordance with Agreement Accounting Principles.
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"Non-Excluded Taxes" is defined in SECTION 2.18(A).
"Notes" means, collectively, the Competitive Bid Notes, the Ratable
Notes and the Swing Line Notes; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in SECTION 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Administrative Agent or any indemnified party hereunder
arising under any of the Loan Documents.
"Participants" is defined in SECTION 12.2.1.
"Payment Date" means the last day of each of March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof. "Plan" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, as to which the Borrower or any member of the
Controlled Group may have any liability.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.
"Purchase" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any firm, corporation or division or line of
business thereof, whether through purchase of assets, merger or otherwise, or
(b) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding partnership interests of a partnership or equity
interests in a limited liability company.
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"Purchasers" is defined in SECTION 12.3.1.
"Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, of the same Type and for the same Interest Period.
"Ratable Borrowing Notice" is defined in SECTION 2.2.3.
"Ratable Loan" means a Loan made by a Lender pursuant to SECTION 2.2.
"Ratable Note" means a promissory note in substantially the form of
EXHIBIT A hereto, duly executed and delivered to the Administrative Agent by the
Borrower for the account of each Lender and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buybacks, reversals, terminations or assignments of any of the
foregoing.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to depositary institutions.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by Persons other than banks,
brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by securities brokers and dealers
for the purpose of purchasing or carrying margin stocks applicable to such
Persons.
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"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Risk-Based Capital Guidelines" is defined in SECTION 3.2.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group, other than a
Multiemployer Plan.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the
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Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (a) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries, as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the Fiscal Quarter next preceding the date on which such
determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the Net Income of the Borrower and its Subsidiaries
for the 12-month period ending as of the end of the Fiscal Quarter next
preceding the date of determination.
"Swing Line Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Swing Line Loans made by the Swing Line Banks to
the Borrower on the same Borrowing Date.
"Swing Line Banks" means First Chicago and First Bank and their
respective successors and assigns.
"Swing Line Commitment" means the obligation of a Swing Line Bank to
make Swing Line Loans hereunder in an aggregate amount at any one time
outstanding not to exceed the amount set forth below, as the same may be
terminated or permanently reduced from time to time hereunder; PROVIDED,
HOWEVER, that the aggregate of the Swing Line Commitments on the date hereof
shall be $50,000,000. The Swing Line Commitments will automatically and
permanently terminate on the Facility Termination Date. The initial Swing Line
Commitments shall be:
First Chicago - $25,000,000
First Bank - $25,000,000
"Swing Line Loan" means a Loan made by a Swing Line Bank pursuant to
SECTION 2.4.
"Swing Line Note" means a promissory note substantially in the form of
EXHIBIT F hereto, duly executed and delivered to the Administrative Agent by the
Borrower and payable to the order of a Swing Line Bank in the amount of its
Swing Line Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other member of the Controlled Group from such Plan during a plan year in
which the Borrower or any other member of the Controlled Group was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such Plan, the
filing of a notice of intent to terminate such Plan or the treatment of an
amendment of such Plan as a termination under Section 4041 of ERISA, (d) the
institution by the PBGC of proceedings to terminate such Plan or (e) any event
or condition which might constitute grounds under Section
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4042 of ERISA for the termination of, or appointment of a trustee to administer,
such Plan.
"Transferee" is defined in SECTION 12.4.
"Type" means, with respect to any Advance, its nature as an Alternate
Base Rate Advance, Swing Line Advance, Eurodollar Advance or Absolute Rate
Advance.
"Unfunded Liability" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under a Single Employer Plan
exceeds the fair market value of assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Unrefunded Swing Line Loans" is defined in SECTION 2.4(D).
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE FACILITY
2.1. THE FACILITY.
2.1.1. DESCRIPTION OF FACILITY The Lenders hereby establish in favor of
the Borrower a revolving credit facility pursuant to which, and upon the terms
and subject to the conditions herein set out:
(a) each Lender severally agrees to make Ratable Loans to the
Borrower in accordance with SECTION 2.2 in amounts not to exceed in the
aggregate at any one time outstanding the amount of its Commitment less
(i) the amount of such Lender's pro-rata share of the outstanding
principal amount of all Competitive Bid Advances (regardless of which
Lender or Lenders made such Competitive Bid Advances) exclusive of
Competitive Bid Advances being repaid substantially contemporaneously
with the making of any such Ratable Loans and (ii) the amount of such
Lender's pro-rata share of the outstanding principal amount of all
Swing Line Advances (regardless of which Lender or Lenders made such
Swing Line Advances) exclusive of Swing Line Advances being repaid
substantially contemporaneously with the making of any such Ratable
Loans;
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(b) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower, and make such Loans, in
accordance with SECTION 2.3; and
(c) each Swing Line Bank agrees, severally and not jointly, to
make Swing Line Loans to the Borrower in accordance with SECTION 2.4.
2.1.2. FACILITY AMOUNT. In no event may the aggregate principal amount
of all outstanding Advances (including the Ratable Advances, the Swing Line
Advances and the Competitive Bid Advances) at any time exceed the Aggregate
Commitment.
2.1.3. AVAILABILITY OF FACILITY. Subject to the terms of this
Agreement, from and including the date hereof to, but not including, the
Facility Termination Date, the Borrower may borrow, repay and reborrow Advances
hereunder. All outstanding Advances and all other unpaid Obligations shall be
due and payable in full by the Borrower on the Facility Termination Date and on
such date all remaining Commitments shall be deemed to have been reduced to
zero.
2.2. RATABLE ADVANCES
2.2.1. RATABLE ADVANCES. Each Ratable Advance hereunder shall consist
of borrowings made from the several Lenders ratably in proportion to the amounts
of their respective Commitments. The Borrower's obligation to pay the principal
of, and interest on, the Ratable Advances shall be evidenced by the Ratable
Notes. Although the Ratable Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding and, although the
stated amount of each Ratable Note shall be equal to the applicable Lender's
Commitment, each Ratable Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the Ratable Loans at the time evidenced thereby.
2.2.2 RATABLE ADVANCE RATE OPTIONS. The Ratable Advances may be
Alternate Base Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the Borrower in accordance with SECTION 2.2.3 or 2.2.4. No
Ratable Advance may mature after, or have an Interest Period which extends
beyond, the Facility Termination Date.
2.2.3. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR RATABLE
ADVANCES. The Borrower shall select the Type of each Ratable Advance and, in the
case of each Eurodollar Ratable Advance, the Eurodollar Interest Period
applicable to such Ratable Advance from time to time. The Borrower shall give
the Administrative Agent irrevocable notice (a "RATABLE BORROWING NOTICE") not
later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Alternate
Base Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for an Alternate Base Rate Advance may be given not later than 30 minutes
after the time which the
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Borrower is required to reject one or more bids offered in connection with an
Absolute Rate Auction pursuant to SECTION 2.3.6 and a Ratable Borrowing Notice
for a Eurodollar Ratable Advance may be given not later than 30 minutes after
the time the Borrower is required to reject one or more bids offered in
connection with a Eurodollar Auction pursuant to SECTION 2.3.6. A Ratable
Borrowing Notice shall specify:
(a) the Borrowing Date, which shall be a Business Day, of such
Ratable Advance;
(b) the aggregate amount of such Ratable Advance, which, when
added to all outstanding Ratable Advances, Swing Line Advances and
Competitive Bid Advances and after giving effect to the repayment of
any such outstanding Advances out of the proceeds of the requested
Ratable Advance, shall not exceed the Aggregate Commitment;
(c) the Type of Advance selected; and
(d) in the case of each Eurodollar Ratable Advance, the
Eurodollar Interest Period applicable thereto (which may not end after
the Facility Termination Date).
2.2.4. CONVERSION AND CONTINUATION OF OUTSTANDING RATABLE ADVANCES.
Alternate Base Rate Advances shall continue as Alternate Base Rate Advances
unless and until such Alternate Base Rate Advances are converted into Eurodollar
Ratable Advances. Each Eurodollar Ratable Advance shall continue as a Eurodollar
Ratable Advance until the end of the then applicable Eurodollar Interest Period
therefor, at which time such Eurodollar Ratable Advance shall be automatically
converted into an Alternate Base Rate Advance unless the Borrower shall have
given the Administrative Agent a Conversion/Continuation Notice requesting that,
at the end of such Eurodollar Interest Period, such Eurodollar Ratable Advance
continue as a Eurodollar Ratable Advance for the same or another Eurodollar
Interest Period. Subject to the terms of SECTION 2.7, the Borrower may elect
from time to time to convert all or any part of a Ratable Advance of any Type
into any other Type or Types of Ratable Advances; PROVIDED that any conversion
of any Eurodollar Ratable Advance shall be made on, and only on, the last day of
the Eurodollar Interest Period applicable thereto. The Borrower shall give the
Administrative Agent irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of
each conversion of a Ratable Advance or continuation of a Eurodollar Ratable
Advance not later than 10:00 a.m. (Chicago time) at least three Business Days,
in the case of a conversion into or continuation of a Eurodollar Ratable
Advance, prior to the date of the requested conversion or continuation,
specifying:
(b) the requested date, which shall be a Business Day, of such
conversion or continuation;
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(c) the aggregate amount and Type of Ratable Advance which is
to be converted or continued; and
(d) the amount and Type(s) of Ratable Advance(s) into which
such Ratable Advance is to be converted or continued and, in the case
of a conversion into or continuation of an Eurodollar Ratable Advance,
the duration of the Eurodollar Interest Period applicable thereto.
2.3. COMPETITIVE BID ADVANCES.
2.3.1. COMPETITIVE BID OPTION. In addition to Ratable Advances pursuant
to SECTION 2.2, but subject to the terms and conditions of this Agreement
(including, without limitation, the limitation set forth in SECTION 2.1.2 as to
the maximum aggregate principal amount of all outstanding Advances hereunder),
prior to the Facility Termination Date the Borrower may, as set forth in this
SECTION 2.3, request the Lenders to make offers to make Competitive Bid Advances
to the Borrower. Each Lender may, but shall have no obligation to, make such
offers and the Borrower may, but shall have no obligation to, accept any such
offers in the manner set forth in this SECTION 2.3. The Borrower's obligation to
pay the principal of, and interest on, the Competitive Bid Advances shall be
evidenced by the Competitive Bid Notes. Although the Competitive Bid Notes shall
be dated the date of the initial Advance, interest in respect thereof shall be
payable only for the periods during which the Loans evidenced thereby are
outstanding.
2.3.2. COMPETITIVE BID QUOTE REQUEST. When the Borrower wishes to
request offers to make Competitive Bid Loans under this SECTION 2.3, it shall
transmit to the Administrative Agent by telecopy a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto so as to be received no later than
(a) 10:00 a.m. (Chicago time) at least five Business Days prior to the Borrowing
Date proposed therein, in the case of a Eurodollar Auction, or (b) 9:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction, specifying:
(a) the proposed Borrowing Date, which shall be a Business
Day, for the proposed Competitive Bid Advance;
(b) the aggregate principal amount of such Competitive Bid
Advance;
(c) whether the Competitive Bid Quotes requested are to set
forth a Eurodollar Bid Rate, an Absolute Rate, or both; and
(d) the Interest Period applicable thereto (which may not end
after the Facility Termination Date).
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be
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given within five Business Days (or such other number of days as the Borrower
and the Administrative Agent may agree) of any other Competitive Bid Quote
Request. A Competitive Bid Quote Request that does not conform substantially to
the format of EXHIBIT C hereto shall be rejected, and the Administrative Agent
shall promptly notify the Borrower of such rejection by telecopy.
2.3.3. INVITATION FOR COMPETITIVE BID QUOTES. Promptly and in any event
before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to SECTION 2.3.2,
the Administrative Agent shall send to each of the Lenders by telex or telecopy
an Invitation for Competitive Bid Quotes substantially in the form of EXHIBIT D
hereto, which shall constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to
which such Competitive Bid Quote Request relates in accordance with this SECTION
2.3.
2.3.4. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.
(b) Each Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid Quotes.
Each Competitive Bid Quote must comply with the requirements of this
SECTION 2.3.4 and must be submitted to the Administrative Agent by
telex or telecopy at its offices specified in or pursuant to ARTICLE
XIII not later than (i) 9:00 a.m. (Chicago time) at least three
Business Days prior to the proposed Borrowing Date, in the case of a
Eurodollar Auction or (ii) 9:00 a.m. (Chicago time) on the proposed
Borrowing Date, in the case of an Absolute Rate Auction (or, in either
case, upon reasonable prior notice to the Lenders, such earlier time
and date as the Borrower and the Administrative Agent may agree);
PROVIDED that Competitive Bid Quotes submitted by First Chicago may
only be submitted if the Administrative Agent or First Chicago notifies
the Borrower of the terms of the offer or offers contained therein not
later than 15 minutes prior to the latest time at which the relevant
Competitive Bid Quotes must be submitted by the other Lenders. Subject
to ARTICLES IV AND VIII, any Competitive Bid Quote so made shall be
irrevocable except with the written consent of the Administrative Agent
given on the instructions of the Borrower.
(c) Each Competitive Bid Quote shall be in substantially the
form of EXHIBIT E hereto and shall in any case specify:
(i) the proposed Borrowing Date, which shall be the
same as that set forth in the applicable Invitation for
Competitive Bid Quotes;
(ii) the principal amount of the Competitive Bid Loan
for which each such offer is being made, which principal
amount a) may be greater than, less than or equal to the
Commitment of the quoting Lender, b) must be at least
$10,000,000 and an integral multiple of $5,000,000, and c) may
not exceed
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the principal amount of Competitive Bid Loans for which offers
were requested;
(iii) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each such Competitive Bid
Loan;
(iv) the minimum amount, if any, of the Competitive
Bid Loan which may be accepted by the Borrower;
(v) in the case of an Absolute Rate Auction, the
Absolute Rate offered for each such Competitive Bid Loan; and
(vi) the identity of the quoting Lender.
(d) The Administrative Agent shall reject any Competitive Bid
Quote that:
(i) is not substantially in the form of EXHIBIT E
hereto or does not specify all of the information required by
SECTION 2.3.4(B);
(ii) contains qualifying, conditional or similar
language, other than any such language contained in EXHIBIT E
hereto;
(iii) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bid Quotes; or
(iv) arrives after the time set forth in SECTION
2.3.4(A).
If any Competitive Bid Quote shall be rejected pursuant to this SECTION
2.3.4(C), then the Administrative Agent shall promptly notify the relevant
Lender of such rejection.
2.3.5. NOTICE TO BORROWER. The Administrative Agent shall promptly
notify the Borrower of the terms (a) of any Competitive Bid Quote submitted by a
Lender that is in accordance with SECTION 2.3.4 and (b) of any Competitive Bid
Quote that amends, modifies or is otherwise inconsistent with a previous
Competitive Bid Quote submitted by such Lender with respect to the same
Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall
be disregarded by the Administrative Agent unless such subsequent Competitive
Bid Quote specifically states that it is submitted solely to correct a manifest
error in such former Competitive Bid Quote. The Administrative Agent's notice to
the Borrower shall specify the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request and the respective principal amounts
and Eurodollar Bid Rates or Absolute Rates, as the case may be, so offered.
2.3.6. ACCEPTANCE AND NOTICE BY BORROWER2.3.6. ACCEPTANCE AND
NOTICE BY BORROWER. Not later than (a) 10:00 a.m.
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(Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (b) 10:00 a.m. (Chicago time) on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case, upon reasonable prior notice to the Lenders, such earlier time and
date as the Borrower and the Administrative Agent may agree), the Borrower shall
notify the Administrative Agent of its acceptance or rejection of the offers so
notified to it pursuant to SECTION 2.3.5; PROVIDED, HOWEVER, that the failure by
the Borrower to give such notice to the Administrative Agent shall be deemed to
be a rejection of all such offers. In the case of acceptance, such notice (a
"COMPETITIVE BID BORROWING NOTICE") shall specify the aggregate principal amount
of offers for each Interest Period that are accepted. The Borrower may accept
any Competitive Bid Quote in whole or in part (subject to the terms of SECTION
2.3.4(B)(IV)); PROVIDED that:
(b) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request,
(c) acceptance of offers may only be made on the basis of
ascending Eurodollar Bid Rates or Absolute Rates, as the case may be,
and
(d) the Borrower may not accept any offer that is described in
SECTION 2.3.4(C) or that otherwise fails to comply with the
requirements of this Agreement.
2.3.7. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by two or
more Lenders with the same Eurodollar Bid Rates or Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which offers are accepted for the related Interest Period, the principal amount
of Competitive Bid Loans in respect of which such offers are accepted shall be
allocated by the Administrative Agent among such Lenders as nearly as possible
(in such multiples, not greater than $1,000,000, as the Administrative Agent may
deem appropriate) in proportion to the aggregate principal amount of such
offers; PROVIDED, HOWEVER, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Administrative
Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence
of manifest error. The Administrative Agent shall promptly, but in any event on
the same Business Day, notify each Lender of its receipt of a Competitive Bid
Borrowing Notice and the aggregate principal amount of such Competitive Bid
Advance allocated to each participating Lender.
2.4. SWING LINE ADVANCES
(a) On the terms and subject to the conditions and relying
upon the representations and warranties herein set forth, each Swing
Line Bank agrees, severally and not jointly, at any time and from time
to time from and including the date hereof to but excluding the earlier
of the Facility Termination Date and the termination of the Commitments
or the Swing
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Line Commitments, in accordance with the terms hereof, to make Swing
Line Loans to the Borrower in an aggregate principal amount at any time
outstanding not to exceed the lesser of (i) the amount of the Swing
Line Commitment of such Swing Line Bank at such time and (ii) an amount
equal to (A) the Aggregate Commitment at such time MINUS (B) the sum of
the aggregate principal amounts of all Ratable Loans, Competitive Bid
Loans and Swing Line Loans outstanding at such time. The Swing Line
Loans comprising each Swing Line Advance shall be made by the Swing
Line Banks, at the option of the Borrower, either (i) ratably at the
Alternate Base Rate in accordance with their Swing Line Commitments or
(ii) either ratably or non-ratably at the Alternate Swing Line Rate.
All Swing Line Advances shall be in a minimum amount of $1,000,000 and
in any integral multiple of $500,000 if in excess thereof. In no event
shall any Swing Line Loan be made hereunder if (i) the Administrative
Agent and the Swing Line Banks shall have received notice from the
Majority Lenders prior to any such Swing Line Loan that a condition
specified in SECTION 4.1 or 4.2 has not been satisfied and (ii) such
condition shall not have been subsequently waived in compliance with
SECTION 8.2.
(b) The Borrower shall give the Swing Line Banks (with a copy
to the Administrative Agent) telephonic, written or telecopy notice (in
the case of telephonic notice, such notice shall be promptly confirmed
in writing or by telecopy) not later than 1:00 p.m., Chicago time, on a
day of a proposed Swing Line Advance. Such notice shall be delivered on
a Business Day, shall be irrevocable and shall refer to this Agreement
and shall specify the requested Borrowing Date (which shall be a
Business Day) and amount of such Swing Line Advance. Each Swing Line
Bank shall by 2:00 p.m., Chicago time, on the requested Borrowing Date,
make the requested Swing Line Loans by crediting the principal amount
thereof, in immediately available funds, to the account of the Borrower
maintained with such Swing Line Bank, unless such Advance shall not
occur on such date because any condition precedent herein specified
shall not have been met.
(c) Notwithstanding the occurrence of any Default or
noncompliance with the conditions precedent set forth in ARTICLE IV, if
(i) any Swing Line Loans aggregating $10,000,000 or more shall remain
outstanding at 10:00 a.m., Chicago time, on the fifth Business Day
following the Borrowing Date thereof and if by such time on such fifth
Business Day the Administrative Agent shall have received neither (A) a
Ratable Borrowing Notice delivered by the Borrower pursuant to SECTION
2.2.3 requesting that Ratable Loans be made pursuant to SECTION 2.2 on
the immediately succeeding Business Day in an amount at least equal to
the aggregate principal amount of such Swing Line Loans nor (B) any
other notice satisfactory to the Administrative Agent indicating the
Borrower's intent to repay all such Swing Line Loans on or before the
immediately succeeding Business Day with funds obtained from other
sources, or (ii) on any date either Swing Line Bank in its sole
discretion shall so request with respect to the outstanding Swing Line
Loans, the Administrative Agent shall be deemed to have received a
Ratable Borrowing Notice from the Borrower pursuant to SECTION 2.2.3
requesting that a Ratable Advance of Alternate Base Rate Loans be made
pursuant to SECTION 2.2 on such immediately succeeding Business Day in
an amount equal to the aggregate amount of such Swing Line Loans, and
the procedures set forth in SECTION 2.5 shall be followed in making
such Alternate Base Rate
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Loans, provided that the proceeds of such Alternate Base Rate Loans
received by the Administrative Agent shall be immediately delivered to
the Swing Line Banks and applied to the direct repayment of such Swing
Line Loans. Effective on the day such Ratable Loans are made, the
portion of the Swing Line Loans so paid shall no longer be outstanding
as Swing Line Loans and shall be outstanding as Ratable Loans of the
Lenders bearing interest at a rate determined by reference to the
Alternate Base Rate, in accordance with the provisions of this ARTICLE
II. The Borrower authorizes the Administrative Agent and each Swing
Line Bank to charge the Borrower's account maintained with such Swing
Line Bank (up to the amount available in such account) in order to
immediately pay the amount of such Swing Line Loans to the extent
amounts received from the Lenders are not sufficient to repay in full
such Swing Line Loans. If any portion of any such amount paid (or
deemed paid) to the Swing Line Banks should be recovered by or on
behalf of the Borrower from the Swing Line Banks in the event of the
bankruptcy or reorganization of the Borrower or otherwise, the loss of
the amount so recovered shall be ratably shared among all Lenders in
the manner contemplated by SECTION 11.2.
(d) If, for any reason (including, without limitation, the
occurrence of a Default described in SECTION 7.6 or 7.7 of ARTICLE
VII), Alternate Base Rate Loans may not be, or are not, made pursuant
to paragraph (c) of this SECTION 2.4 to repay Swing Line Loans as
required by such paragraph, effective on the date such Alternate Base
Rate Loans would otherwise have been made, (i) each Lender severally,
unconditionally and irrevocably agrees that it shall, without regard to
the occurrence of any Default, purchase a participating interest in
such Swing Line Loans ("UNREFUNDED SWING LINE LOANS") in an amount
equal to the amount of Alternate Base Rate Loans which would otherwise
have been made by such Lender pursuant to paragraph (c) of this SECTION
2.4 and (ii) each Unrefunded Swing Line Loan previously bearing
interest at the Alternate Swing Line Rate shall commence accruing
interest at the Alternate Base Rate. Each Lender will immediately
transfer to the Administrative Agent, in immediately available funds,
the amount of its participation, and the proceeds of such participation
shall be distributed by the Administrative Agent to the Swing Line
Banks in such amount as will reduce the amount of the participating
interest retained by the Swing Line Banks in their Swing Line Loans to
the amount of the Alternate Base Rate Loans which were to have been
made by the Swing Line Banks pursuant to paragraph (c) of this SECTION
2.4. In the event a Lender fails to make available to the Swing Line
Banks the amount of such Lender's participation as provided in this
paragraph (d), the Swing Line Banks shall be entitled to recover such
amount on demand from such Lender together with interest at the
customary rate set by the Swing Line Banks for correction of errors
among banks for one Business Day and thereafter at the Alternate Base
Rate then in effect. All payments in respect of Unrefunded Swing Line
Loans and participations therein shall be made in accordance with
SECTION 2.12.
(e) Each Lender's obligation to make Ratable Loans pursuant to
paragraph (c) of this SECTION 2.4 and to purchase participating
interests pursuant to paragraph (d) of this SECTION 2.4 shall be
absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Lender or
the Borrower may have against the Swing Line Banks, the Borrower or
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any other Person, as the case may be, for any reason whatsoever; (ii)
the occurrence or continuance of a Default; (iii) any adverse change in
the condition (financial or otherwise) of the Borrower or any of its
Subsidiaries; (iv) any breach of this Agreement by the Borrower, any of
its Subsidiaries or any Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing.
2.5. AVAILABILITY OF FUNDS. Not later than noon (Chicago time) on each
Borrowing Date, each Lender (or in the case of a Competitive Bid Advance, each
Lender making a portion of such Advance) shall make available its Loan or Loans
(other than Swing Line Loans), in immediately available funds in Chicago, to the
Administrative Agent at its address specified pursuant to ARTICLE XIII. The
Administrative Agent shall, by 2:00 p.m. (Chicago time) on such Borrowing Date,
make the funds so received from the Lenders available to the Borrower by
crediting the principal amount thereof, in immediately available funds, to the
account of the Borrower maintained with First Chicago.
2.6. FACILITY FEE; UTILIZATION FEE; REDUCTIONS IN AGGREGATE COMMITMENT.
(a) The Borrower agrees to pay to the Administrative Agent for
the ratable account of each Lender a facility fee equal to the
Applicable Facility Fee Percentage times such Lender's Commitment from
the date hereof to and including the Facility Termination Date, payable
in arrears on each Payment Date hereafter and on the Facility
Termination Date.
(b) The Borrower agrees to pay to the Administrative Agent for
the ratable account of each Lender a utilization fee equal to the
Applicable Utilization Fee Percentage times such Lender's average daily
principal amount of the Ratable Loans and the Swing Line Loans
outstanding during each calendar quarter from the date hereof to the
Facility Termination Date, payable in arrears on each Payment Date
hereafter and on the Facility Termination Date; PROVIDED, HOWEVER, that
in the event the average daily principal amount of the Ratable Loans
and the Swing Line Loans outstanding during any calendar quarter is
less than or equal to 33_% of the Aggregate Commitment as in effect on
the last day of such quarter, no utilization fee shall be payable with
respect to such quarter.
(c) The Borrower may permanently reduce the Aggregate
Commitment in whole, or in part ratably among the Lenders in a minimum
aggregate amount of $25,000,000, or any integral multiple of $5,000,000
in excess thereof, upon at least three Business Days' written notice to
the Administrative Agent, which notice shall specify the amount of any
such reduction; PROVIDED, HOWEVER, that the amount of the Aggregate
Commitment may not be reduced below the aggregate principal amount of
the outstanding Advances. All accrued facility fees and utilization
fees shall be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
2.7. Each Advance (other than any Swing Line Advance) shall be in the
minimum amount of $10,000,000 (and in any integral multiple of
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$5,000,000 if in excess thereof); PROVIDED, HOWEVER, that (a) any Alternate Base
Rate Advance may be in the amount of the unused Aggregate Commitment and (b) in
no event shall more than six Eurodollar Advances be permitted to be outstanding
at any time.
2.8. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to time
pay, without penalty or premium, all outstanding Ratable Advances or, in a
minimum aggregate amount of $10,000,000 or any integral multiple of $5,000,000
in excess thereof, any portion of the outstanding Ratable Advances upon one
Business Day's prior notice to the Administrative Agent in the case of an
Alternate Base Rate Advance and upon three Business Days' prior notice to the
Administrative Agent in the case of a Eurodollar Advance. Any prepayment of a
Eurodollar Advance prior to the last day of the applicable Eurodollar Interest
Period shall be subject to the indemnity provisions of SECTION 3.4. Competitive
Bid Advances may not be voluntarily prepaid.
2.9. MANDATORY PREPAYMENTS. If at any time the aggregate principal
balance of the Loans exceeds the Aggregate Commitment, the Borrower shall repay
immediately its then outstanding Loans in such amount as may be necessary to
eliminate such excess.
2.10. CHANGES IN INTEREST RATE, ETC. Each Alternate Base Rate Advance
shall bear interest at the Alternate Base Rate from and including the date of
such Advance or the date on which such Advance was converted into an Alternate
Base Rate Advance to (but not including) the date on which such Alternate Base
Rate Advance is paid or converted to a Eurodollar Ratable Advance. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Ratable Advance and Absolute Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to, but not including, the last day of such Interest Period
at the interest rate determined as applicable to such Eurodollar Ratable Advance
or Absolute Rate Advance. No Interest Period may end after the Facility
Termination Date.
2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in SECTION 2.2.3 and 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Administrative Agent and the Majority Lenders) when any Default
or Unmatured Default has occurred and is continuing. During the continuance of a
Default, each Eurodollar Advance, Absolute Rate Advance and Alternate Base Rate
Advance shall bear interest (for the remainder of the applicable Interest Period
in the case of Eurodollar Advances and Absolute Rate Advances) at the rate
otherwise applicable plus two percent (2%) per annum.
2.12. METHOD OF PAYMENT. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent's
address specified pursuant to ARTICLE XIII, or at any other Lending Installation
of the Administrative Agent specified in writing by the Administrative Agent to
the Borrower, by noon (Chicago time) on the date when due and shall be applied
ratably
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by the Administrative Agent among the applicable Lenders. Each payment delivered
to the Administrative Agent for the account of any Lender shall be delivered
promptly by the Administrative Agent to such Lender in the same type of funds
that the Administrative Agent received at its address specified pursuant to
ARTICLE XIII or at any Lending Installation specified in a notice received by
the Administrative Agent from such Lender. The Administrative Agent is hereby
authorized to charge the account of the Borrower maintained with First Chicago
for each payment of principal, interest and fees as it becomes due hereunder.
2.13. NOTES; TELEPHONIC NOTICES. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note; PROVIDED, HOWEVER, that neither the failure to so
record nor any error in such recordation shall affect the Borrower's obligations
under such Note. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances, submit Competitive Bid Quotes and to transfer funds based
on telephonic notices made by any person or persons the Administrative Agent or
any Lender in good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.
2.14. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued
on each Alternate Base Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which an Alternate Base Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Alternate Base Rate Advance converted into a
Eurodollar Ratable Advance on a day other than a Payment Date shall be payable
on the date of conversion. Interest accrued on each Eurodollar Advance or
Absolute Rate Advance shall be payable on the last day of its applicable
Interest Period, on any date on which the Eurodollar Advance or Absolute Rate
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Advance or Absolute Rate Advance having an
Interest Period longer than three months shall also be payable on the last day
of each three-month interval during such Interest Period. Interest, facility and
utilization fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (Chicago time) at the place of payment. If any payment shall be received by
the Administrative Agent later than noon (Chicago time), such payment shall be
deemed to have been received on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest and utilization fees in connection with such payment. If any
payment shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest and utilization fees in connection with
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such payment.
2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Administrative Agent
will notify each Lender of the contents of each Aggregate Commitment reduction
notice, Ratable Borrowing Notice, Conversion/Continuation Notice, Invitation for
Competitive Quotes and repayment notice received by it hereunder. The
Administrative Agent will notify each Lender of the interest rate applicable to
each Eurodollar Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the Alternate Base Rate.
2.16. LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Administrative Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
2.17. NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
Agent of (a) in the case of a Lender, the proceeds of a Loan, or (b) in the case
of the Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If the Borrower has not in fact made such payment to the
Administrative Agent, the Lenders shall, on demand by the Administrative Agent,
repay to the Administrative Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to the
Federal Funds Effective Rate for each such day. If any Lender has not in fact
made such payment to the Administrative Agent, such Lender or the Borrower
shall, on demand by the Administrative Agent, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Administrative Agent until the date the Administrative Agent recovers
such amount at a rate per annum equal to (a) in the case of payment by a Lender,
the Federal Funds Effective Rate for each such day, or (b) in the case of
payment by the Borrower, the interest rate applicable to the relevant Loan.
2.18. TAXES.
(a) Any payments made by the Borrower under this Agreement
shall be made
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free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes
or any other tax based upon any income imposed on the Administrative
Agent or any Lender by the jurisdiction in which the Administrative
Agent or such Lender is incorporated or has its principal place of
business. If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("NON-EXCLUDED Taxes") are
required to be withheld from any amounts payable to the Administrative
Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent
necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in or
pursuant to this Agreement; PROVIDED, HOWEVER, that the Borrower shall
not be required to increase any such amounts payable to any Lender that
is not organized under the laws of the U.S. or a state thereof if such
Lender fails to comply with the requirements of paragraph (b) of this
SECTION 2.18. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as practicable thereafter the Borrower shall send
to the Administrative Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other required documentary evidence, the
Borrower shall indemnify the Administrative Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by
any Administrative Agent or any Lender as a result of any such failure.
The agreements in this SECTION 2.18 shall survive the termination of
this Agreement and the payment of all other amounts payable hereunder.
(b) At least five Business Days prior to the first date on
which interest or fees are payable hereunder for the account of any
Lender, each Lender that is not incorporated under the laws of the
United States of America, or a state thereof, agrees that it will
deliver to each of the Borrower and the Administrative Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Administrative Agent two additional copies
of such form (or a successor form) on or before the date that such form
expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the
Administrative Agent, in each case certifying that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes,
unless an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable
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or which would prevent such Lender from duly completing and delivering
any such form with respect to it and such Lender advises the Borrower
and the Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
2.19. ADMINISTRATIVE AGENT'S FEES. The Borrower shall pay to
the Administrative Agent those fees, in addition to the facility fees
and utilization fees referenced in SECTION 2.6(A) and 2.6(B), in the
amounts and at the times separately agreed to between the
Administrative Agent and the Borrower.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION. If, after the date hereof, the adoption of or
any change in any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof, or the compliance of any Lender therewith,
(a) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
the Borrower (excluding taxation of the overall net income of any
Lender or applicable Lending Installation imposed by the jurisdiction
in which such Lender or Lending Installation is incorporated or has its
principal place of business), or changes the basis of taxation of
principal, interest or any other payments to any Lender or Lending
Installation in respect of its Loans or other amounts due it hereunder,
or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or
(c) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining Loans or reduces any amount
receivable by any Lender or any applicable Lending Installation in
connection with any Loans, or requires any Lender or any applicable
Lending Installation to make any payment calculated by reference to the
amount of Loans held, or interest received by it, by an amount deemed
material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.
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3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (a) any change after the date
of this Agreement in the Risk-Based Capital Guidelines, or (b) any adoption of
or change in any law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means
(a) the risk-based capital guidelines in effect in the United States on the date
of this Agreement and (b) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory Practices
entitled "International Convergence of Capital Measurements and Capital
Standards" and any amendments to such regulations adopted prior to the date of
this Agreement. Notwithstanding the foregoing, no Lender shall be entitled to
demand compensation pursuant to this SECTION 3.2 if it shall not be the general
practice of such Lender to demand such compensation in similar circumstances
under comparable provisions of comparable credit agreements.
3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Majority Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available, or (b) the interest rate applicable to a Type of Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
then the Administrative Agent shall suspend the availability of the affected
Type of Advance until such circumstance no longer exists and require any
Eurodollar Advances of the affected Type to be repaid.
3.4. FUNDING INDEMNIFICATION. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower will indemnify the Administrative
Agent and each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Advance.
3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar
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Advances to reduce any liability of the Borrower to such Lender under SECTIONS
3.1 and 3.2 or to avoid the unavailability of a Type of Advance under SECTION
3.3, so long as such designation is not disadvantageous to such Lender. Each
Lender shall deliver a written statement of such Lender to the Borrower (with a
copy to the Administrative Agent) as to the amount due, if any, under SECTION
3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Advance shall be calculated as though each Lender funded its
Eurodollar Advances through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurodollar
Rate applicable to such Loan, whether in fact that is the case or not. The
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrower of the written statement; PROVIDED,
HOWEVER, that no amount shall be payable by the Borrower pursuant to SECTION
3.1, 3.2 or 3.4 with respect to any period commencing more than 120 days before
the delivery of the written statement contemplated by this SECTION 3.5. The
obligations of the Borrower under SECTIONS 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. INITIAL LOANS. The Lenders shall not be required to make the
initial Advance hereunder unless the Borrower has furnished the following to the
Administrative Agent with sufficient copies for the Lenders and the other
conditions set forth below have been satisfied, in each case on or before April
30, 1997:
(a) CHARTER DOCUMENTS; GOOD STANDING CERTIFICATES. Copies of
the certificate of incorporation of the Borrower, together with all
amendments thereto, certified by the appropriate governmental officer
in its jurisdiction of incorporation, together with a good standing
certificate issued by the Secretary of State of the jurisdiction of its
incorporation and such other jurisdictions as shall be requested by the
Administrative Agent.
(b) BY-LAWS AND RESOLUTIONS. Copies, certified by the
Secretary or Assistant Secretary of the Borrower, of its by-laws and of
its Board of Directors' resolutions authorizing the execution, delivery
and performance of the Loan Documents to which the Borrower is a party.
(c) SECRETARY'S CERTIFICATE. An incumbency certificate,
executed by the Secretary or Assistant Secretary of the Borrower, which
shall identify by name and title and bear the signature of the officers
of the Borrower authorized to sign the Loan Documents and to make
borrowings hereunder, upon which certificate the Administrative Agent
and the Lenders shall be
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entitled to rely until informed of any change in writing by the
Borrower.
(d) OFFICER'S CERTIFICATE. A certificate, dated the date
hereof, signed by an Authorized Officer of the Borrower, in form and
substance satisfactory to the Administrative Agent, to the effect that:
(i) on such date (both before and after giving effect to the making of
any Loans hereunder), no Default or Unmatured Default has occurred and
is continuing; (ii) no injunction or temporary restraining order which
would prohibit the making of the Loans or the consummation of any of
the other transactions contemplated hereby (collectively, including the
making of the Loans, the "CLOSING TRANSACTIONS"), or other litigation
which could reasonably be expected to have a Material Adverse Effect is
pending or, to the best of such Person's knowledge, threatened; (iii)
each of the representations and warranties set forth in ARTICLE V of
this Agreement is true and correct on and as of such date; and (iv)
since December 31, 1996, no event or change has occurred that has
caused or evidences a Material Adverse Effect.
(e) LEGAL OPINIONS. A written opinion of each of (i) Briggs
and Morgan, counsel to the Borrower, substantially in the form of
EXHIBIT G-1 hereto, and (ii) Joel H. Gottesman, general counsel of the
Borrower, substantially in the form of EXHIBIT G-2 hereto, addressed to
the Administrative Agent and the Lenders.
(f) NOTES. Notes payable to the order of each of the Lenders
duly executed by the Borrower.
(g) LOAN DOCUMENTS. Executed originals of this Agreement and
each of the Loan Documents, which shall be in full force and effect,
together with all schedules, exhibits, certificates, instruments,
opinions, documents and financial statements required to be delivered
pursuant hereto and thereto.
(h) LETTERS OF DIRECTION. Written money transfer instructions
with respect to the initial Advances and to future Advances in the form
of EXHIBIT J hereto addressed to the Administrative Agent and signed by
an Authorized Officer, together with such other related money transfer
authorizations as the Administrative Agent may have reasonably
requested.
(i) TERMINATION OF AGREEMENT. Evidence satisfactory to the
Administrative Agent that the Credit Agreement dated as of April 16,
1996 among the Borrower, First Chicago, individually and as
administrative agent, and the other financial institutions party
thereto has been, or is contemporaneously being, terminated and all
amounts due thereunder paid in full.
(j) OTHER. Such other documents as the Administrative Agent,
any Lender or their counsel may have reasonably requested.
4.2. EACH FUTURE ADVANCE. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:
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(a) There exists no Default or Unmatured Default and none
would result from such Advance;
(b) The representations and warranties contained in ARTICLE V
(other than SECTION 5.6) are true and correct as of such Borrowing
Date;
(c) A Ratable Borrowing Notice or Competitive Bid Quote
Request shall have been properly submitted; and
(d) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Ratable Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in SECTION 4.2 have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that, both before
and after giving effect to the Closing Transactions:
5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified and in good standing as a foreign corporation and is duly
authorized to conduct its business in each jurisdiction in which its business is
conducted or proposed to be conducted except where the failure to be so
qualified or authorized may not reasonably be expected to have a Material
Adverse Effect.
5.2. AUTHORIZATION AND VALIDITY. The Borrower has all requisite power
and authority (corporate and otherwise) and legal right to execute and deliver
(or file, as the case may be) each of the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.3. COMPLIANCE WTIH LAWS AND CONTRACTS. The Borrower and its
Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof,
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having jurisdiction over the conduct of their respective businesses or the
ownership of their respective properties, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect. Neither the
execution and delivery by the Borrower of the Loan Documents, the application of
the proceeds of the Loans or the consummation of the Closing Transactions, nor
compliance with the provisions of the Loan Documents, or at the relevant time
did, (a) violate any law, rule, regulation (including Regulations G, T, U and
X), order, writ, judgment, injunction, decree or award binding on the Borrower
or any Subsidiary or the Borrower's or any Subsidiary's charter, articles or
certificate of incorporation or by-laws, (b) violate the provisions of or
require the approval or consent of any party to any indenture, instrument or
agreement to which the Borrower or any Subsidiary is a party or is subject, or
by which it, or its respective property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien (other than Liens permitted by, the Loan Documents) in, of or on the
property of the Borrower or any Subsidiary pursuant to the terms of any such
indenture, instrument or agreement, or (c) require any consent of the
stockholders of any Person, except for approvals or consents which will be
obtained on or before the initial Advance and are disclosed on SCHEDULE 5.3,
except for any violation of, or failure to obtain an approval or consent
required under, any such indenture, instrument or agreement that could not
reasonably be expected to have a Material Adverse Effect.
5.4. GOVERNMENTAL CONSENTS. No order, consent, approval, qualification,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any Governmental
Authority, any securities exchange or other Person is or at the relevant time
was required to authorize, or is or at the relevant time was required in
connection with the execution, delivery, consummation or performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents, the application of the proceeds of the Loans or any other transaction
contemplated in the Loan Documents.
5.5. FINANCIAL STATEMENTS. The Borrower has heretofore furnished to
each of the Lenders the December 31, 1996 audited consolidated financial
statements of the Borrower and its Subsidiaries (the "FINANCIAL STATEMENTS").
Each of the Financial Statements was prepared in accordance with Agreement
Accounting Principles and fairly presents the consolidated financial condition
and operations of the Borrower and its Subsidiaries at such date and the
consolidated results of their operations for the period then ended.
5.6. MATERIAL ADVERSE CHANGE. No material adverse change in the
business, Property, condition (financial or otherwise), performance, prospects
or results of operations of the Borrower and its Subsidiaries taken as a whole
has occurred since December 31, 1996.
5.7. TAXES. The Borrower and its Subsidiaries have filed or caused to
be filed on a timely basis and in correct form all United States federal and
applicable foreign, state and local tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any Subsidiary, except
such taxes, if any, as are being contested in good faith and as to which
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adequate reserves have been provided in accordance with Agreement Accounting
Principles and as to which no Lien prohibited by Section 6.10 exists. As of the
date hereof, the United States income tax returns of the Borrower on a
consolidated basis have been audited by the Internal Revenue Service through its
Fiscal Year ending December 31, [1991], and there are no pending audits or
investigations regarding the Borrower's or its Subsidiaries' federal, foreign,
state or local tax returns. No tax liens have been filed and no claims are being
asserted with respect to any such taxes which could reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with Agreement Accounting Principles.
5.8. LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, proceeding, inquiry or governmental investigation (including,
without limitation, by the Federal Trade Commission) pending or, to the
knowledge of any of their officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective properties which could reasonably
be expected to have a Material Adverse Effect or to prevent, enjoin or unduly
delay the making of the Loans under this Agreement. Neither the Borrower nor any
Subsidiary has any material contingent obligations except as set forth on
SCHEDULE 5.8.
5.9. SUBSIDIARIES. SCHEDULE 5.9 hereto contains an accurate list of all
of the existing Subsidiaries as of the date of this Agreement, setting forth
their respective jurisdictions of incorporation and the percentage of their
capital stock owned by the Borrower or other Subsidiaries.
5.10. ERISA. Except as disclosed on SCHEDULE 5.10, neither the Borrower
nor any other member of the Controlled Group maintains any Single Employer
Plans, and no Single Employer Plan has any Unfunded Liability. Neither the
Borrower nor any other member of the Controlled Group maintains, or is obligated
to contribute to, any Multiemployer Plan or has incurred, or is reasonably
expected to incur, any withdrawal liability to any Multiemployer Plan. Each Plan
complies in all material respects with all applicable requirements of law and
regulations. Neither the Borrower nor any member of the Controlled Group has,
with respect to any Plan, failed to make any contribution or pay any amount
required under Section 412 of the Code or Section 302 of ERISA or the terms of
such Plan. There are no pending or, to the knowledge of the Borrower, threatened
claims, actions, investigations or lawsuits against any Plan, any fiduciary
thereof, or the Borrower or any member of the Controlled Group with respect to a
Plan. Neither the Borrower nor any member of the Controlled Group has engaged in
any prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) in connection with any Plan which would subject such Person to any
material liability. Within the last five years neither the Borrower nor any
member of the Controlled Group has engaged in a transaction which resulted in a
Single Employer Plan with an Unfunded Liability being transferred out of the
Controlled Group. No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which is subject to Title IV of ERISA.
5.11. DEFAULTS. No Default or Unmatured Default has occurred and is
continuing.
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5.12. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation G, Regulation T, Regulation U or
Regulation X. Neither the making of any Advance hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, Regulation T, Regulation U or Regulation X.
5.13. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
the Borrower nor any Subsidiary is, or after giving effect to any Advance will
be, an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.14. DISCLOSURE. None of the (a) information, exhibits or reports
furnished or to be furnished by the Borrower or any Subsidiary to the
Administrative Agent or to any Lender in connection with the negotiation of the
Loan Documents, or (b) representations or warranties of the Borrower contained
in this Agreement, the other Loan Documents, or any other document, certificate
or written statement furnished to the Administrative Agent or the Lenders by or
on behalf of the Borrower for use in connection with the transactions
contemplated by this Agreement, contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. There is
no fact known to the Borrower (other than matters of a general economic nature)
that has had or could reasonably be expected to have a Material Adverse Effect
and that has not been disclosed herein or in such other documents, certificates
and statements furnished to the Lenders for use in connection with the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Majority Lenders shall
otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently applied,
and furnish to the Lenders:
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(a) As soon as practicable and in any event within 90 days
after the close of each of its Fiscal Years, an unqualified audit
report certified by KPMG Peat Marwick or other independent certified
public accountants, acceptable to the Lenders, prepared in accordance
with Agreement Accounting Principles on a consolidated basis for itself
and its Subsidiaries, including balance sheets as of the end of such
period and related statements of income, retained earnings and cash
flows.
(b) As soon as practicable and in any event within 60 days
after the close of the first three Fiscal Quarters of each of its
Fiscal Years, for itself and its Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and consolidated
statements of income, retained earnings and cash flows for the period
from the beginning of such Fiscal Year to the end of such quarter, all
certified by its chief financial officer or treasurer and prepared in
accordance with Agreement Accounting Principles.
(c) concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of the chief financial officer or
treasurer of the Borrower, substantially in the form of EXHIBIT H
hereto, opining on or certifying such statements (i) certifying that no
Default or Unmatured Default has occurred or, if such Default or
Unmatured Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto and (ii) setting forth computations in reasonable
detail satisfactory to the Administrative Agent demonstrating
compliance with the covenants contained in SECTIONS 6.12.1, 6.12.2 AND
6.12.3;
(d) As soon as possible and in any event within ten days after
the Borrower knows that any Termination Event has occurred with respect
to any Plan, a statement, signed by the chief financial officer or
treasurer of the Borrower, describing said Termination Event and the
action which the Borrower proposes to take with respect thereto.
(e) Promptly upon the furnishing thereof to the shareholders
of the Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(f) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission.
(g) Such other information (including non-financial
information) as the Administrative Agent or any Lender may from time to
time reasonably request.
6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the general corporate needs,
including commercial paper backup, of the Borrower and its Subsidiaries. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any "margin stock" (as defined in
Regulation U) or to finance the Purchase of any Person which has not been
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approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.
6.3. NOTICE OF DEFAULT. The Borrower will give prompt notice in writing
to the Lenders of the occurrence of (a) any Default or Unmatured Default and (b)
of any other event or development, financial or other, relating specifically to
the Borrower or any of its Subsidiaries (and not of a general economic or
political nature) which could reasonably be expected to have a Material Adverse
Effect.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted, except where failure to
maintain such authority could not reasonably be expected to have a Material
Adverse Effect.
6.5. TAXES. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by applicable law and pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.
6.6. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws (including ERISA), rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, the failure to comply with which could reasonably be expected to have a
Material Adverse Effect.
6.7. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.8. INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Lenders may
designate. The Borrower will keep or cause to be kept, and cause each Subsidiary
to keep or cause to be kept, appropriate records and books of account in which
complete entries are to be made reflecting its and their business and financial
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transactions, such entries to be made in accordance with Agreement Accounting
Principles consistently applied.
6.9. MERGERS, SALES OF ASSETS, ETC.
(a) The Borrower will not consolidate with or merge into any
other corporation or convey, transfer or lease its Property
substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or
into which the Borrower is merged or the Person which acquires
by conveyance or transfer, or which leases, the Property of
the Borrower substantially as an entirety shall be a
corporation organized and existing under the laws of the
United States of America or any state or the District of
Columbia and shall expressly assume, by an agreement
supplemental hereto, executed and delivered to each other
party hereto, in form satisfactory to the Administrative
Agent, the due and punctual payment of the Obligations and the
performance or observance of every covenant of this Agreement
on the part of the Borrower to be performed or observed;
(ii) immediately after giving effect to such
transaction, no Default or Unmatured Default shall have
occurred and be continuing; and
(ii) the Borrower shall have delivered to the
Administrative Agent an officer's certificate and an opinion
of counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental agreement
comply with this paragraph (a) and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
(b) Upon any consolidation by the Borrower with or merger by
the Borrower into any other corporation or any conveyance, transfer or
lease of the Property of the Borrower substantially as an entirety in
accordance with paragraph (a) above, the successor corporation formed
by such consolidation or into which the Borrower is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the
Borrower under the Loan Documents with the same effect as if such
successor corporation had been named as the Borrower herein.
6.10. LIENS. The Borrower will not, nor will it permit any Subsidiary
to, create, incur or assume any Lien on the Property of the Borrower or any
Subsidiary to secure any obligation incurred, issued, assumed or guaranteed by
the Borrower or any Subsidiary, except:
(a) any Lien existing on any Property or shares of stock of a
corporation at the time the corporation becomes a Subsidiary or merges
into or consolidates with the Borrower or any Subsidiary;
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(b) any Lien existing on any Property at the time the Borrower
or any Subsidiary acquires such property; PROVIDED, HOWEVER, that such
Lien may not extend to any other Property owned by the Borrower or any
Subsidiary at the time (or after the time) such Lien is created,
incurred or assumed;
(c) any Lien securing Indebtedness incurred to finance all or
part of the purchase price or cost of construction of Property of the
Borrower or any Subsidiary; PROVIDED that (i) such Lien does not extend
to any other Property owned by the Borrower or any Subsidiary at the
time (or after the time) the Lien is created, incurred or assumed,
except that, in the case of a Lien incurred to finance construction on
real property, such Lien may extend to unimproved real property on
which the construction takes place and (ii) the Indebtedness secured by
such Lien may not be incurred more than 120 days after the later of the
acquisition, completion of construction or commencement of full
operation of the Property subject to such Lien;
(d) any Lien securing Indebtedness of any Subsidiary owing to
the Borrower or any other Subsidiary;
(e) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate
reserves shall have been set aside on its books in accordance with
Agreement Accounting Principles;
(f) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more than 60
days past due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside
on its books;
(g) Liens arising out of pledges or deposits made in the
ordinary course of business in connection with worker's compensation
laws, unemployment insurance, old age pensions and other social
security or retirement benefits, and statutory obligations and other
similar obligations;
(h) any Lien arising out of a judgment, decree or court order,
so long as any appropriate legal proceeding that may have been
initiated for review shall not have been finally terminated or so long
as the period within which such proceeding may be initiated shall not
have expired or such Lien arises in connection with any other
proceeding or action at law or in equity; PROVIDED that no proceeding
to enforce such Lien has been commenced and the aggregate amount
secured by all such Liens shall not at any time exceed $10,000,000;
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(i) any Lien on chattel paper, instruments or other rights to
payment of the Borrower or any Subsidiary, or cash deposited or
otherwise subjected to such Lien, (i) as a basis for the issuance of
Letters of Credit, to secure repurchase obligations arising in
connection with securities repurchase agreements entered into in the
ordinary course of business or in aid of other similar borrowing
arrangements, or (ii) arising in connection with the Borrower's
securitizations of such rights to payment conducted in the ordinary
course of business;
(j) any Lien on Property (or any receivables arising in
connection with the lease thereof) acquired by the Borrower or any
Subsidiary through repossession, foreclosure or like proceeding, or
securing Indebtedness incurred at the time of such acquisition or at
any time thereafter to finance all or part of the cost of maintenance,
improvement or construction relating thereto; PROVIDED that such Lien
does not apply to any other Property of the Borrower or any Subsidiary,
except that, in the case of any such Lien incurred to finance
construction on real property, such Lien may extend to unimproved real
property on which the construction takes place;
(k) any Lien incurred or deposit or pledge made or given in
the ordinary course of business in connection with, or to secure
payment of, indemnity, performance or other similar bonds;
(l) any encumbrance in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real
property, and landlord's liens under leases on the premises rented,
which do not materially detract from the value of such property or
impair the use thereof in the business of the Borrower and its
Subsidiaries;
(m) any Lien (an "EXTENDED LIEN") extending, renewing or
replacing in whole or in part another Lien (an "EXISTING LIEN")
permitted by paragraphs (a) through (l) above; PROVIDED that (i) such
Extended Lien shall not extend beyond (A) the Property subject to such
Existing Lien and (B) improvements and construction on such Property,
and (ii) the principal amount of the Indebtedness secured by such
Extended Lien may not exceed the principal amount of the Indebtedness
secured by such Existing Lien; or
(n) any Lien securing Indebtedness of the Borrower or any
Subsidiary in a principal amount at any time outstanding that does not
exceed the amount, if any, by which (i) 5% of Consolidated Net Tangible
Assets exceeds (ii) the aggregate amount of all other Indebtedness of
the Borrower and its Subsidiaries outstanding at such time that is
secured by Liens on Property of the Borrower and its Subsidiaries,
other than Indebtedness secured by Liens permitted by paragraphs (a)
through (m) above.
6.11. INCONSISTENT AGREEMENTS. The Borrower shall not, nor shall it
permit any Subsidiary to, enter into any indenture, agreement, instrument or
other arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the granting of
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Liens to secure the Obligations, the amending of the Loan Documents or the
ability of any Subsidiary to (i) pay dividends or make other distributions on
its capital stock, (ii) make loans or advances to the Borrower or (iii) repay
loans or advances from the Borrower or (b) contains any provision which would be
violated or breached by the making of Advances or by the performance by the
Borrower of any of its obligations under any Loan Document.
6.12. FINANCIAL COVENANTS. The Borrower on a consolidated basis with
its Subsidiaries shall:
6.12.1. NET WORTH. At all times after the date hereof,
maintain a minimum Net Worth of at least $750,000,000.
6.12.2. FIXED CHARGE COVERAGE RATIO. For the twelve-month
period ending on each Fiscal Quarter end, maintain a Fixed Charge
Coverage Ratio of not less than 1.25:1.0.
6.12.3. DEBT TO EQUITY RATIO. At all times after the date
hereof, maintain a Debt to Equity Ratio of not more than 5.0:1.0.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower to the Lenders or the Administrative Agent under or in
connection with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be false in any material respect on the date as of
which made.
7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any facility or utilization fee or obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, SECTION 6.3(A) or SECTIONS 6.9 through 6.12.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under SECTION 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within 30 days after written notice from
the Administrative Agent or any Lender.
7.5. The default by the Borrower or any of its Subsidiaries in the
performance of any
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term, provision or condition contained in any agreement or
agreements under which any Indebtedness aggregating an amount equal to or in
excess of $25,000,000 was created or is governed, or the occurrence of any other
event or existence of any other condition, the effect of any of which is to
cause, or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof.
7.6. The Borrower or any of its Subsidiaries shall (a) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (d) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (e)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this SECTION 7.6, (f) fail to contest in good faith any appointment
or proceeding described in SECTION 7.7 or (g) become unable to pay, not pay, or
admit in writing its inability to pay, its debts generally as they become due.
7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in SECTION 7.6(D)
shall be instituted against the Borrower or any of its Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 30 consecutive days.
7.8. For any period of 60 consecutive days there shall be outstanding
against the Borrower or any of its Subsidiaries any judgment(s) or order(s) for
the payment of money aggregating in excess of $25,000,000, which judgments or
orders have not been paid, bonded, otherwise discharged or stayed on appeal or
as to which any enforcement action has been commenced.
7.9. The Unfunded Liabilities of all Plans shall exceed in the
aggregate $10,000,000.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in SECTION 7.6 or 7.7
occurs with respect to
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the Borrower, the obligations of the Lenders to make Loans hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Administrative Agent
or any Lender. If any other Default occurs, the Majority Lenders may (or the
Administrative Agent, if so directed by the Majority Lenders, shall) terminate
or suspend the obligations of the Lenders to make Loans hereunder, or declare
the Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives.
If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
SECTION 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Majority Lenders (in their sole discretion) shall so direct, the
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
8.2. AMENDMENTS. Subject to the provisions of this ARTICLE VIII, the
Majority Lenders (or the Administrative Agent with the consent in writing of the
Majority Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default or condition hereunder; PROVIDED, HOWEVER, that no such
supplemental agreement shall, without the consent of each Lender:
(a) Extend the final maturity of any Loan or Note or reduce
the principal amount thereof, or reduce the rate or extend the time of
payment of interest or fees (including facility fees and utilization
fees) thereon;
(b) Change the percentage specified in the definition of
Majority Lenders;
(c) Reduce the amount of or extend the date for the mandatory
prepayments required under SECTION 2.9, or increase the amount of the
Commitment of any Lender hereunder;
(d) Extend the Facility Termination Date;
(e) Amend this SECTION 8.2;
(f) Permit any assignment by the Borrower of its Obligations
or its rights hereunder (other than an assignment of such Obligations
or rights occurring by operation of law pursuant to a merger or
consolidation permitted pursuant to SECTION 6.9).
No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
SECTION 12.3.2 without obtaining the consent of any other party to this
Agreement.
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8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to SECTION 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive delivery of the Notes and the
making of the Loans herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. TAXES. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Administrative Agent and the Lenders
and supersede all prior agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject matter thereof
other than the fee letter dated March 4, 1997 in favor of First Chicago.
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any
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other (except to the extent to which the Administrative Agent is authorized to
act as such). The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. This Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns.
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Administrative Agent for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Administrative Agent and the Lenders, which attorneys may be employees
of the Administrative Agent or the Lenders) paid or incurred by the
Administrative Agent or any Lender in connection with the collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify the
Administrative Agent and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby or the direct or indirect application or proposed application of the
proceeds of any Loan hereunder except to the extent that they arise out of the
gross negligence or willful misconduct of the party seeking indemnification. The
obligations of the Borrower under this SECTION 9.7 shall survive the termination
of this Agreement.
9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
9.9. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the
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Administrative Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Administrative Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations. The Borrower
shall rely entirely upon its own judgment with respect to its business, and any
review, inspection or supervision of, or information supplied to the Borrower by
the Administrative Agent or the Lenders is for the protection of the
Administrative Agent and the Lenders and neither the Borrower nor any other
Person is entitled to rely thereon. The Borrower agrees that neither the
Administrative Agent nor any Lender shall have any liability with respect to,
and the Borrower hereby waives, releases and agrees not to sue for, any special,
indirect or consequential damages suffered by the Borrower in connection with,
arising out of, or in any way related to the Loan Documents or the transactions
contemplated thereby or the relationship established by the Loan Documents, or
any act, omission or event occurring in connection therewith.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL
BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS; PROVIDED THAT SUCH PROCEEDINGS
MAY BE BROUGHT IN OTHER COURTS IF JURISDICTION MAY NOT BE OBTAINED IN A COURT IN
CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE
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RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. DISCLOSURE. The Borrower and each Lender hereby (a) acknowledge
and agree that First Chicago and/or its Affiliates from time to time may hold
other investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates.
9.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Administrative Agent and the Lenders and each party has notified
the Administrative Agent that it has taken such action.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. APPOINTMENT. First Chicago is hereby appointed Administrative
Agent hereunder and under each other Loan Document, and each of the Lenders
authorizes the Administrative Agent to act as the agent of such Lender. The
Administrative Agent agrees to act as such upon the express conditions contained
in this ARTICLE X. The Administrative Agent shall not have a fiduciary
relationship in respect of the Borrower or any Lender by reason of this
Agreement.
10.2. POWERS. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder, except any action specifically provided by the Loan Documents
to be taken by the Administrative Agent.
10.3. GENERAL IMMUNITY. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower or any
Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except for
its or their own gross negligence or willful misconduct.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be ETC. responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty or representation made in connection
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with any Loan Document or any borrowing hereunder, (b) the performance or
observance of any of the covenants or agreements of any obligor under any Loan
Document, including, without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition
specified in ARTICLE IV, except receipt of items required to be delivered to the
Administrative Agent and not waived at closing, or (d) the validity,
effectiveness, sufficiency, enforceability or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith. The
Administrative Agent shall have no duty to disclose to the Lenders information
that is not required to be furnished by the Borrower to the Administrative Agent
at such time, but is voluntarily furnished by the Borrower to the Administrative
Agent (either in its capacity as Administrative Agent or in its individual
capacity).
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Majority Lenders (or, to the extent required by
SECTION 8.2, all Lenders), and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Administrative Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any of its duties as Administrative Agent hereunder and under any other
Loan Document by or through employees, agents and attorneys-in-fact and shall
not be answerable to the Lenders, except as to money or securities received by
it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.
10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.
10.8. ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (a) for any amounts not reimbursed by the Borrower for which the
Administrative Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (b) for any other expenses incurred by the Administrative Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents, and (c) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature
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whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents; PROVIDED that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Administrative Agent. The obligations of the Lenders under
this SECTION 10.8 shall survive payment of the Obligations and termination of
this Agreement.
10.9. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Administrative Agent has received written notice
from a Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders.
10.10. RIGHTS AS A LENDER. In the event the Administrative Agent is a
Lender, the Administrative Agent shall have the same rights and powers hereunder
and under any other Loan Document as any Lender and may exercise the same as
though it were not the Administrative Agent, and the term "Lender" or "Lenders"
shall, at any time when the Administrative Agent is a Lender, unless the context
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Administrative Agent, in its individual capacity, is not obligated to remain a
Lender.
10.11. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower, such resignation to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative Agent gives notice
of its intention to resign. Upon any such resignation, the Majority Lenders
shall have the right to appoint, on behalf of the Lenders, a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders and shall
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have accepted such appointment within thirty days after the resigning
Administrative Agent's giving notice of its intention to resign, then the
resigning Administrative Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Administrative Agent. If the Administrative Agent has
resigned and no successor Administrative Agent has been appointed, the Lenders
may perform all the duties of the Administrative Agent hereunder and the
Borrower shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Administrative Agent shall be deemed to be appointed hereunder until
such successor Administrative Agent has accepted the appointment. Any such
successor Administrative Agent shall be a commercial bank having capital and
retained earnings of at least $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Administrative Agent. Upon the effectiveness of the resignation of the
Administrative Agent, the resigning Administrative Agent shall be discharged
from its duties and obligations hereunder and under the Loan Documents. After
the effectiveness of the resignation of an Administrative Agent, the provisions
of this ARTICLE X shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder and under the other Loan Documents.
10.13. CO-AGENTS. There shall be no rights, obligations or liabilities
imposed upon the Co-Agents identified on the signature pages of this Agreement
by virtue of their status as such.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(whether general or special, time or demand, including all account balances,
whether provisional or final and whether or not collected or available) and any
other Indebtedness at any time held or owing by any Lender to or for the credit
or account of the Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations, or any part
hereof, shall then be due.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTION 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share of such
Loans, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the
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benefits of such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made. If an amount to be setoff is to be applied to
Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced by
any of the Notes held by such Lender, such amount shall be applied ratably to
such other Indebtedness and to the Indebtedness evidenced by such Notes.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or Obligations under the
Loan Documents (other than an assignment of such rights or Obligations occurring
by operation of law pursuant to a merger or consolidation permitted pursuant to
SECTION 6.9), and (b) any assignment by any Lender must be made in compliance
with SECTION 12.3. Notwithstanding CLAUSE (B) of this SECTION 12.1, any Lender
may at any time, without the consent of the Borrower or the Administrative
Agent, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Administrative Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee complies with
SECTION 12.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Administrative
Agent. Any assignee or transferee of a Note agrees by acceptance thereof to be
bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("PARTICIPANTS") participating interests
in any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the Loan
Documents.
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12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver which effects any of the modifications referenced in
clauses (a) through (f) of SECTION 8.2.
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in SECTION 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents; PROVIDED that each Lender shall
retain the right of setoff provided in SECTION 11.1 with respect to the amount
of participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in SECTION 11.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with SECTION 11.2 as if each Participant were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("PURCHASERS") all or any part of its rights and
obligations under the Loan Documents; PROVIDED, HOWEVER, that in the case of an
assignment to an entity which is not a Lender or an Affiliate of a lender, such
assignment shall be in a minimum amount of $10,000,000. Such assignment shall be
substantially in the form of EXHIBIT I hereto or in such other form as may be
agreed to by the parties thereto. The consent of the Administrative Agent and,
so long as no Default is continuing, the Borrower shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender
or an Affiliate thereof. Such consent shall not be unreasonably withheld.
12.3.2. EFFECT; EFFECTIVE DATE. Upon (a) delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached as EXHIBIT I
to EXHIBIT I hereto (a "NOTICE OF ASSIGNMENT"), together with any consents
required by SECTION 12.3.1, and (b) payment of a $3,500 fee to the
Administrative Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
On and after the effective date of such assignment, (a) such Purchaser shall for
all purposes be a Lender party to this Agreement and any other Loan Document
executed by the Lenders and shall have all the rights and obligations of a
Lender under the Loan Documents, to the same extent as if it were an original
party hereto, and (b) the transferor Lender shall be released with respect to
the percentage of the Aggregate Commitment and Loans assigned to such Purchaser
without any further consent or action by the Borrower, the Lenders or the
Administrative Agent. Upon the consummation of any assignment to a Purchaser
pursuant to this SECTION 12.3.2, the transferor Lender, the Administrative Agent
and the Borrower shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
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replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Revolving Credit Commitment, as adjusted pursuant to
such assignment.
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries.
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 2.18.
ARTICLE XIII
NOTICES
13.1. GIVING NOTICE. Except as otherwise permitted by SECTION 2.15 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with first class
postage prepaid, return receipt requested, shall be deemed given three Business
Days after deposit in the U.S. mail; any notice, if transmitted by facsimile,
shall be deemed given when transmitted; and any notice given by overnight
courier shall be deemed given when received by the addressee.
13.2. CHANGE OF ADDRESS. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
[signature pages follow]
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EXHIBIT A
NOTE
(RATABLE LOAN)
$______________________ _________________, _____
Green Tree Financial Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of _______________________________
(the "Lender") the lesser of the principal sum of __________________ United
States Dollars ($_______________) or the aggregate unpaid principal amount of
all Ratable Loans made by the Lender to the Borrower pursuant to Sections
2.1.1(a) and 2.2 of the Agreement (as hereinafter defined), in immediately
available funds at the main office of The First National Bank of Chic ago in
Chicago, Illinois, as Administrative Agent, together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Ratable Loans evidenced hereby in full on the Facility
Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date, amount, applicable interest rate or margin and Interest Period, if
applicable, of each Ratable Loan and the date and amount of each principal
payment hereunder; provided, however, that neither the failure to so record nor
any error in this recordation shall affect the Borrower's obligations under this
Note.
This Note (Ratable Loan) is one of the Notes issued pursuant to, and is
entitled to the benefits of, the $750,000,000 (364-day) Credit Agreement, dated
as of April 29, 1997 (as the same may be amended, modified, restated or
supplemented and in effect from time to time, the "Agreement"), among the
Borrower, the lenders named therein, including the Lender, and The First
National Bank of Chicago, as Administrative Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions g overning this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used but not otherwise defined
herein are used with the meanings attributed to them in the Agreement.
GREEN TREE FINANCIAL CORPORATION
By:
---------------------------
Title:
------------------------
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE (RATABLE LOAN) OF GREEN TREE FINANCIAL CORPORATION,
DATED ________________, ______
Principal
Amount of Interest Rate Principal Unpaid
Date Loan (or Margin) Amount Paid Balance
---- --------- ------------- ----------- -------
<PAGE>
EXHIBIT B
NOTE
(COMPETITIVE BID LOAN)
---------------, ------
Green Tree Financial Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of ___________________________ (the
"Lender") the aggregate unpaid principal amount of all Competitive Bid Loans
made by the Lender to the Borrower pursuant to Section 2.3 of the Agreement (as
hereinafter defined), in immediately available funds at the main office of The
First National Bank of Chicago in Chicago, Illinois, as Administrative Agent,
together with interest on the unpaid principal amount hereof at the rates and on
the dates determined pursuant to Section 2.3 of the Agreement. The Borrower
shall pay the principal of and accrued and unpaid interest on the Competitive
Bid Loans evidenced hereby in full on the maturity date thereof.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date, amount, applicable interest rate or margin and Interest Period of each
Competitive Bid Loan and the date and amount of each principal payment
hereunder; provided, HOWEVER, that neither the failure to so record nor any
error in this recordation shall affect the Borrower's obligations under this
Note.
This Note (Competitive Bid Loan) is one of the Notes issued pursuant
to, and is entitled to the benefits of, the $750,000,000 (364-day) Credit
Agreement, dated as of April 29, 1997 (as the same may be amended, modified,
restated or supplemented and in effect from time to time, the "Agreement"),
among the Borrower, the lenders named therein, including the Lender, and The
First National Bank of Chicago, as Administrative Agent, to which Agreement
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. Capitalized terms used but not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
GREEN TREE FINANCIAL CORPORATION
By:
------------------------------
Title:
---------------------------
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE (COMPETITIVE BID LOAN) OF GREEN TREE FINANCIAL CORPORATION,
DATED _____________________, ______
Principal
Amount of Interest Rate Principal Unpaid
Date Loan (or Margin) Amount Paid Balance
---- --------- ------------- ----------- -------
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EXHIBIT C
COMPETITIVE BID QUOTE REQUEST
(Section 2.3.2)
________________, ____
To: The First National Bank of Chicago, as Administrative Agent
From: Green Tree Financial Corporation (the "Borrower")
Re: $750,000,000 (3-year) Credit Agreement, dated as of April 29, 1997, among
the Borrower, The First National Bank of Chicago, individually and as
Administrative Agent, and the Lenders parties thereto (the
"Agreement")
We hereby give notice pursuant to Section 2.3.2 of the Agreement that we
request Competitive Bid Quotes for the following proposed Competitive Bid
Advance(s):
Borrowing Date: __________________________, _____________
Principal Amount: $_____________________________________(1)
Interest Period: _____________________________________(2)
Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate].
Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of such date the representations and warranties made in
the Agreement to the extent specified in Section 4.2(b) thereof. Capitalized
terms used but not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
GREEN TREE FINANCIAL CORPORATION
By:
-----------------------------------
Title:
--------------------------------
(1) Principal amount must be at least $10,000,000 and an integral multiple of
$5,000,000.
(2) One, two, three or six months (Eurodollar Auction) or at least 30 days and
up to 180 days (Absolute Rate Auction), subject to the provisions of the
definitions of Eurodollar Interest Period and Absolute Rate Interest
Period.
<PAGE>
EXHIBIT D
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.3.3)
_______________, _______
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to Green Tree Financial Corporation
(the "Borrower")
Pursuant to Section 2.3.3 of the $750,000,000 (364-day) Credit Agreement,
dated as of April 29, 1997 (the "Agreement"), among the Borrower, the Lenders
parties thereto and the undersigned, as Administrative Agent, we are pleased on
behalf of the Borrower to invite you to submit Competitive Bid Quotes to the
Borrower for the following proposed Competitive Bid Advance(s):
Borrowing Date: ___________________, _____
Principal Amount: $___________
Interest Period: ___________
Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate]. Your Competitive Bid Quote must comply with Section 2.3.4 of
the Agreement and the foregoing terms on which the Competitive Bid Quote Request
was made. Capitalized terms used but not otherwise defined herein are used with
the meanings attributed to them in the Agreement.
Please respond to this invitation by no later than 9:00 a.m., Chicago time,
on ____________, ____. .
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
By:________________________________
Authorized Officer
<PAGE>
EXHIBIT E
COMPETITIVE BID QUOTE
(Section 2.3.4)
________________, _____
To: The First National Bank of Chicago, as Administrative Agent
Attn: ________________________
Financial Services Department
Fax No.: ________________
Re: Competitive Bid Quote to Green Tree Financial Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
________________, ________, we hereby make the following Competitive Bid Quote
pursuant to Section 2.3.4 of the Agreement (as hereinafter defined) and on the
following terms:
1. Quoting Lender: _________________________________
2. Person to contact at Quoting Lender: ____________________
3. Borrowing Date: __________________________, _______(1)
4. We hereby offer to make Competitive Bid Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
Principal Interest [Competitive [Absolute Minimum
Amount(2) Period(3) Bid Margin(4)] Rate(5)] Amount(6)
--------- --------- -------------- --------- --------
$
- -------------------
(1) As specified in the related Invitation for Competitive Bid Quotes.
(2) Principal amount bid for each Interest Period may not exceed principal
amount requested. Principal amount bid must be at least $10,000,000 and an
integral multiple of $5,000,000.
(3) One, two, three or six months (Eurodollar Auction) or at least 30 days and
up to 180 days (Absolute Rate Auction), as specified in the related
Invitation for Competitive Bid Quotes.
(4) Competitive Bid Margin over or under the Eurodollar Base Rate determined for
the applicable Interest Period. Specify percentage (rounded to the nearest
1/100 of 1%) and specify whether "PLUS" or "MINUS".
(5) Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
(6) Specify minimum amount which the Borrower may accept (see Section
2.3.4(b)(iv)).
<PAGE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the $750,000,000 (3-year)
Credit Agreement, dated as of April 29, 1997 (the "Agreement"), among the
Borrower, the Lenders parties thereto and yourself, as Administrative Agent,
irrevocably obligates us to make the Competitive Bid Loan(s) for which any
offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF LENDER]
By:
--------------------------------------
Authorized Officer
-2-
<PAGE>
EXHIBIT F
NOTE
(SWING LINE LOAN)
$________________ April __, 1997
Green Tree Financial Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of __________________________ (the
"Lender") the lesser of the principal sum of ______________________ United
States Dollars ($__________) or the aggregate unpaid principal amount of all
Swing Line Loans made by the Lender to the Borrower pursuant to Section 2.4 of
the Agreement (as hereinafter defined), in immediately available funds at the
main office of The First National Bank of Chicago in Chicago, Illinois, as
Administrative Agent, together with interest on the unpaid principal amount
hereof at the rates and on the dates set forth in the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Swing Line Loan and the date and amount of each
principal payment hereunder; provided, however, that neither the failure to so
record nor any error in this recordation shall affect the Borrower's obligations
under this Note.
This Note (Swing Line Loan) is one of the Notes issued pursuant to,
and is entitled to the benefits of, the $750,000,000 (3-year) Credit Agreement,
dated as of April , 1997 (as the same may be amended, modified, restated or
supplemented and in effect from time to time, the "Agreement") among the
Borrower, the lenders named therein, including the Lender, and The First
National Bank of Chicago, as Administrative Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used but not otherwise defined
herein are used with the meanings attributed to them in the Agreement.
GREEN TREE FINANCIAL CORPORATION
By:_________________________________
Title:______________________________
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE (SWING LINE LOAN) OF GREEN TREE FINANCIAL CORPORATION
DATED ____________, ____
Principal
Amount of Interest Rate Principal Unpaid
Date Loan (or Margin) Amount Paid Balance
---- --------- ------------- ----------- -------
-2-
<PAGE>
WINSTON & STRAWN
DRAFT DATED 4/7/97
EXHIBIT G-1
Opinion of Counsel to the Borrower
April __, 1997
The First National Bank of Chicago, as Administrative Agent
One First National Plaza
Chicago, Illinois 60670
and
Each of the Financial Institutions
identified on Schedule I hereto
Ladies and Gentlemen:
We have acted as counsel for Green Tree Financial Corporation, a
Delaware corporation (the "Borrower"), in connection with the agreements listed
below, each dated the date hereof:
(a) the $750,000,000 [(364-day)] [(3-year)] Credit Agreement (the "Credit
Agreement") by and among the Borrower, the financial institutions
signatory thereto (the "Lenders") and The First National Bank of
Chicago ("First Chicago"), as administrative agent (the
"Administrative Agent");
(b) the Ratable Notes by the Borrower in favor of each of the Lenders (the
"Ratable Notes")[; and]
(c) the Competitive Bid Notes by the Borrower in favor of each of the
Lenders (the "Competitive Bid Notes")[; and
(d) the Swing Line Notes by the Borrower in favor of each of First Chicago
and First Bank National Association (the "Swing Line Notes")](1)
The Credit Agreement, the Ratable Notes, [and] the Competitive Bid Notes[, and
the Swing Line Notes] are hereinafter referred to collectively as the
"Transaction Agreements". Capitalized
- -------------------
(1) The 364-day Credit Agreement does not provide for Swing Line Notes. Thus,
item (d) should be deleted from the opinion for that Credit Agreement.
<PAGE>
terms used but not otherwise defined herein have the meanings ascribed thereto
in the Credit Agreement.
Pursuant to Section 4.1(e) of the Credit Agreement, this opinion letter is
delivered to the addresses hereof upon the express instructions and request of
our client, the Borrower. For purposes of this opinion letter only, the
addresses hereof are deemed to be in privity with this firm.
We have examined originals, or copies certified or otherwise identified to
our satisfaction, of such corporate records, agreements, instruments and
documents of the Borrower and certificates and other statements of public
officials and corporate officers, and have made such other investigation of fact
and law, as we have deemed necessary in connection with the opinions set forth
herein. In our examination, we have assumed the genuineness of all documents
submitted to us as originals and the conformity to originals of all documents
submitted to us as copies.
Based upon the foregoing, and subject to the comments and exceptions
hereinafter set forth, we are of the opinion that:
1. The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation. The Borrower is
duly qualified, in good standing and duly authorized to conduct business as a
foreign corporation in the State of Minnesota.
2. The Borrower has all requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Transaction
Agreements, to own its assets and to carry on its business as presently
conducted.
3. The execution, delivery and performance by the Borrower of each of the
Transaction Agreements and the consummation of the Closing Transactions do not
(a) violate any provision of law, rule or regulation (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System), or of any order, writ, judgment, decree, determination or award
known to us which is presently in effect having applicability to the Borrower
and its Subsidiaries, (b) conflict with or result in a breach of, or constitute
a default under, the certificate or articles of incorporation or by-laws of the
Borrower, (c) conflict with or result in a breach of, or constitute a default
under, any indenture, loan or credit agreement or other agreement or instrument
known to us to which the Borrower is a party or by which the Borrower or any of
its property is bound, or (d) result in or require the creation or imposition of
any Lien of any nature (except Liens permitted under the Credit Agreement) upon
or with respect to any of the properties now owned or hereafter acquired by the
Borrower.
4. Each of the Transaction Agreements has been duly authorized, executed
and delivered by the Borrower and constitutes a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors' rights
generally which may be in effect and to general principles of equity.
<PAGE>
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April , 1997
Page 3
5. No authorization, consent, approval, license, qualification or formal
exemption from, or filing, declaration or registration with, any court,
governmental agency or other regulatory authority or any securities exchange is
required in connection with the execution, delivery or performance by the
Borrower of the Transaction Agreements or the consummation of any of the Closing
Transactions, except such as have been previously obtained and remain in full
force and effect.
6. There is no action, suit, proceeding, governmental investigation or
arbitration pending or, to our knowledge, threatened against the Borrower or any
of its material property before any court or arbitrator or any governmental or
administrative body, agency or official which challenges the validity, or seeks
to enjoin the performance of, any Transaction Agreement or the consummation of
any of the Closing Transactions.
7. The Borrower is not an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended. The Borrower is not a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
8. A court applying the conflicts of laws principles applied by the courts
of the State of Minnesota will give effect to the choice of law provisions in
the Transaction Agreements pursuant to which such agreements are to be governed
by the laws of the State of Illinois.
9. The rates of interest provided in the Credit Agreement do not violate
any laws of the State of Minnesota relating to interest or usury.
Our opinion is subject to the following additional qualifications:
1. We express no opinion with respect to whether any Administrative
Agent, Lender or Participant is required to file a Notice of Business
Activities Report under Minnesota Statutes Section 290.371. Any party who
is so required and does not file such a report has no cause of action upon
which it may bring suit under Minnesota law, except for issues related to
its Minnesota tax liability, unless and until it pays all taxes, interest,
and civil penalties due the State of Minnesota for all periods, or provides
for their payment by security or bond. Insofar as our opinion may relate
to the enforceability of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report
<PAGE>
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April , 1997
Page 4
or, if not exempt, has, prior to the date of such enforcement, made
such filing and paid any such taxes, interest and civil penalties due.
Subject to such restrictions upon the ability of the Administrative Agent
or any Lender to enforce the Loan Documents prior to the filing of a Notice
of Business Activities Report and the payment of any such taxes, interest
and civil penalties, the failure of the Administrative Agent or any Lender
to make such filing or to pay any such taxes, interest and civil penalties
(a) does not and will not affect or impair the enforceability of any Loan
Documents and (b) does not and will not affect the ability of the
Administrative Agent or any Lender which has made such filing and paid any
such taxes, interest and civil penalties to enforce the Loan Documents in
accordance with their respective terms.
2. We express no opinion with respect to the validity and
enforceability of (a) any remedies insofar as any party exercising such
remedies may take any action which is arbitrary or capricious,
unreasonable, not in good faith, or not commercially reasonable;
(b) provisions to the effect that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such
right or remedy or which purport to render ineffective any waiver,
modification or amendment not in writing; and (c) the waiver of
inconvenient forum set forth in Section 9.13 of the Credit Agreement.
3. We express no opinion with respect to the ability of any party to
collect or be reimbursed for costs and expenses, including attorneys' fees,
to the extent (a) its rights may be limited to reasonable fees and expenses
as determined by a court; or (b) it is not the prevailing party in the
action.
4. With respect to our opinion in paragraph 8, above, we do not opine
that a court applying Minnesota conflicts of laws principles would
recognize the laws of the State of Illinois as the governing law with
respect to every issue that might arise under the Transaction Agreements.
Under Minnesota choice of law rules, a Minnesota court will apply Minnesota
law to determine whether the law at issue is procedural or substantive and
if procedural will apply Minnesota law. If the law at issue is
substantive, decisions are made on a case-by-case, issue-by-issue basis.
Generally, Minnesota courts enforce contractual choice of law provisions,
so long as application of the chosen law is consistent with constitutional
requirements.
5. This opinion is limited to the laws of the State of Minnesota, the
General Corporation Law of the State of Delaware and the federal laws of
the United States of America. With respect to matters involving the laws
of the State of Illinois, we have assumed with your permission that the
laws of such state are identical to the laws of the
<PAGE>
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April , 1997
Page 5
State of Minnesota.
This opinion is rendered solely for the benefit of the Lenders, the
Administrative Agent, and any party that becomes a Participant, Lender or
Administrative Agent under the Credit Agreement after the date hereof pursuant
to the Credit Agreement. No copies of this opinion may be delivered or
furnished to any other party nor may all or portions of this opinion be quoted,
circulated or referred to in any other document without our prior written
consent, except that copies of this opinion may be provided to any party
entitled to rely upon this opinion or to any regulatory agency having
supervisory authority over any party entitled to rely upon this opinion, and
except that this opinion may be used in connection with the assertion of a
defense as to which this opinion is relevant and necessary or in response to a
court order.
Very truly yours,
Briggs and Morgan, P.A.
<PAGE>
EXHIBIT G-2
Opinion of General Counsel to the Borrower
April __, 1997
The First National Bank of Chicago, as Administrative Agent
One First National Plaza
Chicago, Illinois 60670
and
Each of the Financial Institutions
identified on Schedule I hereto
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Green Tree
Financial Corporation, a Delaware corporation (the "Borrower"). In that capacity
I have reviewed the agreements listed below, each dated the date hereof:
(a) the $750,000,000 [(364-day)] [(3-year)] Credit Agreement (the "Credit
Agreement") by and among the Borrower, the financial institutions
signatory thereto (the "Lenders") and The First National Bank of
Chicago ("First Chicago"), as administrative agent (the
"Administrative Agent");
(b) the Ratable Notes by the Borrower in favor of each of the Lenders (the
"Ratable Notes")[; and]
(c) the Competitive Bid Notes by the Borrower in favor of each of the
Lenders (the "Competitive Bid Notes")[; and
(d) the Swing Line Notes by the Borrower in favor of each of First Chicago
and First Bank National Association (the "Swing Line Notes")].(1)
The Credit Agreement, the Ratable Notes, [and] the Competitive Bid Notes[, and
the Swing Line Notes] are hereinafter referred to collectively as the
"Transaction Agreements." Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the Credit Agreement.
- --------------------
(1) The 364-day Credit Agreement does not provide for Swing Line Notes. Thus
item (d) should be deleted from the opinion for that Credit Agreement.
<PAGE>
This opinion is delivered to the addressees hereof pursuant to Section
4.1(e) of the Credit Agreement.
I have examined originals, or copies certified or otherwise identified to
my satisfaction, of such corporate records, agreements, instruments and
documents of the Borrower and certificates and other statements of public
officials and corporate officers, and have made such other investigation of fact
and law, as I have deemed necessary in connection with the opinions set forth
herein. In my examination, I have assumed the genuineness of all documents
submitted to me as originals and the conformity to originals of all documents
submitted to me as copies.
Based upon the foregoing, and subject to the comments and exceptions
hereinafter set forth, I am of the opinion that:
1. The Borrower is duly qualified, in good standing and duly authorized to
conduct business as a foreign corporation in the jurisdictions specified in
Schedule II hereto.
2. The execution, delivery and performance by the Borrower of each of the
Transaction Agreements and the consummation of the Closing Transactions do not
(a) conflict with or result in a breach of, or constitute a default under, the
certificate or articles of incorporation or by-laws of any Subsidiary, (b)
conflict with or result in a breach of, or constitute a default under, any
indenture, loan or credit agreement or other agreement or instrument known to me
to which the Borrower or any Subsidiary is a party or by which the Borrower or
any Subsidiary or any of its property is bound, or (c) result in or require the
creation or imposition of any Lien of any nature (except Liens permitted under
the Credit Agreement) upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower or any Subsidiary.
3. There is no action, suit, proceeding, governmental investigation or
arbitration pending or threatened against the Borrower or any of its material
property before any court or arbitrator or any governmental or administrative
body, agency or official which could reasonably be expected to have a Material
Adverse Effect.
This opinion is rendered solely for the benefit of the Lenders, the
Administrative Agent, and any party that becomes a Participant, Lender or
Administrative Agent under the Credit Agreement after the date hereof pursuant
to the Credit Agreement. No copies of this opinion may be delivered or
furnished to any other party nor may all or portions of this opinion be quoted,
circulated or referred to in any other document without my prior written
consent, except that copies of this opinion may be provided to any party
entitled to rely upon this opinion or to any regulatory agency having
supervisory authority over any party entitled to rely upon this opinion, and
except that this opinion may be used in connection with the assertion of a
defense as to which this opinion is relevant and necessary or in response to a
court order.
Very truly yours,
Joel H. Gottesman,
<PAGE>
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April , 1997
Page 3
Senior Vice President
and General Counsel
<PAGE>
EXHIBIT H
COMPLIANCE CERTIFICATE
I, _________________, certify that I am the [chief financial
officer/treasurer] of Green Tree Financial Corporation (the "Borrower"), and
that as such I am authorized to execute this Compliance Certificate on behalf of
the Borrower, and DO HEREBY FURTHER CERTIFY on behalf of the Borrower that:
1. I have reviewed the terms of that certain $750,000,000 (364-day) Credit
Agreement, dated as of April 29, 1997, among the Borrower, the financial
institutions named therein (the "Lenders") and The First National Bank of
Chicago, as administrative agent (the "Administrative Agent") (as amended,
restated, supplemented or modified from time to time, the "Credit Agreement"),
and I have made, or have caused to be made by employees or agents under my
supervision, a detailed review of the transactions and conditions of the
Borrower and its Subsidiaries (as this and other capitalized terms used but not
defined herein are defined in the Credit Agreement) during the accounting period
covered by the attached financial statements;
2. The examinations described in paragraph 1 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Compliance Certificate, except as set forth below; and
3. Schedule I attached hereto sets forth financial data and computations
evidencing compliance with the covenants set forth in Section 6.12 of the Credit
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 2, listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
<PAGE>
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Compliance
Certificate in support hereof, are made and delivered this ______ day of
______________, ____.
GREEN TREE FINANCIAL CORPORATION
By:
---------------------------------
Title:
-------------------------------
<PAGE>
SCHEDULE I
----------
SECTION 6.12.1 -- NET WORTH
- ---------------------------
1. Required Net Worth $750,000,000
2. Actual Net Worth $
SECTION 6.12.2 -- FIXED CHARGE COVERAGE RATIO
- ---------------------------------------------
1. Required Fixed Charge Coverage Ratio 1.25 to 1.0
2. Actual Fixed Charge Coverage Ratio:
(a) Net Income $
(b) income and franchise taxes paid or accrued $
(c) Interest Expense $
(d) income from discontinued operations $
(e) extraordinary gains resulting from changes in the
application of Agreement Account Principles $
(f) Adjusted EBIT ((a) plus (b) plus (c) minus (d)
minus (e)) $
(g) Ratio of (f) to (c) _____ to 1.0
SECTION 6.12.3 -- DEBT TO EQUITY RATIO
- --------------------------------------
1. Required Debt to Equity Ratio 5.0 to 1.0
2. Actual Debt to Equity Ratio:
(a) Consolidated Debt $
(b) Net Worth $
(c) Ratio (a) to (b) _____ to 1.0
<PAGE>
EXHIBIT I
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_______________________________ (the "Assignor") and
_______________________________ (the "Assignee") is dated as of
____________________, ____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as it may be amended, supplemented, modified, renewed or extended from
time to time, is herein called the "Credit Agreement") described in Item 1 of
Schedule 1 attached hereto. Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the Loans and the other Loan Documents.
The aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Administrative
Agent) after a Notice of Assignment substantially in the form of Exhibit I
attached hereto has been delivered to the Administrative Agent. Such Notice of
Assignment must include any consents required to be delivered to the
Administrative Agent pursuant to Section 12.3.1 of the Credit Agreement. In no
event will the Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date under Section 4 hereof are not
made on the proposed Effective Date. The Assignor will notify the Assignee of
the proposed Effective Date no later than the Business Day prior to the proposed
Effective Date. As of the Effective Date, (a) the Assignee shall have the
rights and obligations of a Lender under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder, and (b) the Assignor
shall relinquish its rights and be released from its corresponding obligations
under the Loan Documents with respect to the rights and obligations assigned to
the Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees
<PAGE>
with respect to the interest assigned hereby. The Assignee shall advance funds
directly to the Administrative Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby. [In consideration for the sale and assignment of Loans
hereunder, (a) the Assignee shall pay the Assignor, on the Effective Date, an
amount equal to the principal amount of the portion of all Alternate Base Rate
Loans assigned to the Assignee hereunder, and (b) with respect to each
Eurodollar Loan or Absolute Rate Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (i) on the last
day of the Interest Period therefor, (ii) on such earlier date agreed to by the
Assignor and the Assignee, or (iii) on the date on which any such Eurodollar
Loan or Absolute Rate Loan either becomes due (by acceleration or otherwise) or
is prepaid (the date as described in the foregoing clauses (i), (ii) or (iii)
being hereinafter referred to as the "Payment Date"), the Assignee shall pay the
Assignor an amount equal to the principal amount of the portion of such
Eurodollar Loan or Absolute Rate Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that
the Payment Date for such Eurodollar Loan or Absolute Rate Loan shall be the
Effective Date, they shall agree to the interest rate applicable to the portion
of such Loan assigned hereunder for the period from the Effective Date to the
end of the existing Interest Period applicable to such Eurodollar Loan or
Absolute Rate Loan (the "Agreed Interest Rate") and any interest received by the
Assignee in excess of the Agreed Interest Rate shall be remitted to the
Assignor. In the event interest for the period from the Effective Date to, but
not including, the Payment Date is not paid by the Borrower with respect to any
Eurodollar Loan or Absolute Rate Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period on
the portion of such Eurodollar Loan or Absolute Rate Loan sold by the Assignor
to the Assignee hereunder at the applicable rate provided by the Credit
Agreement. In the event a prepayment of any Eurodollar Loan or Absolute Rate
Loan which is existing on the Payment Date and assigned by the Assignor to the
Assignee hereunder occurs after the Payment Date but before the end of the
Interest Period applicable to such Eurodollar Loan or Absolute Rate Loan, the
Assignee shall remit to the Assignor the excess of the prepayment penalty paid
with respect to the portion of such Eurodollar Loan or Absolute Rate Loan
assigned to the Assignee hereunder over the amount which would have been paid if
such prepayment penalty was calculated based on the Agreed Interest Rate. The
Assignee will also promptly remit to the Assignor (x) any principal payments
received from the Administrative Agent with respect to Eurodollar Loans and
Absolute Rate Loans prior to the Payment Date, and (y) any amounts of interest
on Loans and fees received from the Administrative Agent which relate to the
portion of the Loans assigned to the Assignee hereunder for periods prior to the
Effective Date, in the case of Alternate Base Rate Loans, or the Payment Date,
in the case of Eurodollar Loans and Absolute Rate Loans, and not previously paid
by the Assignee to the Assignor.]* In the event that either party hereto
receives any payment to which the other party hereto is entitled under this
Assignment Agreement, then the party receiving such amount shall promptly remit
it to the other party hereto.
* Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
5. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE
-2-
<PAGE>
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim created by the
Assignor. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to the Assignee. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (a) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of any Loan Document,
[including, without limitation, documents granting the Assignor and the other
Lenders a security interest in assets of any Borrower or any guarantor], (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of any Borrower
[or any guarantor], (d) the performance of or compliance with any of the terms
or provisions of any of the Loan Documents, (e) inspecting any of the Property,
books or records of any Borrower, [(f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans], or (g) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
* include bracketed language if applicable.
6. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (a) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement, (b) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, (c) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto, (d)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, (e) agrees that its payment instructions and notice
instructions are as set forth in the attachment to Schedule 1, (f) confirms that
none of the funds, monies, assets or other consideration being used to make the
purchase and assumption hereunder are "plan assets" as defined under ERISA and
that its rights, benefits and interests in and under the Loan Documents will not
be "plan assets" under ERISA, [and (g) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying that the Assignee is
entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes].*
* to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
7. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless
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<PAGE>
against any and all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment Agreement. The obligations of the
Assignee under this Section 7 shall survive the payment of all amounts hereunder
and the termination of this Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to and in accordance with Section 12.3 of the Credit
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person; provided that (a) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained, and (b) unless
the prior written consent of the Assignor is obtained, the Assignee is not
thereby released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under Sections 4, 6
and 7 hereof.
9. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Aggregate Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
11. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
12. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
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<PAGE>
By:
--------------------------------
Title:
-----------------------------
[NAME OF ASSIGNEE]
By:
--------------------------------
Title:
-----------------------------
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<PAGE>
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
That certain $750,000,000 (364-day) Credit Agreement, dated as of
April 29, 1997, among Green Tree Financial Corporation, the financial
institutions named therein and The First National Bank of Chicago, as
Administrative Agent.
2. Date of Assignment Agreement:
3. Amounts (As of Date of Item 2 above):
(a) Total of Commitments (Loans)*
under Credit Agreement $
------------
(b) Assignee's percentage of the
(Loans)* Commitments purchased
under the Assignment Agreement** %
------------
4. Assignee's aggregate (Loan amount)*
Commitment amount purchased hereunder: $
------------
5. Proposed Effective Date:
------------
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
* If a Commitment has been terminated, insert outstanding Loans in place of
Commitment
** Percentage taken to 10 decimal places
<PAGE>
ATTACHMENT TO SCHEDULE 1 TO ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<PAGE>
EXHIBIT I
TO ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
________________, ______
To: Green Tree Financial Corporation
500 Landmark Towers
345 St. Peter Street
St. Paul, MN 55102
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to the Credit Agreement (the "Credit Agreement") described in
Item 1 of Schedule 1 attached hereto. Capitalized terms used but not otherwise
defined herein have the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to the
Borrower and the Administrative Agent pursuant to Section 12.3.2 of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of __________________, ____ (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1, including,
without limitation, such interest in the Assignor's Commitment (if applicable)
and the Loans owing to the Assignor relating to such facilities. The effective
date of the Assignment (the "Effective Date") shall be the later of the date
specified in Item 5 of Schedule 1 or two Business Days (or such shorter period
as agreed to by the Administrative Agent) after this Notice of Assignment and
any consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Administrative Agent; provided that the
Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and the
Administrative Agent notice of the assignment and delegation referred to herein.
The Assignor
<PAGE>
will confer with the Administrative Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective on
such date pursuant to Section 3 hereof and will confer with the Administrative
Agent to determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Administrative Agent if the Assignment
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Administrative Agent, the Assignor will give the
Administrative Agent written confirmation of the satisfaction of the conditions
precedent.
5. The Assignor or the Assignee shall pay to the Administrative Agent on
or before the Effective Date the processing fee of $3,500 required by Section
12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Administrative Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacement Notes,
to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee
each agree to deliver to the Administrative Agent the original Notes received by
it from the Borrower upon its receipt of new Notes in the appropriate amount.
7. The Assignee advises the Administrative Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. Each party consenting to the Assignment in the space indicated below
hereby releases the Assignor from any obligations to it which have been assigned
to the Assignee. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
9. The Assignee authorizes the Administrative Agent to act as its agent
under the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Administrative Agent has no duty to supply information
with respect to the Borrower or the Loan Documents to the Assignee until the
Assignee becomes a party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
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<PAGE>
ACKNOWLEDGED AND CONSENTED TO ACKNOWLEDGED AND CONSENTED
BY THE FIRST NATIONAL BANK OF TO BY GREEN TREE FINANCIAL
CHICAGO, as Administrative Agent CORPORATION
By: By:
------------------------------- ------------------------------------
Title: Title:
---------------------------- ---------------------------------
[Attach photocopy of Schedule 1 to Assignment]
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<PAGE>
EXHIBIT J
MONEY TRANSFER INSTRUCTIONS
The First National Bank of Chicago,
as Administrative Agent under the
Credit Agreement described below
Re: $750,000,000 (364-day) Credit Agreement, dated as of April 29, 1997 (as the
same may be amended, modified, supplemented or restated from time to time,
the "Credit Agreement"), among Green Tree Financial Corporation (the
"Borrower"), the Administrative Agent and the Lenders from time to time
parties thereto. Terms used but not otherwise defined herein have the
meanings assigned thereto in the Credit Agreement
The Administrative Agent is specifically authorized and directed to act
upon the following standing money transfer instructions with respect to the
proceeds of Advances or other extensions of credit from time to time until
receipt by the Administrative Agent of a specific written revocation of such
instructions by the Borrower; provided, however, that the Administrative Agent
may otherwise transfer funds as hereafter directed in writing by the Borrower in
accordance with Section 13.1 of the Credit Agreement or based on any telephonic
notice made in accordance with Section 2.13 of the Credit Agreement.
Customer/Account Name:
-------------------------------------------------------
Transfer Funds To:
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
For Account No.:
-----------------------------------------------------------
<PAGE>
Reference/Attention To:
-------------------------------------------------------
Authorized Officer
(Customer Representative) Date:______________________, ______
-----------------------------------
(Please Print) Signature
Bank Officer Name Date:______________________, ______
-----------------------------------
(Please Print) Signature
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<PAGE>
EXECUTION COPY
AMENDMENT NO. 1 AND LIMITED WAIVER TO CREDIT AGREEMENT
------------------------------------------------------
(364-DAY)
This Amendment No. 1 and Limited Waiver (this "Amendment") is entered into
as of February 6, 1998 by The First National Bank of Chicago, individually and
as administrative agent (the "Administrative Agent"), the other financial
institutions signatory hereto and Green Tree Financial Corporation, a Delaware
corporation (the "Borrower").
RECITALS
--------
A. The Borrower, the Administrative Agent and the Lenders are party to
that certain $750,000,000 (364-day) Credit Agreement dated as of April 29, 1997
(as amended, the "Credit Agreement"). Unless otherwise specified herein,
capitalized terms used in this Amendment shall have the meanings set forth in
the Credit Agreement.
B. The Borrower, the Administrative Agent and the undersigned Lenders
wish to amend the Credit Agreement and temporarily waive certain provisions
thereof on the terms and conditions set forth below.
Now, therefore, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:
SECTION 1. REDUCTION OF COMMITMENTS. The Borrower hereby permanently
reduces the Aggregate Commitment to $375,000,000 from $750,000,000 in accordance
with the terms of Section 2.6(c) of the Credit Agreement and on the "Effective
Date" (as defined below) each Lender's Commitment will be reduced on a pro rata
basis such that the Commitment of such Lender shall be as specified opposite its
signature line on this Amendment. The Lenders hereby waive any requirement of
Section 2.6(c) of the Credit Agreement as to advance written notice of such
reduction.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. Upon the "Effective Date" (as
defined below), the Credit Agreement shall be amended as follows:
SECTION 2.1. DEFINITIONS.
(A) AMENDED DEFINITIONS. Article I shall be amended by amending
the following definitions to read, in their entirety, as follows:
"Aggregate Commitment" means the aggregate of the Commitments of all
the
<PAGE>
Lenders hereunder. The Aggregate Commitment as of the First Amendment
Effective Date is $375,000,000.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent
with those used in preparing the Financial Statements (except for the
application during the Waiver Period (as defined in Section 3 of the First
Amendment) of Statement of Financial Accounting Standards No. 125);
provided, however, that for purposes of all computations required to be
made with respect to compliance by the Borrower with Section 6.12, such
term shall mean generally accepted accounting principles as in effect on
the date hereof, applied in a manner consistent with those used in
preparing the Financial Statements (except for the application during the
Waiver Period (as defined in Section 3 of the First Amendment) of Statement
of Financial Accounting Standards No. 125).
"Applicable Eurodollar Margin" means, on any date, subject to the
following sentence of this definition, 0.55%; provided that in the event
that (a) the Debt Rating is either lower than Baa3 (or the equivalent) by
Moody's or lower than BBB- (or the equivalent) by S&P or (b) the Borrower's
senior, long-term, unsecured debt is unrated by either Moody's or S&P,
"Applicable Eurodollar Margin" means 0.75%. Any change in the Applicable
Eurodollar Margin shall be effective as of the date of the change in (or
unavailability of ) the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next
such change.
"Applicable Facility Fee Percentage" means, on any date, subject to
the following sentence of this definition, 0.20%; provided that in the
event that (a) the Debt Rating is either lower than Baa3 (or the
equivalent) by Moody's or lower than BBB- (or the equivalent) by S&P or (b)
the Borrower's senior, long-term, unsecured debt is unrated by either
Moody's or S&P, "Applicable Facility Fee Percentage" means 0.25%. Any
change in the Applicable Facility Fee Percentage shall be effective as of
the date of the change in (or unavailability of ) the Debt Rating giving
rise thereto and shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the
effective date of the next such change.
"Applicable Utilization Fee Percentage" means zero.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and the other documents and agreements contemplated hereby and
executed by the Borrower in favor of the Administrative Agent, the
Collateral Agent or any Lender.
(b) NEW DEFINITIONS. Article I shall be amended by adding the
following definitions to read, in their entirety, as follows:
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<PAGE>
"Adjusted Tangible Net Worth" means, at any date, (i) Net Worth plus
(ii) Subordinated Indebtedness minus (iii) Intangible Assets.
"Asset Based Receivables" means all amounts payable to the Borrower
pursuant to credit facilities between the Borrower or a Subsidiary and a
dealer in order to finance the dealer's production, inventory or real
property, secured by finished goods inventory, accounts receivable, certain
work-in-process, raw materials, component parts, and, in the case of real
property, Mortgages, as well as other assets of the dealer.
"Borrowing Base" means, as of any date of determination ninety percent
(90%) of the Collateral Value of Eligible Contracts (other than Asset Based
Receivables and Other Eligible Receivables) plus eighty percent (80%) of
the Collateral Value of Eligible Contracts consisting of Asset Based
Receivables plus the applicable percentage determined by the Administrative
Agent in its sole discretion (but in no event more than 90%) of the
Collateral Value of Other Eligible Receivables in each case as reported on
the Borrowing Base Certificate most recently delivered; provided that the
portion of the Borrowing Base attributable to Eligible Contracts which are
Wet Loans shall not at any time exceed 40% of the sum of (i) the Aggregate
Commitment under the Agreement and (ii) the "Aggregate Commitment" under
the Long Term Credit Agreement. In connection with the Borrowing Base, the
Administrative Agent is hereby authorized by the Lenders to grant temporary
waivers of strict compliance by the Borrower with the eligibility
requirements regarding qualification of any assets of the Borrower for the
Borrowing Base, when the Administrative Agent deems it appropriate in its
sole discretion, so long as the aggregate amount of deviation from strict
compliance, based on the Collateral Value so included in the Borrowing
Base, does not exceed $10,000,000 at any time.
"Borrowing Base Certificate" means a certificate executed by the chief
financial officer of the Borrower or the treasurer (or other employees of
the Borrower so authorized in writing, an original of which shall be
delivered to the Administrative Agent and the Collateral Agent, by the
chief financial officer or treasurer) substantially in the form attached as
Exhibit A to the First Amendment.
"Cash Equivalents" means (a) cash, (b) short-term obligations of, or
fully guaranteed by, the United States of America, (c) commercial paper
rated A-1 or better by S&P or P-1 or better by Moody's, (d) demand deposit
accounts maintained in the ordinary course of business, (e) certificates of
deposit issued by and time deposits with commercial banks (whether domestic
or foreign) having capital and surplus in excess of $100,000,000 and (f)
funds which invest solely in any obligations described in clauses (a)
through (f); provided that (1) such "Cash Equivalents" are not and would
not be designated as "restricted" on the consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with Agreement
Accounting Principles and (2) such "Cash Equivalents" are not Investor
Payables.
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<PAGE>
"Collateral" has the meaning set forth in the Security Agreement
"Collateral Agent" means the "Collateral Agent" as defined in the
Security Agreement.
"Collateral Value" means with respect to each Contract included in the
Borrowing Base on any given day, the lesser of (a) the principal amount of
the Contract and (b) the book value of the Contract on the consolidated
balance sheet of the Borrower and its Subsidiaries, in accordance with
generally accepted accounting principles and, with respect to Interest Only
Securities, the book value thereof in accordance with generally accepted
accounting principles.
"Consumer Products" means goods consisting of motorcycles, marine
products (including boats, boat trailers and outboard motors), pianos and
organs, horse trailers, sport vehicles (including snowmobiles, personal
watercraft and all-terrain vehicles), trucks, aircraft, recreational
vehicles, other consumer goods financed by the Borrower and its
Subsidiaries and included in asset securitization transactions of the
Borrower or its Subsidiaries, all in the ordinary course of business, and
any other asset as shall be acceptable to the Administrative Agent in its
sole discretion.
"Consumer Products Contracts" means retail installment sales contracts
and promissory notes evidencing the financing of, and the grant of a
security interest in, a Consumer Product, purchased or originated by the
Borrower, or by a Subsidiary and transferred for value to the Borrower, in
the ordinary course of business
"Contracts" means Consumer Products Contracts, Home Equity Contracts,
Home Improvement Contracts, MH Contracts, Floor Plan Receivables, Asset
Based Receivables and Other Eligible Receivables.
"Eligible Contracts" means Contracts that meet the respective criteria
for each type of Contract set forth in Exhibit B to the First Amendment.
"First Amendment" means that certain Amendment No. 1 and Limited
Waiver to Credit Agreement dated as of February 6, 1998.
"First Amendment Effective Date" means the "Effective Date" as defined
in the First Amendment.
"Floor Plan Agreement" shall mean an agreement, entered into by the
Borrower or a Subsidiary and a manufacturer, as amended or modified from
time to time, pursuant to which such manufacturer agrees, among other
matters, to repurchase from the Borrower or a Subsidiary, Floor Plan
Products sold by such manufacturer to any of its dealers and financed by
the Borrower or a Subsidiary under a Wholesale Financing Agreement if the
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<PAGE>
Borrower or a Subsidiary acquires possession of such Floor Plan Products
because of a default by such dealer under such Wholesale Financing
Agreement, voluntary surrender or other circumstances.
"Floor Plan Products" means the commercial and consumer goods financed
by the Borrower and its Subsidiaries for dealers pursuant to a Wholesale
Financing Agreement.
"Floor Plan Receivables" means all amounts payable (including
interest, finance charges and other charges) to the Borrower pursuant to a
revolving credit agreement between a dealer and the Borrower or its
Subsidiaries to finance such dealer's inventory of Floor Plan Products, and
the obligation to pay such amounts, in respect of advances made by the
Borrower to or on behalf of such dealer, together with the group of
writings evidencing such amounts and the security interest created in
connection therewith and all of the rights, remedies, powers and privileges
thereunder (including under the related Wholesale Financing Agreement)
purchased or originated by the Borrower, or by a Subsidiary and transferred
for value to the Borrower, in the ordinary course of business .
"Funded Senior Debt" means, at any date, Consolidated Debt, including,
without limitation, Indebtedness secured by Liens permitted pursuant to
Section 6.10(n) minus Subordinated Indebtedness.
"Home Equity Contracts" means closed-end home equity loans, each
secured by a Mortgage, purchased or originated by the Borrower, or by a
Subsidiary and transferred for value to the Borrower, in the ordinary
course of business.
"Home Improvement Contracts" means home improvement contracts and
promissory notes, including Secured Home Improvement Contracts, purchased
or originated by the Borrower, or by a Subsidiary and transferred for value
to the Borrower, in the ordinary course of business.
"Intangible Assets" means, at any date, the assets of the Borrower and
its consolidated Subsidiaries which would be treated as intangibles in
accordance with Agreement Accounting Principles.
"Interest Only Securities" means, at any date, (i) the guaranty fees
payable to the Borrower under certain asset pooling and servicing
agreements with respect to asset securitization transactions entered into
by the Borrower and its Subsidiaries, (ii) the net interest margin or
residual interest payable to the Borrower or a wholly-owned Subsidiary of
the Borrower with respect to asset securitization transactions entered into
by the Borrower and its Subsidiaries and (iii) Servicing Rights.
"Investor Payables" means all amounts held by the Borrower in trust
for the benefit of investors in asset securitization transactions.
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<PAGE>
"Land-and-Home Contract" means a MH Contract that is secured by a
Mortgage on the real estate on which the related Manufactured Home is
situated, and which Manufactured Home is considered or classified as part
of the real estate under the laws of the jurisdiction in which it is
located.
"Long Term Credit Agreement" means that certain Credit Agreement (3-
year) dated as of April 29, 1997 among the Borrower, the administrative
agent named therein and the lenders parties thereto, as amended.
"Manufactured Home" means a unit of manufactured housing, including
all accessions thereto, securing the indebtedness of the obligor under the
related Contract.
"MH Contracts" means the manufactured housing installment sales
contracts and installment loan agreements with consumers with respect to
Manufactured Homes, including Land-and-Home Contracts, originated or
purchased by the Borrower, or by a Subsidiary and transferred for value to
the Borrower, in the ordinary course of business.
"Mortgage" means a mortgage, deed of trust, security deed or similar
evidence of a lien on real property.
"Other Eligible Receivables" means a type of receivable or contract of
Borrower incurred in the ordinary course of business which is approved by
the Administrative Agent and the Collateral Agent in their sole discretion
for inclusion in the Borrowing Base, provided, however that the Collateral
Value of such Other Eligible Receivables shall not exceed 5% of the
Aggregate Commitment under the Agreement plus the "Aggregate Commitment"
under the Long Term Credit Agreement unless Administrative Agent shall have
notified the Lenders of the Borrower's request to include such type of
Collateral in the Borrowing Base, together with the applicable advance rate
and eligibility criteria proposed to be applicable to such Collateral at
least 10 Business Days prior to any inclusion of such Collateral in the
Borrowing Base and the Administrative Agent during such 10 business day
period shall not have received written notice from the Lenders holding more
than 33% of the Aggregate Commitments that such Lenders object to the
inclusion of such Collateral on such proposed terms. In connection with
the Administrative Agent's and Collateral Agent's approval of any type of
such receivable or contract, the Administrative Agent shall determine in
its sole discretion the criteria for eligibility, and shall notify the
Borrower and the Lenders in writing, of such criteria whereupon such
criteria shall be incorporated by reference into Exhibit B to the First
Amendment.
"Restated Financial Statements" means, as of any date, the "Restated
Financial Statements" as defined in the First Amendment.
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<PAGE>
"Secured Home Improvement Contracts" means Home Improvement Contracts
secured by a Mortgage owned by the Borrower.
"Security Agreement" means that certain Security Agreement dated as of
the First Amendment Effective Date, satisfactory to the Administrative
Agent and the Collateral Agent, granting, upon the occurrence of a Security
Event, a first security interest in the assets of the Borrower included in
the Borrowing Base, duly executed and delivered by the Borrower in favor of
the Collateral Agent, on behalf of the Administrative Agent, the Collateral
Agent and the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"Security Documents" means, collectively the Security Agreement and
all other agreements, assignments, security agreements, instruments and
documents executed pursuant thereto, in each case as the same may at any
time be amended, supplemented, restated or otherwise modified and in
effect. For purposes of this Agreement, "Security Documents" shall also
include all guaranties, security agreements, mortgages, pledge agreements,
collateral assignments, subordination agreements and other collateral
documents in the nature of any thereof entered into by Borrower or any
Subsidiary of Borrower after the date of this Agreement in favor of the
Administrative Agent or the Collateral Agent for the benefit of the Lenders
in satisfaction of the requirements of this Agreement or any other Security
Document.
"Security Event" means the occurrence of any of the following events:
(i) the occurrence of a Default or (ii) (A) the Debt Rating is either lower
than Baa3 (or the equivalent) by Moody's or lower than BBB- (or the
equivalent) by S&P or (B) the Borrower's long-term, senior, unsecured debt
is unrated by either Moody's or S&P.
"Security Perfection Date" means the date as soon as practicable
following the occurrence of a Security Event that the Borrower can complete
the actions specified in Section 6.13 and in no event later than the date
that is twenty one (21) days after the date of the occurrence of a Security
Event.
"Servicing Rights" means the amount reflected as such on a
consolidated balance sheet of the Borrower prepared in accordance with
generally accepted accounting principles.
"Subordinated Indebtedness" means, at any time, any Indebtedness of
the Borrower the payment of which is contractually subordinated to payment
of the Obligations to the written satisfaction of the Administrative Agent.
Subordinated Indebtedness shall include, without limitation, (i) the
Indebtedness in respect of those certain 10-1/4% Senior Subordinated Notes
due June 1, 2002 issued pursuant to that certain Indenture by and between
the Borrower and First Wisconsin Trust Company dated as of March 15, 1992
and (ii) any other Indebtedness of the Borrower issued on substantially
similar subordination terms and on other terms reasonably satisfactory to
the
-7-
<PAGE>
Administrative Agent.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"Wet Loans" means, after the occurrence of a Security Event, Contracts
which are included in a "Borrowing Base Addition Report" and as to which
the Collateral Agent is to receive the "Required Documents" (each of such
terms, as defined in the Security Agreement) within 10 Business Days after
origination (or purchase from an unaffiliated Person) of such Contract.
"Wholesale Financing Agreement" shall mean a wholesale financing
agreement entered into by the Borrower or a Subsidiary and a dealer in
order to finance Floor Plan Products purchased by such dealer from a
manufacturer, as amended from time to time.
(c) DELETED DEFINITIONS. Article I shall be amended by deleting
the definitions "Level I Status", "Level II Status", "Level III Status" and
"Level IV Status" in their entirety.
SECTION 2.2. FACILITY AMOUNT; MINIMUM LOAN AMOUNTS; MANDATORY
PREPAYMENTS.
(a) FACILITY AMOUNT. Section 2.1.2 shall be amended to read, in its
entirety, as follows:
"2.1.2. Facility Amount. In no event may the aggregate
principal amount of all outstanding Advances (including the Ratable
Advances and the Competitive Bid Advances) at any time exceed the
lesser of (i) the Aggregate Commitment and (ii) the amount of (1) the
Borrowing Base minus (2) the aggregate principal balance of the
"Loans" outstanding under the Long Term Credit Agreement.
(b) REDUCTION IN MINIMUM LOAN AMOUNTS. Section 2.7 shall be amended
by deleting the reference to"$10,000,000" and replacing it with
"$5,000,000" and by deleting the reference to "$5,000,000" and replacing it
with "$1,000,000".
(c) MANDATORY PREPAYMENTS. Section 2.9 shall be amended to read, in
its entirety as follows:
"2.9. Mandatory Prepayments. If at any time the aggregate
principal balance of the Loans outstanding exceeds the lesser of (A) the
Aggregate Commitment and (B) the amount of (1) the Borrowing Base minus (2)
the aggregate principal balance of the "Loans" outstanding under the Long
Term Credit Agreement, the Borrower shall repay immediately its then
outstanding Loans or outstanding "Loans" under the Long Term Credit
Agreement in such
-8-
<PAGE>
amount as may be necessary to eliminate such excess."
SECTION 2.3. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Article V
shall be amended by adding the following additional Sections 5.15, 5.16 and 5.17
to read, in their entirety, as follows:
"5.15 Security. Upon the occurrence of a Security Event, the
provisions of the Security Documents are effective to create in favor
of the Collateral Agent, for the benefit of the Lenders, as security
for the repayments of the obligations secured thereby, a legal, valid
and enforceable security interest in all right, title and interest of
the Borrower in the Collateral, and at all times after the Security
Perfection Date will create with respect to the Borrower a fully
perfected first lien on, and security interest in, all right, title
and interest of the Borrower in all of the Collateral (except for
Collateral consisting of Wet Loans which shall become perfected in
accordance with the terms of the Security Agreement).
5.16 No Material adverse Change. Since December 31, 1996 as
reflected on the Restated Financial Statements, and except as
disclosed in any press release on or before February 6, 1998, no
material adverse change in the business, Property, conditions
(financial or otherwise), performance, prospects or results of
operations, of the Borrower and its Subsidiaries taken as a whole, has
occurred.
5.17. Incorporation of Representations and Warranties of First
Amendment The representations and warranties of the Borrower set forth
in the First Amendment, which are hereby incorporated herein by
reference, are true and correct as of the First Amendment Effective
Date."
SECTION 2.4. FINANCIAL REPORTING.
(a) MONTHLY FINANCIAL STATEMENTS AND BORROWING BASE CERTIFICATE.
Sections 6.1(c), 6.1(d), 6.1(e) , 6.1(f) and 6.1(g), respectively, shall be
amended to be
-9-
<PAGE>
designated as Sections 6.1(f), 6.1(g), 6.1(h) , 6.1(i) and
6.1(j), respectively. Section 6.1 shall be amended to add new Sections
6.1(c), 6.1(d) and 6.1(e) to read, in their entirety, as follows:
"(c) As soon as practicable and in any event within 30 days
after the close of each calendar month, for itself and its
Subsidiaries, consolidated unaudited balance sheets as at the close of
each such period and consolidated statements of income, retained
earnings and cash flows for the period from the beginning of the
relevant Fiscal Year to the end of such month, all certified by its
chief financial officer or controller and prepared in accordance with
Agreement Accounting Principles.
(d) Within 15 days after the end of each month, and concurrently
with each Ratable Borrowing Notice, Competitive Bid Borrowing Notice,
and at any other time as the Administrative Agent shall reasonably
request, a fully completed Borrowing Base Certificate to the
Administrative Agent and the Collateral Agent.
(e) Within 30 days after the First Amendment Effective Date, (i)
for the Fiscal Year ended December 31, 1996, a restated, unqualified
audit report certified by KPMG Peat Marwick or other independent
certified public accountants acceptable to the Lenders, prepared in
accordance with generally accepted accounting principles on a
consolidated basis for itself and its Subsidiaries, including balance
sheets as of the end of such period and related statements of income,
retained earnings and cash flows and (ii) for each of the first three
quarters of its Fiscal Year ended December 31, 1997, restated
unaudited consolidated balance sheets as at the close of each such
period and consolidated statements of income, retained earnings and
cash flow for each of the periods from the beginning of such Fiscal
Year to the end of such quarter, all certified by its chief financial
officer or controller and prepared in accordance with generally
accepted accounting principles except for the absence of footnotes.
(b) MONTHLY COVENANT COMPLIANCE CERTIFICATE. Redesignated Section
6.1(f) shall be further amended (1) by deleting the reference to "(a) and
(b) above" and replacing it with "(a), (b) and (c) above" and (2) by
deleting the reference to "Sections 6.12.1, 6.12.2, and 6.12.3" and
replacing it with "Section 6.12".
SECTION 2.5. ALLOWANCE FOR LIENS UNDER THE SECURITY DOCUMENTS,
ALLOWANCE FOR OTHER SECURED FINANCING OF INTEREST ONLY SECURITIES; NO LIENS
ON BORROWING BASE.
(a) Sections 6.10(m) and (n) are amended to be designated as
paragraphs (o) and (p), respectively, and by deleting the references to
"paragraphs (a) through (l)" and "paragraphs (a)
-10-
<PAGE>
through (m)", respectively, and replacing them with "paragraphs (a) through
(o)" and "paragraphs (a) through (p)", respectively.
(b) Section 6.10 shall be amended by adding new Section 6.10 (m) and
(n) as follows:
"(m) Liens in favor of the Collateral Agent arising under
the Security Documents;
"(n) Liens in favor of parties other than the Collateral
Agent upon Interest Only Securities (or the stock of Subsidiaries
holding assets consisting solely of Interest Only Securities) of
the Borrower or any Subsidiary securing Indebtedness for money
borrowed after the First Amendment Effective Date provided,
however, that to the extent the covenants set forth in the
agreement with respect to Indebtedness are more restrictive than
the covenants set forth herein, such covenants and all related
provisions shall be deemed to be incorporated by reference into
this Agreement.
(c) Section 6.10 shall be further amended by adding at the end the
following sentence:
"Notwithstanding anything in this Section 6.10 to the contrary,
the Borrower will not, and will not permit any Subsidiary to, at
any time create, incur or assume any Lien on any Property of the
Borrower or any Subsidiary included in the Borrowing Base at such
time."
(d) Section 6.11 shall be amended by adding at the end of Section
6.11(a)(i) the following:
", provided that the Borrower may, and may permit any Subsidiary
to, enter into an indenture, agreement, instrument or other
arrangement which may restrict the ability of such Subsidiary to
pay dividends or make other distributions on its capital stock
but only to the extent that the terms of such arrangement
restrict the transfer of the property subject to a Lien permitted
by Section 6.10(n)"
SECTION 2.6. ADJUSTED TANGIBLE NET WORTH. Section 6.12.1 shall be
amended in its entirety to read as follows:
"6.12.1. Adjusted Tangible Net Worth. At all times after the
date hereof, maintain a minimum Adjusted Tangible Net Worth of at
least $1,422,292,000."
SECTION 2.7. MAXIMUM FUNDED SENIOR DEBT. A new Section 6.12.4 shall
be
-11-
<PAGE>
added to the Credit Agreement which reads as follows:
"6.12.4. Funded Senior Debt. At all times after the date hereof,
not permit its Funded Senior Debt to exceed the sum of (without
duplication) (A) 100% of cash and Cash Equivalents, plus (B) 90% of
"lease receivables", "commercial finance receivables" (less
"commercial finance payables"), "revolving credit receivables" and
"other receivables" and "contracts and collateral", as such assets are
reflected on the consolidated balance sheet of the Borrower, which has
been prepared in a manner consistent with the Borrower's September 30,
1997 balance sheet, plus (C) the lesser of (x) 50% of the Collateral
Value of Interest Only Securities and (y) the amount of Indebtedness
secured by Liens permitted pursuant to Section 6.10(n).
SECTION 2.8. SECURITY EVENT A new Section 6.13 shall be added to
the Credit Agreement which reads as follows:
"6.13. Security Event. If a Security Event occurs, as promptly
as practicable after the occurrence of such Security Event, and in any
event on or before the Security Perfection Date in respect thereof,
the Borrower shall take or cause to be taken the following actions:
(a) take all actions required (including where required,
physical delivery to the Collateral Agent of any of the
Collateral, filing of UCC financing statements and execution and
delivery of any other Security Documents reasonably requested by
the Administrative Agent or the Collateral Agent, to the extent
such actions have not already been taken) to cause the Collateral
to be delivered under the Security Agreement;
(b) deliver to the Administrative Agent, with a counterpart
for each Lender, executed legal opinions of such counsel to the
Borrower and its Subsidiaries as shall be reasonably acceptable
to the Administrative Agent confirming, as of a date not more
than 10 days prior to the Security Perfection Date, the opinions
rendered on the First Amendment Effective Date by such respective
counsel in respect of the creation and perfection of the
Collateral Agent's security interest in the Collateral, with such
changes therein as the Administrative Agent or the Collateral
Agent shall reasonably approve or reasonably request;
and thereafter from time to time promptly take or cause to be taken
all such further actions as shall be requested by the Administrative
Agent or the Collateral Agent in order to ensure that the provisions
of the Security Agreement are satisfied and the representations and
warranties therein with respect to the Collateral are true and
correct.
-12-
<PAGE>
SECTION 2.9. DEFAULTS.
(a) Section 7.3 is amended by deleting the reference to "Sections
6.9 through 6.12" and replacing it with "Sections 6.9 through 6.13".
(b) Section 7.5 is amended by deleting the reference to
"$25,000,000" and replacing it with "$5,000,000".
(c) Section 7.8 by deleting the reference to "$25,000,000" and
replacing it with "$10,000,000".
(d) A new Sections 7.10 is added to the Credit Agreement as
follows:
"7.10. (a) any "Default", as such term is defined in the Security
Agreement shall occur or (b) the Security Agreement shall fail to
remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of the
Security Agreement.
SECTION 2.10. RELEASE OF COLLATERAL. A new Section 8.4 shall be added
as follows:
"8.4 Release of Collateral. Except as set forth in the Security
Agreement, any amendment or modification of the Security Agreement
which provides for the release of all or substantially all of the
Collateral shall require the written consent of each Lender. "
SECTION 2.11. COLLATERAL AGENT. Section 10.1 shall be amended by
adding at the end the following sentence:
"In addition to the foregoing, the Lenders hereby appoint the
Collateral Agent to act as such under the terms of the Security
Documents and authorize the Collateral Agent to enter into the
Security Documents and all obligations of the Lenders thereunder shall
be binding upon each Lender as if such Lender had executed the
Security Documents. Except as specifically otherwise provided in the
Security Agreement, all provisions in this Article X with respect to
the Administrative Agent shall also apply to the Collateral Agent."
SECTION 3. WAIVER. The undersigned Lenders hereby, for the period
commencing with the "Effective Date" (as defined below) and ending on April 28,
1998 (the "Waiver Period"), waive only during the Waiver Period (a) any breach
of Section 5.5 or 5.14 of the Credit Agreement arising solely out of either (i)
the restatement of the Borrower's 1996 audited financial statements as more
fully described in the Borrower's January 27, 1998 press release or
-13-
<PAGE>
(ii) the impact of such adjustment and the application of Statement of Financial
Accounting Standards No. 125 upon the consolidated unaudited financial
statements of the Borrower and its Subsidiaries for the first three Fiscal
Quarters of Fiscal Year 1997 provided to the Lenders by the Borrower pursuant to
Section 6.1 of the Credit Agreement (any such breach being a "Representation
Breach"), (b) any failure of the Financial Statements or any other financial
statements of the Borrower and its Subsidiaries delivered to the Lenders since
December 31, 1996 to have been prepared in accordance with Agreement Accounting
Principles so long as such statements were prepared in a manner consistent with
the Restated Financial Statements (as defined below), (c) any Default under
Section 7.1 of the Credit Agreement which may have heretofore arisen out of any
Representation Breach and (d) any condition to borrowing set forth in Section
4.2(b) of the Credit Agreement which would be satisfied but for any
Representation Breach. At the conclusion of the Waiver Period, the waivers set
forth above shall be of no further force or effect and all rights of the Lenders
with respect to the subject matter thereof shall be reinstated.
SECTION 4. [RESERVED]
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants that:
(a) The execution, delivery and performance by the Borrower of
this Amendment and the Security Documents have been duly authorized by all
necessary corporate action and this Amendment and the Security Documents
are legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as the
enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally;
(b) Each of the representations and warranties contained in
Article V of the Credit Agreement (other than Section 5.6 or with respect
to the Representation Breach) is true and correct in all material respects
on and as of the date hereof as if made on the date hereof;
(c) None of the execution, delivery or performance by the
Borrower of this Amendment and the Security Documents nor the consummation
of the transactions contemplated hereby or thereby, nor compliance with the
provisions of the Loan Documents, or at the relevant time did, (a) violate
any law, rule, regulation (including Regulations G, T, U and X), order,
writ, judgment, injunction, decree or award binding on the Borrower or any
Subsidiary or the Borrower's or any Subsidiary's charter, articles or
certificate of incorporation or by-laws, (b) violate the provisions of or
require the approval or consent of any party to any indenture, instrument
or agreement to which the Borrower or any Subsidiary is a party or is
subject, or by which it, or its respective property, is bound, or conflict
with or constitute a default thereunder, or result in the
-14-
<PAGE>
creation or imposition of any Lien (other than Liens permitted by the Loan
Documents) in, of or on the property of the Borrower or any Subsidiary
pursuant to the terms of any such indenture, instrument or agreement, or
(c) require any consent of the stockholders of any Person, except for
approvals or consents which will be obtained on or before the Effective
Date and are disclosed in writing to the Lenders;
(d) Attached hereto as Exhibit C are the December 31, 1996,
unaudited annual restated consolidated financial statements of the Borrower
and its Subsidiaries (the "Restated Financial Statements"), prepared in
accordance with generally accepted accounting principles except for the
absence of accompanying footnotes and prior to giving effect to adjustments
relating to reduced compensation under the CEO bonus plan as a consequence
of the Restated Financial Statements. Each of the Restated Financial
Statements was prepared in accordance with generally accepted accounting
principles and fairly presents the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such dates and the
consolidated results of their operations for the periods then ended; and
(e) After giving effect to this Amendment no Default or Unmatured
Default has occurred and is continuing.
SECTION 6. EFFECTIVE DATE. This Amendment shall become effective upon (a)
the execution and delivery by the Majority Lenders (without respect to whether
it has been executed and delivered by all Lenders) and the Borrower of this
Amendment, (b) the payment by the Borrower to the Administrative Agent for the
ratable benefit of all of the Lenders of an amendment fee equal to 0.05% of the
Commitment (as amended by this Amendment) of each Lender and (c) the
satisfaction of all of the following additional conditions (the "Effective
Date"):
(i) Charter Documents; Good Standing Certificates. Copies of the
certificate of incorporation of the Borrower, together with all amendments
thereto, certified by the appropriate governmental officer in its
jurisdiction of incorporation, together with a good standing certificate
issued by the Secretary of State of the jurisdiction of its incorporation
and such other jurisdictions as shall be requested by the Administrative
Agent or a certificate executed by the Secretary or Assistant Secretary of
the Borrower to the effect that its certificate of incorporation has not
changed since April 29, 1997.
(ii) By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of the Borrower, of its by-laws and of its Board of
Directors' resolutions authorizing the execution, delivery and performance
of the Loan Documents to which the Borrower is a party or a certificate
executed by the Secretary or Assistant Secretary of the Borrower to the
effect that such by-laws and resolutions have not changed since April 29,
1997.
-15-
<PAGE>
(iii) Secretary's Certificate. An incumbency certificate, executed
by the Secretary or Assistant Secretary of the Borrower, which shall
identify by name and title and bear the signature of the officers of the
Borrower authorized to sign this Amendment, the Security Documents and the
other documents contemplated hereby and thereby, upon which certificate the
Administrative Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(iv) Officer's Certificate. A certificate, dated the Effective Date,
signed by an Authorized Officer of the Borrower, in form and substance
satisfactory to the Administrative Agent, to the effect that: (i) on such
date (after giving effect to this Amendment), no Default or Unmatured
Default has occurred and is continuing; (ii) no injunction or temporary
restraining order which would prohibit the entering into of this Amendment
or the consummation of any of the other transactions contemplated hereby,
or other litigation which could reasonably be expected to have a Material
Adverse Effect is pending or, to the best of such Person's knowledge,
threatened; and (iii) each of the representations and warranties set forth
in Article V of the Credit Agreement (other than Section 5.6 or with
respect to the Representation Breach) is true and correct on and as of such
date.
(v) Legal Opinions. A written opinion of each of (i) Briggs and
Morgan, counsel to the Borrower, and (ii) Joel H. Gottesman, general
counsel of the Borrower, both in form reasonably satisfactory to the
Administrative Agent.
(vi) Security Documents and Other Documents. Executed originals of
each of the Security Documents, together with all schedules, exhibits,
certificates, instruments, opinions and documents required to be delivered
pursuant to this Amendment and the Security Documents.
(vii) Other Amendment. Evidence satisfactory to the Administrative
Agent that the First Amendment (as defined in the Short Term Credit
Agreement) is, or simultaneously with this Amendment will be, effective.
SECTION 7. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
(a) Except as specifically amended or waived above, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or any Lender under the Credit Agreement or any Loan
Document, nor constitute a waiver of any provision of the Credit Agreement
or any Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in the Credit
-16-
<PAGE>
Agreement and any other Loan Document to "this Agreement", "hereunder",
"hereof", "herein" or words of similar import shall mean and be a reference
to the Credit Agreement as amended hereby.
SECTION 8. COSTS AND EXPENSES.
(a) The Borrower hereby affirms its obligation under Section 9.7
of the Credit Agreement to reimburse the Administrative Agent for all
reasonable costs, internal charges and out-of-pocket expenses paid or
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution and delivery of this Amendment, including but not
limited to the attorneys' fees and time charges of attorneys for the
Administrative Agent with respect thereto.
(b) The Borrower hereby agrees that the Borrower shall pay First
Chicago Capital Markets, Inc. (the "Arranger") an additional amendment fee
pursuant to that certain fee letter dated on or before the date hereof
between the Arranger and the Borrower with respect this Amendment.
SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
SECTION 10. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
SECTION 11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.
[signature pages follow]
-17-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.
GREEN TREE FINANCIAL CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
Commitments: $[23,125,000] THE FIRST NATIONAL BANK OF CHICAGO,
- ----------- Individually and as Administrative Agent
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[18,125,000] THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[23,125,000] FIRST BANK NATIONAL ASSOCIATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
-18-
<PAGE>
$[23,125,000] MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[18,125,000] COMMERZBANK AG, CHICAGO BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[18,125,000] FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[18,125,000] FLEET BANK N.A.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
-19-
<PAGE>
$[18,125,000] NATIONSBANK OF TEXAS, N.A.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[18,125,000] UNION BANK OF SWITZERLAND NEW YORK
BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[18,125,000] WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
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<PAGE>
$[12,500,000] THE BANK OF MONTREAL
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[12,500,000] THE BANK OF NEW YORK
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[12,500,000] BANQUE NATIONALE DE PARIS
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[12,500,000] CANADIAN IMPERIAL BANK OF COMMERCE
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
-21-
<PAGE>
$[12,500,000] THE CHASE MANHATTAN BANK
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[12,500,000] COMERICA BANK
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[12,500,000] CREDIT LYONNAIS, NEW YORK BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] THE ASAHI BANK, LTD.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
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<PAGE>
$[6,250,000] BANCA MONTE DEI PASCHI DI SIENA SpA
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] BAYERISCHE VEREINSBANK
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
CAYMAN ISLAND BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
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<PAGE>
$[6,250,000] FIRST HAWAIIAN BANK
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] FIRSTAR BANK MILWAUKEE, N.A.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] THE FUJI BANK, LIMITED
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
-24-
<PAGE>
$[6,250,000] THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
CHICAGO BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] NORDDEUTSCHE LANDESBANK
GIROZENTRALE
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[6,250,000] THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
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<PAGE>
$[5,000,000] ARAB BANK, Plc
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
$[5,000,000] BANK HAPOALIM
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
Aggregate
Commitment $[375,000,000]
-26-
<PAGE>
EXECUTION COPY
AMENDMENT NO. 2 AND LIMITED WAIVER TO CREDIT AGREEMENT
--------------------------------------------------------
(3-YEAR)
This Amendment No. 2 and Limited Waiver (this "Amendment") is entered into
as of February 6, 1998 by The First National Bank of Chicago, individually and
as administrative agent (the "Administrative Agent"), the other financial
institutions signatory hereto and Green Tree Financial Corporation, a Delaware
corporation (the "Borrower").
RECITALS
--------
A. The Borrower, the Administrative Agent and the Lenders are party to that
certain $750,000,000 (3-year) Credit Agreement dated as of April 29, 1997 (as
amended, the "Credit Agreement"). Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings set forth in the Credit
Agreement.
B. The Borrower, the Administrative Agent and the undersigned Lenders wish
to amend the Credit Agreement and temporarily waive certain provisions thereof
on the terms and conditions set forth below.
Now, therefore, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:
SECTION 1. REDUCTION OF COMMITMENTS. The Borrower hereby permanently
reduces the Aggregate Commitment to $375,000,000 from $750,000,000 in accordance
with the terms of Section 2.6(c) of the Credit Agreement and on the "Effective
Date" (as defined below) each Lender's Commitment will be reduced on a pro rata
basis such that the Commitment of such Lender shall be as specified opposite its
signature line on this Amendment. The Lenders hereby waive any requirement of
Section 2.6(c) of the Credit Agreement as to advance written notice of such
reduction.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. Upon the "Effective Date" (as
defined below), the Credit Agreement shall be amended as follows:
SECTION 2.1. DEFINITIONS.
(A) AMENDED DEFINITIONS. Article I shall be amended by amending
the following definitions to read, in their entirety, as follows:
"Aggregate Commitment" means the aggregate of the Commitments of all
the
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Lenders hereunder. The Aggregate Commitment as of the Second Amendment
Effective Date is $375,000,000.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent
with those used in preparing the Financial Statements (except for the
application during the Waiver Period (as defined in Section 3 of the Second
Amendment) of Statement of Financial Accounting Standards No. 125);
provided, however, that for purposes of all computations required to be
made with respect to compliance by the Borrower with Section 6.12, such
term shall mean generally accepted accounting principles as in effect on
the date hereof, applied in a manner consistent with those used in
preparing the Financial Statements (except for the application during the
Waiver Period (as defined in Section 3 of the Second Amendment) of
Statement of Financial Accounting Standards No. 125).
"Applicable Eurodollar Margin" means, on any date, subject to the
following sentence of this definition, 0.55%; provided that in the event
that (a) the Debt Rating is either lower than Baa3 (or the equivalent) by
Moody's or lower than BBB- (or the equivalent) by S&P or (b) the Borrower's
senior, long-term, unsecured debt is unrated by either Moody's or S&P,
"Applicable Eurodollar Margin" means 0.75%. Any change in the Applicable
Eurodollar Margin shall be effective as of the date of the change in (or
unavailability of ) the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next
such change.
"Applicable Facility Fee Percentage" means, on any date, subject to
the following sentence of this definition, 0.20%; provided that in the
event that (a) the Debt Rating is either lower than Baa3 (or the
equivalent) by Moody's or lower than BBB- (or the equivalent) by S&P or (b)
the Borrower's senior, long-term, unsecured debt is unrated by either
Moody's or S&P, "Applicable Facility Fee Percentage" means 0.25%. Any
change in the Applicable Facility Fee Percentage shall be effective as of
the date of the change in (or unavailability of ) the Debt Rating giving
rise thereto and shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the
effective date of the next such change.
"Applicable Utilization Fee Percentage" means zero.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and the other documents and agreements contemplated hereby and
executed by the Borrower in favor of the Administrative Agent, the
Collateral Agent or any Lender.
(B) NEW DEFINITIONS. Article I shall be amended by adding the
following definitions to read, in their entirety, as follows:
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"Adjusted Tangible Net Worth" means, at any date, (i) Net Worth plus
(ii) Subordinated Indebtedness minus (iii) Intangible Assets.
"Asset Based Receivables" means all amounts payable to the Borrower
pursuant to credit facilities between the Borrower or a Subsidiary and a
dealer in order to finance the dealer's production, inventory or real
property, secured by finished goods inventory, accounts receivable, certain
work-in-process, raw materials, component parts, and, in the case of real
property, Mortgages, as well as other assets of the dealer.
"Borrowing Base" means, as of any date of determination ninety percent
(90%) of the Collateral Value of Eligible Contracts (other than Asset Based
Receivables and Other Eligible Receivables) plus eighty percent (80%) of
the Collateral Value of Eligible Contracts consisting of Asset Based
Receivables plus the applicable percentage determined by the Administrative
Agent in its sole discretion (but in no event more than 90%) of the
Collateral Value of Other Eligible Receivables in each case as reported on
the Borrowing Base Certificate most recently delivered; provided that the
portion of the Borrowing Base attributable to Eligible Contracts which are
Wet Loans shall not at any time exceed 40% of the sum of (i) the Aggregate
Commitment under the Agreement and (ii) the "Aggregate Commitment" under
the Short Term Credit Agreement. In connection with the Borrowing Base,
the Administrative Agent is hereby authorized by the Lenders to grant
temporary waivers of strict compliance by the Borrower with the eligibility
requirements regarding qualification of any assets of the Borrower for the
Borrowing Base, when the Administrative Agent deems it appropriate in its
sole discretion, so long as the aggregate amount of deviation from strict
compliance, based on the Collateral Value so included in the Borrowing
Base, does not exceed $10,000,000 at any time.
"Borrowing Base Certificate" means a certificate executed by the chief
financial officer of the Borrower or the treasurer (or other employees of
the Borrower so authorized in writing, an original of which shall be
delivered to the Administrative Agent and the Collateral Agent, by the
chief financial officer or treasurer) substantially in the form attached as
Exhibit A to the Second Amendment.
"Cash Equivalents" means (a) cash, (b) short-term obligations of, or
fully guaranteed by, the United States of America, (c) commercial paper
rated A-1 or better by S&P or P-1 or better by Moody's, (d) demand deposit
accounts maintained in the ordinary course of business, (e) certificates of
deposit issued by and time deposits with commercial banks (whether domestic
or foreign) having capital and surplus in excess of $100,000,000 and (f)
funds which invest solely in any obligations described in clauses (a)
through (f); provided that (1) such "Cash Equivalents" are not and would
not be designated as "restricted" on the consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with Agreement
Accounting Principles and (2) such "Cash Equivalents" are not Investor
Payables.
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"Collateral" has the meaning set forth in the Security Agreement
"Collateral Agent" means the "Collateral Agent" as defined in the
Security Agreement.
"Collateral Value" means with respect to each Contract included in the
Borrowing Base on any given day, the lesser of (a) the principal amount of
the Contract and (b) the book value of the Contract on the consolidated
balance sheet of the Borrower and its Subsidiaries, in accordance with
generally accepted accounting principles and, with respect to Interest Only
Securities, the book value thereof in accordance with generally accepted
accounting principles.
"Consumer Products" means goods consisting of motorcycles, marine
products (including boats, boat trailers and outboard motors), pianos and
organs, horse trailers, sport vehicles (including snowmobiles, personal
watercraft and all-terrain vehicles), trucks, aircraft, recreational
vehicles, other consumer goods financed by the Borrower and its
Subsidiaries and included in asset securitization transactions of the
Borrower or its Subsidiaries, all in the ordinary course of business, and
any other asset as shall be acceptable to the Administrative Agent in its
sole discretion.
"Consumer Products Contracts" means retail installment sales contracts
and promissory notes evidencing the financing of, and the grant of a
security interest in, a Consumer Product, purchased or originated by the
Borrower, or by a Subsidiary and transferred for value to the Borrower, in
the ordinary course of business
"Contracts" means Consumer Products Contracts, Home Equity Contracts,
Home Improvement Contracts, MH Contracts, Floor Plan Receivables, Asset
Based Receivables and Other Eligible Receivables.
"Eligible Contracts" means Contracts that meet the respective criteria
for each type of Contract set forth in Exhibit B to the Second Amendment.
"Floor Plan Agreement" shall mean an agreement, entered into by the
Borrower or a Subsidiary and a manufacturer, as amended or modified from
time to time, pursuant to which such manufacturer agrees, among other
matters, to repurchase from the Borrower or a Subsidiary, Floor Plan
Products sold by such manufacturer to any of its dealers and financed by
the Borrower or a Subsidiary under a Wholesale Financing Agreement if the
Borrower or a Subsidiary acquires possession of such Floor Plan Products
because of a default by such dealer under such Wholesale Financing
Agreement, voluntary surrender or other circumstances.
"Floor Plan Products" means the commercial and consumer goods financed
by the Borrower and its Subsidiaries for dealers pursuant to a Wholesale
Financing Agreement.
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"Floor Plan Receivables" means all amounts payable (including
interest, finance charges and other charges) to the Borrower pursuant to a
revolving credit agreement between a dealer and the Borrower or its
Subsidiaries to finance such dealer's inventory of Floor Plan Products, and
the obligation to pay such amounts, in respect of advances made by the
Borrower to or on behalf of such dealer, together with the group of
writings evidencing such amounts and the security interest created in
connection therewith and all of the rights, remedies, powers and privileges
thereunder (including under the related Wholesale Financing Agreement)
purchased or originated by the Borrower, or by a Subsidiary and transferred
for value to the Borrower, in the ordinary course of business .
"Funded Senior Debt" means, at any date, Consolidated Debt, including,
without limitation, Indebtedness secured by Liens permitted pursuant to
Section 6.10(n) minus Subordinated Indebtedness.
"Home Equity Contracts" means closed-end home equity loans, each
secured by a Mortgage, purchased or originated by the Borrower, or by a
Subsidiary and transferred for value to the Borrower, in the ordinary
course of business.
"Home Improvement Contracts" means home improvement contracts and
promissory notes, including Secured Home Improvement Contracts, purchased
or originated by the Borrower, or by a Subsidiary and transferred for value
to the Borrower, in the ordinary course of business.
"Intangible Assets" means, at any date, the assets of the Borrower and
its consolidated Subsidiaries which would be treated as intangibles in
accordance with Agreement Accounting Principles.
"Interest Only Securities" means, at any date, (i) the guaranty fees
payable to the Borrower under certain asset pooling and servicing
agreements with respect to asset securitization transactions entered into
by the Borrower and its Subsidiaries, (ii) the net interest margin or
residual interest payable to the Borrower or a wholly-owned Subsidiary of
the Borrower with respect to asset securitization transactions entered into
by the Borrower and its Subsidiaries and (iii) Servicing Rights.
"Investor Payables" means all amounts held by the Borrower in trust
for the benefit of investors in asset securitization transactions.
"Land-and-Home Contract" means a MH Contract that is secured by a
Mortgage on the real estate on which the related Manufactured Home is
situated, and which Manufactured Home is considered or classified as part
of the real estate under the laws of the jurisdiction in which it is
located.
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"Manufactured Home" means a unit of manufactured housing, including
all accessions thereto, securing the indebtedness of the obligor under the
related Contract.
"MH Contracts" means the manufactured housing installment sales
contracts and installment loan agreements with consumers with respect to
Manufactured Homes, including Land-and-Home Contracts, originated or
purchased by the Borrower, or by a Subsidiary and transferred for value to
the Borrower, in the ordinary course of business.
"Mortgage" means a mortgage, deed of trust, security deed or similar
evidence of a lien on real property.
"Other Eligible Receivables" means a type of receivable or contract of
Borrower incurred in the ordinary course of business which is approved by
the Administrative Agent and the Collateral Agent in their sole discretion
for inclusion in the Borrowing Base, provided, however that the Collateral
Value of such Other Eligible Receivables shall not exceed 5% of the
Aggregate Commitment under the Agreement plus the "Aggregate Commitment"
under the Short Term Credit Agreement unless Administrative Agent shall
have notified the Lenders of the Borrower's request to include such type of
Collateral in the Borrowing Base, together with the applicable advance rate
and eligibility criteria proposed to be applicable to such Collateral at
least 10 Business Days prior to any inclusion of such Collateral in the
Borrowing Base and the Administrative Agent during such 10 business day
period shall not have received written notice from the Lenders holding more
than 33% of the Aggregate Commitments that such Lenders object to the
inclusion of such Collateral on such proposed terms. In connection with
the Administrative Agent's and Collateral Agent's approval of any type of
such receivable or contract, the Administrative Agent shall determine in
its sole discretion the criteria for eligibility, and shall notify the
Borrower and the Lenders in writing, of such criteria whereupon such
criteria shall be incorporated by reference into Exhibit B to the Second
Amendment.
"Restated Financial Statements" means, as of any date, the "Restated
Financial Statements" as defined in the Second Amendment.
"Second Amendment" means that certain Amendment No. 2 and Limited
Waiver to Credit Agreement dated as of February 6, 1998.
"Second Amendment Effective Date" means the "Effective Date" as
defined in the Second Amendment.
"Secured Home Improvement Contracts" means Home Improvement Contracts
secured by a Mortgage owned by the Borrower.
"Security Agreement" means that certain Security Agreement dated as of
the
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Second Amendment Effective Date, satisfactory to the Administrative Agent
and the Collateral Agent, granting, upon the occurrence of a Security
Event, a first security interest in the assets of the Borrower included in
the Borrowing Base, duly executed and delivered by the Borrower in favor of
the Collateral Agent, on behalf of the Administrative Agent, the Collateral
Agent and the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"Security Documents" means, collectively the Security Agreement and
all other agreements, assignments, security agreements, instruments and
documents executed pursuant thereto, in each case as the same may at any
time be amended, supplemented, restated or otherwise modified and in
effect. For purposes of this Agreement, "Security Documents" shall also
include all guaranties, security agreements, mortgages, pledge agreements,
collateral assignments, subordination agreements and other collateral
documents in the nature of any thereof entered into by Borrower or any
Subsidiary of Borrower after the date of this Agreement in favor of the
Administrative Agent or the Collateral Agent for the benefit of the Lenders
in satisfaction of the requirements of this Agreement or any other Security
Document.
"Security Event" means the occurrence of any of the following events:
(i) the occurrence of a Default or (ii) (A) the Debt Rating is either lower
than Baa3 (or the equivalent) by Moody's or lower than BBB- (or the
equivalent) by S&P or (B) the Borrower's long-term, senior, unsecured debt
is unrated by either Moody's or S&P.
"Security Perfection Date" means the date as soon as practicable
following the occurrence of a Security Event that the Borrower can complete
the actions specified in Section 6.13 and in no event later than the date
that is twenty one (21) days after the date of the occurrence of a Security
Event.
"Servicing Rights" means the amount reflected as such on a
consolidated balance sheet of the Borrower prepared in accordance with
generally accepted accounting principles.
"Short Term Credit Agreement" means that certain Credit Agreement
(364-day) dated as of April 29, 1997 among the Borrower, the administrative
agent named therein and the lenders parties thereto, as amended.
"Subordinated Indebtedness" means, at any time, any Indebtedness of
the Borrower the payment of which is contractually subordinated to payment
of the Obligations to the written satisfaction of the Administrative Agent.
Subordinated Indebtedness shall include, without limitation, (i) the
Indebtedness in respect of those certain 10-1/4% Senior Subordinated Notes
due June 1, 2002 issued pursuant to that certain Indenture by and between
the Borrower and First Wisconsin Trust Company dated as of March 15, 1992
and (ii) any other Indebtedness of the Borrower issued on
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substantially similar subordination terms and on other terms reasonably
satisfactory to the Administrative Agent.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"Wet Loans" means, after the occurrence of a Security Event, Contracts
which are included in a "Borrowing Base Addition Report" and as to which
the Collateral Agent is to receive the "Required Documents" (each of such
terms, as defined in the Security Agreement) within 10 Business Days after
origination (or purchase from an unaffiliated Person) of such Contract.
"Wholesale Financing Agreement" shall mean a wholesale financing
agreement entered into by the Borrower or a Subsidiary and a dealer in
order to finance Floor Plan Products purchased by such dealer from a
manufacturer, as amended from time to time.
(C) DELETED DEFINITIONS. Article I shall be amended by deleting
the definitions "Level I Status", "Level II Status", "Level III Status" and
"Level IV Status" in their entirety.
SECTION 2.2. FACILITY AMOUNT; MINIMUM LOAN AMOUNTS; MANDATORY
PREPAYMENTS.
(A) FACILITY AMOUNT. Section 2.1.2 shall be amended to read, in its
entirety, as follows:
"2.1.2. Facility Amount. In no event may the aggregate
principal amount of all outstanding Advances (including the Ratable
Advances[, the Swing Line Advances] and the Competitive Bid Advances)
at any time exceed the lesser of (i) the Aggregate Commitment and (ii)
the amount of (1) the Borrowing Base minus (2) the aggregate principal
balance of the "Loans" outstanding under the Short Term Credit
Agreement.
(B) REDUCTION IN MINIMUM LOAN AMOUNTS. Section 2.7 shall be amended
by deleting the reference to"$10,000,000" and replacing it with
"$5,000,000" and by deleting the reference to "$5,000,000" and replacing it
with "$1,000,000".
(C) MANDATORY PREPAYMENTS. Section 2.9 shall be amended to read, in
its entirety as follows:
"2.9. Mandatory Prepayments. If at any time the aggregate
principal balance of the Loans outstanding exceeds the lesser of (A) the
Aggregate Commitment and (B) the amount of (1) the Borrowing Base minus (2)
the
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aggregate principal balance of the "Loans" outstanding under the Short
Term Credit Agreement, the Borrower shall repay immediately its then
outstanding Loans or outstanding "Loans" under the Short Term Credit
Agreement in such amount as may be necessary to eliminate such excess."
SECTION 2.3. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Article V shall be
amended by adding the following additional Sections 5.15, 5.16 and 5.17 to read,
in their entirety, as follows:
"5.15 Security. Upon the occurrence of a Security Event, the
provisions of the Security Documents are effective to create in favor
of the Collateral Agent, for the benefit of the Lenders, as security
for the repayments of the obligations secured thereby, a legal, valid
and enforceable security interest in all right, title and interest of
the Borrower in the Collateral, and at all times after the Security
Perfection Date will create with respect to the Borrower a fully
perfected first lien on, and security interest in, all right, title
and interest of the Borrower in all of the Collateral (except for
Collateral consisting of Wet Loans which shall become perfected in
accordance with the terms of the Security Agreement).
5.16 No Material adverse Change. Since December 31, 1996 as
reflected on the Restated Financial Statements, and except as
disclosed in any press release on or before February 6, 1998, no
material adverse change in the business, Property, conditions
(financial or otherwise), performance, prospects or results of
operations, of the Borrower and its Subsidiaries taken as a whole, has
occurred.
5.17. Incorporation of Representations and Warranties of Second
Amendment The representations and warranties of the Borrower set
forth in the Second Amendment, which are hereby incorporated herein by
reference, are true and correct as of the Second Amendment Effective
Date."
SECTION 2.4. FINANCIAL REPORTING.
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(A) MONTHLY FINANCIAL STATEMENTS AND BORROWING BASE CERTIFICATE.
Sections 6.1(c), 6.1(d), 6.1(e) , 6.1(f) and 6.1(g), respectively, shall be
amended to be designated as Sections 6.1(f), 6.1(g), 6.1(h) , 6.1(i) and
6.1(j), respectively. Section 6.1 shall be amended to add new Sections
6.1(c), 6.1(d) and 6.1(e) to read, in their entirety, as follows:
"(c) As soon as practicable and in any event within 30 days
after the close of each calendar month, for itself and its
Subsidiaries, consolidated unaudited balance sheets as at the close of
each such period and consolidated statements of income, retained
earnings and cash flows for the period from the beginning of the
relevant Fiscal Year to the end of such month, all certified by its
chief financial officer or controller and prepared in accordance with
Agreement Accounting Principles.
(d) Within 15 days after the end of each month, and concurrently
with each Ratable Borrowing Notice, Competitive Bid Borrowing Notice
and request for any Swing Line Advance, and at any other time as the
Administrative Agent shall reasonably request, a fully completed
Borrowing Base Certificate to the Administrative Agent and the
Collateral Agent.
(e) Within 30 days after the Second Amendment Effective Date, (i)
for the Fiscal Year ended December 31, 1996, a restated, unqualified
audit report certified by KPMG Peat Marwick or other independent
certified public accountants acceptable to the Lenders, prepared in
accordance with generally accepted accounting principles on a
consolidated basis for itself and its Subsidiaries, including balance
sheets as of the end of such period and related statements of income,
retained earnings and cash flows and (ii) for each of the first three
quarters of its Fiscal Year ended December 31, 1997, restated
unaudited consolidated balance sheets as at the close of each such
period and consolidated statements of income, retained earnings and
cash flow for each of the periods from the beginning of such Fiscal
Year to the end of such quarter, all certified by its chief financial
officer or controller and prepared in accordance with generally
accepted accounting principles except for the absence of footnotes.
(B) MONTHLY COVENANT COMPLIANCE CERTIFICATE. Redesignated Section
6.1(f) shall be further amended (1) by deleting the reference to "(a) and
(b) above" and replacing it with "(a), (b) and (c) above" and (2) by
deleting the reference to "Sections 6.12.1, 6.12.2, and 6.12.3" and
replacing it with "Section 6.12".
SECTION 2.5. ALLOWANCE FOR LIENS UNDER THE SECURITY DOCUMENTS,
ALLOWANCE FOR OTHER SECURED FINANCING OF INTEREST ONLY SECURITIES; NO LIENS
ON BORROWING BASE.
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(A) Sections 6.10(m) and (n) are amended to be designated as
paragraphs (o) and (p), respectively, and by deleting the references to
"paragraphs (a) through (l)" and "paragraphs (a) through (m)",
respectively, and replacing them with "paragraphs (a) through (o)" and
"paragraphs (a) through (p)", respectively.
(B) Section 6.10 shall be amended by adding new Section 6.10 (m) and
(n) as follows:
"(m) Liens in favor of the Collateral Agent arising under
the Security Documents;
"(n) Liens in favor of parties other than the Collateral
Agent upon Interest Only Securities (or the stock of Subsidiaries
holding assets consisting solely of Interest Only Securities) of
the Borrower or any Subsidiary securing Indebtedness for money
borrowed after the Second Amendment Effective Date provided,
however, that to the extent the covenants set forth in the
agreement with respect to Indebtedness are more restrictive than
the covenants set forth herein, such covenants and all related
provisions shall be deemed to be incorporated by reference into
this Agreement.
(C) Section 6.10 shall be further amended by adding at the end the
following sentence:
"Notwithstanding anything in this Section 6.10 to the contrary,
the Borrower will not, and will not permit any Subsidiary to, at
any time create, incur or assume any Lien on any Property of the
Borrower or any Subsidiary included in the Borrowing Base at such
time."
(D) Section 6.11 shall be amended by adding at the end of Section
6.11(a)(i) the following:
", provided that the Borrower may, and may permit any Subsidiary
to, enter into an indenture, agreement, instrument or other
arrangement which may restrict the ability of such Subsidiary to
pay dividends or make other distributions on its capital stock
but only to the extent that the terms of such arrangement
restrict the transfer of the property subject to a Lien permitted
by Section 6.10(n)"
SECTION 2.6. ADJUSTED TANGIBLE NET WORTH. Section 6.12.1 shall be
amended in its entirety to read as follows:
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"6.12.1. Adjusted Tangible Net Worth. At all times after the
date hereof, maintain a minimum Adjusted Tangible Net Worth of at
least $1,422,292,000."
SECTION 2.7. MAXIMUM FUNDED SENIOR DEBT. A new Section 6.12.4 shall
be added to the Credit Agreement which reads as follows:
"6.12.4. Funded Senior Debt. At all times after the date hereof,
not permit its Funded Senior Debt to exceed the sum of (without
duplication) (A) 100% of cash and Cash Equivalents, plus (B) 90% of
"lease receivables", "commercial finance receivables" (less
"commercial finance payables"), "revolving credit receivables" and
"other receivables" and "contracts and collateral", as such assets are
reflected on the consolidated balance sheet of the Borrower, which has
been prepared in a manner consistent with the Borrower's September 30,
1997 balance sheet, plus (C) the lesser of (x) 50% of the Collateral
Value of Interest Only Securities and (y) the amount of Indebtedness
secured by Liens permitted pursuant to Section 6.10(n).
SECTION 2.8. SECURITY EVENT A new Section 6.13 shall be added to
the Credit Agreement which reads as follows:
"6.13. Security Event. If a Security Event occurs, as promptly
as practicable after the occurrence of such Security Event, and in any
event on or before the Security Perfection Date in respect thereof,
the Borrower shall take or cause to be taken the following actions:
(a) take all actions required (including where required,
physical delivery to the Collateral Agent of any of the
Collateral, filing of UCC financing statements and execution and
delivery of any other Security Documents reasonably requested by
the Administrative Agent or the Collateral Agent, to the extent
such actions have not already been taken) to cause the Collateral
to be delivered under the Security Agreement;
(b) deliver to the Administrative Agent, with a counterpart
for each Lender, executed legal opinions of such counsel to the
Borrower and its Subsidiaries as shall be reasonably acceptable
to the Administrative Agent confirming, as of a date not more
than 10 days prior to the Security Perfection Date, the opinions
rendered on the Second Amendment Effective Date by such
respective counsel in respect of the creation and perfection of
the Collateral Agent's security interest in the Collateral, with
such changes therein as the Administrative Agent or the
Collateral Agent shall reasonably approve or reasonably request;
and thereafter from time to time promptly take or cause to be taken
all such
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further actions as shall be requested by the Administrative Agent or
the Collateral Agent in order to ensure that the provisions of the
Security Agreement are satisfied and the representations and
warranties therein with respect to the Collateral are true and
correct.
SECTION 2.9. DEFAULTS.
(a) Section 7.3 is amended by deleting the reference to "Sections
6.9 through 6.12" and replacing it with "Sections 6.9 through 6.13 or
Section 4 of the Second Amendment".
(b) Section 7.5 is amended by deleting the reference to
"$25,000,000" and replacing it with "$5,000,000".
(c) Section 7.8 by deleting the reference to "$25,000,000" and
replacing it with "$10,000,000".
(d) A new Sections 7.10 is added to the Credit Agreement as
follows:
"7.10. (a) any "Default", as such term is defined in the Security
Agreement shall occur or (b) the Security Agreement shall fail to
remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of the
Security Agreement.
SECTION 2.10. RELEASE OF COLLATERAL. A new Section 8.4 shall be added
as follows:
"8.4 Release of Collateral. Except as set forth in the Security
Agreement, any amendment or modification of the Security Agreement
which provides for the release of all or substantially all of the
Collateral shall require the written consent of each Lender. "
SECTION 2.11. COLLATERAL AGENT. Section 10.1 shall be amended by
adding at the end the following sentence:
"In addition to the foregoing, the Lenders hereby appoint the
Collateral Agent to act as such under the terms of the Security
Documents and authorize the Collateral Agent to enter into the
Security Documents and all obligations of the Lenders thereunder shall
be binding upon each Lender as if such Lender had executed the
Security Documents. Except as specifically otherwise provided in the
Security Agreement, all provisions in this Article X with respect to
the Administrative Agent shall also apply to the Collateral Agent."
-13-
<PAGE>
SECTION 3. WAIVER. The undersigned Lenders hereby, for the period
commencing with the "Effective Date" (as defined below) and ending on April 28,
1998 (the "Waiver Period"), waive only during the Waiver Period (a) any breach
of Section 5.5 or 5.14 of the Credit Agreement arising solely out of either (i)
the restatement of the Borrower's 1996 audited financial statements as more
fully described in the Borrower's January 27, 1998 press release or (ii) the
impact of such adjustment and the application of Statement of Financial
Accounting Standards No. 125 upon the consolidated unaudited financial
statements of the Borrower and its Subsidiaries for the first three Fiscal
Quarters of Fiscal Year 1997 provided to the Lenders by the Borrower pursuant to
Section 6.1 of the Credit Agreement (any such breach being a "Representation
Breach"), (b) any failure of the Financial Statements or any other financial
statements of the Borrower and its Subsidiaries delivered to the Lenders since
December 31, 1996 to have been prepared in accordance with Agreement Accounting
Principles so long as such statements were prepared in a manner consistent with
the Restated Financial Statements (as defined below), (c) any Default under
Section 7.1 of the Credit Agreement which may have heretofore arisen out of any
Representation Breach and (d) any condition to borrowing set forth in Section
4.2(b) of the Credit Agreement which would be satisfied but for any
Representation Breach. At the conclusion of the Waiver Period, the waivers set
forth above shall be of no further force or effect and all rights of the Lenders
with respect to the subject matter thereof shall be reinstated.
SECTION 4. ACTION BY BORROWER AT THE END OF THE WAIVER PERIOD. The Borrower
hereby acknowledges and agrees with the Lenders that, on the first Business Day
after the expiration of the Waiver Period, the Borrower shall either (a) have
obtained an extension of the Waiver Period or (b) unless waived in writing by
the Majority Lenders, prepay all outstanding Loans and all of the other
Obligations under the Credit Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:
(a) The execution, delivery and performance by the Borrower of
this Amendment and the Security Documents have been duly authorized by all
necessary corporate action and this Amendment and the Security Documents
are legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as the
enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally;
(b) Each of the representations and warranties contained in
Article V of the Credit Agreement (other than Section 5.6 or with respect
to the Representation Breach) is true and correct in all material respects
on and as of the date hereof as if made on the date hereof;
(c) None of the execution, delivery or performance by the
Borrower of this Amendment and the Security Documents nor the consummation
of the transactions
-14-
<PAGE>
contemplated hereby or thereby, nor compliance with the
provisions of the Loan Documents, or at the relevant time did, (a) violate
any law, rule, regulation (including Regulations G, T, U and X), order,
writ, judgment, injunction, decree or award binding on the Borrower or any
Subsidiary or the Borrower's or any Subsidiary's charter, articles or
certificate of incorporation or by-laws, (b) violate the provisions of or
require the approval or consent of any party to any indenture, instrument
or agreement to which the Borrower or any Subsidiary is a party or is
subject, or by which it, or its respective property, is bound, or conflict
with or constitute a default thereunder, or result in the creation or
imposition of any Lien (other than Liens permitted by the Loan Documents)
in, of or on the property of the Borrower or any Subsidiary pursuant to the
terms of any such indenture, instrument or agreement, or (c) require any
consent of the stockholders of any Person, except for approvals or consents
which will be obtained on or before the Effective Date and are disclosed in
writing to the Lenders;
(d) Attached hereto as Exhibit C are the December 31, 1996,
unaudited annual restated consolidated financial statements of the Borrower
and its Subsidiaries (the "Restated Financial Statements"), prepared in
accordance with generally accepted accounting principles except for the
absence of accompanying footnotes and prior to giving effect to adjustments
relating to reduced compensation under the CEO bonus plan as a consequence
of the Restated Financial Statements. Each of the Restated Financial
Statements was prepared in accordance with generally accepted accounting
principles and fairly presents the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such dates and the
consolidated results of their operations for the periods then ended; and
(e) After giving effect to this Amendment no Default or Unmatured
Default has occurred and is continuing.
SECTION 6. EFFECTIVE DATE. This Amendment shall become effective upon (a)
the execution and delivery by the Majority Lenders (without respect to whether
it has been executed and delivered by all Lenders) and the Borrower of this
Amendment, (b) the payment by the Borrower to the Administrative Agent for the
ratable benefit of all of the Lenders of an amendment fee equal to 0.05% of the
Commitment (as amended by this Amendment) of each Lender and (c) the
satisfaction of all of the following additional conditions (the "Effective
Date"):
(i) Charter Documents; Good Standing Certificates. Copies of the
certificate of incorporation of the Borrower, together with all amendments
thereto, certified by the appropriate governmental officer in its
jurisdiction of incorporation, together with a good standing certificate
issued by the Secretary of State of the jurisdiction of its incorporation
and such other jurisdictions as shall be requested by the Administrative
Agent or a certificate executed by the Secretary or Assistant Secretary of
the Borrower to the effect that its certificate of incorporation has not
changed since April 29, 1997.
-15-
<PAGE>
(ii) By-Laws and Resolutions. Copies, certified by the Secretary or
Assistant Secretary of the Borrower, of its by-laws and of its Board of
Directors' resolutions authorizing the execution, delivery and performance
of the Loan Documents to which the Borrower is a party or a certificate
executed by the Secretary or Assistant Secretary of the Borrower to the
effect that such by-laws and resolutions have not changed since April 29,
1997.
(iii) Secretary's Certificate. An incumbency certificate, executed
by the Secretary or Assistant Secretary of the Borrower, which shall
identify by name and title and bear the signature of the officers of the
Borrower authorized to sign this Amendment, the Security Documents and the
other documents contemplated hereby and thereby, upon which certificate the
Administrative Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(iv) Officer's Certificate. A certificate, dated the Effective Date,
signed by an Authorized Officer of the Borrower, in form and substance
satisfactory to the Administrative Agent, to the effect that: (i) on such
date (after giving effect to this Amendment), no Default or Unmatured
Default has occurred and is continuing; (ii) no injunction or temporary
restraining order which would prohibit the entering into of this Amendment
or the consummation of any of the other transactions contemplated hereby,
or other litigation which could reasonably be expected to have a Material
Adverse Effect is pending or, to the best of such Person's knowledge,
threatened; and (iii) each of the representations and warranties set forth
in Article V of the Credit Agreement (other than Section 5.6 or with
respect to the Representation Breach) is true and correct on and as of such
date.
(v) Legal Opinions. A written opinion of each of (i) Briggs and
Morgan, counsel to the Borrower, and (ii) Joel H. Gottesman, general
counsel of the Borrower, both in form reasonably satisfactory to the
Administrative Agent.
(vi) Security Documents and Other Documents. Executed originals of
each of the Security Documents, together with all schedules, exhibits,
certificates, instruments, opinions and documents required to be delivered
pursuant to this Amendment and the Security Documents.
(vii) Other Amendment. Evidence satisfactory to the Administrative
Agent that the Second Amendment (as defined in the Short Term Credit
Agreement) is, or simultaneously with this Amendment will be, effective.
SECTION 7. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
(a) Except as specifically amended or waived above, the Credit
-16-
<PAGE>
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or any Lender under the Credit Agreement or any Loan
Document, nor constitute a waiver of any provision of the Credit Agreement
or any Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in the Credit Agreement and
any other Loan Document to "this Agreement", "hereunder", "hereof",
"herein" or words of similar import shall mean and be a reference to the
Credit Agreement as amended hereby.
SECTION 8. COSTS AND EXPENSES.
(a) The Borrower hereby affirms its obligation under Section 9.7
of the Credit Agreement to reimburse the Administrative Agent for all
reasonable costs, internal charges and out-of-pocket expenses paid or
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution and delivery of this Amendment, including but not
limited to the attorneys' fees and time charges of attorneys for the
Administrative Agent with respect thereto.
(b) The Borrower hereby agrees that the Borrower shall pay First
Chicago Capital Markets, Inc. (the "Arranger") an additional amendment fee
pursuant to that certain fee letter dated on or before the date hereof
between the Arranger and the Borrower with respect this Amendment.
SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
SECTION 10. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
SECTION 11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.
[signature pages follow]
-17-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.
GREEN TREE FINANCIAL CORPORATION
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Commitments: $[23,125,000] THE FIRST NATIONAL BANK OF CHICAGO,
- ----------- Individually and as Administrative Agent
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[18,125,000] THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[23,125,000] FIRST BANK NATIONAL ASSOCIATION
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-18-
<PAGE>
$[23,125,000] MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[18,125,000] COMMERZBANK AG, CHICAGO BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[18,125,000] FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[18,125,000] FLEET BANK N.A.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-19-
<PAGE>
$[18,125,000] NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[18,125,000] UNION BANK OF SWITZERLAND NEW YORK
BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[18,125,000] WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-20-
<PAGE>
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[12,500,000] THE BANK OF MONTREAL
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[12,500,000] THE BANK OF NEW YORK
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[12,500,000] BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[12,500,000] CANADIAN IMPERIAL BANK OF COMMERCE
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-21-
<PAGE>
$[12,500,000] THE CHASE MANHATTAN BANK
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[12,500,000] COMERICA BANK
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[12,500,000] CREDIT LYONNAIS, NEW YORK BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] THE ASAHI BANK, LTD.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-22-
<PAGE>
$[6,250,000] BANCA MONTE DEI PASCHI DI SIENA SpA
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] BAYERISCHE VEREINSBANK
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
CAYMAN ISLAND BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-23-
<PAGE>
$[6,250,000] FIRST HAWAIIAN BANK
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] FIRSTAR BANK MILWAUKEE, N.A.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] THE FUJI BANK, LIMITED
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-24-
<PAGE>
$[6,250,000] THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
CHICAGO BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] NORDDEUTSCHE LANDESBANK
GIROZENTRALE
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$ [6,250,000] NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[6,250,000] THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
-25-
<PAGE>
$[5,000,000] ARAB BANK, Plc
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
$[5,000,000] BANK HAPOALIM
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Aggregate
Commitment $[375,000,000]
<PAGE>
EXHIBIT A
BORROWING BASE CERTIFICATE
Reference is made to that certain Credit Agreement (the "Credit Agreement")
dated as of April 29, 1997 among Green Tree Financial Corporation (the
"Borrower"), the lenders named therein (the "Lenders") and The First National
Bank of Chicago, as administrative agent for the Lenders, as amended.
Capitalized terms not otherwise defined herein are used with the same meanings
as in the Credit Agreement.
Borrowing Base:
- --------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
1. Eligible Contracts (excluding Asset Based Receivables and
Other Eligible Receivables) (Collateral Value)
- --------------------------------------------------------------------------------
(a) Eligible Consumer Products Contracts $
- --------------------------------------------------------------------------------
(b) Eligible Home Equity Contracts $
- --------------------------------------------------------------------------------
(c) Eligible Home Improvement Contracts $
- --------------------------------------------------------------------------------
(d) Eligible MH Contracts (real property) $
- --------------------------------------------------------------------------------
(e) Eligible MH Contracts (not real property) $
- --------------------------------------------------------------------------------
(f) Eligible Floor Plan Receivables $
- --------------------------------------------------------------------------------
(g) Total Eligible Contracts (sum of (a) through (f) $
- --------------------------------------------------------------------------------
(h) Borrowing Base percentage 90%
- --------------------------------------------------------------------------------
(i) Borrowing Base with respect to Contracts ((g) times (h)) $
- --------------------------------------------------------------------------------
2. Asset Based Receivables (Collateral Value)
- --------------------------------------------------------------------------------
(a) Eligible Asset Based Receivables $
- --------------------------------------------------------------------------------
(b) Borrowing Base percentage 80%
- --------------------------------------------------------------------------------
(c) Borrowing Base with respect to Asset Based Receivables $
((a) times (b))
- --------------------------------------------------------------------------------
3. Other Receivables (Collateral Value) (as determined pursuant
to the definition of "Other Eligible Receivables")
- --------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
(a) Eligible Other Receivables $
- --------------------------------------------------------------------------------
(b) Borrowing Base percentage (as determined pursuant to the %
definition of "Other Eligible Receivables")
- --------------------------------------------------------------------------------
(c) Borrowing Base with respect to Other Receivables $
((a) times (b))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BORROWING BASE (sum of (1.) and (2.) and (3.)) $
- --------------------------------------------------------------------------------
</TABLE>
Certification: The Borrower hereby certifies to The First National Bank of
Chicago for the benefit of lenders under the Credit Agreement that: (a) the
above information is, and the computations are accurate and complete and in
accordance with the requirements of the Credit Agreement, and (b) as of the date
hereof, (1) the representations and warranties contained in Article V (other
than Section 5.6 and with respect to the Restatement Breach) of the Credit
Agreement are true and correct and (2) there does not exist a Default or an
Unmatured Default under the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Borrowing Base Certificate
to be executed and delivered by its duly authorized officer this ___ day of
___________, 199__.
GREEN TREE FINANCIAL CORPORATION
By:
------------------------------------
Name:
Title:
2
<PAGE>
EXHIBIT B
DEFINITIONS
-----------
For purposes of this Exhibit B to Amendment and Limited Waiver to Credit
Agreement, capitalized terms not defined in the Credit Agreement or the Security
Agreement shall have the respective meanings set forth below:
"Electronic Ledger" means to the electric master record of installment
sale contracts of the Grantor.
"FHA" means the Federal Housing Administration of HUD.
"FHA/VA MH Contracts" means MH Contracts that are insured by the FHA
or guaranteed by the Department of Veterans Affairs.
"HUD" means the U.S. Department of Housing and Urban Development.
"Step-Up Rate Contract" means a Contract bearing interest during an
initial period at a fixed rate that is lower than the fixed rate borne
thereafter.
"Title I Loan" means a Home Improvement Contract insured under the
FHA's Title I Program.
<PAGE>
PART A-1
--------
Eligibility Criteria with respect to MH Contracts (not Land-and-Home Contracts)
- -------------------------------------------------------------------------------
A. Payments. The scheduled payment of principal and interest for the most
recent due date was made by or on behalf of the obligor (without any advance
from the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days.
B. No Waivers. The terms of the MH Contract have not been waived, altered
or modified in any respect, except by instruments or documents which are among
the Required Documents or the Additional Required Documents.
C. Binding Obligation. The MH Contract is the legal, valid and binding
obligation of the obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights in general.
D. No Defenses. The MH Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the MH Contract or the exercise of any right
thereunder will not render the MH Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
E. Insurance. The Grantor or its agent has monitored the existence of a
hazard insurance policy with respect to the Manufactured Home securing a MH
Contract and if the Grantor has determined that no such policy exists, the
Grantor has arranged for such insurance and has billed the related obligor
through its loan account.
F. Origination. The MH Contract was originated by a manufactured housing
dealer or the Grantor or a Subsidiary in the regular course of its business and,
if originated by a manufactured housing dealer, was purchased by the Grantor in
the regular course of its business.
G. Lawful Assignment. The MH Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the MH Contract to the Collateral Agent or the ownership of the MH Contracts by
the Collateral Agent unlawful.
H. Compliance With Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the MH Contract have been complied with and such
compliance is not affected by the holding of the MH Contracts by the Collateral
Agent or the Collateral Agent's ownership of the MH Contracts, and the Grantor
shall maintain in its possession, available for the Collateral Agent's
inspection, and shall deliver to the Collateral Agent upon demand, evidence of
<PAGE>
compliance with all such requirements.
I. MH Contract In Force. The MH Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Manufactured Home
securing the MH Contract has not been released from the lien of the MH Contract
in whole or in part.
J. Valid Security Interest. The MH Contract creates a valid and
enforceable perfected first priority security interest in favor of the Grantor
in the Manufactured Home covered thereby as security for payment of the
outstanding principal balance of such MH Contract and all other obligations of
the obligor under such MH Contract; if the Security Perfection Date has
occurred, such security interest has been assigned by the Grantor to the
Collateral Agent, and the Collateral Agent has and will have a valid and
perfected and enforceable first priority security interest in such Manufactured
Home.
K. Capacity Of Parties. All parties to the MH Contract had capacity to
execute the MH Contract.
L. Good Title. The Grantor is the sole owner of the MH Contract and has
the authority to sell, transfer and assign the MH Contract. In the case of a MH
Contract purchased from a manufactured housing dealer, the Grantor purchased the
MH Contract for fair value and took possession thereof in the ordinary course of
its business, without knowledge that the MH Contract was subject to a security
interest. The Grantor has not sold, assigned or pledged the MH Contract to any
Person other than the Collateral Agent.
M. No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the MH Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such MH
Contract. The Grantor has not waived any such default, breach, violation or
event permitting acceleration.
N. No Liens. There are, to the best of the Grantor's knowledge, no liens
or claims which have been filed for work, labor or materials affecting the
Manufactured Home securing the MH Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the MH Contract.
O. Installment Payments. The MH Contract either has a fixed rate, a
variable rate or is a Step-Up Rate Contract and provides for monthly principal
payments which fully amortize the loan over its term.
P. Enforceability. The MH Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.
Q. One Original. There is only one original executed MH Contract, which
is held by
<PAGE>
the Grantor, its agent or the Collateral Agent.
R. Loan-to-value Ratio. At the time of its origination each MH Contract
had a loan-to-value ratio not greater than 95%; if the related Manufactured Home
was new at the time such MH Contract was originated, the original principal
balance of such MH Contract was not in excess of that permitted by the Grantor's
underwriting guidelines in effect at the time the MH Contract was originated.
S. Primary Resident. At the time of origination of the MH Contract the
obligor was the primary resident of the related Manufactured Home or the primary
resident was the child of the obligor.
T. Not Real Estate. The related Manufactured Home is not considered or
classified as part of the real estate on which it is located under the laws of
the jurisdiction in which it is located and such Manufactured Home is, to the
best of the Grantor's knowledge, free of damage and in good repair.
U. Notation of Security Interest. If the related Manufactured Home is
located in a state in which notation of a security interest on the title
document is required or permitted to perfect such security interest, the title
document shows, or if a new or replacement title document with respect to such
Manufactured Home is being applied for such title document will be issued within
180 days and will show, the Grantor as the holder of a first priority security
interest in such Manufactured Home. If the related Manufactured Home is located
in a state in which the filing of a financing statement under the UCC is
required to perfect a security interest in manufactured housing, such filings or
recordings have been duly made and show the Grantor as secured party. In either
case, if the Security Perfection Date has occurred, the Collateral Agent has the
same rights as the secured party of record would have (if such secured party
were still the owner of the MH Contract) against all Persons claiming an
interest in such Manufactured Home.
V. FHA/VA MH Contracts. If the MH Contract is a FHA/VA MH Contract, the
MH Contract has been serviced in accordance with the regulations of the FHA/VA,
the insurance or guarantee of the MH Contract under regulations of the FHA/VA
and related laws is in full force and effect, and no event has occurred which,
with or without notice or lapse of time or both, would impair such insurance or
guarantee.
W. No Adverse Selection. Except for the effect of the representations
and warranties made hereunder, no adverse selection procedures have been
employed in selecting the MH Contracts.
X. Holding Period. The MH Contract was not originated more than 180 days
previously.
Y. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall
A-1-3
<PAGE>
reasonably require and notify to the Grantor.
A-1-4
<PAGE>
PART A-2
--------
ELIGIBILITY CRITERIA WITH RESPECT TO MH CONTRACTS (LAND-AND-HOME CONTRACTS)
---------------------------------------------------------------------------
B. Payments. The scheduled payment of principal and interest for the most
recent due date was made by or on behalf of the obligor (without any advance
from the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days.
C. No Waivers. The terms of the MH Contract have not been waived, altered
or modified in any respect, except by instruments or documents which are among
the Required Documents or Additional Required Documents.
D. Binding Obligation. The MH Contract is the legal, valid and binding
obligation of the obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights general.
E. No Defenses. The MH Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the MH Contract or the exercise of any right
thereunder will not render the MH Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
F. Insurance. The Grantor or its agent has monitored the existence of a
hazard insurance policy with respect to the Manufactured Home securing a MH
Contract and if Grantor has determined that no such policy exists, the Grantor
has arranged for such insurance and has billed the related obligor through its
loan account
G. Origination. The MH Contract was originated by a manufactured housing
dealer or the Grantor or a Subsidiary in the regular course of its business and,
if originated by a manufactured housing dealer, was purchased by the Grantor in
the regular course of its business.
H. Lawful Assignment. The MH Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the MH Contract to the Collateral Agent or the ownership of the MH Contracts by
Collateral Agent unlawful.
I. Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the MH Contract have been complied with and such
compliance is not affected by the holding of the MH Contracts by the Collateral
Agent or the Collateral Agent's security interest in the MH Contracts, and the
Grantor shall maintain in its possession, available for the Buyer's inspection,
and shall deliver to the Buyer upon demand, evidence of compliance with all such
requirements.
<PAGE>
J. MH Contract in Force. The MH Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Manufactured Home
securing the MH Contract has not been released from the lien of the MH Contract
in whole or in part.
K. Interest in Real Property. Each Mortgage is a valid first lien in favor
of the Grantor on real property securing the amount owed by the obligor under
the related MH Contract subject only to (a) the lien of current real property
taxes and assessments, (b) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording of
such Mortgage, such exceptions appearing of record being acceptable to Mortgage
lending institutions generally in the area wherein the property subject to the
Mortgage is located or specifically reflected in the appraisal obtained in
connection with the origination of the related MH Contract obtained by the
Grantor and (c) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security intended to
be provided by such Mortgage. If the Security Perfection Date has occurred, (1)
the Grantor has assigned all of its right, title and interest in such MH
Contract and related Mortgage, including the security interest in the
Manufactured Home covered thereby, to the Collateral Agent and (2) the
Collateral Agent has and will have a valid and perfected and enforceable first
priority security interest in such MH Contract. The MH Contract creates a valid
and enforceable perfected first priority security interest in favor of the
Grantor in the Manufactured Home covered thereby (to the extent such
Manufactured Home is not considered real property) as security for payment of
the outstanding principal balance of such MH Contract and all other obligations
of the obligor under such MH Contract; if the Security Perfection Date has
occurred, such security interest has been assigned by the Grantor to the
Collateral Agent, and the Collateral Agent has and will have a valid and
perfected and enforceable first priority security interest in such Manufactured
Home.
L. Capacity of Parties. All parties to the MH Contract had capacity to
execute the MH Contract.
M. Good Title. The Grantor is the sole owner of the MH Contract and has the
authority to sell, transfer and assign the MH Contract. In the case of a MH
Contract purchased from a manufactured housing dealer, the Grantor purchased the
MH Contract for fair value and took possession thereof in the ordinary course of
its business, without knowledge that the MH Contract was subject to a security
interest. The Grantor has not sold, assigned or pledged the MH Contract to any
Person other than the Collateral Agent.
N. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the MH Contract and no event which, with notice and
the expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such MH Contract. The
Grantor has not waived any such default, breach, violation or event permitting
acceleration.
O. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the
Manufactured Home securing the MH Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the MH
<PAGE>
Contract.
P. Installments Payments. The MH Contract either has a fixed rate, variable
rate or is a Step-Up Rate Contract and provides for monthly principal payments
which fully amortize the loan over its term.
Q. Enforceability. The MH Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.
R. One Original. There is only one original executed MH Contract, which is
held by the Grantor, its agent or the Collateral Agent.
S. Loan-to-Value Ratio. At the time of its origination each MH Contract had
a loan-to-value ratio not greater than 95%; if the related Manufactured Home was
new at the time such MH Contract was originated, the original principal balance
of such MH Contract was not in excess of that permitted by the Grantor's
underwriting guidelines in effect at the time the MH Contract was originated.
T. Primary Resident. At the time of origination of the MH Contract the
obligor was the primary resident of the related Manufactured Home or the primary
resident was the child of the obligor.
U. Good Repair. The related Manufactured Home is, to the best of the
Grantor's knowledge, free of damage and in good repair.
V. FHA/VA MH Contracts. If the MH Contract is a FHA/VA MH Contract, the MH
Contract has been serviced in accordance with the regulations of the FHA/VA, the
insurance or guarantee of the MH Contract under the regulations of the FHA/VA
and related laws is in full force and effect, and no event has occurred which,
with or without notice or lapse of time or both, would impair such insurance or
guarantee.
W. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the MH Contracts.
X. Holding Period. The MH Contract was not originated more than 180 days
previously.
Y. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.
A-2-3
<PAGE>
PART B
------
Eligibility Criteria with respect to Home Equity Contract
---------------------------------------------------------
B. Payments. The scheduled payment of principal and interest due under the
Home Equity Contract with respect to the prior due date was made on or before
such due date by or on behalf of the obligor (without any advance from the
Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days after such due date.
C. No Waivers. The terms of the Home Equity Contract have not been waived,
altered or modified in any respect, except by instruments or documents which are
among the Required Documents or Additional Required Documents. All costs, fees
and expenses incurred in making, closing and perfecting the lien and/or security
interest, as applicable, of the Home Equity Contract have been paid.
D. Binding Obligation. The Home Equity Contract is the legal, valid and
binding obligation of the obligor thereunder and is enforceable in accordance
with its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally. If the Security Perfection Date
has occurred, the Grantor has delivered, or caused to be delivered, to the
Collateral Agent the original Mortgage, with evidence of recording thereon, or
if the original Mortgage has not yet been returned from the recording office, a
true copy of the Mortgage which has been delivered for recording in the
appropriate recording office of the jurisdiction in which the real property is
located.
E. No Defenses. The Home Equity Contract is not subject to any right of
rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Home Equity Contract or the
exercise of any right thereunder will not render the Home Equity Contract
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.
F. Insurance. At origination of the relevant Home Equity Contract, all
improvements on the related real property are covered by a hazard insurance
policy. To the Grantor's knowledge, such insurance has not been canceled.
G. Origination. The Home Equity Contract was originated by a home equity
lender or the Grantor or a Subsidiary in the regular course of its business and,
if originated by a home equity lender, was purchased by the Grantor in the
regular course of its business.
H. Lawful Assignment. The Home Equity Contract was not originated in and is
not subject to the laws of any jurisdiction whose laws would make the transfer
of the Home Equity Contract to Collateral Agent or the security interest in the
Home Equity Contract by the Collateral Agent thereof unlawful or make the Home
Equity Contract unenforceable.
<PAGE>
I. Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the Home Equity Contract have been complied with
and such compliance is not affected by the holding of the Home Equity Contract
by Collateral Agent or the Collateral Agent's ownership of the Home Equity
Contract, and the Grantor maintains in its possession, available for Collateral
Agent's inspection, and shall deliver to Collateral Agent upon demand, evidence
of compliance with all such requirements.
J. Home Equity Contract in Force. The Home Equity Contract has not been
satisfied or subordinated in whole or in part or rescinded, and the real
property securing the Home Equity Contract has not been released from the lien
of the Home Equity Contract in whole or in part.
K. Valid Lien. The Home Equity Contract has been duly executed and
delivered by the obligor and the related Mortgage is a valid and subsisting
first, second or third lien on the property therein described; if the Security
Perfection Date has occurred, any related Mortgage has been assigned by the
Grantor to Collateral Agent, and Collateral Agent has and will have a valid and
subsisting lien on the property therein described. The Grantor has full right to
sell and assign the Home Equity Contract to the Collateral Agent.
L. Capacity of Parties. All parties to the Home Equity Contract had
capacity to execute the Home Equity Contract.
M. Good Title. The Grantor is the sole owner of the Home Equity Contract
and has the authority to sell, transfer and assign the Home Equity Contract. The
Grantor has not sold, assigned or pledged the Home Equity Contract to any Person
other than the Collateral Agent.
N. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Home Equity Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Home
Equity Contract. The Grantor has not waived any such default, breach, violation
or event permitting acceleration.
O. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the real
property securing the Home Equity Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the Home Equity Contract.
P. Installment Payments. The Home Equity Contract has a fixed rate, or a
variable rate and provides for monthly principal payments which fully amortize
the loan over its term.
Q. Enforceability. The Home Equity Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the
B-2
<PAGE>
realization against the collateral of the benefits of the security provided
thereby.
R. One Original. There is only one original executed Home Equity Contract
note, and it has been delivered to the Collateral Agent.
S. Primary Resident. At the time of origination of the Home Equity
Contract, the obligor was the primary resident of the related real property.
T. Proceedings. There is no proceeding pending or, to the Grantor's
knowledge, threatened for the total or partial condemnation of collateral
securing a Home Equity Contract.
U. Marking Records. If the Security Perfection Date has occurred, the
Grantor has caused the portions of the Electronic Ledger relating to the Home
Equity Contract to be clearly and unambiguously marked to indicate that the
Collateral Agent holds a security interest in such Home Equity Contract in
accordance with the terms of the Security Agreement.
V. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Home Equity Contract.
W. Real Property. Each mortgaged property is improved by a single family
dwelling which constitutes real property under state law and is the principal
residence of the obligor.
X. Holding Period. The Home Equity Contract was not originated more than
180 days previously.
Y. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.
B-3
<PAGE>
PART C
------
Eligibility Criteria with respect to Consumer Products Contracts
----------------------------------------------------------------
B. Payments. The most recent scheduled payment was made by or on behalf of
the obligor (without any advance from the Grantor or any Person acting at the
request of the Grantor) or was not delinquent for more than 30 days.
C. No Waivers. The terms of the Consumer Products Contract have not been
waived, altered or modified in any respect, except by instruments or documents
which are among the Required Documents or Additional Required Documents.
D. Binding Obligation. The Consumer Products Contract is the legal, valid
and binding obligation of the obligor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by laws
affecting the enforcement of creditors' rights generally.
E. No Defenses. The Consumer Products Contract is not subject to any right
of rescission, setoff, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Consumer Products Contract or the
exercise of any right thereunder will not render the Consumer Products Contract
unenforceable in whole or in part or subject to any right of rescission, setoff,
counterclaim or defense, including the defense of usury, and no such right of
rescission, setoff, counterclaim or defense has been asserted with respect
thereto.
F. Origination. Each Consumer Products Contract was originated by a dealer
of goods of a class including the Consumer Product subject to the Consumer
Products Contract, or by the Grantor or a Subsidiary, in the regular course of
its business and, if originated by a dealer, was purchased by the Grantor or a
Subsidiary in the regular course of its business.
G. Lawful Assignment. The Consumer Products Contract was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Consumer Products Contract to the Collateral Agent unlawful or
render the Consumer Products Contract unenforceable.
H. Compliance with Law. At the date of origination of the Consumer Products
Contract, all requirements of any federal and state laws, rules and regulations
applicable to the Consumer Products Contract, including, without limitation,
usury, truth in lending and equal credit opportunity laws, have been complied
with, and the Grantor shall maintain its possession, available for the
Collateral Agent's inspection, and shall deliver to the Collateral Agent upon
demand, evidence of compliance with all such requirements.
I. Consumer Products Contract in Force. The Consumer Products Contract has
not been satisfied or subordinated in whole or in part or rescinded, and the
Consumer Product or real
<PAGE>
property, if any, securing the Consumer Products Contract has not been released
in whole or in part.
J. Valid Security Interest or Lien. (a) the Consumer Products Contract
creates a valid and enforceable perfected first priority security interest in
favor of the Grantor in the Consumer Product covered thereby as security for
payment of the outstanding principal balance of such Consumer Products Contract;
(b) if the Security Perfection Date has occurred, the Grantor has assigned all
of its right, title and interest in such Consumer Products Contract, including
the security interest in the Consumer Product covered thereby to the Collateral
Agent; and (c) if the Security Perfection Date has occurred, the Collateral
Agent has and will have a valid and perfected and enforceable first priority
security interest in such Consumer Product.
K. Capacity of Parties. The signature(s) of the obligor(s) on the Consumer
Products Contract are genuine and all parties to the Consumer Products Contract
had full legal capacity to execute the Consumer Products Contract.
L. Good Title. The Grantor is the sole owner of the Consumer Products
Contract and has the authority to sell, transfer and assign the Consumer
Products Contract. In the case of a Consumer Products Contract purchased from a
dealer, home improvement contractor or home equity lender, the Grantor purchased
the Consumer Products Contract for fair value and took possession thereof in the
ordinary course of its business, without knowledge that the Consumer Products
Contract was subject to a security interest. The Grantor has not sold, assigned
or pledged the Consumer Products Contract to any Person and prior to the
transfer of the Consumer Products Contract by the Grantor to the Collateral
Agent, the Grantor had good and marketable title thereto free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest and was
the sole owner thereof with full right to transfer the Consumer Products
Contract to the Collateral Agent. No financing statement describing or referring
to any Consumer Products Contract (other than any financing statement naming the
Collateral Agent as secured party, or filed by the Grantor as secured party to
perfect its interest in a Consumer Products Contract purchased from a dealer) is
on file in any public office.
M. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Consumer Products Contract and no event which,
with notice and the expiration of any grace or cure period, would constitute
such a default, breach, violation or event permitting acceleration under such
Consumer Products Contract (except payment delinquencies permitted by clause
(A.) above). The Grantor has not waived any such default, breach, violation or
event permitting acceleration except payment delinquencies permitted by clause
(A.) above. The related Consumer Product is, to the best of the Grantor's
knowledge, free of damage and in good repair.
N. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the Consumer
Product securing the Consumer Products Contract which are or may be liens prior
to, or equal or coordinate with, the lien of the Consumer Products Contract.
<PAGE>
O. Installment Payments. Each Consumer Products Contract has a fixed
interest rate or a variable interest rate and provides for regular principal
payments which fully amortize the loan over its term.
P. Enforceability. The Consumer Products Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security.
Q. One Original. There is only one original executed Consumer Products
Contract (other than an original in the possession of the relevant obligor),
which, if the Security Perfection Date has occurred, has been delivered to the
Collateral Agent and has been stamped to reflect the assignment of such Consumer
Products Contract to the Collateral Agent.
R. Notation of Security Interest. With respect to each Consumer Products
Contract, if the related Consumer Product is located in a state in which
notation of a security interest on the title document is required or permitted
to perfect such security interest, the title document shows, or if a new or
replacement title document with respect to such Consumer Product is being
applied for such title document will be issued within 180 days and will show,
the Grantor as the holder of a first priority security interest in such Consumer
Product; if the related Consumer Product is located in a state in which the
filing of a financing statement under the UCC is required to perfect a security
interest in goods of the type including the Consumer Product, such filings or
recordings have been duly made and show the Grantor as secured party; and if the
related Consumer Product is an aircraft subject to registration with the Federal
Aviation Administration's Aircraft Registry, and the recordation of a Mortgage,
security agreement or similar conveyance with such Registry is required to
perfect the lien created thereby, such recordation has been duly made and shows
the Grantor as secured party or mortgagee. In any case, if the Security
Perfection Date has occurred, the Collateral Agent has the same rights as the
secured party of record would have against all Persons (including the Grantor
and any trustee in bankruptcy of the Grantor) claiming an interest in such
Consumer Product.
S. No Government Consumer Products Contracts. No obligor is the United
States government or an agency, authority, instrumentality or other political
subdivision of the United States government.
T. Holding Period. The Consumer Products Contract was not originated more
than 180 days previously.
U. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.
C-3
<PAGE>
PART D
------
Eligibility Criteria with respect to Home Improvement Contracts
---------------------------------------------------------------
B. Payments. The scheduled payment of principal and interest due under the
Home Improvement Contract with respect to the prior due date was made on or
before such Due Date by or on behalf of the obligor (without any advance from
the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days after such Due Date.
C. No Waivers. The terms of the Home Improvement Contract have not been
waived, altered or modified in any respect, except by instruments or documents
which are among Required Documents or Additional Required Documents. All costs,
fees and expenses incurred in making, closing and perfecting the lien and/or
security interest, as applicable, of the Home Improvement Contract have been
paid.
D. Binding Obligation. The Home Improvement Contract is the legal, valid
and binding obligation of the obligor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by laws
affecting the enforcement of creditors' rights generally. In the case of Secured
Home Improvement Contract other than Home Improvement Contract, if the Security
Perfection Date has occurred, the Grantor has delivered, or caused to be
delivered, to the Collateral Agent the original Mortgage, with evidence of
recording thereon, or if the original Mortgage has not yet been returned from
the recording office, a true copy of the Mortgage which has been delivered for
recording in the appropriate recording office of the jurisdiction in which the
Real Property is located.
E. No Defenses. The Home Improvement Contract is not subject to any right
of rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Home Improvement Contract or the
exercise of any right thereunder will not render the Home Improvement Contract
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.
F. Insurance. At origination of the relevant Secured Home Improvement
Contract, all improvements on the related real property are covered by a hazard
insurance policy. To the knowledge of the Grantor, such insurance has not been
canceled.
G. Title I Loans. Each Title I Loan was originated in compliance with FHA
regulations and is insured, without set-off, surcharge or defense, by FHA
insurance. The Grantor has, in conformity with the regulations of the FHA, filed
all reports necessary for the Title I Loan to be registered for FHA insurance.
Following assignment of the Title I Loan to Collateral Agent, on behalf of the
Secured Parties, Collateral Agent will be entitled to the full benefits of the
FHA insurance.
<PAGE>
H. Origination. The Home Improvement Contract was originated by a home
improvement contractor or the Grantor or a Subsidiary in the regular course of
its business and, if originated by a home improvement contractor, was purchased
by the Grantor or a Subsidiary in the regular course of its business.
I. Lawful Assignment. The Home Improvement Contract was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Home Improvement Contract to Collateral Agent or the security
interest in the Home Improvement Contract by the Grantor thereof unlawful or
make the Home Improvement Contract unenforceable.
J. Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws and the regulations of the FHA, applicable to the Home
Improvement Contract have been complied with and such compliance is not affected
by the holding of the Home Improvement Contract by Collateral Agent or the
Collateral Agent's security interest in the Home Improvement Contract, and the
Grantor maintains in its possession, available for Collateral Agent's
inspection, and shall deliver to Collateral Agent upon demand, evidence of
compliance with all such requirements.
K. Home Improvement Contract in Force. The Home Improvement Contract has
not been satisfied or subordinated (except for such subordination as may be
allowed under FHA regulations) in whole or in part or rescinded, and, in the
case of a Secured Home Improvement Contract, the real property securing the Home
Improvement Contract, as applicable, has not been released from the lien of the
Home Improvement Contract in whole or in part.
L. Valid Lien. The Home Improvement Contract has been duly executed and
delivered by the obligor and either the related Mortgage is a valid and
subsisting first, second or third lien on the property therein described or the
Home Improvement Contract is an unsecured borrowing of the obligor; if the
Security Perfection Date has occurred, any related Mortgage has been assigned by
the Grantor to Collateral Agent, and Collateral Agent has and will have a valid
and subsisting lien on the property therein described. The Grantor has full
right to grant a security interest in the Home Improvement Contract in favor of
Collateral Agent.
M. Capacity of Parties. All parties to the Home Improvement Contract had
capacity to execute the Home Improvement Contract.
N. Good Title. The Grantor is the sole owner of the Home Improvement
Contract and has the authority to sell, transfer and assign the Home Improvement
Contract. The Grantor has not sold, assigned or pledged the Home Improvement
Contract to any Person other than the Collateral Agent.
O. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Home Improvement Contract and no event which,
with notice and
D-2
<PAGE>
the expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such Home Improvement
Contract. The Grantor has not waived any such default, breach, violation or
event permitting acceleration.
P. No Liens. In the case of Secured Home Improvement Contracts, there are,
to the best of the Grantor's knowledge, no liens or claims which have been filed
for work, labor or materials affecting the real property securing the Home
Improvement Contract which are or may be liens prior to, or equal or coordinate
with, the lien of the Home Improvement Contract.
Q. Installment Payments. The Home Improvement Contract has a fixed rate or
a variable rate and provides for monthly principal payments which fully amortize
the loan over its term.
R. Enforceability. The Home Improvement Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security provided thereby.
S. One Original. There is only one original executed Home Improvement
Contract and note, and, if the Security Perfection Date has occurred, each of
which has been delivered to the Collateral Agent.
T. Primary Resident. At the time of origination of the Home Improvement
Contract, the obligor was the primary resident of the related real property.
U. Proceedings. There is no proceeding pending or, to the Grantor's
knowledge, threatened for the total or partial condemnation of collateral
securing a Home Improvement Contact.
V. Marking Records. If the Security Perfection Date has occurred, the
Grantor has caused the portions of the Electronic Ledger relating to the
Mortgage Loans to be clearly and unambiguously marked to indicate that the
Collateral Agent holds in security interest such Home Improvement Contract in
accordance with the terms of the Security Agreement.
W. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Home Improvement Contract.
Holding Period. The Home Improvement Contract was not originated more than
180 days previously.
X. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.
D-3
<PAGE>
PART E
------
Eligibility Criteria with respect to Floor Plan Receivables
-----------------------------------------------------------
A. "Eligible Account". The Floor Plan Receivable has arisen under an
"Eligible Account". An "Eligible Account" with respect to Floor Plan Receivables
is an arrangement to provide an extension of credit by the Grantor or a
Subsidiary to a borrower (i) in order to finance the purchase by the borrower of
consumer or commercial product inventory or (ii) as a line of credit secured by
unencumbered assets of such borrower, made in the regular course of the
Grantor's or its Subsidiary's business and, if originated by a another, was
purchased by the Grantor or a Subsidiary in the regular course of its business.
B. Payments. The scheduled payment of principal and interest for the most
recent due date was made by or on behalf of the borrower (without any advance
from the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days.
C. Binding Obligation. The Floor Plan Receivable is the legal, valid and
binding obligation of the borrower thereunder and is enforceable in accordance
with its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally.
D. No Defenses. The Floor Plan Receivable is not subject to any right of
rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Floor Plan Receivable or the
exercise of any right thereunder will not render the Floor Plan Receivable
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.
E. Lawful Assignment. The Floor Plan Receivable was not originated in and
is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Floor Plan Receivable to the Grantor or the security interest in
the Floor Plan Receivable in favor of the Collateral Agent unlawful or
unenforceable.
F. Valid Security Interest. The Floor Plan Receivable is secured by a first
perfected security interest in the applicable commercial or consumer goods.
G. Compliance with Law. The Floor Plan Receivable was created in compliance
with all federal, state or local law applicable thereto.
H. Capacity of Parties. The borrower had the capacity to enter into the
Floor Plan Agreement.
I. Good Title. The Grantor is the sole owner of the Floor Plan Receivable
and has the
<PAGE>
authority to sell, transfer and assign the Floor Plan Receivable. The Grantor
has not sold, assigned or pledged the Floor Plan Receivable to any Person other
than the Collateral Agent.
J. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Floor Plan Receivable and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Floor
Plan Receivable. The Grantor has not waived any such default, breach, violation
or event permitting acceleration.
K. Manufacturer Agreement. The related agreement between the Grantor or
subsidiaries and the manufacturer of the consumer or commercial products
financed by the Grantor or a Subsidiary under the Floor Plan Agreement with the
borrower provides, subject to the terms and limitations thereof, that the
manufacturer is obligated to repurchase the products securing the Floor Plan
Receivable upon repossession thereof by the Grantor or a Subsidiary upon the
related borrower's default.
L. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims affecting the assets securing the Floor Plan Receivable other than the
lien, if any, in favor of the Collateral Agent.
M. No Waivers. The terms of the Floor Plan Receivable have not been waived,
altered or modified in any respect, except by instruments or documents which are
among the Required Documents or the Additional Required Documents.
N. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Floor Plan Receivable.
O. Holding Period. The Floor Plan Receivable was not originated more than
180 days previously, unless the Floor Plan Agreement provides for revolving
credit.
P. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.
E-3
<PAGE>
PART F
------
Eligibility Criteria with respect to Asset Based Receivables
------------------------------------------------------------
A. Asset Based Receivables. The Asset Based Receivables are receivables
or amounts payable arising from extensions of credit by the Grantor or a
Subsidiary to finance a borrower's or dealer's production or inventory (which
may include goods held for sale, interests in real estate or chattel paper) or
to provide working capital, and are secured by finished goods inventory,
accounts receivable, certain work-in-process, raw materials, component parts, or
interests in real property or other assets of the borrower or dealer, in all
cases, made, or if originated by another, purchased (whether in whole or in
part, including via participation) by the Grantor or a Subsidiary in the regular
course of its business.
B. Payments. The scheduled payment of principal and interest for the
most recent due date was made by or on behalf of the borrower (without any
advance from the Grantor or any Person acting at the request of the Grantor) or
was not delinquent for more than 30 days.
C. Binding Obligation. The Asset Based Receivable is the legal, valid
and binding obligation of the borrower thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by laws
affecting the enforcement of creditors' rights generally.
D. No Defenses. The Asset Based Receivable is not subject to any right
of rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Asset Based Receivable or the
exercise of any right thereunder will not render the Asset Based Receivable
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.
E. Lawful Assignment. The Asset Based Receivable was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Asset Based Receivable to Collateral Agent or the security
interest in the Asset Based Receivable by the Grantor thereof unlawful or
unenforceable.
F. Valid Security Interest or Mortgage. The Asset Based Receivable is
secured by a first perfected security interest or Mortgage in the assets
financed by the Grantor or a Subsidiary and the perfection of such security
interest is governed by the laws of one or more of the states of the United
States.
G. Compliance with Law. The Asset Based Receivable and the underlying
financing agreement were created in compliance with all federal, state or local
law applicable thereto.
H. Capacity of Parties. The borrower had the capacity to enter into the
Asset Based Agreement.
<PAGE>
I. Good Title. The Grantor is the sole owner of the Asset Based Receivable
and has the authority to sell, transfer and assign the Asset Based Receivable.
The Grantor has not sold, assigned or pledged the Asset Based Receivable to any
Person other than the Collateral Agent.
J. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Asset Based Receivable and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Asset
Based Receivable. The Grantor has not waived any such default, breach, violation
or event permitting acceleration.
K. No Liens. There are, to the best of the Grantor's knowledge, no liens
or claims affecting the assets securing the Asset Based Receivable other than
the lien, if any, in favor of the Collateral Agent.
L. No Waivers. The terms of the Asset Based Receivable have not been
waived, altered or modified in any respect, except by instruments or documents
which are among the Required Documents or the Additional Required Documents.
M. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Asset Based Receivable.
N. Holding Period. The Asset Based Receivable was not originated more than
180 days previously, unless the Asset Based Agreement provides for revolving
credit.
O. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.
F-3
<PAGE>
PART G
------
Eligibility Criteria with respect to Other Eligible Receivables
---------------------------------------------------------------
Other similar eligibility criteria for Other Receivables to be determined in the
reasonable discretion of the Collateral Agent and within customary terms for
secured financings of such Collateral, including, without limitation, the
criteria of not delinquent for more than 30 days, all as agreed between the
Administrative Agent, the Collateral Agent and the Grantor within 30 days after
the [First][Second] Amendment Effective Date; provided that no such Collateral
shall be included in the Borrowing Base until the Administrative Agent, the
Collateral Agent and the Grantor have so agreed in writing whereupon such
revised eligibility criteria shall be deemed incorporated herein.
<PAGE>
SECURITY AGREEMENT
------------------
This Agreement is made as of February ___, 1998 by and between Green Tree
Financial Corporation, a Delaware corporation (the "Grantor"), and THE FIRST
NATIONAL BANK OF CHICAGO, as Collateral Agent (as hereinafter defined) for the
Lenders (as hereinafter defined).
R E C I T A L S:
---------------
A. Pursuant to the Long Term Credit Agreement and the Short Term Credit
Agreement (each, as hereinafter defined), the Lenders have agreed to make
certain loans to the Grantor; and
B. Pursuant to the Second Amendment to the Long Term Credit Agreement and
the First Amendment to the Short Term Credit Agreement (collectively, the
"Amendments"), and as a condition to entering into the Amendments, the
Administrative Agent, the Collateral Agent and the Lenders have requested that
the Grantor grant to the Collateral Agent, on behalf of the Secured Parties (as
hereinafter defined), a security interest in the Collateral (as hereinafter
defined) upon the terms and conditions as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
-----------
Terms defined in the UCC (as hereinafter defined) are used herein as
therein defined. As used in this Agreement, capitalized terms defined in the
Credit Agreements and not otherwise defined herein have the meanings given in
the Credit Agreements, and the following terms have the meanings specified below
(such meanings being equally applicable to both the singular and plural forms of
the terms defined):
"Additional Required Documents" has the meaning set forth in Section 4.1 of
this Agreement.
"Administrative Agent" means The First National Bank of Chicago, a national
banking association, as administrative agent for the Lenders pursuant to Section
10.1 of the Credit Agreements, and the successors and assigns thereof as
administrative agent for the Lenders.
"Agreement" means this Security Agreement, as it may be amended, modified
or
<PAGE>
supplemented from time to time.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Agent" means The First National Bank of Chicago, a national
banking association, as collateral agent for the Secured Parties pursuant to the
terms hereof, and the successors and assigns thereof as such collateral agent.
"Collateral Security" means:
With respect to any Contract, (i) the security interests, if any,
granted by or on behalf of the related obligor with respect thereto,
including a first priority perfected security interest in the related
Manufactured Home if an MH Contract, a first priority perfected security
interest in the related Product if a Consumer Product Contract, a first
priority security interest in the related Floor Plan Products or assets, if
a Floor Plan Receivable, and a Mortgage if a Home Equity Contract, Secured
Home Improvement Contract, or Land-and-Home Contract, (ii) all other
security interests or liens and property subject thereto from time to time
purporting to secure payment of such Contract, whether pursuant to the
agreement giving rise to such Contract or otherwise, together with all
financing statements signed by the obligor describing any collateral
securing such Contract, (iii) all guarantees, insurance and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Contract whether pursuant to the
agreement giving rise to such Contract or otherwise, and (iv) all records
in respect of such Contract and all documents comprising the Required
Documents or the Additional Required Documents, (v) all rights under any
FHA/VA Regulations in respect of each FHA/VA Contract, (vi) all rights
under any hazard, flood or other individual insurance policy for the
benefit of the creditor of the Contract on any real estate, Manufactured
Home Consumer Product or other tangible property securing the Contract,
(vii) all rights the Grantor may have against the originating contractor or
lender if originated by a contractor or lender other than the Grantor,
(viii) all rights under any title insurance policy, if applicable, on any
property securing the Contract.
"Contracts" means Consumer Product Contracts, Home Equity Contracts, Home
Improvement Loans, MH Contracts, Asset-Based Receivables, Floor Plan Receivables
and Other Eligible Receivables.
"Credit Agreements" means the Long Term Credit Agreement and the Short Term
Credit Agreement and ,after the expiration of the Short Term Credit Agreement,
the Long Term Credit Agreement.
"Default" means any one or more of the events described in Section 12
hereof.
"Grantor" means Green Tree Financial Corporation, a Delaware corporation,
and its
<PAGE>
successors.
"Indemnitee" means any Person entitled to be indemnified by the Grantor
pursuant to Section 15 hereof.
"Lenders" means, collectively, the "Lenders" as defined under each of the
Credit Agreements and their respective successors and assigns.
"Long Term Credit Agreement" means that certain Credit Agreement (3-year)
dated as of April 29, 1997 among the Grantor, the Administrative Agent and the
lenders party thereto, as heretofore or hereafter amended, renewed, modified or
supplemented from time to time.
"Proceeds" shall mean "proceeds," as such term is defined in Section 9-
306(l) of the UCC, and, in any event, includes, without limitation, (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to the
Grantor from time to time with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable to the Grantor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), and (c)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Required Documents" is defined in Section 4.1.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Obligations" shall mean, collectively, the unpaid principal of and
interest on the Loans and any Notes and all other obligations and liabilities of
the Grantor and to the Secured Parties (including, without limitation, all
"Obligations" (as defined in the Credit Agreements) and all interest accruing at
the then applicable rate provided in the Credit Agreements after the maturity of
the Loans and interest accruing at the then applicable rate provided in the
Credit Agreements after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Grantor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreements, the Loans, any
Notes, this Agreement, the other Loan Documents or any other document made,
delivered or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to any of the Secured Parties that are required to be paid by the
Grantor pursuant to the terms of the Credit Agreements, this Agreement or any
other Loan Document).
-3-
<PAGE>
"Secured Parties" shall mean, collectively, the Lenders, the Collateral
Agent and the Administrative Agent.
"Short Term Credit Agreement" means that certain Credit Agreement (364-day)
dated as of April 29 1997 among the Grantor, the Administrative Agent and the
lenders party thereto, as heretofore or hereafter amended, renewed, modified or
supplemented from time to time.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
2. APPOINTMENT OF COLLATERAL AGENT.
-------------------------------
Pursuant to the Credit Agreement, the Collateral Agent has been appointed
to act as secured party, agent, bailee and custodian for the exclusive benefit
of the Secured Parties with respect to the Collateral. The Collateral Agent
hereby acknowledges that it has accepted such appointment and agrees to maintain
and hold all Collateral at any time delivered to it as secured party, agent,
bailee and custodian for the exclusive benefit of the Secured Parties. The
Collateral Agent acknowledges and agrees that it is acting and will act with
respect to the Collateral for the exclusive benefit of the Secured Parties and
is not, and shall not any time in the future be, subject, with respect to the
Collateral, in any manner or to any extent, to the direction or control of the
Grantor, except as expressly permitted hereunder and under the other Loan
Documents. The Collateral Agent agrees to act in accordance with this Agreement
and in accordance with any written instructions from the Administrative Agent
delivered pursuant to either Credit Agreement. Under no circumstances shall the
Collateral Agent deliver possession of Collateral to the Grantor or any other
Person (other than the Administrative Agent) or otherwise release any Collateral
from the Lien created hereby, except in accordance with the express terms of
this Agreement or otherwise upon the written instructions of the Administrative
Agent.
3. GRANT OF SECURITY INTEREST
--------------------------
3.1 GRANT OF SECURITY INTEREST. Effective upon the occurrence of a
Security Event, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Grantor hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in all right, title and interest of the Grantor in the following
Property now owned or at any time hereafter acquired by the Grantor or in which
the Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):
(a) all Contracts identified by Grantor pursuant to a Borrowing
Base Addition Report for inclusion in the Borrowing Base including,
without
-4-
<PAGE>
limitation, all Collateral Security with respect thereto;
(b) to the extent relating to the foregoing, all files,
documents, agreements, instruments, deeds, chattel paper, inventory,
insurance policies, personal property, contract rights, accounts,
general intangibles, records, surveys, certificates, correspondence,
appraisals, computer records, tapes, discs, cards accounting records
and other books, records, information and data of the Grantor
(including all such items necessary or helpful in the administration
or servicing of the Collateral) of whatever kind or nature whatsoever
relating to the foregoing or the servicing of the foregoing or any
other Collateral, and all other documents or instruments delivered to
the Collateral Agent in respect of the Collateral, including, without
limitation, the right to receive all insurance proceeds and
condemnation awards which may be payable in respect of any of the
Property; and
(c) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements
for, and rents, profits and products of, each of the foregoing.
4. DELIVERY OF ELIGIBLE COLLATERAL FOR INCLUSION IN BORROWING BASE; RELEASE OF
COLLATERAL; COLLATERAL AGENT VERIFICATION
-----------------------------------------
4.1 DELIVERY OF ELIGIBLE COLLATERAL. From time to time, the Grantor shall
deliver or cause to be delivered to the Collateral Agent or its bailee
Collateral to be included in the Borrowing Base as permitted or required
pursuant to the Credit Agreements, by delivering to the Collateral Agent (with a
copy to the Administrative Agent) a Borrowing Base Addition Report in the form
of Exhibit 4(a) hereto, with all blanks completed in conformity therewith,
together with any financial statement reasonably requested by the Collateral
Agent. From and after the date of a Security Event, each Borrowing Base
Addition Report shall be accompanies by those documents, instruments and
agreements described on Exhibit 4(b) hereto with respect to each type of
Eligible Contract described in the Borrowing Base Addition Report (the "Required
Documents") and a financing statement meeting the requirements of the UCC or
other documents necessary to perfect the interest of the Collateral Agent in the
Eligible Contract described in the Borrowing Base. Additionally, if required by
the Collateral Agent or the Administrative Agent, the Grantor shall use diligent
efforts to promptly deliver to the Collateral Agent the items described on
Exhibit 4(c) hereto (the "Additional Required Documents"). Whenever the Grantor
shall deliver a Borrowing Base Addition Report, the Grantor shall be deemed to
have represented and warranted that (i) if the date is on or after the date of a
Security Event, it has delivered to the Collateral Agent the Required Documents
(or in the case of Wet Loans, it will deliver such Required Documents with 10
business days of origination (or acquisition from an unaffiliated Person) of the
related Contract, (ii) if the date is on or after the date of a Security Event,
it has delivered, holds in its possession or is using diligent efforts to obtain
possession of the
-5-
<PAGE>
Additional Required Documents and to deliver the Additional Required Documents
to the Collateral Agent, (iii) that each item of Collateral or Contract
constitutes an Eligible Contract as set forth in the Credit Agreement or if such
Contract does not constitute an Eligible Contract, that the Borrowing Base
(calculated as if the Collateral Value for such ineligible Contract is zero) is
not less than the outstanding amount of Loans and other Secured Obligations then
due and payable and (iv) that each of the representations and warranties set
forth in Section 6 hereof are true and correct as of such date. The Grantor
shall hold the Additional Required Documents in its possession in trust for the
benefit of the Secured Parties until delivery thereof to the Collateral Agent as
provided herein.
4.2 COLLATERAL AGENT OFFICE. The Collateral Agent shall hold all
documentation relating to or constituting Collateral delivered to it from time
to time under this Agreement or any other Loan Document in accordance with the
provisions hereof and of the other Loan Documents in a fire resistant vault,
drawer or other suitable depository in an office maintained by the Collateral
Agent on premises owned or leased or subleased by it and occupied and controlled
solely by the Collateral Agent (the "Collateral Agent Office"), which
documentation shall (x) be conspicuously marked to show the Collateral Agent's
and the other Secured Parties' interests therein and (y) not be commingled with
any other assets or property of, or held by, the Collateral Agent. The
Collateral Agent Office may, in the discretion of the Collateral Agent, be
located on premises leased or subleased to the Collateral Agent by the Grantor
or an Affiliate of the Grantor, and may be adjacent to or in the same office
building as offices maintained and occupied by the Grantor or its Affiliates;
provided, however, that (i) any such lease or sublease shall be in a form
customary in the location of such premises for arms'-length leases or subleases
of office premises between unrelated parties, and subject to clause (vi), shall
provide that the Collateral Agent shall enjoy exclusive occupancy of such
premises with no right of access being granted to or retained by the Grantor or
its other Affiliates pursuant to such lease or sublease (other than any such
right which is customary for unaffiliated, third-party landlords to be granted
in order to respond to emergencies, or in order to conduct inspection of the
premises upon reasonable notice to the Collateral Agent and in the presence of
the Collateral Agent), (ii) there shall be no doorway or other physical access
to the Collateral Agent Office directly from premises occupied exclusively by
the Grantor or any of its other Affiliates, (iii) the public entrance to the
Collateral Agent Office shall be accessible from the street, a public lobby or
other public space, and entrance by the public into the Collateral Agent Office
shall not require access to space occupied exclusively by the Grantor or any of
its other Affiliates, (iv) the public entrance to the Collateral Agent Office
shall be conspicuously marked with the name of the Collateral Agent to identify
such premises as being premises of the Collateral Agent, and there shall be no
reference in such markings to the Grantor or any of its other Affiliates, (v)
the Collateral Agent Office shall be staffed solely by employees, officers or
agents of the Collateral Agent and not of the Grantor or any of its other
Affiliates, which employees, officers and agents will be under the sole
supervision and direction of the Collateral Agent, and (vi) the Grantor shall
have access to the Collateral Agent Office, under the supervision of the
Collateral Agent, during normal business hours, which access shall be not
greater than that afforded to similar Persons in an arm's-length custodial
transaction.
-6-
<PAGE>
4.3 RELEASE OF COLLATERAL. In the event that no Default or Unmatured
Default has occurred and is continuing and in the further event that the
outstanding principal amount of Loans and other then due and owing Secured
Obligations is less than the Borrowing Base (and will continue to be less than
the Borrowing Base immediately after giving effect to any request under this
Section 4.3), the Grantor may request, by delivery to the Administrative Agent
and the Collateral Agent of a Borrowing Base Deletion Request in the form of
Exhibit 4.3 hereto, with all blanks completed in conformity therewith, that
certain specifically identified Contracts or Collateral be removed from the
Borrowing Base, and after the occurrence of a Security Event, released from the
Lien granted pursuant hereto. Delivery of a Borrowing Base Deletion Request
shall be deemed a representation and warranty by the Grantor that the above
conditions are satisfied and that no Default or Unmatured Default will exist
after giving effect to the request. Upon receipt of a Borrowing Base Deletion
Request prior to the occurrence of a Security Event and upon confirmation by the
Administration Agent that the above conditions are satisfied (or will be
contemporaneously therewith), the Contracts identified in such Borrowing Base
Deletion Request shall be deemed deleted from the Borrowing Base. Upon receipt
of a Borrowing Base Deletion Request after the occurrence of a Security Event
and upon confirmation by the Administrative Agent that the above conditions are
satisfied (or will be contemporaneously with the release), the Collateral Agent
shall release all or a portion of the Collateral identified in the Borrowing
Base Deletion Request from the Lien in favor of the Collateral Agent for the
benefit of the Secured Parties hereunder and, as evidence of such release of
Lien, shall execute and deliver to the Grantor (i) a confirmation of such
release, (ii) such UCC termination statements as are necessary to terminate all
existing UCC-1 financing statements covering the released Collateral filed by
the Collateral Agent on behalf of the Secured Parties and (iii) where relevant,
shall deliver to Grantor all original and other documents pertaining solely to
the Collateral requested to be released.
4.4 MASTER BORROWING BASE LIST. The Grantor will maintain a master list
(which may be in electronic form) (the "Master Collateral Report") of Collateral
or Contracts which at any time constitute a part of the Borrowing Base and
within 2 Business Days after delivery of a Borrowing Base Addition Report or a
Borrowing Base Deletion report shall deliver a revised copy of the Master
Collateral Report to the Collateral Agent. The Company will cause the portions
of its electronic records relating to the Collateral to be clearly and
unambiguously marked to indicate that such Contracts or Collateral constitutes
part of the Borrowing Base and after the occurrence of a Security Event, is
pledged to the Collateral Agent, as security for the Secured Obligations.
4.5 If the Collateral Agent is First Bank National Association or an
affiliate, the Collateral Agent will, after the occurrence of a Security Event
and upon the written request and direction of the Grantor, confirm, to the
extent the Collateral Agent's electronic records allow it to so, whether:
(A) Any Contract constituting Collateral is pledged by the Grantor to
any other
-7-
<PAGE>
party for whom the Collateral Agent maintains records; or
(B) Any Contract pledged or to be pledged or sold by the Grantor to
any other party (for whom the Collateral Agent maintains records),
constitutes Collateral.
4.6 COLLATERAL AGENT'S REVIEW OF COLLATERAL
(a) Review of Collateral. Upon receipt of Required Documents
specified in Exhibit 4(b) hereto for any Collateral, the Collateral Agent
shall promptly review the same and verify that:
(i) all Required Documents appear regular on their face and
remain in the Collateral Agent's possession;
(ii) all documents submitted are consistent with the information
provided in the schedules attached to the Borrowing Base Addition
Report as to the obligor's name, face amount and loan or account
number;
(iii) any note or Mortgage each bears an original signature or
signatures which appear to be those of the person or persons named as
the maker or mortgagor or trustor, or in the case of a copy of a
Mortgage, such copy bears what appears to be a reproduction of such
signature or signatures; and
(iv) such other matters as may be reasonably requested by
Administrative Agent in writing and agreed to by Collateral Agent.
Such verification of Collateral delivered during any period covered by a
status report referred to in Section 4.6 (c) hereof shall be set forth in such
report. If the Collateral Agent (x) notes any exception in the review described
in subsections (i) through (vi) above, (y) determines that any item of
Collateral does not satisfy the requirements of the Required Documents for
inclusion in Eligible Contracts or (z) questions, in its reasonable discretion,
the genuineness, regularity, propriety, or accuracy of any item of Collateral,
the Collateral Agent shall note the same as not constituting an Eligible
Contract and promptly advise Grantor thereof. Until such exception is cured,
such Contract shall not constitute an Eligible Contract. Notwithstanding the
foregoing as to any financing statements or other documentation which is not
specifically described such that Collateral Agent can, without reference to any
other information, determine if such Required Document has been delivered,
Collateral Agent shall be entitled to rely on the representation of Grantor that
such Required Document has been delivered.
(b) Borrowing Base Determination; Determination Assumptions. On any
Business Day after the occurrence of a Security Event, the Collateral Agent
shall at the request of the Administrative Agent use its best effort to compute
the value of the Borrowing Base and notify the Administrative Agent of any such
determination. In the event either the Collateral
-8-
<PAGE>
Agent determines that a discrepancy exists with the Borrowing Base as most
recently determined by the Grantor or is unable to determine such Borrowing
Base, the Grantor shall cooperate with the Collateral Agent to reconcile such
discrepancy or determine such Borrowing Base promptly but in any event not later
than the following Business Day and prior to any delivery of a Borrowing Base
Certificate to the Administrative Agent. In making any Borrowing Base
Determination or other calculation involving a determination of the value of the
Borrowing Base, the Collateral Agent shall be permitted to rely, without
independent investigation of the correctness thereof, on the information
supplied by the Grantor to the Collateral Agent on the related Borrowing Base
Certificate.
(c) Reports. After the occurrence of a Security Event, the Collateral
Agent shall deliver to: (i) the Administrative Agent and the Grantor, (A)
within three Business Days after the end of the each month, a basic status
report in form and substance reasonably acceptable to the Administrative Agent
and the Collateral Agent with respect to the status of the Borrowing Base
("Basic Status Report") as of the end of the preceding month and (B) within one
Business Day after the end of each week, a report in form and substance
acceptable to the Administrative Agent with respect to exceptions noted by the
Collateral Agent in accordance with Section 4.5(a) above outstanding as of the
end of the preceding week (an "Outstanding Exceptions Report"), and (ii) to the
Administrative Agent and the Lenders, from time to time, such other reports and
information as the Administrative Agent or the Majority Lenders may from time to
time reasonably request. In preparing such reports, the Collateral Agent shall
be entitled to rely, without independent investigation (other than the review
steps described in Section 4.5 (a) above), on information supplied to the
Collateral Agent by the Grantor.
5. RIGHTS OF COLLATERAL AGENT AND SECURED PARTIES; LIMITATIONS ON COLLATERAL
AGENT'S AND SECURED PARTIES' OBLIGATIONS.
-----------------------------------------
5.1. GRANTOR REMAINS LIABLE. It is expressly agreed by the Grantor that
anything herein or therein to the contrary notwithstanding, the Grantor shall
remain liable under the Collateral and all agreements relating to the Collateral
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of the Collateral
and in accordance with the terms of any agreements giving rise thereto. Neither
the Collateral Agent nor any Secured Party shall have any obligation or
liability under any instrument, agreement, contract or other document by reason
of or arising out of this Agreement or the receipt by the Collateral Agent or
any such Secured Party pursuant hereto or thereto of any payment relating to any
Collateral, nor shall the Collateral Agent or any other Secured Party be
obligated in any manner to perform any of the obligations of the Grantor
thereunder, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Collateral or any agreement giving rise
thereto, to present or file any claim, to take any action to enforce any
performance or to collect the payment or any amount which may have been assigned
to it or to which it may be
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<PAGE>
entitled at any time.
5.2 COLLECTIONS ON COLLATERAL. Subject to the provisions of Sections 14.1
and 14.2, the Collateral Agent hereby authorizes the Grantor to collect all sums
in respect of the Collateral, subject, so long as the Grantor has rights in the
Collateral, to the Collateral Agent's direction and control after the occurrence
of a Security Event, and the Collateral Agent may, so long as the Grantor has
rights in the Collateral, curtail or terminate said authority at any time after
the occurrence and during the continuance of a Security Event and a Default or
Unmatured Default of the type specified in Section 7.7 of the Credit Agreements.
All Proceeds constituting collections in respect of the Collateral while held by
the Collateral Agent (or by the Grantor in trust for the Collateral Agent and
the Lenders) shall continue to be collateral security for all of the Secured
Obligations.
5.3 NOTICE TO CONTRACTING PARTIES. Upon the request of the Collateral
Agent at any time after the occurrence and during the continuance of an event of
Default or Unmatured Default of the type specified in Section 7.7 of the Credit
Agreement, the Grantor shall promptly notify parties to any contract
constituting Collateral that such contract has been assigned to the Collateral
Agent. The Collateral Agent may from time to time during the continuance of a
Default communicate with parties to any such contract.
6. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Grantor represents and warrants to the Collateral Agent, on behalf of
the Secured Parties, which representations and warranties shall survive the
execution and delivery of this Agreement and any investigation by or on behalf
of the Collateral Agent or any Secured Party, as follows:
6.1 CORPORATE EXISTENCE AND STANDING. The Grantor is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified and in good standing as a
foreign corporation and is duly authorized to conduct its business in each
jurisdiction in which its business is conducted or proposed to be conducted,
except where the failure to be so qualified may not reasonably be expected to
have a Material Adverse Effect.
6.2 AUTHORIZATION AND VALIDITY. The Grantor has the requisite power and
authority (corporate and otherwise) and legal right to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by the Grantor of this Agreement and the performance of its obligations
hereunder have been duly authorized by proper corporate proceedings, and this
Agreement constitutes the legal, valid and binding obligation of the Grantor
enforceable against the Grantor in accordance with its terms and, after the
occurrence of a Security Event, creates a valid security interest which will
thereafter be enforceable against the Grantor in the Collateral, except as
enforceability may be limited by bankruptcy, insolvency or
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similar laws affecting the enforcement of creditors' rights generally.
6.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery by
the Grantor of this Agreement, the creation and perfection of a security
interest in the Collateral as contemplated hereby, nor compliance with the
provisions hereof, will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Grantor or the Grantor's
articles of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Grantor is a party or is subject, or by
which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien (except to the
extent created by this Agreement) in, of or on the property of the Grantor
pursuant to the terms of any such indenture, instrument or agreement. No
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required either for the execution
and delivery by the Grantor of this Agreement or for the performance by the
Grantor of its obligations under this Agreement except for filings expressly
contemplated hereby.
6.4 PRINCIPAL LOCATION. The Grantor's mailing address, and location of
its chief executive office and the locations at which Grantor maintains books
and records relating to the Collateral, are set forth on Exhibit 6.4 hereto.
6.5 TITLE; NO OTHER LIENS. Except for the Lien granted after the
occurrence of a Security Event to the Collateral Agent hereunder, the Grantor
has good and marketable title, to each item of Collateral, free and clear of any
and all Liens or claims of others. No security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Collateral Agent, for the ratable benefit of the Secured Parties,
pursuant to this Agreement.
6.6 PERFECTION OF LIENS. On and after the Security Perfection Date, all
filings, registrations, recordings and actions necessary or appropriate to
create, preserve, protect and perfect the security interest granted by the
Grantor to the Collateral Agent, on behalf of the Secured Parties, hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent, on behalf of the Secured Parties, pursuant to
this Agreement in and to the Collateral constitutes a perfected security
interest (except for Collateral consisting of Wet Loans which security interest
shall constitute a perfected security interest within 10 Business Days after the
origination (or purchase from an unaffiliated person) thereof), superior and
prior to the rights of all other Persons therein and subject to no other Liens
and is entitled to all the rights, priorities and benefits afforded by the UCC
or other relevant law as enacted in any relevant jurisdiction which relates to
perfected security interests.
7. COVENANTS.
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From the date of this Agreement, and thereafter until this Agreement is
terminated pursuant to Section 16.12:
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7.1 FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL PAPER. At
any time and from time to time after the occurrence of a Security Event, upon
the written request of the Collateral Agent, and at the sole expense of the
Grantor, the Grantor will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, using its best efforts to secure all consents and
approvals necessary or appropriate for the assignment to the Collateral Agent of
any Collateral held by the Grantor or in which the Grantor has any rights not
heretofore assigned the filing of any financing or continuation statements under
the UCC in effect in any jurisdiction with respect to the Liens created hereby,
and, at any time when a Default is continuing, the filing or recording of any
other assignments, instruments and documents under applicable real property law
relating to the Collateral, to the extent that the Collateral Agent has not
become satisfied, through receipt of appropriate legal opinions or otherwise,
that the filing or recording of such assignments, instruments or documents is
not required under applicable real property law. The Grantor also hereby
authorizes the Collateral Agent to file any such financing or continuation
statement without the signature of the Grantor to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement of filing in any jurisdiction.
After the occurrence of a Security Event, the Grantor will deliver to the
Collateral Agent (a) the originals of all instruments, documents and chattel
paper which are evidenced by certificates included in the Collateral endorsed in
blank, marked with such legends and assigned as the Collateral Agent shall
specify, and (b) hold in trust for the Collateral Agent, on behalf of the
Secured Parties, upon receipt and immediately thereafter deliver to the
Collateral Agent, on behalf of the Secured Parties, any instrument or document
evidencing or constituting Collateral.
7.2 INSPECTION. The Grantor will permit the Collateral Agent and the
Secured Parties, by their representatives and agents, to inspect the Collateral,
to examine and make copies of the records of the Grantor relating thereto, and
to discuss the Collateral and the records of the Grantor with respect thereto
with, and to be advised as to the same by, the Grantor's officers and employees
and, in the case of any item of Collateral, with any person or entity which is
or may be obligated thereon, all upon reasonable prior notice from the
Collateral Agent and at such reasonable times and intervals as the Collateral
Agent may determine, all at the Grantor's expense with the same rights to, and
limited to, expense reimbursement as provided in accordance with Section 9.7 of
the Credit Agreements or inspections permitted thereby.
7.3 RECORDS AND REPORTS. The Grantor will keep and maintain at its own
cost and expense satisfactory and complete records of the Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to the Collateral and all other dealings with the Collateral.
After the occurrence of a Security Event, the Grantor will mark its books and
records pertaining to the Collateral to evidence this Agreement and the Lien and
security interests granted hereby. For the Collateral Agent's and the other
Secured Parties' further security, the Grantor agrees that after the occurrence
of a Security Event, the Collateral
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Agent and the other Secured Parties shall have a special property interest in
all of the Grantor's books and records pertaining to the Collateral and, upon
the occurrence and during the continuance of any Default or Unmatured Default,
the Grantor shall deliver and turn over any such books and records to the
Collateral Agent or to its representatives at any time on demand of the
Collateral Agent.
7.4 COMPLIANCE WITH LAWS, ETC. The Grantor will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any Governmental Authority, applicable to the Collateral or any part thereof or
to the operation of the Grantor's business; provided, however, that the Grantor
may contest any act, regulation, order, decree or direction in any reasonable
manner which shall not, in the sole opinion of the Collateral Agent, adversely
affect the Collateral Agent's rights hereunder or adversely affect the first
priority of its Lien on and security interest in the Collateral for the benefit
of the Secured Parties.
7.5 PAYMENT OF OBLIGATIONS. The Grantor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom and all claims of
any kind (including, without limitation, claims for labor, materials and
supplies), except that no such charge need be paid if (i) such non-payment does
not involve any danger of the sale, forfeiture or loss of any of the Collateral
or any interest therein and is being contested in good faith by appropriate
proceedings, and (ii) such charge is adequately reserved against in accordance
with and to the extent required by Agreement Accounting Principles.
7.6 COMPLIANCE WITH TERMS OF AGREEMENTS, ETC. In all material respects,
the Grantor will comply with and perform with all obligations, covenants,
conditions and other agreements with respect to any of the Collateral and all
other agreements related thereto to which it is a party or by which it is bound.
7.7 LIMITATION ON LIENS ON COLLATERAL. The Grantor will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral except the
Liens created under this Agreement and the other Loan Documents, and will defend
the right, title and interest of the Collateral Agent and the other Secured
Parties in and to any of the Grantor's rights in and under the Collateral and in
and to the Proceeds thereof against the claims and demands of all Persons
whomsoever.
7.8 LIMITATIONS ON DISPOSITION. At any time when the Borrowing Base is
less than or equal to the amount of Loans and other Secured Obligations then due
and payable, the Grantor will not sell, lease, transfer or otherwise dispose of
any of the Collateral, or contract to do so (unless the contract or the related
documentation provides that simultaneously with the consummation thereof any
Loans secured by the Collateral will be prepaid to the extent required by the
Credit Agreement).
7.9 FURTHER IDENTIFICATION OF COLLATERAL. After the occurrence of a
Security Event,
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the Grantor will, if so requested by the Collateral Agent, furnish to the
Collateral Agent as often as the Collateral Agent reasonably requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
7.10. NOTICES. The Grantor will advise the Collateral Agent promptly, in
reasonable detail, (i) of any Lien or claim made or assessed against any of the
Collateral, (ii) of any material change in the composition of the Collateral,
and (iii) of the occurrence of any other event which would have a material
adverse effect on the aggregate value of the Collateral or on the security
interests created hereunder.
7.11. CHANGE IN LOCATION OR NAME. The Grantor will not (a) change its
principal place of business or chief executive offices to a location other than
a location specified on Exhibit 6.4 hereto, (b) change its name, or (c) change
its mailing address, unless the Grantor shall have given the Collateral Agent
not less than thirty (30) days' prior written notice thereof, and the Collateral
Agent shall have determined that after giving effect to any such change of name,
address or chief executive offices and the making of any additional filings,
registrations or recordings as the Collateral Agent shall determine necessary,
the Collateral Agent, for the benefit of the Lenders, shall have a valid and
continuing, first perfected security interest in the Collateral.
7.12. OTHER FINANCING STATEMENTS. The Grantor will not sign or authorize
the signing on its behalf of any financing statement naming it as debtor
covering all or any portion of the Collateral, except financing statements
naming the Collateral Agent, on behalf of the Secured Parties, as secured party.
7.13. FURTHER ACTIONS. After the occurrence of a Security Event, the
Grantor will, at its own expense, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, as the Collateral Agent may reasonably require.
8. STANDARD OF CARE OF COLLATERAL AGENT; DUTIES;
INDEMNIFICATION.
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The Collateral Agent is a bailee for hire and shall hold the Collateral in
accordance with customary standards for those engaged as custodians of
commercial documents or other Collateral in similar capacities. Nothing
contained herein or in the Credit Agreements shall be construed to make the
Collateral Agent a trustee or other fiduciary for the Administrative Agent or
any other Secured Party. Notwithstanding anything to the contrary contained
herein:
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(a) The provisions of the Credit Agreements, this Agreement and the
schedules, exhibits and attachments hereto set forth the exclusive duties of the
Collateral Agent and no implied duties or obligations shall be read into this
Agreement against the Collateral Agent. The Collateral Agent shall not be bound
in any way by any agreement or contract other than this Agreement and the
schedules, the exhibits and the attachments hereto and any other agreement to
which it is a party. The Collateral Agent shall not be required to ascertain or
inquire as to the performance or observance of any or the conditions or
agreements to be performed or observed by any other party, except as
specifically provided in this Agreement and the annexes, schedules, exhibits and
attachments hereto. The Collateral Agent disclaims any responsibility for the
validity or accuracy of the recitals to this Agreement and any representations
and warranties contained herein, unless specifically identified as recitals,
representations or warranties of the Collateral Agent.
(b) Throughout the term of this Agreement, except as expressly set forth
herein, the Collateral Agent shall have no responsibility for ascertaining the
value, collectability, insurability, enforceability, effectiveness or
suitability of any Collateral, the title of any party therein, the validity or
adequacy of the security afforded thereby or the validity of this Agreement
(except as to Collateral Agent's authority to enter into this Agreement and to
perform its obligations hereunder).
(c) The Collateral Agent shall not be under any duty to examine or pass
upon the genuineness, validity, or legal sufficiency of any of the documents
constituting part of any Collateral file, including, without limitation, whether
any document purporting to be an assignment is in recordable form or whether any
loan or document is in compliance with Regulation Z or other applicable law, and
shall be entitled to assume that all documents constituting part of such files
are genuine and valid and that they are what they purport to be and that any
endorsements or assignments thereof are genuine and valid. The Collateral Agent
may rely upon and shall be protected in acting in good faith upon any notice,
resolution, request, consent, order, certificate, report, statement or other
paper or document appearing on its face to be genuine and to have been signed or
presented by the proper party or parties or by a person or persons authorized to
act on behalf of the proper party or parties. The Collateral Agent shall not be
liable for any action or omission to act as bailee, except for its own gross
negligence or willful misconduct.
(d) No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if, in its judgment, it shall believe that repayment of such
funds or adequate indemnity against such risk or liability is not assured to it.
(e) The Collateral Agent is not responsible for preparing or filing any
reports or returns relating to federal, state or local income taxes with respect
to this Agreement, other than for the Collateral Agent's compensation or for
reimbursement of expenses.
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(f) The Grantor agrees to reimburse, indemnify and hold harmless the
Collateral Agent and its directors, officers, employees, Affiliates and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, reasonable attorneys' fees and disbursements and allocated costs of
internal counsel) or disbursements of any kind or nature that may be imposed on,
incurred by or asserted against the Collateral Agent and its directors,
officers, employees, Affiliates and agents arising from or connected with the
Collateral Agent's execution and performance of this Agreement, including, but
not limited, to, the claims of any third parties, including any assignee. The
foregoing shall apply regardless of whether such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements are in any way or to any extent caused, in whole or in part, by
any negligent act or omission of any kind by the Collateral Agent; provided that
the Grantor shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments' suits, costs,
expenses or disbursements resulting from gross negligence or willful misconduct
on the part of the Collateral Agent. This provision shall survive the
termination of this Agreement.
(g) The Collateral Agent shall have the power to employ such agents as it
may deem necessary or appropriate in the performance of its duties and the
exercise of its powers under this Agreement.
9. FEES AND EXPENSES OF COLLATERAL AGENT.
-------------------------------------
The Collateral Agent shall notify the Grantor of all reasonable fees,
expenses, and charges of the Collateral Agent arising out of the Collateral
Agent's entering into this Agreement and performing its duties and obligations
under this Agreement (including in connection with the enforcement of remedies
hereunder and realization upon the Collateral), and (except as set forth in
Section 8(g) hereof) such fees, expenses and charges shall be paid promptly by
the Grantor or, if already paid by the Collateral Agent, the Grantor shall
reimburse the Collateral Agent promptly therefor. The Collateral Agent shall
receive reasonable additional compensation from the Grantor for services
rendered beyond those specifically enumerated in this Agreement; provided that
the Collateral Agent shall, to the extent possible, provide reasonable advance
notice to the Grantor of such services and its estimate of fees, expenses and
charges in connection therewith. The Collateral Agent may employ, at the
Grantor's expense, such legal counsel and other experts as it reasonably deems
necessary in connection with entering into this Agreement and performing its
duties and obligations under this Agreement. The Collateral Agent may rely upon
and shall be protected if acting in good faith upon the advice of such legal
counsel or experts.
10. REMOVAL OR RESIGNATION OF COLLATERAL AGENT.
------------------------------------------
Either Administrative Agent, upon the direction of the Lenders under the
applicable Credit Agreement, may, at any time, remove and discharge the
Collateral Agent from the
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performance of its duties under this Agreement, effective (a) immediately if
such termination is for cause or (b) upon not less than thirty (30) days' prior
written notice to the Collateral Agent and the Grantor if such termination is
without cause. In addition, the Collateral Agent may, at any time, terminate its
agreement to act as the Collateral Agent hereunder, effective upon sixty (60)
days' prior written notice to the Grantor, the Administrative Agent and the
Lenders. Upon the effective date of any such termination, the Collateral Agent
shall promptly deliver the Collateral then held by it and any and all books and
records (or copies thereof) relating thereto, to the Administrative Agent or to
such other person or entity as the Administrative Agent may direct in writing,
and shall cooperate with the Administrative Agent and any successor Collateral
Agent in order to effect the orderly transfer of the Collateral and the rights
and obligations of the Collateral Agent hereunder to any successor Collateral
Agent. Upon resignation or removal of the Collateral Agent hereunder, the
Administrative Agent and the Majority Lenders shall appoint a successor
Collateral Agent; provided, however, that The First National Bank of Chicago may
assign its rights and obligations under this Agreement as Collateral Agent to
First Bank National Association at any time without the consent of any Person.
The indemnification obligations of the Grantor with respect to the Collateral
Agent (both as set forth herein and in the Credit Agreements) shall survive any
termination of this Agreement, the Credit Agreements or any assignment by the
Collateral Agent of its rights and obligations hereunder. If no successor
Collateral Agent shall have been so appointed, and shall have accepted such
appointment, before the end of the thirty (30) or sixty (60) day period referred
to above, as the case may be, then the Administrative Agent (or, at the
discretion of the Administrative Agent, an Affiliate of the Administrative
Agent) shall succeed as Collateral Agent.
11. THE COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
------------------------------------------------------
(a) The Grantor hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Grantor and in the name of the Grantor or in its own
name, from time to time in the Collateral Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which the Collateral Agent may deem necessary or desirable to
accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, hereby gives the Collateral Agent the power and
right, on behalf of the Grantor, without notice to or assent by the Grantor to
do the following:
(i) at any time, (A) to execute on behalf of the Grantor as debtor and
to file financing statements necessary or desirable in the Collateral
Agent's sole discretion to perfect and to maintain the perfection and
priority of the Collateral Agent's security interest in the Collateral, on
behalf of the Secured Parties or (B) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with
respect to the Collateral as a financing statement in such offices as the
Collateral Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Collateral
Agent's security interest in the Collateral;
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(ii) after the occurrence of a Security Event, to ask, demand,
collect, receive and give acquittances and receipts for any and all moneys
due and to become due under any Collateral and, in the name of the Grantor
or in its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral and to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever payable and to
file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Collateral Agent for
the purpose of collecting any and all such moneys due under any Collateral
whenever payable;
(iii) after the occurrence of a Security Event, to pay or discharge
taxes, Liens, security interests or other encumbrances levied or placed on
or threatened against the Collateral, to effect any insurance called for by
the terms of this Security Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(iv) after the occurrence of a Security Event, (A) to direct any party
liable for any Collateral payment under any of the Collateral to make any
and all Collateral payments due and to become due thereunder, directly to
the Collateral Agent or as the Collateral Agent shall direct; (B) to
receive payment of and receipt for any and all moneys, claims and other
amounts due and to become due at any time, in respect of or arising out of
any Collateral; (C) to sign and indorse any invoices, freight or express
bills, bills of lading, storage, trust or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
accounts and other documents constituting or relating to the Collateral;
(D) to commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the Collateral
or any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceedings brought against
the Grantor with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Collateral Agent may
deem appropriate; (G) to license or, to the extent permitted by an
applicable license, sublicense, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any patent or trademark
constituting Collateral, throughout the world for such term or terms, on
such conditions, and in such manner, as the Collateral Agent shall in its
sole discretion determine; and (H) generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Collateral Agent were the
absolute owner thereof for all purposes, and to do, at the Collateral
Agent's option and the Grantor's expense, at any time, or from time to
time, all acts and things which the Collateral Agent reasonably deems
necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's and the other Secured Parties' Lien therein, in order to
effect the intent
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of this Agreement, all as fully and effectively as the Grantor might do.
(b) The Collateral Agent agrees that, except upon the occurrence and during
the continuance of any Default or Unmatured Default, it will forbear from
exercising the power of attorney or any rights granted to the Collateral Agent
pursuant to this Section 11. The Grantor hereby ratifies, to the extent
permitted by law, all that any said attorney shall lawfully do or cause to be
done by virtue hereof. The power of attorney granted pursuant to this Section
11, being coupled with an interest, shall be irrevocable until the Secured
Obligations are indefeasibly paid in full.
(c) The powers conferred on the Collateral Agent hereunder are solely to
protect the Collateral Agent's and the other Secured Parties' interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Collateral Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agent shall be responsible to the Grantor
for any act or failure to act, except for its own gross negligence or willful
misconduct.
(d) The Grantor also authorizes the Collateral Agent, at any time and from
time to time upon the occurrence and during the continuance of a Default or
Unmatured Default, (i) to communicate in its own name with any party to any
contract, instrument, agreement or document constituting Collateral with regard
to the assignment of the right, title and interest of the Grantor therein and
thereunder and other matters relating thereto and (ii) to execute, in connection
with the sale provided for in Section 12.3 hereof, any indorsements, assignments
or other instruments of conveyance or transfer with respect to the Collateral.
12. DEFAULT.
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12.1. The occurrence of any one or more of the following events shall
constitute a Default:
(a) Any representation or warranty made or deemed made by or on behalf
of the Grantor to the Collateral Agent or the Secured Parties under or in
connection with this Agreement shall be false in any material respect as of
the date on which made.
(b) The breach by the Grantor of any of the terms or provisions of
Sections 7.4, 7.7 or 7.8 hereof.
(c) The breach by the Grantor (other than a breach which constitutes a
Default under Section 12.1(a) or 12.1(b)hereof) of any of the terms or
provisions of this Agreement which is not remedied within thirty (30) days
after the giving of written notice
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by the Collateral Agent.
(d) The occurrence of any "Default" under, and as defined in, either
of the Credit Agreements.
Notwithstanding the foregoing, in the event of any breach hereunder
arising due to one or more Contracts ceasing to constitute Eligible Contracts,
Grantor shall have a period of 5 business days after learning thereof to provide
substitute Collateral in accordance with the provisions of Section 4.1 to cure
such breach.
12.2. ACCELERATION AND REMEDIES. If any Default described in Section 7.6 or
7.7 of the Credit Agreements occurs, the Secured Obligations shall immediately
become due and payable without any election or action on the part of the
Collateral Agent or any Lender. If any other Default occurs, the Secured
Obligations may be declared to be due and payable in accordance with the Credit
Agreements, whereupon the Secured Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Grantor hereby expressly waives.
12.3. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. The Grantor agrees
that, if any Default shall have occurred and be continuing, then and in every
such case, the Collateral Agent may (and upon the direction of the
Administrative Agent under either of the Credit Agreements (acting upon the
direction of the Majority Lenders under the applicable Credit Agreement) shall):
(a) personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from the Grantor or any other Person
who then has possession of any part thereof with or without notice or
process of law (unless the same shall be required by applicable law), and
for that purpose may enter in an orderly and lawful manner upon the
Grantor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of the Grantor;
(b) instruct the obligor or obligors on any contract, agreement,
instrument or other obligation constituting the Collateral to make any
payment required by the terms of such instrument or agreement directly to
the Collateral Agent, on behalf of the Secured Parties;
(c) sell or otherwise liquidate, or direct the Grantor to sell or
otherwise liquidate, any or all investments made in whole or in part with
the Collateral or any part thereof, and take possession of the proceeds of
any such sale or liquidation;
(d) with respect to Secured Obligations which are contingent and
cannot be accelerated by their nature, require the Grantor to deposit cash
or other acceptable
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collateral in an amount sufficient to cover principal, interest and fees
which will have accrued by the maturity date on said Secured Obligations to
be held as security for said Secured Obligations in the special collateral
account referred to in Section 14.2 hereof; and
(e) take possession of the Collateral or any part thereof, by
directing the Grantor in writing to deliver the same to the Collateral
Agent, on behalf of the Secured Parties, at any reasonable place or places
designated by the Collateral Agent, in which event the Grantor shall at its
own expense:
(i) forthwith cause the same to be moved to the place or places
so designated by the Collateral Agent and there delivered to the
Collateral Agent, on behalf of the Secured Parties;
(ii) store and keep any Collateral so delivered to the Collateral
Agent, on behalf of the Secured Parties, at such place or places
pending further action by the Collateral Agent; and
(iii) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition;
it being understood that the Grantor's obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Collateral Agent,
on behalf of the Secured Parties, shall be entitled to a decree requiring
specific performance by the Grantor of said obligation.
12.4. DISPOSITION OF THE COLLATERAL.
-----------------------------
(a) Any Collateral repossessed by the Collateral Agent, on behalf of
the Secured Parties, under or pursuant to Section 12.3 hereof and any other
Collateral whether or not so repossessed by the Collateral Agent, on behalf
of the Secured Parties, upon the occurrence of a Default may be sold,
leased or otherwise disposed of under one or more contracts or as an
entirety and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms and for such prices as the
Collateral Agent may determine to be commercially reasonable. Upon the
occurrence and during the continuance of any Default, the Collateral Agent,
on behalf of the Secured Parties, shall have the power to foreclose the
Grantor's right of redemption in the Collateral by sale, lease or other
disposition of the Collateral in accordance with the Uniform Commercial
Code as enacted in each state where the Collateral is located. Any of the
Collateral may be sold, leased or otherwise disposed of in the condition in
which the same existed when taken by the Collateral Agent, on behalf of the
Secured Parties, or after any overhaul or
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repair which the Collateral Agent shall determine to be commercially
reasonable and the Collateral Agent shall be entitled to reimbursement for
the payment of any costs or expenses of such overhaul or repair. Any such
disposition which shall be a private sale or other private proceeding
permitted by the requirements of applicable law shall be made after written
notice to the Grantor specifying the time at which such disposition is to
be made and the intended sale price or other consideration therefor. Any
such disposition which shall be a public sale permitted by such
requirements of applicable law shall be made after written notice to the
Grantor specifying the time and place of such sale and, in the absence of
applicable requirements of law, shall be by public auction. To the extent
permitted by any such requirement of law, the Collateral Agent, on behalf
of the Secured Parties, may itself bid for and become the purchaser of the
Collateral or any item thereof, offered for sale in accordance with this
Section 12.4 without accountability to the Grantor. In the payment of the
purchase price of the Collateral the purchaser shall be entitled to have
credit on account of the purchase price thereof of amounts owing to such
purchaser on account of any of the Secured Obligations held by such
purchaser and any such purchaser may deliver notes, claims for interest, or
claims for other payment with respect to such Secured Obligations in lieu
of cash up to the amount which would, upon distribution of the net proceeds
of such sale, be payable thereon. Such notes, if the amount payable
hereunder shall be less than the amount due thereon, shall be returned to
the holder thereof after being appropriately stamped to show partial
payment. If, under mandatory requirements of applicable law, the Collateral
Agent, on behalf of the Secured Parties, shall be required to make
disposition of the Collateral within a period of time which does not permit
the giving of notice to the Grantor as hereinabove specified, the
Collateral Agent need give the Grantor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law.
(b) No notification need be given to the Grantor if it has signed,
after an Unmatured Default or Default, a statement renouncing or modifying
any right to notification of sale or other intended disposition. In
addition to the rights and remedies granted to it in this Agreement and in
the Credit Agreements, the Collateral Agent, on behalf of the Secured
Parties, shall have all the rights and remedies of a secured party under
the Uniform Commercial Code of the state in which the Collateral is
located.
13. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
(a) No delay or omission of the Collateral Agent, the Administrative Agent
or any Lender to exercise any right or remedy granted under this Agreement shall
impair such right or remedy or be construed to be a waiver of any Default or
Unmatured Default or an acquiescence therein, and any single or partial exercise
of any such right or remedy shall not preclude other or further exercise thereof
or the exercise of any other right or remedy. No waiver, amendment or other
variation of the terms, conditions or provisions of this Agreement whatsoever
shall be valid unless in writing signed by the Collateral Agent and the
Administrative Agent (with the consent of the Majority Lenders under each of the
Credit Agreements) (if so required by the Credit
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Agreements), and then only to the extent specifically set forth in such writing;
provided, however, that any amendment purporting to release all or substantially
all of the Collateral other than in accordance with Section 4.3 shall be valid
only if consented to by each of the Lenders
(b) The Grantor, the Collateral Agent and the Administrative Agent, at any
time and from time to time, may enter into additional security documents or one
or more agreements supplemental hereto for the purpose of subjecting additional
property to liens in favor of the Collateral Agent for the benefit of the
Secured Parties.
(c) Notwithstanding the provisions of Section 13(a) hereof, and without
the consent of any Person, the Collateral Agent (at the direction of the
Administrative Agent) and the Grantor may, from time to time, enter into written
agreements supplemental hereto or to the other Security Documents for the
purpose of (w) modifying the obligations of or other provisions relating to the
Collateral Agent hereunder in a manner which is not adverse to the interests of
the Secured Parties, (x) making any ministerial or clarifying modification to
this Agreement or any Security Documents, including, but not limited to,
clarifying or correcting clerical or typographical errors in this Agreement or
any Security Document; (y) releasing Collateral from the security interest of
this Agreement pursuant to the terms of Section 4.3 hereof or (z) modifying the
Exhibits and Schedules hereto, including without limitation changes to Exhibits
4(b) and 4(c) as to the items constituting Required Documents or Additional
Required Documents.
(d) All rights and remedies contained in this Agreement or by law afforded
shall be cumulative and all shall be available to the Collateral Agent and the
Secured Parties until the Secured Obligations have been paid in full.
14. PROCEEDS; COLLECTION.
--------------------
14.1 COLLECTION. The Collateral Agent may at any time when a Default has
occurred and is continuing in its sole discretion by giving the Grantor written
notice, elect to require that payments with respect to the Collateral be paid
directly to the Collateral Agent, on behalf of the Secured Parties. In such
event, the Grantor shall, and shall permit the Collateral Agent to, promptly
notify the account debtors or obligors under the Collateral of the Collateral
Agent's and the Secured Parties' interest therein and direct such account
debtors or obligors to make payment of all amounts then or thereafter due under
the Collateral directly to the Collateral Agent. Upon receipt of any such
notice from the Collateral Agent, the Grantor shall thereafter hold in trust for
the Collateral Agent and the Secured Parties all amounts and proceeds received
by it with respect to the Collateral and immediately and at all times thereafter
deliver to the Collateral Agent, on behalf of the Secured Parties, all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. The Collateral Agent shall
hold and apply funds so received as provided by the terms of Sections 14.3 and
14.4 hereof.
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14.2. SPECIAL COLLATERAL ACCOUNT. The Collateral Agent may require all cash
proceeds of the Collateral received by the Collateral Agent, on behalf of the
Secured Parties, to be deposited in a special interest bearing cash collateral
account with the Collateral Agent and held there as security for the Secured
Obligations. Prior to a Default or Unmatured Default, the Grantor, upon advance
written notice to the Collateral Agent, may direct investment of the collected
balances said cash collateral account in cash and Cash Equivalents (as such term
is defined in the Credit Agreements) reasonably acceptable to the Collateral
Agent; provided, however, upon the occurrence and during the continuance of a
Default or Unmatured Default, the Grantor shall have no control whatsoever over
said cash collateral account or the investment thereof. The Collateral Agent
shall from time to time, in its sole discretion, either deposit the collected
balances in said cash collateral account into the Grantor's general operating
account with the Collateral Agent or apply the collected balances in said cash
collateral account to the payment of the Secured Obligations whether or not the
Secured Obligations shall then be due.
14.3. APPLICATION OF PROCEEDS. The proceeds of the Collateral paid to the
Collateral Agent shall be applied by the Collateral Agent to payment of the
Secured Obligations in the following order unless a court of competent
jurisdiction shall otherwise direct:
(a) FIRST, to payment of all reasonable costs and expenses of the
Administrative Agent or the Collateral Agent incurred in connection with
the collection and enforcement of the Secured Obligations or of the
security interest granted to the Collateral Agent pursuant to this
Agreement, including all costs and expenses of any sale pursuant to
Sections 12.3 and 12.4 hereof, and of any judicial or private proceedings
in which such sale may be made, and of all other expenses, liabilities and
advances made or incurred by the Administrative Agent or the Collateral
Agent and the agents and attorneys of each of them, together with interest
at the Default Rate on such costs, expenses and liabilities and on all
advances made by the Administrative Agent, the Collateral Agent or any
Lender from the date any such cost, expense or liability is due, owing or
unpaid or any such advance is made, in each case until paid in full;
(b) SECOND, ratably to payment of that portion of the Secured
Obligations constituting accrued and unpaid interest (including, if
applicable, interest owing thereon at the Default Rate) and fees from the
date due, owing or unpaid until paid in full;
(c) THIRD, ratably to payment of the principal of the Secured
Obligations, then due, owing or unpaid in respect of any Advances pursuant
to the Credit Agreements or the Notes with interest on such unpaid
principal at the Default Rate from and after the happening of any Default
until paid in full;
(d) FOURTH, ratably to payment of any other Secured Obligations due,
owing or unpaid until paid in full including, without limitation, any
Secured Obligations incurred pursuant to Section 16.3 hereof; and
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<PAGE>
(e) FIFTH, the balance, if any, after all of the Secured Obligations
have been satisfied, shall be remitted as required by law.
14.4. REMEDIES CUMULATIVE. Each and every right, power and remedy hereby
specifically given to the Collateral Agent, for the benefit of the Secured
Parties, shall be in addition to every other right, power and remedy
specifically given under this Agreement, the Credit Agreements or any other Loan
Document now or hereafter existing at law or in equity, or by statute and each
and every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Collateral Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise any of the others. No delay or omission of the Collateral Agent in the
exercise of any such right, power or remedy and no renewal or extension of any
of the Secured Obligations shall impair any such right, power or remedy or shall
be construed to be a waiver of any Default or an acquiescence therein. In the
event that the Collateral Agent, the Administrative Agent or any Lender shall
bring any suit to enforce any of its rights hereunder and shall be entitled to
judgment, then in such suit the Collateral Agent, the Administrative Agent or
such Lender may recover reasonable expenses, including attorneys' fees, which
attorneys may be employees of the Collateral Agent, the Administrative Agent or
such Lender, and the amounts thereof shall be included in such judgment.
14.5. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Agent, the
Administrative Agent or any Lender shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Collateral Agent, the Administrative Agent or such Lender, then and in every
such case the Grantor and the Collateral Agent or such Lender shall be restored
to their respective former positions and rights hereunder with respect to the
Collateral, and all rights, remedies and powers of the Collateral Agent or such
Lender shall continue as if no such proceeding had been instituted.
15. INDEMNITY.
---------
15.1. INDEMNITY.
(a) The Grantor agrees to indemnify the Collateral Agent and other
Secured Parties and their respective successors, assigns, directors,
employees, agents and servants (each an "Indemnitee") as provided by
Section 9.7 of the Credit Agreements as if such Section 9.7 were fully set
forth herein with the Collateral Agent being identified as being entitled
to indemnification thereunder.
(b) Without limiting the application of Section 15.1(a) hereof, the
Grantor
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agrees to pay, or reimburse the Collateral Agent for any and all
reasonable fees (including, without limitation, reasonable attorneys' fees,
which attorneys may be employees of the Collateral Agent), costs and
expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Collateral Agent's security
interest in the Collateral, including, without limitation, all fees and
taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes (excluding
income, franchise taxes or other taxes levied on gross earnings, profits or
the like) or Liens upon or in respect of the Collateral, premiums for
insurance with respect to the Collateral (except to the extent that the
Grantor has already paid any such premiums in compliance with the Credit
Agreements) and all other reasonable fees, costs and expenses in connection
with preparing, executing, delivering or administering this Agreement and
in connection with protecting, maintaining or preserving the Collateral and
the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits
or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 15.1(a) or (b) hereof,
the Grantor agrees to pay, indemnify and hold each Indemnitee harmless from
and against any losses, costs, damages and expenses which such Indemnitee
may suffer, expend or incur as a consequence or growing out of any
misrepresentation by the Grantor in this Agreement or the Credit Agreements
or in any statement or writing contemplated by, made or delivered pursuant
to or in connection with this Agreement or the Credit Agreements, except to
the extent that any such loss arises out of the gross negligence or willful
misconduct of such Indemnitee.
(d) If and to the extent that the obligations of the Grantor under
this Section are unenforceable for any reason, the Grantor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
(e) The obligations of the Grantor contained in this Section 15.1
shall survive the termination of this Agreement and the discharge of the
Grantor's other obligations hereunder.
15.2. INDEMNITY OBLIGATION SECURED BY COLLATERAL; SURVIVAL. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by the Collateral.
The indemnity obligations of the Grantor contained in this Agreement shall
continue in full force and effect notwithstanding the full payment of all
amounts owing under the Credit Agreements and all of the other Secured
Obligations and notwithstanding the discharge thereof and the termination of
this Agreement.
15.3. DISCRETIONARY ACTION. With respect to any discretionary action
hereunder (including, in any exhibit or schedule hereto), the Collateral Agent
shall be entitled to rely upon
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the direction of the Administrative Agent and shall have no liability to the
Secured Parties in so acting.
16. GENERAL PROVISIONS.
------------------
16.1. NOTICE OF DISPOSITION OF COLLATERAL. The Grantor hereby agrees that
any notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral shall be
deemed reasonable if sent to the Grantor, addressed as set forth in Section 17
hereof, at least ten (10) days prior to any such public sale or the time after
which any such private sale or other disposition may be made.
16.2. COMPROMISES AND COLLECTION OF COLLATERAL. The Grantor, the
Administrative Agent, the Collateral Agent and the Lenders recognize that
setoffs, counterclaims, defenses and other claims may be asserted by obligors
with respect to certain of the Collateral, that certain of the Collateral may be
or become uncollectible in whole or in part and that the expense and probability
of success in litigating a disputed portion of the Collateral may exceed the
amount that reasonably may be expected to be recovered with respect to any
Collateral. In view of the foregoing, the Grantor agrees that the Collateral
Agent, on behalf of the Secured Parties, may at any time and from time to time,
if a Default has occurred and is continuing, compromise with the obligor on any
portion of the Collateral, accept in full payment of any portion of the
Collateral such amount as the Collateral Agent in its sole discretion shall
determine or abandon any portion of the Collateral, and any such action by the
Collateral Agent shall be commercially reasonable so long as the Collateral
Agent acts in good faith based on information known to it at the time it takes
any such action.
16.3. SECURED PARTY PERFORMANCE OF GRANTOR OBLIGATIONS. Without having any
obligation to do so, upon either (a) notice to the Grantor or (b) the occurrence
of an Unmatured Default or a Default, the Collateral Agent may perform or pay
any obligation which the Grantor has agreed to perform or pay in this Agreement
and the Grantor shall reimburse the Collateral Agent for any amounts paid by the
Collateral Agent pursuant to this Section 16.3. The Grantor's obligation to
reimburse the Collateral Agent pursuant to the preceding sentence shall be an
obligation payable on demand.
16.4. SPECIFIC PERFORMANCE OF CERTAIN COVENANTS. The Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 12.3, 14
and 16.6 hereof will cause irreparable injury to the Collateral Agent and the
Secured Parties and that the Collateral Agent and the Lenders have no adequate
remedy at law in respect of such breaches and therefore agrees, without limiting
the right of the Collateral Agent and the Secured Parties to seek and obtain
specific performance of other obligations of the Grantor contained in this
Agreement, that the covenants of the Grantor contained in the Sections referred
to in this Section 16.4 shall be specifically enforceable against the Grantor.
16.5. USE AND POSSESSION OF CERTAIN PREMISES. Upon the occurrence of a
Default or
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Unmatured Default, the Collateral Agent shall be entitled to occupy and use any
premises owned or leased by the Grantor where records relating to the Collateral
are located until the Secured Obligations are paid, without any obligation to
pay the Grantor or any other Person for such use and occupancy.
16.6. DISPOSITIONS NOT AUTHORIZED. The Grantor is not authorized to sell or
otherwise dispose of the Collateral except as permitted by this Agreement and
notwithstanding any course of dealing between the Grantor and the Collateral
Agent or any Secured Party or other conduct of the Collateral Agent or any
Secured Party , no authorization to sell or otherwise dispose of the Collateral
(except as set forth in this Agreement or in the Credit Agreements) shall be
binding upon the Collateral Agent or any Secured Party unless such authorization
is in writing signed as required by Section 13 hereof.
16.7. DEFINITION OF CERTAIN TERMS. Terms defined in the Illinois Uniform
Commercial Code which are not otherwise defined in this Agreement are used in
this Agreement as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
16.8. BENEFIT OF AGREEMENT. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the Grantor, the
Administrative Agent, the Collateral Agent and the Lenders and each such
Person's successors and assigns, except that the Grantor shall not have the
right to assign its rights under this Agreement or any interest herein without
the prior written consent of the Collateral Agent. The Collateral Agent may,
subject to the provisions of Section 10, assign its rights and obligations
hereunder. The First National Bank of Chicago may assign all of its rights and
obligations as Collateral Agent hereunder to First Bank National Association at
any time without the consent of any other Person.
16.9. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Grantor contained in this Agreement shall survive the execution and delivery
of this Agreement.
16.10. TAXES AND EXPENSES. Any taxes (excluding income taxes, franchise
taxes or other taxes levied on gross earnings, profits or the like) payable or
ruled payable by any Federal or State authority in respect of this Agreement
shall be paid by the Grantor, together with interest and penalties, if any. The
Grantor shall reimburse the Collateral Agent for any and all reasonable out-of-
pocket expenses and internal charges (including reasonable attorneys', auditors'
and accountants' fees and reasonable time charges of attorneys, auditors and
accountants who may be employees of the Collateral Agent or the Lenders) paid or
incurred by the Collateral Agent in connection with the preparation, execution,
delivery, administration, collection and enforcement of this Agreement and in
the audit, analysis, administration, collection, preservation or sale of the
Collateral (including the expenses and charges associated, with any periodic or
special audit of the Collateral). The Grantor shall reimburse the other Secured
Parties for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, auditors and accountants who may be employees of the
Collateral Agent or the Secured Parties) paid or incurred by any Secured Party
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in connection with the enforcement of this Agreement.
16.11. HEADINGS. The title of and section headings in this Agreement are
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Agreement.
16.12. TERMINATION. This Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Credit Agreements in
accordance with its terms and all commitments of the Lenders thereunder, at
which time the security interests granted hereby shall terminate and any and all
rights to the Collateral shall revert to the Grantor. Upon such termination, the
Collateral Agent shall promptly return to the Grantor, at the Grantor's expense,
such of the Collateral held by the Collateral Agent as shall not have been sold
or otherwise applied pursuant to the terms hereof. The Collateral Agent will
promptly execute and deliver to the Grantor such other documents as the Grantor
shall reasonably request to evidence such termination.
16.13. ENTIRE AGREEMENT. This Agreement, the Credit Agreements and the
other Loan Documents embody the entire agreement and understanding among the
Grantor, the Collateral Agent and the Secured Parties relating to the Collateral
and supersede all prior written and oral agreements and understandings among the
Grantor, the Collateral Agent and the Lenders relating to the subject matter
hereof.
16.14. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
16.15. DISTRIBUTION OF REPORTS. The Grantor authorizes the Collateral Agent
and each Secured Party, as the Collateral Agent or such Secured Party may elect
in its sole discretion, to discuss with and furnish to any other Person having
an interest in the Secured Obligations (whether as a guarantor, pledgor of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to the Grantor or the Collateral whether such
information was provided by the Grantor or prepared or obtained by the
Collateral Agent or such Secured Party. Neither the Collateral Agent nor any
Secured Party, nor any of such Person's employees, officers, directors or agents
makes any representation or warranty regarding any audit reports or other
analyses of the Grantor's condition which the Collateral Agent or such Secured
Party may in its sole discretion prepare and elect to distribute, nor shall the
Collateral Agent or any Secured Party, nor any such Person's employees,
officers, directors or agents be liable to any person or entity receiving a copy
of such reports or analyses for any inaccuracy or omission contained in or
relating thereto.
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<PAGE>
17. NOTICES.
-------
17.1 SENDING NOTICES. Any notice required or permitted to be given under
this Agreement shall be given in accordance with Section 13.1 of the Credit
Agreements.
17.2 CHANGE IN ADDRESS FOR NOTICES. Each of the Grantor and the Collateral
Agent may change the address for service of notice upon it by a notice in
writing to the other party hereto.
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<PAGE>
IN WITNESS WHEREOF, the Grantor has executed this Agreement as of the date
first above written.
GREEN TREE FINANCIAL CORPORATION
By:
--------------------------------
Title:
-----------------------------
Accepted and Agreed to:
- ----------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Collateral Agent
By:
--------------------------------
Title:
-----------------------------
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EXHIBIT 6.4
-----------
Principal Place of Business and Mailing Address:
Attention:
---------------------------------
<PAGE>
EXHIBIT 4(a)
to Security Agreement
[letterhead of Grantor]
BORROWING BASE ADDITION REPORT
[date]
[Administrative Agent]
[Address]
[Collateral Agent]
[Address]
Ladies and Gentlemen:
Pursuant to the terms of the Credit Agreement [(364-day)][(3-year)]
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), dated as of April 29, 1997, among Green Tree Financial Corporation
(the "Grantor"), The First National Bank of Chicago individually and as
administrative agent (the "Administrative Agent") and the other financial
institutions signatory thereto and the Security Agreement (as amended,
supplemented or otherwise modified from time to time, the "Security
Agreement"), dated as of February 6, 1998 between the Grantor and The First
National Bank of Chicago as Collateral Agent (the "Collateral Agent"), we hereby
add the Contracts listed on the Schedule A attached hereto to the Borrowing Base
and agree, that if a Security Event occurs, such Contracts, unless otherwise
released pursuant to the terms of the Security Agreement shall constitute
"Collateral" as defined in the Security Agreement. The capitalized terms used
herein by not defined shall have the respective meanings as set forth in the
Credit Agreement or the Security Agreement.
The Grantor, with respect to each of the Contracts listed on the attached
Schedule A hereby certifies that, (i) if the date is on or after the date of a
Security Event, it has delivered to the Collateral Agent the Required Documents
(or in the case of Wet Loans, it will deliver such Required Documents within 10
business days of origination (or acquisition from an unaffiliated Person)) of
the related Contract, (ii) if the date is on or after the date of a Security
Event, it has delivered, holds in its possession or is using diligent efforts to
obtain possession of the Additional Required Documents and to deliver the
Additional Required Documents to the Collateral Agent, (iii) each Contract
constitutes an Eligible Contract as set forth in the Credit Agreement or if such
Contract does not constitute an Eligible Contract, that the Borrowing Base
(calculated as if the Collateral Value for such ineligible Contract is zero) is
not less than the outstanding amount of Loans and other Secured Obligations then
due and payable and (iv) each of the representations and warranties set forth in
Section 6 of the Security Agreement are true and correct as of such date.
The Grantor hereby confirms that, if a Security Event occurs, the
Contracts listed on the attached Schedule A, unless released pursuant to the
terms of the Security Agreement, (1) shall be deemed to be "Collateral" as
defined in the Security Agreement and (2) shall be pledged to the Collateral
Agent under the Security Agreement for the benefit of the Secured Parties as
security for the Secured Obligations. We acknowledge and agree that the
inclusion of such Contracts in the Borrowing Base constitutes "new value" as
that term is used in Section 9-304(4) of the UCC.
GREEN TREE FINANCIAL CORPORATION
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT 4(b)-1
to Security Agreement
REQUIRED DOCUMENTS
FOR LAND-AND-HOME CONTRACTS
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. the original of the MH Contract;
2. the original Mortgage with evidence of recording thereon, or if the
original Mortgage has not yet been returned from the recording office, a
copy of the original Mortgage, which copy shall be replaced by the original
Mortgage as soon as practicable after the original Mortgage is returned
from the recording office;
3. any title document for the related Manufactured Home, or if such title
document has not yet been issued, a copy of the title application;
4. the blanket assignment of the Mortgage, assigned in blank, which assignment
shall be in form and substance acceptable for recording. In the event that
the MH Contract was acquired by the Grantor in a merger, the assignment
must be by "[Grantor], successor by merger to [name of predecessor]"; and
in the event that the MH Contract was acquired or originated by the Grantor
while doing business under another name, the assignment must be by
"[Grantor], formerly known as [previous name]";
5. the assignment of the MH Contract from the originator (if other than the
Grantor) to the Grantor;
6. if such MH Contract was originated by the Grantor, an endorsement of such
MH Contract by the Grantor;
7. any extension, modification or waiver agreement(s); and
8. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4(b)-2
to Security Agreement
REQUIRED DOCUMENTS
FOR MH CONTRACTS (NOT LAND-AND-HOME CONTRACTS)
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. the original copy of the MH Contract;
2. either (a) the original title document for the Manufactured Home or a
duplicate certified by the appropriate governmental authority which issued
the original thereof or the application for such title document [unless the
application for title was made less than 180 days earlier] or (b) if the
laws of the jurisdiction in which the related Manufactured Home is located
do not provide for the issuance of title documents for manufactured homes,
other evidence of ownership of the Manufactured Home which is customarily
relied upon in such jurisdiction as evidence of title to a Manufactured
Home;
3. evidence of one or more of the following types of perfection of the
security interest in the Manufactured Home granted by such MH Contract, as
appropriate:
(a) notation of such security interest on the title document [unless the
application for title was made less than 180 days earlier];
(b) a financing statement meeting the requirements of the UCC, with
evidence of recording indicated thereon (if required to perfect a
security interest in a Manufactured Home under the UCC); or
(c) such other evidence of perfection of a security interest in
manufactured homes as is customarily relied upon in the jurisdiction
in which the Manufactured Home is located;
4. A blanket assignment of all other instruments and agreements securing the
whole or any part of the MH Contracts (including but not limited to all
guaranties, insurance assignments and stock pledges), assigned in blank,
which assignment shall be in form and substance acceptable for recording or
filing if recordation or filing is necessary for effecting or perfecting
such assignment including without limitation, where a UCC-1 financing
statement or similar filing, exists in favor of Grantor, a UCC-3 statement
(or similar filing) assigning such financing statement to the Collateral
Agent.;
5. the assignment of the MH Contract from the originator (if other than the
Grantor) to the Grantor;
6. any extension, modification or waiver agreement(s);
7. if required by the Collateral Agent, in its sole discretion, evidence of
any insurance the Grantor or any Subsidiary may carry or may have applied
for, or may require the obligor to carry or to apply for, with respect to
the Manufactured Home;
8. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4(b)-3
to Security Agreement
REQUIRED DOCUMENTS
FOR CONSUMER PRODUCTS CONTRACTS
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. the original copy of the Consumer Products Contract, including the executed
evidence of the obligation of the obligor;
2. either (a) the original title document for the related Consumer Product or
a duplicate certified by the appropriate governmental authority which
issued the original thereof or the application for such title document or
(b) if the laws of the jurisdiction in which the related Consumer Product
is located do not provide for the issuance of title documents for goods of
the type including the Consumer Product, other evidence of ownership of the
related Consumer Product, if any, which is customarily relied upon in such
jurisdiction as evidence of title to such goods;
3. evidence of one or more of the following types of perfection of the
security interest in the related Consumer Product granted by such Consumer
Products Contract , as appropriate: (a) notation of such security interest
on the title document;(b) a financing statement meeting the requirements of
the UCC, with evidence of recording indicated thereon (if required to
perfect a security interest in the related Consumer Product under the UCC);
(c) in the case of a Consumer Products Contract secured by a security
interest in an aircraft, evidence of filing with the Federal Aviation
Administration Aircraft Registry; or (d) such other evidence of perfection
of a security interest in goods of the type including the Consumer Product
as is customarily relied upon in the jurisdiction in which the related
Consumer Product is located;
4. A blanket assignment of all other instruments and agreements securing the
whole or any part of the Floor Plan Receivables (including but not limited
to all guaranties, insurance assignments and stock pledges), assigned in
blank, which assignment shall be in form and substance acceptable for
recording or filing if recordation or filing is necessary for effecting or
perfecting such assignment including without limitation, where a UCC-1
financing statement or similar filing, exists in favor of Grantor, a UCC-3
statement (or similar filing) assigning such financing statement to the
Collateral Agent.;
5. the assignment of the Consumer Products Contract from the originator (if
other than the Grantor) to the Grantor;
6. any extension, modification or waiver agreement(s);
7. a credit application signed by the obligor, or a copy thereof;
8. if required by the Collateral Agent, in its sole discretion, evidence of
any insurance the Grantor or any Subsidiary may carry or may have applied
for, or may require the obligor to carry or to apply for, with respect to
the Consumer Product;
9. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4(b)-4
to Security Agreement
REQUIRED DOCUMENTS
FOR HOME EQUITY CONTRACTS
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. the original contract and note relating to the Home Equity Contract, with
the note endorsed by the Grantor in blank;
2. the original Mortgage with evidence of recording thereon, or if the
original Mortgage has not yet been returned from the recording office, a
copy of the original Mortgage, which copy shall be replaced by the original
Mortgage as soon as practicable after the original Mortgage is returned
from the recording office;
3. the blanket assignment of the Mortgage, assigned in blank, which assignment
shall be in form and substance acceptable for recording. In the event that
the Home Equity Contract was acquired by the Grantor in a merger, the
assignment must be by "[Grantor], successor by merger to [name of
predecessor]"; and in the event that the Home Equity Contract was acquired
or originated by the Grantor while doing business under another name, the
assignment must be by "[Grantor], formerly known as [previous name]";
4. if such Home Equity Contract was originated by a contractor or lender other
than the Grantor, the original or a copy of an assignment of the Mortgage;
and
5. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4(b)-5
to Security Agreement
REQUIRED DOCUMENTS
FOR HOME IMPROVEMENT CONTRACTS
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. the original contract and note relating to the Home Improvement Contract,
with the note endorsed by the Grantor in blank;
2. if a Secured Home Improvement Contract, the original Mortgage with evidence
of recording thereon, or if the original Mortgage has not yet been returned
from the recording office, a copy of the original Mortgage, certified as
true and complete by such recording office which copy shall be replaced by
the original Mortgage as soon as practicable after the original Mortgage is
returned from the recording office;
3. if a Secured Home Improvement Contract, the blanket assignment of the
Mortgage, assigned in blank, which assignment shall be in form and
substance acceptable for recording. In the event that the Home Equity
Contract was acquired by the Grantor in a merger, the assignment must be
by "[Grantor], successor by merger to [name of predecessor]"; and in the
event that the Home Equity Contract was acquired or originated by the
Grantor while doing business under another name, the assignment must be by
"[Grantor], formerly known as [previous name]";
4. if a Secured Home Improvement Contract, and if originated by a contractor
or a lender other than the Grantor, the original or a copy of the Mortgage;
and
5. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4(b)-6
to Security Agreement
REQUIRED DOCUMENTS
FOR FLOOR PLAN RECEIVABLES
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. a fully executed original of the Floor Plan Agreement ;
2. the documents evidencing or related to any insurance policy benefitting the
Grantor and that the Grantor may require providing loss or physical damage,
theft or similar coverage with respect to the Floor Plan Products;
3. evidence of perfection of the security interest of Grantor in the related
Floor Plan Product financed by such Floor Plan Receivable, as appropriate:
(a) notation of such security interest on the title document; (b) a
financing statement meeting the requirements of the UCC, with evidence of
recording indicated thereon (if required to perfect a security interest in
the related Floor Plan Product under the UCC); (c) in the case of a Floor
Plan Receivable secured by a security interest in an aircraft, evidence of
filing with the Federal Aviation Administration Aircraft Registry; or (d)
such other evidence of perfection of a security interest in goods of the
type including the Floor Plan Product as is customarily relied upon in the
jurisdiction in which the related Floor Plan Product is located;
4. A blanket assignment of all other instruments and agreements securing the
whole or any part of the Floor Plan Receivables (including but not limited
to all guaranties, insurance assignments and stock pledges), assigned in
blank, which assignment shall be in form and substance acceptable for
recording or filing if recordation or filing is necessary for effecting or
perfecting such assignment including without limitation, where a UCC-1
financing statement or similar filing, exists in favor of Grantor, a UCC-3
statement (or similar filing) assigning such financing statement to the
Collateral Agent.;
5. any extension, modification and waiver agreement(s); and
6. other documentation (including information contained in electronic,
microfilm or other medium) as the Collateral Agent or the Administrative
Agent may reasonably deem appropriate.
<PAGE>
EXHIBIT 4(b)-8
to Security Agreement
REQUIRED DOCUMENTS
FOR ASSET BASED RECEIVABLES
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
A. Originations
------------
1. the original loan and security documentation, and note relating to the
Asset Based Receivable, with the note endorsed by the Grantor in blank;
2. if secured by an interest in real estate, the original Mortgage or other
collateral assignment document with evidence of recording thereon, or if
the original Mortgage or other collateral assignment has not yet been
returned from the recording office, a copy of the original Mortgage or
other collateral assignment, certified as true and complete by such
recording office which copy shall be replaced by the original mortgage or
collateral assignment as soon as practicable after the original Mortgage is
returned from the recording office;
3. if secured by an interest in real estate, a blanket assignment of the
Mortgage or other collateral assignment, assigned in blank, which
assignment shall be in form and substance acceptable for recording;
4. such other documents, that the Grantor or a Subsidiary keeps on file in
accordance with its customary procedures indicating that the Floor Plan
Products are subject to a first priority perfected security interest in
favor of the Grantor as secured party;
5. A blanket assignment of all other instruments and agreements securing the
whole or any part of the Asset Based Receivables (including but not limited
to all guaranties, insurance assignments and stock pledges), assigned in
blank, which assignment shall be in form and substance acceptable for
recording or filing if recordation or filing is necessary for effecting or
perfecting such assignment including without limitation, where a UCC-1
financing statement or similar filing, exists in favor of Grantor, a UCC-3
statement (or similar filing) assigning such financing statement to the
Collateral Agent.;
6. any extension, modification or waiver agreement(s);
7. if required by the Administrative Agent or the Collateral Agent, in its
sole discretion, evidence of any insurance the Grantor or any Subsidiary
may carry or may have applied for, or may required the obligor to carry or
apply for, with respect to the collateral described in the Mortgage, other
collateral assignment or other instruments or agreements securing all or
any part of the Asset Based Receivable; and
8. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
[continued]
<PAGE>
B. Participations
--------------
1. original participation agreement or certificate relating to the Asset Based
Receivable; and
2. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4(b)-8
to Security Agreement
REQUIRED DOCUMENTS
FOR OTHER RECEIVABLES
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. documentation similar to that required under other parts of this Exhibit
4(b), to the extent applicable, and such other documentation (including
information contained in electronic, microfilm or other medium) to be
determined in the reasonable discretion of the Administrative Agent and the
Collateral Agent and within customary terms for secured financings of such
Collateral; provided that no such Collateral shall be included in the
Borrowing Base until the Administrative Agent, the Collateral Agent and the
Grantor have so agreed in writing whereupon such revised required
documentation shall be deemed incorporated herein.
<PAGE>
EXHIBIT 4(c)
to Security Agreement
ADDITIONAL REQUIRED DOCUMENTS
FOR LAND-AND-HOME CONTRACTS,
HOME EQUITY CONTRACTS and
SECURED HOME IMPROVEMENT CONTRACTS
SUBMITTED FOR INCLUSION
IN THE BORROWING BASE
1. the original Mortgage securing the Contract;
2. if required pursuant to the current underwriting standards of the Grantor,
a copy of which has been provided to the Administrative Agent for its
review and approval with respect to title insurance requirements, a copy of
the title insurance policy (or a binding commitment of the title company
therefor) covering at least the face amount of the Contract with the
original policy of title insurance insuring the Mortgage as a first or
second lien, as applicable, on the related Manufactured Home or other real
property written by a title company and containing exceptions reasonably
acceptable to the Collateral Agent;
3. if in the Grantor's possession, evidence of the applicable FHA commitment
for insurance with respect to each FHA-insured Contract, or VA commitment
for guaranty with respect to each VA-guaranteed Contract, and of the
applicable commitment for private mortgage loan insurance with respect to
each conventional Mortgage note having a loan-to-value ration in excess of
80%;
4. if required pursuant to the current underwriting standards of the Grantor,
a copy of which has been provided to the Administrative Agent for its
review and approval with respect to insurance requirements, evidence of
fire and extended coverage insurance in an amount not less than the lower
of the following: (a) the amount of the Contract and (b) 100% of the
insurable value of the improvements with such insurance written by a
company satisfactory to the Collateral Agent;
5. if required pursuant to the current underwriting standards of the Grantor,
a copy of which has been provided to the Administrative Agent for its
review and approval with respect to appraisal requirements, a copy of any
appraisal of the related real estate;
6. other documentation (including information contained in electronic,
microfilm or other medium) in the possession of the Grantor as the
Collateral Agent or the Administrative Agent may reasonably deem
appropriate.
<PAGE>
EXHIBIT 4.3
to Security Agreement
BORROWING BASE DELETION REQUEST
[date]
[Administrative Agent]
[Address]
[Collateral Agent]
[Address]
Ladies and Gentlemen:
Pursuant to the terms of the Credit Agreement [(364-day)][(3-year)]
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), dated as of April 29, 1997, among Green Tree Financial Corporation
(the "Grantor"), The First National Bank of Chicago individually and as
administrative agent (the "Administrative Agent") and the other financial
institutions signatory thereto (the "Lenders") and the Security Agreement (as
amended, supplemented or otherwise modified from time to time, the "Security
Agreement"), dated as of February 6, 1998 between the Grantor and The First
National Bank of Chicago as Collateral Agent (the "Collateral Agent"), we hereby
request that the Administrative Agent and the Collateral Agent delete from the
Borrowing Base the Contracts listed on the Schedule A attached hereto. The
capitalized terms used herein but not defined shall have the respective meanings
as set forth in the Credit Agreement or the Security Agreement.
The Grantor hereby certifies that as of the date of the release of
such Collateral, (1) no Default or Unmatured Default has occurred and is
continuing, (2) upon the release of such Collateral the outstanding principal
amount of Loans and other then due and owing Secured Obligations is (or will be
due to a simultaneous prepayment) less than the Borrowing Base as set forth in
the pro forma Borrowing Base Certificate attached hereto.
GREEN TREE FINANCIAL CORPORATION
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT 6.4
to Security Agreement
Principal Place of Business and Mailing Address:
_________________________________
_________________________________
_________________________________
Attention: _____________________
<PAGE>
EXHIBIT 10(j)
GREEN TREE FINANCIAL CORPORATION
RESTATED 1992 SUPPLEMENTAL STOCK OPTION PLAN
1. Purpose of Plan.
---------------
This Plan shall be known as the "Green Tree Financial Corporation Restated
1992 Supplemental Stock Option Plan" and is hereinafter referred to as the
"Plan." The purpose of the Plan is to attract and retain the services of
experienced and knowledgeable non-employee directors of Green Tree Financial
Corporation (the "Company") and to provide additional incentive for such
directors to increase their interest in the Company's long term success and
progress. Options granted under this Plan shall be non-qualified stock options
which do not qualify as Incentive Stock Options within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended (the "Code").
2. Stock Subject to Plan.
---------------------
Subject to the provisions of Section 11 hereof, the stock to be subject to
options under the Plan (the "Shares") shall be the Company's authorized Common
Stock, par value $0.01 per share (the "Common Stock"). Such shares will be
authorized but unissued shares. Subject to adjustment as provided in Section 11
hereof, the maximum number of shares on which options may be exercised under
this Plan shall be 50,000 shares. If an option under the Plan expires, or for
any reason is terminated or unexercised with respect to any Shares, such Shares
shall again be available for options thereafter granted during the term of the
Plan.
3. Administration of Plan.
----------------------
The Plan shall be administered by the Board of Directors of the Company.
The Board of Directors shall have plenary authority in its discretion, but
subject to the express provisions of this Plan, to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to the Plan, and to
make all other determinations necessary or advisable for the administration of
the Plan. The Board of Directors' determinations on the foregoing matters shall
be final and conclusive.
4. Eligibility.
-----------
An "Eligible Director" shall be a director of the Company who is not
otherwise an employee of the Company or any subsidiary of the Company; provided,
however, that so long as any director of the Company is serving as a
representative of another organization and any options issued to such director
under the Plan are required to be remitted to such organization, such director
shall not be deemed to be an Eligible Director for purposes of the Plan.
5. Grant of Options.
----------------
Upon approval of the Plan by the Board of Directors, but subject to
approval of the Plan by the stockholders of the Company pursuant to Section 14
hereof, each Eligible Director who completes a full fiscal quarter of service as
a director of the Company after December 31, 1992 shall automatically be granted
on the last business day of each such quarter an option to acquire 500 Shares
under the Plan.
<PAGE>
6. Price.
-----
The option price for all options granted under the Plan shall be the fair
market value of the Shares covered by the option at the time the option is
granted. For the purpose of the preceding sentence and for all other valuation
purposes under the Plan, the "fair market value" of the Common Stock as of any
date shall be (i) the closing price of the Common Stock on such date, as
reported on the consolidated reporting system for the New York Stock Exchange or
such other national securities exchange as is then the primary exchange for
trading in the Common Stock, or (ii) if the Common Stock is not then listed on a
national securities exchange, the last sale price or highest closing bid price
(whichever is applicable) as reported on the National Association of Securities
Dealers Automated Quotation System. If, on the date of determination of fair
market value, the Common Stock is not publicly traded, the Board of Directors
shall make a good faith attempt to determine the fair market value of the Common
Stock as required by this Section 6 and in connection therewith shall take such
action as it deems necessary or advisable.
7. Term.
----
Each option and all rights and obligations thereunder shall, subject to the
provisions of Section 9 herein, expire ten (10) years from the date of granting
of the option.
8. Exercise of Option.
------------------
(a) Options granted under the Plan shall not be exercisable for a period of
six months after the date of grant, or until stockholder approval of the Plan
has been obtained, whichever occurs later, but thereafter will be exercisable in
full at any time or from time to time during the term of the option, subject to
the provisions of Section 9 hereof.
(b) The exercise of any option granted hereunder shall only be effective at
such time as counsel to the Company shall have determined that the issuance and
delivery of Common Stock pursuant to such exercise will not violate any state or
federal securities or other laws. An optionee desiring to exercise an option
may be required by the Company, as a condition of the effectiveness of any
exercise of an option granted hereunder, to agree in writing that all Common
Stock to be acquired pursuant to such exercise shall be held for his or her own
account without a view to any further distribution thereof, that the
certificates for such shares shall bear an appropriate legend to that effect and
that such shares will not be transferred or disposed of except in compliance
with applicable federal and state securities laws.
(c) An optionee electing to exercise an option shall give written notice to
the Company of such election and of the number of Shares subject to such
exercise. The full purchase price of such Shares shall be tendered with such
notice of exercise. Payment shall be made to the Company either (i) in cash
(including check, bank draft or money order), or (ii) by delivering shares of
Common Stock already owned by the optionee having a fair market value equal to
the full purchase price of the Shares, or (iii) by any combination of cash and
such shares; provided, however, that an optionee shall not be entitled to tender
shares of Common Stock pursuant to successive, substantially simultaneous
exercises of options granted under this or any other stock option plan of the
Company. For purposes of the preceding sentence, the "fair market value" of
such tendered shares shall be determined as provided in Section 6 herein as of
the date of exercise. Until such person has been issued the Shares subject to
such exercise, he or she shall possess no rights as a stockholder with respect
to such Shares.
2
<PAGE>
9. Effect of Termination of Directorship or Death or Disability.
------------------------------------------------------------
(a) In the event that an optionee shall cease to be a director of the
Company for any reason other than removal for cause due to his or her serious
misconduct or his or her death or disability, such optionee shall have the right
to exercise the option at any time within seven months after such termination of
directorship to the extent of the full number of Shares he or she was entitled
to purchase under the option on the date of termination, subject to the
condition that no option shall be exercisable after the expiration of the term
of the option.
(b) In the event that an optionee shall be removed for cause as a director
of the Company by reason of his or her serious misconduct during the course of
his or her service as a director of the Company, the option shall be terminated
as of the date of the misconduct.
(c) If the optionee shall die while serving as a director of the Company or
within three months after termination of his or her directorship for any reason
other than removal for cause due to his or her serious misconduct, or become
disabled (as determined by the Board of Directors in its sole discretion) while
serving as a director of the Company and such optionee shall not have fully
exercised the option, such option may be exercised at any time within twelve
months after his or her death or disability by the personal representatives,
administrators, or, if applicable, guardian, of the optionee or by any person or
persons to whom the option is transferred by will or the applicable laws of
descent and distribution, to the extent of the full number of shares he or she
was entitled to purchase under the option on the date of death, disability, or
termination of directorship, if earlier, and subject to the condition that no
option shall be exercisable after the expiration of the term of the option.
10. Non-Transferability.
-------------------
No option granted under the Plan shall be transferable by the optionee,
otherwise than by will or the laws of descent and distribution as provided in
Section 9(c) herein. Except as provided in Section 9(c) herein with respect to
disability of the optionee, during the lifetime of an optionee the option shall
be exercisable only by such optionee.
11. Dilution or Other Adjustments.
-----------------------------
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made by the Board of
Directors. In the event of any such changes, adjustments shall include, where
appropriate, changes in the aggregate number of shares subject to the Plan, the
number of shares and the price per share subject to outstanding options in order
to prevent dilution or enlargement of option rights.
12. Amendment or Discontinuance of Plan.
-----------------------------------
The Board of Directors may amend or discontinue the Plan at any time.
However, subject to the provisions of Section 11 no amendment of the Plan shall,
without stockholder approval: (i) increase the maximum number of Shares with
respect to which options may be granted under the Plan as provided in Section 2
hereof, (ii) modify the eligibility requirements for participation in the Plan
as provided in
3
<PAGE>
Section 4 hereof, or (iii) change the date of grant or exercise price of, or the
number of Shares subject to, options granted or to be granted to Eligible
Directors, as provided in Sections 5 and 6 hereof. The Board of Directors shall
not alter or impair any option theretofore granted under the Plan without the
consent of the holder of the option. Notwithstanding any other provision of the
Plan or any option, without the approval of stockholders of the Company, no such
amendment shall be made that, absent such approval, would cause the exemptions
of Rule16b-3 to become unavailable with respect to the options hereunder or with
respect to the ability of the Eligible Directors to satisfy the disinterested
person requirements of Rule 16b-3 in administering any other stock-based
compensation plan of the Company (this limitation on amendments to the Plan
shall include, without limitation, a prohibition on any contemplated amendment
within six months of any prior amendment, other than to comport with changes in
the Code, the Employee Retirement Income Security Act, or the rules thereunder).
13. Time of Granting.
----------------
Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the stockholders of the Company, and no action
taken by the Board of Directors (other than the execution and delivery of an
option), shall constitute the granting of an option hereunder.
14. Effective Date and Termination of Plan.
--------------------------------------
(a) The Plan was approved by the Board of Directors on March10, 1992 and
shall be approved by the stockholders of the Company within twelve (12) months
thereafter. The effective date of the Plan shall be the date of stockholder
approval.
(b) Unless the Plan shall have been discontinued as provided in Section 12
hereof, the Plan shall terminate on December 31, 2002. No option may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee, alter or impair any rights or obligations under any
option theretofore granted.
(Restated as of November 22, 1997)
4
<PAGE>
Exhibit 10(n)
FOURTH AMENDMENT
OF
GREEN TREE FINANCIAL CORPORATION
PENSION PLAN
(1989 RESTATEMENT)
"GREEN TREE FINANCIAL CORPORATION PENSION PLAN (1989 Restatement)" adopted
by GREEN TREE FINANCIAL CORPORATION, a Minnesota corporation, on November 19,
1991, but effective January 1, 1989, as heretofore amended by a First Amendment
adopted effective January 1, 1992, a Second Amendment adopted effective July 1,
1992 and January 1, 1993, and a Third Amendment adopted effective January 1,
1989, January 1, 1993, January 1, 1994 and January 1, 1995 (hereinafter
collectively referred to as the "Plan Statement"), is hereby further amended in
the following respects:
1. GATT AND LUMP SUMS. EFFECTIVE FOR LUMP SUM DISTRIBUTIONS MADE ON OR AFTER
JANUARY 1, 1997, SECTION 2 OF THE APPENDIX C TO THE PLAN STATEMENT IS AMENDED TO
READ IN FULL AS FOLLOWS.
Section 2. LUMP SUM SETTLEMENTS. When converting benefits to a single
lump sum for payment to a Participant, the benefit to be converted is the Single
Life Annuity form payable at Normal Retirement Age or the date as of which it is
determined, if later. When converting benefits to a single lump sum for payment
to any person entitled to a benefit who is not a Participant, the benefit to be
converted shall be the benefit payable to such other person. The factors to be
used to convert the Single Life Annuity form to a lump sum benefit shall be:
Insert Assumption: During each stability period, the annual rate of
interest on 30-year Treasury securities for the
lookback month. The stability period shall be the Plan
Year. The lookback month shall be the second calendar
month preceding the commencement of the stability
period.
Mortality Assumption: The mortality rate determined from the table prescribed
by the Secretary of the Treasury under section
417(e)(3)(A)(ii)(I) of the Code based on the prevailing
commissioners' standard table used to determine
reserves for group annuity contracts.
2. GATT AND 415(B) RULES. EFFECTIVE FOR LIMITATION YEARS BEGINNING ON OR AFTER
JANUARY 1, 1997, THE APPENDIX C TO THE PLAN STATEMENT IS AMENDED BY ADDING A NEW
SECTION 4 WHICH SHALL READ IN FULL AS FOLLOWS.
Section 4. ANNUAL BENEFIT LIMITATIONS. If, for the purpose of
applying Appendix A, a benefit payable in a single lump sum is adjusted to the
actuarial equivalent straight life annuity, the interest rate assumption and the
mortality assumption specified in the defined benefit plan's plan document shall
be those specified in Section 2 of this Appendix. If, for the purpose of
applying Appendix A, a benefit payable in any other form is adjusted to the
actuarial equivalent straight life annuity, the interest rate assumption and the
mortality assumption specified in the defined benefit plan's plan document shall
be the following:
<PAGE>
Insert Assumption: During each stability period, the annual rate of
interest on 30-year Treasury securities for the
lookback month. The stability period shall be the Plan
Year. The lookback month shall be the second calendar
month preceding the commencement of the stability
period.
Mortality Assumption: The mortality rate determined from the table prescribed
by the Secretary of the Treasury under section
417(e)(3)(A)(ii)(I) of the Code based on the prevailing
commissioners' standard table used to determine
reserves for group annuity contracts.
If, for the purpose of applying Appendix A, a benefit commences before or after
the social security retirement age, the interest rate assumption and the
mortality assumption specified in the defined benefit plan's plan document for
the purpose of determining the actuarial equivalent of a Ninety Thousand Dollar
(as adjusted) annual benefit beginning at the social security retirement age
shall be the following:
Insert Assumption: During each stability period, the annual rate of
interest on 30-year Treasury securities for the
lookback month. The stability period shall be the Plan
Year. The lookback month shall be the second calendar
month preceding the commencement of the stability
period.
Mortality Assumption: The mortality rate determined from the table prescribed
by the Secretary of the Treasury under section
417(e)(3)(A)(ii)(I) of the Code based on the prevailing
commissioners' standard table used to determine
reserves for group annuity contracts.
3. GATT AND 415(B) RULES. NOTWITHSTANDING ANYTHING APPARENTLY TO THE CONTRARY
IN THIS AMENDMENT, THIS AMENDMENT OF APPENDIX C INSOFAR AS IT RELATES TO
APPENDIX A SHALL NOT HAVE THE EFFECT OF REDUCING THE BENEFIT PAYABLE TO OR WITH
RESPECT TO ANY PARTICIPANT AS DETERMINED UNDER THE RULES OF THIS PLAN STATEMENT
AS OF IMMEDIATELY BEFORE THE EFFECTIVE DATE OF SAID AMENDMENT OF APPENDIX C.
<PAGE>
Exhibit 12.
------------
GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES
-------------------------------------------------
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Earnings:
Earnings before
income taxes $486,123,000 $323,829,000 $409,628,000 $302,131,000 $200,537,000
Fixed charges:
Interest 160,882,000 70,050,000 57,313,000 41,619,000 51,155,000
One-third rent 4,352,000 2,888,000 2,034,000 1,688,000 1,483,000
-------------- ------------- ------------- ------------- -------------
165,234,000 72,938,000 59,347,000 43,307,000 52,638,000
-------------- ------------- ------------- ------------- -------------
$651,357,000 $396,767,000 $468,975,000 $345,438,000 $253,175,000
============== ============= ============= ============= =============
Fixed charges:
Interest $160,882,000 $ 70,050,000 $ 57,313,000 $ 41,619,000 $ 51,155,000
One-third rent 4,352,000 2,888,000 2,034,000 1,688,000 1,483,000
-------------- ------------- ------------- ------------- -------------
$165,234,000 $ 72,938,000 $ 59,347,000 $ 43,307,000 $ 52,638,000
============== ============= ============= ============= =============
Ratio of earnings
to fixed charges (1) 3.94 5.44 7.90 7.98 4.81
============== ============= ============= ============= =============
</TABLE>
(1) For purposes of computing the ratio, earnings consist of earnings before
income taxes plus fixed charges.
<PAGE>
Exhibit 21.
-----------
GREEN TREE FINANCIAL CORPORATION SUBSIDIARIES
The following is a list of the Company's subsidiaries which are all owned 100%
by Green Tree Financial Corporation who is the ultimate or immediate parent:
State of
Name of Subsidiary Incorporation
- ------------------ -------------
Green Tree Financial Servicing Corporation Delaware
Green Tree Financial Corp.-Alabama Delaware
Green Tree Financial Corp.-Texas Delaware
Green Tree Credit Corp. New York
Green Tree Consumer Discount Company Pennsylvania
Consolidated Acceptance Corporation Nevada
Piper Financial Services, Inc. Minnesota
Green Tree Retail Services Bank, Inc. South Dakota
Green Tree Capital Bank, Inc. Utah
Green Tree Vendor Services Corporation Delaware
Green Tree Finance Corp.-One Minnesota
Green Tree Finance Corp.-Two Minnesota
Green Tree Finance Corp.-Three Minnesota
Green Tree Finance Corp.-Five Minnesota
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I Delaware
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. II Delaware
Green Tree Floorplan Funding Corp. Delaware
Green Tree Vehicles Guaranty Corporation Minnesota
MaHCS Guaranty Corporation Delaware
<PAGE>
State of
Name of Subsidiary Incorporation
- ------------------ -------------
Green Tree RECS Guaranty Corporation Minnesota
Green Tree First GP Inc. Minnesota
Green Tree Second GP Inc. Minnesota
Green Tree Agency, Inc. Minnesota
Green Tree Agency of Alabama, Inc. Alabama
Green Tree Agency of Kentucky, Inc. Kentucky
Green Tree Agency of Nevada, Inc. Nevada
GTA Agency, Inc. New York
Crum-Reed General Agency, Inc. Texas
Dealer Service Trust Corporation Minnesota
G.T. Reinsurance Limited Turks an Caicos Island
Rice Park Properties Corporation Minnesota
Woodgate Consolidated Incorporated Texas
Woodgate Utilities Incorporated Texas
Green Tree Financial Canada Holding Company Delaware
Green Tree Financial Canada Company Nova Scotia
Green Tree RECS II Guaranty Corporation Minnesota
Green Tree Retail Services Funding Corporation Minnesota
Green Tree Lease Finance I, Inc. Minnesota
Green Tree Lease Finance I, LLC. Delaware
Green Tree Lease Finance II, Inc. Minnesota
<PAGE>
State of
Name of Subsidiary Incorporation
- ------------------ -------------
Green Tree Lease Finance 1997-1, LLC. Delaware
Green Tree Leasing Trust Delaware
Green Tree Titling Limited Partnership I Delaware
Green Tree Titling Limited Partnership II Delaware
Green Tree Titling, LLC I Delaware
Green Tree Titling, LLC II Delaware
Green Tree Titling Holding Company I Delaware
<PAGE>
Exhibit 23.
-----------
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
The Board of Directors
Green Tree Financial Corporation:
We consent to incorporation by reference of our report dated January 27, 1998,
except as to Note O which is as of February 13, 1998, relating to the
consolidated balance sheets of Green Tree Financial Corporation and subsidiaries
as of December 31, 1997 and 1996 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, which report appears in the December
31, 1997 Form 10-K of Green Tree Financial Corporation, in the following
Registration Statements of Green Tree Financial Corporation; No. 2-88293 on
Form S-8, No. 33-26498 on Form S-8/S-3, No. 33-60541 on Form S-8/S-3,
No. 33-51804 on Form S-3, No. 333-21191 on Form S-8/S-3, No. 333-36943 on
Form S-3, No. 333-25641 on Form S-3, No. 333-27433 on Form S-3, No. 333-36969
on Form S-3, No. 333-32669 on Form S-3, and No. 333-46457 on Form S-3. Our
report refers to the Company's adoption of the Financial Accounting Standards
Board's Statement No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," in 1997.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 18, 1998
<PAGE>
Exhibit 24.
-----------
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Lawrence M. Coss and Joel H. Gottesman, and each
or either one of them, his true and lawful attorney(s)-in-fact and agent(s),
with full power of substitution and resubstitution for him and in his name,
place, and stead, in any and all capacities, to sign the 1997 Annual Report on
Form 10-K of Green Tree Financial Corporation, and any and all amendments
thereto, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney(s)-in-fact an agent(s), and each of them, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney(s)-
in-fact and agent(s), or either of them, or his or their substitutes, may
lawfully do or cause to be done by virtue hereof.
- --------------------------------------- March 20, 1998
W. Max McGee
- --------------------------------------- March 20, 1998
Robert S. Nickoloff
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GREEN TREE FINANCIAL CORPORATION AND SUBSIDIARIES FOR
THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 988,635,000
<SECURITIES> 1,363,200,000
<RECEIVABLES> 1,971,024,000
<ALLOWANCES> 19,800,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 182,463,000
<DEPRECIATION> 70,059,000
<TOTAL-ASSETS> 4,866,792,000
<CURRENT-LIABILITIES> 0
<BONDS> 510,316,000
0
0
<COMMON> 1,416,000
<OTHER-SE> 1,332,140,000
<TOTAL-LIABILITY-AND-EQUITY> 4,866,792,000
<SALES> 546,828,000
<TOTAL-REVENUES> 1,091,460,000
<CGS> 0
<TOTAL-COSTS> 444,455,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 160,882,000
<INCOME-PRETAX> 486,123,000
<INCOME-TAX> 184,727,000
<INCOME-CONTINUING> 301,396,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301,396,000
<EPS-PRIMARY> 2.20
<EPS-DILUTED> 2.15
</TABLE>
