EXHIBIT 10.1
EXECUTION COPY
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REVOLVING CREDIT AGREEMENT
among
FIRSTCITY FINANCIAL CORPORATION
as Borrower
and
THE FINANCIAL INSTITUTIONS LISTED
ON THE SIGNATURE PAGES HEREOF
as Lenders,
with
BANK OF SCOTLAND,
acting through its New York Branch,
as Agent
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Dated as of November 12, 2004
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REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT, dated as of November 12, 2004, among FIRSTCITY
FINANCIAL CORPORATION, a Delaware corporation ("Borrower"), the financial
institutions from time to time party hereto (each a "Lender" and collectively,
the "Lenders") and BANK OF SCOTLAND, acting through its New York branch, as
agent for Lenders (in such capacity, "Agent").
W I T N E S S E T H :
WHEREAS, the parties hereto are parties to a certain Term Loan and
Revolving Credit Agreement, dated as of December 12, 2002, as amended by
Amendment No. 1 dated as of March 24, 2003, Amendment No. 2 and Consent No. 2
dated as of April 29, 2003, Amendment No. 3 and Consent No. 4 dated as of May 2,
2003, Amendment No. 4 dated as of June 30, 2003, Amendment No. 5 dated as of
March 31, 2004, and Amendment No. 6 dated as of September 29, 2004 (as so
amended, the "Existing Agreement");
WHEREAS, pursuant to the Existing Agreement, Lenders have made certain
Term Loans and Revolving Credit Loans (each as defined in the Existing
Agreement) to Borrower, which are evidenced by certain Term Notes and Revolving
Credit Notes (each as defined in the Existing Agreement) payable to the order of
Lenders, each dated December 12, 2002, the aggregate principal amount
outstanding under which as the date hereof is $1,000,000.00 with respect to
Revolving Credit Loans (the "Existing Revolving Credit Loans") and
$36,459,155.06 with respect to Term Loans (the "Existing Term Loans"); and
WHEREAS, Borrower has requested that Lenders amend and restate the
Existing Agreement in its entirety;
NOW, THEREFORE, the parties hereto hereby agree that from and after the
Effective Date, the Existing Agreement is hereby amended and restated to read in
its entirety as set forth herein:
NOW, THEREFORE, it is agreed:
Section 1. DEFINITIONS.
(a) Terms used in this Agreement which are defined in Annex I hereto
shall have the meanings specified in such Annex I hereto (unless otherwise
defined herein) and shall include in the singular number the plural and in the
plural number the singular.
(b) Unless otherwise specified, each reference in this Agreement or
in any other Loan Document to a Loan Document shall mean such Loan Document as
the same may from time to time be amended, extended, restated, supplemented or
otherwise modified.
(c) All references to Sections in this Agreement or in Annex I
hereto shall be deemed references to Sections in this Agreement unless otherwise
specified.
(d) As used in this Agreement and the other Loan Documents, the
terms "including" and "such as" are illustrative and not limitative.
Section 2. THE LOANS.
2.1 The Loans.
(a) Subject to the terms and conditions set forth herein, each
Lender severally agrees, at any time and from time to time during the Commitment
Period to make one or more loans in Dollars or Euros to Borrower (each a "Loan",
and collectively the "Loans") in an aggregate outstanding principal amount not
in excess of its Loan Commitment; provided that, after giving effect to all
pending requests for Loans and Letters of Credit, (i) the aggregate outstanding
principal amount of Loans made in Euros by such Lender shall not exceed the
Eurosublimit of such Lender, and (ii) Total Outstandings shall not exceed the
lesser of (x) the Total Loan Commitment then in effect and (y) Borrowing Base
Availability; and provided, further, that, (A) the aggregate amount of
Acquisition Loans (as defined below) financing the acquisition of any Eligible
Asset Pool shall not exceed (i) the Applicable Portfolio Percentage, times the
Acquisition Price of the Related Asset Pool, in the event proceeds of such Loans
shall be contributed to the capital of the acquiring Portfolio Entity, or (ii)
the Acquisition Price of the Related Asset Pool, in the event proceeds of such
Loans shall be loaned to the acquiring Portfolio Entity, and (B) the aggregate
principal amount of Working Capital Loans (as defined below) outstanding, shall
not at any time exceed the Working Capital Sublimit.
(b) The Loans shall be used by Borrower solely (i) (A) to make
advances to a Primary Obligor, the full amount of which advances are used by
such Primary Obligor (as more fully set forth in other portions of this Section
2, in Section 6B and in other Sections of this Agreement) to make, directly or
indirectly, a loan or contribution to the capital of an Eligible Portfolio
Entity to be used by such entity for the acquisition of one or more Eligible
Asset Pools, (B) to make advances to an Eligible Portfolio Entity, the full
amount of which advances are used by such entity for the acquisition of one or
more Eligible Asset Pools, or (C) if requested by Borrower in the Notice of
Borrowing for such Loans, to pay any fee (including the Utilization Fee) in
respect of such Loans (such Loans, "Acquisition Loans"); or (ii) for working
capital and other general corporate purposes (such Loans, "Working Capital
Loans").
(c) Loans made pursuant to Section 2.1 shall be made from each
Lender pro rata, based upon the percentage that each Lender's Loan Commitment
represents of the Total Loan Commitment.
(d) Unless otherwise provided herein, all Loans denominated in Euros
shall be made, maintained and continued as Eurocurrency Loans.
(e) Without the consent of Agent, Borrower shall not be entitled to
borrow more than four Working Capital Loans or more than eight Loans in total in
any calendar month.
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2.2 Notice of Borrowing.
(a) Whenever Borrower desires to utilize the Loan Commitments for an
Acquisition Loan, it shall deliver to Agent a Borrowing Base Certificate and a
Notice of Borrowing not later than 11:00 a.m., Closing Office Time, three
Business Days prior to the date of the proposed borrowing, which Notice of
Borrowing shall, among other items, (A) specify (i) the Eligible Portfolio
Entity to whose capital Borrower or a Primary Obligor will, directly or
indirectly, contribute or loan the proceeds of the Loans; (ii) the Asset Pool or
Asset Pools to be acquired by such Portfolio Entity; (iii) the date of the
proposed borrowing (which shall be a Business Day (each, a "Borrowing Date"));
(iv) if such Borrowing Date is a Payment Date, whether such Loans shall
constitute Base Rate Loans or Eurocurrency Loans (if not specified or if such
date is not a Payment Date, Base Rate Loans shall be deemed to have been
requested); (v) the currency in which the Loan will be borrowed; (vi) the total
amount of such borrowing (which shall be in a minimum amount of 100,000 units of
the relevant currency, and in an amount the Dollar Equivalent of which is equal
to or greater than $100,000, and integral multiples of 100,000 units of relevant
currency in excess thereof); and (vii) the amount, if any, of fees (including
the Utilization Fee) requested to be borrowed; and (B) certify that (x) Borrower
delivered the Final Asset Pool Acquisition Certificate in respect of such Asset
Pool or Asset Pools not later than five Business Days before the Borrowing Date
specified in such notice and that all information set forth in such Asset Pool
Acquisition Certificate (as revised through the Final Asset Pool Acquisition
Certificate and as further revised to the extent permitted by Section 6B.4)
remains true and correct and (y) on or prior to the date of such Notice of
Borrowing, Borrower has delivered to Agent a Final NPV Pool Certificate in
respect of such Asset Pool.
(b) Whenever Borrower desires to utilize the Loan Commitments for
Working Capital Loans, it shall deliver to Agent a Notice of Borrowing not later
than 11:00 a.m., Closing Office Time, three Business Days prior to the date of
the proposed borrowing, which notice shall specify (i) the date of the proposed
borrowing (which shall be a Business Day) (each, also a "Borrowing Date"), (ii)
if such Borrowing Date is a Payment Date, whether such Loans shall constitute
Base Rate Loans or Eurocurrency Loans (if not specified or if such date is not a
Payment Date, Base Rate Loans shall be deemed to have been requested), (iii) the
currency in which such Loans will be borrowed, and (iv) the total amount of such
borrowing (which shall be in a minimum amount of $250,000 and, if greater, in
integral multiples of $100,000).
(c) Agent shall promptly notify (in writing or by telephone,
confirmed as soon as possible thereafter in writing) each of Lenders of the date
and type (i.e., Acquisition Loan or Working Capital Loan) of any proposed Loans,
the amount of the Loan or Loans such Lender is being requested to make and
whether such Loans shall constitute Base Rate Loans or Eurocurrency Loans. Each
Lender will make the amount of its Loan or Loans available to Agent, at the
Closing Office, before 1:00 p.m. Closing Office Time on the date specified in
the Notice of Borrowing in same day funds. Such proceeds shall be made available
to Borrower (subject to Section 2.2(d)) by Agent, in the same type of funds
received by Agent, at the Closing Office against delivery to Agent for the
account of each Lender of such instruments, documents and papers as are provided
for herein; provided that Agent may pay on behalf of Borrower the portion of any
Utilization Fee borrowed in connection with any such Loan directly to Lenders
entitled thereto. Agent shall deliver the instruments, documents and papers
received by it for the account of each Lender to such Lender or upon its order.
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(d) Unless Agent shall have received notice from a Lender prior to
11:00 a.m., Closing Office Time, on the date of any borrowing that such Lender
will not make available to Agent such Lender's ratable portion of such
borrowing, Agent may assume that such Lender has made such portion available to
Agent on the date of such borrowing in accordance with Section 2.2(c) and Agent
may, in reliance upon such assumption, make available to Borrower on such date a
corresponding amount. If and to the extent such Lender shall not have made such
ratable portion available to Agent, such Lender and Borrower severally agree to
repay to Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
Borrower until the date such amount is repaid to Agent, at the rate from time to
time prevailing on the applicable Note; provided that to the extent such
interest is paid by a Lender, interest shall be at the rate specified in Section
11.10 hereof. If such Lender shall pay to Agent such corresponding amount, such
amount so paid shall constitute such Lender's Loan as part of such borrowing for
purposes of this Agreement.
(e) The failure of any Lender to make the Loan to be made by it as
part of any borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Loan on the date of such borrowing. No Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender on the date of any borrowing.
2.3 The Notes.
(a) Borrower's obligation to pay (x) the principal of, and interest
on, the Loans of each Lender shall be evidenced by a promissory note payable to
the order of such Lender, each substantially in the form of Exhibit A (each a
"Note", and collectively, the "Notes").
(b) The Note of each Lender shall: (i) be dated the Effective Date;
(ii) be in an original principal amount, with respect to each Lender, as set
forth on Schedule 0 hereto; (iii) be payable in full on the Maturity Date
(subject to mandatory prepayment as herein provided).
(c) The Notes shall be, and hereby are, secured by the Collateral
and the Security Documents.
2.4 Mandatory Prepayments and Repayments of Loans.
(a) If at any time Total Outstandings shall exceed the Total Loan
Commitment in effect at such time, Borrower shall immediately prepay the Loans
in an amount equal to or greater than the amount of such excess.
(b) If at any time Total Outstandings shall exceed Borrowing Base
Availability at such time, Borrower shall immediately prepay the Loans in an
amount equal to or greater than the amount of such excess.
(c) Borrower shall repay the unpaid principal amount of all Loans,
together with all unpaid interest thereon and all other fees and amounts due
with respect thereto in full on the Maturity Date.
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(d) Unless there shall exist any Default or any Event of Default,
Borrower shall be entitled to designate whether mandatory prepayments are
applied to Working Capital Loans or Acquisition Loans.
2.5 Voluntary Prepayments of Loans.
(a) Borrower may, upon not less than three Business Days prior
written notice to Agent (which notice Agent shall promptly transmit to Lenders
in writing or by telephone, confirmed as soon as possible thereafter in writing)
prepay any Loans in whole at any time, or from time to time in part in amounts
of 250,000 units of the relevant currency equal to or greater than an amount the
Dollar Equivalent of which is $250,000 (and, if greater, in integral multiples
of 50,000 units of the relevant currency), without premium (subject to Section
3.8) or penalty; provided that at the time of any such prepayment, Borrower
shall pay all interest accrued on the principal amount so prepaid. Repayments
pursuant to this Section 2.5 shall be applied to such Loans as Borrower may at
the time in writing direct or, if no such direction is given, as determined by
Agent. All notices pursuant to this Section 2.5 shall be irrevocable and result
in the principal amount of Loans specified therein becoming due and payable on
the prepayment date specified therein. Subject to the terms and conditions of
this Agreement, amounts prepaid under this Section 2.5 may be reborrowed.
2.6 Reduction of Commitments.
(a) The Total Loan Commitment shall be reduced by $1,333,333.00
automatically on the fourth to last Business Day of March, June, September and
December in each year, commencing December 27, 2005.
(b) Borrower shall have the right at any time and from time to time
upon at least three Business Days' prior written notice to Agent (which notice
Agent shall promptly transmit to Lenders in writing or by telephone, confirmed
as soon as possible thereafter in writing) to reduce permanently in amounts
equal to $500,000 (and if greater, in integral multiples of $100,000) or
terminate the unutilized (after giving effect to all pending requests for Loans)
Total Loan Commitment.
(c) Any reduction of the Total Loan Commitment pursuant to this
Section 2.6 shall be allocated to the Loan Commitments of Lenders, pro rata,
based upon the percentage that each Lender's Loan Commitment represents of Total
Loan Commitment. Any reduction of the Total Loan Commitment below $80,000,000
shall result in a pro rata reduction, based upon the percentage that such
reduction represents of Total Loan Commitment then in effect, to the Working
Capital Sublimit and the Eurosublimits of each Lender. Any reduction to or any
termination of the Total Loan Commitment shall be accompanied by the payment in
full of any Commitment Commission then accrued hereunder.
(d) Borrower shall have the right at any time and from time to time
upon at least 3 Business Days' prior written notice to Agent to reduce
permanently in amounts equal to $500,000 (and if greater, in integral multiples
of $100,000) or terminate the Letter of Credit Commitment (after giving effect
to all pending Issuance Requests).
2.7 Currency Fluctuations, etc.
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(a) Not later than 1:00 p.m., New York City time, on each Borrowing
Date and each Payment Date, Agent shall (i) determine the Exchange Rate as of
such date if at such time there are outstanding Eurocurrency Loans denominated
in Euros and (ii) give notice thereof to Lenders and to Borrower. The Exchange
Rate so determined shall become effective on the first Business Day immediately
following the relevant Borrowing Date or Payment Date (a "Reset Date") and shall
remain effective until the next succeeding Reset Date.
(b) Not later than 5:00 p.m., New York City time, on each Reset
Date, Agent shall (i) determine the Dollar Equivalent of the Eurocurrency Loans
in Euros then outstanding (after giving effect to any Eurocurrency Loans to be
made or repaid on such date) and (ii) notify Lenders and Borrower of the results
of such determination.
2.8 Conversion of Existing Loans. On the Effective Date, (i) the Existing
Term Loans shall be deemed to convert to and thereafter constitute Acquisition
Loans hereunder, and (ii) the Existing Revolving Credit Loans shall be deemed to
convert to and thereafter constitute Working Capital Loans, in each case made by
Lenders hereunder pro rata, based upon the percentage that each Lender's Loan
Commitment represents of the Total Loan Commitment, and subject to all of the
terms and conditions of this Agreement and the other Loan Documents applicable
thereto.
SECTION 2A. LETTERS OF CREDIT
SECTION 2A.1. Requests. (a) By delivering to the Issuer (with a copy to
Agent if Bank of Scotland should at any time not be Issuer hereunder) a written
request (an "Issuance Request") on or before 10:00 a.m. Closing Office Time on a
Business Day, Borrower may request, from time to time during the Commitment
Period and on not less than 3 nor more than 10 Business Days' notice, that the
Issuer issue an irrevocable letter of credit in such form as shall be acceptable
to the Issuer (each a "Letter of Credit", and collectively, the "Letters of
Credit"), in support of such financial obligations of Borrower, any Subsidiaries
or any Eligible Portfolio Entities which are described in such Issuance Request
and are permitted by Section 2A.1(c). Each Issuance Request shall specify (i)
the proposed date of issuance (which shall be a Business Day during the
Commitment Period), (ii) the stated amount of the Letter of Credit, (iii) the
expiration date of the Letter of Credit, (iv) the name and address of the
beneficiary of the Letter of Credit, and (v) a precise description of the
documents and have attached the verbatim text of any certificate to be presented
by the beneficiary of such Letter of Credit which, if presented by such
beneficiary prior to the expiration date of the Letter of Credit, would require
the Issuer to make payment under the Letter of Credit; provided that the Issuer,
in its sole judgment, may prior to the date of issuance require changes in any
such documents and certificates; and provided, further, that (unless otherwise
consented to by the Issuer) no Letter of Credit shall require payment against a
conforming draft to be made thereunder earlier than the third Business Day after
such draft is presented.
(b) Each Letter of Credit shall by its terms (unless otherwise consented
to by the Issuer):
(i) be issued for the account of Borrower in a Stated Amount (in U.S.
dollars) which does not exceed (or would not exceed) the then Letter of Credit
Availability; and
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(ii) be stated to expire on a date (its "Stated Expiry Date") no later
than the earlier of (x) one year from its date of issuance or (y) the last day
of the Commitment Period; and, if renewable by its terms, shall not be renewed
so as to expire on a date later than the last day of the Commitment Period; and
(iii) on or prior to its Stated Expiry Date:
(A) terminate immediately upon notice to the Issuer thereof
from the beneficiary thereunder that all obligations covered thereby
have been terminated, paid, or otherwise satisfied in full,
(B) reduce in part immediately to the extent the beneficiary
thereunder has notified the Issuer that the obligations covered
thereby have been paid or otherwise satisfied in part, and
(C) if the Stated Expiry Date is later than 60 days from its
date of issuance, terminate 30 Business Days after notice to the
beneficiary thereunder from the Issuer or Agent that an Event of
Default has occurred and is continuing.
(c) Letters of Credit may be issued to support (i) lease obligations,
statutory obligations, performance and return-of-money bonds and other similar
ordinary course obligations (exclusive of obligations for the payment of
borrowed money) of Borrower, its Subsidiaries or any Eligible Portfolio Entity,
(ii) obligations arising in connection with the acquisition of an Eligible Asset
Pool by an Eligible Portfolio Entity in accordance with Section 2.1(b), or (iii)
any other purposes for the benefit of Borrower, any Subsidiary or any Portfolio
Entity approved by Agent, in its sole discretion.
SECTION 2A.2. Issuances and Extensions. Subject to the terms and
conditions of this Agreement and of any applicable Continuing Letter of Credit
Agreement (but in the event of any direct and clear conflict between this
Agreement and the Continuing Letter of Credit Agreement, this Agreement shall
control), the Issuer shall issue Letters of Credit in accordance with the
Issuance Requests made therefore. The Issuer will make available to Borrower
(or, at Borrower's request, the beneficiary) the original of each Letter of
Credit which it issues in accordance with the Issuance Request therefore. The
Issuer shall not be liable to any Lender with respect to any Letter of Credit
if, at the time of such issuance, it has not received from Borrower, Agent or
any Lender notice that any condition for the issuance of such Letter of Credit
has not been satisfied.
SECTION 2A.3. Fees and Expenses. (a) Borrower agrees to pay to Agent for
distribution to Lenders (pro rata, based upon the percentage that each Lender's
Loan Commitment represents of Total Loan Commitment or, if such commitments are
no longer in effect, their pro rata shares of the LC Outstandings as determined
in accordance with Section 2A.8) a non-refundable letter of credit fee with
respect to each Letter of Credit equal to, per annum (calculated on the basis of
a 360-day year and the actual number of days elapsed), (x) the Applicable Margin
(after giving effect to the Letter of Credit requested) in effect for
Eurocurrency Loans, times (y) the Stated Amount of such Letter of Credit, such
fee payable quarterly in advance, on the issuance date (for the period from the
issuance date until the next
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succeeding fourth to last Business Day of March, June, September or December, as
the case may be) and on each fourth to last Business Day of each March, June,
September and December thereafter (each a "Letter of Credit Fee"), and in
addition, in the case of each Letter of Credit (Acquisition), the Utilization
Fee, if any, required pursuant to Section 4.3. In addition, Borrower further
agrees to pay to the Issuer for its own account the Issuer's standard opening,
documentary and processing charges and all other administrative expenses of the
Issuer in connection with the issuance and maintenance of each Letter of Credit.
(b) If any Regulatory Change shall at any time (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit issued by the Issuer or participated in by any Lender or Lender
Assignee, or (ii) subject letters of credit issued by the Issuer or
participations therein held by any Lender or Lender Assignee to any assessment
or other cost imposed by the Federal Deposit Insurance Corporation or any
successor thereto or (iii) impose on the Issuer or any Lender or Lender Assignee
any other or similar condition regarding any Letter of Credit, the commitment or
obligation of the Issuer to issue Letters of Credit hereunder or any Lender's or
Lender Assignee's participation therein and the result of any event referred to
in clause (i), (ii) or (iii) above shall be to increase the cost to the Issuer
or any Lender or Lender Assignee of agreeing to issue, issuing or maintaining
any Letter of Credit or its participation therein by an amount which the Issuer
or such Lender or Lender Assignee shall deem to be material (which increase in
cost shall be the result of the reasonable allocation by the Issuer or such
Lender or Lender Assignee of the aggregate of such cost increases resulting from
such events), then and in each case upon demand from time to time by the Issuer
or such Lender or Lender Assignee (furnished to Borrower by Agent), provided
such demand is made no later than six months after such Issuer, Lender or Lender
Assignee obtains knowledge of such Regulatory Change, Borrower shall promptly
pay to Agent (for the account of such Issuer, Lender or Lender Assignee, as the
case may be) additional amounts which shall be sufficient to compensate the
Issuer (or such Lender or Lender Assignee) for such increased cost from the date
of such change, together with interest on each such amount from the date
demanded by the Issuer (or such Lender or Lender Assignee) until payment in full
thereof (after as well as before judgment) at a rate per annum equal to the
Past-Due Rate from time to time in effect. A certificate of the Issuer (or such
Lender or Lender Assignee) submitted to Borrower as to any additional amount or
amounts (including calculations thereof, in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on Borrower. In determining
such amount or amounts, the Issuer (or such Lender or Lender Assignee) may use
any method of averaging and attribution as it (in its reasonable discretion)
shall deem applicable.
(c) The provisions of this Section 2A.3 and Section 2A.7 shall survive any
termination of this Agreement and the payment in full of the Loans and the LC
Obligations.
SECTION 2A.4. Disbursements. (a) The Issuer will notify Borrower and Agent
promptly of the presentment for payment of any Letter of Credit together with
notice of the date (the "Disbursement Date") such payment shall be made. Subject
to the terms and provisions of such Letter of Credit and this Agreement, the
Issuer shall make such payment to the beneficiary (or its designee) of such
Letter of Credit.
(b) Prior to 11:00 a.m. Closing Office Time on the Disbursement Date,
Borrower will reimburse the Issuer by making payment to Agent at the Closing
Office for all amounts
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disbursed or to be disbursed by the Issuer on that day (the "Disbursement")
under such Letter of Credit (the "Reimbursement Obligation"). At Borrower's
option, but subject to the provisions of Sections 2 and 6A hereof, prior to
11:00 a.m. Closing Office Time on the Business Day before the Disbursement Date,
Borrower may request in accordance with Section 2.2 (but without regard to the
last sentence of Section 2.2(b) or the requirement that the borrowing be in a
minimum amount of $250,000 and, if greater, in integral multiples of $100,000)
that a Working Capital Loan (or an Acquisition Loan in the case of a
Reimbursement Obligation relating to a Letter of Credit (Acquisition)) in the
amount of the Reimbursement Obligation be made and that the proceeds of such
Loan be used to so reimburse the Issuer. The proceeds of any such Working
Capital Loan (or Acquisition Loan) shall be applied to so reimburse the Issuer.
To the extent the Issuer is not reimbursed in full in accordance with this
Section 2A.4(b), Borrower's Reimbursement Obligation shall accrue interest at a
rate per annum equal to the Past-Due Rate from time to time in effect, payable
on demand.
SECTION 2A.5. Reimbursement. Borrower's Reimbursement Obligation with
respect to each Disbursement (including interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment which Borrower may have or have had against
the Issuer, Lenders, Agent, any Lender Assignee or any beneficiary of any Letter
of Credit, including any defense based upon the failure of any Disbursement to
conform to the terms of the applicable Letter of Credit or any application or
misapplication by the beneficiary of the proceeds of such Disbursement, or the
legality, validity, form, regularity, or enforceability of such Letter of
Credit; provided, however, that Borrower shall not be obligated to reimburse the
Issuer for any wrongful Disbursement made by the Issuer under any Letter of
Credit as a result of acts or omissions constituting gross negligence or willful
misconduct on the part of the Issuer.
SECTION 2A.6. Deemed Disbursements. (a) Upon the occurrence and during the
continuance of any Event of Default with respect to which Agent has exercised
any right under Section 9, an amount equal to the LC Outstandings shall, at the
option of the Issuer, without demand upon or notice to Borrower, be deemed to
have been paid or disbursed by the Issuer (each, a "Deemed Disbursement") under
all outstanding Letters of Credit (notwithstanding that such amount may not in
fact have been so paid or disbursed), and, upon notification by the Issuer to
Borrower of Borrower's obligations under this Section 2A.6, Borrower shall be
immediately obligated to reimburse the aggregate amount of the Deemed
Disbursements to the Issuer prior to 11:00 a.m. Closing Office Time on the date
of such Deemed Disbursement and any amount not so reimbursed shall accrue
interest (after as well as before judgment) at a rate per annum equal to the
Past-Due Rate from time to time in effect, payable on demand; provided however,
that if an Event of Default described in Section 9.8 shall occur with respect to
Borrower, all results which would otherwise occur under this Section 2A.6(a)
only at the option of the Issuer, or upon notification by the Issuer to
Borrower, shall occur automatically without the giving of any such notice or the
need to exercise any such option. All Deemed Disbursements reimbursed by
Borrower pursuant to this Section 2A.6(a) shall be deposited into a special
depository account (the "Deemed Disbursement Account") maintained by Borrower
with, and under the control of, the Issuer and titled appropriately so as to
identify the nature of such account. Borrower shall take all such action, if
any, as is necessary to assure that the Issuer, Agent and Lenders have a
perfected first priority security interest in said account. All of Borrower's
right, title and interest in and to all monies at any time in the Deemed
Disbursement Account (and all earnings, if any,
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thereon) are hereby irrevocably pledged by Borrower to the Issuer, Agent and
Lenders as security to secure the prompt payment to the Issuer, Agent and
Lenders of all Borrower's liabilities to the Issuer, Agent and Lenders and to
secure the performance by Borrower of its Obligations under this Agreement and
the other Loan Documents; and such amounts may be applied to such liabilities in
such order as Agent may direct without notice to, or the consent of, Borrower or
any other Loan Party. Borrower shall be entitled to receive monies from the
Deemed Disbursement Account only as permitted by Section 2A.6(b). The Issuer
shall invest the monies in the Deemed Disbursement Account in such types of
investments as are agreed to by Borrower and the Issuer.
(b) If any such Letter of Credit shall thereafter terminate without the
Issuer being required to pay the full amount of the Deemed Disbursement with
respect to such Letter of Credit to the beneficiary thereunder, and if at the
time all Obligations of Borrower (whether of performance or payment) under this
Agreement or any of the other Loan Documents which are then required to be
performed or paid shall have been either terminated, performed or paid in full,
then the obligations of Borrower under this Section 2A.6 shall be reduced
accordingly (subject, however, to reinstatement in the event any payment in
respect of such Letters of Credit is recovered in any manner from the Issuer),
and the Issuer will return to Borrower the excess, if any, of
(i) the aggregate amount deposited by Borrower with the Issuer
pursuant to this Section 2A.6 and not theretofore applied by the
Issuer to any Reimbursement Obligation or paid by the Issuer to any
beneficiary of any Letter of Credit or applied by Agent or any
Lender in payment of the Notes or any other Obligation of Borrower
under this Agreement or any of the Loan Documents
over
(ii) the aggregate amount of all then-existing Reimbursement
Obligations, LC Outstandings and other Deemed Disbursements.
At such time when all Events of Default shall have been cured or waived, the
Issuer shall return to Borrower all amounts then on deposit in the Deemed
Disbursement Account.
SECTION 2A.7. Nature of Reimbursement Obligations. Borrower shall assume
all risks of the acts, omissions, or misuse of any Letter of Credit by the
beneficiary thereof. Neither the Issuer (except to the extent of its own gross
negligence or willful misconduct), Agent nor any Lender shall be responsible
for:
(a) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any Letter of Credit or of any draft, demand or other document,
instrument or other paper relating to, or presented under, any Letter of Credit,
or any document submitted by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the
10
rights or benefits thereunder or proceeds thereof in whole or in part, which may
prove to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions required in
order to demand payment under any Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, telecopier or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any document or
draft required in order to make a Disbursement under any Letter of Credit or of
the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of any
of the rights or powers granted the Issuer, Agent or Lenders hereunder. In
furtherance and extension and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by the Issuer in good faith
shall be binding upon Borrower, Agent, Lenders and each Lender Assignee and
shall not put the Issuer (except to the extent of its own gross negligence or
willful misconduct), Agent or any Lender or Lender Assignee under any resulting
liability to Borrower nor put the Issuer under any resulting liability to Agent
or any Lender or Lender Assignee. Nothing herein shall constitute a waiver by
Borrower of any of its rights against any beneficiary of any Letter of Credit.
2A.8 Other Lenders' Participation. Effective upon the issuance of each
Letter of Credit and without further action, each Letter of Credit shall be
deemed to be issued on behalf of all Lenders (including the Issuer), pro rata,
based upon the percentage that each Lender's Loan Commitment represents of Total
Loan Commitment (or if such commitments are no longer in effect, based upon the
percentage that each Lender's outstanding Loans and participations in Letters of
Credit represents of all Lenders' Loans and participations in Letters of
Credit), and each Lender shall be deemed to have irrevocably purchased from the
Issuer a participation in such Letter of Credit equal to such Lender's pro rata
share of the Stated Amount. Each Lender shall, to the extent of such pro rata
share, promptly reimburse the Issuer for any Reimbursement Obligation which has
not been promptly reimbursed by Borrower in accordance with Section 2A.4(b).
Borrower hereby agrees that any such reimbursements to the Issuer by Lenders
shall (notwithstanding the provisions of Sections 6A and 2.2 and notwithstanding
that Borrower may at the time be the subject of a proceeding of the type
described in Section 9.8) be treated as Working Capital Loans (or Acquisition
Loans in the case of reimbursements in connection with a Letter of Credit
(Acquisition)) made by Lenders to Borrower for all purposes of this Agreement.
2A.9 Indemnification. To the extent the Issuer is not reimbursed or
indemnified by Borrower, Lenders will reimburse and/or indemnify the Issuer on a
pro rata basis, based upon the percentage that each Lender's Loan Commitment
represents of Total Loan Commitment (or if such commitments are no longer in
effect, based upon the percentage that each Lender's outstanding Loans and
participations in Letters of Credit represents of all Lenders' Loans and
participations in Letters of Credit), for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred or sustained by or asserted against the Issuer, acting pursuant to
this Section 2A or pursuant to any Letter of Credit or any Continuing
11
Letter of Credit Agreement, in any way relating to or arising out of any of the
foregoing, provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Issuer's gross
negligence or willful misconduct. The obligations of Lenders under this Section
2A.9 shall survive the payment in full of the Notes, the expiration and
termination of all Letters of Credit, the payment of all Reimbursement
Obligations and any termination of this Agreement.
Section 3. INTEREST.
3.1 Rate of Interest.
(a) Subject to the provisions of Section 3.3, Borrower agrees to pay
interest in respect of the unpaid principal amount of the Loans from the date
such Loans are made until maturity (whether by acceleration or otherwise) for
each period from and including each Payment Date to but excluding the
immediately following Payment Date at the following rates: (i) Eurocurrency
Loans, at a rate per annum equal LIBOR for the Eurocurrency Interest Period then
in effect, plus the Applicable Margin in effect for such period, and (ii) Base
Rate Loans, at a rate per annum equal to the sum of the Base Rate, plus the
Applicable Margin in effect for such period, such rate to change as and when the
Base Rate shall change.
(b) Loans (provided that such Loan was made in Dollars) which are
made on a date other than a Payment Date shall constitute Base Rate Loans until
converted in accordance with Section 3.10.
3.2 Interest Payment Dates. Interest on and prior to maturity in respect
of each Loan shall be payable in arrears (i) on each Payment Date; (ii) upon any
repayment or prepayment (to the extent accrued on the principal amount so repaid
or prepaid); and (iii) at maturity (whether by acceleration or otherwise) and,
after maturity, on demand.
3.3 Past Due Rate. Each Loan (and any overdue interest in respect of each
Loan) shall bear interest for each day on which an Event of Default exists
(after as well as before judgment), payable on demand, at a rate per annum (the
"Past-Due Rate") equal to the greater of 5% in excess of the interest rate
otherwise applicable to such Loan on such day or 4.5% in excess of the Base Rate
in effect on such day.
3.4 Capital Adequacy. If any Lender shall have determined that the
applicability of any law, rule, regulation or guideline adopted after the date
hereof, it being agreed that "adopted after the date hereof" shall include
compliance by a Lender or any lending office or holding company of a Lender with
any Basle Law whether or not such Basle Law was in effect, applicable or phased
in on or prior to or after the date hereof pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards" or pursuant to or arising out of any report, agreement or convention
of any international banking group adopted subsequent to such 1988 report (said
laws, rules, regulations and guidelines pursuant to or arising out of such 1988
report or any such subsequently adopted report, agreement or convention being
sometimes collectively herein referred to as "Basle Laws"), or the adoption
after the date hereof
12
of any other law, rule, regulation or guideline regarding capital adequacy (any
such other law, rule, regulation or guideline being sometimes herein referred to
as "Other Laws"), or any change in any of the foregoing (after the date hereof
in respect of Other Laws; before or after the date hereof in respect of Basle
Laws) or in the enforcement or interpretation or administration of any of the
foregoing (after the date hereof in respect of Other Laws; before or after the
date hereof in respect of Basle Laws) by any Government Authority, central bank
or comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by any Lender (or any lending office of
any Lender) or any holding company of any Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of its Commitments, Loans or
any of its obligations hereunder to a level below that which such Lender or such
Lender's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's policies
and the policies of such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be material, then, upon demand
by such Lender (or by Agent on such Lender's behalf), Borrower shall pay to such
Lender from time to time such additional amount or amounts as will compensate
such Lender or such Lender's holding company for any such reduction suffered,
together with interest on each such amount from the date demanded until payment
in full (after as well as before judgment) thereof at the Base Rate. Each Lender
shall endeavor to give Borrower notice of its intention to require compensation
under this Section 3.4 within a reasonable time after the loan officer of such
Lender with responsibility for this Agreement becomes aware of its entitlement
to such compensation under this Section 3.4, but no failure to give any such
notice shall affect or relieve Borrower of any of Borrower's obligations under
this Section 3.4 or under any other provision of this Agreement or any other
Loan Document or result in any obligation or liability of Agent or any Lender to
Borrower or any other Person. A certificate of a Lender as to the amount
required to be paid by Borrower under this Section 3.4 and showing in reasonable
detail the basis for the calculation thereof shall, absent manifest error, be
final and conclusive (it being understood that in no event shall any Lender be
required to disclose in such certificate or otherwise any non-public
information). In determining such amount or amounts, a Lender may use any method
of averaging and attribution as it (in its sole and absolute discretion) shall
deem applicable.
3.5 Determination of Rate of Borrowing. As soon as practicable after 10:00
A.M. (New York time) on each Eurocurrency Interest Determination Date, Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the rate of interest (the "Rate of
Borrowing") which shall be applicable to the Eurocurrency Loans for the next
succeeding Eurocurrency Interest Period and shall promptly give notice thereof
in writing or by telephone (confirmed in writing) to Borrower and Lenders.
3.6 Substituted Rate of Borrowing.
(a) In the event that on any Eurocurrency Interest Determination
Date any Lender shall have reasonably determined (which determination shall be
final and conclusive and binding upon all parties but, with respect to the
following clauses (i), (ii)(y) and (ii)(z), shall be made only after
consultation with Agent on the date of such determination) that:
13
(i) by reason of any changes arising after the date of this
Agreement affecting the interbank Eurocurrency market or affecting the position
of such Lender in such market, adequate and fair means do not exist for
ascertaining the applicable Rate of Borrowing by reference to LIBOR with respect
to the Eurocurrency Loans as to which an interest rate determination is then
being made; or
(ii) by reason of (x) the requirements of Regulation D, (y)
any change after the date hereof in any other applicable law or governmental
rule, regulation or order (or any interpretation thereof and including the
enactment of any new law or governmental rule, regulation or order) or (z) other
circumstances affecting such Lender or the interbank Eurocurrency market or the
position of such Lender in such market (such as for example but not limited to a
change in official reserve requirements or increased capital reserves required
or imposed by any regulatory authority or entity (domestic or foreign) having
jurisdiction over or with respect to such Lender to the extent not provided for
in clause (ii)(x) above), LIBOR shall not represent the effective pricing to
such Lender for U.S. dollar deposits of comparable amounts for the relevant
periods;
then, and in any such event, Lender so affected shall on such date give notice
of such determination in writing or by telephone (confirmed in writing) to
Borrower and to Agent. Thereafter, Borrower shall pay to such Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its reasonable discretion shall determine) as shall be required to
cause such Lender to receive interest with respect to its Eurocurrency Loan for
the Eurocurrency Interest Period following such Eurocurrency Interest
Determination Date and for any succeeding Eurocurrency Interest Period with
respect to which such changes or requirements apply (each such period, an
"Affected Interest Period") at a rate per annum equal to 2.75% in excess of the
effective pricing to such Lender for U.S. dollar deposits to make or maintain
its Eurocurrency Loans, provided that in the case of any such determination
pursuant to clause (ii)(x), the written notice from such Lender to Agent and
Borrower on the relevant Eurocurrency Interest Determination Date shall specify
(x) any such amount on account thereof theretofore incurred, and such amount
shall be paid at such time and (y) the additional amount required to be paid
with respect to the relevant Affected Interest Period (with such amount so
stated to be final with respect to the relevant Affected Interest Period) and
such additional amount shall be paid at the same time, and together with, the
interest otherwise payable in respect of such Eurocurrency Loans for such
Affected Interest Period. A certificate as to additional amounts owed any such
Lender, showing in reasonable detail the basis for the calculation thereof,
submitted to Borrower by such Lender through Agent shall, absent manifest error,
be final and conclusive and binding upon all of the parties hereto.
(b) In lieu of paying additional moneys to any Lender affected by
Section (a), other than clause (ii)(x) thereof (any such Lender, together with
any Lender affected by Section 3.7(a), an "Affected Lender"), Borrower may
(subject to Section 3.8), by giving notice in writing or by telephone (confirmed
in writing) to the Affected Lender, Agent and the other Lenders on such
Eurocurrency Interest Determination Date, (x) require the Affected Lender to
convert its Eurocurrency Loan then outstanding or requested that is so affected
into a Base Rate Loan on the first day of the Affected Interest Period, such
notice to pertain only to the Loans of the Affected Lender and to have no effect
on the obligations of the other Lenders to maintain Eurocurrency
14
Loans, or (y) terminate the obligations of Lenders to make or maintain Loans as,
or convert Loans into, Eurocurrency Loans and in such event, on the first day of
what would have been the next Eurocurrency Interest Period, all Eurocurrency
Loans shall be outstanding as Base Rate Loans.
3.7 Required Termination and Prepayment.
(a) In the event that at any time any Affected Lender shall have
reasonably determined (which determination shall be final and conclusive and
binding upon all parties) that the making or continuation of its Eurocurrency
Loans has become unlawful by compliance by such Lender in good faith with any
law, governmental rule, regulation, guideline or order, the Affected Lender
shall on such date give notice in writing or by telephone (confirmed in writing)
to Agent and Borrower of such determination. The obligation of the Affected
Lender to make or maintain its Eurocurrency Loan or Loans so affected shall be
terminated and Borrower shall forthwith and in any event no later than the
earliest of (x) the termination of the Eurocurrency Interest Period in effect at
the time any such determination pursuant to this Section 3.7(a) is made, (y) the
first day of the Eurocurrency Interest Period commencing immediately thereafter
if such determination is made in respect of a requested Eurocurrency Loan, or
(z) five Business Days after receipt of notice from an Affected Lender under
this Section 3.7(a), take one of the actions specified in Section 3.7(b). If by
the earliest of (x), (y) or (z) Borrower has not exercised one of the options
specified in Section 3.7(b), Borrower shall be deemed to have exercised the
option set forth in clause (iii) of Section 3.7(b) and to have given the notice
specified therein.
(b) Upon receiving any notification provided in Section 3.7(a),
Borrower may (subject to Section 3.8) exercise one of the following options:
(i) If the determination by an Affected Bank relates only to
Eurocurrency Loans then being requested by Borrower pursuant to a Notice
of Borrowing or to Base Rate Loans then being requested by Borrower to be
converted to Eurocurrency Loans pursuant to a Notice of Conversion,
Borrower may by giving notice in writing to Agent and Lenders prior to the
date on which such Eurocurrency Loan is to be made or converted, withdraw
such Notice of Borrowing or Notice of Conversion for all Lenders;
(ii) Upon written notice to Lenders, Borrower may terminate the
obligations of Lenders to make or maintain Loans as, or convert Loans
into, Eurocurrency Loans and in such event, Borrower, shall not later than
the time specified in subsection 3.7(a), convert all Eurocurrency Loans
into Base Rate Loans by giving notice thereof to Agent and Lenders.
(iii) Borrower may, by giving notice in writing to the Affected
Lender, Agent and the other Lenders require the Affected Lender to make
the Eurocurrency Loan then being requested as a Base Rate Loan (or to keep
outstanding as a Base Rate Loan the Base Rate Loan then being converted),
such notice to pertain only to the affected Eurocurrency Loans of the
Affected Lender and to have no effect on the obligations of the other
Lenders to make or maintain Eurocurrency Loans.
15
3.8 Compensation. Borrower shall compensate each Lender, upon written
request by such Lender (which request shall be made through Agent and shall set
forth the basis for requesting such amounts), for all losses, expenses and
liabilities (including, without limitation, any interest paid by such Lender to
lenders of funds borrowed by it to make or carry its Eurocurrency Loans to
Borrower, losses sustained by such Lender in connection with the liquidation or
re-employment of such funds and all other funding losses) which such Lender may
sustain: (i) if for any reason a conversion of any Eurocurrency Loan does not
occur on a date specified therefor pursuant to Section 3.6, 3.7 or 3.10, or any
conversion into a Eurocurrency Loan does not occur on the date specified
therefor in Section 3.10, (ii) if for any reason any prepayment or repayment or
conversion of any of its Eurocurrency Loans occurs on a date which is not the
last day of a Eurocurrency Interest Period applicable thereto, (iii) if any
prepayment, repayment or conversion of any of its Eurocurrency Loans occurs on
such last day of the Eurocurrency Interest Period applicable thereto in any
amount in excess of the amount notified to Agent in writing not less than three
Business Days prior to such last day of such Eurocurrency Interest Period, (iv)
if any prepayment, repayment or conversion of any of its Eurocurrency Loans
occurs without at least three Business Days prior written notice thereof having
been given to Agent, (v) if any prepayment or repayment of any of its
Eurocurrency Loans is not made on any date specified in a notice thereof given
by Borrower or if any prepayment or repayment contemplated or required by a
Waterfall Certificate is not made on the Payment Date following the date such
Waterfall Certificate is delivered, or (vi) as a consequence of any default
under this Agreement or the delivery of any Certified Error Certificate.
3.9 Eurocurrency Interest Period Determination.
(a) Each Eurocurrency Interest Period for any Loan shall commence on
a Payment Date and expire on the succeeding Payment Date.
(b) No Eurocurrency Interest Period in respect of any Loan shall
extend beyond its stated maturity date.
(c) Subject to Section 3.9(e), if Agent shall not have received
written notice from Borrower on or prior to 11:00 a.m. (Closing Office time) at
least three Business Days prior to a Payment Date that Borrower has elected to
convert all or a portion of Loans outstanding as Eurocurrency Loans to Base Rate
Loans in accordance with the other provisions of this Agreement, Borrower shall
be deemed to have elected to have such Loans (or portion thereof, as the case
may be) continued as Eurocurrency Loans for a new Eurocurrency Interest Period.
(d) Unless the Majority Lenders specifically agree in writing, no
Eurocurrency Interest Period may be selected at any time that a Default or Event
of Default exists and Borrower shall be deemed to have elected to convert such
Eurocurrency Loans into Base Rate Loans.
(e) Borrower shall not be permitted to maintain as Eurocurrency
Loans any Loans if the outstanding amount of such Loans to be maintained as
Eurocurrency Loans is less than 1,000,000 units of the relevant currency, and an
amount the Dollar Equivalent of which is equal to or greater than $1,000,000, or
an integral multiple of 100,000 units of the relevant currency in excess
thereof.
16
3.10 Conversions. Borrower shall have the option to convert, on any
Payment Date, all or any portion of Loans from Base Rate Loans to Eurocurrency
Loans or (provided that such Loan was made in Dollars) from Eurocurrency Loans
to Base Rate Loans; provided that (i) after giving effect to any such conversion
the amount outstanding as a Eurocurrency Loans, if any, shall be equal to
$1,000,000 or an integral multiple of $100,000 in excess thereof, and the amount
outstanding as Base Rate Loans, if any, shall not be less than $20,000; and (ii)
unless the Majority Lenders specifically agree in writing, no conversion to
Eurocurrency Loans shall be permitted at any time that a Default or Event of
Default exists. Each such conversion shall be effected by Borrower giving Agent
written notice thereof (a "Notice of Conversion") on or prior to 11:00 a.m.
(Closing Office time) at least three Business Days prior to a Payment Date,
specifying the amount of Loans to be converted and whether such Loans are
Acquisition Loans or Working Capital Loans.
Section 4. FEES.
4.1 Facility Fee. Borrower agrees to pay to Agent, for the ratable account
of each Lender (based upon the percentage that each Lender's Loan Commitment
represents of the Total Loan Commitment) an annual facility fee (each such fee,
a "Facility Fee") in the amount of $250,000, which fee shall be fully earned by
Lenders and payable thereto on the Effective Date and on each anniversary
thereof.
4.2 Commitment Commission. Borrower agrees to pay to Agent for the account
of each Lender a commitment commission with respect to each Lender's Loan
Commitment for the period commencing on the Effective Date, to and including the
Maturity Date, computed at a rate per annum (calculated on the basis of a
360-day year and the actual number of days elapsed) equal to .20% of the average
daily Unutilized Loan Commitment of such Lender during the period for which
payment is made. Such commission (each a "Commitment Commission") shall be due
and payable quarterly in arrears on the fourth to last Business Day of the
months of March, June, September and December, commencing with December 28, 2004
(such date to include the full period from the Effective Date until said date).
4.3 Utilization Fee. Borrower agrees to pay to Agent, for the ratable
account of each Lender (based upon the percentage that each Lender's Loan
Commitment represents of the Total Loan Commitment) a utilization fee equal to
1% of the amount of each Acquisition Loan made and each Letter of Credit
(Acquisition) issued, such fee to be due and payable on each date on which a
Loan is made or a Letter of Credit (Acquisition) is issued (each such fee, a
"Utilization Fee"); provided, however, in no event shall the aggregate amount of
Utilization Fees payable during the term of this Agreement exceed $600,000. The
Existing Term Loans shall not be subject to the Utilization Fee.
4.4 Upfront Fee. Borrower agrees to pay to Agent, for the ratable account
of each Lender (based upon the percentage that each Lender's Loan Commitment
represents of the Total Loan Commitment) an upfront fee (the "Upfront Fee") in
the amount of $460,000, which fee shall be due and payable in full on the
Effective Date.
17
Section 5. PAYMENTS, ETC.
5.1 Currency of Payments. All payments of principal and interest on Loans
and under the Notes shall be made to Agent in immediately available funds in the
currency of the applicable Loan for which payment is being made.
5.2 Payments on Non-Business Days; Calculations. Whenever any payment to
be made hereunder or under the Notes shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest shall be payable at the applicable rate
during such extension. Interest on Base Rate Loans hereunder and under the Notes
shall be calculated on the basis of a 365-day year and the actual number of days
elapsed and interest on Eurocurrency Loans hereunder and under the Notes shall
be calculated on the basis of a 360-day year and the actual number of days
elapsed. If for any reason a Loan is repaid on the same day on which it is made,
one day's interest (subject to the other provisions of this Agreement) shall be
paid on that Loan. Borrower hereby authorizes and directs Agent and each Lender
to charge any account of Borrower maintained at any office of Agent or such
Lender with the amount of any principal, interest or fee when the same becomes
due and payable under the terms hereof or of the Notes; provided, however, that
neither Agent nor any Lender shall be under any obligation to charge any such
account.
5.3 Payment Date and Distribution of Funds.
(a) Until such time as Agent has exercised control over the Cash
Flow Cash Collateral Account and the Cash Collateral Account-Servicing in
accordance with the Loan Documents, all funds in such accounts shall be
distributed by Borrower on the fourth to last Business Day of each month (each,
a "Payment Date") pursuant to the distribution statement approved in writing by
Agent (or at any other times as may be agreed upon from time to time by
Borrower, Agent and Lenders) to be paid and applied as follows:
(i) First, to the payment to Agent, for the account of Lenders, of
all interest on the Loans which is then due and payable;
(ii) Second, to the payment to Agent, for the account of Lenders, of
any Commitment Commission and any Letter of Credit Fee payable pursuant to
Section 2A.3(a);
(iii) Third, to the payment to Agent, for the account of Lenders, as
a principal payment, any mandatory prepayment which is then due and
payable pursuant to Section 2.4(a) and 2.4(b);
(iv) Fourth, to the payment to Agent, for the account of Lenders, an
amount equal to all of any fees, late charges and other fees and expenses
which are then due and payable to Agent and/or Lenders under this
Agreement or any of the other Loan Documents or which will become so due
and payable on or before the last day of the calendar month in which the
Payment Date in question occurs;
(v) Fifth, to the payment to Agent, for the account of Lenders, as a
principal payment, an amount equal to the amount (if any) of any voluntary
prepayment which
18
Borrower elects to pay pursuant to Section 2.5 and any Commitment
Commission payable pursuant to Section 2.6(c);
(vi) Sixth, to the payment to Borrower of any remaining balance of
the funds in the Cash Flow Cash Collateral Account and the Cash Collateral
Account-Servicing.
(b) Upon the exercise by Agent of its right to control the Cash Flow
Cash Collateral Account and the Cash Collateral Account-Servicing in accordance
with the Loan Documents, all funds in the Cash Flow Cash Collateral Account and
the Cash Collateral Account-Servicing may be applied by Agent to Obligations in
the following order of priority: (i) to any amounts not otherwise listed in this
Section 5.2 then due and payable by Borrower under this Agreement, the Notes or
the Security Documents, (ii) to any fees then due and payable pursuant to
Section 4 of this Agreement, pro rata according to the aggregate amount of fees
then due and payable, (iii) to any interest on the Notes (pro rata according to
the aggregate amount of interest then due and payable on the Notes) then due and
payable, (iv) to any principal amount then due under the Notes and (v) to any
amounts not then due under the Notes, unless otherwise provided herein.
5.4 Net Payments; Application.
(a) All payments hereunder and under the Loan Documents (including,
without limitation, repayments and prepayments pursuant to Section 2) shall be
made by Borrower to Agent, except as otherwise provided in Section 5.1 in freely
transferable U.S. dollars, and in same day funds at the Closing Office without
setoff or counterclaim and in such amounts as may be necessary in order that all
such payments (after (i) withholding for or on account of any present or future
taxes, levies, imposts, duties or other similar charges of whatsoever nature
imposed on the amounts described above by any government or any political
subdivision or taxing authority thereof, other than any tax (other than such
taxes referred to in clause (ii) below) imposed on a Lender pursuant to the
income tax laws of the jurisdiction where such Lender's principal or lending
office or offices are located (collectively, the "Taxes") and (ii) deduction of
an amount equal to any taxes on or measured by the net income payable to such
Lender with respect to the amount by which the payments required to be made by
this Section 5.4 exceed the amount otherwise specified to be paid under this
Agreement and the Notes) shall not be less than the amounts otherwise specified
to be paid under this Agreement and the Notes. With respect to each such
deduction or withholding imposed in respect of any payment by or on behalf of
Borrower, Borrower shall promptly (and in no event later than 30 days
thereafter) furnish to Agent such certificates, receipts and other documents as
may be required to establish any tax credit, exemption or reduction in rate to
which any Lender or holder of a Note may be entitled. Each Lender, other than a
Lender organized and existing under the laws of the United States of America or
any political subdivision thereof, agrees to furnish Borrower, as soon as
practicable after any written request of Borrower to such effect, any executed
form reasonably requested by Borrower such as IRS Form W-8BEN or W-8ECI, and any
other applicable form as to such Lender's entitlement, if any, to exemption
from, or a reduced rate of, or its subjection to, United States withholding tax
on amounts payable to it hereunder by Borrower or under the Notes of Borrower
and each such Lender undertakes to use its best efforts promptly to notify
Borrower of any material change in any information, statement or form so
furnished to Borrower; provided, however, that any failure on the part of any
Lender to furnish any such
19
information, statements or forms shall in no way affect the obligations of
Borrower or the rights of any Lender under the terms of this Agreement or of the
Notes.
5.5 Distribution by Agent. All payments received by Agent on behalf of
Lenders on account of principal and interest under this Agreement or the Notes
or on account of any fees payable for the account of Lenders shall be promptly
distributed by Agent to Lenders (in the type of funds received by Agent) as
follows: (i) if in respect of principal of any Loans made to Borrower then on a
pro rata basis to each of Lenders holding the Loans in respect of which such
payment is being made; (ii) if in respect of interest on the Loans, then to each
Lender in the proportion that the aggregate amount of such unpaid interest due
on the Loans of each such Lender bears to the aggregate amount of such unpaid
interest due on all such Loans; (iii) if in respect of fees, then to Lenders in
accordance with their entitlement thereto (based on each Lender's share of the
Total Loan Commitment, in the case of the Facility Fee, the Upfront Fee and the
Commitment Commission, and based on each Lender's share of the applicable
Acquisition Loans or Letter of Credit (Acquisition) described in Section 4.3, in
the case of the Utilization Fee); and (iv) if in respect of a payment under
Section 3 other than an interest payment hereof, to each Lender in accordance
with its entitlement thereto.
Section 6. CONDITIONS PRECEDENT TO EFFECTIVENESS
This Agreement shall become effective when and as of the date (the
"Effective Date") that each of the following conditions have been satisfied to
the satisfaction of Agent (or waived by Agent). If the Effective Date shall not
have occurred by the close of business (New York time) on November 12, 2004 (or
such later date as is agreed to by Agent in writing), this Agreement shall not
become effective and shall be deemed rescinded, null and void.
6.1 Default, etc. On the Effective Date (both before and after giving
effect to the occurrence of the Effective Date) there shall exist no Default or
Event of Default and all representations and warranties made by the Loan Parties
herein or in the other Loan Documents or otherwise by the Loan Parties in
writing in connection herewith or therewith shall be true and correct in all
material respects with the same effect as though such representations and
warranties have been made at and as of such time.
6.2 Notes. Agent shall have received for each of Lenders the Notes, each
duly executed and completed by Borrower.
6.3 Supporting Documents of Borrower. There shall have been delivered to
Agent (with sufficient copies for each of Lenders) such information and copies
of documents (if any), approvals (if any) and records (certified where
appropriate) of corporate and legal proceedings (if any) in addition to those
listed on the Closing Checklist as Agent or any Lender may have reasonably
requested relating to the Loan Parties' entering into and performance of the
Loan Documents or any other agreements or documents related thereto.
6.4 Officer's Certificate. There shall have been delivered to Agent (with
sufficient copies for each of Lenders) a certificate of an Executive Officer of
Borrower certifying, as of the Effective Date, compliance with the conditions of
Section 6.1 and also the absence of any Material Adverse Changes of the type
referred to in Section 6.8.
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6.5 Certifications; Financial Statements. Borrower shall have delivered to
Agent such financial statements and certifications of financial statements as
Agent may have requested, which statements shall include, in any event, month
end financial statements of the type required by Section 7.1(a) and certified by
the CFO as of the most recent month ending 30 days prior to the Effective Date,
the annual financial statements required by Section 7.1(b) and 7.1(c) for the
Fiscal Year most recently ended (or the prior Fiscal Year, if less than 105 days
have passed since the end of a Fiscal Year) accompanied by the certifications
required by Section 7.1(d).
6.6 Approvals and Consents. All orders, permissions, consents, approvals,
licenses, authorizations and validations of, and filings, recordings and
registrations with, and exemptions by (all of the foregoing, "Requisite
Consents"), any Government Authority, or any other Person, required to authorize
or required in connection with the execution, delivery and performance of this
Agreement or the other Loan Documents and the transactions contemplated hereby
and thereby by any Loan Party shall have been obtained (and, if so requested,
furnished to Agent, with sufficient copies for Lenders).
6.7 Legal Opinions. Agent shall have received legal opinions (in
sufficient counterparts for each of Lenders) dated the Effective Date from
Haynes and Boone, LLP, counsel to Borrower and each other Loan Party, in form
and substance satisfactory to Agent.
6.8 Adverse Change. There shall have been, in Agent's opinion, no Material
Adverse Change since June 30, 2004. Neither Agent nor any Loan Party shall have
become aware of any previously undisclosed information with respect to any Loan
Party which, in Agent's opinion, would have a Material Adverse Effect
6.9 Change in Law; No Opposition. (i) No change shall have occurred in
applicable law or in applicable regulations thereunder or in the interpretations
thereof by any Governmental Authority which, in the opinion of any Lender, would
make it illegal for such Lender to make one or more Loans hereunder; and (ii) no
suit, action or proceeding shall be pending or threatened before or by any
Governmental Authority seeking to restrain or prohibit the making of any Loan or
the consummation of the transactions contemplated hereby.
6.10 All Proceedings to be Satisfactory. All corporate, partnership,
limited liability company and legal proceedings and all instruments, documents
and papers in connection with the transactions contemplated by this Agreement
and the other Loan Documents and the other documents referred to herein shall be
satisfactory in form and substance to Agent, and Agent and each Lender shall
have received all such information and copies of all documents which Agent or
such Lender may reasonably have requested in connection herewith, such documents
where appropriate to be certified by proper corporate officials or governmental
authorities.
6.11 Fees and Expenses. The fees referred to in Section 4.1 and Section
4.4, the legal fees and expenses of Agent's New York counsel and (if any) local
or special counsel in connection with the transactions contemplated by this
Agreement shall (to the extent demand for payment thereof shall have been made)
have been paid in full.
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Section 6A. CONDITIONS PRECEDENT TO ALL LOANS.
Lenders shall not be obligated to make any Loans on or after the Effective
Date unless, at the time of the making of such Loan (except as hereinafter
indicated) the following conditions (unless waived in writing by the Majority
Lenders) have been satisfied:
6A.1 Certain Conditions. At the time of the making of such Loan, and
immediately after giving effect thereto, (a) all deficiencies, if any, with
respect to conditions precedent to any prior Loan shall have been corrected to
the satisfaction of Agent, (b) all of the conditions specified in Sections 6.1,
6.6, 6.8, 6.9 and 6.10 (with any reference in any such Section to the Effective
Date being deemed to be a reference to the date of such Loans) shall be
satisfied to the satisfaction of Agent, (c) each of the Notes, the Guaranties
and the Security Documents shall be in full force and effect and no party
thereto shall have failed to perform in any material respect any of its
obligations thereunder, (d) no issuer of any legal opinion issued in connection
with any Loan Document or the making of any Loan shall have rescinded or
qualified any such legal opinion, (e) no issuer thereof shall have rescinded or
qualified any of the financial statements, certificates, letters, reports,
analyses, Requisite Consents or other opinions referred to in Section 6, and (f)
there shall have been, in the Majority Lenders' opinion, no Material Adverse
Change since the Effective Date.
6A.2 Subsequent Opinions of Counsel. If reasonably requested by Agent or
Majority Lenders, Agent shall have received from any or all of the counsel
referred to in 6.7 (or other counsel satisfactory to Agent) such favorable
supplemental legal opinions addressed to Agent and Lenders and dated the date of
such Loan and covering such matters incidental to the transactions contemplated
by this Agreement as Agent or the Majority Lenders shall reasonably request,
each of which opinions shall be in form and substance satisfactory to Agent and
Lender requesting same.
6A.3 Officer's Certificate.
(a) If requested by Agent, Agent shall have received a certificate
of an Executive Officer of Borrower certifying, as of the date of the Loan then
being made, compliance with the provisions of Section 6.1 (with the reference
therein to the Effective Date being deemed a reference to the date such Loans is
being made) and further to the effect that the conditions specified in Section
6A.1 are satisfied at such time.
(b) The making of each Loan subsequent to the Effective Date shall
constitute a representation and warranty by Borrower to Agent that, at the time
of said subsequent Loan (and after giving effect thereto), (i) all
representations and warranties contained herein or in the other Loan Documents
or otherwise made by Borrower or any other Loan Party in connection herewith or
therewith are true and correct in all material respects with the same effect as
though such representations and warranties were being made at and as of such
time, (ii) no Default or Event of Default exists and (iii) the conditions
specified in Section 6A.1 are satisfied at such time.
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6A.4 Fees and Expenses. To the extent demand therefor shall have been
made, all legal fees and expenses of Agent's New York counsel and (if any) local
or special counsel in connection with the transactions contemplated by this
Agreement shall have been paid in full.
Section 6B. ADDITIONAL CONDITIONS PRECEDENT TO ACQUISITION LOANS
Lenders shall not be obligated to make any Acquisition Loans unless, at
the time of making of such Loans, the following conditions (unless waived in
writing by the Majority Lenders), in addition to the conditions set forth in
Section 6A (unless waived in writing by the Majority Lenders), have been
satisfied:
6B.1 Eligible Portfolio Entity. (i) The Portfolio Entity (the "Subject
Portfolio Entity") identified in the related Asset Pool Acquisition Certificate
as the entity which will acquire the Asset Pool specified therein with a loan
from Borrower or a loan and/or contribution to its capital, directly or
indirectly, from a Primary Obligor (together with any other equity contributions
made by the Person holding other Equity Interests pursuant to Section 6B.2(a)
and the proceeds of Indebtedness (if any) incurred pursuant to Approved
Portfolio Leverage Arrangements) shall be an Eligible Portfolio Entity; (ii)
there shall have been no change to the Charter Documents of such Person or to
any Shareholder Agreement relating to such Person from the Charter Documents and
Shareholder Agreement provided with such Asset Pool Acquisition Certificate (or,
if the Loans are being requested in respect of an Asset Pool other than the
first Asset Pool acquired by such Subject Portfolio Entity, since the Charter
Documents and Shareholder Agreement delivered in connection with the acquisition
of such first Asset Pool), except for any such changes consented to in writing
by Agent; (iii) such Charter Documents and Shareholder Agreement shall be the
sole agreements with respect to equity ownership arrangements with respect to
such Subject Portfolio Entity and such Charter Documents and Shareholder
Agreement shall evidence Permitted Shareholder Arrangements with respect to such
Subject Portfolio Entity; and (iv) all action contemplated by Section 7.15 and
Section 6B.11 in connection with such Subject Portfolio Entity, including,
without limitation, the amendment of Section 2 to the Subsidiary Collateral
Assignment or Subsidiary Pledge Agreement (as applicable) to specify such
Subject Portfolio Entity, and the delivery of any promissory notes, stock
certificates or other certificates or instruments issued by such Subject
Portfolio Entity and of an acknowledgement of lien by such Subject Portfolio
Entity, all in form and substance satisfactory to Agent, shall have been taken
and completed.
6B.2 Capital Structure.
(a) No Third Party Investor shall have greater rights with respect
to such Subject Portfolio Entity than Borrower or any Affiliate thereof (except
to the extent that, if such Third Party Investor has acquired more Equity
Interests in such Subject Portfolio Entity than Borrower or such Affiliate
thereof (and was permitted to do so pursuant to the terms hereof), such greater
rights are commensurate with and derive solely from, such larger holding of
Equity Interests).
(b) No Third Party Investor shall have acquired equity interests or
voting rights in such Subject Portfolio Entity on a basis more favorable to such
Person than the
23
arrangements pursuant to which Borrower or relevant Primary Obligor directly or
indirectly acquired its equity interests in such Subject Portfolio Entity (and
without limiting the foregoing, no Third Party Investor shall have acquired its
Equity Interests at a cash cost per unit or interest lower than that paid by
Borrower or such Primary Obligor) and no Third Party Investor acquiring any
Equity Interests in such Subject Portfolio Entity shall have been given any
consideration (other than issuance of such Equity Interests) for making its
equity contribution.
6B.3 Consummation of Asset Acquisition. There shall have been delivered to
Agent evidence satisfactory to Agent that the acquisition of the Asset Pool
described in the related Asset Pool Acquisition Certificate shall have been
consummated in accordance with the terms of the applicable asset purchase
agreement (without any waiver of any material provision thereof by the Subject
Portfolio Entity) and the Asset Pool conforms to the description thereof
contained in the Asset Pool Acquisition Certificate as modified by revisions
permitted by Section 6B.4, that the entire amount of proceeds of such Loan were
loaned or contributed by Borrower to the Subject Portfolio Entity or a Primary
Obligor which directly or indirectly loaned or contributed such funds to the
Subject Portfolio Entity simultaneously with the closing of such acquisition,
that the entire amount of the capital contribution by other holders of the
Equity Interests in such Subject Portfolio Entity were contributed, and the
proceeds of all Indebtedness incurred by such Subject Portfolio Entity were
received by such Subject Portfolio Entity, at the same time as or before such
Primary Obligor's contribution or loan, and that such Subject Portfolio Entity
used all such loans or capital contributions together with all such proceeds of
Indebtedness to acquire such Asset Pool.
6B.4 Notices.
(a) The Final Asset Pool Acquisition Certificate in respect of the
Asset Pool in respect of which such Loans are requested shall have been
delivered to Agent not less than 5 Business Days prior to the Borrowing Date of
such Loans; provided that additional written revisions to the applicable Asset
Pool Acquisition Certificate may be delivered to Agent until 11:00 a.m. (Closing
Office time) on the day which is two Business Days preceding the Borrowing Date
for such Loans if such revisions relate only to the Acquisition Price, the
amount of Loans being requested (three Business Days notice being required if
such Loans are to be Eurocurrency Loans) or provide additional details as to the
related Asset Pool which do not result in the Asset Pool as so described being
different in any material respect from the Asset Pool as most recently described
in the Final Asset Pool Acquisition Certificate delivered on or prior to the
fifth Business Day preceding such Borrowing Date.
(b) A Notice of Borrowing, Borrowing Base Certificate and Final NPV
Pool Certificate in respect of the related Asset Pool shall have been delivered
to Agent, each in accordance with Section 2.2.
(c) Agent shall have been provided with such other information as to
the Asset Pool as it shall have reasonably requested.
6B.5 Asset Pool. The Asset Pool shall be an Eligible Asset Pool.
6B.6 Officer's Certificate.
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(a) Borrower shall have delivered to Agent a certificate of an
Executive Officer certifying compliance with Sections 6B.1, 6B.2, 6B.3, 6B.5 and
6B.10.
(b) In addition to the representations and warranties applicable to
the making of such Loan set forth in Section 6A.3, the making of each such Loan
shall constitute a representation and warranty by Borrower to Agent that, at the
time of said Loan (and after giving effect thereto) all conditions specified
Sections 6B.1, 6B.2, 6B.3, 6B.5 and 6B.10 are satisfied at such time.
6B.7 Opinion of Counsel. If requested by Agent, in the case of a Subject
Portfolio Entity which is a US Person, Haynes and Boone LLP or other counsel to
Borrower satisfactory to Agent and, in the case of any other Subject Portfolio
Entity, counsel satisfactory to Agent, shall have delivered to Agent an opinion
of counsel as to matters relating to the Subject Portfolio Entity or such other
matters as Agent may reasonably request.
6B.8 Utilization Fee. The Utilization Fee in respect of such Loans shall
have been paid in full to Agent.
6B.9 Leverage Arrangements. Not less than five Business Days prior to the
proposed Borrowing Date for such Loans (or such lesser period of time (if any)
to which Agent consents in writing) Borrower shall have delivered to Agent
copies, certified by an Executive Officer as complete and correct of each
instrument, agreement and other document evidencing any of the arrangements with
respect to Indebtedness incurred and to be incurred by the Subject Portfolio
Entity as Approved Portfolio Leverage Arrangements, or a certificate from an
Executive Officer that such Subject Portfolio Entity has not incurred any
Indebtedness with respect to any other Asset Pool and will not incur any
Indebtedness with respect to the Asset Pool in respect of which such Loans are
requested.
6B.10 Adverse Waterfall Event. No Adverse Waterfall Event shall have
occurred at any time during the preceding six months with respect to any Asset
Pool owned by the Subject Portfolio Entity.
6B.11 Pledged Shares and Notes.
(a) Each Primary Obligor shall have executed and delivered to
Borrower a revolving credit note payable to order of Borrower in a principal
amount equal to the Total Commitment, or if less the aggregate amount of Loans
which may from time to time be advanced by Borrower to such Primary Obligor, and
Borrower shall have delivered such notes to Agent in accordance with Section
7.15(b)
(b) In the event the proceeds of such Loans will be loaned by
Borrower to the Subject Portfolio Entity, no later than 90 days following the
related Funding Date, the Subject Portfolio Entity shall have executed and
delivered to Borrower a note payable to order of Borrower in principal amount
equal to the amount of the Loans, and Borrower shall have delivered such note to
Agent in accordance with Section 7.15(b). In the event the proceeds of such
Loans shall be advanced by Borrower to a Primary Obligor and loaned directly or
indirectly by such Primary Obligor to the Subject Portfolio Entity, no later
than 90 days following the related Funding Date, such Subject Portfolio Entity
shall have executed and delivered, directly or
25
indirectly, to such Primary Obligor, a promissory note payable to the order of
such Primary Obligor in a principal amount equal to the amount of such Loans,
and such Primary Obligor shall have delivered such note to Agent in accordance
with Section 7.15(b). In the event the proceeds of such Loans shall be advanced
by Borrower to a Primary Obligor and directly or indirectly contributed by such
Primary Obligor to the capital of the Subject Portfolio Entity, no later than 90
days following the related Funding Date, such Subject Portfolio Entity shall
have issued and delivered to such Primary Obligor, directly or indirectly,
shares of its stock, partnership interests, membership interests or similar
equity interests evidencing such capital contribution, and such Primary Obligor
shall have delivered such shares of stock, partnership interests, membership
interests or similar equity interests to Agent to the extent required pursuant
to Section 7.15(a).
6B.12 Minimum Portfolio Leverage. After giving effect to such Loans, the
sum of the Net Present Equity Values of all Portfolio Entities which have an FC
Percentage of 100% and which do not have an Approved Portfolio Leverage
Arrangement shall not be greater than 50% of the Aggregate Net Present Equity
Value.
All documents, agreements, instruments, certificates, financial
statements, legal opinions, analyses, reports and other papers required to be
delivered by this Section 6B shall be in form and substance satisfactory to
Agent and shall be delivered (with sufficient copies for each of Lenders) to
Agent at its Closing Office or as Agent may otherwise direct.
Section 6C. ADDITIONAL CONDITIONS
Notwithstanding any provision herein to the contrary no Lender shall be
obligated to make any Loans on or after the Effective Date unless the following
conditions (unless waived in writing by the Majority Lenders) have been
satisfied:
6C.1. Checklist Documents. The documentation set forth on the Closing
Checklist (Schedule 6C.1), including, without limitation, the Guaranties, Pledge
Agreements and Security Agreements listed thereon, satisfactory to Agent in form
and substance, shall have been delivered to Agent, and such other actions
referred to on such Schedule and in such documentation shall have been taken.
6C.2. Legal Opinions. Agent shall have received a legal opinion (in
sufficient counterparts for each of Lenders) from Haynes and Boone, LLP, counsel
to Borrower and each other Loan Party, in form and substance satisfactory to
Agent.
6C.3. Intercompany Security Agreements. Each Primary Obligor shall have
delivered (i) intercompany security agreements in form and substance
satisfactory to Agent securing each such Person's obligations under its Pledged
Note together with such other documents and instruments relating thereto and
records of company proceedings and (ii) if requested by Agent, legal opinions,
as Agent may reasonably request.
6C.4. Schedules. All schedules to this Loan Agreement not attached hereto
on the Effective Date shall have been complete in a manner satisfactory to
Agent.
6C.5. UCC Statements. Lien search results confirming the absence of any
perfected Liens prior to Lenders' and of any other Liens other than Liens
permitted hereunder shall have
26
been delivered to Agent and all actions with respect to the Liens created by the
Security Documents as are necessary or appropriate to perfect such Liens shall
have been taken.
Section 7. AFFIRMATIVE COVENANTS.
Borrower warrants and represents to and covenants to the Lenders and Agent
that, so long as this Agreement is in effect and until the Commitments are
terminated and all of the Loans, together with interest and all other
obligations (including Deemed Disbursements and Reimbursement Obligations and
fees and disbursements in connection therewith) are paid in full, Borrower will
(unless it shall have first procured the written consent of the Majority Lenders
to do otherwise) (i) perform the obligations set forth in this Section 7, (ii)
cause each Primary Obligor, Wholly-Owned Subsidiary and other Loan Party to
perform the obligations set forth in this Section 7 which are applicable to such
Person and (iii) exercise commercially reasonable efforts to cause each Material
Portfolio Entity to perform the obligations set forth in this Section 7 which
are applicable to such Person.
7.1 Financial Statements. Borrower will furnish to Agent and each Lender:
(a) As soon as available and in any event within 30 days after the
close of each calendar month, as at the end of such month and for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such month, a consolidated and consolidating balance sheet of Borrower and the
other members of the Consolidated Group, and the related statement of operations
for such period, all certified by the CFO of Borrower and each other member of
the Consolidated Group as being prepared in accordance with GAAP and to present
fairly the financial position and results of operation of such Person for such
period;
(b) As soon as available but not later than one hundred five (105)
days after the close of each Fiscal Year of Borrower, as at the end of and for
the Fiscal Year just closed, an audited consolidated balance sheet of Borrower
and the other members of the Consolidated Group, the related statement of
operations (including income statement) and a reconciliation of capital for such
year, all certified on an unqualified basis by a firm of independent certified
public accountants selected by Borrower and acceptable to Agent in Agent's sole
and absolute discretion;
(c) As soon as available but not later than one hundred five (105)
days after the close of each Fiscal Year of Borrower, as at the end of and for
the Fiscal Year just closed, an unaudited consolidating balance sheet of
Borrower and the other members of the Consolidated Group, the related statements
of operations (including income statement) and a reconciliation of capital for
such year, prepared by the CFO of Borrower;
(d) Concurrently with the delivery of the financial statements
described in subsection (b) above, a certificate of the aforesaid independent
certified public accountants certifying to Agent that based upon their
examination of the affairs of Borrower and the other members of the Consolidated
Group, performed in connection with the preparation of said financial
statements, Borrower is in compliance with the covenants set forth in Section
8.18 hereof, or, if Borrower is not in compliance, the nature of the
noncompliance therewith;
27
(e) Concurrently with delivery to its stockholders, copies of all
financial and other information delivered by Borrower to such Persons, including
without limitation, its proxy statements and annual reports to stockholders.
Within two (2) Business Days after delivery to the SEC by Borrower, which in all
cases shall be on a timely basis in accordance with the applicable document and
the Securities Laws, copies of all reports and other filings filed by Borrower
with the SEC, including without limitation, all reports on Forms 10K, 10Q or 8K
promulgated under the Securities Exchange Act of 1934, as amended, and all
registration statements filed under the Securities Act of 1933, as amended;
(f) Concurrently with delivery of the financial statements required
pursuant to Section 7.1(a) and (b) hereof, a certificate executed by the
President, Treasurer or CFO of Borrower that (A) no Event of Default or Default
has occurred and is continuing under this Agreement, (B) Borrower is in
compliance with the covenants set forth in Section 8.18 hereof, setting forth
Borrower's calculations with respect to such compliance; and (C) no event of
default and no event or condition which, with the passage of time or the giving
of notice or both, would constitute an event of default has occurred and is
continuing under any other Indebtedness Instrument ("Other Indebtedness
Instrument Unmatured Default") or, if an Event of Default or Default has
occurred under this Agreement or an event of default or Other Indebtedness
Instrument Unmatured Default has occurred under any other Indebtedness
Instrument, setting forth the details of such event and the action which
Borrower proposes to take with respect thereto;
(g) Promptly upon receipt thereof, copies of all detailed financial
reports and Management Letters, if any, submitted to any member of the
Consolidated Group by the Auditors, in connection with each annual or interim
audit of their respective books by such Auditors;
(h) As soon as possible and in any event (A) within 30 days after a
Loan Party, or any of the respective ERISA Affiliates of any Loan Party, knows
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Pension Plan has occurred or is expected
to occur and (B) within 10 days after a Loan Party or any of its ERISA
Affiliates knows that any other Termination Event with respect to any Pension
Plan has occurred or is expected to occur, a statement of the CFO of Borrower
describing such Termination Event and the action, if any, which the affected
Loan Party or ERISA Affiliate proposes to take with respect thereto;
(i) Promptly and in any event within five Business Days after
receipt thereof by a Loan Party or any of its ERISA Affiliates from the PBGC,
copies of each notice received by such Person of the PBGC's intention to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, any notice of noncompliance issued by the PBGC with respect to a
proposed standard termination of a Pension Plan, and any notice issued by the
PBGC with respect to a proposed distress termination of a Pension Plan;
(j) Promptly and in any event within 30 days after the filing
thereof with the IRS, copies of each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) with respect to each Pension Plan;
28
(k) Promptly and in any event within five Business Days after
receipt thereof by a Loan Party or any of its ERISA Affiliates from a
Multiemployer Plan sponsor, a copy of each notice received by such Person
concerning (x) the imposition or amount of withdrawal liability under Subtitle E
of Title IV of ERISA or (y) any determination by a Multiemployer Plan sponsor
that such Multiemployer Plan is, or is expected to be, in "reorganization"
(within the meaning of Section 4241 of ERISA) or "insolvent" (within the meaning
of Section 4245 of ERISA), or has incurred or is expected to incur an
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code);
(l) Upon request of Agent made from time to time, a copy of any
Pension Plan sponsored, contributed to, participated in or maintained by
Borrower or any ERISA Affiliate; and
(m) With reasonable promptness, such other information respecting
the business, properties, operations, prospects or condition (financial or
otherwise) of any member of the Consolidated Group and any other Primary Obligor
and, to the extent reasonably available, any other Related Entity as Agent or
any Lender may from time to time in writing reasonably request provided, that
Borrower shall not be required to furnish to Agent or any Lender any such
information relating to a Portfolio Entity if (i) the Charter Documents of, or
Shareholder Agreement relating to, such Person, in each case as in effect on the
date of formation of such Person, prohibit such disclosure and (ii) notice of
such prohibition on disclosure is provided to Agent within five days of
formation of such Person (any such restriction, a "Disclosure Restriction").
7.2 Other Required Notices.
(a) Borrower shall notify Agent promptly after obtaining knowledge
of:
(i) except as otherwise previously disclosed, any event or
occurrence which Borrower has determined could have a Material Adverse
Effect as a result of a loss or decline in value of the Assets of
Borrower, any Primary Obligor, any Portfolio Entity or any Related Entity
due to casualty or any other adverse occurrence and the estimated (or
actual, if available) amount of such loss or decline;
(ii) the institution of (x) any suit or administrative proceeding
which if determined adversely to Borrower, any Primary Obligor, any
Portfolio Entity or any Related Entity is reasonably likely to or could
reasonably be expected to result in a Material Adverse Effect, and (y) any
other suit or administrative proceeding against Borrower, any Primary
Obligor or any Portfolio Entity in which the uninsured amount involved is
$750,000 or more, such notice to be given on or prior to the end of the
calendar month in which the applicable event occurs;
(iii) Borrower, any Primary Obligor or any Material Portfolio Entity
becoming subject to any Charge, restriction, judgment, decree or order
which could reasonably be expected to materially adversely affect the
operations, financial conditions or business of such Person, or any other
Portfolio Entity or any Related Entity becoming subject to any Charge,
restriction, judgment, decree or order if the same could reasonably be
expected to
29
materially adversely affect the operations, financial conditions or
business of Borrower, any Primary Obligor, or any Material Portfolio
Entity;
(iv) the commencement of any lockout, strike or walkout relating to
any labor contract to which Borrower, any Primary Obligor, any Portfolio
Entity or any Related Entity is a party, if the same could reasonably be
expected to have a Material Adverse Effect;
(v) except as otherwise previously disclosed, any event or
occurrence in respect of Borrower, any Primary Obligor, any Portfolio
Entity or any Related Entity which could reasonably be expected to have a
Material Adverse Effect;
(vi) (x) the occurrence of a default by Borrower, any Primary
Obligor, any Portfolio Entity, any Related Entity or any other Loan Party
under any agreement, document or instrument to which such Person is a
party which could reasonably be expected to have a Material Adverse
Effect, or (y) the occurrence of any default by Borrower, any Primary
Obligor or any other Loan Party which could reasonably be expected to
materially and adversely affect any such Person's ability to perform its
respective obligations under the Loan Documents;
(vii) the filing of a petition by or against Borrower, any Primary
Obligor, any Portfolio Entity, any Related Entity or any other Loan Party
under any section or chapter of the United States Bankruptcy Code or any
similar law or regulation or if any such Person shall make an assignment
for the benefit of its creditors or if any case or proceeding is filed by
or against any such Person for its dissolution or liquidation;
(viii) the making of an application for the appointment of a
receiver, trustee or custodian for any of the Assets of Borrower, any
Primary Obligor, any Material Portfolio Entity, any Related Entity or any
other Loan Party, other than a Non-Default Voluntary Custodial
Arrangement;
(ix) the exercise by any holder of any option, warrant or right to
purchase any Equity Interest in Borrower, any Primary Obligor or any
Material Portfolio Entity;
(x) the issuance or sale of any Securities by Borrower, any Primary
Obligor or any Portfolio Entity, whether or not permitted pursuant to the
terms hereof; and
(xi) the occurrence of the REO Post - 25% Time.
(b) On the 25th day of each month or, if sooner, on the fourth to
last Business Day of each month, Borrower shall deliver to Agent (i) Waterfall
Certificates in respect of each Asset Pool and Portfolio Entity, certified by an
Executive Officer of Borrower; and (ii) a Summary Waterfall Certificate in
respect of all Asset Pools; and (iii) a report in the form attached hereto as
Exhibit B setting forth the computation of the Aggregate Undistributed Funds of
all Portfolio Entities.
(c) Borrower shall notify Agent of the occurrence of any
Extraordinary Transaction no later than 10 days prior to the occurrence of such
event.
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(d) (i) Borrower shall give Agent notice that a Portfolio Entity has
become a Material Portfolio Entity (due to the amount of Assets
contributed to it on the date of its formation or an increase in Assets
thereafter) within 30 days of such Person becoming a Material Portfolio
Entity.
(i) Borrower shall give Agent notice that an Immaterial Entity has
ceased to constitute an Immaterial Entity (due to an increase in the fair
market value of its assets or such company engaging in any business)
within 30 days of such Person ceasing to constitute an Immaterial Entity
and shall promptly deliver to Lender a revised Schedule 10.37 to reflect
such change.
(ii) Borrower shall give Agent notice of the dissolution or full
liquidation of, or the suspension or discontinuation of business by, any
Portfolio Entity, not less than 30 days prior to such dissolution,
liquidation, suspension or discontinuation.
(e) Borrower shall give Agent notice within 45 days after it or any
Primary Obligor, Material Portfolio Entity, Wholly-Owned Subsidiary or other
Loan Party acquires Equity Interests in any Person or forms a Subsidiary and, if
requested in writing by Agent, forthwith upon receipt of such request, shall
deliver to Agent an addendum to Schedule 10.22 reflecting the same and, if such
acquisition or formation is of an REO Affiliate, a new Schedule 10.40 reflecting
the same.
(f) On or before the fourth to last Business Day of each month,
Borrower shall deliver to Agent a Portfolio Protection Expense Report in form
and detail satisfactory to Agent showing as of the close of business on the last
Business Day of the preceding calendar month the aggregate amount retained by
Portfolio Entities as Portfolio Protection Expenses to pay Portfolio Protection
Expenses not theretofore paid, the aggregate amount of Portfolio Protection
Expenses theretofore paid and the aggregate amount of Portfolio Protection
Expenses withheld (in the aggregate) by such Persons during the immediately
preceding calendar month. Borrower shall provide to the Agent such other
information with respect thereto as Agent may reasonably request.
(g) On or before the fourth to last Business Day of each month,
Borrower shall deliver to Agent a Borrowing Base Certificate.
(h) Borrower shall give Agent notice of the transfer of any property
by a Portfolio Entity to one of its REO Affiliates within 30 days of any such
transfer and such other information as Agent may request with respect thereto
promptly following such request.
(i) Borrower shall give Agent notice of the occurrence of an Adverse
Waterfall Event within thirty days of such occurrence.
(j) Borrower shall give Agent notice if the amount of Aggregate
Undistributed Funds at any time exceeds $5,000,000.
(k) If Borrower at any time has knowledge of any servicer default,
servicing termination event, amortization event or similar event or condition
occurring or existing under any agreement relating to the securitization of
Assets of any Primary Obligor or other Loan Party
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or securitization entity established by any Primary Obligor or other Loan Party,
Borrower shall immediately notify Agent thereof.
7.3 Payment of Charges.
(a) Other than Charges payable by First X or First B, Borrower, each
Primary Obligor, each Material Portfolio Entity, and each Wholly-Owned
Subsidiary other than any REO Affiliate shall pay promptly when due and
discharge all Charges. In the event Borrower, any Primary Obligor, any Material
Portfolio Entity or any Wholly-Owned Subsidiary other than an REO Affiliate, at
any time or times hereafter, shall fail to pay the Charges or to obtain such
discharges as required herein, Borrower shall so advise Agent thereof in
writing. Agent may, without waiving or releasing any obligation, covenant or
agreement of Borrower or any Event of Default or Default, in its sole and
absolute discretion, at any time or times thereafter, make such payment, or any
part thereof, or obtain such discharge and take any other action with respect
thereto which Agent deems advisable. All sums so paid by Agent and any expenses
relating thereto, including reasonable attorneys' fees, court costs, expenses
and other charges, shall be part of the Obligations, payable by Borrower to
Agent on demand. Notwithstanding the foregoing, Borrower, any Primary Obligor,
any Material Portfolio Entity or any Wholly-Owned Subsidiary may permit or
suffer the Charges to attach to its Assets on the conditions that: (i) Borrower
or the applicable Primary Obligor, Material Portfolio Entity or Wholly-Owned
Subsidiary, in good faith, shall be contesting the same in an appropriate
proceeding diligently pursued; (ii) enforcement thereof against any Assets of
Borrower or any applicable Material Portfolio Entity or Wholly-Owned Subsidiary
shall be stayed; and (iii) appropriate reserves therefor shall have been
established on the Records of Borrower or the applicable Primary Obligor,
Material Portfolio Entity or Wholly-Owned Subsidiary in accordance with GAAP.
7.4 Insurance. Borrower, each Primary Obligor, each Portfolio Entity
(other than any Foreign Portfolio Entity), each REO Affiliate and each
Wholly-Owned Subsidiary at each of such respective Person's sole cost and
expense, shall keep and maintain: (i) policies of insurance against all hazards
and risks ordinarily insured against by other owners or users of properties in
similar business or as reasonably requested in writing by Agent; and (ii) public
liability insurance relating to such Person's ownership and use of its Assets;
provided, however, no such Person shall be required to maintain the insurance
referred to in clause (i) as to any Asset if the Net Present Value of the Asset
is less than $50,000. All such policies of insurance shall be in form, with
insurers and in such amounts as may be satisfactory to Agent. Borrower shall
deliver to Agent the original (or certified) copy of each policy of insurance,
and evidence of payment of all premiums for each such policy. Such policies of
insurance of Borrower, Primary Obligors and Wholly-Owned Subsidiaries (except
those of public liability) shall contain an endorsement, in form and substance
acceptable to Agent, showing losses payable to Agent for the ratable benefit of
Lenders (excluding any losses payable to the lenders under any Approved
Portfolio Leverage Arrangement). Such endorsement or an independent instrument
furnished to Agent, shall provide that all insurance companies will give Agent
at least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
Borrower or any other Person shall affect the right of Agent for the ratable
benefit of Lenders, to recover under such policy or policies of insurance in
case of loss or damage (excluding any losses payable to the lenders under any
Approved Portfolio Leverage Arrangement). Upon request by Agent and, whether or
not such request is made, upon the
32
occurrence of an Event of Default or Default, Borrower hereby directs all
insurers under such policies of insurance (except those of public liability) to
pay all proceeds payable thereunder directly to Agent (excluding any losses
payable to the lenders under any Approved Portfolio Leverage Arrangement). Upon
request by Agent and upon the occurrence of an Event of Default or Default,
Borrower, irrevocably, appoints Agent (and all officers, employees or agents
designated by Agent) as Borrower's true and lawful agent and attorney-in-fact
for the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance. In the event Borrower, any Primary Obligor, any Portfolio Entity, any
REO Affiliate or any Wholly-Owned Subsidiary at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance required above
or to pay any premium in whole or in part relating thereto, then Agent, without
waiving or releasing any obligation, covenant or agreement of Borrower or any
Event of Default or Default, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance and
pay such premium and take any other action with respect thereto which Agent
deems advisable. All sums so disbursed by Agent, including reasonable attorneys'
fees, court costs, expenses and other charges relating thereto, shall be part of
the Obligations, payable by Borrower to Agent on demand. Agent shall also be
named as an additional insured with respect to Borrower's, each Primary
Obligor's and each Wholly-Owned Subsidiary's liability insurance.
7.5 Maintenance of Records. Borrower will keep, and will cause each
Primary Obligor and each Wholly-Owned Subsidiary other than REO Affiliates to
keep, at all times books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and affairs, and each such Person will provide, and will cause each such other
Person to provide, adequate protection against loss or damage to such books of
record and account.
7.6 Preservation of Existence. Borrower, each Primary Obligor, each
Material Portfolio Entity, and each Subsidiary of Borrower other than an
Immaterial Entity, REO Affiliate or a Harbor Debtor, will maintain and preserve
its respective corporate, limited liability company or partnership existence,
rights, privileges and franchises in its jurisdiction of organization, and
qualify and remain qualified to do business in, and maintain its rights,
privileges and franchises in each other jurisdiction which in the opinion of the
respective board of directors, manager, general partner or other governing
Person thereof continue to be advantageous to it and shall comply in all
material respects with all applicable Legal Requirements. Without limiting the
generality of the foregoing, Borrower agrees to (and to cause each such other
Person to) qualify to do business as a foreign corporation in each jurisdiction
where the nature of its business and the operations conducted by it therein
require it to be so qualified.
7.7 Preservation of Assets. Borrower and each Primary Obligor will keep
its property material to the conduct of its business in good repair, working
order and condition and from time to time make all needful and proper repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto, so that the business carried on by it may be conducted at all times in
accordance with prudent business management.
33
7.8 Inspection of Books and Assets. Borrower shall permit Agent, Lenders
and each of their respective representatives reasonable access during normal
business hours to its properties and personnel, and shall disclose and make
available to Agent and Lenders all books, papers and records relating to the
Assets, stock ownership, properties, operations, obligations, and liabilities of
Borrower and its Subsidiaries (and shall use commercially reasonable efforts to
cause each other Portfolio Entity to do the same), including, but not limited
to, all books of account (including the general ledger), tax records, minute
books of meetings of boards of directors (and any committees thereof) and
shareholders, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, accountants' work papers
(other than those that are the property of its independent outside auditors),
litigation files, loan files, plans affecting employees, and any other business
or prospects in which Lenders may have a reasonable interest in connection with
the Loans, provided that such access shall be reasonably related to the
transactions contemplated hereby and not unduly interfere with normal
operations, and provided further that in the event that any of the foregoing are
in the control of any third party, Borrower shall use its reasonable best
efforts to cause such third party to provide access to such materials to Agent
and Lenders who shall request the same. In the event that Borrower is prohibited
by law from providing any of the access referred to in the preceding sentence to
Agent and Lenders, it shall use its commercially reasonable efforts to obtain
waivers thereof promptly so as to permit such access. Borrower shall make the
directors, officers, employees and agents and authorized representatives
(including counsel and independent public accountants) of Borrower and its
Subsidiaries (and shall use its commercially reasonable efforts to cause each
other Portfolio Entity to do the same) to confer with Agent and Lenders and
their respective representatives, provided that (i) such access shall be
reasonably related to the transactions contemplated hereby and not unduly
interfere with normal operations and (ii) unless a Default or Event of Default
exists, counsel to Borrower shall be permitted to be present at any meeting
between Borrower's independent public accountants and Agent or Lenders.
7.9 Payment of Indebtedness. Each of Borrower, each Primary Obligor, each
Material Portfolio Entity and, subject to the final sentence of this Section
7.9, each Wholly-Owned Subsidiary will duly and punctually pay, or cause to be
paid, the principal of and the interest on all Indebtedness heretofore or
hereafter incurred or assumed by such Person, when and as the same shall become
due and payable, provided that neither Borrower, nor any Primary Obligor, any
Wholly-Owned Subsidiary or any Material Portfolio Entity shall be required to
pay any Indebtedness (other than Indebtedness incurred under this Agreement or
any other Loan Document) while the same is being contested by it in good faith
and by appropriate proceedings so long as Borrower or such Primary Obligor or
Wholly-Owned Subsidiary or Material Portfolio Entity (as the case may be) shall
have set aside on its books appropriate reserves in accordance with GAAP with
respect thereto and title to any property of Borrower or the applicable Primary
Obligor or Wholly-Owned Subsidiary or Material Portfolio Entity is not
jeopardized. The provisions of this Section 7.9 do not relate to Indebtedness of
FC Capital or other Wholly-Owned Subsidiaries which are REO Affiliates.
7.10 Further Assurances. Each of Borrower, each Primary Obligor, each
Wholly-Owned Subsidiary and each other Loan Party will, and will cause each of
its respective Subsidiaries to, make, execute or endorse, and acknowledge and
deliver or file, all such vouchers, invoices, notices, and certifications and
additional agreements, undertakings, conveyances, transfers, assignments, or
further assurances, and take any and all such other
34
action, as Agent or any Lender may, from time to time, deem necessary or proper
in connection with this Agreement, the obligations of such Person hereunder or
under the Notes or any of the other Loan Documents to which such Person is a
party, or for the better assuring and confirming unto Agent on behalf of
Lenders, with the Requisite Priority, all or any part of the security for the
Obligations.
7.11 Notice of Default. Forthwith and in any event within five days after
Borrower shall have obtained knowledge of the existence of a Default or Event of
Default, Borrower will deliver to Agent a certificate signed by an Executive
Officer of Borrower setting forth the details of such event, the period of
existence thereof, and what action Borrower proposes to take with respect
thereto.
7.12 Reserves. Each of Borrower, each Primary Obligor and, subject to the
last sentence of this Section 7.12, each Wholly-Owned Subsidiary, will set up on
its books of its earnings, reserves for bad debt in accordance with GAAP and in
an aggregate amount deemed adequate in the judgment of such Person and accepted
by the outside auditors in their annual audits and Borrower shall use its
commercially reasonable efforts to cause each other Material Portfolio Entity to
do the same. The provisions of this Section 7.12 shall not apply to any
Wholly-Owned Subsidiary which is an REO Affiliate, or any Immaterial Entity.
7.13 Representation and Warranties; Covenants as to Other Persons,
Amendment of Schedules.
(a) To the extent any representation or warranty contained herein
refers to an event or state of facts which exists on or after the date hereof,
on or after the Execution Date or on or after the Effective Date or on or after
the date of any Loan and shall exist during the term hereof or at the time of
any or each Loan hereunder, to the extent not already a covenant, said
representation or warranty shall be deemed to be an affirmative covenant by
Borrower to take all actions, omit to take such actions or cause such actions to
be taken which shall be necessary or desirable to cause such representation or
warranty to be true and accurate at all times during the term hereof. To the
extent any representation, warranty or covenant herein (including the covenants
set forth in Section 8 and in this Section 7) relates to any Primary Obligor,
other Subsidiary or any other Loan Party, it shall be deemed to be a covenant of
Borrower to cause such Person to comply with or otherwise perform such
representation, warranty or covenant, whether or not Borrower has the legal,
corporate or other ability to cause such compliance or performance. To the
extent any representation, warranty or covenant herein (including the covenants
set forth in Section 8 and in this Section 7) relates to any Person other than a
Primary Obligor, other Subsidiary or any other Loan Party it shall be deemed to
be a covenant of Borrower to exercise commercially reasonable efforts to cause
such Person to comply with or otherwise perform such representation, warranty or
covenant, whether or not Borrower has the legal, corporate or other ability to
cause such compliance or performance.
(b) No delivery of any new or supplemented Schedule to this
Agreement (whether or not such delivery is required by this Agreement or any
other Loan Document) shall waive or cure any Default or Event of Default which
would occur absent such delivery (other than a Default or Event of Default
arising solely from the breach of an obligation to deliver such
35
Schedule and other than as may be set forth in writing in a consent or amendment
(if any) pursuant to which any such new or supplemented Schedule is delivered).
7.14 Perform Obligations. Borrower and each other Loan Party shall duly
and punctually pay and perform each of its obligations under the Loan Documents
to which it is a party, in accordance with the terms hereof and thereof.
7.15 New Debt and Equity Interests.
(a) Borrower shall ensure that at the time that Borrower, any
Primary Obligor or any Wholly-Owned Subsidiary acquires an Equity Interest in
any Person other than Asset Servicing De Mexico, S.A. de C.V. and Servicios
Efectivos De Recuperacion, S.A. De C.V., or, in the case of a Wholly-Owned
Subsidiary, an REO Affiliate of such Wholly-Owned Subsidiary, such new Equity
Interest is subject to a perfected security interest of the Requisite Priority
in favor of Agent and Lenders and, in connection therewith, shall take such
action and execute and deliver such pledge agreements or amendments to pledge
agreements and such other instruments and agreements, including, without
limitation, delivery of notices of lien to the Pledged Entity, acknowledgement
of such notice from the Pledged Entity, delivery of the original certificates of
certificated securities to Collateral Agent, together with an assignment
separate from certificate therefor, in each case in form and substance
satisfactory to the Collateral Agent, as the Collateral Agent may require. If
requested in writing by Agent, Borrower shall also deliver to Agent a supplement
to Schedule 10.5(b) hereto to reflect the acquisition of such new Equity
Interest. The provisions of this Section 7.15(a) are in addition to, and not in
limitation of, other provisions of this Agreement limiting the investments, the
acquisition of Equity Interests and the acquisition of other Assets by Borrower,
any Primary Obligor, any Wholly-Owned Subsidiary or any other Loan Party.
Notwithstanding the foregoing, no Primary Obligor, Wholly-Owned Subsidiary or
other Loan Party shall be required to pledge to Agent (x) shares of stock,
partnership interests, membership interests or other similar equity interests
consisting of more than 66.66% of the shares of stock, partnership interests,
membership interests or other similar equity interests in any Person which is
not a US Person or (y) any Equity Interest issued by an REO Affiliate.
(b) Borrower shall ensure that at the time that Borrower, any
Primary Obligor or any Wholly-Owned Subsidiary other than a Portfolio Entity or
an REO Affiliate makes any loan or acquires any rights to any other indebtedness
or acquires any note, bond or other indebtedness instrument (any such note, bond
or other instrument, a "Subject Debt Instrument"), all rights of Borrower, such
Primary Obligor or suchWholly-Owned Subsidiary with respect to such loan, other
indebtedness and Subject Debt Instrument are subject to a perfected security
interest of the Requisite Priority in favor of Agent and Lenders and, in
connection therewith, shall take such action and execute and deliver such pledge
agreements or amendments to pledge agreements and such other instruments and
agreements, including, without limitation, delivery of notices of pledge to the
issuer of such indebtedness, acknowledgement of such notice from such issuer,
delivery of the Subject Debt Instruments to Collateral Agent, together with an
assignment separate from such Subject Debt Instrument or an allonge thereto, and
estoppel certificates from the issuer thereof, in each case in form and
substance satisfactory to the Collateral Agent, as the Collateral Agent may
require. The provisions of this Section 7.15(b) are in addition to, and not in
limitation of, other provisions of this Agreement limiting the investments, the
acquisition of Equity Interests and the acquisition of other Assets by Borrower,
Primary Obligors, and Wholly-
36
Owned Subsidiaries. If requested by Agent in writing, Borrower shall prepare a
Schedule 10.20A setting forth the maker and holder of such Subject Debt
Instrument, the principal amount thereof and the payment terms thereof.
7.16 Cooperation. At Agent's request, Borrower will meet from time to time
with (and provide then available financial information to) other financial
institutions to which any Lender may wish to grant participations in the Loans,
including potential Lender Assignees and potential Purchasing Lenders.
7.17 Approvals and Consents. In the event that any approval, consent or
non-objection need be obtained by Borrower, any Primary Obligor or other Loan
Party from, or a notice or other filing need be filed by Borrower or any such
other Person, with, any Governmental Authority in connection with the execution,
delivery and performance of this Agreement or any Loan Document by Borrower or
any such other Person, Borrower shall take and cause such other Person (as
applicable) to take, all actions reasonably necessary to obtain any such
approval, consent or non-objection or file such notice or other filing as
promptly as practicable, and Lenders agree to cooperate with Borrower in
obtaining or filing the same.
7.18 Payment of Dividends from Primary Obligors and Subsidiaries. In
furtherance and not in limitation of other provisions hereof (including Section
8.24) regarding required distributions, to the extent necessary to enable it to
make payments of the Obligations in accordance with the terms hereof, unless
prohibited by applicable law Borrower shall cause dividends to be paid to it by
each Primary Obligor and each other Wholly-Owned Subsidiary of Borrower (whether
in existence as of the date hereof or hereafter formed or acquired) in amounts
which are sufficient to enable Borrower to satisfy its payment obligations under
the terms hereof.
7.19 Stay, Extension and Usury Laws. Borrower covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law or other law which would prohibit or forgive it from
paying all or any portion of the principal of, premium, if any, or interest on
the Notes, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of its obligations under the Notes, and
Borrower (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantages of any such law.
7.20 Compliance with Laws. Borrower shall comply with, and shall cause
each Primary Obligor, each other Subsidiary and each other Loan Party to comply
with, and shall exercise commercially reasonable efforts to cause each Portfolio
Entity to comply with, all laws, rules, regulations and governmental orders
(federal, state and local), including all Environmental Laws, having
applicability to it or to the business or businesses at any time conducted by
it, where the failure to so comply would have, or could reasonably be expected
to have, a Material Adverse Effect.
7.21 Payment of Extraordinary Proceeds. If any Extraordinary Transaction
otherwise permitted hereunder would cause Total Outstandings to exceed the
Borrowing Base, Borrower shall pay the amount of such excess to Agent by wire
transfer of immediately available funds on the date of the closing of the
applicable transaction, to be applied by Agent upon receipt toward the
prepayment obligation under Section 2.4(b).
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Section 8. NEGATIVE COVENANTS.
Borrower warrants and represents to and covenants to Lenders and Agent
that, so long as this Agreement is in effect and until the Commitments are
terminated and all of the Loans, together with interest and all other
obligations incurred hereunder are paid in full, Borrower will perform the
obligations set forth in this Section 8 (unless it shall have first procured the
written consent of the Majority Lenders to do otherwise), and will cause each
Primary Obligor, Subsidiary, and other Loan Party to, and will use commercially
reasonable efforts to cause each Portfolio Entity-50% and other Material
Portfolio Entity to, perform the obligations set forth in this Section 8 which
are applicable to such Person (unless it shall have first procured the written
consent of the Majority Lenders to do otherwise).
8.1 Amend Charter Documents; Engage in Same Type of Business.
(a) None of Borrower, any Subsidiary or any Portfolio Entity-50%
shall (i) make or consent to any change: (i) in its Charter Documents, in any
Shareholder Agreement or in its capital structure or (ii) make any change in any
of its business objectives, purposes and operations, including by undertaking
additional business activities or (iii) waive any material right under its
Charter Documents or any Shareholder Agreement. None of Borrower, any Subsidiary
or any Portfolio Entity-50% shall engage in any business not of the same general
type as those conducted by it on the Execution Date or, in the case of a newly
formed entity, any business not of the same general type as those conducted by
Borrower, any Portfolio Entity-50% or any other Subsidiary (as the case may be)
on the Execution Date. Without limiting the foregoing, no Subsidiary which is a
Portfolio Entity and no Portfolio Entity-50% shall engage in any business other
than purchasing Asset Pools in accordance with the terms hereof and causing such
Asset Pools to be serviced in accordance with Section 8.26.
(b) None of Borrower, any Subsidiary or any Portfolio Entity-50%
shall enter into any Shareholder Agreement after the Execution Date other than a
Permitted Shareholder Agreement.
8.2 Liens. None of Borrower, any Subsidiary (other than an REO Affiliate)
or any Portfolio Entity-50%, will grant, contract, create, incur, assume or
suffer or permit to exist any Lien upon or with respect to, or by transfer or
otherwise subject to the prior payment of any indebtedness (other than the
Loans), any of its Assets, whether now owned or hereafter acquired, except (i)
Permitted Liens or (ii) in the case of an REO Affiliate, Liens in favor of its
REO Owner and non-consensual Charges.
8.3 Other Indebtedness. None of Borrower, any Subsidiary or any Portfolio
Entity-50% will contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) the Loans and the obligations of Borrower in respect of the LC
Obligations;
(ii) other Indebtedness existing on the Effective Date listed on
Schedule 10.19 to this Agreement;
38
(iii) Indebtedness of any Portfolio Entity incurred under Approved
Portfolio Leverage Arrangements;
(iv) Indebtedness of any Portfolio Entity to which no proceeds of
any Loans were, directly or indirectly, advanced or contributed;
(v) Indebtedness of FC Holdings under the FC Holdings Line of
Credit;
(vi) unsecured trade payables incurred in the ordinary course of
business;
(vii) in the case of any REO Affiliates, Indebtedness owed to its
REO Owner and trade payables incurred in the ordinary course of business
and, to the extent constituting Indebtedness, Charges incurred by such REO
Affiliate;
(viii) Indebtedness to the extent permitted by Section
8.12(a)(i)-(iii);
(ix) Indebtedness of Portfolio Entities in respect of loans
permitted to be made by FC Servicing and ASDM pursuant to Section
8.12(a)(iv);
(x) Up to $5,000,000 in aggregate principal Indebtedness incurred by
FCS Creamer, Ltd., FCS Wood Ltd. and FCS Wildhorse Ltd. or other REO
Affiliates to finance developmental expenses of real property owned by
such entities;
(xi) Indebtedness of any Subsidiary or Portfolio Entity-50% payable
to Borrower or a Wholly-Owned Subsidiary; and
(xii) Guaranty Equivalents to the extent permitted under Section
8.12(b).
8.4 Sell Assets. None of Borrower, any Subsidiary or any Portfolio
Entity-50% shall assign, sell or transfer any of its Assets to any Person, other
than in the ordinary course of business and for fair and adequate consideration
(and, in the case of Assets constituting Equity Interests, only to the extent
permitted by Section 8.8(a)); provided that the foregoing shall not restrict (i)
an REO Affiliate from transferring its Assets to the Person which owns all of
its equity interests or to any other Person which is not a Subsidiary or
Affiliate of Borrower or such REO Affiliate or (ii) any Person which owns all of
the equity interests in an REO Affiliate from transferring distressed notes
secured by real estate (and such real estate security) to such REO Affiliate.
8.5 Attachment. None of Borrower, any Subsidiary or any Portfolio
Entity-50% shall permit or suffer any levy, attachment, seizure, or restraint to
be made of, upon or affecting any of its Assets or permit any of its Assets to
be subject to a writ of distress, if the same would have a Material Adverse
Effect.
8.6 Receiver. None of Borrower, any Subsidiary or any Portfolio Entity-50%
shall permit or suffer any receiver, trustee or assignee for the benefit of
creditors, or any other custodian to be appointed to take possession of all or
any of its Assets, or for all or any of its Assets to come within the possession
of any receiver, trustee, assignee for the benefit of creditors
39
or custodian, other than a custodian pursuant to a Non-Default Voluntary
Custodial Arrangement, if the same would have a Material Adverse Effect.
8.7 Mergers and Acquisitions. None of Borrower, any Primary Obligor or any
Material Portfolio Entity shall wind up, liquidate or dissolve its affairs or
merge or consolidate with any Person other than Borrower or a Primary Obligor
(or agree to do any of the foregoing at any future time) or fail to maintain its
corporate, partnership or limited liability company or other formal existence.
8.8 Stock Transfers.
(a) Except as permitted pursuant to Section 8.8(b), none of
Borrower, any Subsidiary or any Portfolio Entity-50% shall (i) except for
options, warrants or other rights to purchase Equity Interests in Borrower
pursuant to plans or instruments described in Schedule 10.5(c) as amended from
time to time with Majority Lenders' written consent and for Equity Interests in
Borrower issued upon exercise thereof, (x) grant any option, warrant or other
right to purchase any Equity Interest in Borrower, any Subsidiary or any
Portfolio Entity-50% or (y) issue any other Equity Interests other than (subject
to Section 7.15) upon its formation, or (ii) transfer any Equity Interests
(whether its own or Equity Interests issued by any Person other than itself)
without, in each case, the prior written consent of Majority Lenders.
(b) Notwithstanding anything to the contrary contained herein,
Borrower shall have the right to offer and sell equity Securities of Borrower
under the following terms and conditions: (w) Borrower shall deliver notice to
Agent, within twenty-four (24) hours of any filing with the SEC; (x) Borrower
shall fully and timely comply with all Securities Laws and with all terms and
provisions of the underwriting agreement pursuant to which such Securities are
offered for sale; and (y) the prospectus and all other selling materials used by
Borrower in such offering shall not contain any misstatement of material fact or
omit to state any fact which would render the statements contained therein false
or misleading.
8.9 Adverse Transactions. None of Borrower, any Subsidiary or any
Portfolio Entity-50% shall enter into any transaction which materially and
adversely affects its ability to perform its obligations under the Loan
Documents or to pay any other Indebtedness.
8.10 Investments.
(a) Subject to the further limitations set forth in Sections
8.10(b), (c) and (d), after the Execution Date, neither Borrower, any Subsidiary
or any Portfolio Entity-50% shall make any investment in Equity Interests of any
Person, except for (i) in connection with the acquisition by a Portfolio Entity
of an Asset Pool in accordance with the other terms hereof on the Funding Date
of the Acquisition Loans relating thereto in accordance with the Asset Pool
Acquisition Certificate relating thereto (or of any other asset pool in respect
of which no Loans have been requested if such acquisition is in the ordinary
course of business for the Consolidated Group and is not otherwise prohibited
hereunder), (ii) direct or indirect contributions by Primary Obligors to capital
of Portfolio Entities to be used by such entities (a) to pay development
expenses related to real estate or (b) to pay Portfolio Protection Expenses, and
(iii) investments by any such Person (other than by a Portfolio Entity) in the
ordinary course of business.
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(b) As used in Sections 8.10(a),(c) and (d) "invest" shall include,
but not be limited to contributions to the capital of a Person.
(c) In furtherance and not in limitation of the other restrictions
herein and in the other Loan Documents under no circumstances shall Borrower,
any Subsidiary or any Portfolio Entity-50% at any time invest in any of the
Harbor Debtors.
(d) In furtherance and not in limitation of other restrictions
herein and in the other Loan Documents on such contributions, loans, gifts,
investments and Guaranty Equivalents set forth, none of Borrower, any Subsidiary
or any Portfolio Entity-50% shall make capital contributions, loans or gifts to,
investments in or enter into or issue any Guaranty Equivalent with respect to
the obligations of any entity identified on Schedule 10.37 or any other
Immaterial Entity at any time during the term hereof.
8.11 Dividends. Borrower will not and will not permit any Subsidiary or
any Portfolio Entity-50% to authorize, declare, or pay any dividends or return
any capital to its stockholders as such or authorize or make any other
distribution, payments or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration any shares of any class of its capital stock now or
hereafter outstanding or any options, warrants or other securities (now or
hereafter outstanding) convertible into or exercisable for any equity or other
securities of Borrower, any Subsidiary or any Portfolio Entity-50% or set aside
funds for any of the foregoing and Borrower will not permit any Subsidiary or
any Portfolio Entity-50% to purchase any Equity Interests of Borrower, or set
aside funds for any of the foregoing (any such authorization, declaration,
payment, dividend, return of capital, distribution, delivery, redemption,
retirement, purchase, acquisition or setting aside of funds, a "Dividend"),
provided, that (i) any Subsidiary or Portfolio Entity-50% may declare or pay
Dividends to Borrower or any Wholly-Owned Subsidiary and (ii) any Subsidiary or
Portfolio Entity-50% may pay cash Dividends to holders of its shares of stock,
partnership interests, limited liability company interests or similar equity
interests generally so long as Borrower or its respective Subsidiaries which own
such equity interests in the Person paying such Dividends receives at least its
proportionate share thereof (based on its relative holdings of such equity
interests in the Person paying such Dividends).
8.12 Loan; Guaranty Debt.
(a) Except as set forth on Schedule 8.12(a), none of Borrower, any
Subsidiary or any Portfolio Entity-50% shall make any loan to any Person, or
otherwise invest in or acquire any note, bond, other debt instruments or
obligations of or issued by any Person except (subject to compliance with
Section 7.15) (i) for loans made by Borrower to any Primary Obligors which are
evidenced by a Pledged Note; (ii) for loans made by Borrower, any Subsidiary or
any Portfolio Entity-50% to any Portfolio Entity in the ordinary course of
business, which loans are evidenced by a Pledged Note in the case of a loan by
the Borrower or any Subsidiary or a note in the case of a loan by a Portfolio
Entity-50%, or an inter-company receivable; (iii) the accepting by a Subsidiary
or a Portfolio Entity-50% of a note from its 100% owned REO Affiliate evidencing
the deferred purchase price of a mortgage note sold to such REO Affiliate by
such Subsidiary or Portfolio Entity-50% or a portion of the purchase price for
the real property in the event that the REO Affiliate acquires the real property
at a foreclosure sale or otherwise by
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purchase from the Subsidiary or Portfolio Entity-50%; (iv) the accepting by an
REO Affiliate, a Latin American Acquisition Entity or a European Acquisition
Entity of a note from the transferee of real property sold by such REO
Affiliate, Latin American Acquisition Entity or European Acquisition Entity (as
the case may be) in the ordinary course of business evidencing a portion of the
deferred purchase price of such property; (v) in the case of FC Servicing and
ASDM, short term servicer advances in the ordinary course of business with
respect to portfolios which they are servicing in aggregate principal amount at
any one time outstanding not in excess of $5,000,000, on a combined basis; (vi)
for loans made by a Primary Obligor or other Wholly-Owned Subsidiary to Sergio
Madrazo, MICSA Gestion Inmobiliaria , S.A., or Jean de Mailly Nesle for the
purpose of allowing such Persons or an affiliate of such Person to invest with a
Wholly-Owned Subsidiary in an entity that will make an investment directly or
indirectly in a Portfolio Entity to be secured by the ownership interest of such
Person in the joint investment entity, which loans are evidenced by a Pledged
Note and shall not exceed $4,500,000.00; (vii) direct of indirect loans by
Primary Obligors to a Portfolio Entity for the acquisition of an Asset Pool in
accordance with the other terms hereof on the Funding Date of the Acquisition
Loans relating thereto in accordance with the Asset Pool Acquisition Certificate
relating thereto (or of any other asset pool in respect of which no Loans have
been requested if such acquisition is in the ordinary course of business for the
Consolidated Group and is not otherwise prohibited hereunder); (viii) direct or
indirect loans by Primary Obligors to Portfolio Entities to be used by such
entities (a) to pay development expenses related to real estate or (b) to pay
Portfolio Protection Expenses.
(b) Except as set forth on Schedule 8.12(b), none of Borrower, any
Subsidiary or any Portfolio Entity-50% shall enter into or issue any Guaranty
Equivalents; provided that any Primary Obligor shall be permitted to guaranty
Indebtedness of any other Primary Obligor, any Related Entity or any Portfolio
Entity provided that the outstanding balance of Indebtedness guaranteed pursuant
to such guaranties does not exceed $10,000,000.
8.13 Issue Power of Attorney. Except pursuant to the other provisions of
this Agreement or the Security Documents to which Agent is a party, none of
Borrower, any Subsidiary or any Portfolio Entity-50% shall issue any power of
attorney or other contract or agreement giving any Person power or control over
the day-to-day operations of any such Person's business; provided that, any
Primary Obligor, any Portfolio Entity, FirstCity do Brazil, Ltda., FirstCity
Argentina Corporation, First South America LLC, FirstCity Recovery S.A., Asset
Servicing de Mexico and Servicios Efectivos de Recuperacion, S.A. de C.V. shall
have the right to grant powers of attorney necessary to conduct business outside
the United States, to pursue or consummate asset acquisitions outside the United
States and to collect or liquidate Assets or pursue litigation related Assets
outside the United States, which are undertaken in the ordinary course of such
respective company's business.
8.14 Amendment of Credit Agreements. None of Borrower, any Subsidiary or
any Portfolio Entity-50% shall amend, modify or extend (or agree to amend,
modify or extend or give any notice of any sort the result of which would amend,
modify or extend (whether or not, without limitation, any such extension would
occur pursuant to a renewal or extension option contained therein or any other
term thereof)) any note, credit agreement, security agreement or other document,
instrument or agreement evidencing or securing Indebtedness of such entity;
provided that Borrower, any Subsidiary or any Portfolio Entity-50% may extend
the term of any
42
credit facilities or loans permitted under the terms of this Agreement (other
than the Holdings/CFSC Loan Agreement or any other Holdings CFSC Loan Document)
under financial terms no more onerous than those provided for in the applicable
existing credit facility or then-existing market credit terms.
8.15 Use of Proceeds. The proceeds of Acquisition Loans shall be used by
Borrower solely to make advances evidenced by Pledged Notes in the amount of
such advance (minus any portion thereof utilized to pay any Utilization Fee) to
a Primary Obligor for such Primary Obligor, directly or indirectly, to loan to,
or contribute to the capital of, the Portfolio Entity identified in the Notice
of Borrowing, the full amount of which loan or contribution to capital is used
by such Portfolio Entity to pay all or a portion of the Acquisition Price of the
Asset Pool identified in the related Notice of Borrowing to the seller of such
Asset Pool previously identified to Agent and Lenders pursuant to the terms
hereof. The proceeds of Working Capital Loans shall be used solely for working
capital purposes of Borrower.
8.16 Payments for Consent. None of Borrower or any Subsidiary or any
Portfolio Entity-50% shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of any Loan Document unless such consideration is paid to all Lenders.
8.17 Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries. Borrower shall not, and shall not permit any Subsidiary, or any
Portfolio Entity-50% to, create, assume or otherwise cause or suffer to exist or
to become effective any consensual encumbrance or restriction on the ability of
any such Person to:
(i) pay any dividends or make any other distribution on its Stock or
other Equity Interests to Borrower or any of its Subsidiaries;
(ii) make payments on or in respect to any Indebtedness owed to
Borrower, any Subsidiary; or
(iii) make loans or advances to Borrower or any of its Subsidiaries
or to guarantee Indebtedness of Borrower or any of its Subsidiaries;
other than, in the case of (i), (ii) and (iii),
(1) Permitted Restrictions on payment of dividends by FC
Holdings existing under agreements listed on Schedule 8.17;
(2) restrictions with respect to a Subsidiary other than
a Portfolio Entity, a Primary Obligor or an REO Affiliate
imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all the
assets (which term may include the capital stock) of such
Subsidiary provided that such restrictions terminate upon the
closing of such sale or disposition or termination of such
agreement;
43
(3) to the extent the same result in a restriction of
non-cash in-kind distributions of such assets, restrictions on
the transfer by any Subsidiary other than a Portfolio Entity,
a Primary Obligor or an REO Affiliate of non-cash assets which
are subject to Permitted Liens;
(4) restrictions existing under any agreement which
refinances or replaces any of the agreements containing the
restrictions in clauses (1) or (5), provided that the terms
and conditions of any such restrictions are not materially
less favorable to the Lenders or materially more burdensome to
the applicable Person bound thereby than those under the
agreement evidencing or relating to the Indebtedness
refinanced or replaced;
(5) Permitted Restrictions on payment of dividends by a
Subsidiary of Borrower under a loan agreement listed on
Schedule 10.19 to which such Subsidiary is a party;
(6) restrictions under this Agreement;
(7) Permitted Restrictions imposed under Approved
Portfolio Leverage Arrangements; and
(8) Permitted Restrictions on the payment of dividends
by a Portfolio Entity-50% under credit agreements under which
such Portfolio Entity-50% is a borrower.
and other than in the case of (iii), a consensual encumbrance or
restriction on the ability of any Subsidiary other than a
Wholly-Owned Subsidiary or any Portfolio Entity-50% to make a loan
or advance to or guarantee Indebtedness of Borrower or any of its
Subsidiaries.
8.18 Financial Covenants.
(a) Borrower and all other members of the Consolidated Group, on a
consolidated basis, shall, at the end of each fiscal quarter:
(i) maintain a ratio of Indebtedness to Tangible Net Worth equal to
or less than 2.00 to 1.00 for the last day of the fiscal quarter then
ended;
(ii) maintain a ratio of EBITDA to Interest Coverage not less than
2.50 to 1.00 for the four fiscal quarters then ended; and
(iii) maintain a Tangible Net Worth equal to or greater than
$75,000,000 for the last day of the fiscal quarter then ended;
(b) All covenants set forth in this Section 8.18 shall be measured
quarterly, upon receipt of the Financial Statements delivered to Agent pursuant
to Section 7.1(a), and also upon receipt of the annual consolidated Financial
Statements delivered in accordance with Section 7.1(b).
44
(c) In the event that any Financial Statement required to be
delivered pursuant to Section 7.1(a) or Section 7.1(b) or any certificate
required to be delivered pursuant to Section 7.1(f) hereof (in the case of any
such certificate required in connection with monthly financial statements, at
the end of any month which is also a fiscal quarter end date) is not delivered
within 10 days after the date required therefor pursuant to such section,
Borrower shall be deemed to be in default of this Section 8.18 for purposes of
Section 9.3 hereof.
8.19 Accounting Changes. None of Borrower, any Subsidiary or any Portfolio
Entity-50% will make any significant change in (x) accounting treatment and
reporting practices except as permitted or required by GAAP or Legal
Requirements or (y) unless Agent consents thereto in writing (which consent
shall not be unreasonably withheld), its Fiscal Year; provided that in any such
case, if any such change would affect any computation required by Section 8.18
hereof or any amount required to be paid by Section 2.4 hereof, appropriate
amendment shall have been made to this Agreement with respect thereto (or, in
the case of change required at such time by a Legal Requirement, appropriate
amendment is made to this Agreement contemporaneous with such change and, and if
such amendment is not made, Borrower shall be deemed in default under Section
8.18).
8.20 Related Transactions. Borrower has not and shall not, and shall not
permit any Subsidiary or any Portfolio Entity-50% to, enter into any
transactions with any Affiliate or Associate, including, without limitation,
agreements for the purchase, sale or exchange of property or the rendering of
any services to or by any Affiliate or Associate of Borrower or any Parent, or
enter into, assume or suffer to exist any employment, management,
administration, advisory or consulting contract with any Affiliate or Associate
of Borrower or any Parent or, in each of the foregoing cases, with any officer,
director or partner of any Affiliate or Associate of Borrower or any Parent or
modify any Fee Agreement unless, in any such case, such transaction (a) is
otherwise not in violation of this Agreement or any other Loan Document and (b)
is in the ordinary course of its business and is upon fair and reasonable terms
no less favorable to Borrower, such Subsidiary or such Portfolio Entity-50% (as
the case may be) than such Person would obtain in a comparable arm's-length
transaction with a Person not an Affiliate or Associate; provided, that the
foregoing shall not restrict a Subsidiary from entering into a transaction
contemplated by the definition of "REO Affiliate" to sell real estate (or
distressed notes secured by real estate) to its wholly owned REO Affiliate.
8.21 Leasebacks. None of Borrower, any Subsidiary or any Portfolio
Entity-50% will enter into any arrangement with any bank, insurance company or
other lender or investor providing for the leasing to any of the foregoing
Persons of real property (i) which at the time has been or is to be sold or
transferred by any of the foregoing Persons to such lender or investor, or (ii)
which has been or is being acquired from another Person by such lender or
investor or on which one or more buildings or facilities have been or are to be
constructed by such lender or investor for the purpose of leasing such property
to Borrower, any Subsidiary or any Portfolio Entity-50%.
8.22 Compliance with ERISA. Neither Borrower nor any Subsidiary (each, an
"Applicable Person") will (i) terminate, or permit any of its Subsidiaries to
terminate, any Pension Plan so as to result in any material (in the opinion of
Agent or the Majority Lenders) liability of any such Person or Subsidiary to the
PBGC, (ii) permit to exist the occurrence of any
45
Reportable Event (as defined in Section 4043 of ERISA), or any other event or
condition, which presents a material (in the opinion of Agent or the Majority
Lenders) risk of such a termination by the PBGC of any Pension Plan, (iii)
allow, or permit any of its Subsidiaries to allow, the aggregate amount of
"benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under
all Pension Plans of which any Applicable Person or any ERISA Affiliate is a
"contributing sponsor" (within the meaning of Section 4001(a)(13) of ERISA) to
exceed $100,000, (iv) allow, or permit any of its Subsidiaries to allow, any
Plan to incur an "accumulated funding deficiency" (within the meaning of Section
302 of ERISA or Section 412 of the Code), whether or not waived, (v) engage, or
permit any of its Subsidiaries or any Plan to engage, in any "prohibited
transaction" (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) resulting in any material (in the opinion of Agent or the Majority Lenders
and considered by itself or together with all other such liabilities of Borrower
and all ERISA Affiliates) liability to any Applicable Person or any ERISA
Affiliate, (vi) allow, or permit any of its Subsidiary to allow, any Plan to
fail to comply with the applicable provisions of ERISA and the Code in any
material respect, (vii) fail, or permit any of its Subsidiaries to fail, to make
any required contribution to any Multiemployer Plan, or (viii) completely or
partially withdraw, or permit any of its Subsidiaries to completely or partially
withdraw, from a Multiemployer Plan, if such complete or partial withdrawal will
result in any material (in the opinion of Agent or the Majority Lenders)
withdrawal liability under Title IV of ERISA. No Loan Party or Subsidiary, other
than Borrower and Subsidiaries that are not Portfolio Entities has or shall at
any time have any employees.
8.23 FC Holdings Line of Credit.
(a) Borrower shall not permit the outstanding principal balance
under the Holdings/CFSC Loan Agreement to exceed $35,000,000.
(b) Borrower shall not permit the amendment, modification,
supplement, waiver, forbearance, restatement or replacement of any Holdings/CFSC
Loan Document (including without limitation, any waiver or modification of the
borrowing base, advance rate, or purpose for which funds are being disbursed).
(c) Borrower shall not, and shall not permit any Subsidiary, FC
Holdings or any other Person to grant a Lien on any property to secure payment
and performance of any obligation or liability under the Holdings/CFSC Loan
Documents, except as expressly set forth on Schedule 10.33(c).
(d) From time to time after the date hereof, if any additional
collateral is pledged to CFCS in accordance with the Holdings/CFCS Loan
Documents, Borrower shall not fail to execute and deliver, or cause the
applicable affiliated entity to execute and deliver, to Agent, for the ratable
benefit of Lenders, such documents, instruments and agreements as shall be
necessary or desirable to create and perfect a security interest with the
Requisite Priority in any such collateral in favor of Agent for the ratable
benefit of Lenders.
(e) From time to time after the date hereof, Borrower shall not fail
to deliver to Agent, upon request, such information as Agent shall request
relating to the Holdings/CFSC Loan Agreement or the Holdings/CFSC
46
Loan Documents, the amounts outstanding thereunder, the use of the proceeds
thereof, or the collateral pledged therefor.
8.24 Distributions to Primary Obligors and Borrower.
(a) Borrower shall each calendar month (i) cause each Portfolio
Entity and each REO Affiliate to distribute to a Primary Obligor, on or prior
the Payment Date occurring in such month, the Portfolio Entity Proceeds, and
(ii) cause each such Primary Obligor to pay to Borrower, upon receipt, each such
Dividend received by such Primary Obligor under clause (i) above by prepaying
the applicable Pledged Note or intercompany receivable and, if no amount then
remains outstanding thereunder, by distributing any remaining portion of such
distribution as a Dividend (in accordance with Section 8.11) to Borrower.
(b) Borrower shall cause each amount required to be distributed or
paid to Borrower or any Primary Obligor pursuant to this Section 8.24 to be
distributed or paid to Borrower or such Primary Obligor by deposit or wire
transfer directly to the Cash Flow Cash Collateral Account.
8.25 Capital Expenditures. Borrower will not make any Capital Expenditures
and will not permit any of its Subsidiaries to make any Capital Expenditures,
except that Borrower and its Subsidiaries may make Capital Expenditures in an
aggregate amount (excluding the capitalization of insurance premiums) not in
excess of $1,000,000 during each fiscal year.
8.26 Servicing.
(a) Borrower shall ensure that FC Servicing or Minn Servicing is the
servicer for each Subsidiary and Portfolio Entity-50% which is a US Person.
(b) Borrower shall (i) cause FC Servicing to deposit all fee income
and all other funds received by it not constituting Servicing Restricted Funds
to the Cash Collateral Account-Servicing upon receipt of each such amount and
(ii) cause Minn Servicing to distribute to FC Servicing all fee income and all
other funds received by it not constituting Servicing Restricted Funds by wiring
all such amounts directly to the Cash Collateral Account-Servicing upon receipt
of each such amount.
8.27 Portfolio Entity Ownership. In furtherance and not in limitation of
Section 8.8(a), Borrower shall ensure (x) that there is no change in the
percentage of Equity Interests issued by any Portfolio Entity and owned by any
Subsidiary from that reflected on Schedule 10.5(b) and (y) that with respect to
any Portfolio Entity formed after the Effective Date, there is no change in the
percentage of Equity Interest issued by such Portfolio Entity and owned by any
Subsidiary from that set forth in the Final Asset Pool Acquisition Certificate
with respect to the acquisition of the initial Asset Pool by such Portfolio
Entity (as revised up to the time of the giving of the Notice of Borrowing in
respect of such Asset Pool), in each case unless otherwise consented to in
writing by Agent.
8.28 Activities of Portfolio Entity.
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(a) In furtherance and not in limitation of the other restrictions
set forth in this Agreement, Borrower shall ensure that (i) no Subsidiary which
is a Portfolio Entity and no Portfolio Entity-50% engages in any activity other
than owning Asset Pools and shall have no Assets other than such Asset Pools,
collections thereon and interests in REO Affiliates of which it is the REO
Owner, or the ownership of Incidental Equity Interests, provided, that (i) a
Subsidiary or a Portfolio Entity-50% doing business outside the United States
may own the type of assets an REO Affiliate would own (if it had an REO
Affiliate of which it were the REO Owner); and (ii) each REO Affiliate shall be
formed in respect of a specific REO Owner and shall not hold assets other than
from such REO Owner and (ii) WAMCO III, Ltd. and WAMCO IX, Ltd. may continue to
own Equity Interests in FirstStreet Investment LLC.
Section 9. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.1 Principal and Interest. Borrower shall default in the due and punctual
payment of any principal, interest or other amount due hereunder or under any
Note or any other Loan Document; provided, that the failure to make any interest
payment when due shall not constitute an Event of Default if such interest
payment is made within three days of the date when due and Borrower has not been
late in making any other interest payment on any Note more than once in the
preceding 12 months; or
9.2 Representations and Warranties. Any representation, warranty,
statement, report or certificate made or delivered by Borrower or any other Loan
Party or any officer, director, manager or authorized employee or agent thereof
herein or in any other Loan Document or otherwise in writing by such Person in
connection with any of the foregoing or in any certificate, report or other
statement furnished pursuant to or in connection with any of the foregoing,
shall be breached or shall prove to be untrue in any material respect; or
9.3 Negative and Certain Other Covenants. Borrower shall fail to perform
or observe, or shall fail to cause (or as to a Portfolio Entity-50% use its
commercially reasonable efforts to cause) any Subsidiary, Portfolio Entity-50%
or any other Loan Party or other Person covered thereby to perform or observe,
any term, covenant or agreement to be performed or observed by Borrower or such
Subsidiary, Portfolio Entity-50%, Loan Party or other Person, as the case may
be, pursuant to Section 7.11 or Section 8; or
9.4 Other Covenants. Borrower shall fail to perform or observe, or shall
fail to cause Subsidiary, Portfolio Entity, other Loan Party or other Person
covered thereby to perform or observe, any term, covenant or agreement to be
performed or observed by Borrower or such Subsidiary, Portfolio Entity, other
Loan Party or other Person, as the case may be, pursuant to any of the
provisions of this Agreement (other than those referred to in Sections 9.1, 9.2
or 9.3) or any other Loan Document and such default (which shall be capable of
cure) shall continue unremedied for a period of thirty days, after the earlier
of the date on which (x) Agent or any Lender gives Borrower notice thereof, or
(y) Borrower obtains knowledge of such default; or
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9.5 Other Indebtedness of Borrower. Any Applicable Indebtedness of
Borrower (i) shall be declared to be or shall become due and payable prior to
the stated maturity thereof or (ii) shall not be paid as and when the same
becomes due and payable; or any other event of default shall occur and be
continuing under any other Indebtedness Instrument (other than a Loan Document)
relating to any Indebtedness of Borrower in excess of $15,000,000 and, if a cure
period is applicable thereto, such default shall not be cured within 15 days
after the occurrence thereof; or
9.6 Other Indebtedness of other Loan Parties.
(a) Any Applicable Indebtedness of any Primary Obligor or other Loan
Party (i) shall be declared to be or shall become due and payable prior to the
stated maturity thereof or (ii) shall not be paid as and when the same becomes
due and payable; or any other event of default shall occur and be continuing
under any other Indebtedness Instrument (other than a Loan Document) relating to
any Indebtedness of such Person in excess of $15,000,000 and, if a cure period
is applicable thereto, such default shall not be cured within 15 days after the
occurrence thereof; or
(b) Any event of default shall occur and be continuing under any
Holdings /CFSC Loan Document and, if under the Holdings/CFSC Loan Agreement a
cure period is applicable to such default, such default is not cured before the
earlier of (x) 15 days after such default occurs and (y) the cure period
applicable thereto under the Holdings/CFSC Loan Agreement; or
9.7 [Reserved.]
9.8 Insolvency. (i) Borrower, any Primary Obligor or any other Loan Party
(Borrower and each of the other foregoing Persons being a "Section 9.8 Entity")
shall make an assignment for the benefit of creditors or a composition with
creditors; or (ii) any Section 9.9 Entity shall admit in writing its inability
to pay its debts as they mature, shall file a petition in bankruptcy, shall be
adjudicated insolvent or bankrupt, shall petition or apply to any tribunal for
the appointment of any receiver, liquidator, trustee or custodian of or for it
or any of its Assets; or (iii) any application is made by any other Person for
the appointment of any receiver, liquidator, trustee or custodian for any
Section 9.8 Entity or for any of the Assets of any Section 9.8 Entity; or (iv)
any Section 9.8 Entity shall commence any proceedings relating to it under any
bankruptcy, reorganization, arrangement, readjustment of debt, receivership,
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (v) there shall be commenced against any Section 9.8
Entity any such proceeding which shall remain undismissed for a period of 60
days or more, or any order, judgment or decree approving the petition in any
such proceeding shall be entered; or (vi) any Section 9.8 Entity shall by any
act or failure to act indicate its consent to, approval of or acquiescence in,
any such proceeding or in the appointment of any receiver, liquidator, trustee
or custodian (other than a custodian under Non-Default Voluntary Custodial
Arrangements) of or for it or any of its Assets, or shall suffer any such
appointment to exist; or (vii) any Section 9.8 Entity shall take any action for
the purpose of effecting any of the foregoing; or any court of competent
jurisdiction shall assume jurisdiction with respect to any such proceeding or a
receiver or trustee or other officer or representative of a court or of
creditors, or any court, governmental officer or agency, shall under
49
color of legal authority, take and hold possession of any substantial part of
the property or Assets of any Section 9.8 Entity; or (viii) any Section 9.8
Entity shall become insolvent (howsoever such insolvency may be evidenced) or
shall be unable to pay its debts as they mature (except that the occurrence of
any condition set forth in this clause (viii) with respect to FC Mexico, so long
as FC Mexico is paying its debts as they mature, shall not constitute an Event
of Default under this Section 9.8 unless the occurrence of any such condition
with respect to FC Mexico is an Event of Default under any other clause of this
Section 9.8); or
9.9 Security Documents. The breach by Borrower or any other Loan Party of
any term or provision of, or the occurrence of any default under, any Security
Document or other Loan Document (other than this Agreement) or other agreement,
instrument or document delivered in connection therewith to which such Person is
a party, which breach or default is in the opinion of Agent, material, or any
other such breach or default (other than such a material breach or default)
occurs and is not cured within the time, if any, specified therefor therein or
fifteen days thereafter, if no such time is specified or such time is less than
15 days; or if any such Security Document or Loan Document is at any time not in
full force and effect; or any of the Security Documents shall fail to grant to
Agent on behalf of Lenders the Liens (if any) intended to be created thereby; or
if any Loan Party shall assert that it is not liable with respect to any
Security Document to which it is a party; or any Primary Obligor shall assert
that it is not liable as a guarantor under the Guaranty to which it is party; or
9.10 Notice of Charge. Except as expressly permitted pursuant to Section
7.3, if a notice of any Charge is filed of record with respect to all or any of
the Assets of Borrower, any Primary Obligor, any Material Portfolio Entity or
any Wholly-Owned Subsidiary (other than any REO Affiliate); or
9.11 Judgments.
(a) Any final non-appealable judgment for the payment of money in
excess of $1,000,000 (after giving effect to any amount covered by insurance as
to which the insurer shall not have denied or questioned its obligation to pay)
shall be rendered against Borrower or any Primary Obligor; or
(b) Final judgment for the payment of money in excess of $1,000,000
shall be rendered against Borrower or any Primary Obligor, and the same shall
remain undischarged for a period of 30 days during which execution shall not be
effectively stayed or diligently contested in good faith by appropriate
proceedings; or
(c) If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due from Borrower in the currency expressed to be
payable herein (the "specified currency") into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures Agent could purchase the specified currency with other such currency
at Agent's New York branch on the Business Day that is on or immediately
following the day on which final judgment is given. The obligations of Borrower
in respect of any sum due to any Lender or Agent hereunder shall,
notwithstanding any judgment in a currency other than the specified currency, be
discharged only to the extent that on the Business Day following receipt
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by such Lender or Agent, as the case may be, of any sum adjudged to be so due in
such other currency such Lender or Agent as the case may be, may in accordance
with normal banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than the
sum originally due to such Lender or Agent, as the case may be, in the specified
currency, Borrower agrees, to the fullest extent it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Lender or Agent, as the case may be, against such loss, and if the amount of the
specified currency so purchased exceeds the sum originally due to any Lender or
Agent, as the case may be, in the specified currency, such Lender or Agent, as
the case may be, agrees to remit such excess to the appropriate Borrower; or
9.12 Stock Issuance or Transfer. Except as expressly permitted pursuant to
the terms hereof, if any Subsidiary or Portfolio Entity-50% issues to (except
upon formation of a Person permitted by this Agreement) or transfers to any
Person any Stock or other Equity Interests; or
9.13 ERISA. Any ERISA Affiliate of Borrower or of any other Applicable
Person under Section 8.22 which is not a Subsidiary of Borrower or such
Applicable Person shall fail in the performance or observance of any term,
provision or agreement with respect to a Plan or Multiemployer Plan set forth in
Section 8.22 as if such ERISA Affiliate were a Subsidiary of Borrower or an
Applicable Person; or
9.14 Material Effect Defaults. To the extent that the same does not
constitute an Event of Default under any other provision of this Section 9, a
default by Borrower or any Primary Obligor shall occur under any agreement,
document or instrument (other than this Agreement or any of the other Loan
Documents) now or hereafter existing, to which Borrower or any Primary Obligor
is a party and the effect of such default could reasonably be expected to have a
Material Adverse Effect; or
9.15 Change in Control. A Change in Control shall occur (for purposes
hereof, a Change in Control shall mean the occurrence of any of the following
events after the date hereof: (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly, or indirectly, of
more than fifty percent (50%) of the aggregate voting power of all classes of
Capital Stock of Borrower entitled to vote generally in an election of
directors; (ii) Borrower is merged with or into another corporation or another
corporation is merged with or into Borrower with the effect that immediately
after such transaction the stockholders of Borrower immediately prior to such
transaction hold less than a majority in interest of the total voting power
entitled to vote in the election of directors, managers or trustees of the
entity surviving the transaction; or (iii) to the extent not otherwise then
constituting an Event of Default, all or substantially all of the Assets of
Borrower or a Primary Obligor are sold to any person or persons (as an entirety
in one transaction or a series of related transactions). For purposes of this
Section 9.15, "Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents in the equity (however designated) of such
Person and any rights (other than debt securities convertible into an equity
interest), warrants or options to acquire an equity interest in such Person); or
51
9.16 Management. If James Sartain ceases to be employed full-time with
Borrower and responsible for the day to day management of Borrower. Such
occurrence shall be an Event of Default without notice or cure period, unless
Borrower employs a replacement officer of Borrower having the duties of Mr.
Sartain acceptable to Lenders in their reasonable discretion within ninety (90)
days after Mr. Sartain ceases to be employed; or
9.17 Court Orders. To the extent not otherwise constituting an Event of
Default, if Borrower, any Primary Obligor or any other Loan Party is enjoined,
restrained or in any way prevented by court order from conducting all or any
material part of its business or affairs and such Person consents (by action,
inaction or otherwise) to such order or such order remains in effect for a
period of 30 days; or
9.18 Dissolution. Borrower, any Primary Obligor or any other Loan Party
shall dissolve, fully liquidate or suspend or discontinue its business; or
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, Agent may (and shall, if instructed in writing by the
Majority Lenders) by written notice to Borrower: (i) declare the principal of
and accrued interest on the Loans of Borrower to be, whereupon the same shall
forthwith become, due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by Borrower; and/or (ii)
declare the Commitments of Lenders terminated, whereupon such Commitments shall
forthwith terminate immediately; provided that if any Event of Default described
in Section 9.8 shall occur with respect to Borrower, the result which would
otherwise occur only upon the giving of written notice by Agent to Borrower as
herein described shall occur automatically, without the giving of any such
notice.
Section 10. GENERAL REPRESENTATIONS AND WARRANTIES AND RELATED COVENANTS.
In order to induce Lenders to enter into this Agreement and to maintain
the Loans, and to issue the Letters of Credit, provided for herein, each Loan
Party party hereto makes the following representations, covenants and
warranties, both as of the Execution Date and (after giving effect to the
transactions contemplated hereby to occur on the Effective Date) as of the
Effective Date (unless otherwise specified), which representations, covenants
and warranties shall survive the execution and delivery of this Agreement and
the other documents and instruments referred to herein:
10.1 Organization.
(a) Borrower is and at all times hereafter shall be a corporation,
duly organized and validly existing and in good standing under the laws of the
State of Delaware and qualified or licensed to do business and in good standing
in all states in which the laws thereof require Borrower to be so qualified
and/or licensed and in which the failure to so qualify could have a Material
Adverse Effect, including, without limitation, the State of Texas. Schedule
10.1(a) identifies each jurisdiction in which Borrower has qualified or been
licensed to do business and describes the nature and current status of any such
qualification or license.
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(b) Each Primary Obligor and each Portfolio Entity and each other
Loan Party is a corporation or limited liability company or a limited
partnership, duly organized and validly existing and in good standing under the
laws of the state or foreign jurisdiction of its organization.
(c) Each Primary Obligor and other Loan Party is and at all times
hereafter shall be qualified or licensed to do business and in good standing in
all states in which the laws thereof require such Primary Obligor, and other
Loan Party to be so qualified and/or licensed.
(d) Each Portfolio Entity is and at all times hereafter shall be
qualified or licensed to do business and in good standing in all states in which
the laws thereof require such Portfolio Entity to be so qualified and/or
licensed and in which the failure to so qualify could have a Material Adverse
Effect. Schedule 10.1(d) identifies each jurisdiction in which each Primary
Obligor, Portfolio Entity, Related Entity and each other Loan Party has
qualified or been licensed to do business and describes the nature and current
status of any such qualification or license.
(e) Schedule 10.1(e) lists all Shareholder Agreements to which
Borrower, any Subsidiary, any Portfolio Entity-50% or any other holder of any
Equity Interest in a Pledged Entity is a party.
10.2 Entity Power.
(a) Borrower has the right, power and capacity and is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and the other Loan Documents to which it is a party.
(b) Each Primary Obligor and each other Loan Party has the right,
power and capacity and is duly authorized and empowered to enter into, execute,
deliver and perform those Loan Documents to which it is a party.
10.3 Violation of Charter Documents.
(a) The execution, delivery and/or performance by Borrower of this
Agreement and the other Loan Documents to which it is a party and the
consummation of the transactions contemplated hereunder have been duly
authorized by all necessary corporate and shareholder action and none of such
execution, delivery, performance or consummation shall, by the lapse of time,
the giving of notice or otherwise, constitute a violation of any Legal
Requirement or a breach of any provision contained in the Charter Documents of
Borrower, or contained in any agreement, instrument or document to which
Borrower is now or hereafter a party or by which it or any of its Assets is or
may become bound, other than agreements, instruments or documents that are
immaterial to Borrower the breach of which could not have a Material Adverse
Effect.
(b) The execution, delivery and/or performance by each Primary
Obligor and other Loan Party of each Loan Document to which it is a party and
the consummation of each such Person of the transactions contemplated hereunder
have been duly authorized by all necessary corporate, partnership or limited
liability company action (as the case may be) and
53
other action by the holders of the Equity Interests thereof and none of such
execution, delivery, performance or consummation shall, by the lapse of time,
the giving of notice or otherwise, constitute a violation of any Legal
Requirement or a breach of any provision contained in the Charter Documents of
such Primary Obligor or such other Loan Party, or contained in any agreement,
instrument or document to which such Primary Obligor or such other Loan Party is
now or hereafter a party or by which it or any of its Assets is or may become
bound, other than agreements, instruments or documents that are immaterial to
such Primary Obligor and other Loan Party the breach of which could not have a
Material Adverse Effect.
10.4 Enforceability.
(a) This Agreement and the other Loan Documents to which Borrower is
a party are and will be the legal, valid and binding agreements of Borrower,
enforceable in accordance with their respective terms, except as enforcement
thereof may be subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and to general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law); and
(b) Those other Loan Documents to which each other Loan Party is a
party are and will be the legal, valid and binding agreements of such Loan
Party, enforceable in accordance with their respective terms, except as
enforcement thereof may be subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and to general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
10.5 Ownership.
(a) Schedule 10.5(a) sets forth all classes of stock of Borrower, as
of December 31, 2003, the shareholders thereof (other than members of the
general public), addresses of each shareholder, and number of shares owned as of
such date;
(b) Schedule 10.5(b) sets forth all classes of stock and/or other
Equity Interests (other than options, warrants and rights to acquire Stock or
other Equity Interests) issued by each Primary Obligor, each Portfolio Entity
and each Related Entity, the shareholders and other equity holders thereof, and
the addresses, number of shares and/or partnership interests owned.
(c) Schedule 10.5(c) sets forth all options, warrants and other
rights to acquire Stock or other Equity Interests of Borrower, any Primary
Obligor, any Portfolio Entity, any Related Entity and any other Pledged Entity,
the nature of such option, warrant or right and the conditions for the exercise
thereof. Lenders hereby expressly consent to the transfer, issuance or
conveyance of Stock and/or other Equity Interests of Borrower in accordance with
such options, warrants and rights; provided that the same does not result in a
Change of Control.
(d) All Equity Interests of Borrower, each Primary Obligor, each
Portfolio Entity, each Related Entity and each other Loan Party have been duly
and validly issued, are fully paid and are non-assessable.
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10.6 Fictitious Names.
(a) Each of the fictitious names, if any, used by Borrower during
the five (5) year period preceding the Execution Date is set forth on Schedule
10.6 attached hereto (as amended from time to time) and none of such fictitious
names are registered trademarks or tradenames with the U.S. Patent and Trademark
Office, except as set forth in Schedule 10.6;
(b) Each of the fictitious names, if any, used by each Primary
Obligor, Material Portfolio Entity and any other Loan Party, during the five (5)
year period preceding the Execution Date is set forth on Schedule 10.6 attached
hereto (as amended from time to time), and none of such fictitious names are
registered trademarks or tradenames with the U.S. Patent and Trademark Office;
provided that, variations on the corporate name of any Primary Obligor,
Portfolio Entity or any other Loan Party in states where used solely for
qualifying to do business therein shall and have been excluded from such
schedule, with Lender's consent and approval.
10.7 Title.
(a) Schedule 10.7 is a true, accurate and complete list of all Liens
relating to the Collateral on the Execution Date and Effective Date.
(b) First X and First B shall at all times own fee title to its real
estate subject to no liens other than the Permitted Liens.
(c) Borrower, each Primary Obligor, Portfolio Entity and other Loan
Party shall at all times have indefeasible and merchantable title to and
ownership of all of its Assets except to the extent the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
10.8 Financial Warranty. Except as set forth on Schedule 10.8, Borrower
(i) is paying its debts as they mature, (ii) owns property which, at a fair
valuation, is greater than the sum of its debt, and (iii) has capital sufficient
to carry on its business and transactions and all businesses and transactions in
which it is about to engage. Except as set forth on Schedule 10.8, each Primary
Obligor and each Material Portfolio Entity: (i) is paying its respective debts
as they mature, (ii) owns property which, at a fair valuation, is greater than
the sum of its debt and (iii) has capital sufficient to carry on its business
and transactions and all businesses and transactions in which it is about to
engage.
10.9 Proceedings. Except as set forth on Schedule 10.9, there are no
actions or proceedings which are pending or threatened against Borrower, any
Primary Obligor, any Material Portfolio Entity or any other Loan Party which
could reasonably be expected to have a Material Adverse Effect. None of the
actions or proceedings referred to on Schedule 10.9 could have a Material
Adverse Effect.
10.10 Government Contracts. Except as set forth on Schedule 10.10, neither
Borrower, nor any Primary Obligor, Material Portfolio Entity or other Loan Party
has any government contracts.
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10.11 Adequate Licenses. Borrower, and each Primary Obligor, Portfolio
Entity and other Loan Party possesses adequate Assets, licenses, patents,
copyrights, trademarks and tradenames to continue to conduct its business as
previously conducted by it and as contemplated in the foreseeable future except
such licenses, patents, copyrights, trademarks and trade names the failure of
which to obtain could not be reasonably expected to have a Material Adverse
Effect.
10.12 Government Permits; Approvals and Consents.
(a) Except for matters which could not result in a Material Adverse
Effect, Borrower and each Primary Obligor, each Portfolio Entity and each other
Loan Party has been and is in good standing with respect to all governmental
permits, certificates, consents and franchises necessary to continue to conduct
its business as previously conducted prior to the date hereof and prior to the
Execution Date and to own or lease and operate its properties as now owned or
leased by it. None of said permits, certificates, consents or franchises contain
any term, provision, condition or limitation more burdensome than such as are
generally applicable to Persons engaged in the same or similar business as the
applicable Person.
(b) Except for those consents and other items set forth on Schedule
10.12, neither Borrower, nor any Primary Obligor, Material Portfolio Entity or
other Loan Party requires the approval, consent, waiver, order, permission,
license, authorization, registration or validation of, or filing with or
exemption by, any Government Authority or any other Person (including but not
limited to shareholders, partners, members, equity owners, holders of
Indebtedness Instruments, or any owner of any lien upon the Assets of any one or
more of them or their Affiliates) for the execution and delivery of, and the
consummation of the transactions contemplated by, this Agreement and the other
Loan Documents, including but not limited to the borrowing of any Loans, the
pledge of the Collateral, and the payment and performance of all Obligations.
Borrower and each other Primary Obligor, Material Portfolio Entity and other
Loan Party have received the consents and other items described on Schedule
10.12 and has delivered a copy thereof to Agent, which consents are in full
force and effect, unmodified and unamended on the date hereof and on the
Execution Date.
10.13 Charge; Restrictions.
(a) On the Execution Date and on the Effective Date, neither
Borrower, nor any Primary Obligor nor any Portfolio Entity or any other Loan
Party is a party to (nor are any of such Person's Assets otherwise subject to)
any contract or agreement or restriction, judgment, decree or order that could
have a Material Adverse Effect.
(b) On the Execution Date and on the Effective Date, none of
Borrower, nor any Primary Obligor, Material Portfolio Entity , or any other Loan
Party is subject to (nor are any such Person's Assets otherwise subject to) any
Charge (other than Charges owed by First B or First X).
10.14 Compliance with Laws. Except for matters which could not result in a
Material Adverse Effect, neither Borrower, nor any Primary Obligor nor any
Portfolio Entity nor any other Loan Party is in violation of any applicable
statute, regulation, order or ordinance of the
56
United States of America, of any state, city, town, municipality, county or of
any other jurisdiction, or of any agency thereof, including the Federal Reserve
Board, in any respect.
10.15 Compliance with Indebtedness Instruments. Other than those defaults
set forth on Schedule 10.15, Borrower is not in default under any Indebtedness
Instrument or any other material agreement to which it is a party. Other than
those defaults set forth on Schedule 10.15, no Primary Obligor, Material
Portfolio Entity, or any other Loan Party is in default under any Indebtedness
Instrument.
10.16 Financials. The Financial Statements delivered by Borrower, any
Primary Obligor, Material Portfolio Entity or any other Loan Party to Agent,
fairly and accurately present the Assets, liabilities and financial conditions
and results of operations of Borrower, and such other Persons described therein
as of and for the periods ending on such dates and have been prepared in
accordance with GAAP and such principles have been applied on a basis
consistently followed in all material respects throughout the periods involved.
10.17 Tax Returns. Borrower and each other member of the Consolidated
Group has filed or caused to be filed all tax returns which are required to be
filed, and has paid all Charges shown to be due and payable on said returns or
on any assessments made against it or any of its property, and all other Charges
imposed on it or any of its properties by any Governmental Authority, except for
Charges arising at any time after the Effective Date, which Borrower is
disputing in accordance with the final sentence of Section 7.3.
10.18 No Material Adverse Change. Except as set forth in Schedule 10.18,
since June 30, 2004, no event or circumstance has occurred that had, has or
could reasonably be expected to have a Material Adverse Effect.
10.19 No Indebtedness. None of Borrower, any Primary Obligor, Portfolio
Entity, Wholly-Owned Subsidiary or other Loan Party (i) has any Indebtedness
except for Indebtedness described in Schedule 10.19, Schedule 10.20 and Schedule
8.12(a) and except for Indebtedness permitted by this Agreement which (other
than in the case of MCS, any Latin American Acquisition Entity or any European
Acquisition Entity ) is reflected in the most recent Financial Statements
delivered pursuant to 7.1(a) or (b) (except for any such Indebtedness permitted
by this Agreement (x) incurred since such most recent Financial Statements were
delivered, or (y) constituting unsecured trade payables arising in the ordinary
course of business since the dates reflected in the June 30, 2004 Financial
Statements that is not Indebtedness for borrowed money or Indebtedness of any
REO Affiliate to its REO Parent evidenced by a note payable to such REO Parent,
in each case, to the extent, if any, not required by GAAP to be reflected in
Financial Statements) or (ii) has guaranteed any indebtedness or entered into or
issued any Guaranty Equivalent (other than as a result of the endorsement of any
instrument of items of payment for deposit or collection in the ordinary course
of business or as otherwise expressly permitted pursuant to the terms hereof) in
respect of the obligations of any Person.
10.20 Affiliate Notes. Attached hereto as Schedule 10.20 is a true,
accurate and complete schedule of all promissory notes made by any Affiliate
payable to the order of a Borrower, a Wholly-Owned Subsidiary, a Portfolio
Entity or a Related Entity, other than the Pledged Notes and the Excluded Notes.
57
10.21 No Liability on Lenders or Agent. None of the execution, delivery
and performance by Borrower or any other Loan Party of this Agreement and/or the
other Loan Documents will impose on or subject any of the Lenders or the Agent
to any liability, whether fixed or contingent, in respect of any Environmental
Law, whether relating to the operation of Borrower's business or otherwise. None
of the Lenders' or the Agent's exercise of any of the rights or remedies
described in this Agreement or in any of the other Loan Documents shall
constitute a breach of any provision contained in any agreement, instrument or
document concerning the assignment or license of, or the payment of royalties
for, any patents, patent rights, tradenames, trademarks, trade secrets,
know-how, copyrights or any other form of intellectual property now or at any
time or times hereafter protected as such by any applicable law.
10.22 Affiliates. Schedule 10.22 attached hereto is a true, accurate and
complete schedule of Borrower's Affiliates as of the Effective Date, together
with a description of Borrower's relationship to each such Affiliate.
10.23 Real Property; Environmental Issues. Except as set forth on Schedule
10.23, neither Borrower, any Primary Obligor, any Portfolio Entity or any
Related Entity other than First X, First B, FCS Creamer, Ltd., FCS Wood Ltd.,
and FCS Wildhorse Ltd., FCS Fischer Ltd., any REO Affiliate, any Latin American
Acquisition Entity or European Acquisition Entity now owns or, in the case of US
Persons, leases or at any time in the five (5) years preceding the Execution
Date has owned or leased any real property. Neither Borrower, any Primary
Obligor, any Portfolio Entity, any Related Entity, any Immaterial Entity, or any
other Loan Party has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other Governmental Authority concerning
any action or omission resulting in the releasing, or otherwise disposing of
hazardous waste or hazardous substances into the environment with respect to any
real property.
10.24 Investment Company Act and Public Utility Holding Company Act.
Neither Borrower nor any Primary Obligor nor any other Loan Party or the
entering into of any Loan Documents, nor the issuance of the Notes is subject to
any of the provisions of the Investment Company Act of 1940, as amended. Neither
Borrower, nor any Primary Obligor or any other Loan Party is a "holding company"
as defined in the Public Utility Holding Company Act of 1935, as amended, or
subject to any other federal or state statute or regulation limiting its ability
to incur Indebtedness for money borrowed.
10.25 Disclosure. Neither this Agreement nor any other Loan Document nor
any statement, list, certificate or other document or information, nor any
schedules to this Agreement or any other Loan Document, delivered or to be
delivered to Lenders or Agent, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary to make
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading. Copies of all documents delivered to Lenders
and/or Agent pursuant to this Section 10 or any other provision of this
Agreement are true, correct and complete copies thereof and include all
amendments, restatements, supplements and other modifications thereto and
thereof.
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10.26 Qualification.
(a) Solely by reason of (and without regard to any other activities
of Lenders and/or Agent in any state in which Assets of the Borrower, any
Primary Obligor, any Portfolio Entity, any Related Entity or other Loan Party
are located) the entering into and performance of this Agreement, the Notes, the
other Loan Documents and the documents, instruments and agreements delivered in
connection therewith by Lenders and/or Agent will not constitute doing business
by Lenders and/or Agent in any of such states or result in any liability of
Lenders and/or Agent for taxes or other governmental charges; and qualification
by Lenders and/or Agent to do business in such jurisdiction is not necessary in
connection with, and the failure to so qualify will not affect, the enforcement
of, or exercise of any rights or remedies under, any of such documents.
(b) No "business activity," "doing business" or similar report or
notice is required to be filed by the Lenders and/or Agent in any such
jurisdiction in connection with the Loans or the transactions contemplated by
this Agreement or any other Loan Document, and the failure to file any such
report or notice will not affect the enforcement of, or the exercise of any
rights or remedies under, this Agreement or any of the other Loan Documents.
(c) SEC Filings. The Borrower has filed and made available to the
Agent and Lenders each form, registration statement, schedule, report, proxy
statement and document required to be filed by Borrower with the SEC since
January 1, 1995 (collectively, the "SEC REPORTS"). Except as set forth on
Schedule 10.26, the SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Laws and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in the SEC Reports or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Borrower is the only Loan Party required to file pursuant to the
Exchange Act. Since January 1, 1995, Borrower has made all filings with the SEC
in a timely manner (except as set forth on Schedule 10.26, each of which filing
deficiencies was subsequently cured in a manner that brought Borrower into full
compliance with law) as required by law and no event has occurred that requires
an additional filing or any amendment to a prior filing, which has not been made
or filed.
10.27 Federal Reserve Margin Regulations; Use of Proceeds
(a) Neither Borrower, any Primary Obligor, any Portfolio Entity, any
Related Entity or any other Loan Party or member of the Consolidated Group or
Subsidiary of any of the foregoing is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System). No part of the proceeds
of any Loan will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.
(b) Neither the Loans nor the use of proceeds therefrom will result
in a violation of any of the foreign assets control regulations of the United
States Treasury
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Department (31 CFR, Subtitle B, Chapter V, as amended), or any ruling issued
thereunder or any enabling legislation or Presidential Executive Order in
connection therewith.
10.28 Intellectual Property. All patents, trademarks, registered
copyrights and trade names of Borrower, each Primary Obligor, each Material
Portfolio Entity and each other Loan Party are listed in Schedule 10.28 to this
Agreement; all of those so listed are in full force and effect. If any member of
the Consolidated Group at any time acquires, establishes, invents or develops
any patent, trademark, copyright or trade name that is or becomes material to
such Person's business or operations, it will promptly notify Agent of same and
take such action as Agent shall request to grant to Agent on behalf of Lenders a
perfected, first priority security interest in same.
10.29 Compliance with ERISA. No Loan Party or Subsidiary, other than
Borrower and Subsidiaries that are not Portfolio Entities has or shall at any
time have any employees. Schedule 10.29 describes the Pension Plans to which
Borrower or any ERISA Affiliates may have obligations. Each Loan Party and each
ERISA Affiliate and each Plan and the trusts maintained pursuant to such plans
are in compliance in all material respects with the presently applicable
provisions of Sections 401 through and including 417 of the Code, and of ERISA
and (i) no event which constitutes a Reportable Event as defined in Section 4043
of ERISA has occurred and is continuing with respect to any Plan which is or was
covered by Title IV of ERISA, (ii) no Plan which is subject to Part 3 of
Subtitle B of Title 1 of ERISA has incurred any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code) whether
or not waived, and (iii) no written notice of liability has been received with
respect to any Loan Party or any Subsidiary for any "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of ERISA), nor
has any such prohibited transaction resulting in liability to any Loan Party or
ERISA Affiliate occurred.
Neither any Loan Party nor any ERISA Affiliate (i) has incurred any
liability to the PBGC (or any successor thereto under ERISA), or to any trustee
of a trust established under Section 4049 of ERISA, in connection with any Plan
(other than liability for premiums under Section 4007 or ERISA), (ii) has
incurred any withdrawal liability under Subtitle E of Title IV of ERISA in
connection with any Plan which is a Multiemployer Plan, nor (iii) has
contributed or has been obligated to contribute on or after September 26, 1980,
to any "multiemployer plan" (within the meaning of Section 3(37) of ERISA) which
is subject to Title IV of ERISA.
The consummation of the transactions contemplated by this Agreement
(i) will not give rise to any liability on behalf of any Loan Party or any ERISA
Affiliate under Title IV of ERISA to the PBGC (other than ordinary and usual
PBGC premium liability), to the trustee of a trust established pursuant to
Section 4049 of ERISA, or to any Multiemployer Plan, and (ii) will not
constitute a "prohibited transaction" under Section 406 of ERISA or Section 4975
of the Code.
10.30 The Security Documents.
(a) Each Security Document heretofore delivered grants, and each
Security Document hereafter delivered when delivered will grant a Lien in the
properties or rights intended to be covered thereby (the "Collateral") which (i)
will constitute a valid and enforceable
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security interest under the Uniform Commercial Code of the State (x) in which
the Collateral is located and (y) by which any Security Document is governed (as
applicable, the "UCC"), (ii) will be entitled to all of the rights, benefits and
priorities provided by the UCC, and (iii) when such Security Documents or
financing statements with respect thereto are filed and recorded as required by
the UCC, will be superior and prior to the rights of all third Persons now
existing or hereafter arising whether by way of mortgage, pledge, lien, security
interest, encumbrance or otherwise, except for Permitted Liens, and will provide
Agent and Lenders the Requisite Priority. All such action as is necessary in law
has been taken, or prior to the Effective Date will have been taken, to
establish and perfect the security interest of Agent and Lenders in the
Collateral and to entitle Lenders or Agent on behalf of Lenders to exercise the
rights and remedies provided in each of the Security Documents and the UCC, as
applicable, and no filing, recording, registration or giving of notice or other
action is required in connection therewith except such as has been made or given
or will have been made or given prior to such dates. All filing and other fees
and all recording or other tax payable with respect to the recording of any of
the Security Documents and UCC financing statements have been paid or provided
for.
(b) In furtherance (and not in limitation) of Section 10.30(a), after
giving effect to the Pledge Agreements and Security Agreements listed on
Schedule 10.30(b), each Borrower and each Primary Obligor will have granted
Agent a Lien of the Requisite Priority on (x) each Pledged Note and on each
other note, instrument or other evidence of indebtedness, other than any
Excluded Note, in which it has any right, title or interest; and (y) each Equity
Interest, other than Equity Interests in Excluded Entities, in which it has any
right, title or interest, including, without limitation, each Equity Interest
issued to it by any Portfolio Entity acquiring any Asset Pool.
10.31 Other Loan Documents. All representations and warranties contained
in the other Loan Documents are true and correct.
10.32 Exclusion of Harbor Debtors. No representation, warranty or covenant
set forth in this Section 10 shall be deemed to be a representation, warranty or
covenant with respect to or by a Harbor Debtor.
10.33 FC Holdings Line of Credit.
(a) FC Holdings has entered into that certain Loan Agreement dated
as of April 6, 2000 by and between FC Holdings and CFSC (said agreement as in
effect on such date and as amended with the written consent of the Majority
Lenders, the "Holdings/CFSC Loan Agreement") pursuant to which FC Holdings
obtained the FC Holdings Line of Credit. In addition, Agent (on behalf of
Lenders), certain subordinated lenders (whose indebtedness was subsequently
repaid) and CFSC have entered into two separate subordination agreements dated
as of April 6, 2000 (as from time to time amended, restated, supplemented or
otherwise modified), one relating to their respective rights to the Shared
Collateral and one (as from time to time amended, restated, supplemented or
otherwise modified, the "CFSC Guaranty Subordination Agreement") relating to
their respective rights relating to payments which may be made by FC Commercial
pursuant to guarantees to CFSC or Lenders (collectively, the "CFSC Intercreditor
Agreement").
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(b) Attached hereto as Schedule 10.33(b) is a true, complete and
accurate schedule of all material documents, instruments and agreements
executed, delivered or caused to be delivered by FC Holdings or any other Person
to CFSC to evidence, guaranty or secure the FC Holdings Line of Credit (the
"Holdings/CFSC Loan Documents").
(c) Attached hereto as Schedule 10.33(c) is a true, accurate and
complete schedule of all property (including but not limited to all equipment,
partnership interests, stock, membership interests, general intangibles,
instruments, bank accounts, accounts, accounts receivable, contract rights) (the
"Shared Collateral") in which a Lien has been or will be granted to secure
payment or performance of any obligation or liability of Borrower, FC Holdings,
any Primary Obligor, any Portfolio Entity, any Related Entity, any Pledged
Entity or any other Person to CFSC under the Holdings/CFSC Loan Documents.
Borrower has caused FC Holdings to deliver to Agent a true, accurate and
complete copy of the Holdings/CFSC Loan Agreement and all Holdings/CFSC Loan
Documents.
(d) Neither the Holdings/CFSC Loan Agreement nor any other
Holdings/CFSC Loan Document has been amended, extended, restated, supplemented
or otherwise modified, nor have any of the provisions thereof been waived.
(e) The Holdings/CFSC Loan Agreement has been duly executed and
delivered by FC Holdings and is in full force and effect.
(f) All obligations of CFSC under the CFSC Guaranty Subordination
Agreement are the legal, valid and binding obligations of CFSC, enforceable
against CFSC in accordance with its terms.
(g) All representations, warranties and covenants in the
Holdings/CFSC Loan Documents of FC Holdings and the other Primary Obligors party
thereto, are legal, valid and binding obligations of such Persons, enforceable
in accordance with the terms thereof. All obligations of CFSC under the CFSC
Guaranty Subordination Agreement are the legal, valid and binding obligations of
CFSC, enforceable against CFSC in accordance with its terms.
(h) With respect to that FC Commercial Guaranty in favor of CFSC (as
identified on Schedule 10.33) Borrower acknowledges that said guaranty is
subordinate in right of payment to the obligations of FC Commercial under that
certain Guaranty Agreement executed by FC Commercial in favor of Lenders and
Agent and that Borrower shall not permit any payment to be made by FC Commercial
with respect to such guaranty in favor of CFSC at any time prior to indefeasible
payment in full of all Obligations and the termination of this Agreement and all
obligations of Lenders hereunder.
(i) Borrower hereby represents and warrants that it has pledged or
caused to be pledged to Agent, for the benefit of Lenders, a subordinated
security interest in all Shared Collateral, except a security interest in a
promissory note in the amount of $268,345.11 payable by Cartera en
Administration Y Cobranza, SA de CV to FC Holdings, in which promissory note
Lenders have elected not to take a security interest.
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10.34 FCS Fisher, Ltd. Transactions.
(a) FC Holdings borrowed approximately $1,000,000 under the FC
Holdings Line of Credit which it used to make a capital contribution to FCS
Fisher, Ltd. in the amount of $24,666.67 and a loan to FCS Fisher, Ltd. in the
amount of $898,012, secured by a deed of trust dated March 31, 2000, as amended
which is a lien against a 183 acre tract of land located in Bexar County, Texas
(the "Fischer Property").
(b) Borrower has (i) caused FC Holdings to pledge to Lender the note
by FCS Fisher, Ltd. to FC Holdings and all collateral pledged to secure payment
thereof; (ii) delivered said note, together with an endorsement thereof to
Agent, for the benefit of Lenders; and (iii) pledged to Agent, for the benefit
of Lenders, all of its right, title and interest in FCS Fisher, Ltd. and FCS
Fischer, G.P., Corp.
(c) FCS Fischer, Ltd. is the fee title holder of the Fischer
Property, subject to no liens or encumbrances other than that certain Deed of
Trust in favor of CFSC, as agent dated March 31, 2000.
(d) FC Holdings owns an aggregate 25% interest in equity of FCS
Fischer Ltd. and its general partner, free and clear of all liens and
encumbrances, except those in favor of Agent (on behalf of Lenders).
10.35 Fee Agreements. Attached hereto as Schedule 10.35 is a true,
accurate and complete schedule, as of the Effective Date, of all Fee Agreements
to which Borrower or any Primary Obligor, or Material Portfolio Entity is a
party.
10.36 Securitization Agreements. Attached hereto as Schedule 10.36 is a
true, accurate and complete schedule as of the Execution Date of all sales and
servicing agreements and similar agreements relating to securitizations to which
Borrower, any Primary Obligor or any other Subsidiary of Borrower is a party.
10.37 Immaterial Entities. Schedule 10.37 lists each Affiliate of Borrower
that does not engage in any business and that has assets of with a fair market
value of less than $100,000. The aggregate fair market value of Assets of all
entities listed on Schedule 10.37 does not exceed $1,500,000.
10.38 Waterfall Restrictions. No loan agreement or other borrowing
arrangement of any Portfolio Entity contains any provision (x) pursuant to which
such agreement or arrangement would cross-default to a loan agreement or other
borrowing arrangement of any other Portfolio Entity or to a different loan
agreement or other borrowing arrangement of such Portfolio Entity or (y) which
would in any way restrict, reduce or prohibit distributions by a Portfolio
Entity on account of any event or condition with respect to any Affiliate of
such Portfolio Entity or with respect to that Portfolio Entity under any other
borrowing or credit arrangement.
10.39 Wholly Owned Subsidiary Interests. Attached as Schedule 10.39 hereto
is a true and complete list, as of the Effective Date, of each Wholly-Owned
Subsidiary which owns Equity Interests issued by any other Person other than an
REO Affiliate of such Wholly-Owned Subsidiary,
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10.40 REO Affiliates. Attached as Schedule 10.40 hereto is a true and
complete list, as of the Effective Date, of each REO Affiliate.
10.41 Material Portfolio Entities. Attached hereto as Schedule 10.41 is a
true and complete list, as of the Effective Date, of each Material Portfolio
Entity.
Section 11. AGENT.
11.1 Appointment. Lenders hereby irrevocably appoint Bank of Scotland,
acting through its New York branch, to act as Agent hereunder and as Agent or
Collateral Agent or "Assignee" or "Secured Party" (or in any other similar
representative capacity designated in any Security Document) under the Security
Documents (in such capacity, the "Agent"). Each Lender hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, Agent to take such action on its behalf under
the provisions of this Agreement, the Notes, the Security Documents, the other
Loan Documents and any other instruments and agreements referred to therein and
to exercise such powers thereunder as are specifically delegated to or required
of it by the terms thereof and such other powers as are reasonably incidental
thereto; provided that Agent shall not take any action to realize upon any
security interest in any of the Collateral, or release any substantial portion
of the Collateral, without the consent of the Majority Lenders. Agent may
perform any of its duties under any of the Loan Documents by or through its
agents or employees.
11.2 Nature of Duties. Agent shall have no duties or responsibilities
except those expressly set forth in the Loan Documents. Neither Agent nor any of
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted by it under any of the Loan Documents, or in
connection therewith unless caused by its or their gross negligence or willful
misconduct. Nothing in the Loan Documents, expressed or implied, is intended to
or shall be so construed as to impose upon Agent any obligations in respect of
the Loan Documents except as expressly set forth therein. The duties of Agent
under the Loan Documents shall be mechanical and administrative in nature and
Agent shall not have by reason of its duties under the Loan Documents a
fiduciary relationship in respect of any Lender. Agent agrees to deliver
promptly to each Lender (i) copies of notices received by it pursuant to
Sections 7.1, 7.2 and 7.11 of this Agreement, and (ii) copies of all documents
required to be delivered hereunder by Borrower to Lenders directly but that are
not so delivered to any Lender (but were delivered to Agent) if such Lender
notifies Agent that it has not received such document or documents, specifying
same.
11.3 Lack of Reliance. Independently and without reliance on Agent, each
Lender to the extent it deems appropriate has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
the Loan Parties in connection with the making and the continuance of the Loans
and its Commitments hereunder and the taking or not taking of any action in
connection herewith, (ii) its own appraisal of the creditworthiness of the Loan
Parties and (iii) its own independent investigation and appraisal of the
Collateral; and, except as expressly provided in the Loan Documents, Agent shall
have no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the date hereof or at any time or
times thereafter. Agent shall not be responsible to any Lender for any recitals,
64
statements, representations or warranties herein or in any certificate or other
document delivered in connection herewith or for the authorization, execution,
effectiveness, genuineness, validity, enforceability, perfection,
collectibility, or sufficiency of any of the Loan Documents, the financial
condition of the Loan Parties or the condition of any of the Collateral, or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of any of the Loan Documents, the
financial condition of the Loan Parties or the existence or possible existence
of any Event of Default or Default.
11.4 Certain Rights. If Agent requests instructions from Lenders or
Majority Lenders with respect to any interpretation, act or action (including
failure to act in connection with this Agreement or any of the other Loan
Documents) Agent shall be entitled to refrain from such act or taking such
actions unless and until it shall have received instructions from Lenders or the
Majority Lenders, as the case may be; and Agent shall not incur liability to any
Person by so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder or under any of the other Loan Documents in
accordance with the instructions of the Majority Lenders (as to matters
requiring the consent of the Majority Lenders) or all Lenders (as to matters
requiring the consent of all Lenders). Agent shall be fully justified in failing
or refusing to take any action under any Loan Document unless, if it requests,
it shall first be indemnified to its satisfaction by Lenders against any and all
liability and expense which may be incurred by it by reason of taking,
continuing to take or not taking any such action.
11.5 Reliance. Agent shall be entitled to rely upon any written notice or
any telephone message believed by it to be genuine or correct and to have been
signed, sent or made by the proper Person, and, with respect to all legal
matters pertaining to the Loan Documents and its duties thereunder, upon advice
of counsel selected by it.
11.6 Indemnification. TO THE EXTENT AGENT IS NOT REIMBURSED OR INDEMNIFIED
BY BORROWER, LENDERS WILL REIMBURSE AND/OR INDEMNIFY AGENT, IN PROPORTION TO THE
AGGREGATE AMOUNT OF THEIR RESPECTIVE COMMITMENTS (OR, IF COMMITMENTS ARE
TERMINATED, LOANS OUTSTANDING) UNDER THIS AGREEMENT, FOR AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED OR SUSTAINED BY OR ASSERTED AGAINST AGENT, ACTING PURSUANT
HERETO OR ANY OF THE OTHER LOAN DOCUMENTS IN ITS CAPACITY PROVIDED FOR IN THIS
SECTION 11, IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, OR ANY OF
THE OTHER LOAN DOCUMENTS, PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR
ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE OBLIGATIONS OF LENDERS UNDER
THIS SECTION 11.6 SHALL SURVIVE THE REPAYMENT OF THE NOTES AND THE LOANS AND THE
TERMINATION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.7 Agent, Individually. With respect to its Commitments under this
Agreement, the Loans made by it and any Note issued to or held by it, Agent
shall have and may exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent set forth herein
for any other Lender or holder of a Note. The terms "Lender", "holders of Notes"
or any similar terms shall, unless the context clearly otherwise indicates, not
65
exclude Agent in its individual capacity as a Lender or holder of a Note. Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with the Loan Parties and their Subsidiaries as
if it were not acting pursuant hereto, and may accept fees and other
consideration from the Loan Parties and their Subsidiaries for services as Agent
in connection with this Agreement and the other Loan Documents and for services
otherwise than as Agent without having to account for the same to Lenders.
11.8 Holders of Notes. Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment or transfer thereof shall have been received by Agent. Any
request, authority or consent of any Person, who at the time of making such
request or of giving such authority or consent is the payee of any Note, shall
be conclusive and binding on any subsequent holder, transferee, assignee or
payee of such Note or of any Note or Notes issued in exchange therefor.
11.9 Resignation. Agent may resign at any time from the performance of all
its functions and duties hereunder and under the other Loan Documents by giving
30 days prior written notice to Borrower and each Lender. Such resignation shall
take effect upon the expiration of such 30-day period or upon the earlier
appointment of a successor. Notwithstanding any such resignation, the provisions
of Sections 11.6 and 12.3 shall inure also to the benefit of each Agent who has
so resigned with respect to the period it served as Agent. In case of the
resignation of Agent, the Majority Lenders, with the prior consent of Borrower,
which consent may not be unreasonably withheld, may appoint a successor by a
written instrument signed by the Majority Lenders. Any successor shall execute
and deliver to Agent an instrument accepting such appointment, and thereupon
such successor, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trusts of Agent hereunder and with like
effect as if originally named as "Agent" herein and therein, and upon request,
the predecessor Agent shall take all actions and execute all documents necessary
to give effect to the foregoing. In the event Agent's resignation becomes
effective at a time when no successor has been named, all notices, other
communications and payments hereunder required to be given by or to Agent shall
be sufficiently given if given by the Majority Lenders (or all Lenders, if the
consent of all Lenders is required therefor hereunder) or to each Lender, as the
case may be. In such event, all powers specifically delegated to Agent may be
exercised by the Majority Lenders and the Majority Lenders shall be entitled to
all rights of Agent hereunder.
11.10 Reimbursement. Without limiting the provisions of Section 11.6,
Lenders and Agent hereby agree that Agent shall not be obligated to make
available to any Person any sum which Agent is expecting to receive for the
account of that Person until Agent has determined that it has received that sum.
Agent may, however, disburse funds prior to determining that the sums which
Agent expects to receive have been finally and unconditionally paid to Agent, if
Agent wishes to do so. If and to the extent that Agent does disburse funds and
it later becomes apparent that Agent did not then receive a payment in an amount
equal to the sum paid out, then any Person to whom Agent made the funds
available shall, on demand from Agent:
(a) refund Agent the sum paid to that Person; and
(b) reimburse Agent for the additional amount certified by Agent as
being necessary to indemnify Agent against any funding or other cost, loss,
expense or liability
66
sustained or incurred by Agent as a result of paying out the sums before
receiving it; provided, however, that if such funds were made available to any
Lender, such additional amount shall be limited to interest on the sum to be
repaid, for each day from the date such amount was disbursed until the date
repaid to Agent, at (for the first three days) the customary rate set by Agent
for correction of errors among banks, and thereafter at the Base Rate (or, if
greater and in respect of a Loan, the rate from time to time prevailing on such
Loan).
Section 12. MISCELLANEOUS.
12.1 Calculations and Financial Data. Calculations hereunder (including,
without limitation, calculations used in determining, or in any certificate of
any Loan Party delivered reflecting compliance by any Loan Party with the
provisions of this Agreement) shall be made and financial data required hereby
shall be prepared both as to classification of items and as to amount in
accordance with GAAP, consistent with the audited Financial Statements described
in Section 10.16; provided that for purposes of Section 8.18 no effect shall be
given to any change in GAAP from those in effect on December 31, 2003.
12.2 Amendment and Waiver. Except as otherwise provided, no provision of
any of the Loan Documents may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Majority Lenders (or
Agent on their behalf) and, if Borrower is a party thereto, Borrower, except
that waivers of provisions relating to a Loan Party's performance or
non-performance of its obligations hereunder or thereunder need not be signed by
such Loan Party or any other Loan Party; provided however that the written
consent of Agent shall also be required to change, waive, discharge or terminate
provisions of Section 11 and the written consent of the Issuing Bank shall also
be required to change, waive, discharge or terminate provisions of Section 2A;
and provided further that without the consent of all of Lenders (or Agent on
their behalf) no change, waiver, discharge or termination may be made that would
increase the amount of any Commitment of any Lender, decrease the principal of
any Loan; decrease the interest rate payable on any Loan; decrease the amount of
any fee or Commitment Commission; extend the Maturity Date of any Loan; change
the definition of "Majority Lenders" or modify this Section 12.2. Any such
change, waiver, discharge or termination shall be effective only in the specific
instance and for the specific purposes for which made or given.
12.3 Expenses; Indemnification.
(a) Whether or not the transactions hereby contemplated shall be
consummated, Borrower shall pay all out-of-pocket costs and expenses of (x)
Agent incurred in connection with the preparation, execution, delivery,
administration, filing and recording of, and (y) Agent and Lenders incurred in
connection with the amendment (including any waiver or consent) or modification
of (including any amendment, waiver, consent or modification at any time
requested by Borrower, whether or not same is finalized or executed), any
failure of Borrower to perform or observe any provision of, and enforcement of
or preservation of any rights under, this Agreement, the other Loan Documents,
the making and repayment of the Loans, and the payment of all interest and fees,
including, without limitation, (A) the fees and expenses of Sullivan & Worcester
LLP, counsel for Agent, and any special or local counsel retained by Agent or
Lenders, and with respect to enforcement, the reasonable fees and expenses
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of counsel for Agent or any Lender, (B) the reasonable fees and expenses of
accountants, other consultants, appraisers and other professionals retained by
Agent in connection with the transactions contemplated hereunder, and (C)
printing, travel, title insurance, mortgage recording, filing, communication and
signing taxes and costs.
(b) BORROWER AGREES TO PAY, AND TO SAVE AGENT AND LENDERS HARMLESS
FROM (X) ALL PRESENT AND FUTURE STAMP, FILING AND OTHER SIMILAR TAXES, FEES OR
CHARGES (INCLUDING INTEREST AND PENALTIES, IF ANY), WHICH MAY BE PAYABLE IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE ISSUANCE OF THE NOTES OR ANY
MODIFICATION OF ANY OF THE FOREGOING, AND (Y) ALL FINDER'S AND BROKER'S FEES IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.
(c) BORROWER AGREES TO INDEMNIFY, PAY AND HOLD HARMLESS AGENT, EACH
LENDER, ANY LENDER ASSIGNEE AND EACH HOLDER OF A NOTE AND THEIR RESPECTIVE
PRESENT AND FUTURE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (COLLECTIVELY, THE
"INDEMNIFIED PARTIES") FROM AND AGAINST ALL LIABILITY, LOSSES, DAMAGES AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, LEGAL FEES AND EXPENSES) ARISING OUT
OF, OR IN ANY WAY CONNECTED WITH, OR AS A RESULT OF (I) THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE DOCUMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY OR THE PERFORMANCE BY THE PARTIES
HERETO OR THERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER AND THEREUNDER OR
RELATING THERETO; OR (II) ANY CLAIM, ACTION, SUIT, INVESTIGATION OR PROCEEDING
(IN EACH CASE, REGARDLESS OF WHETHER OR NOT THE INDEMNIFIED PARTY IS A PARTY
THERETO OR TARGET THEREOF) IN ANY WAY RELATING TO BORROWER, ANY PRIMARY OBLIGOR,
ANY PORTFOLIO ENTITY, ANY RELATED ENTITY OR SUBSIDIARY OF ANY THEREOF OR ANY
COLLATERAL OR ANY AFFILIATE OF BORROWER OR ANY SUBSIDIARY OF ANY SUCH AFFILIATE
OR IN ANY WAY RELATING TO ANY OF THE FOREGOING PERSONS OR ANY OTHER LOAN PARTY,
OR ANY AFFILIATE OF ANY OF THE FOREGOING IN RESPECT OF THIS AGREEMENT, ANY OTHER
LOAN DOCUMENTS OR ANY OTHER DOCUMENT OR TRANSACTION IN CONNECTION HEREWITH OR
THEREWITH OR RELATING HERETO OR THERETO; OR (III) ANY ACTUAL OR ALLEGED
VIOLATION BY BORROWER, ANY PRIMARY OBLIGOR, ANY PORTFOLIO ENTITY, ANY RELATED
ENTITY, ANY LOAN PARTY, ANY AFFILIATE OF ANY OF THE FOREGOING PERSONS OR ANY
SUBSIDIARY OF ANY OF THE FOREGOING PERSONS (OR ANY PREDECESSOR IN INTEREST OF
ANY OF THEM) OF ANY ENVIRONMENTAL LAW; PROVIDED THAT BORROWER SHALL NOT BE
LIABLE TO AN INDEMNIFIED PARTY FOR ANY PORTION OF SUCH LIABILITIES, LOSSES,
DAMAGES AND EXPENSES SUSTAINED OR INCURRED AS A DIRECT RESULT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF AGENT, ANY LENDER OR SUCH INDEMNIFIED PARTY
IF SUCH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IS DETERMINED TO HAVE OCCURRED BY
A FINAL AND NON-APPEALABLE DECISION OF A COURT OF COMPETENT JURISDICTION. EACH
LENDER SHALL ENDEAVOR TO GIVE BORROWER NOTICE OF ANY MATERIAL CLAIM, ACTION,
SUIT OR PROCEEDING (IF NOT RESTRICTED BY APPLICABLE LAW, REGULATION OR
GOVERNMENT AUTHORITY FROM SO DOING OR UNLESS THE SAME WOULD BE INCONSISTENT WITH
A REQUEST FROM A GOVERNMENT AUTHORITY) REFERRED TO IN CLAUSE (II) WHICH HAS BEEN
FILED AGAINST SUCH LENDER WITHIN A REASONABLE TIME AFTER THE LOAN OFFICER OF
SUCH LENDER WITH RESPONSIBILITY FOR THIS AGREEMENT BECOMES AWARE OF THE SAME,
BUT NO FAILURE TO GIVE ANY SUCH NOTICE SHALL AFFECT, OR RELIEVE BORROWER OF, ANY
OF BORROWER'S OBLIGATIONS UNDER THIS SECTION 12.3 OR UNDER ANY OTHER PROVISION
OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RESULT IN ANY OBLIGATION OR
LIABILITY OF AGENT OR ANY LENDER TO BORROWER OR ANY OTHER PERSON.
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(d) All obligations provided for in this Section 12.3 and Sections
3.4, 3.8, 4.1, 4.2, 4.3, 5.2 and 11.6 shall survive any termination of this
Agreement and the Commitments and the payment in full of the Obligations.
12.4 Benefits of Agreement; Descriptive Headings.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns, and, in particular, shall inure to the benefit of the holders from time
to time of the Notes; provided, however, that no Loan Party that is party hereto
may assign or transfer any of its rights or obligations hereunder without the
prior written consent of Agent and Lenders and any such purported assignment or
transfer shall be void. In furtherance of the foregoing, each Lender shall be
entitled at any time to grant participations in the whole or any part of its
rights and/or obligations under this Agreement, the Loan Documents or any Loan
or Note to any Person; provided, however, that no Lender Assignee shall be
permitted by the terms of its participation agreement with the relevant Lender
to require such Lender to take or omit to take any action hereunder except to
the extent that if Lender Assignee were a Lender hereunder, its consent to
taking or omitting to take such action would be required by the terms of the
second proviso of Section 12.2 hereto. No such participation pursuant to this
Section 12.4(a) shall relieve any Lender from its obligations hereunder and
Borrower need deal solely with Agent and Lenders with respect to waivers,
modifications and consents to this Agreement, the Loan Documents or the Notes.
Any such participant is referred to in this Agreement as a "Lender Assignee".
Borrower agrees that the provisions of Sections 3.4, 3.6, 3.8, 5.4 and 12.3
shall run to the benefit of each Lender Assignee and its participations or
interests herein, and any Lender may enforce such provisions on behalf of any
such Lender Assignee; provided, however, that if any Lender grants a
participation in the whole or any part of its rights and/or obligations pursuant
to this Section 12.4(a), then the amounts that Borrower is required to pay
pursuant to this Agreement (including, without limitation, additional amounts
made pursuant to Section 5.4) shall not exceed the amounts that Borrower would
have been required to pay to such Lender pursuant to this Agreement had such
Lender not granted such participation. Borrower hereby further agrees that any
such Lender Assignee may, to the fullest extent permitted by applicable law,
exercise the right of setoff with respect to such participation (and in an
amount up to the amount of such participation) as fully as if such Lender
Assignee were the direct creditor of Borrower. Upon a participation in
accordance with the foregoing, Borrower shall execute such documents and do such
acts as any Lender may reasonably request to effect such assignment. Any Lender
may furnish any information concerning the Loan Parties in its possession from
time to time to Lender Assignees (including prospective Lender Assignees) and
prospective Purchasing Lenders. Each Lender shall notify Borrower of any
participation granted by it pursuant to this Section 12.4(a) but neither the
approval of Borrower nor that of any other Loan Party shall be required for any
such participation. Borrower shall not be responsible for any due diligence
costs or legal expenses of such Lender Assignees in connection with their
entering into such participation.
(b) The descriptive headings of the various provisions of this
Agreement and the other Loan Documents are inserted for convenience of reference
only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
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(c) Any Lender may at any time assign to any other Lender or any
affiliate of any Lender, or (subject to obtaining the prior written consent of
Borrower (but no other Loan Party), such consent not to be unreasonably
withheld) to one or more additional banks or financial institutions ("Purchasing
Lenders"), all or any part of its Commitments (and corresponding Loans and Note)
pursuant to a Transfer Supplement ("Transfer Supplement"), the form and
substance satisfactory to Agent; provided, however, that each such assignment
shall be for an amount not less than $1,000,000 (or, if Lender's Loan or
Commitment at the time is less, such amount) and integral multiples of $500,000
above such amount, or such other amount or multiple to which Agent may consent.
Upon (i) such execution of such Transfer Supplement, (ii) delivery of an
executed copy thereof to Borrower and Agent, (iii) payment by such Purchasing
Lender to such transferor Lender of an amount equal to the purchase price agreed
between such transferor Lender and such Purchasing Lender, (iv) payment by the
Purchasing Lender to Agent of a $3,000 processing fee, and (v) any consent of
Borrower required by the first sentence of this Section 12.4(c), such Purchasing
Lender shall for all purposes be a Lender party to this Agreement and shall have
all the rights and obligations of a Lender under this Agreement to the same
extent as if it were an original party hereto and thereto with the percentage
share of the Commitment(s) set forth in Schedule I to such Transfer Supplement,
and no further consent or action by Borrower, any other Loan Party, Lenders or
Agent shall be required. Such Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of the
percentage of the Commitment(s), Notes and Loans (and related rights and
obligations) held by the transferor Lender and the Purchasing Lender arising
from the purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender pursuant to the Transfer Supplement.
Upon the consummation of any transfer to a Purchasing Lender pursuant to this
Section 12.4(c), the transferor Lender, Agent and Borrower shall make
appropriate arrangements so that, if required, a replacement Note or Notes
(dated the same date as the Note or Notes being replaced) is issued to such
transferor Lender and a new Note or Notes (dated the same date as the Note or
Notes being replaced) or, as appropriate, a replacement Note or Notes (dated the
same date as the Note or Notes being replaced) is issued to such Purchasing
Lender, in each case in principal amounts reflecting their outstanding Loans and
Commitment(s), as adjusted pursuant to such Transfer Supplement.
(d) Notwithstanding anything to the contrary contained herein or in
any of the Loan Documents, unless Agent, Borrower or a Lender otherwise request
with respect to any specific exhibit, exhibits to this Agreement shall not be
required to be attached to the execution or any other copy of this Agreement,
and any references in this Agreement or the other Loan Documents to such
exhibits as "Exhibits hereto," "Exhibits to this Agreement" or words of similar
effect shall be deemed to refer to such document as executed by the parties
thereto and delivered on the Effective Date.
12.5 Notices, Requests, Demands, etc. Except as otherwise expressly
provided herein, all notices, requests, demands or other communications to or
upon the respective parties hereto shall be deemed to have been duly given or
made when delivered if sent by Federal Express or other similar overnight
delivery service, or three Business Days after mailing (when mailed, postage
prepaid, by registered or certified mail, return receipt requested) or (in the
case of telex, telegraphic, telecopier or cable notice) when delivered to the
telex, telegraph, telecopier or cable company, or (in the case of telex or
telecopier notice sent over a telex or telecopier owned or
70
operated by a party hereto) when sent; in each case addressed as follows, except
that notices and communications to Agent pursuant to Section 2 and Section 9
shall not be effective until received by Agent: (i) if to Agent, at the Closing
Office, (ii) if to a Lender, at the address specified with its signature below
or (if a Purchasing Lender) on the applicable Transfer Supplement, and (iii) if
to a Loan Party, at its address specified with its signature below (Attention:
President), or to such other addresses as any of the parties hereto may
hereafter specify to the others in writing, provided that communications with
respect to a change of address shall be deemed to be effective when actually
received.
12.6 Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE THAT WOULD RESULT IN THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION, except (as to any other Loan Document) to
the extent specifically set forth otherwise in that Loan Document.
12.7 Counterparts; Telecopies. This Agreement and the other Loan Documents
may be executed in any number of counterparts, and by the different parties
hereto and thereto on the same or separate counterparts, each of which when so
executed and delivered shall be deemed to be an original; all the counterparts
for each such Loan Document shall together constitute one and the same
agreement. Telecopied signatures hereto and to the other Loan Documents shall be
of the same force and effect as an original of a manually signed copy.
12.8 Waiver; Remedies Cumulative; Payment of Claims; Full Recourse.
(a) No failure or delay on the part of Agent or any Lender in
exercising any right, power or privilege under this Agreement or any other Loan
Document, and no course of dealing between Borrower, any Primary Obligor, any
Portfolio Entity, any Related Entity or any other Loan Party or any Subsidiary
thereof and Agent or any Lender shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. No notice to or demand on Borrower, any Primary Obligor, any
Portfolio Entity, any Related Entity or any other Loan Party or any Subsidiary
thereof in any case shall entitle such Person to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
Agent or any Lender to any other or further action in any circumstances without
notice or demand.
(b) The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which Agent or any Lender would
otherwise have pursuant to such documents or at law or equity.
(c) In furtherance and not in limitation of the other rights and
remedies of Agent and the Lenders, upon the occurrence of an Event of Default or
Default, Agent, in its sole and absolute discretion, without waiving or
releasing any covenant, agreement or other obligation of Borrower or any Default
or Event of Default, may at any time or times hereafter, but shall be under no
obligation to, pay, acquire and/or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person against the Assets
of Borrower, or
71
any Primary Obligor, or any Wholly-Owned Subsidiary. All sums paid by Agent in
respect thereof and all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel to Agent) relating thereto incurred by
Agent or for which Agent becomes obligated on account thereof shall be part of
the Obligations payable by a Borrower to Agent on demand and any amount not paid
on demand shall bear interest at the Past Due Rate.
(d) Borrower's obligations to pay principal, interest, fees and
other amounts when due under this Agreement and the other Loan Documents is
absolute and unconditional and a full recourse obligation of Borrower,
notwithstanding any fact or circumstance and, without limiting the generality of
the foregoing, whether or not there are funds available in the Cash Flow Cash
Collateral Account for application to any such obligation.
12.9 Recoveries; Pro Rata Sharing.
(a) Any Recoveries (after deduction and payment of all expenses and
costs permitted by this Agreement, the Security Documents or applicable law)
shall be applied against the Loans held by Lenders until satisfaction in full of
all amounts due thereunder.
(b) Lenders agree among themselves that, with respect to all sums
received by Lenders applicable to the payment of the principal of or interest on
the Notes (except as otherwise provided in Section 3.4, 5.4 or 5.5), equitable
adjustment will be made between Lenders so that, in effect, all such sums shall
be shared ratably by each of Lenders (in accordance with the outstanding
principal amount of their respective applicable Loans) whether received by
voluntary payment, by realization upon security, by the exercise of the right of
set-off or banker's lien, by counterclaim or cross-action or by the enforcement
of any or all of the Notes or otherwise. If any Lender receives any payment on
its Notes of a sum or sums in excess of its pro rata portion (except as
otherwise provided in Section 3.4, 5.4 or 5.5), then such Lender receiving such
excess payment shall purchase for cash from the other Lenders with outstanding
Loans to Borrower an interest in their Note or Notes in such amount as shall
result in a ratable participation by all of Lenders in the aggregate unpaid
amount of applicable Notes then outstanding; provided, however, that if all or
any portion of such excess payment is thereafter recovered by such Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. Borrower hereby agree that any Lender so
purchasing a participation from another Lender pursuant to this Section 12.9(b)
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation.
12.10 Jurisdiction. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH OR
THEREWITH MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS AGENT OR ANY LENDER
MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS
FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND
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AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY AGENT AND THE
MAJORITY LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY
IT AGAINST AGENT OR ANY LENDER AND ANY QUESTIONS RELATING TO USURY. BORROWER
AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY
OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS
OF FORUM NON CONVENIENS. BORROWER HEREBY IRREVOCABLY CONSENTS THAT ALL PROCESS
SERVED OR BROUGHT AGAINST BORROWER WITH RESPECT TO ANY SUCH PROCEEDING IN ANY
SUCH COURT IN NEW YORK SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT
IF SENT BY REGISTERED MAIL, OR (IF PERMITTED BY LAW) BY FEDERAL EXPRESS OR OTHER
SIMILAR OVERNIGHT COURIER SERVICE, TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH
ALONGSIDE ITS SIGNATURE BELOW (OR SUCH OTHER ADDRESS AS AGENT IS NOTIFIED OF IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 12.5). NOTHING HEREIN SHALL AFFECT THE
RIGHT OF AGENT OR LENDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY
LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
12.11 Severability. If any provision of this agreement shall be held or
deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatever.
12.12 Right of Set-off. In addition to any rights now or hereafter granted
under applicable law or otherwise and not by way of limitation of any such
rights, upon the occurrence of an Event of Default each of Lenders is hereby
authorized at any time or from time to time, without notice to any Loan Party or
to any other Person, any such notice being hereby expressly waived, to set-off
and to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final) and any other indebtedness at any time held or
owing by such Lender to or for the credit or the account of such Loan Party
against and on account of the obligations and liabilities of such Loan Party now
or hereafter existing under any of the Loan Documents irrespective of whether or
not any demand shall have been made thereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured. Lender
or Lenders exercising any rights granted under this Section 12.12 shall
thereafter notify the affected Loan Party and Agent of such action; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
12.13 No Third Party Beneficiaries. This Agreement is solely for the
benefit of Agent and Lenders and Borrower and the respective successors and
assigns of Agent and Lenders and nothing contained herein shall be deemed to
confer upon anyone other than Borrower any right to insist on or to enforce the
performance or observance of any of the obligations of Agent or Lenders
contained herein. All conditions to the obligations of Lenders to make Loans
hereunder are imposed solely and exclusively for the benefit of Lenders and
their respective successors and assigns and no other Person shall have standing
to require satisfaction of such conditions in
73
accordance with their terms and no other Person shall under any circumstances be
deemed to be beneficiary of such conditions.
12.14 Survival; Integration.
(a) Each of the representations, warranties, terms, covenants,
agreements and conditions contained in this Agreement shall specifically survive
the execution and delivery of this Agreement and the other Loan Documents and
the making of the Loans and shall, unless otherwise expressly provided, continue
in full force and effect until the Commitments have been terminated and the
Loans together with interest thereon, the Commitment Commissions, the fees and
compensation of Agent, and all other sums payable hereunder or thereunder have
been indefeasibly paid in full.
(b) This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on the subject matter hereof and thereof. In the event of any direct conflict
between the provisions of this Agreement and those of any other Loan Document,
the provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of Agent or Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.
12.15 Domicile of Loans. Any Lender may make, maintain or transfer any of
its Loans hereunder to, or for the account of, any branch office, subsidiary or
affiliate of such Lender.
12.16 No Usury. It is expressly stipulated and agreed to be the intent of
Agent, Lenders and Borrower to comply at all times with applicable usury laws.
If at any time such laws would ever render usurious any amount called for under
any of the Loan Documents, then it is the express intention of the parties
hereto that such excess amount be immediately credited on the applicable Notes,
or if the applicable Notes have been fully paid, refunded by Lenders (pro rata
in accordance with their respective principal amount of the affected Loans), to
Borrower (and Borrower shall accept such refund) and the provisions hereof and
thereof be immediately deemed to be reformed to comply with the then applicable
laws, without the necessity of the execution of any further documents, but so as
to permit the recovery to the fullest amount otherwise called for hereunder and
thereunder. Any such crediting or refunding shall not cure or waive any default
by Borrower under the Loan Documents. If at any time following any such
reduction to the interest rate payable by Borrower there remains unpaid any
principal amounts under the Notes and the maximum interest rate permitted by
applicable law is increased or eliminated, then the interest rate payable to
Lenders shall be readjusted, to the full extent permitted by applicable law, so
that the total amount of interest thereunder payable by Borrower to Lenders
shall be equal to the amount of interest which would have been paid by Borrower
without giving effect to applicable usury laws. Borrower agree, however, that in
determining whether or not any interest payable under the Notes or any of the
other Loan Documents exceeds the highest rate permitted by law, any
non-principal payment (except payments specifically stated in the Notes or such
other Loan Documents to be "interest"), including fees and commissions and all
other sums payable hereunder or thereunder or in connection herewith or
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therewith, shall be deemed, to the full extent permitted by law, to be an
expense, fee, premium or penalty rather than interest.
12.17 Waiver of Jury Trial. BORROWER, AGENT AND EACH LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF BORROWER, ANY PARTNER THEREOF, ANY OTHER LOAN PARTY, AGENT OR
LENDERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT AND LENDERS ENTERING
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12.18 Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY ANY OF LENDERS AND/OR AGENT ON WHICH
BORROWER MAY IN ANY WAY BE LIABLE; (B) ALL RIGHTS TO NOTICE AND A HEARING PRIOR
TO AGENT'S TAKING POSSESSION OR CONTROL OF, OR TO REPLEVY, ATTACHMENT OR LEVY
UPON THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING ANY OF LENDERS AND/OR AGENT TO EXERCISE ANY OF ITS RESPECTIVE
REMEDIES; AND (C) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND
EXEMPTION LAWS.
12.19 Waiver of Marshaling. All rights of marshaling of Assets of
Borrower, including any such right with respect to the Collateral, are hereby
waived by Borrower.
12.20 Waiver of Claims; Release by Borrower.
(a) Borrower releases Lenders and Agent from any and all causes of
action or claims which Borrower may now or hereafter have for any asserted loss
or damage to Borrower claimed to be caused by or arising from any act or
omission to act on the part of any Lenders and/or Agent, their respective
officers, agents or employees, except, in the case of any Lender or Agent, the
willful misconduct or gross negligence of such Lender or Agent (as the case may
be).
(b) Borrower hereby acknowledges, agrees and affirms, as of the
Execution Date and as of the Effective Date, that it possesses no claims,
defenses, offsets, recoupment or counterclaims of any kind or nature against or
with respect to the enforcement of this Agreement or any other Loan Document or
any amendments thereto (collectively, the "CLAIMS"), nor does Borrower now have
knowledge of any facts that would or might give rise to any Claims. If facts now
exist which would or could give rise to any Claim against or with respect to the
enforcement of this Agreement or any other Loan Document, as may have been
amended by the amendments
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thereto, Borrower hereby unconditionally, irrevocably and unequivocally waives
and fully releases any and all such Claims as if such Claims were the subject of
a lawsuit, adjudicated to final judgment from which no appeal could be taken and
therein dismissed with prejudice.
12.21 Confidentiality. Agent and each Lender, severally and with respect
to itself only, covenants and agrees that any information obtained by Agent or
such Lender pursuant to this Agreement shall be held in confidence (it being
understood that documents provided to Agent hereunder may in all cases be
distributed by Agent to Lenders) except that Agent or such Lender may disclose
such information (i) to its officers, directors, employees, agents, counsel,
accountants, auditors, advisors or representatives, (ii) to the extent such
information has become available to the public other than as a result of a
disclosure by or through Agent or such Lender, (iii) to the extent such
information was available to Agent or such Lender in a capacity other than Agent
or Lender hereunder or on a nonconfidential basis prior to its disclosure to
Agent or such Lender hereunder, (iv) with the consent of Borrower, (v) to actual
or prospective Lender Assignees or Purchasing Lenders or (vi) to the extent
Agent or such Lender should be (A) required in connection with any legal or
regulatory proceeding or (B) requested by any Government Authority to disclose
such information.
Section 13. TEXAS LANGUAGE.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE MATTERS COVERED HEREBY AND THEREBY
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
FIRSTCITY FINANCIAL CORPORATION
a Delaware corporation
By:_____________________________________________
Title:__________________________________________
6400 Imperial Drive (delivery only)
Waco, Texas 76710
P.O. Box 8216 (mail)
Waco, Texas 76714-8216
254-761-2953 (telecopier)
BANK OF SCOTLAND, acting through its New York
branch, individually and as Agent
By:_____________________________________________
Title:__________________________________________
[signature page to Revolving Credit Agreement]
TABLE OF CONTENTS
1
EXHIBITS(1)
Annex I Definitions
Exhibit A - Promissory Note
Exhibit B - Report Setting Forth the Computation of the Aggregate Undistributed
Funds of all Portfolio Entities.
Exhibit C - Form of Asset Pool Acquisition Certificate
Exhibit D - Eligible Asset Pool
Exhibit E - Permitted Shareholder Agreements/Arrangements
Exhibit F - Net Present Value
Exhibit G - Borrowing Base Certificate
Exhibit H - Notice of Borrowing
Exhibit I - Eligible Portfolio Entity
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(1) Certain exhibits may not be attached to this Agreement. See Section
12.4(d).
LIST OF SCHEDULES
Schedule 2.1 - Original Principal Amount
Schedule 6.3 - Closing Checklist
Schedule 8.3 - Liens
Schedule 8.13 - Loan; Guaranty Debt
Schedule 8.13(b) - Guaranty Equivalents
Schedule 8.18 - Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries
Schedule 8.19 - Financial Covenants
Schedule 10.1(a) - Organization of Borrower
Schedule 10.1(d) - Organization of Each Primary Obligor, Portfolio Entity,
Related Entity and Each Other Loan Party
Schedule 10.1(e) - Shareholder Agreements
Schedule 10.5(a) - Classes of Stock of Borrower
Schedule 10.5(b) - Classes of Stock and/or Other Equity Interests Issued by Each
Primary
Obligor, Each Portfolio Entity and Each Related Entity, the
Shareholders and
Other Equity Holders
Schedule 10.5(c) - Equity Interests in Borrower
Schedule 10.6 - Fictitious Names
Schedule 10.7 - Liens Relating to the Collateral
Schedule 10.8 - Financial Warranty
Schedule 10.9 - Proceedings
Schedule 10.10 - Government Contracts
Schedule 10.12 - Government Permits; Approvals and Consents
Schedule 10.15 - Defaults under any Indebtedness Instrument
Schedule 10.18 - Material Adverse Change
Schedule 10.19 - Indebtedness Existing on the Effective Date
Schedule 10.20 - Affiliate Notes
Schedule 10.22 - Affiliates
Schedule 10.23 - Real Property; Environmental Issues
Schedule 10.26 - SEC Filings
Schedule 10.28 - Intellectual Property
Schedule 10.29 - Compliance with ERISA
Schedule 10.30(b) - Pledge Agreements and Security Agreements
Schedule 10.33 - FC Commercial Guaranty in Favor of CFSC
Schedule 10.33(b) - FC Holdings Line of Credit Material Documents
Schedule 10.33(c) - Shared Collateral
Schedule 10.35 - Fee Agreements
Schedule 10.36 - Securitization Agreements
Schedule 10.37 - Immaterial Entity
Schedule 10.39 - Wholly Owned Subsidiary Interests
Schedule 10.40 - REO Affiliates
Schedule 10.41 - Material Portfolio Entities
Schedule I - (EE) - Excluded Entities
Schedule I - (EN) - Excluded Notes
Schedule I - (MPE) - Material Portfolio Entity
Schedule I - (PN) - Pledged Notes
Schedule (PL) - Permitted Liens
Schedule I - (RE) - Related Entity
EXECUTION COPY
ANNEX I
DEFINITIONS
As used in the Revolving Credit Agreement to which this Annex I is
annexed, the following terms shall have the meanings herein specified or as
specified in the Section of such Loan Agreement or in such other document herein
referenced:
"Acquisition Loan" - Section 2.1(b).
"Acquisition Price" with respect to any Asset Pool means the purchase
price to be paid to the seller of the Asset Pool by the Portfolio Entity
acquiring such Asset Pool for the acquisition of all rights to all property
included in such Asset Pool plus transaction costs relating to the acquisition
of such Asset Pool of up to 2% of the purchase price of such pool.
"Adverse Waterfall Event" shall mean with respect to any Portfolio
Entity owning more than one Asset Pool or Assets in addition to those contained
in its initial Asset Pool, that any lender to such Portfolio Entity has for any
reason diverted (whether to make up for a shortfall with respect to any other
pool or asset or otherwise) any portion of collections from any Asset Pool of
such Portfolio Entity to a different asset or asset pool (or waterfall with
respect thereto) of such Portfolio Entity or otherwise subsidized any other such
asset or asset pool with collections from any Asset Pool or otherwise restricted
distributions from, or reduced waterfall amounts arising from, collections of
any Asset Pool on account of any condition or occurrence other than a condition
or occurrence arising directly from such Asset Pool.
"Affected Interest Period" - Section 3.6(a).
"Affected Lender" - Section 3.6(b).
"Affiliate" shall mean any Person (i) in which Borrower and/or any
Parent, individually, jointly and/or severally, now or at any time or times
hereafter, has or have an equity or other ownership interest equal to or in
excess of twenty-five percent (25%) of the total equity of or other ownership
interest in such Person; and/or (ii) which directly or indirectly through one or
more intermediaries controls or is controlled by, or is under common control
with Borrower; and/or (iii) any officer or director of Borrower or any Primary
Obligor. For purposes of this definition, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Stock, by
contract or otherwise, and in any case shall include direct or indirect
ownership (beneficially or of record) of, or direct or indirect power to vote,
25% or more of the outstanding shares of any class of capital stock of such
Person (or in the case of a Person that is not a corporation, 25% or more of any
class of equity interest). Notwithstanding the foregoing, none
of the Harbor Debtors shall be deemed to be an Affiliate for the purposes of
this Agreement other than Section 8.20.
"Agent" - introductory paragraph.
"Aggregate Net Present Equity Value" shall mean the sum of the Net
Present Equity Values of each Portfolio Entity (after giving effect, in the case
of a Borrowing Base Certificate delivered contemporaneously with a Notice of
Borrowing, to an applicable Eligible Portfolio Entity's acquisition of an Asset
Pool with proceeds of the related Acquisition Loan).
"Aggregate Undistributed Funds" shall mean, on any date of
determination, the sum of the amounts determined by multiplying (i) the FC
Percentage of each Portfolio Entity, times (ii) the amount of funds held by such
Portfolio Entity (which for purposes of this definition shall include the
operating funds of the general partner of any limited partnership which is the
Portfolio Entity) which are not (x) held in a lockbox account, nor (y) held by
such Portfolio Entity for the payment (a) of indebtedness to a Permitted
Portfolio Company Creditor of such Portfolio Entity due within the next 30 days
or (b) Portfolio Protection Expenses, nor (z) retained by such Portfolio Entity
to satisfy a leverage covenant imposed thereon by the Permitted Portfolio
Company Creditor thereof pursuant to a covenant under a loan agreement between
such creditor and such Portfolio Entity as in effect on the Execution Date, of
which Agent has been given written notice.
"Agreement" or "Loan Agreement" shall mean this Revolving Credit
Agreement, as it may from time to time be amended, extended, restated,
supplemented or otherwise modified.
"Applicable Indebtedness" of any Person shall mean all Indebtedness of
such Person other than trade payables incurred in the ordinary course of
business which are not evidenced by an Indebtedness Instrument.
"Applicable Margin" shall mean, for each period from and including each
Payment Date to but excluding the following Payment Date, the applicable
percentages set forth below opposite the applicable LTV Ratio; provided, if any
change to Total Outstandings occurring during such period would otherwise result
in a higher Applicable Margin, such higher Applicable Margin shall be in effect
from the date of such change to but excluding the following Payment Date:
<Table>
<Caption>
- --------------------------------------------------------------------------------------
APPLICABLE MARGIN APPLICABLE MARGIN
FOR ALTERNATE BASE FOR EUROCURRENCY
LTV RATIO RATE LOANS LOANS
- --------------------------------------------------------------------------------------
Greater than 1.00 to 2.00 0.25% 2.75%
- --------------------------------------------------------------------------------------
Less than or equal to 1.00 to 2.00 0.00% 2.50%
- --------------------------------------------------------------------------------------
</Table>
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; provided, however, if all conditions set forth in Section 6C of the Loan
Agreement are not satisfied on or before November 22, 2004, the Applicable
Margin shall increase by 2% until such conditions have been satisfied.
"Applicable Portfolio Percentage" shall mean, with respect to the
Acquisition Price of any Asset Pool, the percentage of outstanding shares of
stock, membership interests, or partnership interests (as the case may be) or,
in the case of a non-U.S. entity, similar equity interests, issued to the
Borrower or directly or indirectly to the Primary Obligors by the Portfolio
Entity acquiring such Asset Pool.
"Approved Portfolio Leverage Arrangement" shall mean (i) each borrowing
arrangement between a Portfolio Entity and a financial institution existing as
of the Effective Date and (ii) each future borrowing arrangement between a
Portfolio Entity and a financial institution on terms and conditions reasonably
satisfactory to Agent (as indicated in writing by Agent), in each case, pursuant
to which a loan is made to a Portfolio Entity on or prior to the date such
Portfolio Entity acquires an Asset Pool, all of the proceeds of which loan are
used to pay a portion of the Acquisition Price of such Asset Pool. Without
limiting the scope of Agent's discretion pursuant to the preceding sentence, (i)
no borrowing arrangement shall be deemed an Approved Portfolio Leverage
Arrangement if such arrangement cross-defaults to a credit arrangement of any
other Portfolio Entity or contains any provisions which would in any way
restrict, reduce or prohibit distributions by a Portfolio Entity on account of
any event or condition with respect to any Affiliate of such Portfolio Entity;
and (ii) references herein to an Approved Portfolio Leverage Arrangement shall
be limited to such borrowing arrangements governed by the terms of the loan
agreement and other documents in the form delivered to Agent at the time such
arrangements were approved by Agent, as amended, supplemented or otherwise
modified with the written consent of Agent.
"ASDM" shall mean Asset Servicing de Mexico S.A. de C.V.
"Asset" shall mean any real, personal and intangible property of a
Person, including, without limitation, accounts, chattel paper, contract rights,
letters of credit, instruments and documents, equipment , general intangibles,
inventory, leases, options, licenses, real property, and Equity Interests issued
by any other Person whether now existing or hereafter acquired or arising.
"Asset Pool" shall mean (x) in connection with the acquisition thereof
by an Eligible Portfolio Entity, a portfolio of loans or other Assets described
in an Asset Pool Acquisition Certificate, and (y) in all other contexts, all
Assets of a Portfolio Entity.
"Asset Pool Acquisition Certificate" shall mean a certificate from an
Executive Officer of Borrower in the form of Exhibit C to the Agreement, to
which is attached (as contemplated by the form of such certificate) the asset
purchase agreement relating to the Assets proposed to be purchased, and, if not
previously provided to Agent or if amended, restated or otherwise modified since
previously provided, the Charter Documents for the purchasing Portfolio Entity
and any Shareholders Agreement entered into or proposed to be entered into by
the holders of the Equity Interests of such Portfolio Entity.
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"Associate", when used to indicate a relationship with a Person, shall
mean (i) another Person (other than a Loan Party or a Subsidiary thereof) of
which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (ii)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person or an immediate member of his family serves
as trustee or in a similar capacity, and (iii) any relative or spouse of such
Person or any relative of such spouse.
"Auditors" shall mean KPMG LLP or other independent certified public
accountants of recognized standing selected by Borrower and satisfactory to
Agent.
"Base Rate" shall mean, for any day, the higher of (x) the fluctuating
interest rate per annum, in effect from time to time, established by Bank of
Scotland in New York as its base, prime or reference rate for U.S. domestic
commercial loans in Dollars, or (y) the Federal Funds Rate in effect on such day
plus 0.5%. Any change in the interest rate resulting from a change in the Base
Rate shall be effective as of the opening of business on the day on which such
change becomes effective; it is understood and agreed that the aforesaid rates
and the Base Rate are reference rates only and do not necessarily represent the
lowest or best rate actually charged to any customer.
"Base Rate Loan" shall mean any Loan during any period that it bears
interest determined by reference to the Base Rate.
"Basle Laws" - Section 3.4.
"Borrower" - introductory paragraph.
"Borrower Pledge Agreement" shall mean the Amended and Restated Pledge
Agreement (Stock and Debt) made by Borrower in favor of the Collateral Agent
dated as of the date hereof delivered pursuant to Section 6 and each other
pledge agreement with respect to shares of stock or affiliate indebtedness from
time to time hereafter delivered by Borrower in respect of the Obligations., as
each such agreement may be from time to time amended, extended, restated,
supplemented or otherwise modified.
"Borrowing Base" shall mean, as of any date of calculation an amount
equal to, determined as of the immediately preceding Payment Date but giving
effect to all subsequent Asset acquisitions by Portfolio Entities and consequent
changes in values determined pursuant to clauses (A) and (B) below:
the Aggregate Net Present Equity Value, less
(A) the sum of (i) the outstanding balance of the
Indebtedness under the Holdings/CFSC Loan Agreement, (ii) the amount
by which the Net Present Equity Value of all Portfolio Entities
located in, or with Assets which originated in Mexico exceeds
$25,000,000, (iii) the amount by which the Net Present Equity Value of
all Portfolio Entities with Assets which originated in Brazil exceeds
$3,000,000, (iv) the amount by which the Net Present Equity Value of
all Portfolio Entities with Assets which originated in Chile exceeds
$3,000,000, (v) the amount by which the Net Present Equity Value of
all Portfolio Entities with Assets which originated in Argentina or
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Uruguay exceeds $6,000,000, (vi) the amount by which the Net Present
Equity Value of all Portfolio Entities with Assets which originated in
Brazil, Chile, Argentina and Uruguay exceeds $10,000,000 (without
duplication of any deductions in clauses ii through v above), (vii)
reserves as Agent shall from time to time deem, in good faith to be
appropriate, which is not otherwise taken into account in determining
the Net Present Value of an Asset or the Net Present Equity Value of a
Portfolio Entity, (viii) the Aggregate Net Present Equity Value of
each Portfolio Entity whose Equity Interests are owned by any
Subsidiary which has undertaken or is subject to any event described
in clauses (i) through (vii) of Section 9.8 of the Agreement, and (ix)
the REO Excess Value Adjustment, and
(B) the sum of the Net Present Equity Values of each
Portfolio Entity for which any Loan Party has not completed all
actions requested by Agent to ensure the perfection and priority of
its Liens on the Equity Interests issued by such Portfolio Entity
(including the perfection and priority of Liens on Equity Interests in
the country of organization of any Foreign Portfolio Entity,
including, if so requested, furnishing an opinion of counsel in such
country with respect to such perfection and priority, satisfactory to
Agent in form and substance) within ninety (90) days after the Funding
Date of any Related Acquisition Loan.
Once determined, the Borrowing Base shall remain in effect until the earlier of
the next Borrowing Date or the next Payment Date.
"Borrowing Base Availability" shall mean, as of any computation date,
an amount equal to 60% of the Borrowing Base in effect on such date.
"Borrowing Base Certificate" shall mean a certificate, in the form
attached as Exhibit G hereto, of the CFO of Borrower setting forth the Borrowing
Base and showing the computation thereof in reasonable detail.
"Borrowing Date"- Section 2.2.
"Business Day" shall mean any day that is not a Saturday, Sunday or
legal holiday in the State of New York, the State of Texas, the State of
Connecticut (or any other State where the CFCCA is maintained) or a day on which
banking institutions chartered by the State of New York, the State of Texas, the
State of Connecticut (or any other State where the CFCCA is maintained) or the
United States are legally required or authorized to close, and, when used in
connection with LIBOR, means any such Business Day which is also a day on which
deposits in Dollars and Euros may be dealt in on the London interbank market.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital Assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with GAAP) and the amount of obligations
under Capitalized Leases incurred by such Person.
"Capitalized Lease" shall mean any lease which is, or is required under
GAAP to be, capitalized on the balance sheet of the lessee at such time, and
"Capitalized Lease Obligation" of
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any Person at any time shall mean the aggregate amount of rental expenses which
is, or is required under GAAP to be, capitalized on the books of such Person
under Capitalized Leases.
"Cash Collateral Account-Servicing" shall mean shall mean the account
at the Depositary specified in the Cash Collateral Agreement-Servicing and in
the letter agreement between the Collateral Agent and the Depositary relating
thereto or such other account, if any, which is specified in a cash collateral
agreement (in form and substance satisfactory to Agent) between FC Servicing and
Collateral Agent and letter agreement (in form and substance satisfactory to the
Collateral Agent) between the Collateral Agent and the depositary bank with
respect to such other account.
"Cash Collateral Agreement" shall mean the Collateral Assignment of
Account (Cash Flow Cash Collateral Account), dated as of even date herewith,
made by Borrower in favor of the Collateral Agent, as such agreement may be from
time to time amended, extended, restated, supplemented or otherwise modified.
"Cash Collateral Agreement-Servicing" shall mean the Collateral
Assignment of Account (FC Servicing), dated as of even date herewith, made by
Borrower in favor of the Collateral Agent, as such agreement may be from time to
time amended, extended, restated, supplemented or otherwise modified.
"Cash Flow Cash Collateral Account" and "CFCCA" shall mean the account
at the Depositary specified by account number in the Cash Collateral Agreement
and in the letter agreement between the Collateral Agent and the Depositary
relating thereto or such other account, if any, which is specified by account
number in a cash collateral agreement (in form and substance satisfactory to
Agent) between Borrower and Collateral Agent and letter agreement (in form and
substance satisfactory to the Collateral Agent) between the Collateral Agent and
the depositary bank with respect to such other account.
"Certified Error Certificate" shall have the meaning set forth in the
form of Waterfall Certificate approved by Agent prior to the first Borrowing
Date of Acquisition Loans under this Agreement (as the form of certificate
constituting the "Waterfall Certificate" for the purposes of this Agreement may
be from time to time amended, supplemented, restated or otherwise modified).
"CFO", as to any Loan Party shall mean such Loan Party's chief
financial officer.
"CFSC" shall mean CFSC Capital Corp. XXX, a Delaware corporation.
"CFSC Guaranty Subordination Agreement" - Section 10.33(a).
"CFSC Intercreditor Agreement" - Section 10.33(a).
"Charges" shall mean all national, Federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division, agency,
body or department thereof, including without limitation the PBGC) taxes,
levies, assessments, charges, liens, claims or encumbrances upon and/or relating
to the Obligations, a Person's Assets, a Person's business, a Person's
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ownership and/or use of any of its Assets, a Person's income and/or gross
receipts and/or a Person's ownership and/or use of any of its Assets.
"Charter Document" shall mean (i) with respect to a corporation: its
certificate or articles of incorporation or association and its by-laws or
comparable documents under non-US laws; (ii) with respect to a partnership: its
partnership agreement, certificate of partnership (if a limited partnership) and
its certificate of doing business under an assumed name (if a general
partnership); (iii) with respect to a trust, its trust agreement or declaration
of trust; and (iv) with respect to a limited liability company, its certificate
of formation and operating agreement or analogous documents; in each case, with
such other similar documents as Agent shall request or specify.
"Closing Checklist" shall mean the Closing Checklist in the form of
Schedule 6C.1 to the Agreement.
"Closing Office" shall mean the office of Agent at 565 Fifth Avenue,
New York, New York 10017 or such other office as may be designated in writing to
Borrowers by Agent.
"Closing Office Time" shall mean the local time in effect at the
Closing Office.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" - Section 10.30.
"Collateral Agent" shall mean Agent in its capacity as agent under one
or more of the Security Documents and its successor and assigns (Agent, in such
capacity, being sometimes referred to herein and in other Loan Documents as the
"Collateral Agent" and sometimes as the "Agent").
"Commitment Commission" - Section 4.2.
"Commitment Period" shall mean the period from the Effective Date to
and including the Maturity Date.
"Commitments" shall mean the Total Loan Commitment and the Letter of
Credit Commitment.
"Consolidated Group" shall mean Borrower and its consolidated
Subsidiaries, other than the Harbor Debtors.
"Continuing Letter of Credit Agreement" shall mean any continuing
letter of credit, reimbursement or similar agreement executed by Borrower and
Issuer in connection with the issuance of a Letter of Credit.
"Deemed Disbursement" - Section 2A.6.
"Deemed Disbursement Account" - Section 2A.6.
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"Default" shall mean any event which with notice or lapse of time, or
both, would become an Event of Default.
"Depositary" shall mean Bank of America, N.A.
"Disbursement" - Section 2A.4(b).
"Disbursement Date" - Section 2A.4(a).
"Disclosure Restriction" - Section 7.1 (m).
"Dividend" - Section 8.11.
"Dollar Equivalent" shall mean, on any date of determination, with
respect to any amount in Euros, the equivalent in Dollars of such amount,
determined by Agent using the Exchange Rate then in effect.
"Dollars", "U.S. $", "$" and "U.S. dollars" shall mean the lawful
currency of the United States of America.
"EBITDA" for any period, shall mean net income (excluding extraordinary
and non-recurring items, including those which are non-cash in nature) for such
period plus (i) all interest expense, plus (ii) income tax expenses, plus (iii)
depreciation and amortization (including amortization of any goodwill or other
intangibles), minus or plus (iv) without duplication, gains and losses
attributable to any sale of Assets not in the ordinary course of business, plus
or minus (v) any other non-cash charges or gains which have been subtracted or
added in calculating such net income other than gains on asset-securitizations
and loan loss provision charges.
"Effective Date" - Section 6.
"Eligible Asset Pool" shall mean an Asset Pool, to be acquired by a
Portfolio Entity from an Eligible Seller for an all cash purchase price, which
(unless Agent in its discretion otherwise consents in writing) conforms in every
respect with the requirements of Exhibit D to the Agreement.
"Eligible Portfolio Entity" shall mean a partnership, corporation,
trust, or limited liability company or, if not formed in the United States, a
similar foreign organized entity which is a Portfolio Entity of which (i) if
such Portfolio Entity is a US Person, not less than 50% of each class of Equity
Interests is owned directly or indirectly by Borrower or a Primary Obligor, (ii)
no Equity Interests thereof owned directly or indirectly by Borrower or a
Primary Obligor are pledged to any Person other than Agent, for the benefit of
the Lenders, (iii) the Charter Documents and Shareholder Agreements result in
Permitted Shareholder Arrangements, (iv) which has no Indebtedness other than
Indebtedness under an Indebtedness Instrument (a) pursuant to Approved Portfolio
Leverage Arrangements, (b) incurred to pay development expenses related to real
estate, or (c) loaned to it by the owners of the Equity Interests of the
Portfolio Entity to pay Property Improvement Expenses, and (vi) in respect of
which no Disclosure Restriction exists.
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"Eligible Seller" shall mean (i) a seller of an Asset Pool which is
selling an Asset Pool the loans of which were originated in the United States
(or a possession thereof) or (ii) a Non-US Seller which is selling an Asset Pool
the loans of which were originated in Argentina, Brazil, Chile, France, Germany,
Italy, Mexico, the United Kingdom, or Uruguay.
"Environmental Laws" shall mean all laws, common law, statutes, rules
and regulations, and all judgments, decrees, franchises, orders or permits,
issued, promulgated, approved or entered thereunder by any Government Authority
relating to pollution or protection of the environment or occupational health
and safety, including, without limitation, those relating to emissions,
discharges, releases or threatened releases of any waste, pollutant, chemical,
hazardous material, hazardous substance, toxic substance, hazardous waste,
special waste, petroleum or petroleum-derived substance or waste, or any
constituent of any such pollutant material, substance or waste, into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any waste, pollutant, chemical, hazardous material,
hazardous substance, toxic substance, hazardous waste, special waste, petroleum
or petroleum-derived substance or waste.
"Equity Interests" shall mean any equity interests issued by any
Person, including, without limitation, Stock (including, without limitation,
common stock and preferred stock), partnership interests or limited liability
company interests, any other securities convertible into, or exercisable for,
any of the foregoing or other securities of such Person, and options and
warrants or other rights to acquire any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" shall mean any Person which is from time to time a
member of a controlled group or a group under common control with any Loan Party
within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the Code or
Section 4001(a)(14) of ERISA.
"Eurocurrency Interest Determination Date" shall mean the date as of
which LIBOR is determined, which shall be two Business Days prior to the
commencement of a Eurocurrency Interest Period.
"Eurocurrency Interest Period" shall mean, with respect to each
Eurocurrency Loan, the interest period applicable pursuant to Section 3.9(a)
hereof.
"Eurocurrency Loan" shall mean a Loan during any period that it bears
interest determined by reference to LIBOR.
"European Acquisition Entity" shall mean a Foreign Portfolio Entity
which has acquired Assets that originated in Europe.
"Euros" shall mean the single currency of the European Union as
constituted by the Treaty on the European Union.
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"Eurosublimit" shall mean as to each Lender, the amount set forth
opposite its name on Schedule 2.1 under the heading "Eurosublimit" as such
amount may be modified by the provisions of any Transfer Supplement from time to
time entered into and as the same may from time to time be reduced or terminated
pursuant to Section 2.6(c), Section 9 or any other Section of the Agreement. The
total of the Eurosublimits of all Lenders as of the date hereof is $35,000,000.
"Event of Default" shall mean each of the Events of Default defined in
Section 9.
"Exchange Rate" shall mean with respect to Euros on a particular date,
the rate at which Euros may be exchanged into Dollars in London on a spot basis,
as set forth on the display page of the Reuters System applicable to Euros two
Business Days prior to such date as reasonably determined by Agent. In the event
that such rate does not appear on any Reuters display page, the Exchange Rate
with respect to Euros shall be determined by reference to such other publicly
available service for displaying exchange rates as may be agreed upon by Agent
and Borrower or, in the absence of such agreement, such Exchange Rate shall
instead be determined by reference to Agent's spot rate of exchange quoted to
prime banks in London in the London interbank market where its foreign currency
exchange operations in respect of Euros are then being conducted, at or about
noon, local time, two Business Days prior to such date for the purchase of
Dollars with Euros, for delivery on a spot basis; provided, however, that if at
the time of any such determination, for any reason, no such spot rate is being
quoted and no other methods for determining the Exchange Rate can be determined
as set forth above, Agent may use any reasonable method it deems applicable to
determine such rate, and such determination shall be conclusive absent manifest
error.
"Excluded Entities" shall mean each Person listed on Schedule I-(EE).
"Excluded Notes" shall mean those notes listed on Schedule I-(EN).
"Execution Date" shall mean the date on which all parties to this
Agreement shall have signed a copy this Agreement (whether the same or different
copies) and shall have delivered the same to Agent.
"Executive Officer" shall mean the President of Borrower, the CFO of
Borrower or any Senior Vice President of Borrower.
"Existing Agreement" - Recitals.
"Existing Revolving Credit Loans" - Recitals.
"Existing Term Loans" - Recitals.
"Extraordinary Transaction" shall mean (i) a sale, conveyance, lease,
or other transfer by Borrower, any Primary Obligor, or any Related Entity of any
of its Assets (other than any Equity Interest in a Portfolio Entity or REO
Affiliate), not in the ordinary course of its business; (ii) a sale, conveyance,
lease, or other transfer by any Portfolio Entity of a substantial portion of its
Assets for any consideration other than cash; (iii) any sale, conveyance or
other transfer of any Indebtedness owed to a Related Entity by Borrower, a
Primary Obligor or any Affiliate of such
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Related Entity and any sale, conveyance or other transfer of Indebtedness
(regardless of by whom owed) by Borrower or any Primary Obligor other than
pursuant to a Security Document; (iv) the issuance of any Equity Interests by
Borrower, any Primary Obligor or any Related Entity other than the issuance of
Equity Interests by a Related Entity upon formation thereof where the capital
raised by such issuance is used for the acquisition of portfolio Assets; and (v)
receipt of proceeds by Borrower or any Primary Obligor of a settlement or
payments received from litigation, excluding any such proceeds or payments
payable to FC Servicing and/or its Subsidiaries in its capacity as servicer and
collector of debt portfolios.
"Facility Fee" - Section 4.1.
"FC Capital" shall mean FC Capital Corp., a New York corporation.
"FC Commercial" shall mean FirstCity Commercial Corporation, a Texas
corporation.
"FC Europe" shall mean FirstCity Europe Corporation, a Texas
corporation.
"FC Holdings" shall mean FirstCity Holdings Corporation, a Texas
corporation.
"FC Holdings Line of Credit" shall mean, subject to Section 8.23, the
loans made by CFSC to FC Holdings pursuant to the Holdings/CFSC Loan Agreement.
"FC International" shall mean FirstCity International Corporation, a
Texas corporation.
"FC Mexico" shall mean FirstCity Mexico, Inc., a Texas corporation.
"FC Percentage" (x) with respect to any Portfolio Entity or any other
Person shall mean the percentage of outstanding shares of stock, limited
liability company interests or partnership interests (or, in the case of a
non-US entity, similar equity interests) of such Portfolio Entity or Person
owned directly or indirectly by Borrower, (y) with respect to any Asset Pool or
any Asset owned by any Portfolio Entity, the FC Percentage with respect to such
Portfolio Entity, and (z) with respect to any Asset Pool or any Asset owned by
any REO Affiliate, the FC Percentage of the Portfolio Entity which is the parent
of the REO Affiliate.
"FC Servicing" shall mean FirstCity Servicing, Inc., a Texas
corporation.
"Federal Funds Rate" shall mean the rate of interest charged by banks
with excess reserves at a Federal Reserve district bank to banks needing
overnight loans to meet reserve requirements.
"Fee Agreements" shall mean any partnership agreement, management
agreement, consulting agreement, or other agreement pursuant to which Borrower,
any Primary Obligor or any Related Entity is to be paid fees, distributions,
allocations, expense reimbursements, consideration, salary or other compensation
in consideration for providing management, personnel or services, in any form
whatsoever, from any Affiliate or from any other Person. Services to be rendered
under Fee Agreements may include, but not be limited to consulting, collecting
revenues, paying operating expenses not paid directly by others, and providing
clerical and bookkeeping services.
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"Final Asset Pool Acquisition Certificate" with respect to an Asset
Pool at any time, shall mean the Asset Pool Acquisition Certificate with respect
to such Asset Pool or, if such Asset Pool Acquisition Certificate has been
supplemented or revised, the last supplement or revision of such Certificate.
"Final NPV Pool Certificate" with respect to any Asset Pool shall mean
a certificate in a form approved by Agent prior to the first Borrowing Date of
Acquisition Loans under this Agreement which sets forth the anticipated cash
flows and Net Present Value of each Asset included in such Asset Pool and lists
each item of collateral for any Asset in such Asset Pool.
"Financial Statements" shall mean, with respect to any Person, the
statement of financial position (balance sheet) and the statement of earnings,
cash flow, and stockholders' (or partners' or members) equity of such Person.
"First B" shall mean First B Realty L.P., a Texas limited partnership.
"First X" shall mean First X Realty L.P., a Texas limited partnership.
"Fiscal Year" shall mean each January 1 to December 31 period. "Fiscal
Year" followed by a year means the Fiscal Year with its Fiscal Year-End in such
calendar year.
"Foreign Portfolio Entity" shall mean a Portfolio Entity domiciled in
or with a principal place of business in a country other than the United States
or which has acquired Assets originating outside of the United States.
"Funding Date" shall mean each date on which an Acquisition Loan was
made.
"GAAP" shall mean generally accepted accounting principles (as
promulgated by the Financial Accounting Standards Board or any successor entity)
in the United States provided, that when with respect to a Person which is not a
US Person, GAAP shall mean the equivalent in such Person's jurisdiction of
organization.
"Government Authority" shall mean any nation or government, any state
or political subdivision thereof, any agency, authority, regulatory body,
bureau, central bank, commission, department or instrumentality of any of the
foregoing or any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guarantor" shall mean each Primary Obligor and any other Person which
is a guarantor under any Guaranty.
"Guaranty" shall mean any one or more of the guaranties delivered
pursuant to Section 6 and each other guaranty agreement delivered in respect of
the Obligations, as each such agreement may be from time to time amended,
extended, restated, supplemented or otherwise modified.
"Guaranty Equivalent" shall mean any agreement, document or instrument
pursuant to which a Person directly or indirectly guarantees, becomes surety
for, endorses, assumes, agrees to indemnify the obligee of any other Person
against, or otherwise agrees, becomes or remains
-12-
liable (contingently or otherwise) for, such obligation, other than (i) by
endorsements of instruments in the ordinary course of business or (ii)
indemnification of sellers of assets related to breaches of confidential
agreements and obligations related to performance of purchase and sale
agreements in the conduct of the Asset acquisition business. Without limitation,
a Guaranty Equivalent shall be deemed to exist if a Person agrees, becomes or
remains liable (contingently or otherwise), directly or indirectly: (i) to
purchase or assume, or to supply funds for the payment, purchase or satisfaction
of, an obligation; (ii) to make any loan, advance, capital contribution or other
investment in, or a purchase or lease of any property or services from, a
Person; (iii) to maintain the solvency of such Person; (iv) to enable such
Person to meet any other financial condition; (v) to enable such Person to
satisfy any obligation or to make any payment; (vi) to assure the holder of an
obligation against loss; (vii) to purchase or lease property or services from
such Person regardless of the non-delivery of or failure to furnish of such
property or services; or (viii) in respect of any other transaction the effect
of which is to assure the payment or performance (or payment of damages or other
remedy in the event of nonpayment or nonperformance) of any obligation.
"Harbor Debtors" shall mean, collectively, (i) Harbor Financial
Mortgage Corp., (ii) NAF, Inc. (f/k/a New America Financial, Inc.), (iii)
Hamilton Financial Services Corp., (iv) Community National Mortgage Corp., (v)
CalCap, Inc. and (vi) Harbor Financial Group, Inc, and any Subsidiary of such
Person.
"Holdings/CFSC Loan Agreement" - Section 10.33(a).
"Holdings/CFSC Loan Documents" - Section 10.33(b).
"Immaterial Entity" shall mean each Person listed on Schedule 10.37;
provided, that if any such Person engages in business or has assets with an
aggregate fair market value of $100,000 or more, such Person shall cease to
constitute an Immaterial Entity.
"Incidental Equity Interests" shall mean Equity Interests in a Person
acquired by a Portfolio Entity or Related Entity in settlement of collection of
an asset in the portfolio of such Portfolio Entity or Related Entity if such
Equity Interests so acquired (i) constitute Equity Interests in a Person engaged
in a business unrelated to the business of the Consolidated Group and such
Person is not Borrower or an Affiliate of Borrower or a Person in which or in an
Affiliate of which any other Equity Interest is owned by Borrower, any Primary
Obligor or any Related Entity at the time such Equity Interest is so acquired;
and (ii) have a value of less than $500,000.
"Indebtedness" shall mean, with respect to any Person (without
duplication): (i) all obligations on account of money borrowed by, or credit
extended to or on behalf of, or for or on account of deposits with or advances
to, such Person; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments; (iii) all obligations of such Person
for the deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business and on terms customary in
the trade; (iv) all obligations secured by a Lien on property owned by such
Person (whether or not assumed); and all obligations of such Person under
Capitalized Leases (without regard to any limitation of the rights and remedies
of the holder of such Lien or the lessor under such Capitalized Lease to
repossession or sale of such
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property); (v) the face amount of all letters of credit issued for the account
of such Person and, without duplication, the unreimbursed amount of all drafts
drawn thereunder, and all other obligations of such Person associated with such
letters of credit or draws thereon; (vi) all obligations of such Person in
respect of acceptances or similar obligations issued for the account of such
Person; (vii) all obligations of such Person under a project financing or
similar arrangement; (viii) all obligations of such Person under any interest
rate or currency protection agreement, interest rate or currency future,
interest rate or currency option, interest rate or currency swap or cap or other
interest rate or currency hedge agreement; and (ix) all obligations and
liabilities with respect to unfunded vested benefits under any "employee benefit
plan" or with respect to withdrawal liabilities incurred under ERISA by Borrower
or any ERISA Affiliate to a "multiemployer plan", as such terms are defined
under the Employee Retirement Income Security Act of 1974.
"Indebtedness Instrument" shall mean any note, mortgage, indenture,
chattel mortgage, deed of trust, loan agreement, hypothecation agreement,
Guaranty Equivalent, pledge agreement, security agreement, financing statement
or other document, instrument or agreement evidencing or securing the payment of
or otherwise relating to the borrowing of monies. Indebtedness Instruments shall
include, but not be limited to the Loan Documents.
"Indemnified Party" - Section 12.3.
"Interest Coverage" shall mean, for any period, total interest expense
(including that attributable to Capital Leases under GAAP) of the Consolidated
Group on a consolidated basis determined in accordance with GAAP.
"IRS" shall mean the Internal Revenue Service of the United States.
"Issuance Request" - Section 2A.1.
"Issuer" shall mean the Bank of Scotland in its capacity as a Lender
hereunder and not in its capacity as Agent. References to the Lenders in this
Agreement and the other Loan Documents (when used to refer to Bank of Scotland)
shall (without duplication) include such Lender as Issuer.
"Latin American Acquisition Entity" shall mean a Foreign Portfolio
Entity which has acquired Assets that originated in a Latin American country.
"LC Obligations" shall mean the aggregate amount (without duplication)
of all LC Outstandings, Deemed Disbursements and Reimbursement Obligations.
"LC Outstandings" shall mean the aggregate Stated Amount (as reduced
from time to time) of all Letters of Credit issued hereunder and outstanding at
any point in time.
"Legal Requirements" shall mean, with respect to any Person, all laws,
common law, statutes, rules and regulations of any Government Authority to which
such Person or any of its assets is subject or any judgment, decree, franchise,
order or permit of any Government Authority applicable to such Person or any of
its assets.
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"Lender Assignee" - Section 12.4(a).
"Lenders" - introductory paragraph.
"Letter of Credit" shall mean a letter of credit issued pursuant to
Section 2A.1(a).
"Letter of Credit (Acquisition)" shall mean a Letter of Credit which
has been issued for the purposes set forth in clause (ii) of Section 2A.1(c).
"Letter of Credit Availability" shall mean, on any day, the Letter of
Credit Commitment on such day less the aggregate amount of LC Obligations less
the aggregate amount of all pending Issuance Requests.
"Letter of Credit Commitment" shall mean $15,000,000 (as the same may
from time to time be reduced pursuant to Section 2.6) less the amount, if any,
by which (A) the aggregate outstanding principal amount of Loans exceeds (B) the
amount equal to (x) the Total Loan Commitment less (y) $15,000,000 (or such
lesser amount that the fixed dollar component of this definition of "Letter of
Credit Commitment" has been reduced to pursuant to Section 2.6).
"Letter of Credit Fee" - Section 2A.3(a).
"LIBOR" shall mean, for each Eurocurrency Interest Period, (x) the per
annum rate of interest at which U.S. Dollar or Euro deposits in the amount of
the outstanding principal balance of the Loan are or would be offered for such
Eurocurrency Interest Period in the London interbank market at 11:00 A.M. London
time two Business Days prior to the start of such Eurocurrency Interest Period
as published by the British Bankers' Association as the "Interest Settlement
Rate" for such period, divided by (y) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including without limitation
any marginal, emergency, supplemental, special or other reserves required by
applicable law) applicable to any member bank of the Federal Reserve System in
the United States in respect of Eurocurrency funding or liabilities.
"Lien" shall mean any mortgage, deed of trust, security deed, pledge,
security interest, encumbrance, lien or other charge of any kind or any other
agreement or arrangement having the effect of conferring security (including any
agreement to give any of the foregoing, any assignment or lease in the nature
thereof, and any conditional sale or other title retention agreement), any lien
arising by operation of law, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction (or
any similar or comparable law of any jurisdiction that has not enacted the
Uniform Commercial Code).
"Loan(s)" - Section 2.1(a).
"Loan Commitment" shall mean as to each Lender, the amount set forth
opposite its name on Schedule 2.1 under the heading "Loan Commitment" as such
amount may be modified by the provisions of any Transfer Supplement from time to
time entered into and as the same may from time to time be reduced or terminated
pursuant to Section 2.8(b) , Section 9 or any other Section of the Agreement.
-15-
"Loan Documents" shall mean, individually and collectively, this
Agreement, the Notes, the Letters of Credit, the Guaranties, the Pledge
Agreements, the Security Agreements, the other Security Documents and all other
instruments and agreements heretofore or from time to time hereafter executed by
or on behalf of Borrower, any Primary Obligor, any Related Entity or any other
Loan Party in connection herewith or therewith, in each case as amended,
extended, restated, supplemented or otherwise modified from time to time.
Without limiting the generality of the foregoing, each amendment to (or
constituting part of) this Agreement or any other Loan Document and each
instrument and agreement (including, without limitation, consents or waivers,
but excluding any amendment, consent or waiver executed prior to the Effective
Date) executed in connection with any Loan Document shall be deemed to be a Loan
Document for all purposes of the Agreement and the other Loan Documents.
"Loan Party" shall mean, individually and collectively, Borrower and
each Primary Obligor and each other Person which has executed any Security
Document as a pledgor or grantor of collateral thereunder.
"Loans Outstandings" as of any particular date shall mean the aggregate
outstanding principal amount of Loans as of such date in Dollars, after
converting all Loans outstanding in Euros to the Dollar Equivalent, based upon
the Exchange Rate as determined on the immediately preceding Reset Date.
"LTV Ratio" shall mean as of any date of determination the ratio of
Total Outstandings to the Borrowing Base as of such date.
"Majority Lenders" as of a particular date shall mean the holders of at
least 51% of the aggregate unpaid principal amount of all Loans at the
particular time outstanding or, if no Loans are then outstanding, Lenders whose
Commitments aggregate at least 51% of the Total Commitment.
"Management Letter" shall mean any correspondence or report submitted
by the Auditors to a Loan Party's chief executive officer, its Board of
Directors or any committee thereof containing comments and suggestions
concerning a Loan Party's accounting procedures and systems based upon the work
done by the Auditors during their annual or other audit.
"Material Adverse Change" shall mean a material adverse change in (i)
the business, properties, operations, prospects or condition (financial or
otherwise) of Borrower, the Primary Obligors, Portfolio Entities and the Related
Entities, taken as a whole or (ii) the ability of Borrower or any other Loan
Party to perform, or of Agent to enforce, any of the Obligations.
"Material Adverse Effect" shall mean an effect that would result in a
Material Adverse Change.
"Material Portfolio Entity" shall mean each Portfolio Entity, each
Person listed on Schedule I-(MPE) and each other Portfolio Entity (other than a
Foreign Portfolio Entity) with a Net Present Equity Value of $5,000,000 or more.
Each such Person, which at any time constitutes a Material Portfolio Entity
shall continue to constitute a Material Portfolio Entity until the time (if any)
when Borrower sends to Agent written notice (a "Redesignation Notice") executed
by an Executive Officer of Borrower certifying, as to such Person that the Net
Present
-16-
Equity Value of such Person (the "Subject MPE") is below $5,000,000 and has been
below $5,000,000 for the preceding period of 90 consecutive days or more, and
requesting that such Subject MPE no longer constitute a Material Portfolio
Entity. Provided that Borrower provides such additional information, if any,
that Agent may request with respect to such Subject MPE and that Agent has not
given Borrower notice that it disputes such redesignation of such Subject MPE
within 30 days after receiving such Redesignation Notice or, if later, within 30
days after Agent received additional information (if any) requested by it with
respect to such requested redesignation, the Subject MPE shall cease to
constitute a Material Portfolio Entity (until, the time, if any, that such
Subject MPE again satisfies the criteria applicable to Material Portfolio
Entities).
"Maturity Date" shall mean November 12, 2008.
"MCS" shall mean MCS et Associes S.A.
"Minn Servicing" shall mean FirstCity Serving of Minnesota, Inc.
"Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA and to which
any Loan Party or any ERISA Affiliate of either Borrower contributes or has been
obligated to contribute.
"Net Collections" with respect to a Portfolio Entity for any applicable
period shall mean the gross aggregate amount received during such period by the
Portfolio Entity on account of the Assets of the Portfolio Entity (including, in
addition, amounts received by any REO Affiliate of such Portfolio Entity) or
collateral therefor, and including amounts received on account of such Assets
prior to the commencement of such period which were paid to or for the benefit
of such Portfolio Entity during such period, reduced by (a) amounts which were
paid directly to the Permitted Portfolio Company Creditor of such Portfolio
Entity under an Approved Portfolio Leverage Arrangement or amounts which were
remitted to such Creditor, in either case pursuant to the requirements of such
Approved Portfolio Leverage Arrangement, which, in any such case, have not been
released by such Creditor to (or for the benefit of) such Portfolio Entity
(and/or any REO Affiliate thereof), (b) servicing fees, custodial fees and
lockbox bank fees related to such Assets paid by such Portfolio Entity during
such period, (c) escrow payments or deposits made by any obligor related to an
Asset, (d) reasonable accounting and legal fees paid by the Portfolio Entity
related to the operation of the Portfolio Entity, and (e) Portfolio Protection
Expenses related to the Assets of the Portfolio Entity or its related REO
Affiliate.
"Net Present Equity Value" shall mean, with respect to any Person, the
amount determined by multiplying (x) the FC Percentage in respect of such Person
and (y) the amount by which (A) the Net Present Value of the Assets of such
Person exceeds (B) the sum of (i) outstanding Indebtedness of such Person under
any Approved Portfolio Leverage Arrangements and (ii) indebtedness for money
borrowed by, or for any monetary judgment rendered against, such Person; in the
case of the determination of the Net Present Equity Value of an REO Affiliate
the outstanding Indebtedness of the REO Owner under any Approved Portfolio
Leverage Arrangements shall be allocated proportionately between the REO
Affiliate and the REO Owner.
-17-
"Net Present Value" as to any Asset or Asset Pool, the net present
value of all reasonably projected future collections from such Asset(s) reduced
by reasonable and necessary collection expenses and discounted using the "ASR
NPV" discount rate assignments utilized by the Portfolio Entity in making such
determinations for each Asset as set forth on Exhibit F to the Agreement, as
adjusted from time to time with the approval of Agent; all of which
determinations must be reasonably satisfactory to Agent.
"Non-Default Voluntary Custodial Arrangement" shall mean an arrangement
to perfect a lien in favor of Agent or the holder of a different Permitted Lien,
in each case, on certain specified Assets of a Person entered into voluntarily
by a Portfolio Entity or Related Entity at a time when no Default or Event of
Default has occurred and is continuing.
"Non-US Seller" shall mean a Person selling or proposing to sell an
Asset Pool to a Portfolio Entity, which Asset Pool contains Assets which
originated outside of the United States.
"Notes" - Section 2.3.
"Notice of Borrowing" shall mean notice of borrowing providing the
information described in Section 2.2(a) or (b), as applicable, and such other
information as Agent shall require, in the form attached to this Agreement as
Exhibit H to the Loan Agreement.
"Obligations" shall mean (x) with respect to each Loan Party other than
Borrower, all obligations of such Loan Party with respect to the repayment or
performance of any obligations (monetary or otherwise) of Borrower arising under
or in connection with this Agreement, the Notes or any other Loan Document, and
(y) with respect to Borrower, all obligations of Borrower with respect to the
repayment or performance of obligations (monetary or otherwise) arising under or
in connection with this Agreement, Letters of Credit, the Notes or any other
Loan Document.
"Obligor Funding Obligations" shall mean obligations (whether pending,
contingent or otherwise) of a Portfolio Entity to make one or more advances to a
Person which is the obligor of one or more outstanding loans the rights to which
were acquired by such Portfolio Entity pursuant to a purchase by such Portfolio
Entity of a portfolio of loans made by one or more Persons who are not
Affiliates or Associates of Borrower or of such Portfolio Entity.
Other Indebtedness Instrument Unmatured Default - Section 7.1(f).
"Other Laws" - Section 3.4.
"Parent" shall mean any Person now or at any time hereafter owning or
controlling (alone or with Borrower, any Subsidiary and/or any other Person) at
least a majority of the issued and outstanding Stock or other ownership interest
of Borrower or any Subsidiary. For purposes of this definition, "control" shall
have the same meaning ascribed to such term in the definition of "Affiliate".
Notwithstanding the forgoing, no Person shall be a Parent which is not a Parent
of Borrower or a 51% or more owned subsidiary, directly or indirectly, of
Borrower.
"Past-Due Rate" - Section 3.3.
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"Payment Date" - Section 5.3.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA.
"Pension Plan" shall mean any employee pension benefit plan subject to
Title IV of ERISA and maintained by any Loan Party or any ERISA Affiliate of any
Loan Party or any such plan to which any Loan Party or any ERISA Affiliate is or
has been required to contribute on behalf of any of its employees, other than a
Multiemployer Plan.
"Permitted Liens" shall mean (i) any liens created pursuant to the Loan
Documents in favor of Agent for the benefit of Lenders and Agent to secure the
Obligations; (ii) liens for Charges which are not yet due and payable, or claims
and unfunded liabilities under ERISA not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently pursued; (iii)
liens arising in connection with worker's compensation, unemployment insurance,
old age pensions and social security benefits which are not overdue or are being
contested in good faith by appropriate proceedings diligently pursued, provided
that in the case of any such contest any proceedings commenced for the
enforcement of such lien shall have been duly suspended and such provision for
the payment of such lien has been made on the books of Borrower (or the
applicable Affiliate) as may be required by GAAP; (iv) liens incurred in the
ordinary course of business to secure the performance of statutory obligations
arising in connection with progress payments or advance payments due under
contracts with the United States Government or any agency thereof entered into
in the ordinary course of business; (v) any liens securing Indebtedness of
Borrower (or any Affiliate) to any Persons in an amount not greater than
$250,000 for each such Person, provided the aggregate amount of Indebtedness
secured by all such Liens shall not exceed $500,000; (vi) Charges relating to
Assets of First B and First X; (vii) as to any Affiliate, other than Borrower, a
Primary Obligor or a Portfolio Entity, purchase money liens securing permitted
indebtedness incurred in connection with the acquisition of Assets and other
indebtedness incurred under the credit agreement under which such permitted
indebtedness to acquire such Assets was incurred so long as such liens encumber
only the Assets acquired, (viii) as to any Affiliate, other than Borrower or a
Primary Obligor or a Portfolio Entity, liens relating to permitted Indebtedness
incurred in connection with the warehousing of Assets or the securitization of
Assets, so long as such liens encumber only the Assets warehoused or
securitized; (ix) those liens disclosed on Schedule (PL); (x) those liens
granted to CFSC in the Shared Collateral pursuant to the Holdings/CFSC Loan
Documents (as in effect on the date of the execution and delivery of the
Holdings/CFSC Loan Documents); (xi) liens on Assets of a Portfolio Entity in
favor of the Person providing financing under an Approved Portfolio Leverage
Arrangement in respect of the acquisition of Assets acquired pursuant to such
Approved Portfolio Leverage Arrangement to the extent such liens are required
by, and secure only obligations under, such Approved Portfolio Leverage
Arrangement; and (xii) liens on real property of a Portfolio Entity or an REO
Affiliate in favor of a Person providing financing of development expenses
related to such real property which is permitted under Section 8.3(x).
"Permitted Portfolio Company Creditor" shall mean those creditors of a
Portfolio Entity which have provided loans pursuant to Approved Portfolio
Leveraged Arrangement.
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"Permitted Restrictions" on the payment of dividends by a Person shall
mean provisions (i) of an Approved Portfolio Leverage Arrangement, or (ii) of a
loan agreement, as in effect when first entered into, to which such Person is a
party as borrower which prohibit such Person from paying dividends for either of
the following reasons:
(x) the funds restricted from being distributed are required to satisfy
a leverage or required reserve amount covenant (but only if such covenant would
not reasonably be expected to significantly impair such Person's ability to pay
dividends if anticipated cash flows are received as and when anticipated and in
approximately the amounts anticipated); and
(y) such dividends are restricted when there exists an event of default
of a customary type to be found in such agreements and that also permits the
relevant lender to accelerate the maturity of indebtedness outstanding under
such agreement.
"Permitted Shareholder Agreement" shall mean a Shareholder Agreement
with terms permitted by Exhibit E.
"Permitted Shareholder Arrangements" shall mean arrangements which
would arise from a Permitted Shareholder Agreement.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, a trust, an unincorporated association, a joint venture or
other entity or a government or an agency or political subdivision thereof.
"Plan" shall mean any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) maintained by any Loan Party or any ERISA Affiliate or
any such plan to which any Loan Party or any ERISA Affiliate is or has been
required to contribute on behalf of any of its employees, other than a
Multiemployer Plan.
"Pledge Agreement" means each of (or, as the context requires, any of)
Borrower Pledge Agreement, Subsidiary Pledge Agreement, Subsidiary Collateral
Assignment and any other pledge agreement made for the benefit of the Lenders.
"Pledged Entity" shall mean any Person any Equity Interest in which has
been pledged to Agent to secure the Obligations.
"Pledged Notes" shall mean those certain promissory notes listed on
Schedule I-(PN) and any other promissory notes which have been delivered to
Agent and in which the Collateral Agent holds a perfected security interest of
the Requisite Priority pursuant to a Pledge Agreement to which the Collateral
Agent is party.
"Portfolio Entity" shall mean any entity (other than an REO Affiliate
or an Immaterial Entity) in which Borrower or a Primary Obligor is directly or
indirectly an equity owner and which was formed for the purpose of acquiring
Asset Pools, and shall also include Bosque Leasing, L.P. (which is owned by
Bosque Asset Corp. and Bosque Gp Corp.) and FirstStreet Investment LLC (which is
owned by FirstStreet Investment Corporation, WAMCO III, Ltd. and WAMCO IX,
Ltd.).
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"Portfolio Entity-50%" shall mean any Portfolio Entity of which
Borrower or any Subsidiary directly or indirectly owns exactly 50% of the voting
interests or any class of other Equity Interests of such Portfolio Entity.
"Portfolio Entity Proceeds" for any Portfolio Entity in respect of any
Payment Date shall mean the sum of (I) the FC Percentage of the Net Collections,
plus (II) any proceeds from a sale or transfer of any Equity Interests issued by
such Portfolio Entity to FC Commercial or other Wholly Owned Subsidiary, as
applicable, plus (III) the FC Percentage of any proceeds of a sale or transfer
of any Equity Interests issued by any REO Affiliate related to such Portfolio
Entity; (it being understood that any reference in this definition to any sale
or transfer of Equity Interests issued by any Portfolio Entity or REO Affiliate
shall not be construed to affect or modify any prohibition thereof or
requirement for the obtaining of any consent relating thereto set forth
elsewhere in this Agreement).
"Portfolio Protection Expense Report" - Section 7.2(f).
"Portfolio Protection Expenses" with respect to a Portfolio Entity
shall mean expenses or other amounts which (w) such Portfolio Entity has
reasonably determined are necessary to advance to one of its REO Affiliates for
reasonable and necessary expenses to preserve or protect real property owned by
such REO Affiliate, or (x) constitute reasonable and customary, necessary
leasing commissions, reasonable and necessary tenant improvement costs paid by
such Portfolio Entity or REO Affiliate pursuant to a written lease or capital
improvements to such property required in order for the property to be so
leased, or (y) such Portfolio Entity has reasonably determined are necessary to
protect other Assets securing indebtedness owed to such Portfolio Entity, or (z)
constitute Obligor Funding Obligations, such expenses or other amounts to
constitute Portfolio Protection Expenses when amounts therefor are retained by
such Portfolio Entity or REO Affiliate or, if earlier, when such expenses or
other amounts are paid.
"Primary Obligors" shall mean, collectively, (i) FC Commercial; (ii) FC
Servicing; (iii) FC Holdings; (iv) FC International; (v) FC Mexico; and (vi) FC
Europe.
"Purchasing Lenders" - Section 12.4(c).
"Rate of Borrowing" - Section 3.5.
"Records" shall mean all books, records, computer records, computer
software, ledger cards, programs and other computer materials, customer and
supplier lists, invoices, orders and other property and general intangibles at
any time evidencing or relating to Assets.
"Recoveries" shall mean any funds, or substitution of receipts or
collateral, received by the Lenders or Agent (a) from the sale, collection or
other disposition of Collateral pursuant to the Security Documents, or (b) from
any distribution to any of the Lenders or Agent, or abandonment to any of them,
or substitute Liens or payment given to any of them pursuant to events or
proceedings of the nature referred to in Section 9.8 of the Agreement, or
otherwise, which distribution or abandonment pertains to the Collateral.
"Regulatory Change" means, relative to any Lender or Agent, any change
after the Effective Date in any (or the adoption after the Effective Date of any
new):
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(a) United States Federal, state or local law or
foreign law applicable to Agent or such Lender; or
(b) regulation, interpretation, directive, or request
(whether or not having the force of law) applying to Agent or
any Lender of any Government Authority charged with the
interpretation or administration of any law referred to in
clause (a) or of any fiscal, monetary, central bank or other
authority having jurisdiction over Agent or such Lender.
"Reimbursement Obligation" Section 2A.4.
"Related Asset Pool" with respect to any Acquisition Loan shall mean
the Asset Pool specified in the Notice of Borrowing with respect to such
Acquisition Loan.
"Related Entity" shall mean each entity identified on Schedule I-(RE),
as well as, subject to the final sentence of this definition, any other entity,
other than a Primary Obligor, Portfolio Entity, or Immaterial Entity, any Equity
Interest of which is owned by Borrower, any Primary Obligor, any Portfolio
Entity, any Immaterial Entity or any other Related Entity. Notwithstanding the
foregoing, no Immaterial Entity or any Harbor Debtor shall constitute a Related
Entity.
"REO Affiliate" shall mean a Person, other than Borrower, a Primary
Obligor or a Material Portfolio Entity, which is a corporation, limited
liability company or partnership 100% of the Equity Interests in which are owned
by a Portfolio Entity (the "REO Owner") (or, in the case of such an entity which
is a limited partnership, 100% of the limited partnership interest of which is
owned by the REO Owner and 100% of the interest in the general partner is owned
by the REO Owner), which Person has been established solely to acquire, from the
REO Owner or a seller from which the Portfolio Entity is acquiring other Assets,
title to (and owns no Assets other than) parcels of real property (or distressed
notes secured by real property for purposes of obtaining title to real property
securing such loans) in exchange for, with respect to each such parcel, a
promissory note in a principal amount no less than 96% of the value (as
reasonably determined by the REO Owner and the REO Affiliate) of the property;
provided that no Person shall constitute or continue to constitute an REO
Affiliate if (A) such Person acquires property from any Person other than (x)
the REO Owner or a Person from whom the REO Owner is acquiring other Assets, or
(y) in the case where it has acquired a note from the REO Owner solely for
purposes of acquiring title to the real property securing such note, the obligor
of such note; or (B) engages in any business other than business incidental to
owning and selling the parcels of real property so acquired by such REO
Affiliate.
"REO Excess Value Adjustment" shall mean the amount, if any, by which
the Net Present Equity Value of all REO Affiliates exceeds 25% of the Aggregate
Net Present Equity Value.
"REO Post-25% Time" shall mean any time on or after the Net Present
Equity Value of all REO Affiliates exceeds 25% of the Aggregate Net Present
Equity Value, until two Business Days after Borrower gives Agent written notice
along with evidence satisfactory to Agent that
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such Net Present Equity Value of Assets of REO Affiliates no longer so exceeds
25 % of the Aggregate Net Present Equity Value.
"Reportable Event" shall mean a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder.
"Requisite Consents" - Section 6.6.
"Requisite Priority" shall mean (x) except with respect to the Shared
Collateral and except as set forth in the Intercreditor Agreement, first
priority and (y) with respect to Shared Collateral second priority, subject only
to the liens of CFSC to which Agent and the Lenders are subordinate pursuant to
the CFSC Intercreditor Agreement.
"Reset Date" - Section 2.7(a).
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning ascribed to that term in the
Securities Act of 1934.
"Securities Laws" shall mean all applicable Federal and state
securities laws and regulations promulgated pursuant thereto.
"Security Agreements" shall mean any one or more of the security
agreements delivered pursuant to Section 6C and each other security agreement
heretofore or from time to time hereafter delivered in respect of the
Obligations, as each such agreement may be from time to time amended, extended,
restated, supplemented or otherwise modified.
"Security Documents" shall be the collective reference to (x) each of
the agreements referred to in Section 6 (or on the document checklist referred
to therein) pursuant to which Collateral is or was granted or is or was intended
to be granted, directly or indirectly, to Agent on behalf of the Lenders, (y)
each agreement entered into after the Execution Date pursuant to which any
collateral is or was granted or is or was intended to be granted, directly or
indirectly, to Agent on behalf of the Lenders and any other Person (if any)
sharing an interest in such collateral, and (z) all amendments, supplements or
other modifications to such agreements or replacements thereof. Without limiting
the generality of the foregoing, each Security Agreement, each Pledge Agreement,
each cash collateral agreement securing any Obligation, each depositary bank
acknowledgement relating to any bank account of any Loan Party, the CFSC
Guaranty Subordination Agreement, each other agreement pursuant to which any
obligations are subordinated to any of the Obligations (whether pursuant to a
subordination agreement, subordination provisions in any other agreement or
instrument or otherwise), each Pledged Note, and each security agreement
securing the obligations under any Pledged Note shall constitute Security
Documents. However, as to a Loan Party, the term "Security Document" shall not
include any such document as to which such Loan Party is released from all its
obligations thereunder by Agent or the Lenders in accordance with the terms
hereof or thereof.
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"Servicing Restricted Funds" means funds received by FC Servicing or
Minn Servicing in the ordinary course of such company's servicing business for
the account of Persons other than FC Servicing, Minn Servicing, Borrower or any
other Subsidiary of Borrower.
"Shared Collateral" - Section 10.33(c).
"Shareholder Agreement" shall mean any agreement (other than a
certificate of incorporation, customary by-laws, a limited liability company
formation certificate or a partnership formation certificate but including
resolutions of any Person owning any Equity Interests in such Person) among any
holders of Equity Interests issued by Borrower, any Primary Obligor or any
Related Entity relating to the management of any such Person or any of the
rights or privileges of any holders of Equity Interests of any such Person.
"Stated Amount" shall mean, as to each Letter of Credit, the maximum
amount payable thereunder to the beneficiary thereof upon compliance with the
terms and conditions stated therein, as such amount may be reduced from time to
time.
"Stated Expiry Date" - Section 2A.1.
"Stock" shall mean all shares and other Equity Interests issued by a
corporation, whether voting or non-voting, including but not limited to, common
stock, warrants, preferred stock, convertible debentures, and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
or all of the foregoing.
"Subject Debt Instrument" - Section 7.15(b).
"Subject Portfolio Entity" - Section 6B.1.
"Subsidiary" of any Person (the "First Person") shall mean any other
Person more than 50% of the indicia of equity rights (whether capital stock or
otherwise) of which is at the time owned, directly or indirectly by the First
Person and/or by one or more of such First Person's Subsidiaries other than the
Harbor Debtors and Immaterial Related Entities. Unless otherwise indicated,
references to Subsidiaries shall refer to Subsidiaries of Borrower.
"Subsidiary Collateral Assignment" shall mean the Amended and Restated
Partnership Interest and Limited Liability Company Interest Collateral
Assignment Agreement made by certain Primary Obligors in favor of the Collateral
Agent dated as of the date hereof delivered pursuant to Section 6 and each other
collateral assignment from time to time hereafter delivered by one or more
Primary Obligors or other Loan Parties in respect of the Obligations., as each
such agreement may be from time to time amended, extended, restated,
supplemented or otherwise modified.
"Subsidiary Pledge Agreement" shall mean the Amended and Restated
Pledge Agreement (Stock and Debt) made by certain Primary Obligors in favor of
the Collateral Agent dated as of the date hereof delivered pursuant to Section 6
and each other pledge agreement from time to time hereafter delivered by one or
more Primary Obligors or other Loan Parties in respect of the Obligations, as
each such agreement may be from time to time amended, extended,
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restated, supplemented or otherwise modified (including, without limitation, by
the addition of additional parties thereto).
"Summary Waterfall Certificate" shall mean a certificate in a form
approved by Agent which sets forth summary information as to all Waterfall
Certificates being delivered on or about the same day as such certificate
"Tangible Net Worth", at any time, shall mean the total of
shareholders' equity (including capital stock (both common and preferred),
additional paid-in capital and retained earnings after deducting treasury stock
of a Person), less the sum of the total amount of any intangible Assets, which,
for purposes of this definition, shall include, without limitation, general
intangibles and, if applicable, all accounts receivable not incurred in the
ordinary course of business from any Affiliate of such Person or any loans to
directors or officers of any Affiliate of such Person, unamortized deferred
charges and good will, all as determined in accordance with GAAP.
"Taxes" - Section 5.4.
"Termination Event" shall mean (i) a Reportable Event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice to the PBGC
under such regulations), or (ii) the withdrawal of any Loan Party or any of its
ERISA Affiliates from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the
issuance of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of ERISA, or (iv)
receipt by any Loan Party or any ERISA Affiliate of notice of the PBGC's
intention to terminate any Pension Plan or to have a trustee or the PBGC
appointed to administer any Pension Plan or (v) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan.
"Third Party Investor" shall mean any Person other than Borrower or a
Wholly-Owned Subsidiary that has made a capital contribution to any Portfolio
Entity.
"Total Loan Commitment" shall mean the sum of the Loan Commitments of
all of the Lenders, as from time to time reduced pursuant to Section 2.6, which
as of the date of this Agreement shall be $96,000,000.
"Total Outstandings" as of a particular date shall mean the sum of (i)
Loans Outstandings on such date and (ii) LC Obligations on such date.
"Transfer" shall mean any sale, conveyance, lease or other disposition
(and "Transferred", "Transferring" and other variations thereof shall have
correlative meanings).
"Transfer Supplement" - Section 12.4(c).
"UCC" - Section 10.30.
"United States", "US" or "U.S." shall mean the United States of
America.
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"Unutilized Loan Commitment" shall mean at any time, as to each Lender,
the amount by which the Loan Commitment of such Lender exceeds (i) the aggregate
outstanding principal amount of Loans made by such Lender, plus (ii) such
Lender's pro rata share of LC Outstandings (based upon the percentage that such
Lender's Loan Commitment represents of the Total Loan Commitment).
"Upfront Fee" - Section 4.4.
"US Person" shall mean a Person formed under the laws of the United
States, any of the 50 states or the District of Columbia or any territory of the
United States.
"Utilization Fee" - Section 4.3.
"Waterfall Certificate" in respect of any Payment Date shall mean a
completed certificate in a form approved by Agent which sets forth information
with respect to Net Collections of an Asset Pool during the preceding period to
which such certificate is applicable and such other information as Agent shall
require.
"Wholly-Owned Subsidiary" shall mean any Subsidiary of Borrower of
which all of the outstanding shares of stock, limited liability company
interests or partnership interests (as the case may be) are owned by Borrower
and/or one or more wholly owned direct or indirect Subsidiaries of Borrower.
"Working Capital Loans" - Section 2.1(b).
"Working Capital Sublimit" shall mean $20,000,000.
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