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EXHIBIT 10.21
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT dated as of December 29, 1995
(this "Agreement") is between FIRSTCITY FINANCIAL CORPORATION, a Delaware
corporation (the "Company") and CARGILL FINANCIAL SERVICES CORPORATION, a
Delaware corporation (the "Lender").
The Company has requested that the Lender provide the Company
with a revolving credit facility, pursuant to which the Lender will commit to
make revolving credit loans of up to $25,000,000.00 to the Company to finance
working capital expenditures and certain capital investments of the Company
made in the ordinary course of its business.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants set forth herein, the Company and the Lender agree as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Acquisition Entity" means a limited partnership, limited
liability company or corporation formed by the Company, a Subsidiary
of the Company or an Affiliate of the Company (and possibly certain
other investors), for the purpose of acquiring one or more portfolios
of distressed assets in its ordinary course of business; provided, the
Company, Subsidiary or Affiliate of the Company, as the case may be,
does not own more than fifty percent (50%) of such entity. The
Acquisition Entities on the Effective Date are listed on Schedule 1.01
hereof.
"Advance" means an advance pursuant to a Notice of Advance
comprised of a single Type of Loan from the Lender (or resulting from
a conversion or conversions on the same date having, in the case of
Eurodollar Rate Advances, the same Interest Period (except as
otherwise provided in this Agreement)).
"Advance Date" means, with respect to each Advance, the
Business Day upon which the proceeds of such Advance are to be made
available to the Company.
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"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including all directors and
officers of such Person), controlled by, or under direct or indirect
common control with such Person, and any other Person in which such
Person's direct or indirect equity interest is 10% or more of the
total outstanding equity interests of such Person.
"Agreement" has the meaning specified in the introduction to
this Agreement.
"Alternate Base Rate" means, for any date, the lesser of (a)
the highest "Prime Rate" quoted in the Southwest Edition of The Wall
Street Journal plus a margin (determined by the Lender in its sole
discretion) which most closely approximates the most recent Eurodollar
Rate plus the applicable Margin and (b) the Highest Lawful Rate.
"Alternate Base Rate Advance" means any Advance bearing
interest at a rate determined by reference to the Alternate Base Rate
in accordance with the provisions of Article II.
"Assignment and Acceptance" has the meaning specified in
Section 9.10 (c).
"Bankruptcy Code" has the meaning specified in Section
8.01(f).
"Board" means the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of Minnesota) on which
banks are open for business in Minnetonka, Minnesota.
"Capitalized Lease Obligations" means all lease or rental
obligations which, pursuant to GAAP, are capitalized for balance sheet
purposes.
"Change of Control" means any of (i) the failure of the former
shareholders of J-Hawk Corporation (predecessor in interest to the
Company) to hold at least thirty percent (30%) of the outstanding
voting capital stock of the Company, (ii) the failure of any one of
Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxx Xxxxxxxxxx, Xxxx Xxxxxx or
Xxxxx X. XxxXxxxxx (or anyone approved by the Lender in writing in
lieu of any of the above Persons) to be a member of the Board of
Directors of the Company at any time, (iii) all or substantially all
of the assets of the Company are sold in a single transaction or
series of related transactions to any Persons or (iv) the Company
merges or consolidates with or into any other Person.
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"Class A Certificate" means that certain "Class A Certificate"
issued by the FC Liquidating Trust to the Company which requires
payments to the Company in order to provide the Company with the funds
required to pay (a) the Senior Subordinated Notes (i.e., the Senior
Subordinated Certificate Payments), (b) Special Preferred Stock
Payments and (c) certain other payments.
"Code" means Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
"Commitment" means $25,000,000.00.
"Commitment Fee" has the meaning specified in Section 3.01(a).
"Company" has the meaning specified in the introduction to
this Agreement.
"Credit Event" means the making of any Advance or the
continuation of any Advance as a Eurodollar Rate Advance.
"Default" means the occurrence of any event which with the
giving of notice or the passage of time or both could become an Event
of Default.
"Default Rate" means the lesser of (i) the Highest Lawful Rate
and (ii) the Eurodollar Rate plus ten percent (10%) per annum.
"Effective Date" means the date on which all conditions to
make an Advance set forth in Article IV are first met or waived in
accordance with Section 9.01 hereof.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having
total assets in excess of $1,000,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or any successor
organization, or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000; provided that such
bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the
Organization for Economic Cooperation and Development or any successor
organization; (c) the central bank of any country which is a member of
the Organization for Economic Cooperation and Development or any
successor organization; and (d) any other bank or similar financial
institution approved by the Lender.
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"Environmental Laws" means federal, state or local laws, rules
or regulations, and any judicial, arbitral or administrative
interpretations thereof, including any judicial, arbitral or
administrative order, judgment, permit, approval, decision or
determination pertaining to conservation or protection of the
environment in effect at the time in question, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Federal Water Pollution Control Act, the
Occupational Safety and Health Act, the Resource Conservation and
Recovery Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Superfund Amendment and Reauthorization Act of 1986,
the Hazardous Materials Transportation Act, and comparable state and
local laws, and other environmental conservation and protection laws.
"ERISA" means the Employee Retirement Income Security Act of
1974 and the regulations promulgated thereunder.
"ERISA Affiliate" means (a) any trade or business (whether or
not incorporated) which is either a member of the same "controlled
group" or under "common control," within the meaning of Section 414 of
the Code and the regulations thereunder, with the Company and (b) any
Subsidiary of the Company.
"Eurodollar Rate" means the London interbank offered rate per
annum for a period equal to the Interest Period which appears on the
Tele Rate Screen "LIBO" page (3750) as of 11:00 a.m., (London time),
two (2) Business Days prior to the first day of the Interest Period.
"Eurodollar Rate Advance" means any Advance bearing interest
at a rate determined by reference to the Eurodollar Rate in accordance
with the provisions of Article II.
"Events of Default" has the meaning specified in Section 8.01.
"Execution Date" means December 29, 1995.
"FCBOT" means First City Bancorporation of Texas, Inc., a bank
holding company incorporated in the State of Delaware, as it existed
prior to its merger with J-Hawk Corporation, a Texas corporation, on
July 3, 1995.
"FC Intangible Assets" means all "Fidelity Bond" policies and
claims and "D & O" policies and claims of FCBOT and all capital stock
in First City Life Insurance Company, a life insurance company owned
by FCBOT, and all capital stock in Central Texas Insurance Company,
Inc.; all of which FC Intangible Assets are being held in the name of
the Company for the benefit of FCLT Loans, L.P., a Texas limited
partnership, and/or FC
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Liquidating Trust, as provided in the FCLT Asset Agency Agreement.
"FC Liquidating Trust" means FirstCity Liquidating Trust, a
Texas business trust.
"FC Trust Agreement" means that certain Liquidating Trust
Agreement dated as of July 3, 1995 under which Shawmut Bank
Connecticut, National Association, appears as Trustee (the "Trustee")
and pursuant to which FC Liquidating Trust was created, and any
amendments thereto.
"FCLT Asset Agency Agreement" means (i) that certain
Assignment of Proceeds of Causes of Action dated June 21, 1995,
pursuant to which FCBOT assigned to FCLT Loans, L.P., a Texas limited
partnership, all of its right, title and interest in and to any and
all proceeds recovered by FCBOT as the result of the assertion by it
of any claims related to that portion of the FC Intangible Assets
consisting of "Fidelity Bond" policies and claims, and agreed that
FCLT Loans, L.P., a Texas limited partnership, would have the right to
direct the prosecution by FCBOT of any such claims, subject to certain
terms and conditions as set forth therein, (ii) that certain
Assignment of Proceeds of Causes of Action dated July 3, 1995,
pursuant to which FCBOT assigned to FCLT Loans, L.P., a Texas limited
partnership, all of its right, title and interest in and to any and
all proceeds recovered by FCBOT as the result of the assertion by it
of any claims related to that portion of the FC Intangible Assets
consisting of "D & O" policies and claims, and agreed that FCLT Loans,
L.P., a Texas limited partnership, would have the right to direct the
prosecution by FCBOT of any such claims, subject to certain terms and
conditions as set forth therein, and (iii) that certain Undertaking
for Future Assignment dated July 3, 1995, pursuant to which the
Company agreed to hold, for the benefit of FC Liquidating Trust, that
portion of the FC Intangible Assets consisting of capital stock in
First City Life Insurance Company and Central Texas Insurance Company,
Inc., and agreed to transfer to FC Liquidating Trust all proceeds in
respect of such capital stock for the account of FCLT Loans, L.P., a
Texas limited partnership, and to transfer, upon receipt of certain
regulatory approvals and other conditions, such capital stock to FCLT
Loans, L.P., a Texas limited partnership, or other designee of FC
Liquidating Trust, subject to certain terms and conditions as set
forth therein.
"Fees" means all amounts payable pursuant to Section 3.01.
"Financials" has the meaning specified in Section 5.07.
"Funding Fee" shall have the meaning specified in Section
3.01(b).
"GAAP" means generally accepted accounting principles as in
effect from time to
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time as set forth in the opinions, statements and pronouncements of
the Accounting Principles Board of the American Institute of Certified
Public Accountants, the Financial Accounting Standards Board and such
other Persons who shall be approved by a significant segment of the
accounting profession and concurred in by the independent certified
public accountants certifying any audited financial statements of the
Company.
"Hazardous Materials" means (a) hazardous waste as defined in
the Resource Conservation and Recovery Act of 1976, or in any
applicable federal, state or local law or regulation, (b) hazardous
substances, as defined in CERCLA, or in any applicable state or local
law or regulation, (c) gasoline, or any other petroleum product or
by-product, (d) toxic substances, as defined in the Toxic Substances
Control Act of 1976, or in any applicable federal, state or local law
or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of
1975, or in any applicable federal, state or local law or regulation,
as each such Act, statute or regulation may be amended from time to
time.
"Highest Lawful Rate" means the maximum nonusurious rate of
interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by the Lender on the Loans or under the
Loan Documents at any time or from time to time. If the maximum rate
of interest which, under applicable law, the Lender is permitted to
charge the Company on the Loans shall change after the date hereof, to
the extent permitted by applicable law, the Highest Lawful Rate shall
be automatically increased or decreased, as the case may be, as of the
effective time of such change without notice to the Company or any
other Person.
"Indebtedness" means (a) all indebtedness for borrowed money
(whether by loan or the issuance and sale of debt securities) or for
the deferred purchase price of property or services, (b) all
indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property, (c) all
Capitalized Lease Obligations, (d) all guaranties or other contingent
liabilities of any kind (including letter of credit reimbursement
obligations) and (e) all indebtedness, to the extent it would
constitute a liability on a balance sheet prepared in accordance with
GAAP or would be disclosed as a contingent liability in a footnote to
financial statements of such Person prepared in accordance with GAAP.
"Interest Period" means, with respect to any Eurodollar Rate
Advance, (a) initially, the period commencing on the Advance Date and
ending on the last day of the current calendar month and (b)
thereafter, each succeeding monthly period commencing on the first
(1st) day of the following calendar month; provided that any Interest
Period that would otherwise extend beyond the Maturity Date shall end
on the Maturity Date.
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"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of the assets,
stock or other securities of any other Person, or any direct or
indirect loan, advance or capital contribution by such Person to any
other Person, and any other item which would be classified as an
"investment" on a balance sheet of such Person, including any direct
or indirect contribution by such Person of property or assets to a
joint venture, partnership or other business entity in which such
Person retains an interest.
"Joint Plan" means that certain Joint Plan of reorganization
dated December 23, 1994, as amended, filed with the Bankruptcy Court
in the Bankruptcy Case by FCBOT, the Official Committee of Equity
Security Holders and J-Hawk Corporation with the participation of
Cargill Financial Services Corporation.
"Lien" means, when used with respect to any Person, any
mortgage, lien, charge, pledge, security interest or encumbrance of
any kind (whether voluntary or involuntary and whether imposed or
created by operation of law or otherwise) upon, or pledge of, any of
its property or assets, whether now owned or hereafter acquired, or
any lease intended as security, any capital lease in the nature of the
foregoing, any conditional sale agreement or other title retention
agreement, in each case, for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or
performance of an obligation.
"Loan" and "Loans" have the meaning specified in Section 2.01.
"Loan Documents" means this Agreement and the other documents
described in Article IV hereof.
"Margin" means, with respect to any Eurodollar Rate Advance,
five percent (5%) per annum.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any
litigation, arbitration or governmental investigation or proceeding) a
material adverse effect equal to or greater than the lesser of (a) the
value of five percent (5%) of the outstanding common stock of the
Company and (b) $2,000,000.00.
"Maturity Date" means one year from the date hereof, unless
accelerated pursuant to Section 8.02.
"Multiemployer Plan" means any plan which is a "multiemployer
plan" (as such
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term is defined in Section 4001(a)(3) of ERISA).
"Note" has the meaning specified in Section 2.02.
"Notice of Advance" has the meaning provided in Section
2.03(a).
"Notice of Default" has the meaning specified in Section 8.02.
"Obligations" means all the obligations of the Company now or
hereafter existing under the Loan Documents, whether for principal,
interest, Fees, expenses, indemnification or otherwise.
"Payment Office" means the office of the Lender located at
0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx, 00000, or such other
office as the Lender may hereafter designate in writing as such to the
other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Permitted Investments" means, as to any Person:
(a) securities issued or directly and fully
guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof)
having maturities of not more than twelve months from the date
of acquisition thereof,
(b) time deposits and certificates of deposit
with maturities of not more than twelve months from the date
of acquisition by such Person which deposits or certificates
are either: (a) fully insured by the Federal Deposit Insurance
Corporation or (b) in any Bank or other commercial bank
incorporated in the United States or any U.S. branch of any
other commercial bank, in each case having capital, surplus
and undivided profits aggregating $100,000,000 or more with a
long-term unsecured debt rating of at least A- from Standard &
Poor's Ratings Group or A3 from Xxxxx'x Investors Service,
(c) commercial paper issued by any Person
incorporated in the United States rated at least A2 or the
equivalent thereof by Standard & Poor's Ratings Group or at
least P2 or the equivalent thereof by Xxxxx'x Investors
Service and, in each case, maturing not more than 270 days
after the date of issuance,
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(d) investments in money market mutual funds
having assets in excess of $2,000,000,000 substantially all of
whose assets are comprised of securities of the types
described in clauses (a) through (c) above,
(e) repurchase or reverse purchase agreements
respecting obligations with a term of not more than seven days
for underlying securities of the types described in clause (a)
above entered into with any bank listed in or meeting the
qualifications specified in clause (b) above,
(f) acquisitions of promissory notes evidencing
loans (or real property previously foreclosed upon) by the
Company, any Subsidiary or any Acquisition Entity in the
ordinary course of its business, and
(g) equity investments in Subsidiaries and/or
Acquisition Entities for the purposes of acquiring promissory
notes evidencing loans (or real property previously foreclosed
upon).
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a foreign or domestic state or political subdivision
thereof or any agency of such state or subdivision.
"Plan" means any employee pension benefit plan (as defined in
Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of
the Code, other than a Multiemployer Plan, with respect to which the
Company or an ERISA Affiliate contributes or has an obligation or
liability to contribute, including any such plan that may have been
terminated.
"Regulation U" means Regulation U of the Board (respecting
margin credit extended by banks), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment (including the abandonment
or discarding of barrels, containers and other closed receptacles).
"Reportable Event" means an event described in Section 4043(b)
of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
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"Requirements of Environmental Laws" means, as to any Person,
the requirements of any applicable Environmental Law relating to or
affecting such Person or the condition or operation of such Person's
business or its properties, both real and personal.
"Responsible Officer" means, with respect to the Company, the
chairman of the board of directors, president or any executive or
senior vice president.
"Security Documents" means (a) that certain Security Agreement
dated as of even date herewith and executed by the Company granting
the Lender a first priority security interest in substantially all of
the assets of the Company, (b) that certain Pledge Agreement dated as
of even date herewith and executed by the Company granting the Lender
a first priority security interest in all of the outstanding capital
stock of each Subsidiary of the Company, (c) those certain Collateral
Assignment of Partnership Interests dated as of even date herewith,
each executed by the Company and granting the Lender a first priority
security interest in all of the Company's interest in each Acquisition
Entity, (d) that certain Power of Attorney dated as of even date
herewith executed by the Company in favor of the Lender and (e) any
and all other security agreements, pledge agreements, mortgages,
assignments, UCC financing statements, registrations of pledge and
other similar documents executed by the Company and securing the
obligations.
"Senior Subordinated Certificate Payments" means payments
required to be paid to the Company under the Class A Certificate in
order to provide the Company with funds sufficient to make the
scheduled payments required to be paid under the Senior Subordinated
Notes.
"Senior Subordinated Notes" means those certain "Senior
Subordinated Notes" dated July 3, 1995 issued by the Company to the
Class A preferred shareholders of FCBOT pursuant to the Joint Plan;
which Senior Subordinated Notes (a) are in the combined principal
amount of $106,690,029, (b) bear interest at the rate of nine percent
(9%) per annum payable quarterly and (c) require one (1) principal
payment in the amount of $53,345,014.50 on September 30, 1996 and an
additional principal payment in the amount of $53,345,014.50 on
September 30, 1997.
"Special Preferred Stock Payments" means all dividends,
redemption amounts and other amounts at anytime payable to holders of
the "Special Preferred Stock" issued by the Company.
"Subsidiary" means and includes, with respect to any Person,
(a) any corporation more than 50% of whose stock of any class or
classes having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of whether
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or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person, directly or
indirectly and (b) any partnership, association, joint venture or
other entity in which such Person, directly or indirectly, has greater
than 50% of (i) the directors (or Persons performing similar
functions) thereof or (ii) the equity interest; provided, that the
definition of Subsidiary shall not include any Acquisition Entity.
"Tangible Net Worth" means: (a) total assets minus (b) the sum
of (i) all liabilities and (ii) all intangible assets, including,
without limitation, goodwill, patents, trademarks and similar items.
"Unfunded Current Liability" means, with respect to any Plan,
the amount, if any, by which the present value of the accrued benefits
under the Plan as of the close of its most recent Plan year exceeds
the fair market value of the assets allocable thereto, determined in
accordance with Section 412 of the Code.
"Unutilized Commitment" means, at any time, the Commitment
less the outstanding Advances.
SECTION 1.02. Types of Advances. Advances hereunder are
distinguished by "Type". The Type of an Advance refers to the determination
whether such Advance is a Eurodollar Rate Advance or an Alternate Base Rate
Advance.
SECTION 1.03. Accounting Terms. All accounting terms not
defined herein shall be construed in accordance with GAAP, as applicable, and
all calculations required to be made hereunder and all financial information
required to be provided hereunder shall be done or prepared in accordance with
GAAP.
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ARTICLE II
THE LOANS
SECTION 2.01. The Loans. (a) Subject to the terms and
conditions hereof, the Lender agrees at any time and from time to time on and
after the Execution Date and prior to the Maturity Date, to make and maintain a
revolving credit loan or loans (each a "Loan" and collectively, the "Loans") to
the Company, which Loans (i) shall be made and maintained pursuant to one or
more Advances comprised of Eurodollar Rate Advances (unless Eurodollar Rate
Advances are unavailable pursuant to Sections 2.10 or 2.11, and then Alternate
Base Rate Advances); provided, except as otherwise specifically provided
herein, all Loans comprising all or a portion of the same Advance shall at all
times be of the same Type, (ii) shall be made in the minimum amount of
$500,000.00 and integral multiples thereof, (iii) so long as no Default or
Event of Default exists hereunder, may be repaid and reborrowed, at the option
of the Company in accordance with the provisions hereof, (iv) may be borrowed
by the Company (to cover operating expenses only) without the express written
approval of the Lender in an amount not to exceed $3,000,000.00 at any time,
(v) with respect to Advances other than the unrestricted $3,000,000.00
operating expense draw, shall be subject to the Lender's express written
approval and shall be made for a specific purpose with a specifically
identified repayment source and (vi) shall, in the aggregate, not exceed the
Commitment. There shall be no further Advances after the Maturity Date.
(b) The Loans shall be used to provide working capital
and to finance certain capital investments of the Company made in the ordinary
course of its business.
SECTION 2.02. The Note. The Loans shall be evidenced by
the Note in favor of the Lender (the "Note"), substantially in the form of
Exhibit 2.02 hereto.
SECTION 2.03. Notice of Advance. Whenever the Company
requires an Advance, it shall give written notice thereof (a "Notice of
Advance") (or telephonic notice promptly confirmed in writing) to the Lender
not later than 11:00 a.m. (Minnetonka, Minnesota time) two (2) Business Days
prior to the date of such Advance. Each Notice of Advance shall be irrevocable
and shall be in the form of Exhibit 2.03 hereto, specifying (i) the aggregate
principal amount of the Advance to be made and (ii) the date of such Advance
(which shall be a Business Day).
SECTION 2.04. Disbursement of Funds. No later than 1:00
p.m. (Minnetonka, Minnesota time) on each Advance Date, the Lender shall make
available the amount of the Advance in U.S. dollars and in immediately
available funds at the Payment Office.
SECTION 2.05. Continuances. Subject to Sections 2.10 and
2.11, each Advance
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shall automatically continue as a Eurodollar Rate Advance during the term of
this Agreement.
SECTION 2.06. Voluntary Prepayments. The Company shall
have the right to voluntarily prepay Advances in whole or in part at any time
on the following terms and conditions: (a) no Eurodollar Rate Advance may be
prepaid prior to the last day of its Interest Period unless, simultaneously
therewith, the Company pays to the Lender all sums necessary to compensate the
Lender for all costs and expenses resulting from such prepayment, as reasonably
determined by the Lender, including, but not limited to, those costs described
in Sections 2.12, and 2.13 hereof; (b) each partial prepayment shall be in an
initial aggregate principal amount of $500,000.00 and integral multiples
thereof; and (c) each prepayment pursuant to this Section shall be applied
first, to the payment of accrued and unpaid interest, and then, to the
outstanding principal of such Advances in the inverse order of maturity
thereof.
SECTION 2.07. Mandatory Repayments. (a) The aggregate
amount of all Advances under the Note (and all accrued, unpaid interest) shall
be due and payable on the Maturity Date.
(b) The Company shall repay Advances on any day on which
the aggregate outstanding principal amount of the Loans exceeds the Commitment
in the amount of such excess.
SECTION 2.08. Method and Place of Payment. Except as
otherwise specifically provided herein, all payments under this Agreement due
from the Company shall be made to the Lender not later than 11:00 a.m.
(Minnetonka, Minnesota time) on the date when due and shall be made in lawful
money of the United States in immediately available funds at the Payment
Office.
SECTION 2.09. Interest. (a) Subject to Section 9.08, the
Company agrees to pay interest on the total outstanding principal balance of
all Eurodollar Rate Advances from the date of each respective Advance to
maturity (whether by acceleration or otherwise) at a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 360 days)
which shall, during each Interest Period applicable thereto, be equal to the
lesser of (i) the Highest Lawful Rate and (ii) the applicable Eurodollar Rate
for such Interest Period plus the Margin.
(b) Subject to Section 9.08, the Company agrees to pay
interest on the total outstanding principal balance of all Alternate Base Rate
Advances from the date of each respective Advance to maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be
equal to the lesser of (i) the Highest Lawful Rate and (ii) the Alternate Base
Rate in effect from time to time. If the Alternate Base Rate is used, interest
shall be computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be.
(c) Subject to Section 9.08, overdue principal and, to
the extent permitted by law, overdue interest in respect of any Advance and all
other overdue amounts owing hereunder
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shall bear interest for each day that such amounts are overdue at a rate per
annum equal to the Default Rate.
(d) Interest on each Advance shall accrue from and
including the date of such Advance to but excluding the date of any repayment
thereof and shall be payable (i) in respect of Eurodollar Rate Advances (A) on
the first day of each month and (B) on the date of any voluntary or mandatory
repayment or any conversion or continuance, (ii) in respect of Alternate Base
Rate Advances, (A) on the first day of each month and (B) on the date of any
voluntary or mandatory repayment and (iii) in respect of each Advance, at
maturity (whether by acceleration or otherwise) and, after maturity, on demand.
(e) The Lender, upon determining the Eurodollar Rate for
any Interest Period, shall notify the Company thereof. Each such determination
shall, absent manifest error, be final and conclusive and binding on all
parties hereto. In addition, prior to the due date for the payment of interest
on any Advances set forth in the immediately preceding paragraph, the Lender
shall notify the Company of the amount of interest due by the Company on all
outstanding Advances on the applicable due date, but any failure of the Lender
to so notify the Company shall not reduce the Company's liability for the
amount owed.
SECTION 2.10. Interest Rate Not Ascertainable. In the event that
the Lender shall determine (which determination shall, absent manifest error,
be final, conclusive and binding upon all parties) that on any date for
determining the Eurodollar Rate for any Interest Period, by reason of any
changes arising after the date of this Agreement affecting the Eurodollar
interbank market or the Lender's position in such market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Eurodollar Rate, then, and in any such event,
the Lender shall forthwith give notice to the Company of such determination.
Until the Lender notifies the Company that the circumstances giving rise to the
suspension described herein no longer exist, the obligations of the Lender to
make Eurodollar Rate Advances shall be suspended and Alternate Base Rate
Advances shall be available in lieu thereof.
SECTION 2.11. Change in Legality. (a) Notwithstanding anything to
the contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for the Lender
to make or maintain any Eurodollar Rate Advance or to give effect to its
obligations as contemplated hereby, then, by prompt written notice to the
Company, the Lender may:
(i) declare that Eurodollar Rate Advances will not
thereafter be made hereunder, whereupon the Company shall be
prohibited from requesting Eurodollar Rate Advances hereunder unless
such declaration is subsequently withdrawn; and
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(ii) require that all outstanding Eurodollar Rate Advances
be converted to Alternate Base Rate Advances, in which event (A) all
such Eurodollar Rate Advances shall be automatically converted to
Alternate Base Rate Advances as of the effective date of such notice
as provided in paragraph (b) below and (B) all payments and
prepayments of principal which would otherwise have been applied to
repay the converted Eurodollar Rate Advances shall instead be applied
to repay the Alternate Base Rate Advances resulting from the
conversion of such Eurodollar Rate Advances.
(b) For purposes of this Section, a notice to the Company by the
Lender pursuant to paragraph (a) above shall be effective on the date of
receipt thereof by the Company.
SECTION 2.12. Increased Costs or Taxes. If the application or
effectiveness of any applicable law or regulation (i) shall change the basis of
taxation of payments to the Lender of the principal of or interest on any
Eurodollar Rate Advance made by the Lender or any other fees or amounts payable
hereunder (other than taxes imposed on the overall net income of the Lender or
franchise taxes imposed upon it by the jurisdiction in which the Lender has an
office), (ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, the Lender or (iii) shall impose on the
Lender any other condition affecting this Agreement or any Eurodollar Rate
Advance made by the Lender, and the result of any of the foregoing shall be to
increase the cost to the Lender of maintaining the Loans or its Commitment or
of making or maintaining any Eurodollar Rate Advance or to reduce the amount of
any sum received or receivable by the Lender hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed in good faith by
the Lender to be material, then the Company shall pay to the Lender such
additional amount as will compensate it for such increase or reduction upon
demand. The Lender shall not be entitled to make a demand for and the Borrower
shall not be liable for payment of any amount under the terms of this Section
2.12 following the termination of the Obligations hereunder.
SECTION 2.13. Eurodollar Advance Prepayment and Default Penalties.
Subject to Section 9.08, the Company shall indemnify the Lender against any
loss or expense which it may sustain or incur as a consequence of (a) an
Advance of, or a conversion from, Eurodollar Rate Advances that does not occur
on the date specified therefor in a Notice of Advance, (b) any payment,
prepayment or conversion of a Eurodollar Rate Advance required by any other
provision of this Agreement or otherwise made on a date other than the last day
of the applicable Interest Period or (c) any default in the payment or
prepayment of the principal amount of any Eurodollar Advance or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by notice of prepayment or otherwise). Such loss or expense
shall include an amount equal to the excess determined by the Lender of (i) its
cost of obtaining the funds for the Advance being paid, prepaid or converted or
not borrowed (based on the Eurodollar Rate) for the period from the date of
such payment, prepayment or conversion or failure to borrow to the last day of
the Interest Period for such Advance (or, in the case of a failure to borrow,
the Interest Period for the
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Advance which would have commenced on the date of such failure to borrow) over
(ii) the amount of interest (as determined by the Lender in good faith) that
would be realized in reemploying the funds so paid, prepaid or converted or not
borrowed for such period or Interest Period, as the case may be. The Lender
will notify the Company of any loss or expense which will entitle it to
compensation pursuant to this Section, as promptly as possible after it becomes
aware thereof, but failure to so notify shall not affect the Company's
liability therefor. A certificate of the Lender setting forth any amount which
it is entitled to receive pursuant to this Section shall be delivered to the
Company and shall be conclusive absent manifest error. The Company shall pay
to the Lender the amount shown as due on any certificate within ten (10) days
after its receipt of the same. Without prejudice to the survival of any other
obligations of the Company hereunder, the obligations of the Company under this
Section shall survive the termination of this Agreement and the assignment of
the Note.
ARTICLE III
FEES
SECTION 3.01. Fees. (a) The Company agrees to pay to the
Lender a commitment fee (the "Commitment Fee") of $250,000.00. The Commitment
Fee shall be due and payable as follows: (i) $125,000.00 shall be due and
payable on the Execution Date and (ii) $125,000.00 shall be due and payable on
or before May 31, 1996.
(b) The Company agrees to pay to the Lender on each
Advance Date a fee (each a "Funding Fee") in respect of each Advance hereunder
equal to .5% of the amount of such Advance. Notwithstanding the above, the
Funding Fees shall not exceed $175,000.00 in the aggregate during the term
hereof.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Conditions Precedent to the Initial Advance.
The obligation of the Lender to make its initial Advance to the Company is
subject to the condition that the Lender shall have received the following:
(a) this Agreement executed by the Company;
(b) the Note executed by the Company and payable to the
order of the Lender in the amount of the Commitment;
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(c) the Security Documents executed by the Company;
(d) a Notice of Advance with respect to the initial
Advance meeting the requirements of Section 2.03;
(e) a certificate of an officer and of the secretary or
an assistant secretary of the Company certifying, inter alia, (i) true and
complete copies of each of the articles or certificate of incorporation, as
amended and in effect of the Company and each of its Subsidiaries, the bylaws,
as amended and in effect, of the Company and each of its Subsidiaries and the
resolutions adopted by the Board of Directors of the Company (A) authorizing
the execution, delivery and performance by the Company of this Agreement and
the other Loan Documents to which it is or will be a party and the Advances to
be made hereunder, (B) approving the forms of the Loan Documents to which it is
or will be a party and which will be delivered at or prior to the date of the
initial Advance and (C) authorizing officers of the Company to execute and
deliver the Loan Documents to which it is or will be a party and any related
documents, including, any agreement contemplated by this Agreement, (ii) the
incumbency and specimen signatures of the officers of the Company executing any
documents on its behalf and (iii) that there has been no change in the
businesses or financial condition of the Company which could have a Material
Adverse Effect;
(f) favorable, signed opinions addressed to the Lender
from Vander Woude, Xxxxxx & Xxxxx, P.C., counsel to the Company, in form and
substance satisfactory to the Lender and their counsel;
(g) the payment to the Lender of all reasonable fees and
expenses (including the reasonable fees and disbursements of Xxxxxxx & Xxxxx
L.L.P.) agreed upon by such parties to be paid on the Execution Date; and
(h) certificates of appropriate public officials as to
the existence, good standing and qualification to do business as a foreign
corporation, as applicable, of the Company and each of its Subsidiaries in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualifications and where the failure to so qualify would
have a Material Adverse Effect.
The acceptance of the benefits of the initial Credit Event
shall constitute a representation and warranty by the Company to the Lender
that all of the conditions specified in this Section above shall have been
satisfied or waived as of that time.
SECTION 4.02. Conditions Precedent to All Credit Events.
The obligation of the Lender to make any Advance is subject to the further
conditions precedent that on the date of such Credit Event:
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(a) The conditions precedent set forth in Section 4.01
shall have theretofore been satisfied or waived.
(b) The representations and warranties set forth in
Article V shall be true and correct in all material respects as of, and as if
such representations and warranties were made on, the date of the proposed
Advance (unless such representation and warranty expressly relates to an
earlier date or is no longer true and correct solely as a result of
transactions permitted by the Loan Documents), and the Company shall be deemed
to have certified to the Lender that such representations and warranties are
true and correct in all material respects by submitting a Notice of Advance.
(c) The Lender shall have satisfactorily completed a
reasonable due diligence investigation with respect to each Advance other than
an Advance under the unrestricted $3,000,000.00 operating expense draw.
(d) The Company shall have complied with the provisions
of Section 2.03 hereof.
(e) No Default or Event of Default shall have occurred
and be continuing or would result from such Credit Event.
(f) No Material Adverse Effect shall have occurred since
the delivery of the most recent financials.
(g) The Lender shall have received such other approvals,
opinions or documents as the Lender may reasonably request.
The acceptance of the benefits of each such Credit Event shall
constitute a representation and warranty by the Company to the Lender that all
of the conditions specified in this Section above exist as of that time.
SECTION 4.03. Delivery of Documents. The Note,
certificates, legal opinions and other documents and papers referred to in this
Article IV, unless otherwise specified, shall be delivered to the Lender and
shall be reasonably satisfactory in form and substance to the Lender.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and
to make the
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Advances provided for herein, the Company makes, on or as of the occurrence of
each Credit Event (except to the extent such representations or warranties
relate to an earlier date or are no longer true and correct in all material
respects solely as a result of transactions permitted by the Loan Documents),
the following representations and warranties to the Lender:
SECTION 5.01. Organization and Qualification. Each of
Company and its Subsidiaries (a) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
or organization, (b) has the corporate power to own its property and to carry
on its business as now conducted and (c) is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect.
SECTION 5.02. Authorization and Validity. The Company has
the corporate power and authority to execute, deliver and perform its
obligations hereunder and under the other Loan Documents and all such action
has been duly authorized by all necessary corporate proceedings on its part.
The Loan Documents have been duly and validly executed and delivered by the
Company and constitute a valid and legally binding agreement the Company
enforceable in accordance with the respective terms thereof, except, in each
case, as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally, and by general
principles of equity regardless of whether such enforceability is a proceeding
in equity or at law.
SECTION 5.03. Governmental Consents. No authorization,
consent, approval, license or exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is necessary for the valid execution,
delivery or performance by the Company of any Loan Document.
SECTION 5.04. Conflicting or Adverse Agreements or
Restrictions. Neither the Company nor any Subsidiary is a party to any
contract or agreement or subject to any restriction which would reasonably be
expected to have a Material Adverse Effect. All agreements of the Company
relating to the lending of money or the issuance of letters of credit by any
party are described hereto on Schedule 5.04. Neither the execution nor
delivery of the Loan Documents nor compliance with the terms and provisions
hereof or thereof will be contrary to the provisions of, or constitute a
default under (a) the charter or bylaws of the Company, (b) any applicable law
or any applicable regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (c) any material agreement to which the Company
is a party or by which it is bound or to which it is subject.
SECTION 5.05. Title to Assets. Each of the Company and its
Subsidiaries has good title to all material personalty and good and
indefeasible title to all material realty as reflected on the Company's and the
Subsidiaries' books and records as being owned by it, except for
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properties disposed of in the ordinary course of business, subject to no
Liens, except those permitted hereunder or set forth on Schedule 7.04(a). All
of such assets have been and are being maintained by the appropriate Person in
good working condition in accordance with industry standards.
SECTION 5.06. Litigation. No proceedings against or
affecting the Company or any Subsidiary are pending or, to the knowledge of the
Company, threatened before any court or governmental agency or department which
involve a reasonable risk of having a Material Adverse Effect except those
listed on Schedule 5.06 hereof.
SECTION 5.07. Financial Statements. Prior to the Execution
Date, the Company has furnished to the Lender the audited consolidated balance
sheet, income statement and statement of cash flow for J-Hawk Corporation,
predecessor in interest to the Company, as of December 31, 1994 and all
quarterly reports of the Company as are currently available (such audited
financials and quarterly reports, the "Financials"). The Financials have been
prepared in conformity with GAAP consistently applied (except as otherwise
disclosed in such financial statements) throughout the periods involved and
present fairly, in all material respects, the consolidated financial condition
of the Company and its consolidated Subsidiaries as of the dates thereof and
the results of their operations for the periods then ended. As of the
Execution Date, no Material Adverse Effect has occurred in the consolidated
financial condition of the Company and its consolidated Subsidiaries since
December 31, 1994.
SECTION 5.08. Default. Neither the Company nor any
Subsidiary is in default under any material provisions of any instrument
evidencing any Indebtedness or of any agreement relating thereto, or in default
in any respect under any order, writ, injunction or decree of any court, or in
default in any respect under or in violation of any order, injunction or decree
of any governmental instrumentality, in such manner as to cause a Material
Adverse Effect.
SECTION 5.09. Investment Company Act. Neither the Company
nor any Subsidiary is, or is directly or indirectly controlled by or acting on
behalf of any Person which is, an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
SECTION 5.10. Public Utility Holding Company Act. Neither
the Company nor any Subsidiary is a non-exempt "holding company," or is
subject to regulation as such, nor is, to the knowledge of the Company's or
Subsidiaries' officers, an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 5.11. ERISA. No accumulated funding deficiency (as
defined in
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Section 412 of the Code or Section 302 of ERISA), whether or not waived, exists
or is expected to be incurred with respect to any Plan. No liability to the
PBGC (other than required premium payments) has been or is expected by the
Company to be incurred with respect to any Plan by the Company or any ERISA
Affiliate. Neither the Company nor any ERISA Affiliate has incurred any
withdrawal liability under Title IV of ERISA with respect to any Multi-Employer
Plans.
SECTION 5.12. Tax Returns and Payments. Each of the
Company and its Subsidiaries has filed all federal income tax returns and other
tax returns, statements and reports (or obtained extensions with respect
thereto) which are required to be filed and has paid or deposited or made
adequate provision in accordance with GAAP for the payment of all taxes
(including estimated taxes shown on such returns, statements and reports) which
are shown to be due pursuant to such returns, except for such taxes as are
being contested in good faith and by proceedings.
SECTION 5.13. Environmental Matters. Each of the Company
and its Subsidiaries (a) possesses all environmental, health and safety
licenses, permits, authorizations, registrations, approvals and similar rights
necessary under law or otherwise for the Company or such Subsidiary to conduct
its operations as now being conducted (other than those with respect to which
the failure to possess or maintain would not, individually or in the aggregate
for the Company and such Subsidiaries, have a Material Adverse Effect) and (b)
each of such licenses, permits, authorizations, registrations, approvals and
similar rights is valid and subsisting, in full force and effect and
enforceable by the Company or such Subsidiary, and each of the Company and its
Subsidiaries is in compliance with all terms, conditions or other provisions of
such permits, authorizations, registrations, approvals and similar rights
except for such failure or noncompliance that, individually or in the aggregate
for the Company and such Subsidiaries, would not have a Material Adverse
Effect. Except as disclosed on Schedule 5.13, neither the Company nor any of
its Subsidiaries has received any notices of any violation of, noncompliance
with, or remedial obligation under, Requirements of Environmental Laws (which
violation or non-compliance has not been cured) and there are no writs,
injunctions, decrees, orders or judgments outstanding, or lawsuits, claims,
proceedings, investigations or inquiries pending or, to the knowledge of the
Company or any Subsidiary, threatened, relating to the ownership, use,
condition, maintenance or operation of, or conduct of business related to, any
property owned, leased or operated by the Company or any Subsidiary or other
assets of the Company or such Subsidiary, other than those violations,
instances of noncompliance, obligations, writs, injunctions, decrees, orders,
judgments, lawsuits, claims, proceedings, investigations or inquiries that,
individually or in the aggregate for the Company and such Subsidiaries, would
not have a Material Adverse Effect. Except as disclosed on Schedule 5.13,
there are no material obligations, undertakings or liabilities arising out of
or relating to Environmental Laws to which the Company or any of its
Subsidiaries has agreed, assumed or retained, or by which the Company or any of
its Subsidiaries is adversely affected, by contract or otherwise. Except as
disclosed on Schedule 5.13, neither the Company nor any of its Subsidiaries has
received a written notice or claim to the effect that such Person is or may be
liable to any other Person as the result of a Release or threatened Release of
a Hazardous Material.
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SECTION 5.14. Purpose of Loans. (a) The proceeds of the
Advances will be used solely to finance operating expenditures and for certain
capital investments of the Company made in the ordinary course of its business.
(b) None of the proceeds of any Advance will be used
directly or indirectly for the purpose of purchasing or carrying any "margin
stock" within the meaning of Regulation U (herein called "margin stock") or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock.
SECTION 5.15. Franchises and Other Rights. Each of the
Company and its Subsidiaries has all franchises, permits, licenses and other
authority as are necessary to enable it to carry on its businesses as now being
conducted where the absence of such would have a Material Adverse Effect except
those listed on Schedule 5.15 hereof. To the best of its knowledge, the
Company is not in default in respect of any of such operating rights.
SECTION 5.16. Subsidiaries. The Subsidiaries listed on
Schedule 5.16 are all of the Subsidiaries of the Company as of the Execution
Date.
SECTION 5.17. Solvency. After giving effect to the initial
Advance hereunder and all other Indebtedness of the Company, the Company and
its Subsidiaries, viewed as a consolidated entity have (a) capital sufficient
to carry on their businesses and transactions, (b) assets, the fair market
value of which exceeds their consolidated liabilities (as reflected on the
Financials or on the financial statements most recently delivered to the
Lender), and (c) sufficient cash flow to pay their existing debts as they
mature.
SECTION 5.18. Material Facts. There is no fact which the
Company has failed to disclose to the Lender in writing which will have a
Material Adverse Effect on or, so far as the Company can now foresee, will have
a Material Adverse Effect on the assets, business, prospects, profits or
condition (financial or otherwise) of the Company or its Subsidiaries or the
ability of the Company to perform its obligations under this Agreement. No
information, exhibit or report furnished by the Company to the Lender in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted a material fact or any fact necessary to make
the statement contained therein not materially misleading.
SECTION 5.19. Solvency. The Company is, and after giving
effect to the transactions contemplated under the Loan Documents will be,
solvent.
SECTION 5.20. Security Interests. The Security Documents
create valid security interests in the collateral described therein in favor of
the Lender securing the Obligations and constitute perfected first priority
security interests in such collateral described therein subject to no
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Liens other than Liens permitted by Section 7.04.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that on and after the date
hereof and for so long as this Agreement is in effect and until the Commitment
has terminated:
SECTION 6.01. Information Covenants. The Company will
furnish to the Lender:
(a) As soon as available, and in any event within 45 days
after the close of each of the first three quarters in each fiscal year of the
Company, the consolidated and consolidating balance sheet of the Company and
its Subsidiaries as of the end of such quarterly period and the related
consolidated and consolidating statements of income and cash flows for such
quarterly period and for the portion of the fiscal year ended at the end of
such quarter, setting forth, in each case, comparative consolidated figures for
the related periods in the prior fiscal year, all of which shall be certified
by the chief financial officer or chief executive officer of the Company as
fairly presenting in all material respects, the financial position of the
Company and its Subsidiaries as of the end of such period and the results of
their operations for the period then ended in accordance with GAAP, subject to
changes resulting from normal year-end audit adjustments.
(b) As soon as available, and in any event within 120
days after the close of each fiscal year of the Company, the audited
consolidated and the unaudited consolidating balance sheets of the Company and
its Subsidiaries as at the end of such fiscal year and the related consolidated
and consolidating statements of income, stockholders equity and cash flows for
such fiscal year, setting forth, in each case, comparative figures for the
preceding fiscal year and certified by KPMG Peat Marwick, L.L.P. or other
independent certified public accountants of recognized national standing, whose
report shall be without limitation as to the scope of the audit and reasonably
satisfactory in substance to the Lenders.
(c) Immediately after any Responsible Officer of the
Company obtains knowledge thereof, notice of:
(i) any material violation of, noncompliance with, or
remedial obligations under, Requirements of Environmental Laws,
(ii) any material Release or threatened material Release
of Hazardous Materials affecting any property owned, leased or
operated by the Company or any of its Subsidiaries,
(iii) any event or condition which constitutes a Default or
an Event of Default,
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(iv) any condition or event which, in the opinion of
management of the Company, would reasonably be expected to have a
Material Adverse Effect,
(v) any Person having given any written notice to the
Company or taken any other action with respect to a claimed material
default or material adverse event under any material instrument or
material agreement, and
(vi) the institution of any litigation which might
reasonably be expected in the good faith judgment of the Company
either to have a Material Adverse Effect or result in a final,
non-appealable judgment or award in excess of $1,000,000.00 with
respect to any single cause of action, or the institution of any
litigation of any kind by any party with whom the Company has entered
into a franchise agreement;
then, a notice of such event or condition will be delivered to the Lender
specifying the nature and period of existence thereof and specifying the notice
given or action taken by such Person and the nature of any such claimed
default, event or condition and, in the case of an Event of Default or Default,
what action has been taken, is being taken or is proposed to be taken with
respect thereto.
(d) At the time of the delivery of the financial
statement provided for in Sections 6.01(a) and 6.01(b), a certificate of a
Responsible Officer to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof and the action that is being taken or that is proposed to be
taken with respect thereto, which certificate shall set forth the calculations
required to establish whether the Company was in compliance with the provisions
of Sections 7.10 and 7.11 as at the end of such fiscal period or year, as the
case may be.
(e) Upon request by the Lender such audits of the
Company's procedures and policies and operations in respect of Environmental
Laws as the Lender may reasonably request.
(f) Promptly upon receipt thereof, a copy of any report
or letter submitted to the Company by its independent accountants in connection
with any regular or special audit of the Company's records.
(g) From time to time and with reasonable promptness,
such other information or documents as the Lender may reasonably request.
SECTION 6.02. Books, Records and Inspections. The Company
and its Subsidiaries will maintain, and will permit, or cause to be permitted,
any Person designated by the Lender to visit and inspect any of the properties
of the Company and its Subsidiaries, to examine the corporate books and
financial records of the Company and its Subsidiaries and make copies
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thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any such corporations with the officers, employees and agents of the Company
and its Subsidiaries and with their independent public accountants, all at such
reasonable times and as often as the Lender may request. Such inspections
shall be made as often as the Lender reasonably requests, and shall be at the
expense of the Company up to $5,000.00 annually.
SECTION 6.03. Insurance and Maintenance of Properties. (a)
The Company and its Subsidiaries will keep reasonably adequately insured by
financially sound and reputable insurers all of its material property, which is
of a character, and in amounts and against such risks, usually and reasonably
insured by similar Persons engaged in the same or similar businesses,
including, without limitation, insurance against fire, casualty and any other
hazards normally insured against. The Company and its Subsidiaries will at all
times maintain insurance against its liability for injury to Persons or
property, which insurance shall be by financially sound and reputable insurers
and in such amounts and form as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties, and shall annually provide the Lender a listing of all such
insurance and such other certificates and other evidence thereof, as the Lender
shall reasonably request. A listing of all presently existing policies of the
Company and its Subsidiaries is attached hereto as Schedule 6.03.
(b) The Company and its Subsidiaries will cause all of
its material properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all reasonably necessary
repairs, renewals and replacements thereof, all as in the reasonable judgment
of such Person may be reasonably necessary so that the business carried on in
connection therewith may be properly conducted at all times.
(c) The Company will name the Lender as a loss payee on
all of its insurance policies (other than public liability insurance policies).
SECTION 6.04. Payment of Taxes. Except with respect to
"distressed assets" acquired by any Subsidiary in a portfolio acquisition, the
Company and its Subsidiaries will pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on which penalties
attach thereto, except for such amounts that are being contested in good faith
and by appropriate proceedings.
SECTION 6.05. Corporate Existence. The Company and its
Subsidiaries will do all things necessary to preserve and keep in full force
and effect (a) its corporate existence and (b) unless the failure to do so
would not have a Material Adverse Effect, the rights and franchises of each of
the Company and its Subsidiaries.
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SECTION 6.06. Compliance with Statutes. The Company and its
Subsidiaries will comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except to the extent the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
SECTION 6.07. ERISA. Immediately after any Responsible
Officer of the Company or any of its Subsidiaries knows or has reason to know
any of the following items are true the Company will deliver or cause to be
delivered to the Lender a certificate of the chief financial officer of the
Company setting forth details as to such occurrence and such action, if any,
the Company or its ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed with or by the
Company or its ERISA Affiliate with respect thereto; that a Reportable Event
has occurred or that an application may be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard; that
a Multiemployer Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that any required contribution to a
Plan or Multiemployer Plan has not been or may not be timely made; that
proceedings may be or have been instituted under Section 4069(a) of ERISA to
impose liability on the Company or an ERISA Affiliate or under Section 4042 of
ERISA to terminate a Plan or appoint a trustee to administer a Plan; that the
Company or any ERISA Affiliate has incurred or may incur any liability
(including any contingent or secondary liability) on account of the termination
of or withdrawal from a Plan or a Multiemployer Plan; and that the Company or
an ERISA Affiliate may be required to provide security to a Plan under Section
401(a)(29) of the Code; or any other condition exists or may occur with respect
to one or more Plans and/or Multiemployer Plans.
SECTION 6.08. Fidelity Bond. The Company shall at all
times during the term hereof maintain a fidelity bond in an amount not less
than $2,000,000.00 per occurrence and $4,000,000.00 in the aggregate, net of
any applicable deductible.
ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees that, unless the Lender shall
have otherwise given its written consent, on and after the date hereof and for
so long as this Agreement is in effect and until the Commitment has terminated:
SECTION 7.01. Change in Business. The Company will not
engage in any businesses not of the same general type as those conducted by the
Company on the Execution Date.
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SECTION 7.02. Consolidation, Merger or Sale of Assets. The
Company will not wind up, liquidate or dissolve their affairs, or enter into
any transaction of merger or consolidation, or sell or otherwise dispose of all
or any part of their property or assets (other than sales of inventory and
surplus or obsolete assets in the ordinary course of business provided that any
disposal does not prejudice the Lender in any way), including the capital stock
of any Subsidiary, or purchase, lease or otherwise acquire (in one or a series
of related transactions) all or any part of the property or assets of any
Person or all of the capital stock of any Person. The Company will not permit
any of its Subsidiaries to wind up, liquidate or dissolve their affairs, or
enter into any transaction of merger or consolidation, or sell or otherwise
dispose of any capital stock of any Subsidiary, or purchase, lease or otherwise
acquire (in one or a series of related transactions) all or any part of the
property or assets of any Person or all of the capital stock of any Person.
SECTION 7.03. Indebtedness. The Company will not create,
incur, assume or permit to exist any Indebtedness except:
(a) Indebtedness existing hereunder;
(b) long term Indebtedness or unsecured short term
Indebtedness not to exceed in the aggregate $5,000,000.00; and
(c) guarantees of any Indebtedness of any Person not to
exceed in the aggregate $5,000,000.00.
SECTION 7.04. Liens. Neither the Company nor any Subsidiary
will create, incur, assume or suffer to exist any Lien upon or with respect to
any of its property or assets of any kind whether now owned or hereafter
acquired (nor will they covenant with any other Person not to grant such a Lien
to the Lender), except
(a) Liens existing on the Execution Date and listed on
Schedule 7.04(a);
(b) Liens for taxes or assessments or other governmental
charges or levies, either not yet due and payable or being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established;
(c) Liens securing long term Indebtedness permitted under
Section 7.03(b) above;
(d) any renewal, extension or replacement of any Lien
referred to in subparagraph (a) above; provided, that no Lien arising or
existing as a result of such extension, renewal or replacement shall be
extended to cover any property not theretofore subject to the Lien being
extended, renewed or replaced, and provided further, the principal amount of
the
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Indebtedness secured thereby shall not exceed the principal amount of the
Indebtedness so secured at the time of such extension, renewal or replacement;
and
(e) Liens granted in connection with the acquisition of
promissory notes evidencing loans (or real property previously foreclosed
upon).
SECTION 7.05. Investments. Except as provided in Sections
7.02 and 7.09, neither the Company nor any Subsidiary will, directly or
indirectly, make or own any Investment in any Person, except:
(a) The Company and its Subsidiaries may make and own
Permitted Investments;
(b) The Company and its Subsidiaries may continue to own
Investments owned by it on the Execution Date and listed on Schedule 7.05(b);
and
(c) The Company and its Subsidiaries may make and own
Investments arising out of loans and advances for expenses, travel per diem and
similar items in the ordinary course of business to officers, directors and
employees.
SECTION 7.06. Restricted Payments. (a) Other than payments
in respect of the Senior Subordinated Notes and the Special Preferred Stock
Payments, the Company will not pay any dividends or redeem, retire, purchase or
make any other acquisition, direct or indirect, of any shares of any class of
stock of the Company, or of any warrants, rights or options to acquire any such
shares, now or hereafter outstanding; except to the extent that the
consideration therefor consists solely of shares of stock (including warrants,
rights or options relating thereto) of the Company.
(b) Except in the ordinary course of business, the
Subsidiaries will not declare any dividends, make any loans or advances to, or
otherwise transfer any money or other assets to the Company during the term
hereof; provided, such dividends, loans or transfers are simultaneously
transferred to the Lender in repayment of the Obligations.
SECTION 7.07. Change in Accounting. The Company will not,
and will not permit any Subsidiary to, change its method of accounting except
for (a) immaterial changes permitted by GAAP in which the Company's auditors
concur or (b) changes required by GAAP. The Company shall advise the Lender in
writing promptly upon making any material change to the extent same is not
disclosed in the financial statements required under Section 6.01 hereof.
SECTION 7.08. Change of Certain Indebtedness. Other than
payments in respect of the Senior Subordinated Notes and the Special Preferred
Stock Payments, the Company will not
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make any voluntary prepayments of principal or interest on any other of the
Company's Indebtedness.
SECTION 7.09. Transactions with Affiliates. The Company will
not, directly or indirectly, engage in any transaction with any Affiliate,
including the purchase, sale or exchange of assets or the rendering of any
service, except in the ordinary course of business or pursuant to the
reasonable requirements of its business and, in each case, upon terms that are
no less favorable than those which might be obtained in an arm's-length
transaction at the time from non-Affiliates.
SECTION 7.10. Minimum Tangible Net Worth. The Company will
not permit its Tangible Net Worth during the term hereof to be less than
$42,500,000.00.
SECTION 7.11. Indebtedness to Equity Ratio. The Company
will not permit the ratio of (a) its consolidated Indebtedness excluding Senior
Subordinated Notes and "Special Preferred Stock" (as such term is used in the
definition of Special Preferred Stock Payments) to (b) the amount of its equity
represented by common stock, to be greater than 5.0 to 1.0 at any time during
the term hereof.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default. The following events shall
constitute Events of Default ("Events of Default") hereunder:
(a) any installment of principal or payment of interest
on the Note or any payment of any Fee shall not be paid on the date on which
such payment is due and such failure is not remedied within five (5) days; or
(b) any representation or warranty made or, for purposes
of Article V, deemed made by the Company or any Subsidiary herein or in any of
the Loan Documents or other document, certificate or financial statement
delivered in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made
or reaffirmed, as the case may be; or
(c) the Company or any Subsidiary shall fail to perform
or observe any duty or covenant contained in Article VII hereof; or
(d) the Company or any Subsidiary shall fail to perform
or observe any duty or
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covenant contained in this Agreement other than in Article VII, or in any of
the Loan Documents, and such failure is not remedied within thirty (30) days;
or
(e) the Company or any Subsidiary shall (i) fail to make
(whether as primary obligor or as guarantor or other surety) any principal
payment of or interest or premium, if any, on any instrument of Indebtedness
allowed hereunder (other than the Note) outstanding beyond any period of grace
provided with respect thereto or (ii) shall fail to duly observe, perform or
comply with any agreement with any Person or any term or condition of any
instrument of Indebtedness in excess of $500,000.00, if such failure causes
such obligations to become due prior to any stated maturity; or
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of the Company or any Subsidiary, or of a
substantial part of the property or assets of the Company or any Subsidiary,
under Title 11 of the United States Code, as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"), or any other federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Company or any Subsidiary or for a substantial part of the property or
assets of the Company or any Subsidiary or (iii) the winding-up or liquidation
of the Company or any Subsidiary; and such proceeding or petition shall
continue undismissed for sixty 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or
(g) the Company or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under the
Bankruptcy Code or any other federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described in clause (e) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any Subsidiary or for a substantial part of
the property or assets of the Company or any Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing; or
(h) a judgment or order, which with other outstanding
judgments and orders against the Company and its Subsidiaries equal or exceed
$1,000,000.00 in the aggregate (to the extent not covered by insurance as to
which the respective insurer has acknowledged coverage), shall be entered
against the Company or any Subsidiary and (i) within thirty (30) days after
entry thereof such judgment shall not have been paid or discharged or execution
thereof stayed pending appeal or, within thirty (30) days after the expiration
of any such stay, such judgment shall not have been paid or discharged or (ii)
any enforcement proceeding shall have been commenced (and not
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stayed) by any creditor or upon such judgment; or
(i) the occurrence of a change which has a Material
Adverse Effect, in the opinion of the Lender, (A) in the financial condition,
business or operations of the Company or (B) in the ability of the Company to
make payment hereunder or under the Note or the right of the Lender to enforce
any of its remedies to collect any amounts owing under the Loan Documents; or
(j) a Change of Control shall occur.
SECTION 8.02. Primary Remedies. In any such event, and at
any time after the occurrence of any of the above described events, the Lender
may, by written notice to the Company (a "Notice of Default") take any or all
of the following actions to enforce any other rights it may have against the
Company; provided, that if an Event of Default specified in Section 8.01(f) or
Section 8.01(g) shall occur, the following shall occur automatically without
the giving of any Notice of Default: (a) declare the Commitment terminated,
whereupon the Commitment shall forthwith terminate immediately; (b) declare the
principal of and any accrued and unpaid interest in respect of all Advances,
and all obligations owing hereunder, to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, notice of demand or of
dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate, declaration or notice of acceleration or any other notice of any
kind, all of which are hereby waived by the Company; and (c) exercise any
rights or remedies under any document securing any of the Loan Documents. In
the event that no Default has occurred solely because of any grace period
referred to herein, the Company shall, nonetheless, not be entitled to any
Advances during said period.
SECTION 8.03. Other Remedies. Upon the occurrence and
during the continuance of any Event of Default and after a Notice of Default,
the Lender may proceed to protect and enforce its rights, either by suit in
equity or by action at law or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in any other Loan Document
or in aid of the exercise of any power granted in this Agreement or in any
other Loan Document; or may proceed to enforce the payment of all amounts owing
to the Lender under the Loan Documents and any accrued and unpaid interest
thereon in the manner set forth herein or therein; it being intended that no
remedy conferred herein or in any of the other Loan Documents is to be
exclusive of any other remedy, and each and every remedy contained herein or in
any other Loan Document shall be cumulative and shall be in addition to every
other remedy given hereunder and under the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments. No amendment or waiver of any
provision of this Agreement, the Note or any other Loan Document, nor consent
to any departure by the Company herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company, as to
amendments, and by the Lender in all cases, and then, in any case, such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 9.02. Notices. Except with respect to telephone
notifications specifically permitted pursuant to Article II, all notices,
consents, requests, approvals, demands and other communications provided for
herein shall be in writing (including telecopy communications) and mailed,
telecopied, sent by overnight courier or delivered:
(a) If to the Company:
FirstCity Financial Corporation
X.X. Xxx 0000
0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxx 00000
Telecopy No: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx
(b) If to the Lender:
Cargill Financial Services Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopy No: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
with copies to:
Cargill Financial Services Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopy No: (000) 000-0000
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Attention: Xx. Xxxxx X. Xxxxxx
and to:
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxx Xxxx
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other
parties.
All communications shall, when mailed, telecopied or
delivered, be effective when mailed by certified mail, return receipt requested
to any party at its address specified above, or telecopied to any party to the
telecopy number set forth above, or delivered personally to any party at its
address specified above; provided, that communications to the Lender pursuant
to Article II shall not be effective until actually received by the Lender.
SECTION 9.03. No Waiver; Remedies. No failure on the part
of the Lender to exercise, and no delay in exercising, any right hereunder,
under the Note or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, or any
abandonment or discontinuance of any steps to enforce such right, preclude any
other or further exercise thereof or the exercise of any other right. No
notice to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances. The
remedies herein are cumulative and not exclusive of any other remedies provided
by law, at equity or in any other agreement.
SECTION 9.04. Costs, Expenses and Taxes. The Company
agrees to pay on demand: (a) all reasonable due diligence and travel expenses
of the Lender in connection with any Advance not to exceed $10,000.00 per
Advance, (b) all reasonable out-of-pocket costs and expenses of the Lender in
connection with the preparation, execution and delivery of this Agreement, the
Note, the other Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Lender with respect thereto and with respect to advising the Lender as
to its rights and responsibilities under this Agreement, the Note and the other
Loan Documents, and any modification, supplement or waiver of any of the terms
of this Agreement or any other Loan Document, (c) all reasonable costs and
expenses of the Lender and any other holder of an interest in the Note, and the
Obligations of the Company hereunder and under the Loan Documents, including
reasonable legal fees and expenses, in connection with a default or the
enforcement of this Agreement, the Note and the other Loan Documents and (d)
reasonable costs and expenses incurred in connection with third party
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professional services required by the Lender such as appraisers, environmental
consultants, accountants or similar Persons; provided, that prior to any Event
of Default hereunder, the Lender will first obtain the consent of the Company
to such expense, which consent shall not be unreasonably withheld. Without
prejudice to the survival of any other obligations of the Company hereunder and
under the Note, the obligations of the Company under this Section shall survive
the termination of this Agreement or the replacement of the Lender and the
assignment of the Note.
SECTION 9.05. Indemnity. (a) The Company shall indemnify
the Lender and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages (including reasonable legal fees and
expenses) to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Company of the proceeds of any extension of credit
hereunder or any investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the foregoing or any of the
other Loan Documents, and the Company shall reimburse the Lender and each
Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including legal fees) reasonably incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified.
(B) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT
IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE
INDEMNIFIED HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES: (I) ARISING OUT OF
OR RESULTING FROM THE ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON
OR (II) IMPOSED UPON SAID PARTY UNDER ANY THEORY OR STRICT LIABILITY. Without
prejudice to the survival of any other obligations of the Company hereunder and
under the other Loan Documents, the obligations of the Company under this
Section shall survive the termination of this Agreement and the other Loan
Documents and the payment of the Obligations or the assignment of the Note.
SECTION 9.06. Right of Setoff. If any Event of Default
shall have occurred and be continuing, the Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits held and other indebtedness owing by the Lender,
or any Subsidiary or Affiliate, to or for the credit or the account of the
Company against any and all the Obligations of the Company now or hereafter
existing under this Agreement and the other Loan Documents and other
obligations of the Company held by the Lender, irrespective of whether or not
the Lender shall have made any demand under this Agreement, its Note or the
Obligations and although the Obligations may be unmatured. The rights of the
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which the Lender may have.
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SECTION 9.07. Governing Law. This Agreement, the Note, the
other Loan Documents and all other documents executed in connection herewith
shall be deemed to be contracts and agreements executed by the Company and the
Lender under the laws of the State of Minnesota and of the United States of
America and for all purposes shall be construed in accordance with, and
governed by, the laws of said state and of the United States of America.
Without limitation of the foregoing, nothing in this Agreement, or in the Note
or in any other Loan Document shall be deemed to constitute a waiver of any
rights which the Lender may have under applicable federal legislation relating
to the amount of interest which the Lender may contract for, take, receive or
charge in respect of the Loan and the Loan Documents, including any right to
take, receive, reserve and charge interest at the rate allowed by the law of
the state where the Lender is located.
SECTION 9.08. Interest. Each provision in this Agreement
and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, to the Lender
or charged, contracted for, reserved, taken or received by the Lender, for the
use, forbearance or detention of the money to be loaned under this Agreement or
any Loan Document or otherwise (including any sums paid as required by any
covenant or obligation contained herein or in any other Loan Document which is
for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the Highest
Lawful Rate, and all amounts owed under this Agreement and each other Loan
Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in the Note or any other Loan Document to the contrary
notwithstanding, the Company shall not be required to pay unearned interest on
the Note and the Company shall not be required to pay interest on the
Obligations at a rate in excess of the Highest Lawful Rate, and if the
effective rate of interest which would otherwise be payable under the Note and
such Loan Documents would exceed the Highest Lawful Rate, or if the holder of
the Note shall receive any unearned interest or shall receive monies that are
deemed to constitute interest which would increase the effective rate of
interest payable by the Company under the Note and the other Loan Documents to
a rate in excess of the Highest Lawful Rate, then (a) the amount of interest
which would otherwise be payable by the Company shall be reduced to the amount
allowed under applicable law and (b) any unearned interest paid by the Company
or any interest paid by the Company in excess of the Highest Lawful Rate shall
in the first instance be credited on the principal of the obligations of the
Company (or if all such obligations shall have been paid in full, refunded to
the Company). It is further agreed that, without limitation of the foregoing,
all calculations of the rate of interest contracted for, reserved, taken,
charged or received by the Lender under the Note and the Obligations and under
the other Loan Documents are made for the purpose of determining whether such
rate exceeds the Highest Lawful Rate, and shall be made, to the extent
permitted by usury laws applicable to the Lender, by amortizing, prorating and
spreading in equal
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parts during the period of the full stated term of the Note and this Agreement
and all interest at any time contracted for, charged or received by the Lender
in connection therewith.
SECTION 9.09. Survival of Representations and Warranties.
All representations, warranties and covenants contained herein or made in
writing by the Company in connection herewith and the other Loan Documents
shall survive the execution and delivery of this Agreement, the Note and the
other Loan Documents, the termination of the Commitment of the Lender and will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto, whether so expressed or not; provided, that the Commitment of
the Lender shall not inure to the benefit of any successor or assign of the
Company.
SECTION 9.10. Successors and Assigns; Participations. (a)
All covenants, promises and agreements by or on behalf of the Company or the
Lender that are contained in this Agreement shall bind and inure to the benefit
of their respective permitted successors and assigns. The Company may not
assign or transfer any of its rights or obligations hereunder.
(b) The Lender may assign to or sell participations to
one or more banks of all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including all or a portion of the
Commitment, the Advances and the Obligations of the Company owing to it and the
Note); provided, that the participating banks or other entities shall be
entitled to the cost protection provisions contained in Article II and Section
9.04 and the Company shall continue to deal solely and directly with the Lender
in connection with its rights and obligations under this Agreement and the
other Loan Documents. Except with respect to cost protections provided to a
participant pursuant to this paragraph and the items listed in Section 9.01
hereof, no participant shall be a third party beneficiary of this Agreement nor
shall it be entitled to enforce any rights provided to the Lender against the
Company under this Agreement.
(c) With the prior written consent of the Company and the
Lender (which consent shall not be unreasonably withheld), the Lender may
assign to one or more other Eligible Assignees all or a portion of its
interests, rights, and obligations under this Agreement and the other Loan
Documents (including all or a portion of the Commitment and the same portion of
the Loans and other Obligations of the Company at the time owing to it and the
Note); provided, however, that (i) each such assignment shall be in a minimum
principal amount of not less than $1,000,000.00 and shall be of a constant, and
not a varying, percentage of all the Lender's Commitment, rights and
obligations under this Agreement, (ii) the parties to each such assignment
shall execute and deliver to the Lender, for its acceptance, an Assignment and
Acceptance in form and substance satisfactory to the Lender (an "Assignment and
Acceptance") and the Note subject to such assignment and (iii) no assignment
shall be effective until receipt by the Lender of a reasonable service fee in
respect of said assignment equal to $2,000.00. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution
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thereof unless otherwise agreed to by the Lender and the Eligible Assignee
thereunder (x) the Eligible Assignee thereunder shall be a party hereto and to
the other Loan Documents and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of the Lender hereunder and under
the other Loan Documents and (y) the Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement and the other Loan Documents (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of the Lender's
rights and obligations under this Agreement and the other Loan Documents, the
Lender shall cease to be a party hereto).
(d) Notwithstanding any other provision herein, the
Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section disclose to the assignee
or participant or proposed assignee or participant, any information relating to
the Company furnished to the Lender by or on behalf of the Company.
SECTION 9.11. Confidentiality. The Lender agrees to
exercise its best efforts to keep any information delivered or made available
by the Company to it which is clearly indicated to be confidential information,
confidential from anyone other than Persons employed or retained by the Lender
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any
Lender from disclosing such information (a) pursuant to subpoena or upon the
order of any court or administrative agency, (b) upon the request or demand of
any regulatory agency or authority having jurisdiction over the Lender, (c)
which has been publicly disclosed, (d) to the extent reasonably required in
connection with any litigation to which the Lender, the Company or its
respective Affiliates may be a party, (e) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (f) to the Lender's legal
counsel and independent auditors and (g) to any actual or proposed participant
or assignee of all or part of its rights hereunder which has agreed in writing
to be bound by the provisions of this Section. The Lender will promptly notify
the Company of any information that it is required or requested to deliver
pursuant to clause (b) or (c) of this Section and, if the Company is a party to
any such litigation, clause (e) of this Section .
SECTION 9.12. Separability. Should any clause, sentence,
paragraph or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto agree that
the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom and the remainder will have
the same force and effectiveness as if such part or parts had never been
included herein.
SECTION 9.13. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
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SECTION 9.14. Interpretation. (a) In this Agreement,
unless a clear contrary intention appears:
(i) the singular number includes the plural
number and vice versa;
(ii) reference to any gender includes each other
gender;
(iii) the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such
Person's successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement, and reference
to a Person in a particular capacity excludes such Person in any other
capacity or individually, provided that nothing in this clause is
intended to authorize any assignment not otherwise permitted by this
Agreement;
(v) except as expressly provided to the contrary
herein, reference to any agreement, document or instrument (including
this Agreement) means such agreement, document or instrument as
amended, supplemented or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms
hereof, and reference to the Note or other note includes the Note
issued pursuant hereto in extension or renewal thereof and in
substitution or replacement therefor;
(vi) unless the context indicates otherwise,
reference to any Article, Section, Schedule or Exhibit means such
Article or Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative
meaning "include") means including, without limiting the generality of
any description preceding such term;
(viii) with respect to the determination of any
period of time, except as expressly provided to the contrary, the word
"from" means "from and including" and the word "to" means "to but
excluding"; and
(ix) reference to any law, rule or regulation
means such as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time.
(b) The Article and Section headings herein and the Table
of Contents are for
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convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted
or construed against any Person solely because that Person or its legal
representative drafted such provision.
SECTION 9.15. SUBMISSION TO JURISDICTION. (a) ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF MINNESOTA, IN HENNEPIN
COUNTY OR ELSEWHERE OR OF THE UNITED STATES FOR THE DISTRICT OF MINNESOTA AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING.
(b) THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 9.16. WAIVER OF JURY TRIAL. THE COMPANY HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
OR RELATING TO ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 9.17. FINAL AGREEMENT OF THE PARTIES. THIS
AGREEMENT (INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTE AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
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PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
FIRSTCITY FINANCIAL CORPORATION
/s/ XXXXX X. XXXXXXX
------------------------------------------------
Xxxxx X. Xxxxxxx
President
CARGILL FINANCIAL SERVICES
CORPORATION
/s/ XXXXXXX X. XXXXXX
------------------------------------------------
Xxxxxxx X. Xxxxxx
Assistant Vice President
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EIGHTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
This Eighth Amendment to Revolving Credit Agreement (this "Amendment")
is made and entered into as of the _____ day of FEBRUARY, 1998, by and among
CARGILL FINANCIAL SERVICES CORPORATION, a Delaware corporation (the "Lender")
and FIRSTCITY FINANCIAL CORPORATION, a Delaware corporation (the "Borrower").
RECITALS:
A. Borrower and Lender entered into a Revolving Credit Agreement
on or about December 29, 1995, which Revolving Credit Agreement was amended as
of August 12, 1996, and was further amended and restated as of December 27,
1996, and was further amended as of February 28, April 30, June 13, July 29,
August 29, September 25, and December 15, 1997 (as it is hereby and may be
hereafter amended, modified, extended, supplemented or increased from time to
time, the "Loan Agreement"), pursuant to which Lender agreed to advance funds
to Borrower from time to time in an aggregate amount not to exceed the Maximum
Loan Amount.
B. Borrower desires to increase the limit of the credit facility
available to Borrower under the Loan Agreement from $25,000,000.00 to
$35,000,000.00.
C. Lender is willing to increase the limit of the credit facility
available to Borrower to $35,000,000.00 on the terms and conditions herein
contained.
NOW, THEREFORE, in good consideration of the premises herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the
Loan Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS
2.01 AMENDMENT TO DEFINITION OF COMMITMENT. The definition of
"Commitment" in Section 1.01 of the Loan Agreement is hereby amended by
deleting the reference to "$25,000,000.00" and substituting therefore
"$35,000,000.00".
2.02 AMENDMENT TO SECTION 3.01 (FEES). Section 3.01 of the Loan
Agreement is hereby further amended by deleting subsections
EIGHTH AMENDMENT TO REVOLVING CREDIT AGREEMENT PAGE 1
42
(c) and (d) and substituting therefore a new subsection (c) as follows:
"(C) Upon the execution of any modification of or
amendment to the Loan Agreement entered into on or after
February 12, 1998, which increases the Lender's Commitment
from $25,000,000.00 up to and including $35,000,000.00, the
Company agrees to pay to the Lender an additional Commitment
Fee in the amount of $12,876.591. Except as may be otherwise
set forth therein, the additional Commitment Fee shall be due
and payable upon the execution of such modification or
amendment.
____________________
1 I based amount on $10,000,000.00 x 1% divided by 365 x 45
days.
EIGHTH AMENDMENT TO REVOLVING CREDIT AGREEMENT PAGE 2
