SECOND LIMITED WAIVER AGREEMENT
This Second Limited Waiver Agreement (this "Agreement") dated as of
March 10, 1997 is entered into between Mercury Finance Company, a Delaware
corporation ("Mercury"), and the lender whose name appears on the signature
pages hereof (the "Lender").
W I T N E S S E T H:
WHEREAS, the Lender or its predecessors in interest is a party to or
beneficiary of one or more credit agreements, note agreements or other
agreements, instruments or other documents with or executed by Mercury including
those listed on Schedule 1 hereto pursuant to which Lender has extended credit
to Mercury (collectively, the "Existing Agreements");
WHEREAS, Mercury is in default under various provisions of the Existing
Agreements;
WHEREAS, in late January 1997, Mercury began experiencing a severe
liquidity crisis and required immediate emergency financing to continue its
operations;
WHEREAS, in February 1997, to meet such emergency financing needs, Mercury
and certain of its subsidiaries (collectively, the "Borrowers") entered into a
Loan and Security Agreement with BankAmerica Business Credit, Inc. ("BABC")
dated as of February 7, 1997 (the "Bridge Loan Agreement") providing the
Borrowers with a secured revolving loan facility in an aggregate principal
amount not to exceed $50 million and having a maturity of March 10, 1997, with
an option to extend (the "Bridge Loan");
WHEREAS, the Borrowers require financing beyond March 10, 1997 to continue
their operations and have therefore requested BABC to extend the maturity date
of the Bridge Loan to June 10, 1997 in accordance with the terms set forth in
the Second Amendment attached hereto as Exhibit A;
WHEREAS, certain provisions of the Existing Agreements unless waived
prohibit the Borrowers from granting liens on their assets to secure
indebtedness for borrowed money and/or require that the Lender be granted an
equal or ratable lien on such assets in the event such a lien is granted to
another lender;
WHEREAS, in connection with the Bridge Loan, Mercury requested the Lender
to waive such provisions of the Existing Agreements to permit it to obtain the
emergency financing it needed through March 10, 1997, and the Lender or its
assignor granted such a waiver pursuant to a Limited Waiver Agreement dated as
of February 7, 1997;
WHEREAS, in connection with the extension of the maturity date of the
Bridge Loan from March 10, 1997 to June 10, 1997, Mercury has again requested
the Lender to waive such provisions of the Existing Agreements so the Borrowers
may obtain the financing they need to continue their operations;
WHEREAS, the Lender is willing to waive certain limited provisions of the
Existing Agreements to permit the maturity date of the Bridge Loan to be
extended to June 10, 1997;
WHEREAS, Mercury wishes to reserve its rights regarding the application of
certain payments to be made hereunder and the Lender similarly reserves all
rights with respect thereto;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mercury and Lender agree as
follows:
1. Treatment of Existing Indebtedness. Mercury has represented to the
Lender that neither it nor its subsidiaries intend to repay, retire, make a
distribution to or on account of, or make an interest payment on account of, any
existing indebtedness for borrowed money, other than the Bridge Loan, including,
but not limited to, indebtedness on account of commercial paper, note
agreements, loan agreements, subordinated debt agreements or any of the
indebtedness listed on Schedule 2 hereto (collectively, "Funded Debt"), except
as contemplated in this Agreement, unless the Lender receives in connection with
such payment or distribution, and subject to applicable subordination
agreements, its pro rata portion of such payment or distribution on account of
indebtedness owing to the Lender under the Existing Agreements.
2. Amendment of Existing Agreements. The Existing Agreements are hereby
amended to provide that, not withstanding any contrary provision set forth
therein:
(a) commencing on February 10, 1997, the Lender will accrue interest
on the aggregate principal balances owing to the Lender under the Existing
Agreements (whether or not due by reason of acceleration or otherwise) at
the greater rate (the "Default Rate") of (i) 9% per annum and (ii) the
applicable default rate set forth in the Existing Agreements;
(b) from and after the date of this Agreement through June 10, 1997,
(i) interest accrued by the Lender on the aggregate principal balances
owing to the Lender under the Existing Agreements (whether or not due by
reason of acceleration or otherwise) will be paid to the Lender by Mercury
on the first business day of each month (and on June 10, 1997 for the
period from June 1, 1997 through and including June 10, 1997) at the
greater rate of (A) 7% per annum and (B) the applicable nondefault rate set
forth in the Existing Agreements and (ii) on the earlier to occur of (the
"Catch-up Date") (A) June 10, 1997 and (B) the date on which Mercury
receives unrestricted proceeds from the sale of the Xxxxxx insurance
business (stock or assets), all accrued and unpaid interest calculated
through and including the Catch-up Date, subject to a maximum rate of 9%
per annum, will be paid to the Lender by Mercury; and
(c) to the extent that the interest payments to the Lender under
subclause (b) hereof do not pay in full all accrued interest owing to the
Lender under the Existing Agreements because the Default Rate applicable to
certain or all of the aggregate principal balances owing to the Lender
under the Existing Agreements (whether or not due by reason of acceleration
or otherwise) exceeds 9% per annum, the Lender shall retain any and all of
its rights against Mercury under the Existing Agreement or applicable law
with respect to such amounts.
3. Waiver. Solely in connection with the extension of the maturity date
of the Bridge Loan to June 10, 1997 in accordance with the terms and conditions
of the Second Amendment, the Lender waives compliance with any of the provisions
of the Existing Agreements that (a) prohibit or restrict the granting of
security interests, liens or mortgages by any of the Borrowers to BABC (the
"BABC Liens") to secure the Bridge Loan or (b) result in or require the creation
of a security interest, lien or mortgage in favor of the Lender on any assets of
the Borrowers as a result of the granting of the BABC Liens to secure the Bridge
Loan; provided, that the waivers set forth in this Section 3 shall be effective
on the conditions that (i) Mercury shall have paid to the Lender in immediately
available funds any and all accrued and unpaid interest on the aggregate
principal balances owing to the Lender under the Existing Agreements
(A) calculated through and including February 9, 1997 at the nondefault interest
rate applicable to such aggregate principal balances under the relevant Existing
Agreement, and (B) calculated from and including February 10, 1997 through the
date hereof at the rate set forth in paragraph 2(b)(i) hereof, (ii) the
aggregate principal amount of loans advanced to the Borrowers under the Bridge
Loan does not exceed $50 million and (iii) the BABC Liens secure only the Bridge
Loan and do not secure any other indebtedness for borrowed money including
Funded Debt outstanding as of the date hereof or hereafter.
4. Effect on Existing Agreements; Reservation of Rights. In the event of
any conflict between the terms hereof and the terms of any Existing Agreement or
any instruments, documents or agreements executed in connection therewith with
respect to the subject matter of this Agreement, the terms of this Agreement
shall govern and control. Each of the Existing Agreements and such other
related instruments, documents or agreements, and all obligations of Mercury and
all rights and remedies of the Lender thereunder or under applicable law shall
remain in full force and effect except to the extent expressly amended or waived
in accordance with the terms hereof. No defaults or events of default existing
as of the date hereof under the Existing Agreements are being waived or
forborne. Mercury acknowledges that defaults and events of default exist and
are continuing under the Existing Agreements. Mercury and the Lender reserve
any and all of their rights as to the application of the payments to be made
under paragraph 2 of this Agreement; provided, however, that Mercury and the
Lender agree that notwithstanding anything in the Existing Agreements or this
Agreement to the contrary, there shall be no requirement that (a) the debt under
the Existing Agreements be accelerated for such debt to accrue or bear interest
at the applicable rate or (b) unanimous consent from all parties to the Existing
Agreements is necessary for the Lender to accrue interest at the rates specified
in paragraph 2 of this Agreement.
5. Representations. The Lender represents that it has not assigned or
transferred the indebtedness owing to it under the Existing Agreements or it has
assigned or transferred such indebtedness subject to this Agreement and is duly
authorized to enter into and perform this Agreement. Mercury represents to the
Lender that it is duly authorized to enter into and perform this Agreement.
Mercury further represents that it understands that the holders of the Funded
Debt (excluding subordinated debt) will (a) accrue interest on all of the Funded
Debt (excluding subordinated debt) commencing on February 10, 1997 at the
Default Rate (as defined above in paragraph 2) and Mercury will pay interest
accrued by the holders of Funded Debt (excluding subordinated debt) thereon to
the holders thereof on the same payment terms set forth in Section 2 hereof and
(b) will pay to the holders of Funded Debt (excluding subordinated debt) any and
all accrued and unpaid interest thereon calculated through and including
February 9, 1997 at the applicable nondefault contract rate, or in the case of
commercial paper, original issue discount accrued through such date. Mercury
further represents to the Lender that transactions contemplated by the Second
Amendment will not result in or require the creation of a security interest,
lien or mortgage in favor of any holder of commercial paper.
6. Entire Agreement. This Agreement constitutes the full and entire
understanding of the parties hereto with respect to the subject matter hereof.
7. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in a manner as to be effective and valid under applicable
law. If any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity and the remaining provisions of this
Agreement shall remain unaffected and in full force and effect.
8. Governing Law. This Agreement shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the
internal laws of the State of Illinois.
9. Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon the successors and assigns of, each of the parties hereto.
10. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one instrument.
* * * * *
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
MERCURY FINANCE COMPANY,
a Delaware corporation
By:
Name:
Title:
By:
Name:
Title:
Name of Lender:
