EXHIBIT 99.7
FORBEARANCE AND FOURTH LIMITED WAIVER AGREEMENT
This Forbearance and Fourth Limited Waiver Agreement, dated as of November 6,
1997 (this "Agreement"), is between Mercury Finance Company, a Delaware
corporation (the "Company"), and Credit Suisse First Boston Management
Corporation ("CS/FB"), holder of $22,500,000 in Mercury Subordinated Notes as
listed on Schedule 1 hereto (the "Subordinated Notes").
PRELIMINARY STATEMENTS:
1. CS/FB is a party to certain note agreements governing the Subordinated
Notes executed by the Company, including, without limitation, those listed on
Schedule 1, under which credit was extended to the Company (the note agreements
and the Subordinated Notes are collectively referred to herein as the
"Subordinated Debt Documents").
2. One or more defaults or events of default presently exist under the
Subordinated Debt Documents (collectively, the "Existing Events of Default")
which, subject to the terms of the Subordinated Debt Documents, entitle CS/FB to
pursue its rights and remedies with respect to such Existing Events of Default
and the Company has acknowledged that certain other events of default may occur
under the Subordinated Debt Documents during the Forbearance Period (as defined
below).
3. The Company has requested that during the Forbearance Period, CS/FB forbear
from exercising certain of its rights and remedies, as more particularly set
forth in this Agreement.
4. Subject to the terms and conditions of this Agreement, CS/FB is willing to
agree to the requested forbearance terms, as more particularly set forth in this
Agreement.
5. In February 1997, to meet emergency financing needs, the Company 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").
6. The Borrowers required financing beyond March 10, 1997 to continue their
operations and therefore extended the maturity date of the Bridge Loan to
June 10, 1997 in accordance with the Second Amendment to Loan and Security
Agreement dated March 12, 1997 (the "Second Amendment").
7. The Borrowers required financing beyond June 10, 1997 to continue their
operations and therefore BABC agreed to extend the maturity date of Bridge Loan
to January 6, 1998, in accordance with the terms set forth in the Third
Amendment attached hereto as Exhibit A (the "Third Amendment").
8. Certain provisions of the Subordinated Debt Documents unless waived
prohibit the Borrowers from granting liens on their assets to secure
indebtedness for borrowed money and/or require that CS/FB be granted an equal or
ratable lien on such assets in the event such a lien is granted to another
lender.
9. In connection with the Bridge Loan, the Company requested CS/FB, or its
assignor, to waive such provisions of the Subordinated Debt Documents to permit
the Borrowers to obtain the financing they needed to continue their operations
through March 10, 1997, and CS/FB, or its predecessor in interest, granted such
a waiver pursuant to a Limited Waiver Agreement dated as of February 7, 1997;
10. In connection with the extension of the maturity date of the Bridge Loan
from March 10, 1997 to June 10, 1997, the Company requested CS/FB to waive such
provisions of the Subordinated Debt Documents to permit the Borrowers to obtain
the financing they needed to continue their operations through June 10, 1997,
and CS/FB granted such a waiver pursuant to a Limited Waiver Agreement dated as
of March 10, 1997.
11. In connection with the extension of the maturity date of the Bridge Loan
from June 10, 1997 to January 6, 1998, the Company requested CS/FB to waive such
provisions of the Subordinated Debt Documents to permit the Borrowers to obtain
the financing they need to continue their operations, and CS/FB granted such a
waiver pursuant to a Forbearance and Third Limited Waiver Agreement dated as of
July 11, 1997.
12. CS/FB is now willing to waive certain limited provisions of the
Subordinated Debt Documents through January 6, 1998 to permit BABC to fund the
Bridge Loan upon request of Mercury.
13. The Company has entered into Forbearance Agreements dated July 11, 1997 and
is executing a First Amendment to Forbearance Agreements of even date herewith
(collectively, the "Amendment to Forbearance Agreements") with certain holders
of Funded Debt (as such term is defined in the Forbearance Agreements) pursuant
to which an escrow for the benefit of holders of Funded Debt is being
established to fund payment of certain amounts required to be paid to such
holders of Funded Debt under the Forbearance Agreements (the "Forbearance
Escrow").
14. CS/FB desires to waive certain limited provisions of the Subordinated Debt
Documents to permit the Company to establish the Forbearance Escrow.
AGREEMENT:
In consideration of the premises and mutual agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties to this agreement agree as
follows:
1. DEFINED TERMS; INTERPRETATION.
1.1 DEFINITIONS. When used in this Agreement, the following terms have the
following meanings:
"Agreement" has the meaning set forth in the preamble.
"BABC" has the meaning set forth in the fifth preliminary statement.
"Borrowers" has the meaning set forth in the fifth preliminary statement.
"Bridge Loan" has the meaning set forth in the fifth preliminary statement.
"Bridge Loan Agreement" has the meaning set forth in the fifth preliminary
statement.
"Company" has the meaning set forth in the preamble.
"Effective Date" means the date of this Agreement.
"Existing Events of Default" has the meaning set forth in the second preliminary
statement.
"Forbearance Agreements" has the meaning set forth in the thirteenth preliminary
statement.
"Forbearance Escrow" has the meaning set forth in the thirteenth preliminary
statement.
"Forbearance Period" means the period between the Effective Date and the
Termination Date, inclusive.
"Forbearance Period Default" means any event of default under a Subordinated
Debt Document that does not give rise to a Termination Event.
"Second Amendment" has the meaning set forth in the sixth preliminary statement.
"Senior Default Notice" means a Senior Default Notice as referred to in Section
11.4 of the Company's Senior Subordinated Note Agreements dated as of December
1, 1989 and May 15, 1990, respectively.
"Subordinated Debt Documents" has the meaning set forth in the first preliminary
statement.
"Subsidiary" means a corporation of which the Company owns, directly or
indirectly, more than 50% of any class of securities of which the holders are
entitled to vote.
"Termination Date" means the earlier to occur of (i) 11:59(pm) central standard
time on Xxxxx 0, 0000, (xx) the date the Forbearance Period is terminated under
Section 4.2 or (iii) the date a Senior Default Notice is received by the
Company.
"Termination Event" has the meaning set forth in Section 4.1.
"Third Amendment" has the meaning set forth in the seventh preliminary
statement.
1.2 REFERENCE TO AGREEMENTS. All references in this Agreement to other
agreements refer to such agreements as amended, restated, supplemented or
otherwise modified from time to time, unless such reference specifically states
otherwise.
1.3 INTERPRETATION.
(A) The words "hereof", "herein", "hereunder" and "hereto" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not
any particular provision of this Agreement and section, subsection, clause,
exhibit and schedule references are to this Agreement, unless otherwise
specified.
(B) All terms defined in this Agreement in the singular have comparable
meanings when used in the plural and vice versa, unless otherwise specified.
2. FORBEARANCE PROVISIONS.
2.1 FORBEARANCE. During the Forbearance Period, CS/FB will forbear from
exercising any rights or remedies it may have under the Subordinated Debt
Documents, applicable law or otherwise against the Company, any Subsidiary or
their assets with respect to any Existing Event of Default and any Forbearance
Period Default.
2.2 EFFECT OF TERMINATION DATE. The Termination Date shall occur automatically
at 11:59(pm) central standard time on March 2, 1998 or pursuant to Section 4.2
hereof. The Existing Events of Default and any Forbearance Period Default will
be deemed to exist on the Termination Date and, unless all of such Existing
Events of Default and Forbearance Period Defaults have been cured (if curable),
CS/FB may, at its option and subject to the terms of the Subordinated Debt
Documents, exercise any rights and remedies that it may have under any of the
Subordinated Debt Documents, applicable law or otherwise, all of such rights and
remedies being expressly reserved by CS/FB.
2.3 ACKNOWLEDGEMENT. THE COMPANY EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE
FORBEARANCE PROVISION SET FORTH IN SECTION 2.1 IS EFFECTIVE ONLY DURING THE
FORBEARANCE PERIOD AND THAT, ON AND AFTER THE TERMINATION DATE, UNLESS ALL
EXISTING EVENTS OF DEFAULT AND ANY FORBEARANCE PERIOD DEFAULTS HAVE BEEN CURED
(IF CURABLE), THE SUBORDINATED DEBT DOCUMENTS WILL BE IN DEFAULT AND, SUBJECT TO
THE TERMS OF THE SUBORDINATED DEBT DOCUMENTS, CS/FB WILL BE FULLY ENTITLED TO
EXERCISE ANY OF ITS RIGHTS AND REMEDIES UNDER THE SUBORDINATED DEBT DOCUMENTS,
UNDER APPLICABLE LAW OR OTHERWISE. THE COMPANY UNDERSTANDS THAT CS/FB IS
EXPRESSLY RELYING ON THE TERMS OF THIS SECTION 2.3 AND WOULD NOT HAVE ENTERED
INTO THIS AGREEMENT BUT FOR THE COMPANY'S ACKNOWLEDGEMENT AND AGREEMENT IN THIS
SECTION 2.3.
2.4 NO OTHER WAIVERS OR AGREEMENTS. Except for the forbearance agreed to
herein as specifically set forth herein, CS/FB has not agreed to any waiver,
modification or amendment of the Subordinated Debt Documents, or its rights in
respect thereof and the Subordinated Debt Documents remain in full force and
effect and are the valid and binding obligations of the Company, enforceable in
accordance with their respective terms except as limited by bankruptcy,
insolvency or similar laws generally affecting the enforcement of creditors'
rights generally.
2.5 NATURE OF PAYMENTS; RESERVATION OF RIGHTS. All payments to be made by the
Company hereunder to CS/FB shall be free from any offset, defense, recoupment or
counterclaim, at law or in equity, of any kind or nature, subject to the
reservation of rights contained herein. The Company does not waive and
expressly reserves any right it may have to contest the applicable interest rate
to CS/FB, if any.
3. AGREEMENTS BY THE COMPANY.
To induce CS/FB to enter into this Agreement and to make the forbearances as
contemplated by this Agreement, the Company agrees that:
3.1 PAYMENT OF INTEREST.
(A) During the Forbearance Period, interest accrued by CS/FB on the aggregate
principal balances owing to it under the Subordinated Debt Documents (whether or
not due by reason of acceleration or otherwise) will be paid to CS/FB by the
Company on the last business day of each month at the rate of 5.50% per annum.
Notwithstanding the foregoing sentence, the payment due on October 31, 1997
shall be made on the date the conditions set forth in Section 3.1 of the
Amendment to Forbearance Agreements have been met.
(B) CS/FB expressly retains and reserves any and all of its rights against the
Company under the Subordinated Debt Documents or applicable law with respect to
interest accrued and not paid pursuant to the terms of this Agreement and/or the
Subordinated Debt Documents.
3.2 REVIVAL OF OBLIGATIONS. If all or any part of any payment on account of
the Subordinated Debt Documents or this Agreement shall be invalidated, set
aside, declared or found to be void or voidable or required to be repaid to the
issuer or to any trustee, custodian, receiver, conservator, master, liquidator
or any other person pursuant to any bankruptcy law or pursuant to any common law
or equitable cause then, to the extent of such invalidation, set aside,
voidness, voidability or required repayment, such payment shall be deemed to not
have been paid, and the obligations of the Company in respect thereof shall be
immediately and automatically revived without the necessity of any action by
CS/FB.
3.3 TOLLING. The Company agrees that any and all statute of limitations,
repose, or similar legal constraints on the time by which a claim must be filed,
a person given notice thereof, or asserted, that expire, run or lapse during the
Forbearance Period on any claims that CS/FB may have against the Company or any
other persons relating to the Company (collectively, the "Forbearance Period
Statutes of Limitation") shall be tolled during the Forbearance Period and not
expire prior to April 1, 1998. The Company waives any defense it may have
against CS/FB under the Forbearance Period Statutes of Limitation, applicable
law or otherwise solely as to the expiration, running or lapsing of the
Forbearance Period Statutes of Limitation during the Forbearance Period, so long
as CS/FB takes the action required by any applicable Forbearance Period Statute
of Limitation by no later than April 1, 1998.
4. TERMINATION EVENTS; REMEDIES.
4.1 TERMINATION EVENTS. If any of the following events ("Termination Events")
has occurred and is continuing during the Forbearance Period, CS/FB has the
rights and remedies available to it in Sections 4.2 and 4.3:
(A) the Company fails to make any payment required by this Agreement on or
before the date such payment is due;
(B) a proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed by or
against the Company, the Company makes an assignment for the benefit of
creditors or the Company takes any corporate action to authorize any of the
foregoing;
(C) the Company voluntarily or involuntarily dissolves or is dissolved; and
(D) a Termination Event has occurred and is continuing under the Forbearance
Agreement executed by CS/FB with respect to its commercial paper.
4.2 TERMINATION OF THE FORBEARANCE PERIOD. Upon the occurrence of any
Termination Event and at any time after such occurrence during which a
Termination Event is continuing, CS/FB is entitled by written notice to the
Company to terminate the Forbearance Period with immediate effect unless such
Termination Event is of the type described in Section 4.1(B) or (C), in which
case the Forbearance Period automatically terminates without demand or notice of
any kind; provided, however, that any termination of the Forbearance Period
under this Section 4.2 does not terminate any other provision of this Agreement
that is not by its terms limited in application to the Forbearance Period. The
Company shall provide CS/FB with written notice of a Termination Event
immediately upon learning thereof.
4.3 CONSEQUENCES OF TERMINATION. If the Forbearance Period has been terminated
under Section 4.2, then the provisions of Section 2.2 hereof shall apply and,
subject to the terms of the Subordinated Debt Documents, CS/FB is fully entitled
to exercise any rights and remedies it may have under the Subordinated Debt
Documents, under applicable law or otherwise without regard to any matters
transpiring prior to such date of termination or the financial condition or
prospects of the Company as of such date.
5. FOURTH LIMITED WAIVER.
5.1 WAIVER. Solely in connection with the Bridge Loan in accordance with the
terms and conditions of the Third Amendment, CS/FB waives through 11:59(pm)
central standard time on January 6, 1998 compliance with any of the provisions
of the Subordinated Debt Documents 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 CS/FB 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 5.1 shall be
effective on the conditions that the (i) the aggregate principal amount of loans
outstanding to the Borrowers under the Bridge Loan does not exceed $50 million
at any time and (ii) the BABC Liens secure only the Bridge Loan and do not
secure any other indebtedness for borrowed money outstanding as of the date
hereof or hereafter. CS/FB waives compliance with any provisions of the
Subordinated Debt Documents that (a) prohibit or restrict the creation or
operation of the Forbearance Escrow and/or the entering into the Forbearance
Escrow or (b) result in or require the creation of an escrow, security interest,
lien or mortgage in favor of CS/FB on any assets of the Borrowers as a result of
the creation or operation of the Forbearance Escrow and/or the entering into the
Forbearance Escrow. The terms of this Section 5.1 shall not be affected by the
termination of the Forbearance Period.
6. MISCELLANEOUS.
6.1 SECTION TITLES. The preliminary statements to this Agreement (except for
definitions) and the section titles used in this Agreement are for convenience
only and do not affect the construction of this Agreement.
6.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which together constitute one instrument.
6.3 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding of the Company and CS/FB with respect to the subject matter of
this Agreement.
6.4 NOTICES. Any notice required or desired to be given or delivered under
this Agreement must be in writing and is deemed to have been validly given or
delivered (i) five days after deposit in the United States mails, with proper
postage prepaid, (ii) when sent after receipt of confirmation if sent by
telecopy or other similar facsimile transmission, (iii) one business day after
deposit with a reputable overnight courier with all charges prepaid or (iv) when
delivered, if hand delivered by messenger, all of which must be properly
addressed to the party to be notified and sent to the address or number for such
party as indicated on the signature page(s) to this Agreement or to such other
address or number as each party designates to the other in the manner prescribed
in this Section 6.4.
6.5 SUCCESSORS AND ASSIGNS. This Agreement inures to the benefit of, and is
binding upon the successors and assigns of, each of the Company and CS/FB. In
addition, CS/FB hereby agrees that, prior to the Termination Date, it shall not
sell, transfer or assign any of its claims under any of the Subordinated Debt
Documents, or any voting interest therein, unless the transferee thereof agrees
in writing to be bound by all the terms of this Agreement (which writing may
include a trade confirmation issued by a broker or dealer, acting as principal
or as agent for the transferee, stating that such agreement is a term of such
transfer), and the CS/FB provides the Company with a copy of such writing, in
which event the Company shall be deemed to have acknowledged that its
obligations to CS/FB hereunder shall be deemed to constitute obligations in
favor of such transferee, and the Company shall confirm that acknowledgment in
writing.
6.6 GOVERNING LAW. This Agreement will be interpreted, and the rights and
liabilities of the Company and CS/FB determined, in accordance with the internal
laws of the State of Illinois.
6.7 SEVERABILITY. Wherever possible, each provision of this Agreement will be
interpreted in a manner as to be effective and valid under applicable law. If
any provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision is ineffective only to the extent of such
prohibition or invalidity and the remaining provisions of this Agreement remain
unaffected and in full force and effect.
* * *
Delivered at Chicago, Illinois as of the date and year above first mentioned.
MERCURY FINANCE COMPANY
By:__________________________
Name:
Title:
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention:
Telephone: (000) 000-0000
Facsimile: (847) ___-____
CREDIT SUISSE FIRST BOSTON MANAGEMENT
CORPORATION
By:__________________________
Name: ___________________
Title: __________________
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: __________________
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
