Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
FIRST SUPPLEMENTAL TRUST INDENTURE
Dated as of __________, 1998
Supplementing that certain
INDENTURE
Dated as of __________, 1998
Authorizing the Issuance and Delivery of
Senior Secured Securities
consisting of $___________* aggregate principal amount of
9% Senior Secured Notes Due 2001, Series A
____________
* In the execution version, the appropriate amount determined in
accordance with __________________________ of the Plan will be
inserted here, in the first paragraph on page 2 and in Section 1.1(b)
hereof.
2
TABLE OF CONTENTS
PAGE
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
[Form of Face of Security] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
[Form of Reverse of Security]. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES . . . . . . . . . . . . . . . . . . . .7
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity . . .7
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest. . . . .8
ARTICLE II. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III. CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.4. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5. Payment Restrictions Affecting Subsidiaries. . . . . . . . . . . 16
Section 3.6. Issuance of Subsidiary Preferred Stock . . . . . . . . . . . . . 16
Section 3.7. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.8. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 16
Section 3.9. Change in Business . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2. Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Reference to and Effect on the Indenture . . . . . . . . . . . . 17
Section 6.2. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . 17
Section 6.3. Supplemental Indenture May be Executed in Counterparts.. . . . . 18
2
FIRST SUPPLEMENTAL INDENTURE, dated as of __________, 1998 (this "First
Supplemental Indenture"), between Mercury Finance Company, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and Norwest Bank Minnesota, National Association, a U.S. national banking
association, as Trustee (the "Trustee"), supplementing that certain Indenture,
dated as of __________, 1998, between the Company and the Trustee (the
"Indenture").
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its senior secured
notes (the "Securities") to be issued in one or more series as provided for
in the Indenture.
B. The Indenture provides that the Securities of each series shall be
in such form as may be established by or pursuant to a Board Resolution or in
one or more indentures supplemental thereto, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities denominated
"9% Senior Secured Notes Due 2001, Series A" (the "Senior Secured Notes")
pursuant to the terms of this First Supplemental Indenture and substantially
in the form set forth below, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this First Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Secured Notes, as evidenced by their execution thereof.
[Form of Face of Security]
MERCURY FINANCE COMPANY
9% SENIOR SECURED NOTE DUE 2001, SERIES A
No. R-__________ $________________________
CUSIP No.________________
MERCURY FINANCE COMPANY, a corporation duly organized and existing under
the laws of the State of Delaware (hereinafter called the "Company," which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to [_______________], or
registered assigns, the principal sum of $__________ on
[the third anniversary of the Effective Date], subject to earlier redemption
or repurchase as described below, and to pay interest thereon from
_______________, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, at the rate of 9% per annum,
payable quarterly on ___________ of each year, commencing on __________,
199_, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date shall, as provided in said Indenture, be computed on
the basis of a 360-day year consisting of twelve 30-day months and paid to
the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be ________________________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 calendar days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of and any such interest on this Security shall
be made at the office or agency of the Company maintained for such purpose in
New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the Security Register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE
REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT
AS THOUGH FULLY SET FORTH IN THIS PLACE.
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This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication herein has been signed manually by
the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in accordance
with the Indenture.
MERCURY FINANCE COMPANY
By:_____________________________________
Name:___________________________________
Attest: Title:__________________________________
By:______________________
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[Form of Reverse of Security]
MERCURY FINANCE COMPANY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of __________, 1998 (herein called
the "Indenture"), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $___________.
On the terms and subject to the conditions set forth in the Company
Security Documents, the payment and performance of the obligations of the
Company under the Securities issued under this Indenture, including this
Security, are secured by the Company Collateral and have the benefit of the
Subsidiaries Guaranty Agreement executed by each Subsidiary of the Company.
Payment and performance of the obligations of the Subsidiaries under the
Subsidiaries Guaranty Agreement are secured by the Subsidiaries Collateral.
The Company Collateral and the Subsidiaries Collateral has been pledged to
the Trustee on the terms and subject to the conditions set forth in the
Collateral Security Documents for the equal and ratable benefit of the
Holders of Securities issued under the Indenture. As set forth in the
Indenture, the Subsidiaries Guaranty Agreement and the Subsidiaries Security
Agreement, to the extent a Subsidiary of the Company enters into a Warehouse
Facility, the rights of any party lending money to a Subsidiary of the
Company pursuant to such Warehouse Facility with respect to certain assets
comprising a portion of the Subsidiaries Collateral will be senior to those
rights of the Holders of Securities issued under the Indenture.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company, at any time and from time
to time, in whole or in part, in increments of not less than $5.0 million,
upon not more than 60 nor less than 30 days' notice to the Holders prior to
the Redemption Date, at the principal amount thereof, plus accrued and unpaid
interest thereon to the date of redemption.
If less than all of the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed will be selected by such method
as the Trustee may deem fair and appropriate. In the event of the redemption
of this Security in part only, a new Security or Securities of this series
and of like tenor for the portion hereof not so redeemed shall be issued in
the name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company is required to
repurchase the Securities, at the option of the Holders thereof, at a
purchase price equal to 101% of the
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outstanding principal amount thereof, plus accrued and unpaid interest
thereon to the Repurchase Date, but interest installments with a Stated
Maturity on or prior to such Repurchase Date shall be payable to the Holders
of such Securities of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof all as provided in the Indenture.
In the event of the repurchase of this Security in part only, a new Security
or Securities of this series of like tenor for the portion hereof not so
repurchased shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder unless (a) such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, (b) the Holders of not less
than 25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, (c) the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this series at
the time Outstanding a direction inconsistent with such request and (d) the
Trustee shall have failed to institute such proceeding for 60 calendar days
after receipt of such notice, request, and offer of indemnity. However, the
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates therefor expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay
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the principal of and any premium or interest on this Security at the times,
place, and rate, and in the coin or currency, herein prescribed.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering
the same.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this
series and of like tenor, of authorized denominations and for the same
aggregate principal amount, shall be issued to the designated transferee or
transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security shall be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security that are defined in the Indenture shall
have the respective meanings assigned to them in the Indenture. This
Security, the Indenture and the Collateral Security Documents shall be
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws of such State.
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D. The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: Norwest Bank Minnesota, National
Association, as Trustee
By:____________________________________
Authorized Signatory
E. All acts and things necessary to make the Senior Secured Notes,
when the Senior Secured Notes have been executed by the Company and
authenticated by the Trustee and delivered as provided in the Indenture and
this First Supplemental Indenture, the valid, binding and legal obligations
of the Company and to constitute these presents a valid indenture and
agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this First
Supplemental Indenture and the issue hereunder of the Senior Secured Notes
have in all respects been duly authorized; and the Company, in the exercise
of the legal right and power in it vested, has executed and delivered the
Indenture and is executing and delivering this First Supplemental Indenture
and proposes to make, execute, issue and deliver the Senior Secured Notes.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Senior
Secured Notes are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Senior Secured
Notes by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of the respective Holders from time to time of the
Senior Secured Notes, as follows:
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES.
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity.
(a) On __________, 1998, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Senior Secured Notes substantially
in the form set forth above, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this First Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed
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thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Secured Notes, as evidenced by their execution thereof.
(b) The Senior Secured Notes shall be issued in the aggregate principal
amount of $_________ and shall mature on [the third anniversary of the Effective
Date].
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest.
(a) The Senior Secured Notes shall bear interest at the rate of 9% per
annum from [_________________], or, if later, from the most recent Interest
Payment Date to which interest has been paid or duly provided for.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall, as provided in the Indenture, be paid to
the Person in whose name a Senior Secured Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ______________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name the Senior Secured Note (or
one or more Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of the Senior
Secured Notes not less than 10 calendar days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Senior Secured Notes
may be listed, and upon such notice as may be required by such exchange, all
as more fully provided in the Indenture.
(c) Payment of the principal of and any such interest on the Senior
Secured Notes shall be made at the office or agency of the Company maintained
for such purpose in New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security Register.
ARTICLE II. CERTAIN DEFINITIONS.
Section 2.1. Certain Definitions.
The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this First Supplemental Indenture
otherwise requires) for all purposes of this First Supplemental Indenture and
of any indenture supplemental hereto have the respective meanings specified
in this Section 2.1. All accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP. All other terms used
in this First Supplemental Indenture that are defined in the Indenture or the
Trust Indenture Act, either
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directly or by reference therein (except as herein otherwise expressly
provided or unless the context of this First Supplemental Indenture otherwise
requires), have the respective meanings assigned to such terms in the
Indenture or the Trust Indenture Act, as the case may be, as in force at the
date of this First Supplemental Indenture as originally executed.
"Affiliate" has the meaning ascribed thereto in Section 3.8.
"Asset Sale" means any sale or other disposition, or series of sales or
other dispositions (including, without limitation, by merger or consolidation
and whether by operation of law or otherwise) of assets by the Company or its
Subsidiaries to any Person except (i) sales of used, worn out or surplus
equipment in the ordinary course of business and (ii) sales, contributions or
transfers of Receivables pursuant to any Warehouse Facility. The definition
of Asset Sale shall include the receipt of funds from any federal or state
income tax refunds.
"Cash Equivalent" means: (a) obligations issued or unconditionally
guaranteed as to principal and interest by the United States of America or by
any agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America which are backed by the full
faith and credit of the United States of America; (b) obligations (including,
but not limited to, demand or time deposits, bankers' acceptances and
certificates of deposit) issued by a depository institution or trust company
or a wholly owned subsidiary or branch office of any depository institution
or trust company, provided that (i) such depository institution or trust
company has, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
capital, surplus or undivided profits (as of the date of such institution's
most recently published financial statements) in excess of $100 million and
(ii) the commercial paper of such depository institution or trust company, at
the time of the Company's or any of its Subsidiaries' investment therein or
contractual commitment providing for such investment, is rated at least A1 by
S&P or P-1 by Moody's; (c) debt obligations (including, but not limited to,
commercial paper and medium-term notes) issued or unconditionally guaranteed
as to principal and interest by any corporation, state or municipal
government or agency or instrumentality thereof or foreign sovereignty, if
the commercial paper of such corporation, state or municipal government or
foreign sovereignty, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
is rated at least A1 by S&P or P-1 by Moody's; (d) repurchase obligations
with a term of not more than seven calendar days for underlying securities of
the type described above entered into with a depository institution or trust
company meeting the qualifications described in clause (b) above; and (e)
Investments in money market or mutual funds that invest predominantly in Cash
Equivalents of the type described in clauses (a), (b), (c) and (d) above;
provided, however, that, in the case of clause (a) above, each such
investment has a maturity of one year or less from the date of acquisition
thereof, and, in the case of clauses (b) and (c) above, each such investment
has a maturity of 270 days or less from the date of acquisition thereof.
"Change of Control" means the occurrence of the following event: any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be
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deemed to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
voting stock of the Company.
"Effective Date" means ______________, 1998.
"Finance Receivables" means notes and other obligations evidencing
installment loans made to consumers for the purchase of real and personal
property. All Finance Receivables shall be valued in accordance with GAAP.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by any other Person. The
amount of any Investment shall be the original cost thereof, plus the cost of
all additions thereto and minus the amount of all reductions therein in the
nature of repayment of principal or return of capital, without any
adjustments for increases or decreases in value, write-ups, write-downs or
write-offs with respect to such Investment.
"Leverage Ratio" means, at any date of determination, the ratio of the
sum of the Indebtedness and the net worth of the Company and its Subsidiaries
to the Indebtedness of the Company and its Subsidiaries, in each case
calculated on a consolidated basis in accordance with GAAP.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including without limitation
any conditional sale, deferred purchase price or other title retention
agreement, the interest of a lessor under a Capital Lease Obligation, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing, under the Uniform Commercial Code or comparable
law of any jurisdiction, of any financing statement naming the owner of the
asset to which such financing statement relates as debtor.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor to the
rating agency business thereof.
"Permitted Indebtedness" means, without duplication: (a) the Series B
Senior Secured Notes and the Senior Subordinated Notes; (b) Indebtedness
under one or more Warehouse Facilities; (c) Indebtedness between or among the
Company and its wholly owned Subsidiaries; (d) to the extent deemed to be
"Indebtedness," obligations under swap agreements, cap agreements, collar
agreements, insurance arrangements, or any similar agreement or arrangement,
in each case designed to provide a BONA FIDE hedge against fluctuations in
interest rates, the cost of currency, or the cost of goods (other than
inventory); (e) other Indebtedness of
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the Company or its Subsidiaries in outstanding amounts not to exceed $5
million in the aggregate at any particular time; (f) liabilities (other than
for or in connection with borrowed money) incurred in the operation of the
Finance Business in the ordinary course thereof and not more than six months
overdue, unless contested in good faith by appropriate proceedings; (g)
Indebtedness evidenced by letters of credit that are issued in the ordinary
course of the business of the Company and its Subsidiaries to secure workers'
compensation and other insurance coverages; (l) deferred taxes and other
deferred obligations incurred in the ordinary course of business and not
evidenced by notes, bonds, debentures or other evidences of indebtedness; and
(m) Indebtedness incurred in connection with any extension, renewal,
refinancing, replacement, or refunding (including successive extensions,
renewals, refinancings, replacements, or refundings), in whole or in part, of
any Indebtedness of the Company or its Subsidiaries; provided, however, that
the principal amount of the Indebtedness so incurred does not exceed the sum
of the principal amount of the Indebtedness so extended, renewed, refinanced,
replaced, or refunded, plus all interest accrued thereon and all related fees
and expenses.
"Permitted Investments" means, without duplication: (a) Cash
Equivalents; (b) Investments in another Person, if as a result of such
Investment (i) such other Person becomes a Subsidiary of the Company or (ii)
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Subsidiary of the Company; (c) Investments in any Subsidiary of the Company
or Investments in the Company by a Subsidiary of the Company; (d) commissions
and advances to employees of the Company and its Subsidiaries in the ordinary
course of business; (e) Investments representing notes, securities, or other
instruments or obligations acquired in connection with the sale of assets;
(f) Investments represented by that portion of the proceeds from Asset Sales
permitted under Section 3.7 to the extent such Investments are non-cash
proceeds; (g) Investments representing capital stock or obligations issued to
the Company or any Subsidiary of the Company in settlement of claims against
any other Person by reason of a composition or readjustment of debt or a
reorganization of any debtor of the Company or such Subsidiary; and (h) other
Investments, the aggregate amount of which at any one time does not exceed $5
million.
"Permitted Liens" means, without duplication: (a) Liens arising under
the Collateral Security Documents; (b) Liens on new Receivables securing any
Warehouse Facility; (c) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance, workers'
compensation, unemployment insurance, old-age pensions, and other social
security benefits other than in respect of employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended; (d) Liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's,
and vendor's Liens, incurred in the ordinary course of business and securing
obligations which are not yet due or which are being contested in good faith
by appropriate proceedings; (e) Liens securing the payment of taxes,
assessments, and governmental charges or levies, either (i) not delinquent or
(ii) being contested in good faith by appropriate legal or administrative
proceedings and as to which adequate reserves shall have been established on
the books of the relevant Person in conformity with GAAP; (f) zoning
restrictions, easements, rights of way, reciprocal easement agreements,
-11-
operating agreements, covenants, conditions, or restrictions on the use of
any parcel of property that are routinely granted in real estate transactions
or do not interfere in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries or the value of such property
for the purpose of such business; (f) Liens on property existing at the time
such property is acquired; (g) purchase money Liens upon or in any property
acquired or held in the ordinary course of business to secure Indebtedness
incurred solely for the purpose of financing the acquisition of such
property; (h) Liens on the assets of any Subsidiary of the Company at the
time such Subsidiary is acquired; (i) Liens with respect to obligations in
outstanding amounts not to exceed $5.0 million at any particular time and
that (i) are not incurred in connection with the borrowing of money or
obtaining advances or credit (other than trade credit in the ordinary course
of business) and (ii) do not in the aggregate interfere in any material
respect with the ordinary conduct of the business of the Company and its
Subsidiaries; (j) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of the business of the Company and its
Subsidiaries; (k) Liens resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which (i) the Company or a Subsidiary of the Company shall in good
faith be prosecuting an appeal or proceeding for a review, (ii) a stay of
execution pending such appeal or proceeding for review shall be in effect,
and (iii) the Company shall have established on its books adequate reserves
in accordance with GAAP; (l) rights of banks to set off deposits against
Indebtedness owed to such banks; and (m) any extension, renewal or
replacement, in whole or in part, of any Lien described in the foregoing
clauses; provided, however, that any such extension, renewal or replacement
Lien is limited to the property or assets covered by the Lien extended,
renewed or replaced or substitute property or assets, the value of which is
not materially greater than the value of the property or assets for which the
substitute property or assets are substituted.
"Plan" means the Plan of Reorganization of Mercury Finance Company
confirmed by the United States Bankruptcy Court for the District of
_______________ pursuant to an order dated ___________ __, 1998.
"Repurchase Date" has the meaning ascribed thereto in Section 3.4(a).
"Repurchase Price" has the meaning described thereto in Section 3.4(a).
"Restricted Payments" has the meaning ascribed thereto in Section 3.3.
"Senior Subordinated Notes" means the Company's 9% Senior Subordinated
Notes Due 2003 issued under the Indenture dated as of ______________ __, 1998
between the Company and the trustee thereunder.
"Series B Senior Secured Notes" means the Company's Senior Secured Notes,
Series B Due 2001 issued under the Indenture.
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"S&P" means Standard & Poor's Ratings Group., or any successor to the
rating agency business thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company which
is expressly subordinated in right of payment to the senior secured notes
issued or to be issued under this Indenture, including without limitation,
the Series B Senior Secured Notes.
"Uniform Commercial Code" means the New York Uniform Commercial Code as
amended or modified from time to time.
ARTICLE III. CERTAIN COVENANTS.
Section 3.1. Indebtedness.
The Company shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become liable with respect to, any Indebtedness other than Permitted
Indebtedness if immediately after incurring such Indebtedness other than
Permitted Indebtedness, the Company's Leverage Ratio, calculated on a pro
forma basis, would be equal to or greater than 2.00:1.00.
Section 3.2. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of their
respective assets, other than Permitted Liens.
Section 3.3. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
(a) declare or pay any dividend on, or make any other distribution on account
of, the Company's capital stock; (b) purchase, redeem or otherwise acquire or
retire for value any capital stock (including any option, warrant or right to
purchase capital stock) of the Company owned beneficially by a Person other
than a wholly owned Subsidiary of the Company; (c) purchase, redeem or
otherwise acquire or retire for value the principal of any Subordinated
Indebtedness prior to the scheduled maturity thereof other than pursuant to
mandatory scheduled redemptions or repayments; or (d) make any Investment
other than Permitted Investments (all such dividends, distributions,
purchases, redemptions, or Investments being collectively referred to as
"Restricted Payments"). Notwithstanding anything in the foregoing to the
contrary, the Company may take the actions described in CLAUSE (a), (b) or
(d) above if, at the time of such action or after giving effect thereto: (i)
no Event of Default shall have occurred and is continuing; (ii) the Company
could incur at least $1.00 of Indebtedness (other than Permitted
Indebtedness) under Section 3.1; and (iii) the cumulative amount of
Restricted Payments made subsequent to the Effective Date shall not be
greater than the sum of: (A) 50% of the Company's cumulative consolidated
net income (or a negative amount equal to 100% of the Company's cumulative
consolidated net loss, if applicable) from the Effective Date through the end
of the Company's fiscal quarter immediately
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preceding the taking of such action; and (B) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale of capital stock of
the Company (other than redeemable capital stock), including capital stock
issued upon the conversion of convertible Indebtedness issued on or after the
Effective Date, in exchange for outstanding Indebtedness, or from the
exercise of options, warrants, or rights to purchase capital stock of the
Company to any Person other than to a Subsidiary of the Company subsequent to
the Effective Date (with the Company being deemed, in the case of capital
stock issued upon conversion or in exchange for Indebtedness, to have
received net cash proceeds equal to the principal amount of the Indebtedness
so converted or exchanged); provided, however, that (1) the payment of any
dividend within 60 calendar days after the date of declaration thereof, if
such declaration complied with the foregoing redemption or other acquisition
provisions on the date of such declaration, (2) the purchase, redemption, or
other acquisition or retirement for value of any shares of capital stock of
the Company in exchange for, or out of the proceeds of, a substantially
concurrent issue and sale (other than to a Subsidiary of the Company) of
other shares of capital stock (other than redeemable capital stock) of the
Company, and (3) any purchase, redemption or other acquisition or retirement
for value of any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company issued to any employee or director of
the Company pursuant to any employee benefit or similar plan shall not be
deemed to constitute "Restricted Payments" and shall not be prohibited under
this Section.
Section 3.4. Change of Control.
(a) RIGHT TO REQUIRE REPURCHASE. In the event that there shall occur a
Change of Control, then each Holder shall have the right, at such Holder's
option, to require the Company to repurchase all or any designated part of
such Holder's Senior Secured Notes on the date (the "Repurchase Date")
selected by the Company that is not more than 75 days after the date the
Company gives notice of the Change of Control as contemplated in paragraph
(b) below at a price (the "Repurchase Price") equal to 101% of the
outstanding principal amount thereof, plus accrued and unpaid interest to the
Repurchase Date. Such right to require the repurchase of Senior Secured
Notes shall continue notwithstanding a discharge of the Company from its
obligations with respect to the Senior Secured Notes in accordance with the
provisions of Article VI or Article XIII of the Indenture.
(b) NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT. On or before the
fifteenth day after the Company knows that a Change of Control has occurred,
the Company or, at the request of the Company, the Trustee (in the name of
and at the expense of the Company), shall give notice of the occurrence of
the Change of Control and of the repurchase right set forth herein arising as
a result thereof by first-class mail, postage prepaid, to each Holder of the
Senior Secured Notes at such Xxxxxx's address appearing in the Security
Register for the Senior Secured Notes. The Company shall also deliver a copy
of such notice to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
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(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its
repurchase right.
No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise its repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Change
of Control. To exercise a repurchase right, a Holder shall deliver to the
Company (or to an agent designated by the Company for such purpose in the
notice referred to above) on or before the fifth Business Day prior to the
Repurchase Date (i) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of
the Senior Secured Note (or portion of the Senior Secured Note) to be
repurchased and a statement that an election to exercise the repurchase right
is being made thereby, and (ii) the Senior Secured Note with respect to which
the repurchase right is being exercised, duly endorsed for transfer to the
Company. Such written notice shall be irrevocable. If the Repurchase Date
falls between any Regular Record Date and the corresponding succeeding
Interest Payment Date, Senior Secured Notes to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date. In the event a repurchase right shall be exercised in
accordance with the terms hereof and the instructions referred to herein, (x)
the Company shall on the Repurchase Date pay or cause to be paid in cash to
the Holder thereof the Repurchase Price for each Senior Secured Note (or any
portion thereof) as to which the repurchase right has been exercised, and (y)
the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Senior Secured Note without
service charge, a new Senior Secured Note or Notes, as applicable, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for any portion of the principal of such
Senior Secured Note as to which the repurchase right has not been exercised.
Any questions as to the compliance by a Holder of Senior Secured Notes with
the requirements for a valid exercise of a repurchase right (including the
timely delivery of an exercise notice in proper form) shall be determined by
the Company in its sole discretion, which in all events shall be exercised in
good faith.
(c) DEPOSIT OF REPURCHASE PRICE. On or prior to the Repurchase Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 7.03 of the Indenture) an amount of money sufficient to
pay the Repurchase Price of the Senior Secured Notes which are to be
repurchased on the Repurchase Date.
(d) SENIOR SECURED NOTES NOT REPURCHASED ON REPURCHASE DATE. If any
Senior Secured Note (or any portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal of such Senior Secured
Note (or such portion thereof) shall, until paid, bear interest from the
Repurchase Date at the rate borne by such Senior Secured Note.
-15-
(e) COMPLIANCE. The Company shall comply with all tender offer rules,
including but not limited to Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, to the extent applicable to any repurchase of the Senior Secured
Notes under this Section 3.4.
Section 3.5. Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist any
contractual restriction on the ability of any Subsidiary of the Company to
(a) pay any dividend on, or make any other distribution on account of, its
capital stock or pay any Indebtedness owed to the Company or a Subsidiary of
the Company or (b) make loans or advances to the Company or a Subsidiary of
the Company.
Section 3.6. Issuance of Subsidiary Preferred Stock.
The Company shall not permit any Subsidiary of the Company to issue any
shares of preferred stock.
Section 3.7. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, conduct any Asset Sale unless (i) such Asset Sale is
for fair market value (as evidenced by a resolution by the Company's Board of
Directors, certified by an officer of the Company and delivered to the
Trustee) and (ii) at least 85% of the consideration received by the Company
in such Asset Sale is in the form of cash. All net cash proceeds realized
from any Asset Sale (after taxes, reasonable fees and expenses incurred
directly therewith and any Indebtedness secured hereby) in excess of
$10,000,000 in the aggregate for such Asset Sale and all other Asset Sales
occurring within the immediately preceding 360 day period will be paid to the
Trustee within 60 days of the receipt of the proceeds to redeem Securities
issued under the Indenture in accordance with the terms of the Indenture.
Section 3.8. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any transaction with an Affiliate (other than the Company or a
wholly owned Subsidiary thereof) on terms more favorable to the Affiliate
than would have been obtainable in arm's-length dealing. Solely for purposes
of this Section 3.8, an "Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, or any other Person that
has a relationship with such specified Person whereby either of such Persons
holds or beneficially owns 10% or more of the equity interest in the other
or 10% or more of any class of voting securities of the other. For the
purposes of this definition, "control" when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
-16-
Section 3.9. Change in Business.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any material line of business substantially different from the
Finance Business.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
Section 4.1. Immediate Events of Default.
Notwithstanding anything in Section 9.01 of the Indenture to the
contrary, if the Company defaults in the performance of, or breaches any,
covenant set forth in Article III (other than SECTION 3.8) of this First
Supplemental Indenture or in Section 7.05 of the Indenture, such default or
breach shall immediately constitute an Event of Default, without giving
effect to any passage of time or notice or both.
ARTICLE V. REDEMPTION OF SECURITIES.
Section 5.1. Right of Redemption.
The Senior Secured Notes may be redeemed in accordance with the form of
note set forth herein.
Section 5.2. Repurchase.
The Company may at any time and from time to time purchase Senior
Secured Notes in the open market or otherwise at any price, and any Senior
Secured Notes so purchased shall be promptly surrendered to the Trustee for
cancellation and shall not be reissued.
ARTICLE VI. MISCELLANEOUS.
Section 6.1. Reference to and Effect on the Indenture.
This First Supplemental Indenture shall be construed as supplemental to
the Indenture and all the terms and conditions of this First Supplemental
Indenture shall be deemed to be part of the terms and conditions of the
Indenture. Except as set forth herein, the Indenture heretofore executed and
delivered is hereby (i) incorporated by reference in this First Supplemental
Indenture and (ii) ratified, approved and confirmed.
Section 6.2. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Article III hereof if the Holders of a
majority in principal amount of the Outstanding Senior Secured Notes shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition
except to the extent so
-17-
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
Section 6.3. Supplemental Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] MERCURY FINANCE COMPANY
By:_________________________
Name:_______________________
Title:______________________
Attest:
By:_________________________
Name:_______________________
Title:______________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, AS TRUSTEE
By:_________________________
Name:_______________________
Title:______________________
Attest:
By:_________________________
Name:_______________________
Title:______________________
STATE OF ________)
) SS:
COUNTY OF _______)
-18-
On this ____ day of __________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of MERCURY FINANCE COMPANY, one of
the entities described in and which executed the above instrument; that
he/she knows the seal of said entity; that the seal or a facsimile thereof
affixed to said instrument is such seal; that it was so affixed by authority
of the Board of Directors of said entity, and that he/she signed his/her name
thereto by like authority.
____________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
-19-
STATE OF ________)
) SS:
COUNTY OF _______)
On this ____ day of __________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, one of the entities described in and which executed the
above instrument; that he/she knows the seal of said entity; that the seal or
a facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
____________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
-20-
Mercury Finance Company
and
Norwest Bank Minnesota, National Association,
Trustee
SECOND SUPPLEMENTAL TRUST INDENTURE
Dated as of __________, 1998
Supplementing that certain
INDENTURE
Dated as of __________, 1998
Authorizing the Issuance and Delivery of
Senior Secured Securities
consisting of $___________* aggregate principal amount of
Senior Secured Notes Due 2001, Series B
___________
* In the execution version, the appropriate amount determined in
accordance with __________________________ of the Plan will be
inserted here, in the first paragraph on page 2 and in Section 1.1(b)
hereof.
2
TABLE OF CONTENTS
PAGE
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
[Form of Face of Security] . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
[Form of Reverse of Security]. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES . . . . . . . . . . . . . . . . . . . .7
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity . . .7
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest. . . . .8
ARTICLE II. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III. CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.4. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5. Payment Restrictions Affecting Subsidiaries. . . . . . . . . . . 16
Section 3.6. Issuance of Subsidiary Preferred Stock . . . . . . . . . . . . . 16
Section 3.7. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.8. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 16
Section 3.9. Change in Business . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2. Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Reference to and Effect on the Indenture . . . . . . . . . . . . 17
Section 6.2. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . 18
Section 6.3. Supplemental Indenture May be Executed in Counterparts.. . . . . 18
2
SECOND SUPPLEMENTAL INDENTURE, dated as of __________, 1998 (this
"Second Supplemental Indenture"), between Mercury Finance Company, a
corporation duly organized and existing under the laws of the State of
Delaware (the "Company"), and Norwest Bank Minnesota, National Association, a
U.S. national banking association, as Trustee (the "Trustee"), supplementing
that certain Indenture, dated as of __________, 1998, between the Company and
the Trustee (the "Indenture").
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its senior secured
notes (the "Securities") to be issued in one or more series as provided for
in the Indenture.
B. The Indenture provides that the Securities of each series shall be
in such form as may be established by or pursuant to a Board Resolution or in
one or more indentures supplemental thereto, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities denominated
"Senior Secured Notes Due 2001, Series B" (the "Senior Secured Notes")
pursuant to the terms of this Second Supplemental Indenture and substantially
in the form set forth below, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Indenture and this Second Supplemental Indenture, and with such letters,
numbers, or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Senior Secured Notes, as evidenced by their execution thereof.
[Form of Face of Security]
MERCURY FINANCE COMPANY
SENIOR SECURED NOTE DUE 2001, SERIES B
No. R-__________ $_____________________
CUSIP No._____________
MERCURY FINANCE COMPANY, a corporation duly organized and existing under
the laws of the State of Delaware (hereinafter called the "Company," which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to [_______________], or
registered assigns, the principal sum of $__________ on [the third anniversary
of the Effective Date], subject to earlier redemption or repurchase as
described below, and to pay interest thereon from _______________, or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, at a floating rate equal to the London interbank offering rate
for three months quoted in THE WALL STREET JOURNAL on the later of
[Effective Date or 91 days thereafter] and the most recently occurring
Interest Payment Date ("LIBOR") PLUS ___%* per annum, payable quarterly on
___________ of each year, commencing on __________, 199_, until the principal
hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as
provided in said Indenture, be computed on the basis of a 360-day year
consisting of twelve 30-day months and paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be
________________________ (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall
be given to Holders of Securities of this series not less than 10 calendar
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture.
Payment of the principal of and any such interest on this Security shall
be made at the office or agency of the Company maintained for such purpose in
New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the Security Register.
-2-
* Percentage rate will be equal to 9% MINUS the percentage rate of LIBOR on
the date of execution of the Indenture MINUS a percentage rate that
represents the cost to the Company of establishing interest rate protection
such that the effective interest rate to the Company of this offering is 9%.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE
REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT
AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication herein has been signed manually by
the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in accordance
with the Indenture.
MERCURY FINANCE COMPANY
By:____________________________________
Name:__________________________________
Attest: Title:_________________________________
By:________________________
-3-
[Form of Reverse of Security]
MERCURY FINANCE COMPANY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of __________, 1998 (herein called
the "Indenture"), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $___________.
On the terms and subject to the conditions set forth in the Company
Security Documents, the payment and performance of the obligations of the
Company under the Securities issued under this Indenture, including this
Security, are secured by the Company Collateral and have the benefit of the
Subsidiaries Guaranty Agreement executed by each Subsidiary of the Company.
Payment and performance of the obligations of the Subsidiaries under the
Subsidiaries Guaranty Agreement are secured by the Subsidiaries Collateral.
The Company Collateral and the Subsidiaries Collateral has been pledged to
the Trustee on the terms and subject to the conditions set forth in the
Collateral Security Documents for the equal and ratable benefit of the
Holders of Securities issued under the Indenture. As set forth in the
Indenture, the Subsidiaries Guaranty Agreement and the Subsidiaries Security
Agreement, to the extent a Subsidiary of the Company enters into a Warehouse
Facility, the rights of any party lending money to a Subsidiary of the
Company pursuant to such Warehouse Facility with respect to certain assets
comprising a portion of the Subsidiaries Collateral will be senior to those
rights of the Holders of Securities issued under the Indenture.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company, at any time and from time
to time, in whole or in part, in increments of not less than $5.0 million,
upon not more than 60 nor less than 30 days' notice to the Holders prior to
the Redemption Date, at the principal amount thereof, plus accrued and unpaid
interest thereon to the date of redemption.
If less than all of the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed will be selected by such method
as the Trustee may deem fair and appropriate. In the event of the redemption
of this Security in part only, a new Security or Securities of this series
and of like tenor for the portion hereof not so redeemed shall be issued in
the name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company is required to
repurchase the Securities, at the option of the Holders thereof, at a
purchase price equal to 101% of the
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outstanding principal amount thereof, plus accrued and unpaid interest
thereon to the Repurchase Date, but interest installments with a Stated
Maturity on or prior to such Repurchase Date shall be payable to the Holders
of such Securities of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof all as provided in the Indenture.
In the event of the repurchase of this Security in part only, a new Security
or Securities of this series of like tenor for the portion hereof not so
repurchased shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder unless (a) such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, (b) the Holders of not less
than 25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, (c) the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this series at
the time Outstanding a direction inconsistent with such request and (d) the
Trustee shall have failed to institute such proceeding for 60 calendar days
after receipt of such notice, request, and offer of indemnity. However, the
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or interest
hereon on or after the respective due dates therefor expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay
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the principal of and any premium or interest on this Security at the times,
place, and rate, and in the coin or currency, herein prescribed.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering
the same.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this
series and of like tenor, of authorized denominations and for the same
aggregate principal amount, shall be issued to the designated transferee or
transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security shall be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
All terms used in this Security that are defined in the Indenture shall
have the respective meanings assigned to them in the Indenture. This
Security, the Indenture and the Collateral Security Documents shall be
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws of such State.
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D. The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: Norwest Bank Minnesota, National
Association, as Trustee
By:___________________________________
Authorized Signatory
E. All acts and things necessary to make the Senior Secured Notes,
when the Senior Secured Notes have been executed by the Company and
authenticated by the Trustee and delivered as provided in the Indenture and
this Second Supplemental Indenture, the valid, binding and legal obligations
of the Company and to constitute these presents a valid indenture and
agreement according to its terms, have been done and performed, and the
execution and delivery by the Company of the Indenture and this Second
Supplemental Indenture and the issue hereunder of the Senior Secured Notes
have in all respects been duly authorized; and the Company, in the exercise
of the legal right and power in it vested, has executed and delivered the
Indenture and is executing and delivering this Second Supplemental Indenture
and proposes to make, execute, issue and deliver the Senior Secured Notes.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Senior
Secured Notes are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Senior Secured
Notes by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of the respective Holders from time to time of the
Senior Secured Notes, as follows:
ARTICLE I. ISSUANCE OF SENIOR SECURED NOTES.
Section 1.1. Issuance of Senior Secured Notes; Principal Amount; Maturity.
(a) On __________, 1998, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Senior Secured Notes
substantially in the form set forth above, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture and this Second Supplemental Indenture, and with
such
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letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by
the officers executing such Senior Secured Notes, as evidenced by their
execution thereof.
(b) The Senior Secured Notes shall be issued in the aggregate principal
amount of $_________ and shall mature on [the third anniversary of the Effective
Date].
Section 1.2. Interest on the Senior Secured Notes; Payment of Interest.
(a) The Senior Secured Notes shall bear interest for each period
preceding any Interest Payment Date at a floating rate equal to the London
interbank offering rate for three months quoted in THE WALL STREET JOURNAL on
the later of [Effective Date or 91 days thereafter] and the preceding
Interest Payment Date ("LIBOR") PLUS ___% per annum from [_________________],
or, if later, from the most recent Interest Payment Date to which interest
has been paid or duly provided for.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall, as provided in the Indenture, be paid to
the Person in whose name a Senior Secured Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ______________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name the Senior Secured Note (or
one or more Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of the Senior
Secured Notes not less than 10 calendar days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Senior Secured Notes
may be listed, and upon such notice as may be required by such exchange, all
as more fully provided in the Indenture.
(c) Payment of the principal of and any such interest on the Senior
Secured Notes shall be made at the office or agency of the Company maintained
for such purpose in New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security Register.
ARTICLE II. CERTAIN DEFINITIONS.
Section 2.1. Certain Definitions.
The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this Second Supplemental
Indenture otherwise requires) for all purposes of
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this Second Supplemental Indenture and of any indenture supplemental hereto
have the respective meanings specified in this Section 2.1. All accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP. All other terms used in this Second Supplemental
Indenture that are defined in the Indenture or the Trust Indenture Act,
either directly or by reference therein (except as herein otherwise expressly
provided or unless the context of this Second Supplemental Indenture
otherwise requires), have the respective meanings assigned to such terms in
the Indenture or the Trust Indenture Act, as the case may be, as in force at
the date of this Second Supplemental Indenture as originally executed.
"Affiliate" has the meaning ascribed thereto in Section 3.8.
"Asset Sale" means any sale or other disposition, or series of sales or
other dispositions (including, without limitation, by merger or consolidation
and whether by operation of law or otherwise) of assets by the Company or its
Subsidiaries to any Person except (i) sales of used, worn out or surplus
equipment in the ordinary course of business and (ii) sales, contributions or
transfers of Receivables pursuant to any Warehouse Facility. The definition
of Asset Sale shall include the receipt of funds from any federal or state
income tax refunds.
"Cash Equivalent" means: (a) obligations issued or unconditionally
guaranteed as to principal and interest by the United States of America or by
any agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America which are backed by the full
faith and credit of the United States of America; (b) obligations (including,
but not limited to, demand or time deposits, bankers' acceptances and
certificates of deposit) issued by a depository institution or trust company
or a wholly owned subsidiary or branch office of any depository institution
or trust company, provided that (i) such depository institution or trust
company has, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
capital, surplus or undivided profits (as of the date of such institution's
most recently published financial statements) in excess of $100 million and
(ii) the commercial paper of such depository institution or trust company, at
the time of the Company's or any of its Subsidiaries' investment therein or
contractual commitment providing for such investment, is rated at least A1 by
S&P or P-1 by Moody's; (c) debt obligations (including, but not limited to,
commercial paper and medium-term notes) issued or unconditionally guaranteed
as to principal and interest by any corporation, state or municipal
government or agency or instrumentality thereof or foreign sovereignty, if
the commercial paper of such corporation, state or municipal government or
foreign sovereignty, at the time of the Company's or any of its Subsidiaries'
investment therein or contractual commitment providing for such investment,
is rated at least A1 by S&P or P-1 by Moody's; (d) repurchase obligations
with a term of not more than seven calendar days for underlying securities of
the type described above entered into with a depository institution or trust
company meeting the qualifications described in clause (b) above; and (e)
Investments in money market or mutual funds that invest predominantly in Cash
Equivalents of the type described in clauses (a), (b), (c) and (d) above;
provided, however, that, in the case of clause (a) above, each such
01investment has a maturity of one year or less from the date of acquisition
thereof, and, in the case of clauses (b) and (c) above, each such investment
has a maturity of 270 days or less from the date of acquisition thereof.
-9-
"Change of Control" means the occurrence of the following event: any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the voting
stock of the Company.
"Effective Date" means ______________, 1998.
"Finance Receivables" means notes and other obligations evidencing
installment loans made to consumers for the purchase of real and personal
property. All Finance Receivables shall be valued in accordance with GAAP.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by any other Person. The
amount of any Investment shall be the original cost thereof, plus the cost of
all additions thereto and minus the amount of all reductions therein in the
nature of repayment of principal or return of capital, without any
adjustments for increases or decreases in value, write-ups, write-downs or
write-offs with respect to such Investment.
"Leverage Ratio" means, at any date of determination, the ratio of the
sum of the Indebtedness and the net worth of the Company and its Subsidiaries
to the Indebtedness of the Company and its Subsidiaries, in each case
calculated on a consolidated basis in accordance with GAAP.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including without limitation
any conditional sale, deferred purchase price or other title retention
agreement, the interest of a lessor under a Capital Lease Obligation, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing, under the Uniform Commercial Code or comparable
law of any jurisdiction, of any financing statement naming the owner of the
asset to which such financing statement relates as debtor.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor to the
rating agency business thereof.
"Permitted Indebtedness" means, without duplication: (a) the Series A
Senior Secured Notes and the Senior Subordinated Notes; (b) Indebtedness
under one or more Warehouse Facilities; (c) Indebtedness between or among the
Company and its wholly owned Subsidiaries; (d) to the extent deemed to be
"Indebtedness," obligations under swap agreements, cap
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agreements, collar agreements, insurance arrangements, or any similar
agreement or arrangement, in each case designed to provide a BONA FIDE hedge
against fluctuations in interest rates, the cost of currency, or the cost of
goods (other than inventory); (e) other Indebtedness of the Company or its
Subsidiaries in outstanding amounts not to exceed $5 million in the aggregate
at any particular time; (f) liabilities (other than for or in connection with
borrowed money) incurred in the operation of the Finance Business in the
ordinary course thereof and not more than six months overdue, unless
contested in good faith by appropriate proceedings; (g) Indebtedness
evidenced by letters of credit that are issued in the ordinary course of the
business of the Company and its Subsidiaries to secure workers' compensation
and other insurance coverages; (l) deferred taxes and other deferred
obligations incurred in the ordinary course of business and not evidenced by
notes, bonds, debentures or other evidences of indebtedness; and (m)
Indebtedness incurred in connection with any extension, renewal, refinancing,
replacement, or refunding (including successive extensions, renewals,
refinancings, replacements, or refundings), in whole or in part, of any
Indebtedness of the Company or its Subsidiaries; provided, however, that the
principal amount of the Indebtedness so incurred does not exceed the sum of
the principal amount of the Indebtedness so extended, renewed, refinanced,
replaced, or refunded, plus all interest accrued thereon and all related fees
and expenses.
"Permitted Investments" means, without duplication: (a) Cash
Equivalents; (b) Investments in another Person, if as a result of such
Investment (i) such other Person becomes a Subsidiary of the Company or (ii)
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Subsidiary of the Company; (c) Investments in any Subsidiary of the Company
or Investments in the Company by a Subsidiary of the Company; (d) commissions
and advances to employees of the Company and its Subsidiaries in the ordinary
course of business; (e) Investments representing notes, securities, or other
instruments or obligations acquired in connection with the sale of assets;
(f) Investments represented by that portion of the proceeds from Asset Sales
permitted under Section 3.7 to the extent such Investments are non-cash
proceeds; (g) Investments representing capital stock or obligations issued to
the Company or any Subsidiary of the Company in settlement of claims against
any other Person by reason of a composition or readjustment of debt or a
reorganization of any debtor of the Company or such Subsidiary; and (h) other
Investments, the aggregate amount of which at any one time does not exceed $5
million.
"Permitted Liens" means, without duplication: (a) Liens arising under
the Collateral Security Documents; (b) Liens on new Receivables securing any
Warehouse Facility; (c) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance, workers'
compensation, unemployment insurance, old-age pensions, and other social
security benefits other than in respect of employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended; (d) Liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's,
and vendor's Liens, incurred in the ordinary course of business and securing
obligations which are not yet due or which are being contested in good faith
by appropriate proceedings; (e) Liens securing the payment of taxes,
assessments, and governmental charges or levies, either (i) not delinquent or
(ii) being contested
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in good faith by appropriate legal or administrative proceedings and as to
which adequate reserves shall have been established on the books of the
relevant Person in conformity with GAAP; (f) zoning restrictions, easements,
rights of way, reciprocal easement agreements, operating agreements,
covenants, conditions, or restrictions on the use of any parcel of property
that are routinely granted in real estate transactions or do not interfere in
any material respect with the ordinary conduct of the business of the Company
and its Subsidiaries or the value of such property for the purpose of such
business; (f) Liens on property existing at the time such property is
acquired; (g) purchase money Liens upon or in any property acquired or held
in the ordinary course of business to secure Indebtedness incurred solely for
the purpose of financing the acquisition of such property; (h) Liens on the
assets of any Subsidiary of the Company at the time such Subsidiary is
acquired; (i) Liens with respect to obligations in outstanding amounts not to
exceed $5.0 million at any particular time and that (i) are not incurred in
connection with the borrowing of money or obtaining advances or credit (other
than trade credit in the ordinary course of business) and (ii) do not in the
aggregate interfere in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries; (j) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of the business
of the Company and its Subsidiaries; (k) Liens resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall not
have expired, or in respect of which (i) the Company or a Subsidiary of the
Company shall in good faith be prosecuting an appeal or proceeding for a
review, (ii) a stay of execution pending such appeal or proceeding for review
shall be in effect, and (iii) the Company shall have established on its books
adequate reserves in accordance with GAAP; (l) rights of banks to set off
deposits against Indebtedness owed to such banks; and (m) any extension,
renewal or replacement, in whole or in part, of any Lien described in the
foregoing clauses; provided, however, that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced or substitute property or assets, the value of
which is not materially greater than the value of the property or assets for
which the substitute property or assets are substituted.
"Plan" means the Plan of Reorganization of Mercury Finance Company
confirmed by the United States Bankruptcy Court for the District of
_______________ pursuant to an order dated ___________ __, 1998.
"Repurchase Date" has the meaning ascribed thereto in Section 3.4(a).
"Repurchase Price" has the meaning described thereto in Section 3.4(a).
"Restricted Payments" has the meaning ascribed thereto in Section 3.3.
"Senior Subordinated Notes" means the Company's 9% Senior Subordinated
Notes Due 2003 issued under the Indenture dated as of ______________ __, 1998
between the Company and the trustee thereunder.
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"Series A Senior Secured Notes" means the Company's Senior Secured
Notes, Series A Due 2001 issued under the Indenture.
"S&P" means Standard & Poor's Ratings Group., or any successor to the
rating agency business thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company which
is expressly subordinated in right of payment to the senior secured notes
issued or to be issued under this Indenture, including without limitation,
the Series B Senior Secured Notes.
"Uniform Commercial Code" means the New York Uniform Commercial Code as
amended or modified from time to time.
ARTICLE III. CERTAIN COVENANTS.
Section 3.1. Indebtedness.
The Company shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become liable with respect to, any Indebtedness other than Permitted
Indebtedness if immediately after incurring such Indebtedness other than
Permitted Indebtedness, the Company's Leverage Ratio, calculated on a pro
forma basis, would be equal to or greater than 2.00:1.00.
Section 3.2. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of their
respective assets, other than Permitted Liens.
Section 3.3. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
(a) declare or pay any dividend on, or make any other distribution on account
of, the Company's capital stock; (b) purchase, redeem or otherwise acquire or
retire for value any capital stock (including any option, warrant or right to
purchase capital stock) of the Company owned beneficially by a Person other
than a wholly owned Subsidiary of the Company; (c) purchase, redeem or
otherwise acquire or retire for value the principal of any Subordinated
Indebtedness prior to the scheduled maturity thereof other than pursuant to
mandatory scheduled redemptions or repayments; or (d) make any Investment
other than Permitted Investments (all such dividends, distributions,
purchases, redemptions, or Investments being collectively referred to as
"Restricted Payments"). Notwithstanding anything in the foregoing to the
contrary, the Company may take the actions described in CLAUSE (a), (b) or
(d) above if, at the time of such action or after giving effect thereto: (i)
no Event of Default shall have occurred and is continuing; (ii) the Company
could incur at least $1.00 of Indebtedness (other than Permitted
Indebtedness) under Section 3.1; and (iii) the cumulative amount of
Restricted Payments made subsequent to the Effective Date shall
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not be greater than the sum of: (A) 50% of the Company's cumulative
consolidated net income (or a negative amount equal to 100% of the Company's
cumulative consolidated net loss, if applicable) from the Effective Date
through the end of the Company's fiscal quarter immediately preceding the
taking of such action; and (B) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale of capital stock of the
Company (other than redeemable capital stock), including capital stock issued
upon the conversion of convertible Indebtedness issued on or after the
Effective Date, in exchange for outstanding Indebtedness, or from the
exercise of options, warrants, or rights to purchase capital stock of the
Company to any Person other than to a Subsidiary of the Company subsequent to
the Effective Date (with the Company being deemed, in the case of capital
stock issued upon conversion or in exchange for Indebtedness, to have
received net cash proceeds equal to the principal amount of the Indebtedness
so converted or exchanged); provided, however, that (1) the payment of any
dividend within 60 calendar days after the date of declaration thereof, if
such declaration complied with the foregoing redemption or other acquisition
provisions on the date of such declaration, (2) the purchase, redemption, or
other acquisition or retirement for value of any shares of capital stock of
the Company in exchange for, or out of the proceeds of, a substantially
concurrent issue and sale (other than to a Subsidiary of the Company) of
other shares of capital stock (other than redeemable capital stock) of the
Company, and (3) any purchase, redemption or other acquisition or retirement
for value of any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company issued to any employee or director of
the Company pursuant to any employee benefit or similar plan shall not be
deemed to constitute "Restricted Payments" and shall not be prohibited under
this Section.
Section 3.4. Change of Control.
(a) RIGHT TO REQUIRE REPURCHASE. In the event that there shall occur a
Change of Control, then each Holder shall have the right, at such Holder's
option, to require the Company to repurchase all or any designated part of
such Holder's Senior Secured Notes on the date (the "Repurchase Date")
selected by the Company that is not more than 75 days after the date the
Company gives notice of the Change of Control as contemplated in paragraph
(b) below at a price (the "Repurchase Price") equal to 101% of the
outstanding principal amount thereof, plus accrued and unpaid interest to the
Repurchase Date. Such right to require the repurchase of Senior Secured
Notes shall continue notwithstanding a discharge of the Company from its
obligations with respect to the Senior Secured Notes in accordance with the
provisions of Article VI or Article XIII of the Indenture.
(b) NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT. On or before the
fifteenth day after the Company knows that a Change of Control has occurred,
the Company or, at the request of the Company, the Trustee (in the name of
and at the expense of the Company), shall give notice of the occurrence of
the Change of Control and of the repurchase right set forth herein arising as
a result thereof by first-class mail, postage prepaid, to each Holder of the
Senior Secured Notes at such Xxxxxx's address appearing in the Security
Register for the Senior Secured Notes. The Company shall also deliver a copy
of such notice to the Trustee.
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Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its
repurchase right.
No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise its repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Change
of Control. To exercise a repurchase right, a Holder shall deliver to the
Company (or to an agent designated by the Company for such purpose in the
notice referred to above) on or before the fifth Business Day prior to the
Repurchase Date (i) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of
the Senior Secured Note (or portion of the Senior Secured Note) to be
repurchased and a statement that an election to exercise the repurchase right
is being made thereby, and (ii) the Senior Secured Note with respect to which
the repurchase right is being exercised, duly endorsed for transfer to the
Company. Such written notice shall be irrevocable. If the Repurchase Date
falls between any Regular Record Date and the corresponding succeeding
Interest Payment Date, Senior Secured Notes to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date. In the event a repurchase right shall be exercised in
accordance with the terms hereof and the instructions referred to herein, (x)
the Company shall on the Repurchase Date pay or cause to be paid in cash to
the Holder thereof the Repurchase Price for each Senior Secured Note (or any
portion thereof) as to which the repurchase right has been exercised, and (y)
the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Senior Secured Note without
service charge, a new Senior Secured Note or Notes, as applicable, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for any portion of the principal of such
Senior Secured Note as to which the repurchase right has not been exercised.
Any questions as to the compliance by a Holder of Senior Secured Notes with
the requirements for a valid exercise of a repurchase right (including the
timely delivery of an exercise notice in proper form) shall be determined by
the Company in its sole discretion, which in all events shall be exercised in
good faith.
(c) DEPOSIT OF REPURCHASE PRICE. On or prior to the Repurchase Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 7.03 of the Indenture) an amount of money sufficient to
pay the Repurchase Price of the Senior Secured Notes which are to be
repurchased on the Repurchase Date.
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(d) SENIOR SECURED NOTES NOT REPURCHASED ON REPURCHASE DATE. If any
Senior Secured Note (or any portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal of such Senior Secured
Note (or such portion thereof) shall, until paid, bear interest from the
Repurchase Date at the rate borne by such Senior Secured Note.
(e) COMPLIANCE. The Company shall comply with all tender offer rules,
including but not limited to Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, to the extent applicable to any repurchase of the Senior Secured
Notes under this Section 3.4.
Section 3.5. Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist any
contractual restriction on the ability of any Subsidiary of the Company to
(a) pay any dividend on, or make any other distribution on account of, its
capital stock or pay any Indebtedness owed to the Company or a Subsidiary of
the Company or (b) make loans or advances to the Company or a Subsidiary of
the Company.
Section 3.6. Issuance of Subsidiary Preferred Stock.
The Company shall not permit any Subsidiary of the Company to issue any
shares of preferred stock.
Section 3.7. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, conduct any Asset Sale unless (i) such Asset Sale is
for fair market value (as evidenced by a resolution by the Company's Board of
Directors, certified by an officer of the Company and delivered to the
Trustee) and (ii) at least 85% of the consideration received by the Company
in such Asset Sale is in the form of cash. All net cash proceeds realized
from any Asset Sale (after taxes, reasonable fees and expenses incurred
directly therewith and any Indebtedness secured hereby) in excess of
$10,000,000 in the aggregate for such Asset Sale and all other Asset Sales
occurring within the immediately preceding 360 day period will be paid to the
Trustee within 60 days of the receipt of the proceeds to redeem Securities
issued under the Indenture in accordance with the terms of the Indenture.
Section 3.8. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any transaction with an Affiliate (other than the Company or a
wholly owned Subsidiary thereof) on terms more favorable to the Affiliate
than would have been obtainable in arm's-length dealing. Solely for purposes
of this Section 3.8, an "Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, or any other Person that
has a relationship with such specified Person whereby either of such Persons
holds or beneficially owns 10% or more of the equity interest in the other
or 10% or more of any class of voting securities of the other. For the
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purposes of this definition, "control" when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Section 3.9. Change in Business.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any material line of business substantially different from the
Finance Business.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
Section 4.1. Immediate Events of Default.
Notwithstanding anything in Section 9.01 of the Indenture to the
contrary, if the Company defaults in the performance of, or breaches any,
covenant set forth in Article III (other than SECTION 3.8) of this Second
Supplemental Indenture or in Section 7.05 of the Indenture, such default or
breach shall immediately constitute an Event of Default, without giving
effect to any passage of time or notice or both.
ARTICLE V. REDEMPTION OF SECURITIES.
Section 5.1. Right of Redemption.
The Senior Secured Notes may be redeemed in accordance with the form of
note set forth herein.
Section 5.2. Repurchase.
The Company may at any time and from time to time purchase Senior
Secured Notes in the open market or otherwise at any price, and any Senior
Secured Notes so purchased shall be promptly surrendered to the Trustee for
cancellation and shall not be reissued.
ARTICLE VI. MISCELLANEOUS.
Section 6.1. Reference to and Effect on the Indenture.
This Second Supplemental Indenture shall be construed as supplemental to
the Indenture and all the terms and conditions of this Second Supplemental
Indenture shall be deemed to be part of the terms and conditions of the
Indenture. Except as set forth herein, the Indenture heretofore executed and
delivered is hereby (i) incorporated by reference in this Second Supplemental
Indenture and (ii) ratified, approved and confirmed.
Section 6.2. Waiver of Certain Covenants.
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The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Article III hereof if the Holders of a
majority in principal amount of the Outstanding Senior Secured Notes shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force
and effect.
Section 6.3. Supplemental Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] MERCURY FINANCE COMPANY
By:___________________________
Name:_________________________
Title:________________________
Attest:
By:___________________________
Name:_________________________
Title:________________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUSTEE
By:___________________________
Name:_________________________
Title:________________________
Attest:
By:___________________________
Name:_________________________
Title:________________________
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STATE OF __________)
) SS:
COUNTY OF _________)
On this ____ day of ______________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of MERCURY FINANCE COMPANY, one of
the entities described in and which executed the above instrument; that
he/she knows the seal of said entity; that the seal or a facsimile thereof
affixed to said instrument is such seal; that it was so affixed by authority
of the Board of Directors of said entity, and that he/she signed his/her name
thereto by like authority.
___________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
___________________________
Notary Public
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STATE OF __________)
) SS.:
COUNTY OF _________)
On this ____ day of ________________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ___________________ of NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, one of the entities described in and which executed the
above instrument; that he/she knows the seal of said entity; that the seal or
a facsimile thereof affixed to said instrument is such seal; that it was so
affixed by authority of the Board of Directors of said entity, and that
he/she signed his/her name thereto by like authority.
___________________________
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
___________________________
Notary Public
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