Exhibit 4.0.1
Berkadia LLC
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
May 2, 2001
The FINOVA Group Inc.
FINOVA Capital Corporation
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Ladies and Gentlemen:
Pursuant to and as contemplated by the commitment letter (the
"Commitment Letter") dated as of February 26, 2001 by and among Berkadia LLC,
Berkshire Hathaway Inc., Leucadia National Corporation, The FINOVA Group Inc.
("FNV") and FINOVA Capital Corporation ("Borrower"), we hereby confirm that the
attached Senior Secured Credit Facility term sheet and Summary of Terms of New
Senior Notes (the "Term Sheets") are acceptable to Berkshire and Leucadia to be
included as part of the plans of reorganization filed by FNV, Borrower and their
subsidiaries (together, the "Debtors") that have filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court for the District of Delaware (the "Court"). We
and you agree that:
(i) the Term Sheets shall replace Annex I and Exhibit A to Annex I to
the Commitment Letter, respectively, effective upon the earlier to occur of (a)
the approval of the Commitment Letter and the Term Sheets by the Court, or (b)
the effective date of plans of reorganization of the Debtors that satisfy and
incorporate the terms and conditions set forth in the Commitment Letter and the
Term Sheets, and
(ii) this letter and the Term Sheets do not amend or modify the
Commitment Letter in any respect unless and until the occurrence of either of
the events described in clause (a) or (b) of paragraph (i).
Very truly yours,
BERKADIA LLC
By: /s/ Xxxx X. Hamburg
Name: Xxxx X. Hamburg
Title: Manager
BERKSHIRE HATHAWAY INC.
By: /s/ Xxxx X. Hamburg
Name: Xxxx X. Hamburg
Title: Vice President
LEUCADIA NATIONAL CORPORATION
By: /s/ Xxxxxx X. Orlando
Name: Xxxxxx X. Orlando
Title: Vice President
Acknowledged and Agreed
this 2nd day of May, 2001
THE FINOVA GROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
FINOVA CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
2
$6,000,000,000 SENIOR SECURED CREDIT FACILITY
Summary of Terms And Conditions
This Summary of Terms and Conditions outlines certain terms of the Facility
referred to in the Commitment Letter dated February 26, 2001 among The FINOVA
Group Inc. ("FNV"), FINOVA Capital Corporation (the "Company" or the
"Borrower"), Lender, Berkshire and Leucadia (the "Commitment Letter"). This
Summary of Terms and Conditions is part of and subject to the Commitment Letter.
Certain capitalized terms used herein are defined in the Commitment Letter.
Borrower: The Company.
Guarantors: FNV and all of FNV's direct and indirect subsidiaries
other than (i) the Company and (ii) any special purpose
subsidiary that is contractually prohibited (as of
February 26, 2001) from acting as a guarantor (the
"Guarantors").
Lender: Berkadia LLC ("Lender").
The Facility: A five-year amortizing term loan made to the Borrower
in a single drawing on the Closing Date in a principal
amount of $6,000,000,000 (the "Term Loan"), mandatorily
prepayable with cash flows as set forth under
"Prepayments."
The final maturity date for the Term Loan will be five
years from the Closing Date.
Closing Date: On or before August 31, 2001.
Purpose: Proceeds of the Term Loan will be used solely to repay
a portion of the pre-petition debt of the Company and
its subsidiaries in accordance with the Plan.
Interest: The Term Loan will bear interest at the greater of the
following rates:
(i) the current LIBO rate (for a period not to exceed
six months and to be determined prior to execution of
the loan documentation) as quoted by Telerate Page
3750, adjusted for reserve requirements, if any,
applicable to Lender's source of funds and subject to
customary change of circumstance provisions and reserve
requirements applicable to Lender and Lender's provider
of funds (the "LIBO Rate"), plus 3% per annum; and
(ii) 9% per annum.
The interest rate shall be reset daily and interest
shall be calculated on the basis of the actual number
of days elapsed in a 360-day year. Interest shall be
payable quarterly.
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Default Interest: During the continuance of an event of default (as
defined in the loan documentation), the Term Loan
(including unpaid interest and unpaid default interest)
will bear interest at an additional 2% per annum.
Prepayments: Following the (i) payment of or funding of a reserve
for accrued interest on the Term Loan, (ii) payment of
operating expenses and taxes of FNV, the Company and
their respective subsidiaries, (iii) funding of
reasonable reserves for (a) revolving and unfunded
commitments existing at the Closing Date and acceptable
to Lender, (b) commitments otherwise acceptable to
Lender and (c) general corporate purposes of FNV, the
Company and their respective subsidiaries, (iv) payment
of accrued interest on the Senior Notes, and (v)
provided no default has occurred, or would result
therefrom, payment of up to $75 million in any three-
month period to purchase Senior Notes at a purchase
price not to exceed par plus accrued and unpaid
interest thereon, mandatory prepayments of the Term
Loan without premium thereon shall be required in an
amount equal to the aggregate net positive amount of
each of (x) 100% of the net sale proceeds from asset
sales, (y) 100% of excess cash flow (to be defined in
the loan documentation) and (z) 100% of net proceeds
from insurance and condemnation, in each case received
by FNV, the Company or any of its subsidiaries, except
to the extent any special purpose subsidiary is subject
(as of February 26, 2001) to a contractual restriction
on making distributions to its parent entity. In no
event shall the Company or its subsidiaries make any
prepayment on the Term Loan out of any refinancing or
issuance of securities.
Security: All amounts owing by and the obligations of the Company
under the Term Loan and the Guarantors in respect
thereof will be secured by (i) a first priority
perfected pledge of (x) all notes owned by the Company
and the Guarantors and (y) all capital stock,
securities, partnership and LLC interests owned by the
Company and the Guarantors and (ii) a first priority
perfected security interest in all other assets owned
by the Company and the Guarantors, including, without
limitation, accounts, inventory, equipment, investment
property, instruments, chattel paper, real estate,
leasehold interests, contracts, patents, copyrights,
trademarks and other general intangibles, subject to
customary exceptions for transactions of this type.
Conditions Precedent The loan documentation will contain conditions to the
to the Closing: closing of the Facility customarily found in loan
agreements for similar financings and transactions of
this type and other conditions deemed by Lender to be
appropriate to the specific transaction and in any
event including without limitation:
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. All documentation relating to the Facility shall
be in form and substance satisfactory to the
Company and its counsel and Lender and its
counsel. Guarantees in form and substance
satisfactory to the Lender and its counsel shall
have been executed and delivered by the
Guarantors, and shall be in full force and effect.
. FNV and the Company shall not be in default of any
of their obligations under the Commitment Letter.
. The terms and conditions of, and documentation
relating to the Senior Notes, the principal terms
of which are outlined on Exhibit A to this Annex I
together with any changes thereto as may be agreed
to by Lender, shall be satisfactory to Lender,
including in the case of such debt the extent of
subordination, security, absence of guarantees,
amortization, maturity, prepayments, limitations
on remedies and acceleration, covenants, events of
default, interest rate and other intercreditor
arrangements. All conditions precedent to the
issuance of the Senior Notes shall have been
satisfied or, with the prior approval of Lender,
waived and the Senior Notes shall be issued
concurrently with the closing of the Facility.
. FNV, the Company and certain of their subsidiaries
(the "Debtors") shall have filed voluntary
petitions for relief under chapter 11 of the
Bankruptcy Code (the "Chapter 11 Cases") in the
Bankruptcy Court and (i) all motions and other
documents to be filed with and submitted to the
Bankruptcy Court in connection with the Facility
and the Management Agreement, the fees and
transactions contemplated thereby and the approval
thereof and (ii) the plan of reorganization of
each of the Debtors shall be in form and substance
reasonably satisfactory to Lender.
. An order of the Bankruptcy Court granting approval
and confirmation of the Plan of each of the
Debtors shall have been entered and have become
final and nonappealable (the "Final Order"), which
Final Order and plans shall provide for, among
other things, (i) borrowing under the Facility,
including first priority liens on all collateral
thereunder, (ii) the use of proceeds of the
Facility to make the Existing Debt Repayment,
(iii) issuance of the Senior Notes , (iv) the
distribution on a pro-rata basis of $115
5
million principal amount of FNV's 5-1/2%
Convertible Subordinated Debentures due 2016 to
the holders of FNV's outstanding Trust Originated
Preferred Securities ("TOPrS"), (v) the adoption
by each of FNV and the Company of a Certificate of
Incorporation and By-laws in form and substance
acceptable to Lender, (vi) the designees of Lender
constituting not less than a majority of the
Boards of Directors of FNV and the Company, at
least two (2) of the remaining members of which
shall be selected from the current Board of
Directors of FNV as of the date hereof, (vii) the
issuance by FNV to Lender, and/or Berkshire and
Leucadia (the "Berkadia Parties") and/or their
subsidiaries for no additional consideration of
shares of common stock of FNV such that such
parties will own, in the aggregate, 51% (or a
lesser amount as agreed by the Berkadia Parties)
of the outstanding equity of FNV on a fully
diluted basis (and an allocation of consideration
for such issuance to the capital of FNV in an
amount equal to the aggregate par value
represented by such equity interests so that such
equity interests are fully paid and non-
assessable), (viii) the release, in form and
substance satisfactory to Lender, Leucadia and
Berkshire, of each Indemnified Party (as defined
in the Commitment Letter) from any and all claims
or liabilities that any creditor or other party in
interest has or could have had in connection with
or arising out of the Chapter 11 Cases, the
Commitment Letter, the Management Agreement and/or
any action, authority, event or transaction
contemplated by any of the foregoing, (ix) such
other terms as shall be acceptable to Lender in
its reasonable discretion, and (x) such other
terms as are requested by Lender following the
initial date of filing of the Plan and that do not
adversely affect the holders of claims against or
interests in any of the debtors in the Chapter 11
Cases.
. The amounts of the allowed general unsecured
claims, the allowed secured claims and the amount
of disputed claims against FNV, the Company and
their subsidiaries in the Chapter 11 Cases as of
the effective date of the Plan shall be
satisfactory to Lender. Lender shall be satisfied
with the liabilities and capitalization of the
Company, FNV and their subsidiaries after giving
effect to the plans of reorganization of the
Debtors.
. All fees and expenses (including reasonable fees
and expenses of counsel) required to be paid or
reimbursed to Lender, Berkshire and Leucadia on or
before the Closing Date shall have been paid.
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. Lender shall be satisfied in its reasonable
judgment that (i) there shall not occur as a
result of the funding of the Facility, a default
(or any event which with the giving of notice or
lapse of time or both would be a default) under
any debt instruments and other material agreements
of FNV, the Company or any of their respective
subsidiaries that exist following the effective
date of the plans of reorganization of the
Debtors, and (ii) that each of FNV and the Company
are solvent after giving effect to the funding of
the Term Loan and the issuance of the Senior
Notes.
. Lender shall be satisfied that FNV, the Company
and their respective subsidiaries will be able to
meet their respective obligations under all
employee and retiree welfare plans of such
entities, that such employee benefit plans are, in
all material respects, funded in accordance with
the minimum statutory requirements, that no
material "reportable event" (as defined in ERISA,
but excluding events for which reporting has been
waived) has occurred as to any such employee
benefit plan and that no termination of, or
withdrawal from, any such employee benefit plan
has occurred or is contemplated that could result
in a material liability. Lender shall have
reviewed and be satisfied with all employee
benefit plans of FNV, the Company and their
respective subsidiaries.
. Lender shall have received satisfactory opinions
of counsel to FNV and the Company, addressing such
matters as Lender shall reasonably request,
including, without limitation, the enforceability
of all loan documentation, compliance with all
laws and regulations (including Regulations T, U
and X of the Board of Governors of the Federal
Reserve System), the perfection of all security
interests purported to be granted and no conflicts
with material agreements.
. There shall not have occurred any change,
occurrence or development that could, in Lender's
reasonable opinion, result in a material adverse
change in (i) the business, condition (financial
or otherwise), operations, performance,
properties, assets, liabilities (actual or
contingent) or prospects of FNV, the Company and
their respective subsidiaries taken as a whole
since December 31, 2000 (other than the
commencement and continuation
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of the Chapter 11 Cases and the consequences that
would normally result therefrom), (ii) the ability
of the Company to perform its obligations under
the loan documentation, (iii) the ability of the
Guarantors (other than Guarantors as to which
Lender, in its reasonable judgment, is satisfied
that their inability, individually or in the
aggregate, to perform their obligations is not
material) to perform their obligations under the
loan documentation or (iv) the ability of Lender
to enforce the loan documentation (any of the
foregoing being a "Material Adverse Change").
. There shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in
any court or before any arbitrator or governmental
instrumentality that (i) could reasonably be
expected to result in a Material Adverse Change
or, if adversely determined, could reasonably be
expected to result in a Material Adverse Change or
(ii) restrains, prevents or imposes or can
reasonably be expected to impose materially
adverse conditions upon the Facility, the plans of
reorganization of the Debtors or the transactions
contemplated thereby. All necessary governmental
and material third party consents and approvals
necessary in connection with the Facility, the
plans of reorganization of the Debtor and the
transactions contemplated thereby shall have been
obtained (without the imposition of any conditions
that are not reasonably acceptable to Lender) and
shall remain in effect, and all applicable
governmental filings have been made and all
applicable waiting periods shall have expired
without in either case any action being taken by
any competent authority; and no law or regulation
shall be applicable in the judgment of Lender that
restrains, prevents or imposes materially adverse
conditions upon the Facility or the transactions
contemplated thereby.
. No information shall have come to the attention of
Lender that leads Lender to determine that, and
Lender shall not have become aware of any fact or
condition not disclosed to them prior to the date
hereof which leads Lender to determine that, the
Company's or any of its subsidiaries' condition
(financial or otherwise), operations, performance,
properties, assets, liabilities (actual or
contingent) or prospects are different in any
material adverse respect from that known to Lender
as of this date.
8
. Lender shall have a valid and perfected first
priority lien on and security interest in the
collateral referred to above under "Security"
(other than collateral which Lender is satisfied
in its reasonable judgment is not material,
individually or in the aggregate); all filings,
recordations and searches necessary or desirable
in connection with such liens and security
interests shall have been duly made; and all
filing and recording fees and taxes shall have
been duly paid.
. Lender shall be satisfied with the amount, types
and terms and conditions of all insurance and
bonding maintained by the Company and its
subsidiaries, and Lender shall have received
endorsements naming Lender as an additional
insured and loss payee under all insurance
policies to be maintained with respect to the
properties of the Company and its subsidiaries
forming part of Lender's collateral.
. Lender shall be satisfied with all environmental
matters relating to the Company or its business or
assets, and shall have received such environmental
review reports as Lender may request, in form and
substance satisfactory to it, as to any
environmental hazards or liabilities to which the
Company and its subsidiaries may be subject, and
Lender shall be satisfied with the amount and
nature of any such hazards or liabilities and with
the Company's plans with respect thereto.
. The Management Agreement shall be in full force
and effect, and there shall be no cause for
termination thereunder.
. There shall not exist or have occurred any
defaults, prepayment events or creation of liens
under debt instruments that exist following the
effective date of the Plan or otherwise as a
result of the Facility, the plans of
reorganization of the Debtors, or the transactions
contemplated thereby.
. FNV shall have granted registration rights to the
Berkadia Parties and/or their affiliates relating
to the shares of common stock of FNV issued
pursuant to the Plan in form and substance
reasonably satisfactory to the Berkadia Parties.
9
Conditions Precedent to On the funding date of the Term Loan (if
the Loan: different from the closing date of the Facility)
(i) there shall exist no default under the loan
documentation, (ii) the representations and
warranties of the Company and each Guarantor
therein shall be true and correct immediately
prior to, and after giving effect to, funding, and
(iii) the making of the Term Loan shall not
violate any requirement of law and shall not be
enjoined, temporarily, preliminarily or
permanently.
Representations and The loan documentation will contain
Warranties: representations and warranties customarily found
in loan documentation for similar financings and
transactions of this type and other
representations and warranties deemed by Lender
appropriate to the specific transaction (which
will be applicable to FNV, the Company and their
respective subsidiaries) including, without
limitation with respect to: valid existence,
requisite power, due authorization, no conflict
with agreements or applicable law, enforceability
of loan documentation, validity, priority and
perfection of security interests and
enforceability of liens, accuracy of financial
statements and all other information provided,
compliance with law, absence of Material Adverse
Change, no default under the loan documentation,
absence of material litigation, ownership of
properties and necessary rights to intellectual
property, no burdensome restrictions and
inapplicability of Investment Company Act or
Public Utility Holding Company Act.
Affirmative and Financial The loan documentation will contain affirmative
Covenants: and financial covenants customarily found in loan
documentation for similar financings and
transactions of this type and other covenants
deemed by Lender appropriate to the specific
transaction (which will be applicable to FNV, the
Company and their respective subsidiaries),
including, without limitation, the following:
. Comply in all material respects with laws
(including, without limitation, ERISA and
environmental laws), pay taxes, maintain all
necessary licenses and permits and trade
names, trademarks, patents and other
intellectual property, preserve corporate
existence, maintain accurate books and
records, maintain properties, maintain
appropriate and adequate insurance, permit
inspection of properties, books and records,
use loan proceeds as specified and provide
further assurances as required.
. Perform obligations under leases, contracts
and other agreements.
10
. Conduct all transactions with affiliates on
terms reasonably equivalent to those
obtainable in arm's length transactions,
including, without limitation, restrictions
on management fees to affiliates.
. Maintain with a bank satisfactory to Lender
main cash concentration accounts and blocked
accounts into which all cash flows of the
Borrower and proceeds of collateral are paid
and which are swept daily (and with respect
to accounts at other banks, which will be
limited, blocked account agreements in form
and substance acceptable to Lender have been
executed).
. Financial covenants, including, but not
limited to, minimum EBITDA, minimum net
worth, minimum fixed charge coverage, minimum
interest coverage, maximum leverage (measured
on a balance sheet debt to EBITDA basis) and
maximum capital expenditures.
. Maintain a loan-to-collateral value ratio of
no greater than 1:1.75. For purposes of this
covenant, "collateral" (i) shall only include
the value of the tangible assets of the
Company and the Guarantors that have been
specifically identified by the Company and
that are subject to a perfected, first
priority security interest in favor of the
Lender (and shall exclude all assets of (a)
any special purpose subsidiary of the Company
that is subject to contractual or legal
restrictions on making distributions to its
parent entity and (b) any Guarantor for which
the Company does not exercise sole voting
control and/or for which all of the capital
stock is not subject to a perfected, first
priority pledge to Lender) and (ii) shall be
net of all specific and general reserves.
Negative Covenants: The loan documentation will contain negative
covenants customarily found in loan documentation
for similar financings and transactions of this
type (which will be applicable to FNV, the Company
and their respective subsidiaries). Each of FNV,
the Company and their respective subsidiaries
shall agree that (i) except pursuant to the Plan,
or (ii) without the consent of Lender, it will
not:
. Incur or assume any debt (whether or not non-
recourse) other than the Term Loan or the
Senior Notes (as the case may be); give any
guaranties; create any liens, charges or
encumbrances; incur additional lease
obligations; merge or consolidate with any
other person,
11
or change the nature of business or corporate
structure or create any new subsidiaries or
amend its charter or by-laws; sell, lease or
otherwise dispose of assets (including,
without limitation, in connection with a sale
leaseback transaction), except for asset
sales for cash where seller retains no
residual interest in such assets and proceeds
are applied as set forth under "Prepayments;"
give a negative pledge on any assets in favor
of any person other than Lender; permit to
exist any consensual encumbrance on the
ability of any subsidiary to pay dividends or
other distributions to the Company; or permit
to exist any restrictions on the ability of
the Company to prepay the Term Loan.
. Prepay, redeem, purchase, defease, exchange,
refinance or repurchase any debt including,
without limitation, the Senior Notes, except
to fund the commitment to spend up to $75
million per three-month period to repurchase
Senior Notes as contemplated under clause (v)
of "Prepayments," or amend or modify any of
the terms of any such debt or other similar
agreements, or other material agreements,
entered into or binding upon FNV, the Company
or their respective subsidiaries.
. Make any loans or advances, capital
contributions or acquisitions (except to fund
existing commitments not discharged in the
Chapter 11 Cases) or form any joint ventures
or partnerships or make any other investments
in subsidiaries or any other person.
. Make or commit to make any payments in
respect of warrants, options, repurchase of
stock, dividends or any other distributions
to shareholders, except the commitment
contemplated under the terms of the Senior
Notes following the payment in full of the
Term Loan.
. Permit any change in ownership or control of
the Company or any of its respective
subsidiaries or any change in accounting
treatment or reporting practices, except as
required by GAAP and as permitted by the loan
documentation.
. Redeem or otherwise acquire any shares of its
capital stock, or issue or sell any
securities (other than the issuance of the
Senior Notes, pursuant to the exercise of
options or conversion of outstanding
securities or otherwise pursuant to the Plan)
or grant any option,
12
warrant or right relating to its capital
stock or split, combine or reclassify any of
its capital stock, other than pursuant to a
stock option plan adopted following the
effective date of the Plan and reasonably
acceptable to Berkadia.
. Make any material amendment to any existing
or enter into any new employment, consulting,
severance, change in control or similar
agreement or establish any new compensation
or benefit or commission plans or
arrangements for directors or employees.
. Merge, amalgamate or consolidate with any
other entity in any transaction, sell all or
any substantial portion of its business or
assets, or acquire all or substantially all
of the business or assets of any other
entity, other than acquisitions of businesses
in connection with foreclosures in the
ordinary course of business and mergers or
consolidations wholly-owned subsidiaries of
the Company.
. File any petition for voluntary
reorganization or enter into any
reorganization plan or recapitalization,
dissolution or liquidation of the Company.
. Take any action that would have a material
impact on the consolidated federal income tax
return filed by FNV as the common parent,
make or rescind any express or deemed
material election relating to taxes, settle
or compromise any material claim, action,
suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating
to taxes, enter into any material tax ruling,
agreement, contract, arrangement or plan,
file any amended tax return, or, except as
required by applicable law or GAAP or in
accordance with past practices, make any
material change in any method of accounting
for taxes or otherwise or any tax or
accounting practice or policy.
. Enter into any contract, understanding or
commitment that restrains, restricts, limits
or impedes the ability of FNV or any of its
subsidiaries to compete with or conduct any
business or line of business in any
geographic area.
. Permit FNV to engage in any business or
activity, or hold any assets, other than
holding the capital stock of the Company.
13
. Pay any management or similar fees,
other than pursuant to the Management
Agreement.
Financial Reporting Requirements: The Company shall provide: (i) monthly
consolidated financial statements of FNV,
the Company and their respective
subsidiaries, including balance sheet,
income statement and cash flow statement
within 30 days of month-end, certified by
the chief financial officer of FNV or the
Company, as appropriate; (ii) quarterly
consolidated and consolidating financial
statements of FNV, the Company and its
subsidiaries within 45 days of quarter-end,
certified by the chief financial officer of
FNV or the Company, as appropriate; (iii)
annual audited consolidated and
consolidating financial statements of FNV,
the Company and their subsidiaries within
90 days of year-end, certified with respect
to such consolidated statements by
independent certified public accountants
acceptable to Lender; (iv) copies of all
reports on Form 10-K, 10-Q or 8-K filed by
FNV or the Company with the Securities and
Exchange Commission; (v) projections for
the balance of the term of the Facility
provided annually and annual business and
financial plans provided in each case at
least 30 days prior to fiscal year-end,
with the business and financial plans being
updated quarterly; (vi) periodic compliance
certificates; and (vii) periodic
certifications as to collateral value, loan
and asset classification and reserves.
Other Reporting Requirements: The loan documentation will contain other
reporting requirements customarily found in
loan documentation for similar financings
and transactions of this type and other
reporting requirements deemed by Lender
appropriate to the specific transaction,
including, without limitation, with respect
to litigation, contingent liabilities,
defaults, ERISA or environmental events and
potential defaults or events of default
relating to loans or assets held by the
Company and its subsidiaries at such times
and in form and substance as is
satisfactory to Lender.
Events of Default: The loan documentation will contain events
of default customarily found in loan
documentation for similar financings and
transactions of this type and other events
of default deemed by Lender appropriate to
the specific transaction (which will be
applicable to FNV, the Company and their
respective subsidiaries), including,
without limitation, failure to make
payments when due, defaults or
accelerations under other indebtedness,
noncompliance with covenants, breaches of
representations and warranties, bankruptcy
and insolvency events, failure to satisfy
or stay execution of judgments in excess of
specified amounts, the existence of
14
certain materially adverse employee benefit
or environmental liabilities, impairment of
loan documentation or security, Material
Adverse Change, actual or asserted
invalidity of the guarantees, the security
documents or the liens of Lender, change of
ownership or control, and defaults under
material contracts, including the
Management Agreement.
Indemnification: The Company shall indemnify and hold
harmless Lender, Berkshire and Leucadia and
each of their respective affiliates,
officers, directors, employees, members,
managers, agents, advisors, attorneys and
representatives of each (each, an
"Indemnified Party") from and against any
and all claims, damages, losses,
liabilities and expenses (including,
without limitation, reasonable fees and
disbursements of counsel), joint or
several, that may be incurred by or
asserted or awarded against any Indemnified
Party (including, without limitation, in
connection with or relating to any
investigation, litigation or proceeding or
the preparation of any defense in
connection therewith), in each case arising
out of or in connection with or by reason
of the Facility, the loan documentation or
any of the transactions contemplated
thereby, or any actual or proposed use of
the proceeds of the Facility, except to the
extent such claim, damage, loss, liability
or expense is found in a final non-
appealable judgment by a court of competent
jurisdiction (or admitted by an Indemnified
Party pursuant to a written settlement
agreement) to have resulted primarily from
such Indemnified Party's gross negligence
or willful misconduct. In the case of an
investigation, litigation or other
proceeding to which the indemnity in this
paragraph applies, such indemnity shall be
effective whether or not such
investigation, litigation or proceeding is
brought by FNV, the Company, any of their
respective directors, securityholders or
creditors, an Indemnified Party or any
other person, or an Indemnified Party is
otherwise a party thereto and whether or
not the transactions contemplated hereby
are consummated. The Company further agrees
that no Indemnified Party shall have any
liability (whether direct or indirect, in
contract, tort or otherwise) to the Company
or any of its securityholders or creditors
for or in connection with the transactions
contemplated hereby, except for direct
damages (as opposed to special, indirect,
consequential or punitive damages
(including, without limitation, any loss of
profits, business or anticipated savings))
determined in a final non-appealable
judgment by a court of competent
jurisdiction (or admitted by an Indemnified
Party pursuant to a written settlement
agreement) to have resulted primarily from
such Indemnified Party's gross negligence
or willful misconduct and any liability of
any Indemnified Party shall be limited to
the amount of fees actually received
hereunder by such Indemnified Party.
15
Expenses: FNV, the Company and each of their
respective subsidiaries shall jointly and
severally pay all (i) reasonable costs and
expenses of Lender, Berkshire and Leucadia
(including all reasonable fees, expenses
and disbursements of outside counsel) in
connection with the preparation, execution
and delivery of the loan documentation and
the funding of all loans under the
Facility, and all search, filing and
recording fees, incurred or sustained by
Lender, Berkshire and Leucadia in
connection with the Facility, the loan
documentation or the transactions
contemplated thereby, the administration of
the Facility and any amendment or waiver of
any provision of the loan documentation and
(ii) costs and expenses of Lender,
Berkshire and Leucadia (including fees,
expenses and disbursements of counsel) in
connection with the enforcement of any of
their rights and remedies under the loan
documentation.
Miscellaneous: The loan documentation will include
standard yield protection provisions
(including, without limitation, provisions
relating to compliance with risk-based
capital guidelines, increased costs and
payments free and clear of withholding
taxes) relating to Lender and Lender's
provider of funds.
16
Fees and Expenses: Commitment Fee: A commitment fee of
$60,000,000 shall be due and payable to
Lender upon execution of the Commitment
Letter.
Funding Fee: A funding fee of $60,000,000
shall be due and payable to Lender upon the
closing of and borrowing under the
Facility.
Termination Fee: A termination fee of
$60,000,000 shall be due and payable to
Lender if the Company does not borrow under
the Facility for any reason (including the
termination of Lender's obligations under
the Commitment Letter, whether or not the
Facility agreements have been entered)
unless the Company's failure to borrow is
solely due to (x) the failure by Lender to
fund in violation of its obligations under
the Commitment Letter or, (y) following
confirmation of the Plan by the Bankruptcy
Court, a Material Adverse Change has
occurred or a due diligence condition
relating to environmental, insurance or
employee matters has not been satisfied.
Reimbursement Fees: All fees, if any, and
expenses incurred from time to time by
Lender and its affiliates relating to its
financing for the Facility shall be due and
payable to Lender or such affiliates when
incurred by Lender or such affiliates.
Facility Fee: An annual facility fee in an
amount equal to 25 basis points times the
outstanding principal amount of the Term
Loan, payable monthly, shall be due and
payable to Lender, commencing on the date
of borrowing under the Facility.
Governing Law and Submission to
Jurisdiction: State of New York.
17
SUMMARY OF TERMS OF NEW SENIOR NOTES
Issuer The FINOVA Group Inc. ("FNV Group").
---------
Aggregate Principal
Amount................ Approximately $4.44 billion, representing 40% of the
aggregate amount of Allowed General Unsecured Claims
(as defined in the Joint Plan of Reorganization (the
"Plan") of FNV Group and the debtors named therein)
against FINOVA Capital Corporation ("FNV Capital").
-----------
Term.................... Ten (10) years, subject to prepayment as described
below.
Annual Interest
Rate................... The weighted average of the annual interest rates on
FNV Capital's bank debt and bond indebtedness
outstanding on the Petition Date (as defined in the
Plan) , will be determined (as of a date within five
days prior to the Effective Date (as defined in the
Plan) (the "Measurement Date") as follows:
----------------
For each fixed rate obligation, the established
rate in effect at the Measurement Date, without giving
effect to any default rate, penalty or facility or
other fees or any change in rates due to the failure to
elect interest rates or periods from and after the
Petition Date, will be multiplied by the total
principal amount of the obligation outstanding at the
Petition Date, reduced by any amounts that the Debtors
have the right to set-off against such obligation;
For each floating rate obligation, (x) the
specified index in effect at the Measurement Date (or,
if more than one index is specified, the selected index
will be the one that will result in the lowest rate)
(the "Index Rate"), plus the specified spread over the
Index Rate, in each case without giving effect to any
default rate, penalty or facility or other fees or any
change in rates due to the failure to elect interest
rates or periods from and after the Petition Date and
without regard to any limitation on the selection of
indices upon a default or otherwise, will be multiplied
by (y) the total principal amount of the obligation
outstanding at the Petition Date, reduced by any
amounts that the Debtors have the right to set-off
against such obligation.
The sum of such amounts will be divided by the
aggregate principal amount of all bank and bond
indebtedness outstanding at the Petition Date, reduced
by any amounts that the Debtors have the right to set-
off against such obligations. The quotient of such
calculation shall be the annual interest rate the New
Senior Notes will bear.
If the Measurement Date were April 26, 2001, the
annual interest rate would be 6.037%.
18
Payment................. Interest will be paid on semi-annual interest payment
dates if and to the extent that (i) FNV Group has
available cash on such dates for that purpose as
described below under clause SECOND of the "Use of
-----
Cash" covenant and (ii) no default or event of default
----
has occurred and is continuing on such dates under the
credit agreement pursuant to which Berkadia LLC
("Berkadia") will make a $6 billion five-year
--------
amortizing senior secured term loan (the "Berkadia
--------
Loan") to FNV Capital (the "Berkadia Credit
---- ---------------
Agreement").
---------
Each $1,000 principal amount of the New Senior Notes
issued under the Plan (whether issued on the Effective
Date or later) will entitle the holder thereof to
receive such holder's pro rata share of an aggregate
of up to $100 million of additional interest
("Contingent Interest") in respect of all New Senior
-------------------
Notes issued under the Plan (whether issued on the
Effective Date or later). Contingent Interest will be
paid on semi-annual interest payment dates if and to
the extent that FNV Group has available cash on such
dates for that purpose as described below under clause
Eighth of the "Use of Cash" covenant until the first
------ -----------
to occur of (i) the payment of an aggregate of $100
million in Contingent Interest (as such amount may be
reduced as described below under clause Eighth of the
------
"Use of Cash" covenant) or (ii) 15 years after the
-----------
Effective Date of the Plan. Principal will be paid on
semi-annual principal payment dates if and to the
extent that FNV Group has available cash on such
dates for that purpose as described below under
clause Sixth of the "Use of Cash" covenant.
----- -----------
Optional
Prepayment.............. Subject to compliance with the "Use of Cash" covenant,
FNV Group will have the option to prepay the principal
of the New Senior Notes, in whole or in part, at any
time and from time to time, without premium or
penalty, by delivering to the indenture trustee under
the New Senior Notes indenture (the "Indenture
---------
Trustee") an amount equal to the principal to be
-------
repaid, plus interest from the last interest payment
date on which interest was paid to the prepayment
date; provided that such prepayment will not release
FNV Group from its obligations to pay Contingent
Interest with respect to the New Senior Notes so
prepaid.
Priority and
Collateral Security... FNV Group will grant to the Indenture Trustee for the
benefit of the holders of the New Senior Notes (other
than with respect to FNV Group's obligation under the
New Senior Notes Indenture to pay Contingent Interest)
a security interest in all of the capital stock of FNV
Capital, which shall be junior to the first priority
perfected security interest granted to Berkadia as
described below and which shall be released upon
payment in full of all interest (other than Contingent
Interest) on and principal of the New Senior Notes.
Until such time as all obligations under the Berkadia
Loan and related guarantees are paid in full or
otherwise satisfied, the security interest to be
granted to the Indenture Trustee will be junior to the
perfected, first priority security interest in the
capital stock of FNV Capital granted to Berkadia to
secure FNV Group's guarantee of the Berkadia Loan. The
Indenture Trustee and the holders of the New Senior
Notes will
19
have no right to take action to enforce or otherwise
realize on the security interest held by the Indenture
Trustee unless and until all obligations under the
Berkadia Loan and related FNV Group guarantee have
been paid in full or otherwise satisfied or released.
Neither the indenture governing the New Senior Notes
nor the pledge agreement effecting the grant of the
security interest (the "Pledge Agreement") will
----------------
restrict the sale of collateral, other than as
required by the Trust Indenture Act of 1939, as
amended.
The payment of Contingent Interest will not be secured
by the security interest or otherwise. Contingent
Interest shall constitute general unsecured
obligations of FNV Group.
Covenants............... The indenture governing the New Senior Notes will
contain the following covenants:
Use of Cash
To the extent not prohibited by the Berkadia Credit
Agreement, FNV Group will, and will cause its
subsidiaries including FNV Capital to, apply the
aggregate net positive amount of each of (x) 100% of
the net sale proceeds from asset sales, (y) 100% of
excess cash flow (to be defined in the indenture) and
(z) 100% of net proceeds from insurance and
condemnation, in each case received by FNV Group or
any of its subsidiaries, except to the extent any
special purpose subsidiary is subject to a contractual
restriction (which existed on February 26, 2001) or
legal restriction on making distributions to its
parent entity, to the following purposes in the
following order:
First:
-----
For FNV Group or any of its subsidiaries (a) to pay or
to fund its operating expenses, taxes, reasonable
reserves for revolving commitments, unfunded
commitments and general corporate purposes (which
reserve amounts shall be determined in good faith by
the entity setting such reserves), (b) to pay when due
interest on and principal of Permitted Indebtedness
(as defined below) of such entity (other than, in the
case of FNV Capital, the Berkadia Loan or, in the case
of FNV Group, the New Senior Notes and the 5-1/2%
Convertible Subordinated Debentures due 2016 of FNV
Group (the "Group Subordinated Debentures")), the
-----------------------------
payment of each of which is provided for specifically
below), (c) to pay when due interest on and principal
of any Refinancing Indebtedness (as defined below)
incurred to refinance the Permitted Indebtedness
described in clause (b), (d) to pay or to fund a
reserve to pay interest when due on the Berkadia Loan,
and (e) to (i) make payments excluded from the
definition of Restricted Payments (as defined below)
under the proviso contained in the definition of
Restricted Payments (provided that any payments
described in clause (v) of such proviso shall not
exceed $1 million per year) and (ii) fund reasonable
reserves, if any, for interest and Compounded Interest
(as defined in the indenture governing the Group
Subordinated Debentures) on the Group Subordinated
Debentures solely to permit the payment of interest
and Compounded Interest thereon at
20
the end of an Extension Period (as defined in the
indenture governing the Group Subordinated Debentures)
and to pay accrued and unpaid interest and Compounded
Interest on the Group Subordinated Debentures on the
expiration of any Extension Period that has lasted for
20 consecutive quarters; provided that FNV Capital and
its subsidiaries may make distributions to any parent
entity, including FNV Group, which entity shall use
such distributions, plus any other cash it has
available for this purpose, to satisfy its obligations
under this clause First (it being understood that the
-----
listing of subclauses (a) through (e) herein shall be
for ease of reference only and shall not imply any
priority of allocation or payment within this clause
First);
-----
Second:
------
to make distributions to FNV Group, which shall use
such distributions plus any other cash it has
available for this purpose, to pay accrued and
unpaid interest on the New Senior Notes when due;
Third:
-----
commencing with the first calendar quarter following
the Effective Date, and continuing for each subsequent
calendar quarter until the earlier of (i) payment in
full of the Berkadia Loan and (ii) the fifth
anniversary of the Effective Date, to make
distributions to FNV Group, which shall use such
distributions plus any other cash it has available for
this purpose, to spend $75 million per quarter (or
such greater amount as may be consented to by
Berkadia) to purchase New Senior Notes (including the
Contingent Interest in respect of such New Senior
Notes) at a purchase price not to exceed par plus
accrued and unpaid interest thereon (the "Maximum
-------
Price") through (a) tender offers announced during a
-----
quarter, (b) open market purchases and/or (c)
privately negotiated transactions, in all cases at FNV
Group's discretion; provided that additional such
purchases may be made at FNV Group's discretion during
any quarter to satisfy FNV Group's obligation
hereunder for future quarters and, if and to the
extent that such purchases cannot be effected at or
below the Maximum Price during any such quarter, such
purchases shall not be required for such quarter and
FNV Group shall not carry over into any following
quarter any obligation to make purchases hereunder in
excess of $75 million per quarter; and provided
further, that no purchase of New Senior Notes shall be
made under this clause Third if a default or an event
-----
of default under the Berkadia Credit Agreement has
occurred, is continuing or would result therefrom;
Fourth:
------
to make distributions to FNV Capital, or in the case
of FNV Group to make contributions to FNV Capital,
which shall use such distributions or contributions,
plus any other cash it has available for this purpose,
to repay principal of the Berkadia Loan as required
under the Berkadia Credit Agreement;
Fifth:
-----
to the extent not already funded or paid pursuant to
clause First above, to make distributions to FNV
-----
Group, which shall use such distributions plus
21
any other cash it has available for this purpose, to
pay or to fund a reserve to pay accrued and unpaid
interest on the then-outstanding Group Subordinated
Debentures;
Sixth:
-----
until the New Senior Notes are paid in full, to make
distributions to FNV Group, (A) 95% of which FNV Group
will use to repay principal of the New Senior Notes
until the principal of the New Senior Notes has been
paid in full and/or, at FNV Group's option, to prepay
all or part of the New Senior Notes as described under
"Optional Prepayment," and/or to purchase by tender
-------------------
offer, market purchases or privately negotiated
transactions or otherwise all or part of the New
Senior Notes (including the Contingent Interest in
respect of such New Senior Notes), and (B) 5% of which
FNV Group will use to make Restricted Payments (unless
the making of any such Restricted Payments would be an
"Impermissible Restricted Payment" (as defined below),
--------------------------------
in which event FNV Group shall retain such amounts and
any retained amounts shall accumulate and shall be
used to make Restricted Payments at such time or from
time to time, as such Restricted Payments are not
Impermissible Restricted Payments);
Seventh:
-------
until an amount equal to 5.263% of the aggregate
principal amount of the New Senior Notes issued under
the Plan (whether on the Effective Date or later) has
been used to make Restricted Payments to FNV Group's
common stockholders under clause Sixth or, after
-----
repayment of the New Senior Notes, has been used to
make "Deemed Restricted Payments" (as defined below),
--------------------------
to make Deemed Restricted Payments (unless the making
of such Deemed Restricted Payments would be an
"Impermissible Deemed Restricted Payment," (as defined
---------------------------------------
below) in which event FNV Group shall retain such
amounts and any retained amounts shall accumulate and
shall be used to make Deemed Restricted Payments at
such time or from time to time, as such Deemed
Restricted Payments are not Impermissible Deemed
Restricted Payments); and
Eighth:
------
until an aggregate of up to $100 million (as such
amount may be reduced to reflect a decrease in the
principal amount of New Senior Notes outstanding as a
result of purchases (but not prepayments or
repayments) by FNV Group under clause Third and clause
-----
Sixth above) has been paid as Contingent Interest, to
-----
make distributions to FNV Group (i) 95% of which will
be used to pay Contingent Interest and (ii) 5% of
which will be used by FNV Group to make Deemed
Restricted Payments) (unless the making of such Deemed
Restricted Payments would be an Impermissible Deemed
Restricted Payment, in which event FNV Group shall
retain such amounts and any retained amounts shall
accumulate and shall be used to make Deemed Restricted
Payments at such time or from time to time, as such
Deemed Restricted Payments are not Impermissible
Deemed Restricted Payments);.
provided that, notwithstanding the foregoing, it shall
not be a default of this
22
"Use of Cash" covenant if a subsidiary does not make
distributions to its parent entity as set forth in
First through Eighth above if such dividends or
distributions would be Impermissible Restricted
Payments or Impermissible Deemed Restricted Payments.
Funding and payments in respect of any Refinancing
Indebtedness (as defined below) will have the same
priority in this "Use of Cash" covenant as corresponds
to the Indebtedness so refinanced.
"Deemed Restricted Payments means any payments to FNV
--------------------------
Group's stockholders that would have been Restricted
Payments prior to repayment of the New Senior Notes.
"Impermissible Deemed Restricted Payments" means a
----------------------------------------
Deemed Restricted Payment that, if made by FNV Group or
any of its subsidiaries, would render such entity
insolvent, would be a fraudulent conveyance by such
entity or would not be permitted to be made by such
entity under applicable law.
"Impermissible Restricted Payments" means a Restricted
---------------------------------
Payment that, if made by FNV Group or any of its
subsidiaries, would render such entity insolvent, would
be a fraudulent conveyance by such entity or would not
be permitted to be made by such entity under applicable
law.
Limitation on Restricted Payments
FNV Group will not, directly or indirectly, make any
Restricted Payments, other than Restricted Payments
permitted under the "Use of Cash" covenant described
-----------
above.
"Restricted Payment" means (i) the declaration or
------------------
payment of any dividend or the making of any
distribution on account of FNV Group's equity interests
(other than dividends or distributions payable in
equity interests of FNV Group) and (ii) the purchase,
redemption or other acquisition or retirement for value
of any equity interests of FNV Group, other than
redemptions, acquisitions or retirements in exchange
for equity interests of FNV Group; provided, however,
-------- -------
that Restricted Payments shall not include (i)
repurchase of shares to eliminate fractional shares or
odd-lots, whether pursuant to a reverse stock-split,
odd-lot tender offer or otherwise; (ii) cash payments
in lieu of issuance of fractional shares in connection
with the exercise of any warrants, rights, options or
other securities convertible into or exchangeable for
FNV Group equity interests, (iii) the deemed repurchase
of FNV Group's equity interests by FNV Group on the
cashless exercise of stock options; (iv) payments or
distributions to dissenting shareholders pursuant to
applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets; or (v)
repurchases, redemptions, acquisitions or retirements
of equity interests of FNV Group from employees,
directors or officers of FNV Group and its
subsidiaries.
23
Limitation on Incurrence of Indebtedmess
FNV Group will not, and will not permit any of its
subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, for or
with respect to (collectively, "incur") any
-----
Indebtedness other than Permitted Indebtedness or
Permitted Nonrecourse Indebtedness.
"Indebtedness" means any indebtedness in respect of
------------
borrowed money.
"Permitted Indebtedness" means (A) Indebtedness
----------------------
outstanding (or deemed outstanding under the Plan) on
the Effective Date of the Plan, including the Berkadia
Loan and the New Senior Notes; (B) Refinancing
Indebtedness; (C) Indebtedness at any time outstanding
of up to $25 million, excluding Indebtedness
outstanding under clause (A) or (B); (D) Foreclosure
Indebtedness and (E) intercompany Indebtedness between
or among FNV Group and/or any of its subsidiaries.
"Foreclosure Indebtedness" means Indebtedness of any
------------------------
person either (i) existing at the time that such person
becomes a subsidiary of FNV Group or any of its
subsidiaries provided that such person becomes a
subsidiary of FNV Group as a result of a pre-existing
bona fide obligation to FNV Group or any of its
subsidiaries, (ii) assumed in connection with the
acquisition of assets from any such person provided
that such person had a pre-existing bona fide
obligation to FNV Group or any of its subsidiaries or
(iii) incurred to refinance (as defined below) any
Indebtedness described in (i) or (ii) above, subject to
the same limitations contained in the proviso to the
definition of Refinancing Indebtedness below.
"Refinancing Indebtedness" means Indebtedness of FNV
------------------------
Group or any of its subsidiaries that is incurred to
refund, refinance, replace, renew, repay or extend
(including pursuant to any defeasance or discharge
mechanism) (collectively, "refinance") any Indebtedness
---------
issued under the Plan and/or outstanding or deemed to
be outstanding on the Effective Date of the Plan or
incurred in compliance with the New Senior Notes
Indenture (including Indebtedness of FNV Group that
refinances Indebtedness of any subsidiary and
Indebtedness of any subsidiary that refinances
Indebtedness of another subsidiary) including
Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (a) such Refinancing
-------- -------
Indebtedness is incurred in an aggregate principal
amount (or if issued with original issue discount, an
aggregate accreted value) not exceeding the then
outstanding amount of the Indebtedness being
refinanced, plus a reasonable premium and reasonable
costs and expenses paid or incurred in connection with
such refinancing (b) except with respect to Refinancing
Indebtedness incurred to refinance (i) the New Senior
Notes, (ii) Foreclosure Indebtedness or (iii) Permitted
Indebtedness not issued under the Plan, such
Refinancing Indebtedness shall not have a weighted
average life to maturity or maturity date that is
earlier than the Indebtedness being refinanced and (c)
if the Indebtedness being refinanced is subordinate to
the New Senior Notes, then such Refinancing
Indebtedness shall be subordinate to the New Senior
24
Notes at least to the same extent. The accretion of
interest with respect to Indebtedness issued with
original issue discount shall not constitute an
incurrence of additional Indebtedness.
"Permitted Nonrecourse Indebtedness" means Indebtedness
----------------------------------
incurred in connection with the acquisition or lease
(as lessor) of equipment or real estate (a) that is
secured solely by the equipment or real estate acquired
or leased, (b) with respect to which the holder of such
Indebtedness has recourse only to such equipment or
real estate, and (c) which is otherwise nonrecourse to
FNV Group or any subsidiary thereof, provided that all
proceeds of such Indebtedness, less reasonable expenses
incurred in connection with such acquisition or lease,
are used as provided in the "Use of Cash" covenant.
-----------
Limitation on Issuance of Capital Stock of
Subsidiaries.
FNV Group will not permit FNV Capital to issue any
additional equity interests to any person other than to
FNV Group and will not permit any other subsidiary of
FNV Group to issue any preferred equity interests to
any person other than to FNV Group or a subsidiary
thereof, except that preferred equity interests may be
issued such that the liquidation preference of such
preferred equity interests is equal to the amount of
Indebtedness that would be permitted to be incurred
under the "Limitation on Incurrence of Indebtedness"
----------------------------------------
covenant. Mergers and Consolidations
FNV Group will not, directly or indirectly, consolidate
or merge with or into another person (whether or not
FNV Group is the surviving person) unless the person
formed by or surviving any such consolidation or merger
(if other than FNV Group) assumes all of the
obligations under the New Senior Notes and the
indenture and immediately after such consolidation or
merger there is no default or event that, with the
passage of time or notice or both, would be a default
under the indenture.
No Payment Restrictions Affecting Subsidiaries
FNV Group and its subsidiaries will not permit their
respective subsidiaries to create any restriction on
the ability of any subsidiary to make Restricted
Payments, to make loans or advances to its parent
entity or to transfer any property or assets to its
parent entity, except for restrictions pursuant to (i)
the New Senior Notes, (ii) the Berkadia Loan, (iii)
contracts as of February 26, 2001 restricting special
purpose subsidiaries, (iv) applicable law, (v)
Refinancing Indebtedness containing restrictions no
more restrictive, taken as a whole, than those
contained in the Indebtedness so refinanced, (vi)
Permitted Indebtedness described in clause C or D of
the definition of Permitted Indebtedness, provided
restrictions contained therein are no more restrictive,
taken as a whole, than restrictions contained in any
Permitted Indebtedness, or (vii) Permitted Nonrecourse
Indebtedness incurred by any special purpose
subsidiary.
25
The right to receive Contingent Interest under the New
Senior Notes shall not constitute any equity interest
or indebtedness of FNV Group for purposes of the
indenture.
The covenants described under "Limitation on
-------------
Restricted Payments," "Limitation on Incurrence of
------------------- ---------------------------
Indebtedness," "Limitation on Issuance of Capital
------------ ---------------------------------
Stock of FNV Subsidiaries" and "No Payment
-------------------------- ----------
Restrictions Affecting Subsidiaries" will no longer
-----------------------------------
apply to FNV Group or its subsidiaries upon payment in
full of all interest on (other than Contingent
Interest) and principal of the New Senior Notes.
Event of Default........ Each of the following will constitute an "Event of
--------
Default": (i) default in the payment of all or any part
-------
of the unpaid principal, if any, and accrued and unpaid
interest, if any, on the New Senior Notes at maturity;
(ii) failure by FNV Group or any of its subsidiaries to
observe or perform in all material respects the
provisions of the "Payment" covenant and of clauses
-------
First, Second, Fourth, Fifth, Sixth, Seventh, and
----- ------ ------- ----- ----- -------
Eighth of the "Use of Cash" covenants for 30 days;
------ -----------
(iii) failure by FNV Group to observe or perform in all
material respects any other covenant or agreement on
the part of FNV Group contained in the New Senior
Notes, the indenture or the Pledge Agreement if that
failure is not remedied within 60 days after written
notice is given to FNV Group by the trustee or to FNV
Group and the trustee by the holders of at least 25% in
aggregate principal amount of the New Senior Notes then
outstanding, specifying such default, requiring that it
be remedied and stating that such notice is a "Notice
------
of Default" under the indenture; and (iv) certain
----------
events of bankruptcy, dissolution or reorganization of
FNV Group or FNV Capital.
Book-Entry; Delivery New Senior Notes will be represented by one or more
and Form.............. permanent global notes in definitive, fully registered
form, deposited with the Indenture Trustee as custodian
for, and registered in the name of, a nominee of the
Depository Trust Company.
26
