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IMC MORTGAGE COMPANY
as Borrower,
and
GREENWICH STREET CAPITAL PARTNERS II, L.P.,
GREENWICH FUND, L.P.,
GSCP OFFSHORE FUND, L.P.
as Lenders
LOAN AGREEMENT
$33,000,000
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Dated as of October 12, 1998
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.....................................................1
SECTION 1.2 Accounting Terms and Determinations.............................9
ARTICLE II
THE LOAN
SECTION 2.1 Loans...........................................................10
SECTION 2.2 The Note; Repayment of Principal................................10
SECTION 2.3 Loan Record.....................................................10
SECTION 2.4 Interest Rate...................................................10
SECTION 2.5 Mandatory Prepayment of the Loans...............................11
SECTION 2.6 Change of Control Prepayment of the Loan........................11
SECTION 2.7 Manner and Time of Payments.....................................12
SECTION 2.8 Use of Proceeds.................................................12
SECTION 2.9 Borrowings......................................................12
SECTION 2.10 Requests for Advances; Payment.................................12
ARTICLE III
CONDITIONS
SECTION 3.1 Conditions Precedent to the Initial Loan........................13
SECTION 3.2 Conditions Precedent to Additional Loans........................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Corporate Organization, Etc.....................................17
SECTION 4.2 Due Authorization...............................................17
SECTION 4.3 Litigation......................................................18
SECTION 4.4 Absence of Undisclosed Liabilities..............................18
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SECTION 4.5 Taxes...........................................................18
SECTION 4.6 Title to Certain Properties.....................................19
SECTION 4.7 No Default......................................................19
SECTION 4.8 Investment Company..............................................19
SECTION 4.9 Legal, Valid and Binding Agreements.............................19
SECTION 4.10 Compliance with ERISA..........................................19
SECTION 4.11 Disclosure; Financial Statements...............................19
SECTION 4.12 Compliance with Law............................................20
SECTION 4.13 Consents.......................................................20
SECTION 4.14 Patents, Copyrights, Permits and Trademarks....................20
SECTION 4.15 Fairness Opinion...............................................20
SECTION 4.16 Capitalization.................................................21
ARTICLE V
COVENANTS
SECTION 5.1 Performance of Obligations......................................22
SECTION 5.2 Compliance with Laws............................................22
SECTION 5.3 Notice of Default and Event of Default..........................22
SECTION 5.4 Report on Proceedings...........................................22
SECTION 5.5 Financial Statements and Other Reports..........................23
SECTION 5.6 Conduct of Business and Preservation of
Corporate Existence, Etc........................................24
SECTION 5.7 Inspection of Property; Books and Records.......................24
SECTION 5.8 Maintenance of Property; Insurance..............................25
SECTION 5.9 Further Assurances; Additional Collateral Security..............25
SECTION 5.10 Indebtedness...................................................25
SECTION 5.11 Limitation on Liens............................................25
SECTION 5.12 No Dividends...................................................26
SECTION 5.13 Limitation on Investments......................................26
SECTION 5.14 Contingent Liabilities.........................................27
SECTION 5.15 Limitation on Leases...........................................27
SECTION 5.16 Prohibition on Sale of Assets..................................27
SECTION 5.17 Limitation on Prepayments of Debt..............................28
SECTION 5.18 Subsidiaries...................................................28
SECTION 5.19 Mergers, Disposition of Assets, Etc............................28
SECTION 5.20 Fiscal Year....................................................28
SECTION 5.21 No Inconsistent Agreements.....................................28
SECTION 5.22 Use of Proceeds................................................28
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SECTION 5.23 Transactions with Affiliates...................................28
SECTION 5.24 Issuance of Preferred Stock....................................29
SECTION 5.25 Ordinary Course................................................29
ARTICLE VI
DEFAULTS
SECTION 6.1 Events of Default...............................................29
ARTICLE VII
EXCHANGE
SECTION 7.1 Exchange Option..................................................33
SECTION 7.2 Reservation and Authorization of Shares.........................39
SECTION 7.3 Stock Transfer Books............................................40
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices..........................................................40
SECTION 8.2 No Waivers; Remedies Cumulative.................................41
SECTION 8.3 Expenses; Documentary Taxes; Indemnification....................41
SECTION 8.4 Amendments and Waivers..........................................43
SECTION 8.5 Successors and Assigns..........................................43
SECTION 8.6 GOVERNING LAW; VENUE AND JURISDICTION...........................43
SECTION 8.7 WAIVER OF JURY TRIAL............................................44
SECTION 8.8 Limitation on Interest..........................................44
SECTION 8.9 Severability....................................................45
SECTION 8.10 Counterparts; Integration; Section Headings....................45
SECTION 8.11 Confidentiality of Information.................................45
iii
SCHEDULES:
Schedule 1.1(a) - Commitments
Schedule 3.1(h) - Consents from Other Creditors
EXHIBITS:
Exhibit A - Form of Note
Exhibit B - Form of Borrower Security Agreement
Exhibit C - Form of Subsidiary Security Agreement
Exhibit D - Form of Guarantee Agreement
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Intercreditor Agreements
Exhibit G - Form of Registration Rights Agreement
Exhibit H - Form of Articles of Amendment -- Class C Exchangeable
Preferred Stock
Exhibit I - Form of Articles of Amendment -- Class D Preferred Stock
Exhibit J - Form of Articles of Amendment -- Class B Preferred Stock
Exhibit K - Form of Articles of Amendment -- Class A Preferred Stock
iv
LOAN AGREEMENT
LOAN AGREEMENT, dated as of October 12, 1998, between IMC MORTGAGE
COMPANY, a Florida corporation (the "Borrower"); and GREENWICH STREET CAPITAL
PARTNERS II, L.P., a Delaware limited partnership, GREENWICH FUND, L.P., a
Delaware limited partnership, and GSCP OFFSHORE FUND, L.P., a Cayman Islands
exempted limited partnership, (each, a "Lender", and collectively, the
"Lenders").
Whereas, the Borrower wishes to enter into, and the Lenders are willing
to enter into, this Loan Agreement providing the Commitments;
Whereas, the Class A Articles of Amendment and the Class B Articles of
Amendment have been duly authorized by the Board of Directors of the Borrower,
duly executed on behalf of Borrower and duly filed with the Secretary of State
of Florida and are in full force and effect;
Whereas, in consideration of the Lenders entering into this Loan
Agreement, the Borrower has issued, or will prior to the Initial Advance issue,
to the Lenders, in such denominations as they have specified, an aggregate of
23,760.758 shares of its Class C Preferred Stock, which shares have been duly
authorized and, when issued, will be validly issued , fully paid and
non-assessable.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Additional Advance" means any Advance, other than the Initial Advance,
made by the Lenders in the manner set forth in Sections 2.9 and 2.10.
"Advances" means the Initial Advance and any Additional Advance.
"Affiliate" means, as to any Person, any other Person directly or
indirectly controlling, or controlled by or under common control with such
Person, including without limitation any Person owning 5% or more of any class
of voting securities of such Person
("control" meaning the power to direct the management of a Person, whether by
the ownership of securities or by contract or otherwise).
"Agreement" means this Agreement, as the same may be amended, modified
or supplemented from time to time.
"Aggregate Commitment Amount" shall mean $33,000,000.
"Applicable Law" means all applicable laws, treaties, judgments,
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority.
"Average Amount Outstanding" shall mean an amount equal to (x) the sum
of aggregate amount of all Loans outstanding on each day beginning on the date
of the Initial Advance and ending on the Prepayment Date, divided by (y) the
number of days beginning on and including the date of the Initial Advance, and
ending on the Prepayment Date.
"BankBoston Forbearance Agreement" means the agreement of BankBoston,
N.A. (i) to forbear from exercising remedies or taking other action to enforce
the payment of the Debt of the Company owing to BankBoston, N.A. for a period of
45 days and in certain events specified therein, for up to 90 days, (ii)
consenting to the entrance by the Borrower and its Subsidiaries into the Loan
Documents and (iii) to advance the additional $7,500,000 of advances authorized
under its facilities, when requested by the Borrower.
"Board" means the Board of Directors of the Borrower or a committee of
directors lawfully exercising relevant powers of the Board.
"Borrower" has the meaning set forth in the first paragraph of this
Agreement.
"Borrower Security Agreement" shall mean the security agreement, dated
as of the Closing Date, made by the Borrower in favor of the Collateral Agent
for the benefit of the Lenders, as the same may from time to time be amended,
modified or supplemented.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Tampa, Florida or New York, New York are authorized by
law to close.
2
"Change of Control" means the occurrence of any of the following
events (other than as a consequence of the issuance of the Preferred Stock to
the Lenders upon exercise of the Exchange Option):
(i) 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 within one year), directly or indirectly, of more than
50% of the Voting Stock of the Company; or
(ii) individuals who at the date hereof constituted the
Board of Directors of the Borrower cease for any reason to
constitute a majority of the Board of Directors then in office;
or
(iii) Borrower or any of its Subsidiaries consummates any
sale, lease, exchange or other disposition of all or
substantially all of the assets of the Borrower and its
Subsidiaries, taken as a whole, in any transaction or series of
transactions not in the ordinary course of business; or
(iv) Borrower engages in a merger, consolidation or
similar business combination with any third party.
"Class A Articles of Amendment" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
amending and restating the designation of the rights, limitations and
preferences of the Class A Preferred Stock in the form attached hereto as
Exhibit K.
"Class B Articles of Amendment" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
amending and restating the designation of the rights, limitations and
preferences of the Class B Preferred Stock in the form attached hereto as
Exhibit J.
"Class C Certificate of Designations" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
designating the rights, limitations and preferences of the Class C Exchangeable
Preferred Stock in the form attached hereto as Exhibit H.
"Class C Preferred Stock" means the Class C Exchangeable
Preferred Stock, par value $.01 per share, of the Borrower.
3
"Class D Certificate of Designations" shall mean the Articles of
Amendment, to be filed with the Secretary of State of the State of Florida,
designating the rights, limitations and preferences of the Class D Preferred
Stock in the form attached hereto as Exhibit I.
"Class D Preferred Stock" means the Class D Preferred Stock, par
value $.01 per share, of the Borrower.
"Closing Date" shall mean the date on which all of the conditions
set forth in Section 3.1 are satisfied.
"Collateral Agent" means Greenwich Street Capital Partners II,
L.P., acting as Collateral Agent for the Lenders.
"Commitments" means the commitment of each of the Lenders to make
Advances in accordance with its Commitment Percentage.
"Commitment Fee Letter Payment" has the meaning set forth in
Section 2.9.
"Commitment Percentage" shall mean, with respect to each Lender,
the percentage of the Aggregate Commitment Amount set forth beside such Lender's
name on Schedule 1.1(a).
"Commitment Period" shall mean the period beginning on the
Closing Date and ending 90 days from and after the date hereof.
"Common Stock" means the Borrower's common stock, par value $0.01
per share.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all Debt of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person and (vi) all Debt of others Guaranteed
by such Person.
4
"Default" means any condition or event that constitutes an Event
of Default or that with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Definitive Agreement" means a binding agreement between the
Borrower and one or more creditworthy Persons having the financial and other
capacity to consummate the transaction contemplated thereby, providing for (i) a
merger, consolidation, share exchange, business combination or other similar
transaction involving the Borrower in which the outstanding Common Stock is
converted into the right to receive cash or to receive securities
of a Qualifying Issuer; (ii) a sale, conveyance, lease, exchange, transfer or
other disposition of all or substantially all the assets of the Borrower and its
Subsidiaries, taken as a whole, in a single transaction or in a series of
transactions outside of the ordinary course of business in return for cash or
securities of a Qualifying Issuer; or (iii) a tender offer or exchange offer for
any and all of the outstanding shares of Common Stock in return for cash or
securities of a Qualifying Issuer, in each case which, upon consummation of the
transactions contemplated thereby, would result in a Change of Control and which
agreement shall include only customary closing conditions to the obligation of
Borrower and such other Person(s), but which consummation shall not be
conditioned upon the completion of due diligence, or the obtaining of financing
and shall provide for payment of consideration to the holder of any Class C
Preferred Stock or Class D Preferred Stock in connection with such transaction
equal to the consideration payable to such holder in accordance with the
provisions thereof.
"Disclosure Letter" means the letter from the Borrower to the
Lenders making certain disclosures with respect to the representations and
warranties contained herein.
"Dollars," "United States dollars," "U.S.$" or "$" means United
States of America dollars.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" has the meaning set forth in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Option" has the meaning set forth in Section 7.1.
5
"Existing Creditors" means each of Bear Xxxxxxx Home Equity
Trust, Bear Xxxxxxx International Limited, Xxxxx Xxxxxx Real Estate Securities,
Inc., German American Capital Corporation and Aspen Funding Corp. and their
respective successors and assigns.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Agreement" shall mean the Guarantee Agreement, dated
as of the Closing Date, made by the Guarantors in favor of the Lenders, as the
same may from time to time be amended, modified or supplemented.
"Guarantors" shall mean each of IMC Corporation of America, IMC
Credit Card, Inc., IMC Mortgage Company, Canada Ltd., IMC Securities Inc.,
American Home Equity Corporation, IMC Investment Corporation, IMC Investment
Limited Partnership, ACG Financial Services (IMC), Inc., American Mortgage
Reduction, Inc., Central Money Mortgage Co. (IMC), Inc., Corewest Banc, Equity
Mortgage Co., (IMC), Inc., IMCC International, Inc., Mortgage America (IMC),
Inc., National Lending Center, Inc., National Lending Center TILT, Inc.,
National Lending Group, Inc., and Residential Mortgage Corporation (IMC), Inc.,
each a wholly owned subsidiary of the Borrower.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term Guaranty shall not include
endorsements for collection or deposit or obligations under repurchase
agreements and mortgage loan sale agreements, relating to representations and
warranties made therein, in each case in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Initial Advance" shall mean the Advance from the Lenders to the
Borrower made on the Closing Date.
6
"Intercreditor Agreements" shall mean the separate Intercreditor
Agreements substantially in the form attached hereto as Exhibits F-1, F-2 and
F-3, among the Borrower, the Lenders, and each of the Existing Creditors.
"Lender" has the meaning set forth in the first paragraph of this
Agreement.
"Lien" means, with respect to any asset or property, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset or property.
"Loans" shall have the meaning set forth in Section 2.1.
"Loan Documents" means (i) this Agreement, (ii) the Guarantee
Agreement, (iii) the Notes, (iv) the Security Agreements, (v) the Pledge
Agreement, (vi) the Registration Rights Agreement, (vii) the Intercreditor
Agreements, (viii) the BankBoston Forbearance Agreement, and (ix) any other
agreement entered into pursuant to Section 5.9 hereof or Sec tion 4 of the
Security Agreements, in each case as the same may from time to time be amended,
modified or supplemented, and "Loan Document" means any one of them.
"Note" shall mean any promissory note of the Borrower in the form
of Exhib it A hereto, as the same may from time to time be amended, modified or
supplemented.
"Officer's Certificate" means a certificate signed by the
president, a vice president, the secretary or the treasurer of the Borrower.
"Permitted Liens" shall have the meaning set forth in Section
5.11.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the Pledge Agreement, dated as of the
Closing Date, made by the Borrower in favor of the Collateral Agent for the
benefit of the Lenders, as the same may from time to time be amended, modified
or supplemented.
"Preferred Stock" means the Borrower's Preferred Stock, par value
$0.01 per share.
"Prepayment Date" shall have the meaning set forth in Section
2.6.
7
"Qualifying Issuer" means, as of any date of determination, an
issuer the outstanding common stock or other common equity securities of which
is listed on the New York Stock Exchange or NASDAQ National Market System and
which has a publicly traded float of at least $500,000,000.
"Responsible Officer" means, with respect to any Person, the
president or any vice president of such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"SEC Reports" shall mean the annual report on Form 10-K of
Borrower for its fiscal year ended December 31, 1997 (as amended prior to the
date hereof), the quarterly reports on Form 10-Q of Borrower for its fiscal
quarter ended March 31, 1998 and June 30, 1998, the definitive proxy statement
on Schedule 14A filed by the Borrower with respect to its annual meeting of
shareholders held in 1998 and any other report, registration statement,
proxy statement or other filing with the SEC made after December 31, 1997 and
prior to the date hereof.
"Securitization Transaction" means any transaction, however
named, between the Borrower and any one or more purchasers and/or investors
which provides for the monetization of a discrete pool of mortgage loans and/or
mortgage notes through debt securities or ownership interests issued by a
special purpose vehicle supported or backed by mortgage loans and/or mortgage
notes that have been transferred to the special purpose vehicle by the Borrower.
"Security Agreements" shall mean the Borrower Security Agreement
and the Subsidiary Security Agreement.
"Settlement Date" shall have the meaning specified in Section
7.1(b).
"Signing Date" shall mean the date of execution and delivery
hereof by the parties hereto.
"Subsidiary" means, with respect to any Person, any corporation
or other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
8
"Subsidiary Security Agreement" shall mean the security
agreement, dated as of the Closing Date made by the Guarantors in favor of the
Collateral Agent for the benefit of the Lenders, as the same may from time to
time be amended, modified or supplemented.
"Take-Out Premium" shall mean, with respect to the number of days
which shall have elapsed from and including the Signing Date to the date of
execution and delivery of a Definitive Agreement (which results in a Change in
Control), an amount equal to (x) the percentage set forth below listed next to
such number of days elapsed (provided, however, if an Event of Default shall
have occurred and be continuing, such percentage will be calculated as if 91
days had elapsed from the Signing Date), multiplied by (y) the Average Amount
Outstanding:
Take-Out
Days Elapsed Premium
------------ -------
0 - 45 20%
45 - 90 100%
Over 90 200%
"Three-Month Business Plan" shall mean the business plan of the
Borrower and its Subsidiaries included in the Disclosure Letter.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest granted hereunder in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Updated Business Plan" shall mean a report, updated weekly, in
form and substance similar to the Three-Month Business Plan.
"Voting Stock" of an entity means all classes of capital stock of
such entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
"Warehouse Facility" means those certain credit and financing
facilities obtained by the Borrower and the Guarantors from various lenders from
time to time to fund the acquisition and origination of mortgage loans, as the
same may be amended from time to time.
9
SECTION 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a consistent basis.
ARTICLE II
THE LOAN
SECTION 2.1 Loans. Subject to the terms and conditions hereof,
each Lender severally agrees to make Advances in respect of loans (each a "Loan"
and, collectively, the "Loans") to the Borrower on the Closing Date in an amount
equal to such Lender's Commitment Percentage of the Initial Advance, and from
time to time during the Commitment Period in the manner set forth in Sections
2.9 and 2.10 in an aggregate principal amount at any one time outstanding which
does not exceed the amount of such Lenders' Commitment Percentage of the
Aggregate Commitment Amount. During the Commitment Period, the Borrower may use
the Commitments by borrowing such amounts, from time to time in the manner set
forth in and subject to the terms of Sections 2.9 and 2.10, which shall at no
time exceed the Aggregate Commitment Amount. The Borrower may prepay such Loans,
subject to the terms of this Article II, and may reborrow any amounts repaid.
Such Loans will be made available to or at the written direction of the Borrower
in immediately available funds.
SECTION 2.2 The Note; Repayment of Principal. The obligation of
the Borrower to repay the unpaid principal amount of the Loans shall be
evidenced by the Notes in the form of Exhibit A hereto, payable to the Lenders
and their registered assigns, duly executed and delivered by the Borrower to the
Lenders and bearing interest, maturing and subject to optional and mandatory
prepayment as provided herein. The Borrower shall repay the Loans, together with
all accrued interest thereon, on the last day of the Commitment Period, subject
to Section 2.5 and 2.6 hereof.
SECTION 2.3 Loan Record. (a) The Lenders shall maintain a loan
record in which it shall record the date and amount of each Loan and payment or
prepayment of principal of the Loans and the interest paid with respect thereto,
which record may be kept by recordations on the Notes.
10
(b) The failure of any Lender to make an entry in the loan
register or any error made in any such entry shall not in any way affect the
obligations of the Borrower under this Agreement or any other Loan Document,
including without limitation the Borrower's obliga tion to repay the principal
amount of the Loans and the interest accrued from the actual date on which the
Loans are made. The Borrower shall not be bound by any entry in the loan
register not made in accordance with the terms hereof.
SECTION 2.4 Interest Rate. (a) The Loans shall bear interest on
the outstanding principal amount at a rate of 10% per annum. Interest on the
Loans shall be payable in arrears on the date that principal becomes due,
whether at maturity, by acceleration or by prepayment. Interest shall be
calculated on the basis of a 365 (or 366, as the case may be) day year for the
actual days elapsed.
(b) Any overdue principal of and overdue interest on the Loans or
any other overdue amount payable under this Agreement shall bear interest,
payable on demand, for each day until paid (to the extent permitted by
applicable law after as well as before judgment) at a rate per annum equal to 2%
above the interest rate otherwise payable for such day pursuant to Section
2.4(a).
SECTION 2.5 Mandatory Prepayment of the Loans. Unless the Lenders
shall theretofore have exercised the Exchange Option as provided in Section 7.1,
but subject to Section 2.6, the Borrower shall prepay the Loans in whole,
together with all accrued interest and, in the case of prepayment pursuant to
clause (a) below, Take-Out Premium, if any, thereon, on the first to occur of:
(a) a Prepayment Date upon a Change of Control in accordance with Section 2.6,
and (b) the last day of the Commitment Period. Whether or not the Loan shall
have been paid in full, the Borrower shall, unless the Lenders shall theretofore
have exercised the Exchange Option pursuant to Section 7.1, but subject to
Section 2.6, pay to the Lenders the Takeout Premium, if any, on the Prepayment
Date.
SECTION 2.6 Change of Control Prepayment of the Loan. In the
event the Borrower or any Subsidiary shall have executed and delivered a
definitive agreement for, or any other event giving rise to the Lenders' right
to deliver a Notice of Exercise pursuant to clause (ii) or (iii) of Section
7.1(a) shall occur in respect of, a transaction which would, upon consummation,
constitute an Change of Control, the Borrower shall, within 10 days thereafter,
offer to repay the Loan to the Lenders by giving the Lenders written notice of
such intention to repay the Loans upon such Change of Control. Such notice shall
specify the date (which date shall be not less than twenty (20) days after such
notice) upon which the Change of Control is expected to occur (such date, the
"Prepayment Date"). In the event the date upon which the Change of Control is to
occur is delayed or rescheduled, the Borrower shall give the Lenders prompt
written notice thereof specifying the delayed or rescheduled date on which the
11
Change of Control is expected to occur. The Lenders shall notify the Borrower,
not less than five (5) Business Days prior to the date then scheduled for the
Change of Control whether such offer is accepted or not. Failure to respond to
such notice within such period by the Lenders shall be deemed an acceptance of
such offer. Upon acceptance of such offer, the Exchange Option will terminate,
unless such Change of Control fails to occur within two (2) days of such
Prepayment Date set forth in the most recent notice given to the Lenders prior
to acceptance of such offer, in which event the Exchange Option shall be
reinstated.
The amount of any such prepayment shall be equal to all principal
amounts outstanding, if any, together with all interest accrued thereon to the
Prepayment Date, plus Take-Out Premium. If such notice is given, the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the Prepayment Date, together with all accrued interest to
such date on the amount prepaid, plus the Take-Out Premium.
SECTION 2.7 Manner and Time of Payments. (a) All payments of
principal, interest, Take-Out Premium and all other amounts payable hereunder
shall be in United States dollars in Federal or other immediately available
funds and shall be made not later than 1:00 p.m. (New York time) on the date due
to the Lenders at such account of such bank or banks as the Lenders may from
time to time designate. Funds received by a Lender after such time shall be
deemed to have been paid by the Borrower on the next succeeding Business Day.
(b) Whenever any payment to be made hereunder shall be stated to
be due on a day which is not a Business Day, the payment shall be made on the
next succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder.
SECTION 2.8 Use of Proceeds. The Borrower shall use the proceeds
of the Loans only for general corporate purposes, and in accordance with the
Three-Month Business Plan.
SECTION 2.9 Borrowings. (a) The Initial Advance shall be made,
subject to Section 3.1, on the Closing Date in the amount requested by the
Borrower pursuant to Section 2.10, which amount shall be sufficient to enable
the Borrower to pay in full the commitment fee and all out-of-pocket costs and
expenses reimbursement of which has then been requested and which are payable to
the Lenders pursuant to their commitment fee letter dated the date hereof (the
"Commitment Fee Letter Payment"). Each Additional Advance may be made, from time
12
to time, subject to Section 3.2, upon notice to the Lenders in compliance with
Section 2.10.
SECTION 2.10 Requests for Advances; Payment. (i) Subject to the
provisions of Sections 2.9 and 3.1, in the case of the Initial Advance, and
Sections 2.9 and 3.2 in the case of any Additional Advance, a request for an
Advance shall be made, or shall be deemed to be made, in the following manner:
The Borrower may give the Lenders notice of its intention to borrow, in which
notice the Borrower shall specify the amount of the proposed Advance and the
proposed borrowing date, no later than 1:00 P.M. New York time at least one day
prior to the proposed borrowing date. As an accommodation to Borrower, the
Lenders may permit telephonic requests for Advances and electronic transmittal
of instructions, authorizations, agreements or reports to the Lenders by the
Borrower. Unless the Borrower specifically directs the Lenders in writing not to
accept or act upon telephonic or electronic communications from Borrower, no
Lender shall have liability to the Borrower for any loss or damage suffered by
Borrower as a result of such Lender's honoring of any requests, execution of any
instructions, authorizations or agreement or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to such Lender by the Borrower and no Lender shall have any duty to verify
the origin of any such communication or the authority of the person sending it,
provided such Lender does not have reason to believe any such communication is
not authorized. A written notice for any Additional Advance delivered in
accordance with this Section 2.10 shall constitute a representation and warranty
that on the date of such request, the conditions precedent to an Additional
Advance contained in Section 3.2 clauses (a)-(f) have been satisfied as of such
date. As an additional condition to each Advance, the Lenders shall have
received immediately prior to making such Advance written confirmation from
BankBoston that it is making its pro rata advance under its facility as
contemplated by the BankBoston Forbearance Agreement.
(ii) Each borrowing of Advances shall be advanced by each Lender
in accordance with its Commitment Percentage, provided that, if any Lender fails
to advance all or any portion of any requested Advance, any other Lender may,
but shall have no obligation to, advance all or any portion of the amounts to be
advanced by such Lender.
ARTICLE III
CONDITIONS
SECTION 3.1 Conditions Precedent to the Initial Loan. The
obligation of the Lenders to make the Initial Advance to be made by them
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hereunder is subject to the satisfaction of the following conditions precedent
(or the waiver thereof in the sole discretion of the Lenders):
(a) Each Lender shall have received its Note, conforming to the
requirements hereof and duly executed and delivered by a duly authorized
Responsible Officer of the Borrower and duly endorsed by each Guarantor;
(b) The representations and warranties of the Borrower contained
in this Agreement and the other Loan Documents and those otherwise made
in writing by or on behalf of the Borrower pursuant to the provisions of
this Agreement shall be correct in all material respects when made and
at and as of the Closing Date, as if made at and as of the Closing Date;
no Event of Default or Default shall have occurred and be continuing;
and the Borrower shall have delivered to the Lenders a certificate of a
Responsible Officer of the Borrower, dated the Closing Date, certify ing
that the conditions specified in this paragraph (b) have been fulfilled;
(c) The Lenders shall have received an opinion of counsel to the
Borrower, which counsel is satisfactory to the Lenders, and which
opinion is in form and substance satisfactory to the Lenders and covers
such matters incident to the transactions contemplated by this Agreement
and the other Loan Documents as the Lenders may request, addressed to
the Lenders and dated the Closing Date;
(d) The Lenders shall have received the Borrower Security
Agreement in the form of Exhibit B hereto, duly executed and delivered
on behalf of the Borrower by a duly authorized Responsible Officer of
the Borrower, and a Subsidiary Security Agreement in the form of Exhibit
C hereto, duly executed and delivered on behalf of each Guarantor by a
duly authorized Responsible Officer of such Guarantor; and such Security
Agreements shall be in full force and effect;
(e) The Lenders shall have received the Guarantee Agreement in
the form of Exhibit D hereto, duly executed and delivered on behalf of
each Guarantor by a duly authorized Responsible Officer of such
Guarantor; and such Guarantee Agreement shall be in full force and
effect;
(f) The Lenders shall have received the Pledge Agreement in the
form of Ex hibit E hereto, duly executed and delivered on behalf of the
Borrower by a duly authorized Responsible Officer of the Borrower; and
such Pledge Agreement shall be in full force and effect;
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(g) (i) BankBoston, N.A. shall have entered into the BankBoston
Forbearance Agreement, which is satisfactory in substance and form to
the Lenders, and (ii) each Existing Creditor shall have duly executed
and delivered to the Lenders an Intercreditor Agreement in the form
attached as Exhibit F hereto with respect to such Existing Creditor and
each Existing Creditor shall have waived any existing right to terminate
the Standstill Period thereunder and confirmed its satisfaction with the
BankBoston Forbearance Agreement;
(h) the Borrower shall have obtained all consents to the
Borrower's entering into this Agreement (including, without limitation,
all consents from its other creditors listed on Schedule 3.1(h));
(i) the Lenders shall have received the Registration Rights
Agreement in the form of Exhibit G hereto, duly executed and delivered
on behalf of a duly authorized Responsible Officer of the Borrower, and
such Registration Rights Agreement shall be in full force and effect;
(j) the Borrower shall have (i) delivered to the Lenders
certificates evidencing the issuance to the Lenders of 23,760.758 shares
of Class C Preferred Stock, in such denominations and registered in such
names as the Lenders shall request, which shares shall be duly
authorized, validly issued, fully paid and non-assessable; and (ii) paid
the Lenders the Commitment Fee Letter Payment, which condition contained
in this clause (ii) may be satisfied by giving an irrevocable direction
to the Lenders to apply a portion of the Initial Advance in an amount
sufficient to effect such Payment to payment thereof.
(k) The Lenders shall receive from the Borrower a certificate,
dated the Closing Date, of its Secretary or Assistant Secretary as to
(i) resolutions of its Board then in full force and effect (x)
authorizing the execution, delivery and performance of this Agreement,
the Notes and each of the Loan Documents to be executed by it and (y)
authorizing the Class A Articles of Amendment, Class B Articles of
Amendment, the Class C Certificate of Designations and the Class D
Certificate of Designations; (ii) the incumbency and signatures of those
of its officers authorized to act with respect to this Agreement, the
Notes and each of the Loan Documents executed by it; and (iii) by-laws
and Articles of Incorporation of the Borrower;
(l) the Class A Articles of Amendment, Class B Articles of
Amendment, the Class C Certificate of Designations and the Class D
Certificate of Designations shall have been duly authorized by the Board
of Directors of the Borrower, duly executed on behalf of the Borrower
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and duly filed with the Secretary of State of the State of Florida and
shall be in full force and effect;
(m) Borrower shall be in compliance in all material respects with
the Three-Month Business Plan;
(n) the Lenders shall have received all documents it may
reasonably request relating to the existence of the Borrower and its
Subsidiaries, the corporate authority for and the validity of this
Agreement and the other Loan Documents and any other matters relevant
hereto, all in form and substance satisfactory to the Lenders;
(o) the Lenders shall have received the Disclosure Letter, which
shall be satisfactory to the Lenders in substance and form;
(p) the Borrower shall have delivered to the Lenders a
certificate of a Responsible Officer of the Borrower, dated the Closing
Date, certifying that the foregoing conditions specified in paragraphs
(a) through (o), inclusive, have been fulfilled.
SECTION 3.2 Conditions Precedent to Additional Loans. The obligation of
the Lenders to make the Additional Advances to be made by them hereunder is
subject to the satisfaction of the following conditions precedent (or the waiver
in the sole discretion of the Lenders):
(a) the representations and warranties of the Borrower contained
in this Agreement and the other Loan Documents and those otherwise made
in writing by or on behalf of the Borrower in connection with the
transactions contemplated by this Agreement shall be correct in all
material respects when made and at and as of the date of such Additional
Advance, as if made at and as of such date; and no Event of Default or
Default shall have occurred and be continuing;
(b) there shall not have occurred any material adverse change in
the business, properties, condition (financial or otherwise), results of
operations or prospects of the Borrower and its Subsidiaries taken as a
whole;
(c) Borrower shall be in compliance in all material respects with
the Three-Month Business Plan;
(d) no Existing Creditor shall have violated the provisions of
Section 1 of its Intercreditor Agreement;
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(e) BankBoston shall be in compliance in all material respects
with the BankBoston Forbearance Agreement;
(f) the Borrower shall have requested, and the Lenders shall have
become obligated to make, the Initial Advance; and
(g) the Borrower shall have delivered to the Lenders a
certificate of a Responsible Officer of the Borrower, dated the date of
such Additional Loan, certify ing that the conditions specified in this
paragraphs (a), (b), (c), (d), (e) and (f) have been fulfilled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 4.1 Corporate Organization, Etc. (a) The Borrower is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Florida, and has the corporate power and authority to own
or hold under lease its properties and to enter into and perform its obligations
under this Agreement and all other Loan Documents.
(b) The Borrower is duly qualified to do business as a foreign
corporation in each state of the United States in which it has an office or in
which failure to so qualify would, individually or in the aggregate, have a
material adverse effect on the business, assets, liabilities, condition
(financial or otherwise), results of operations or prospects of Borrower and its
Subsidiaries taken as a whole or on its ability to perform its obligations under
this Agreement, the Note or any other Loan Document (a "Material Adverse
Effect").
(c) Each Subsidiary of Borrower is a corporation or limited
partnership duly organized and validly existing and in good standing under the
laws of the state of its incorporation, and has the corporate or partnership
power and authority to own or hold under lease its properties and assets and to
enter into and perform its obligations under each of the Loan Documents to which
it is a party. Each such Subsidiary is duly qualified to do business as a
foreign corporation in each state of the United States in which it has an office
or in which the failure to be so qualified would have a Material Adverse Effect.
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(d) Set forth on Schedule 4.1 to the Disclosure Letter is a list
of all of the Subsidiaries of the Borrower and a true and correct description of
the authorized, issued and outstanding capital stock of each such Subsidiary.
The Borrower owns all of the outstanding capital stock of each such Subsidiary,
free and clear of any Liens, except as specified in Schedule 4.1 to the
Disclosure Letter.
SECTION 4.2 Due Authorization. The execution, delivery and
performance by the Borrower of this Agreement, and the execution, delivery and
performance by the Borrower and the Guarantors of each of the other Loan
Documents to which any of them is a party:
(a) have been duly authorized by all necessary corporate action
and do not require any stockholder approval or the approval or consent
of or notice to any trustee or holder of any indebtedness or
obligations of the Borrower or any Subsidiary;
(b) do not conflict with or result in any violation of the
certificate of incorporation or by-laws of the Borrower or any
Subsidiary;
(c) do not and will not contravene any Applicable Law or conflict
with or constitute a default under, or result in the creation of any
Lien (other than as permitted under this Agreement or the Security
Agreement) upon the property of the Borrower or any Subsidiary under any
indenture, mortgage, lease, instrument or other agreement to which the
Borrower or any Subsidiary is a party or by which it may be bound or
affected; and
(d) do not require the authorization, consent or approval of, the
giving of notice to, the registration with or the taking of any other
action by or in respect of, any Federal, state or foreign governmental
authority, agency or judicial body, or the taking of any other action
under any Applicable Law, except for those that have been or, on or
before the Closing Date, will have been, duly made, given or
accomplished, including without limitation the filing of Uniform
Commercial Code financing statements referred to in the Security
Agreements.
SECTION 4.3 Litigation. Except as disclosed in its SEC Reports,
complete and correct copies of which have been furnished to the Lenders, there
are no pending or, to the knowledge of the Borrower, threatened actions, suits,
proceedings or investigations before any court or administrative agency or
arbitrator which would, if adversely determined, individually or in the
aggregate, have a Material Adverse Effect.
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SECTION 4.4 Absence of Undisclosed Liabilities. Except as
disclosed in the SEC Reports or in Schedule 4.4 to the Disclosure Letter and for
liabilities arising since June 30, 1998 in the ordinary course of business and
consistent with past practice, none of which have had or could reasonably be
expected to have any Material Adverse Effect, neither Borrower nor any of its
Subsidiaries has any liability, obligation, claim or cause of action of any kind
or nature whatsoever, whether absolute, accrued, contingent or other, known or
unknown.
SECTION 4.5 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which are required to be filed by it
and has paid or caused to be paid all taxes which have been shown to be due and
payable by such returns or (except to the extent being contested in good faith
and for the payment of which adequate reserves have been provided) tax
assessments received by the Borrower or such Subsidiary to the extent that such
taxes have become due and payable.
SECTION 4.6 Title to Certain Properties. Each of the Borrower and
the Guarantors has good and marketable title to all of its material properties
and assets free and clear of any Lien, except as disclosed on Schedule 4.6 to
the Disclosure Letter.
SECTION 4.7 No Default. No Event of Default or Default has
occurred and is continuing or has occurred or will occur as a result of the
execution and delivery of this Agreement or the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby, other than
defaults as may result from creating junior liens on assets without the consent
of prior lien holders.
SECTION 4.8 Investment Company. Neither the Borrower nor any
Guarantor is an "investment company" or a company controlled by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.9 Legal, Valid and Binding Agreements. This Agreement,
the Notes and each other Loan Document constitute or, when executed and
delivered by each of the Borrower and the Guarantors which is a party thereto,
will constitute, the legal, valid and binding obligation of each of the Borrower
and the Guarantors which is a party thereto, en forceable against the Borrower
or such Guarantor, as the case may be, in accordance with the respective terms
hereof and thereof, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally and by general principles of equity.
SECTION 4.10 Compliance with ERISA. Neither the Borrower nor any
Subsidiary has breached the fiduciary rules of ERISA or engaged in any
19
prohibited transaction in connection with which the Borrower or such Subsidiary
could be subjected to (in the case of any such breach) liability for damages or
(in the case of any such prohibited transaction) either a civil penalty assessed
under ERISA or a tax, which liability, penalty or tax, in any case, would
reasonably be expected to have a Material Adverse Effect.
SECTION 4.11 Disclosure; Financial Statements. (a) The SEC
Reports, as of their date of filing, do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in the light of the cir cumstances under which they were made, not
misleading.
(b) The consolidated balance sheets of Borrower and its
consolidated Subsidiaries and the related consolidated statements of operations,
changes in shareholders' equity and cash flows contained in the SEC Reports,
present fairly the financial condition of the Borrower and its Subsidiaries as
at the dates thereof, and the consolidated results of its operations, changes in
shareholders, equity and cash flows for the periods presented therein in
accordance with generally accepted accounting principles consistently applied.
There has been no material adverse change in the business, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole from that reflected on the most recent
consolidated balance sheet of the Borrower and its subsidiaries contained in the
SEC Reports, except as disclosed in Schedule 4.11 to the Disclosure Letter.
SECTION 4.12 Compliance with Law. Each of the Borrower and its
subsidiaries is in compliance with Applicable Law, except to the extent that the
failure to comply therewith would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 4.13 Consents. No consent of any other Person and no
consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the borrowing hereunder or
with the execution, delivery or performance by Borrower or any Guarantor, or the
validity or enforceability of, this Agree ment or any other Loan Document,
except as set forth on Schedule 4.13 to the Disclosure Letter and except for
such consents, authorizations, filings or acts the failure of which to obtain or
to undertake would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 4.14 Patents, Copyrights, Permits and Trademarks. Each of
Borrower and its Subsidiaries owns, or has a valid license or sublicense in, all
domestic and foreign letters patent, patents, patent applications, and know-how,
licenses, inventions, technology, permits, trademark registrations and
20
applications, trademarks, tradenames, trade secrets, service marks, copyrights,
product designs, applications, formulae, computer software and programs,
processes and industrial property rights (collectively "proprietary rights")
used in the operation of its business in the manner in which it is currently
being conducted and which are material to the business, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole. Neither the Borrower nor any of its
Subsidiaries is aware of any existing or threatened infringement or
misappropriation of any proprietary rights of others by the Borrower or any of
its Subsidiaries or of any proprietary rights of the Borrower or any of its
Subsidiaries by others, except for such as would not, individually or in the
aggregate, have Material Adverse Effect.
SECTION 4.15 Fairness Opinion. The Borrower has received an
opinion from Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation to the effect
that the transactions contemplated hereby are fair to the Borrower and its
shareholders (other than the Lenders) from a financial point of view and such
opinion has not been modified or withdrawn.
SECTION 4.16 Capitalization. The Borrower's authorized capital
stock consists of (a) 50,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock") and (b) 10,000,000 shares of Preferred Stock, par
value $.01 per share (the "Preferred Stock"), of which 500,000 shares have been
designated Class A Preferred Shares, 300,000 shares have been designated Class B
Preferred Shares, 800,000 shares have been designated Class C Preferred Shares
and 800,000 have been designated Class D Preferred Shares. As of the date
hereof, Section 4.16 of the Disclosure Letter sets forth (i) the number of
shares of Common Stock that are issued and outstanding, all of which are validly
issued, fully paid and nonassessable and not subject to preemptive rights; (ii)
the number of shares of Common Stock are held in the treasury of the Borrower as
treasury stock; (iii) the number of options outstanding to purchase shares of
Common Stock (the "Stock Options"); and (iv) the number of shares of each Class
of Preferred Stock issued and outstanding. Except as set forth in Section 4.16
of the Disclosure Letter, there are no stock appreciation rights out standing.
Section 4.16 of the Disclosure Letter sets forth a list, complete and correct as
of the date hereof, the number of shares of Common Stock issuable upon the
exercise of each Stock Option and the exercise prices thereof, in the case of
Stock Options having exercise prices of $10.00 per share or less, and the
approximate number of shares of Common Stock issuable on the exercise of each
Stock Option in the case of Stock Options having exercise prices in excess of
$10.00 per share. There are no bonds, debentures, notes or other indebtedness of
the Borrower having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of Common
Stock of the Borrower may vote. Except as set forth in this Section 4.16 or in
Section 4.16 of the Disclosure Letter, no shares of capital stock or other
voting securities are issued, reserved for issuance or outstanding, nor are
there any outstanding subscriptions, options, warrants, rights, convertible
21
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of the Borrower or any of
its subsidiaries obligating the Borrower or any of its Subsidiaries to issue,
deliver, sell or purchase, or cause to be issued, delivered, sold or purchased,
any securities of the Borrower or any of its Sub sidiaries. Except as set forth
in Section 4.16 of the Disclosure Letter, there are no voting trusts or other
agreements or understandings to which the Borrower or any of its Subsidiaries is
a party with respect to the voting of capital stock of the Borrower or any of
its Subsidiaries.
ARTICLE V
COVENANTS
The Borrower covenants and agrees that, so long as this Agreement
shall be in effect or any amount payable hereunder shall remain unpaid or any
obligation required to be performed hereunder shall remain unperformed, and
unless the Lenders shall otherwise consent in writing:
SECTION 5.1 Performance of Obligations. (a) The Borrower shall
perform, and shall cause each Guarantor to perform, promptly and faithfully all
of its obligations under this Agreement, the Notes and the other Loan Documents.
(b) The Borrower shall, and shall cause each Subsidiary to, pay
and discharge, at or before maturity, all of its obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and maintain in accordance
with generally accepted accounting principles appropriate reserves for the
accrual of any of the same; provided that the failure of the Borrower and its
Subsidiaries to pay and discharge their obligations or liabilities with respect
to the matters set forth in Schedule 5.1 to the Disclosure Letter or with
respect to any margin call or demand for repayment on existing Securitization
Transactions or Warehouse Facilities of which the Lenders have received notice
under Section 5.3(b) hereof, or to pay and discharge their accounts payable
within 60 days of their presentment to the Borrower or its Subsidiaries shall
not be deemed a breach or nonperformance by the Borrower of its covenants in
this Section 5.1(b).
SECTION 5.2 Compliance with Laws. The Borrower shall, and shall
cause each Subsidiary to, comply with Applicable Law except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings.
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SECTION 5.3 Notice of Default and Event of Default. (a) No later
than two Business Days after becoming aware of the existence of any condition or
event which constitutes a Default or an Event of Default hereunder, the Borrower
shall provide the Lenders with an Officer's Certificate specifying the nature
and period of existence thereof and what action the Borrower is taking or
proposes to take with respect thereto.
(b) Immediately upon the receipt of notice from any creditor of a
margin call or demand for repayment in respect of on a Securitization
Transaction or a Warehouse Facility, the Borrower shall immediately notify the
Lenders of the nature and amount of such margin call or demand for repayment,
and the name of the creditor which made such margin call or demand.
SECTION 5.4 Report on Proceedings. No later than two Business
Days after becoming aware of any investigation of the Borrower or any Subsidiary
by any governmental authority or agency or any court or administrative
proceeding or arbitration which, if adversely determined, would reasonably
involve a possibility of an adverse effect on the ability of the Borrower to
perform its obligations under this Agreement, the Note or any other Loan
Document, the Borrower shall provide the Lenders with an Officer's Certificate
specifying the nature of such investigation or proceeding and what action the
Borrower is taking or proposes to take with respect thereto.
SECTION 5.5 Financial Statements and Other Reports. The Borrower
shall furnish to the Lenders the following described financial statements,
reports, notices and information:
(a) Updated Business Plan. Within two Business Days after the end
of each week, an Updated Business Plan for such week, all in reasonable
detail and in form reasonably satisfactory to the Lenders, together with
such other information as is customarily prepared by the Borrower on a
weekly basis.
(b) Monthly Financial Statements. Within 35 days after the end of
the month, consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries at the end of such month and the related
consolidated and consolidating statements of income and cash flows of
the Borrower and its Subsidiaries for such month, and the general ledger
trial balance of the Borrower and its Subsidiaries for such month, all
in reasonable detail and in form reasonably satisfactory to the Lenders,
together with such other information as is customarily prepared by
Borrower as part of its monthly report to management.
23
(c) Quarterly Financial Statements. Within 45 days after the end
of each fiscal quarter of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries at the end of such
quarter and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow of the Borrower and its
Subsidiaries for such fiscal quarter, setting forth, in the case of the
consolidated statements, in comparative form the figures for the
previous quarter of the Borrower, all in reasonable detail and certified
by a principal financial officer of the Borrower as presenting fairly
the financial position of the Borrower and its Subsidiaries as of the
dates indicated and the results of their operations, changes in
shareholders' equity and cash flows for the periods indicated in
conformity with generally accepted accounting principles applied on a
consistent basis with prior periods (except as otherwise stated
therein); provided that the delivery of the Borrower's Quarterly Report
on Form 10-Q for such fiscal quarter prepared in accordance with the
requirements of the SEC and U.S. securities regulations shall be
sufficient to satisfy the Borrower's obligations under this Section
5.5(c).
(d) Other Reports. Promptly upon their becoming available, copies
of all other financial statements, reports, notices and proxy statements
sent or made avail able by the Borrower to its shareholders or filed
with the SEC.
(e) Officer's Certificate. Together with each delivery of
financial statements or reports required by clauses (a), (b) and (c)
above, a certificate from a Responsible Officer of the Borrower to the
effect that the signer is familiar with or has reviewed the relevant
terms of this Agreement and has made, or caused to be made under his or
her supervision, a review of the transactions and condition of the
Borrower during the period covered by such financial statements, and
that such review has not disclosed the existence during such period, nor
does the signer have knowledge of the existence as at the date of such
certificate, of any condition or event that constitutes an Event of
Default or Default hereunder or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and
what action the Borrower has taken, is taking or proposes to take with
respect thereto.
(f) Other Information. Such other data or information regarding
the business affairs or financial condition of the Borrower as the
Lenders may from time to time reasonably request, promptly upon receipt
of such request.
SECTION 5.6 Conduct of Business and Preservation of Corporate
Existence, Etc. (a) The Borrower shall, and shall cause each Subsidiary to,
maintain and preserve at all times its corporate existence.
24
(b) The Borrower shall, and shall cause each Subsidiary to,
continue to engage in business of the same general type as now conducted by the
Borrower or such Sub sidiary and will do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence and its rights, powers, privileges and franchises, except for any
corporate right, power, privilege or franchise that it determines is no longer
necessary or desirable in the conduct of its business.
(c) The Borrower shall not, without the prior written consent of
the Lenders, enter into the ownership, active management or operation of any
business other than businesses presently conducted in the geographic locations
presently conducted (and except as otherwise permitted hereby the Borrower shall
not effect or permit a change in its corporate organization existing on the date
hereof).
(d) Except as provided in Section 5.24, the Borrower shall not,
and shall not permit any Subsidiary to, amend or modify its Certificate of
Incorporation or By-laws without the prior written consent of the Lenders.
SECTION 5.7 Inspection of Property; Books and Records. The
Borrower shall, and shall cause each Subsidiary to, keep proper books of record
and account in which full, true and correct entries are made in accordance with
generally accepted accounting principles and Applicable Law; and shall permit
representatives of the Lenders to visit and inspect any of its properties, and
examine and make abstracts from any of its books and records at the Borrower's
expense, at any reasonable time and as often as may reasonably be requested, and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees of
the Borrower and its Subsidiaries.
SECTION 5.8 Maintenance of Property; Insurance. The Borrower
shall, and shall cause each Subsidiary to, keep all property useful and
necessary in its business in good working order and condition, and maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against such risks as are usually insured
against in the same general area by Persons engaged in the same or a similar
business.
SECTION 5.9 Further Assurances; Additional Collateral Security.
The Borrower shall, and shall cause each Subsidiary to, execute and file all
such further documents and instruments, and perform such other acts, as the
Lenders may reasonably determine are necessary or advisable to maintain or
perfect the Liens granted to the Lenders in connection with this Agreement and
the other Loan Documents and to maintain the priority and perfection of such
Liens purported to be granted pursuant to this Agreement and the other Loan
25
Documents (including any Liens on property rights). With respect to any real
property, fixtures, equipment or securities identified as collateral under any
Security Agreement acquired and held by the Borrower or any Guarantor at any
time after the Closing Date, upon request of the Lenders, the Borrower shall, or
shall cause such Guarantor to, grant the Lenders a Security Interest (as defined
in the Security Agreement) of record on all such real property, fixtures and
equipment and a pledge of all such securities, upon the terms set forth in the
applicable Security Agreement, as appropriate, and satisfactory in form and
substance to the Lenders.
SECTION 5.10 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary to, create, incur, assume, Guarantee or suffer to exist
any Debt except:
(a) Debt under the Loan Documents; and
(b) Debt listed on Schedule 5.10 to the Disclosure Letter, and
any extensions or renewals thereof;
SECTION 5.11 Limitation on Liens. The Borrower shall not and
shall not permit any Subsidiary to, create, incur, assume or suffer to exist any
Lien on any of its property, assets or revenues, whether now owned or hereafter
acquired, except the following (the "Permitted Liens"):
(a) Liens in favor of the Lenders under the Loan Documents;
(b) Liens existing on the date hereof and set forth on Schedule
5.11 to the Disclosure Letter;
(c) Liens for taxes and special assessments not yet due or which
are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of
the Borrower in accordance with generally accepted accounting
principles;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 90 days or
which are being contested in good faith by appropriate proceedings;
(e) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation or to secure the
26
performance of tenders, statutory obligations, surety and appeal bonds,
performance and return-of-money bonds and similar obligations;
(f) Liens resulting from judgments of any court or governmental
proceeding; provided that such judgments in the aggregate do not
constitute an Event of Default under Section 6.1(j); and
(g) Liens of landlords or of mortgagees of landlords, arising
solely by operation of law, on fixtures located on premises leased in
the ordinary course of business; provided that the rental payments
secured thereby are not more than 30 days over due.
SECTION 5.12 No Dividends. The Borrower shall not, and shall not
permit any Subsidiary to, declare any dividends on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrower, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary.
SECTION 5.13 Limitation on Investments. The Borrower shall not,
and shall not permit any Subsidiary to, make or permit to exist any loans or
cash advances to, or capital investments in, any other Person, including any
Affiliate, except that:
(a) the Borrower and any Subsidiary may make cash advances to, or
investments in, any wholly-owned Subsidiary of the Borrower or, in the
case of advances or investments by any Subsidiary, the Borrower, and may
make advances to Preferred Mortgages, Ltd., a United Kingdom company, as
contemplated by the Three-Month Business Plan;
(b) the Borrower and any Subsidiary may purchase or otherwise
acquire and own (i) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed or insured by the
United States of America or any agency thereof, (ii) commercial paper
issued by domestic issuers rated at least A-1 by Standard & Poor's
Corporation or P-1 by Xxxxx'x Investors Service, Inc. or (iii)
certificates of deposit, Eurodollar time deposits, overnight bank
deposits and bankers acceptances, each with maturities of one year or
less from the date of the ac quisition thereof, of any commercial bank
having capital and surplus in excess of $100,000,000; and
27
(c) the Borrower and its Subsidiaries may acquire investments in
notes and other securities received in settlement of overdue debts and
accounts payable in the ordinary course of business and mortgage loans,
servicing contracts and rights and certificates evidencing its
participation in securitization of mortgage loans and the servicing of
mortgage loans or securitizations in the ordinary course of business.
SECTION 5.14 Contingent Liabilities. The Borrower shall not, and
shall not permit any Subsidiary to, become liable for any Guaranties, except for
(i) the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, (ii) Guaranties
existing as of the date hereof and listed on Schedule 5.14 to the Disclosure
Letter, (iii) Guaranties in respect of Debt permitted under Section 5.10 or
Liens permitted under Section 5.11 and (iv) Guaranties (other than Guaranties of
Debt) arising in the ordinary course of business of the Borrowers and the
Subsidiaries consistent with past practice.
SECTION 5.15 Limitation on Leases. The Borrower shall not, and
shall not permit any Subsidiary to, enter into any agreement, or become liable
under any agreement, for the lease, hire or use of any real or personal property
for a period in excess of one year and an aggregate rental or other payment in
excess of $500,000, except with the prior written approval of the Lenders, such
approval not to be unreasonably withheld.
SECTION 5.16 Prohibition on Sale of Assets. The Borrower shall
not, and shall not permit any Subsidiary to, except as permitted or contemplated
under this Agreement or any other Loan Document, sell, lease, assign, transfer
or otherwise dispose of any of its assets, including any disposition of its
capital stock (except for issuances of shares if its capital stock required
under the acquisition agreements listed in Schedule 5.16 to the Disclosure
Letter), whether now owned or hereafter acquired, except for dispositions of
assets in the ordinary course of business consistent with past practice that,
taken together, do not constitute any material portion of the assets of the
Borrower and its Subsidiaries.
SECTION 5.17 Limitation on Prepayments of Debt. The Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly
prepay, purchase, redeem, retain or otherwise acquire any of its Debt except for
prepayments of the Notes in accordance with the terms of this Agreement and
except as otherwise expressly provided herein; provided, however, that scheduled
payments of interest and principal and mandatory prepayments of Debt which do
not violate the Intercreditor Agreements shall not be deemed to violate this
Section.
SECTION 5.18 Subsidiaries. The Borrower shall not, and shall not
permit any Subsidiary to, without the prior written consent of the Lenders,
create any Subsidiary.
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SECTION 5.19 Mergers, Disposition of Assets, Etc. The Borrower
shall not, and shall not permit any Subsidiary to, merge, combine or consolidate
with or into any Person, or sell, assign, lease or otherwise dispose of (whether
in one transaction or in a series of transactions, whether or not related) all
or any substantial portion of its assets (whether now owned or hereafter
acquired) to any Person, except with the prior written approval of the Lenders,
provided that dispositions of assets in the ordinary course of business that are
not material to the business of the Borrower and its Subsidiaries shall not
violate this Section 5.19.
SECTION 5.20 Fiscal Year. The Borrower shall not, and shall not
permit any Subsidiary to, permit its fiscal year to end on a day other than
December 31 without the prior written consent of the Lenders.
SECTION 5.21 No Inconsistent Agreements. The Borrower shall not,
and shall not permit any Subsidiary to, enter into any agreement containing any
term or provision which will be violated, contravened or breached by (i) the
Borrower's execution or delivery of this Agreement or any Loan Document, (ii)
the Borrower's performance of its obligations hereunder or (iii) the
consummation of the transactions contemplated hereby.
SECTION 5.22 Use of Proceeds. The Borrower agrees to apply the
proceeds of the Loan solely and exclusively for the general corporate purposes
of the Borrower and its Subsidiaries consistent in all material respects with
the Three-Month Business Plan.
SECTION 5.23 Transactions with Affiliates. The Borrower shall
not, and shall not permit any Subsidiary to, directly or indirectly, enter into
or, except for such existing transactions as are disclosed in the SEC Reports or
Schedule 5.23 to the Disclosure Letter, permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Borrower
(other than its wholly-owned Subsidiaries) or any director or executive officer
of the Borrower or its Subsidiaries, on terms that are less favorable to the
Borrower or such Subsidiary than those which might be obtained at the time from
Persons who are not Affil iates, directors or executive officers.
SECTION 5.24 Issuance of Preferred Stock. In consideration of the
Lenders entering into this Loan Agreement, the Borrower shall issue to the
Lenders, as promptly as practicable after the execution and delivery hereof and
in any event prior to requesting the Initial Advance hereunder, in such
denominations as they may specify, an aggregate of 23,760.758 shares of Class C
Preferred Stock, which shares shall be duly authorized, validly issued, fully
paid and non-assessable.
29
SECTION 5.25 Ordinary Course. Notwithstanding anything herein to
the contrary, the following actions taken in the ordinary course of the
Borrower's business consistent with past practice and the Three-Month Business
Plan will not constitute a breach of any of the covenants in the Agreement: (i)
purchase, repurchase or origination of residential mortgage loans, (ii) whole
loan sales or securitization of residential mortgage loans (including, without
limitation, sales of all or any portion of Borrower's residential mortgage loans
to any Existing Creditor and which will comprise a portion of the Collateral (as
defined in the Intercreditor Agreement with such Existing Creditor)), (iii)
borrowing under warehouse loan facilities to finance the acquisition and
origination of residential mortgage loans and the granting of security interest
in such loans, (iv) the sale or borrowing against the value of residual
certificates and interest only certificates generated by securitization of
residential mortgage loans and the granting of a security interest in such
certificates, (v) borrowing to finance the funding of monthly remittance
advances under the Borrower's servicing agreements and the grant of a security
interest in (or sale of) the right to receive a repayment of such advances, (vi)
sales and purchases of loans and securities under repurchase agreements and
(vii) related Guarantees by the Borrower or its Subsidiaries in respect of the
foregoing.
ARTICLE VI
DEFAULTS
SECTION 6.1 Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to make any payment of any principal
of the Loans required to be made under this Agreement when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise;
(b) the Borrower shall fail to make any payment of any other
amount payable under this Agreement or any Note for more than five
Business Days after the same becomes due and payable;
(c) the Borrower shall fail to perform or comply with any
covenant set forth in Section 5.3 ("Notice of Default or Event of
Default"), 5.6 ("Conduct of Business and Preservation of Corporate
Existence, Etc."), 5.12 ("No Dividends"), 5.17 ("Limitation on
Prepayments of Debt"), 5.19 ("Mergers, Disposition of Assets, Etc."), or
5.22 ("Use of Proceeds");
30
(d) the Borrower shall fail to perform or comply with any other
covenant or agreement to be performed or observed by it under this
Agreement or any other Loan Document and such failure shall continue
unremedied for a period of two days after written notice thereof shall
have been given by the Lenders to the Borrower provided, that if such
failure shall not be capable of being remedied within such two-day
period, such period shall be extended for such additional reasonable
period of time, not to exceed 30 days, as may be required to effect such
remedy, further provided that Borrower is diligently pursuing such
remedy;
(e) any representation or warranty of the Borrower or any
Guarantor contained in this Agreement or any other Loan Document or in
any document or certificate delivered in connection herewith or
therewith or pursuant hereto or thereto shall at any time prove to have
been incorrect or incomplete in any material respect at the time made or
deemed to have been made, shall remain material at the time in question
and shall either be incapable of being cured or shall not be cured
within 20 days after notice thereof by the Lenders to the Borrower;
(f) the Borrower or any Subsidiary shall consent to the
appointment of or taking possession by a receiver, assignee, custodian,
sequestrator, trustee or liquidator (or other similar official) of
itself or of a substantial part of its property; or the Borrower or any
Subsidiary shall admit in writing (to any creditor, governmental
authority or judicial court or tribunal) its inability to pay its debts
generally as they come due or shall fail generally to pay its debts as
they become due (except to the extent contemplated by the proviso clause
of Section 5.1(b) hereof), or shall make a general assignment for the
benefit of its creditors; or the Borrower or any Subsidiary shall file a
voluntary petition in bankruptcy or a voluntary petition or answer
seeking liquidation, reorganization or other relief with respect to
itself or its debts under the Federal bankruptcy laws, as now or
hereafter constituted or any other applicable Federal or State
bankruptcy, insolvency or other similar law, or shall consent to the
entry of an order for relief in an involuntary case under any such law;
or the Borrower or any Subsidiary shall file an answer admitting the
material allegations of a petition filed against the Borrower in any
such proceeding, or otherwise seek relief under the provisions of any
existing or future Federal or State bankruptcy, insolvency or other
similar law providing for the reorganization or winding-up of
corporations, or providing for an arrangement, agreement, composition,
extension or adjustment with its creditors; or the Borrower or any
Subsidiary shall take or publicly announce its intention to take
corporate action in furtherance of any of the foregoing;
(g) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without
the consent of the Borrower, a
31
receiver, trustee or liquidator of the Borrower or any Subsidiary or of
any substantial part of its property, or any substantial part of the
property of the Borrower or any Subsidiary shall be sequestered, and any
such order, judgment or decree of appointment or sequestration shall
remain in force undismissed, unstayed or un vacated for a period of 30
days after the date of entry thereof;
(h) a petition against the Borrower or any Subsidiary in a
proceeding under the Federal bankruptcy laws or other insolvency laws,
as now or hereafter in effect, shall be filed and shall not be withdrawn
or dismissed within 30 days thereafter, or a decree or order for relief
in respect of the Borrower or any Subsidiary shall be entered by a court
of competent jurisdiction in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted or, under the
provisions of any law providing for reorganization or winding-up of
corporations which may apply to the Borrower, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the
Borrower or any Subsidiary or of any substantial part of its property
and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 30 days;
(i) the Borrower or any Subsidiary shall fail to pay when due and
payable (after any applicable grace period) the principal of or interest
on any Debt in excess of $100,000 in respect of which it is obligated to
make payment (other than Debt under this Agreement or the Note) or the
maturity of such Debt shall have been accelerated in accordance with the
provisions of the instrument providing for the creation of or concerning
such Debt, or any event shall have occurred or failed to occur and be
continuing which, with the giving of notice or the passage of time or
both, would permit any holder or holders thereof or any agent or trustee
on its or their behalf to accelerate such maturity, provided that the
foregoing shall not constitute an Event of Default or a Default for so
long as the holders of such Debt are prohibited from taking action with
respect to such default under the terms of any Intercreditor Agreement
or the BankBoston Forbearance Agreement;
(j) an uninsured final judgment in the amount, or final judgments
in related proceedings in an aggregate amount, in excess of $100,000
shall be entered against the Borrower or any Subsidiary and such
judgment shall continue unsatisfied and unstayed for a period of ten
days;
(k) the Borrower or any Subsidiary shall fail to pay when due an
amount or amounts aggregating in excess of $100,000 which it shall have
become liable to pay to the Pension Benefit Guaranty Corporation
("PBGC") or to an employee benefit plan under Title IV of ERISA; or
notice of intent to terminate a plan or plans having
32
aggregate unfunded vested liabilities in excess of $100,000 shall be
filed under Title IV of ERISA by the Borrower or any Subsidiary, any
plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or
cause a trustee to be appointed to administer an employee benefit plan;
or a proceeding shall be instituted by a fiduciary of any employee
benefit plan against the Borrower or any Subsidiary to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any plan must be terminated; or
(l) any Loan Document shall cease for any reason to be in full
force and effect in accordance with its terms or the Borrower or any
Subsidiary shall so assert in writing or the Borrower or any Subsidiary
shall in any way challenge, or any proceedings shall be brought to
challenge, the validity, binding effect or enforceability of such Loan
Document or any of the Liens purported to be granted pursuant to any
Loan Document shall cease for any reason to be legal, valid and
enforceable Liens on the collateral purported to be covered thereby or
to have the priority purported to be granted thereby;
then, and in every such event, any Lender may by notice to the Borrower declare
the Loans to be, and the Loans shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower; provided that in the case of any of the
Events of Default specified in clause (f), (g) or (h) above, without any notice
to the Borrower or any other act by any Lender, the Loans shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower.
ARTICLE VII
EXCHANGE
SECTION 7.1 Exchange Option. Subject to the provisions of Section
2.6 and this Section 7.1, the Borrower hereby grants to the Lenders the option
to exchange their right to receive payment in respect of any principal, interest
and Take-Out Premium payable in respect of the Loans (regardless of whether any
such amounts are outstanding at such time of determination) for fully paid and
non-assessable shares of Class C Preferred Stock or Class D Preferred Stock, as
the Lenders may request (the "Exchange Option"), at any time, in an amount of
shares of such Preferred Stock which would, assuming such Preferred Stock were
convertible into Common Stock at a ratio of 1,000 shares of Common Stock for
each
33
share of Preferred Stock, equal the percentage set forth below of the
outstanding Common Stock of the Borrower which in each case corresponds to the
date of such exercise, determined based on the number of days that have elapsed
from the Signing Date to and including the date of execution and delivery of a
Definitive Agreement set forth beside such percentage (provided, however, that
if an Event of Default shall have occurred and be continuing, such percentage
shall be calculated as if 91 days had elapsed since the Signing Date), and which
percentages shall represent in each case a percentage of all fully diluted
shares of Common Stock outstanding on the date of such exercise, and which shall
be adjusted pursuant to Section 7.1(d) below:
Days Elapsed Percentage
------------ ----------
0 - 45 0%
45 - 90 20%
Over 90 50%
(a) The Exchange Option may be exercised by the Lenders by giving
a notice of exercise of the Exchange Option, specifying whether Class C
Preferred Stock or Class D Preferred Stock is to be issued, at any time after
the first to occur of (i) the expiration of the Commitment Period, (ii) the
entrance by the Borrower or any Subsidiary into a Definitive Agreement and (iii)
the commencement of any tender offer, exchange offer, solicitation of proxies or
consents, or the entrance by the Borrower or any Subsidiary into any definitive
agreement, in each case referred to in clause (ii) or (iii) in connection with
any transaction which, upon consummation, would result in a Change of Control
(the "Notice of Exercise") to the Borrower.
(b) The Borrower hereby irrevocably agrees that upon receipt of a
Notice of Exercise, the Borrower shall, on the date which is two Business Days
after exercise of the Exchange Option (the "Settlement Date"):
(i) deliver to the Lenders a share certificate or certificates
issued in such denominations and registered in such names as
the Lenders shall specify, evidencing the shares of such
Preferred Stock so issued;
(ii)deliver to the Lenders evidence satisfactory to the Lenders:
(A) that shares of Preferred Stock are free and clear of
liens, charges and encumbrances, and are fully paid,
duly issued, non-assessable and freely transferable;
34
(B) that all requisite corporate formalities in connection
with their title and delivery have been complied with;
and
(C) that all necessary governmental Authorizations have
been obtained (such evidence to be confirmed by a
legal opinion of the Borrower's counsel at the
Borrower's expense, if the Lenders shall so require in
their sole discretion); and
(c) The shares of Preferred Stock delivered on the Settlement
Date shall carry all economic rights payable on shares of Preferred Stock
generally to shareholders of record.
(d) Prior to the Settlement Date, the number of shares of
Preferred Stock which would, upon an exercise of the Exchange Option and the
issuance of the shares of Preferred Stock on the Settlement Date, be owned by
the Lenders (the "Synthetic Shares") shall be subject to adjustment from time to
time as set forth in this subsection 7.1(d).
(i) In case the Borrower shall (1) pay a dividend or make a
distribution on Common Stock in shares of Common Stock, (2) subdivide its
outstanding shares of Common Stock into a greater number of shares or (3)
combine its outstanding shares of Common Stock into a smaller number of shares,
the number of Synthetic Shares which would be owned upon exercise of the
Exchange Option and issuance of the shares on the Settlement Date immediately
prior to such action shall be adjusted so that a Lender shall be entitled to
receive the number of shares of Preferred Stock representing a right to receive
upon conversion thereof (assuming each such share of Preferred Stock were
convertible into 1,000 shares of Common Stock) the number of shares of Common
Stock which such Lender would have been entitled to receive immediately
following such action had such Lender exercised its Exchange Option immediately
prior thereto and converted subsequent to such exchange its shares of Preferred
Stock issuable thereon into shares of Common Stock. An adjustment made pursuant
to this subsection (i) shall become effective immediately after the record date
in the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(ii) In case the Borrower shall (x) issue, sell or otherwise
distribute any shares of Common Stock or issue (y) rights, options or
warrants entitling the holder thereof to subscribe for or purchase
shares of Common Stock ("Options") or any indebtedness, shares of stock
or other securities which are convertible into or exchangeable for, with
or without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the
happening of a specified event or both ("Convertible Securities") to any
Person, in the case of clause (x) above at a price per share, or in the
case of clause (y) above, at
35
an exercise or conversion price per share, less than the Current Market
Value per share (as defined in subsection (v) below) of the Common Stock
on the record date mentioned below, then the number of Synthetic Shares
which would be owned upon exercise of the Exchange Option and issuance
of the shares on the Settlement Date immediately prior thereto shall be
adjusted so that a Lender shall be entitled to receive the number of
shares of Preferred Stock representing a right to receive upon
conversion thereof (assuming solely for this purpose the Preferred Stock
were so convertible) the number of shares of Common Stock equal to the
product obtained by multiplying the number of Common Shares issuable
upon conversion of the Synthetic Shares which would be owned immediately
prior to the date of issuance of such Common Stock, Options or
Convertible Securities by a fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance,
sale, transfer or distribution of such Common Stock, Options or
Convertible Securities immediately prior to such issuance, sell,
transfer or distribution plus (B) the number of additional shares
of Common Stock which are so offered for subscription or
purchase, or subject to issuance upon exercise, conversion or
exchange of such Options or Convertible Securities, and
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Common Stock, Options or Convertible Securities
immediately prior to such issuance, sell, transfer or
distribution plus (B) the number of shares of Common Stock which
the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Value (determined
by multiplying such total number of shares offered for
subscription or purchase or subject to issuance upon exercise,
conversion or exchange of such Options or Convertible Securities
by the sum of the exercise price of such Options or Convertible
Securities plus the value of any consideration per share paid to
the Borrower for such Common Stock, Options or Convertible
Securities and dividing the product so obtained by such Current
Market Value), and
Such adjustment shall be made successively whenever any Common
Stock is issued, sold or otherwise distributed or any Options or
Convertible Securities are issued, and shall become effective
immediately after the record date for the determination of Persons
entitled to receive such Options or Convertible Securities, as the case
36
may be. In determining the value of any consideration received by the
Borrower for such Common Stock, Options or Convertible Securities, as
the case may be, the determination of the Board in good faith shall be
conclusive and shall be described in a Board resolution, provided that
any shares of Common Stock issued or issuable as contingent
consideration or earn-out payments in respect of acquisition agreements
made by the Borrower on or prior to the date hereof shall give rise to
an adjustment hereunder when the number of such shares to be issued
becomes fixed and shall be deemed to have been issued for no
consideration. If such an adjustment is made and such Options or
Convertible Securities are later exchanged, redeemed, invalidated or
terminated or expire by their own terms, then a corresponding reversing
adjustment shall be made to the number of Synthetic Shares which would
be owned, on an equitable basis, to take account if such event occurs on
or prior to the Settlement Date.
(iii) Notwithstanding subsection (ii) above, any adjustments to
the number of Synthetic Shares which would be owned upon exercise of the
Exchange Option to account for the issuance of "Rights" under a
Shareholder Rights Plan or Agreement (a "Rights Agreement") adopted
subsequent to the date hereof shall be made when such Rights are
exercised or exchanged by the Borrower for Common Stock (Common Stock
issued pursuant to the exercise of, or exchange by the Borrower for,
such Rights are referred to as "Rights Stock") pursuant to a Rights
Agreement or like arrangement at a price per share less than the Current
Market Value per share of Common Stock on the date of such exercise or
exchange. The number of Synthetic Shares which would be owned upon
exercise of the Exchange Option immediately prior to such exercise or
exchange shall be adjusted so that it shall equal the price determined
by multiplying the number of Common Shares issuable upon conversion of
the Synthetic Shares (assuming such Shares were so convertible) which
would be owned immediately prior to the date of such exercise or
exchange by a fraction of which
(1) the numerator shall be the sum of (A) the number
of shares of Common Stock outstanding on the date of issuance of
such Rights Stock immediately prior to such issuance plus (B) the
number of additional shares of Rights Stock which are so issued.
(2) the denominator shall be the sum of (A) the
number of shares of Common Stock outstanding on the date of
issuance of such Rights Stock immediately prior to such issuance
plus (B) the number of shares of Common Stock which the
aggregate consideration received for the total number of shares
of Rights Stock so issued would purchase at such Current Market
Value (determined by multiplying such total number of shares of
37
Rights Stock by the consideration received per share of such
Rights Stock and dividing the product so obtained by such
Current Market Value), and
Such adjustment shall be made successively whenever any Rights
Stock is issued, and shall become effective immediately (except as
provided in subsection (vi) below) after the issuance of Rights Stock.
If after the "Distribution Date" or a similar date (as defined in a
Rights Agreement), the Lenders are, for any reason, not entitled to
receive the Rights or similar rights, options or warrants which would
otherwise be attributable (but for the date of conversion) to the shares
of Common Stock received upon such conversion (assuming the Preferred
Stock were so convertible), then an increasing adjustment shall be made
in the number of Synthetic Shares which would be owned to reflect the
fair market value of the Rights or similar rights, options or warrants.
If such an adjustment is made and the Rights or similar rights, options
or warrants are later exchanged, redeemed, invalidated or terminated,
then a corresponding reversing adjustment shall be made to the number of
Synthetic Shares which would be owned, on an equitable basis, to take
account of such event, if such event occurs on or prior to the
Settlement Date.
(iv) In case the Borrower shall distribute to holders of Common Stock
evidences of indebtedness, equity securities (including equity interests
in the Borrower's subsidiaries) other than Common Stock or other assets
(other than cash dividends paid out of earned surplus of the Borrower
or, if there shall be no earned surplus, out of net profits for the
fiscal year in which the dividend is made and/or the preceding fiscal
year), or shall distribute to holders of Common Stock Convertible
Securities or Options (other than any Rights, Convertible Securities or
Options referred to in subsection (ii) or subsection (iii) above), then
in each such case the Borrower shall prior to effecting any such
distribution, set aside for distribution to the Lenders upon exercise of
the Exchange Option (assuming it were exercisable for the maximum number
of shares of Preferred Stock issuable upon exercise thereon based on the
then outstanding Common Stock) for each share of Preferred Stock the
assets, evidence of indebtedness and equity securities so distributed,
or of such subscription rights, warrants or options, applicable to the
shares of Common Stock into which such share of Preferred Stock would be
convertible (assuming solely for such purpose the Preferred Stock were
so convertible), and upon such exercise shall distribute such assets,
evidence of indebtedness, equity securities, rights, warrants or options
to the Lenders.
(v) For the purpose of any computation under subsection (ii) or
subsection (iii) above, the "Current Market Value" per share of stock on
any date shall be deemed to be (i) if shares of Common Stock are then
listed or admitted to trading on
38
any national securities exchange or traded on any national market
system, the average of the last sale prices of a share of such stock for
the 15 consecutive trading days commencing 20 trading days before the
earliest of the date in question and the date before the "ex date" with
respect to the issuance or distribution requiring such computation, or,
if there shall have been no sales of such stock on any such trading day,
the average of the closing bid and asked prices at the end of such
trading day or (ii) if no shares of Common Stock are then listed or
admitted to trading on any national securities exchange or traded on any
national market system, the Current Market Value of a share of Common
Stock shall be determined in good faith by an independent investment
bank of nationally recognized standing. For purposes of clause (ii) of
the preceding sentence, the determination of "Current Market Value"
shall be made without consideration of (w) the lack of an actively
trading public market for the Common Stock, (x) any restrictions on the
transfer of shares of Common Stock and (y) any discount for holdings of
less than a majority or controlling interest of the outstanding capital
stock of the Borrower. For purposes of this subsection (v), the term "ex
date", when used with respect to any issuance or distribution, means the
first date on which the stock trades regular way on the principal
national securities exchange on which the stock is listed or admitted to
trading (or if not so listed or admitted, on NASDAQ, or a similar
organization if NASDAQ is no longer reporting trading information)
without the right to receive such issuance or distribution.
(vi) If any event occurs as to which the other provisions of this
Section 7.1(d) are not strictly applicable but the failure to make any
adjustment would not fairly protect the exchange rights of the Lenders
in accordance with the essential intent and principles hereof, then, in
each such case, the Borrower shall appoint a firm of independent public
accountants of recognized national standing which shall give their
opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 7.1(d),
necessary to preserve, without dilution, the exchange rights of the
Lenders. Upon receipt of such opinion, the Borrower shall promptly give
written notice to the Lenders and shall make the adjustments described
therein.
(vii) Whenever the number of Synthetic Shares which would be
owned upon exercise of the Exchange Option is adjusted as provided
above, the Borrower shall compute the adjusted number of Synthetic
Shares which would be owned upon exercise of the Exchange Option and
shall promptly forward to the Lenders a certificate signed by a
principal financial officer of the Borrower setting forth the adjusted
number of Synthetic Shares which would be owned upon such exercise and
39
showing in reasonable detail the facts upon which such adjustment is
based and the computation thereof.
In case:
(A) the Borrower shall take any action which would
require an adjustment to the number of Synthetic Shares deemed
owned pursuant to subsection (iv) above;
(B) the Borrower shall authorize the granting to the
holders of its Common Stock of rights, options or warrants
entitling them to subscribe for or purchase any shares of capital
stock of any class or of any other rights;
(C) of any reorganization or reclassification of the
Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or a
subdivision or combination of its outstanding Common Stock), or
of any consolidation or merger to which the Borrower is a party
and for which approval of any shareholders of the Borrower is
required, or of the sale, lease or transfer of all or
substantially all the assets of the Borrower; or
(D) of the voluntary or involuntary liquidation,
dissolution or winding-up of the Borrower;
then the Borrower shall immediately send a written notice to the Lenders
stating (x) the date as of which the holders of record of Common Stock
to be entitled in such dividend, distribution, rights, options or
warrants are to be determined, or (y) the date on which such
reorganization, reclassification, consolidation, merger, sale, lease,
transfer, liquidation, dissolution or winding-up is expected to become
effective, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such
reorganization, reclassification, consolidation, merger, sale, lease,
transfer, liquidation, dissolution or winding-up.
(e) Subject to Section 2.6 hereof, upon exercise of the Exchange
Option, any principal, interest and Take-Out Premium outstanding at such
time so exchanged shall be deemed paid for all purposes of this
Agreement and the Commitments shall be terminated.
40
SECTION 7.2 Reservation and Authorization of Shares.
(a) The Borrower shall at all times reserve and keep available
for issuance upon the exercise of the Exercise Option such number of its
authorized but unissued shares of Preferred Stock as will be sufficient to
permit the exercise in full of the Exercise Option. All shares of Preferred
Stock issuable upon exercise of the Exercise Option shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
(b) Before taking any action which would cause an adjustment
increasing the number of Synthetic Shares, the Borrower shall take any corporate
action which may be necessary in order that the Borrower may validly and legally
issue an increased number of fully paid and nonassessable shares of Preferred
Stock, sufficient to exchange the Loans to Preferred Stock, after giving effect
to such adjustment.
SECTION 7.3 Stock Transfer Books. The Borrower will not at any
time, except upon dissolution, liquidation or winding up of the Borrower, close
its stock transfer books so as to result in preventing or delaying the exercise
or transfer of the Exchange Option.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth below:
If to the Lenders:
Greenwich Street Capital Partners II, L.P.
x/x Xxxxxxxxx Xxxxxx Capital Partners, Inc.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
41
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
If to the Borrower:
IMC Mortgage Company
0000 X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: President
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxxxx X. Xxxxxx
000 X Xxxxxxxxx Xxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other party. Each such notice, request or other
communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means, when delivered at
the address specified in this Section 7.1.
SECTION 8.2 No Waivers; Remedies Cumulative. No failure or delay
by the Lender in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.3 Expenses; Documentary Taxes; Indemnification. (a) The
Borrower shall be liable to pay on demand (i) all out-of-pocket expenses of the
Lenders,
42
including the fees and disbursements of counsel to the Lenders, in connection
with the preparation of any waiver or consent under the Loan Documents or any
amendment of any of the Loan Documents, or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Lenders, including fees and dis bursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom. The Borrower shall indemnify
the Lenders from and hold it harmless against any transfer taxes, documentary
taxes, assessments or other similar charges made by any governmental authority
by reason of the execution and delivery of any Loan Document.
(b) (i) The Borrower shall indemnify, defend and hold harmless
the Lenders and their officers, directors, employees and agents (collectively,
the "Indemnitees") from and against, and pay or reimburse the Indemnitees for,
(i) any and all taxes, and all other assessments or charges made by any
governmental authority, relating to the execution and delivery of this Agreement
or the other Loan Documents, and (ii) any and all liabilities, losses, damages,
penalties, judgments, suits, claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of a single counsel) in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitee shall be designated a party
thereto, which may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in connection with
this Agreement or the other Loan Documents (collectively, the "Indemnified
Liabilities"), and to reimburse each Indemnitee, upon its demand as incurred for
any cost or expenses (including, without limitation, the reasonable fees,
expenses and disbursements of a single counsel) incurred in connection with
investigating, defending or preparing to defend or participating (including as a
witness) in any investigative, ad ministrative or judicial proceeding whether or
not such Indemnitee shall be designated a party thereto, whether commenced or
threatened, with respect to any such actual, alleged or threatened liability,
loss, damage, penalty, judgment, suit, claim, cost or expense; provided that no
Indemnitee shall have a right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
(ii) If any investigative, judicial or administrative proceeding
or arbitration arising from any of the foregoing is brought against any
Indemnitee, the Borrower shall assume the defense thereof on behalf of such
Indemnitee, including the employment of counsel reasonably satisfactory to such
Indemnitee and payment of all expenses relating thereto. The Indemnitee shall
have the right to employ separate counsel in any such proceeding or arbitration
and participate in the defense thereof; provided, that the fees and expenses of
such separate counsel shall be at the expense of the Indemnitee, rather than the
Borrower, unless (A) the employment of such separate counsel has been
specifically authorized by the Borrower or (B) the named parties to any such
action (or any impleaded
43
parties), or the Indemnitee, shall have been advised by its counsel that there
may be one or more legal defenses available to the Indemnitee which are
different from or additional to those available to the Borrower. If the
provisions of clause (B) immediately above are met, the Borrower shall not have
the right to assume the defense of such action on behalf of the Indemnitee. The
Borrower shall not be liable for any settlement of any such proceeding effected
without the written consent of the Borrower, but if settled with the written
consent of the Borrower or if there is a final judgment for the plaintiff in any
such action, the Borrower shall indemnify and hold harmless the Indemnitee from
and against any loss or liability by reason of such settlement or judgment. The
Borrower shall not enter into any settlement of, or consent to the entry of any
judgment with respect to, any actual or alleged Indemnified Liabilities without
the prior written consent of the Indemnitee, unless such settlement or judgement
(x) includes an unconditional release of the Indemnitees from all liabilities
arising out of such actual or alleged Indemnified Liability and (y) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any Indemnitee.
(iii) At any time after the Borrower has assumed the defense of
any proceeding in respect of which indemnity has been sought hereunder against
the Borrower, the Indemnitee may elect, by written notice to the Borrower, to
withdraw its request for indemnity and thereafter the defense of such proceeding
shall be maintained by counsel of the Indemnitee's choosing and at the
Indemnitee's expense.
(iv) To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding provisions may be unenforceable because
it is violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under Applicable Law. All Indemnified
Liabilities shall be payable on demand.
(c) The obligations of the Borrower under this Section 8.3 shall
survive the termination of this Agreement and the discharge of the Borrower's
other obligations hereunder and the other Loan Documents.
SECTION 8.4 Amendments and Waivers. Neither this Agreement nor
any provision hereof may be amended, modified, waived or supplemented except by
an instrument in writing signed by the Borrower and the Lenders.
SECTION 8.5 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of the Lenders.
44
SECTION 8.6 GOVERNING LAW; VENUE AND JURISDICTION. THE VALIDITY
OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT HEREOF AND
THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. THE BORROWER AGREES THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND EACH
OTHER "LOAN DOCUMENT" SHALL BE TRIED AND LITIGATED IN FEDERAL OR, IN THE ABSENCE
OF FEDERAL SUBJECT MATTER JURISDICTION, STATE COURTS LOCATED IN THE COUNTY OF
NEW YORK, STATE OF NEW YORK, UNLESS SUCH ACTIONS OR PROCEEDINGS ARE REQUIRED TO
BE BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY. EACH OF THE BORROWER AND THE LENDER WAIVES, TO THE
FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT
BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE THE DOCTRINE OF FORUM NON CONVENIENS
OR TO OBJECT TO VENUE IN ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THE
IMMEDIATELY PRECEDING SENTENCE. SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL
JURISDICTION IN ANY ACTION AGAINST THE BORROWER, MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION
8.1.
SECTION 8.7 WAIVER OF JURY TRIAL. EACH OF THE LENDERS AND THE
BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL OR EQUITABLE ACTION, SUIT OR PRO CEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER "LOAN DOCUMENTS" OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
SECTION 8.8 Limitation on Interest. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, by the
Borrower for the use, forbearance or detention of the proceeds of the Loans
under this Agreement or any other Loan Document or otherwise (including any sums
paid as required by any covenant or obligation contained herein or in any other
Loan Document which are for the use, forbearance or detention of such money),
exceed that amount of money which would cause the effective rate of interest to
exceed the highest lawful rate permitted by applicable law (the "Highest Lawful
Rate"), and all amounts owed under this Agreement and each other Loan Document
shall be held to be
45
subject to reduction to the effect that such amounts so paid or agreed to be
paid which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Notwithstanding any provision in this Agreement or any other Loan Document
to the contrary, if the maturity of the Loans or the Notes are accelerated for
any reason, or in the event of any prepayment of all or any portion of the Loan
or the Notes by the Borrower or in any other event, earned interest on the Loans
or the Notes may never exceed the Highest Lawful Rate, and any unearned interest
otherwise payable under the Notes that is in excess of the Highest Lawful Rate
shall be canceled automatically as of the date of such acceleration or
prepayment or other such event and, if theretofore paid, shall, at the option of
the holder of the Notes, be either refunded to the Borrower or credited to the
principal of the Notes. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Highest Lawful Rate, the
Borrower and the Lenders shall, to the maximum extent permitted by Applicable
Law, amortize, prorate, allocate and spread, in equal parts during the period of
the actual term of this Agreement, all interest at any time contracted for,
charged, received or reserved in connection with this Agreement.
SECTION 8.9 Severability. Any provision of this Agreement which
is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
SECTION 8.10 Counterparts; Integration; Section Headings. This
Agree ment may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as otherwise indicated, references herein to any "Section" means
a "Section" of this Agreement, and the table of contents and section headings in
this Agreement are for purposes of reference only and shall not limit or define
the meaning hereof.
SECTION 8.11 Confidentiality of Information. The Lenders agree
(for themselves as Lenders hereunder and in their capacity as collateral agent
or pledgee under any other Loan Document and for any assignee of the Lenders'
rights hereunder or under any other Loan Documents) that any information
concerning the Borrower or any of its Subsidiaries furnished to the Lenders
(including the capacity of Greenwich Street Capital Partners II, L.P. as
collateral agent or pledgee under any other Loan Documents) by or on
46
behalf of the Borrower or any of its Subsidiaries pursuant to the terms of this
Agreement or any other Loan Document will be kept strictly confidential;
provided that the foregoing shall not apply to information which (i) is already
in possession of the Lenders, if such information is not known to the Lenders to
be subject to another confidentiality agreement with or another obligation of
secrecy to the Borrower, any of its Subsidiaries or another Person, (ii) is or
becomes generally available to the public other than as a result of a disclosure
by the Lenders or any of their directors, officers, employees, agents, repre
sentatives or advisers, (iii) becomes available to the Lenders on a
non-confidential basis from a source other than the Borrower or any of its
Subsidiaries or their respective directors, officers, employees, agents,
representatives or advisers, if such source is not known by the Lenders to be
bound by a confidentiality agreement with or other obligation of secrecy to the
Borrower or any of their Subsidiaries, or another Person, or (iv) is disclosed
to a prospective assignee of the Lenders in connection with the transfer or
assignment of the Loans or any rights of the Lenders under the Loan Documents,
provided that such prospective transferee agree in advance to keep such
information strictly confidential in accordance with the provisions of this
Section 8.11. Notwithstanding the foregoing, the Borrower acknowledges that the
Lenders may be required to disclose such information or portions thereof, and if
so required, will disclose such information (A) at the request of governmental
or self-regulatory agencies or other authorities, (B) pursuant to subpoena or
other court process, (C) to its independent auditors or (D) otherwise as
required by law; provided that if the Lenders are requested or required to
disclose any such information to governmental or self-regulatory agencies or
other authorities, pursuant to subpoena or other court process or otherwise as
required by law, the Lenders shall, if and to the extent reasonably practicable,
provide the Borrower with prompt notice of such request or requirement, so that
the Borrower may seek an appropriate protective order or other relief from such
request or requirement.
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
IMC MORTGAGE COMPANY
By /s/
------------------------
Name:
Title:
GREENWICH STREET CAPITAL PARTNERS II, L.P.
GSCP OFFSHORE FUND, L.P.
GREENWICH FUND, L.P.
By: GREENWICH STREET
INVESTMENTS II, L.L.C.,
their General Partner
By /s/
------------------------
Name:
Title: Managing Member
48
Schedule 1.01(a)
Commitment Percentage
Lender Percentage
------ ----------
Greenwich Street Capital Partners II, L.P. 92.2678%
Greenwich Fund, L.P. 6.2815%
GSCP Offshore Fund, L.P. 1.4507%
Schedule 3.1(h)
Consents Required
-----------------
Master Repurchase Agreement, dated as of March 29, 1996, as amended from time to
time, by and among Bear Xxxxxxx Home Equity Trust and the Borrower and certain
of the Borrower's Subsidiaries.
Master Repurchase Agreement, dated as of May 1, 1997, between Bear, Xxxxxxx
International Limited and Industry Mortgage Company, L.P.
Institutional Account Agreement, dated October 23, 1996, between and among
Industry Mortgage Company, L.P. and Bear Xxxxxxx.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and German American
Capital Corporation, as lender.
Loan and Security Agreement, dated March 17, 1998, by and among IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Central Money Mortgage Co. (IMC), Inc.,
Corewest Banc, Equity Mortgage Co., (IMC), Inc., Mortgage America (IMC), Inc.,
National Lending Center, Inc., National Lending Center TILT, Inc, and
Residential Mortgage Corporation (IMC), Inc., as borrowers, and Aspen Funding
Corp., as lender
Loan and Security Agreement, dated as of February 28, 1997, between IMC Mortgage
Company, IMC Corporation of America, ACG Financial Services (IMC), Inc.,
American Mortgage Reduction, Inc., Industry Mortgage Company, L.P., Corewest
Banc, IMC Investment Corp., and IMC Investment Limited Partnership, as
borrowers, and Xxxxx Xxxxxx Real Estate Securities, Inc., as lender.
Bridge Loan and Security Agreement, dated as of October 10, 1997, as amended
from time to time, between the Borrower, certain of its Subsidiaries and
BankBoston, N.A.
Loan and Security Agreement, dated March 18, 1994, as amended from time to time,
by and among the Borrower, certain of its Subsidiaries and Bank Boston, N.A.
