Exhibit 10.9
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement") is made and dated as of the 28th
day of February, 1997, by and among SANWA BANK CALIFORNIA ("Sanwa"), those other
lenders from time to time party hereto (Sanwa and such other lenders being
referred to herein individually as a "Lender" and, collectively, as the
"Lenders"), SANWA, as agent for the Lenders (in such capacity, the "Agent"), and
FRANCHISE MORTGAGE ACCEPTANCE COMPANY, L.L.C., a limited liability company
organized under the laws of the State of California (the "Company").
RECITALS
A. The Company has requested that the Lenders extend credit to the
Company in the form of a secured revolving credit facility and the Agent
agree to act as credit agent and collateral agent for the benefit of the Lenders
with respect thereto.
B. The Company, the Agent and Lenders desire to enter into this Agreement
to evidence the willingness of the Lenders to provide such credit facility and
of the Agent to act on their behalf and to set forth the rights and obligations
of the parties with respect to such credit facility.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Revolving Loan Facility.
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1(a) Lending Limit. On the terms and subject to the conditions set
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forth herein, the Lenders severally agree that they shall from time to time to
but not including the Maturity Date (as that term and capitalized terms not
otherwise defined herein are defined in Paragraph 11 below), make Loans (the
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"Loans" or a "Loan"), pro rate in accordance with their respective Percentage
Shares, in an aggregate amount not to exceed at any one time outstanding the
lesser of:
(1) The Credit Limit; and
(2) The Aggregate Collateral Value of the Borrowing Base;
provided, however, that no Loan shall exceed at the funding date thereof the
Collateral Value of the Related Program Contract.
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1(b) Maintenance of Loans. Loans shall be maintained, at the election of
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the Company made from time to time as permitted herein, as Reference Rate Loans
and/or COF Rate Loans.
1(c) Calculation of Interest. The Company shall pay interest on Loans
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outstanding hereunder from the date disbursed to but not including the date of
payment at a rate per annum equal to, at the option of and as selected by the
Company from time to time (subject to the provisions of Paragraphs 1(e) and 1(f)
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below): (1) with respect to each Loan which is a Reference Rate Loan, at a
fluctuating rate per annum equal to the daily average Reference Rate during the
applicable computation period, and (2) with respect to each Loan which is a COF
Rate Loan, at the Applicable COF Rate for the applicable Interest Period.
1(d) Payment of Interest. Interest accruing on Reference Rate Loans shall
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be payable monthly, in arrears, for each month no later than the fifth Business
Day following delivery by the Agent to the Company of an interest billing for
such Reference Rate Loans (which delivery may be telephonic and later confirmed
in writing). Interest accruing on COF Rate Loans shall be payable, in arrears:
(1) in the case of COF Loans with Interest Periods ending 30, 60, or 90 days
from the date advanced, at the end of the applicable Interest Period therefor,
and (2) in the case of COF Loans with the Interest Periods ending later than 90
days from the date advanced, at the end of each 90 day period from the date
advanced and at the end of the applicable Interest Period therefor. Each such
interest billing shall be deemed conclusively correct and accepted by the
Company unless the Company otherwise notifies the Agent to the contrary within
ten Business Days following the delivery of a written copy of such billing.
1(e) Election of Type of Loan: Conversion Options: Funding of Loans.
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(1) The Company may elect from time to time to have Loans funded by
giving the Agent irrevocable notice of such election no later than 10:00 a.m.
(Los Angeles time) on the requested funding date. The principal amount of each
COF Rate Loan shall be in the minimum amount of $250,000.00 and whole multiples
of $25,000.00 in excess thereof. The Company may elect from time to time to
convert Loans outstanding as COF Rate Loans and Reference Rate Loans to the
other type of Loan by giving the Agent irrevocable notice of such election no
later than 10:00 a.m. (Los Angeles time) on the day of the requested conversion.
Any conversion of COF Rate Loans may only be made on the last day of the
applicable Interest Period. No Reference Rate Loan may be converted into a COF
Rate Loan if an Event of Default or Potential Default has occurred and is
continuing at the requested conversion date. All or any part of outstanding
Loans may be converted as provided herein, provided that partial conversions
shall be in a principal amount of $250,000.00 or whole multiples of $25,000.00
in excess thereof.
(2) The Company may elect from time to time to have any COF Rate Loan
continued as such upon the expiration of the Interest Period applicable thereto
by giving the Agent irrevocable notice of such election no later than 10:00 a.m.
(Los Angeles time) on the last day of such Interest Period; provided, however,
that no
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COF Rate Loan may be continued as such when any Event of Default or
Potential Default has occurred and is continuing, but shall be
automatically converted to a Reference Rate Loan on the last day of the
Interest Period applicable thereto. The Agent shall notify the Company
promptly that such automatic conversion will occur. If the Company shall
fail to give notice of its election to continue a COF Rate Loan as such as
provided above, the Company shall be deemed to have elected to convert the
affected COF Rate Loan to a Reference Rate Loan on the last day of the
applicable Interest Period.
(3) Each request for the funding, continuation or conversion of a
Loan shall be evidenced by the timely delivery by the Company to the Agent
of a duly executed Loan Request (which delivery may be by facsimile
transmission).
(4) Upon receipt of a Loan Request for the funding of a new Loan,
the Agent shall notify each Lender of such Lender's Percentage Share
thereof no later than 10:30 a.m. (Los Angeles time) on the date such Loan
Request is received by the Agent (said notice by the Agent to the Lenders
to be given telephonically and confirmed by facsimile transmission). Each
Lender shall make its Percentage Share of the proposed Loan available to
the Agent, in same-day funds, on the funding date at the Contact Office of
the Agent, ABA 000000000, for the Agent's Account #0493-24551, or such
other account as the Agent shall designate no later than 12:00 noon (Los
Angeles time). The failure of any Lender to advance its Percentage Share of
a proposed Loan shall not relieve any other Lender of its obligation
hereunder to advance its Percentage Share thereof, but no Lender shall be
responsible for the failure of any other Lender to make any such advance.
1(f) Illegality. Notwithstanding any other provisions herein, if any
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law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender to
make or maintain COF Rate Loans as contemplated by this Agreement: (1) the
commitment of such Lender hereunder to make or to continue COF Rate Loans or to
convert Reference Rate Loans to COF Rate Loans shall forthwith be canceled and
(2) such Lender's Loans then outstanding as COF Rate Loans, if any, shall be
converted automatically to Reference Rate Loans at the end of their respective
Interest Periods or within such earlier period as may be required by law. In the
event of a conversion of any such Loan prior to the end of its applicable
Interest Period the Company hereby agrees promptly to pay any Lender affected
thereby, upon demand, the amounts required pursuant to Paragraph 1(i) below, it
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being agreed and understood that such conversion shall constitute a prepayment
for all purposes hereof. The provisions hereof shall survive the termination of
this Agreement and payment of the outstanding Loans and all other amounts
payable hereunder.
1(g) Requirements of Law; Increased Costs. In the event that any
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applicable law, order, regulation, treaty or directive issued by any central
bank or other governmental authority, agency or instrumentality or in the
governmental or judicial interpretation or application thereof, or compliance
by any Lender with any request or directive (whether or not having the force of
law) issued by any central bank or other governmental authority, agency or
instrumentality:
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(1) Does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Loans made hereunder, or change
the basis of taxation of payments to such Lender of principal, fee, interest or
any other amount payable hereunder (except for change in the rate of tax on the
overall net income of such Lender);
(2) Does or shall impose, modify or hold applicable any reserve,
capital requirement, special deposit, compulsory loan or similar requirements
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Lender in the nature of the Loans made hereunder
which are not otherwise included in the determination of interest payable on the
Obligations; or
(3) Does or shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining any Loan or to reduce any amount receivable in
respect thereof or the rate of return on the capital of such Lender or any
corporation controlling such Lender, then, in any such case, the Company shall
promptly pay to such Lender, upon its written demand made through the Agent,
any additional amounts necessary to compensate such Lender for such additional
cost or reduced amounts receivable or rate of return as determined by such
Lender with respect to this Agreement or Loans made hereunder. If a Lender
becomes entitled to claim any additional amounts pursuant to this
Paragraph 1(g), it shall promptly notify the Company of the event by reason of
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which it has become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence containing the calculation thereof in
reasonable detail submitted by a Lender to the Company shall be conclusive in
the absence of manifest error. The provisions hereof shall survive the
termination of this Agreement and payment of the outstanding Loans and all other
amounts payable hereunder.
1(h) Funding. Each Lender shall be entitled to fund all or any
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portion of its Loans in any manner it may determine in its sole discretion,
including, without limitation, in the Grand Cayman inter-bank market, the London
inter-bank market and within the United States.
1(i) Prepayment Premium. In addition to all other payment
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obligations hereunder, in the event: (1) any Loan which is outstanding as a COF
Rate Loan is prepaid prior to the last day of the applicable Interest Period,
whether following a mandatory prepayment or otherwise, or (2) the Company shall
fail to continue or to make a conversion to a COF Rate Loan after the Company
has given notice thereof as provided in Paragraph 1(e) above, then the Company
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shall immediately pay to the Lenders holding the Loans prepaid or not converted,
through the Agent, an additional premium sum compensating each Lender for
losses, costs and expenses incurred by such Lender in connection with such
prepayment. A certificate as to any additional amounts payable pursuant to the
foregoing sentence containing the calculation thereof in reasonable detail
submitted by a Lender to the Company shall be conclusive in the absence of
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manifest error. The provisions hereof shall survive the termination of this
Agreement and payment of the outstanding Loans and all other amounts payable
hereunder.
1(j) Repayment of Principal. Subject to the prepayment requirements of
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Paragraph 2(g) below, the Company shall pay the principal amount of each COF
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Rate Loan on the last day of the applicable Interest Period therefor and shall
pay the principal amount of each other Loan on the Maturity Date.
2. Miscellaneous Provisions.
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2(a) Use of Proceeds. The proceeds of all Loans shall be utilized by
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the Company for general corporate and working capital purposes.
2(b) Notes. The obligation of the Company to repay the Loans shall be
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evidenced by a note payable to the order of each Lender in the form of that
attached hereto as Exhibit A (a "Note" or the "Notes"). Upon any advance,
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conversion or prepayment as provided in Paragraph 1(e) or 2(g) with respect to
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any Loan, each Lender is hereby authorized to record the date and amount of each
such advance and conversion made by such Lender, or the date and amount of each
such payment or prepayment of principal of the Loan made by such Lender, the
applicable Interest Period and interest rate with respect thereto, on the
schedules annexed to and constituting a part of its respective Note (or by any
analogous method any Lender may elect consistent with its customary practices)
and any such recordation shall constitute prima facie evidence of the accuracy
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of the information so recorded absent manifest error. The failure of any Lender
to make any such notation shall not affect in any manner or to any extent the
Company's Obligations hereunder.
2(c) Borrowing Base Conformity. In support of its obligation to repay
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Loans hereunder, the Company shall cause the Aggregate Collateral Value of the
Borrowing Base to be not less than, at any date, the aggregate principal amount
of Loans outstanding on such date. The Company shall immediately prepay Loans to
the Agent on behalf of the Lenders, upon telephonic demand by the Agent, on any
day in the amount by which the aggregate principal amount of outstanding Loans
exceeds the Aggregate Collateral Value of the Borrowing Base.
2(d) Nature and Place of Payments. All payments made on account of the
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Obligations shall be made by the Company, without setoff or counterclaim, in
lawful money of the United States of America in immediately available same day
funds, free and clear of and without deduction for any taxes, fees or other
charges of any nature whatsoever imposed by any taxing authority and must be
received by the Agent by 12:00 noon (Los Angeles time) on the day of payment, it
being expressly agreed and understood that if a payment is received after 12:00
noon (Los Angeles time) by the Agent, such payment will be considered to have
been made by the Company on the next succeeding Business Day and interest
thereon shall be payable by the Company at the Reference Rate during such
extension. All payments on account of the Obligations shall be made to the Agent
through its Contact Office. If any payment required to be made by the Company
hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and interest
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thereon shall be payable at the then applicable rate during such extension. The
Agent is hereby irrevocably authorized by the Company, without prior notice to
the Company, to debit the general operating account of the Company maintained
with Sanwa for the full amount of monthly and periodic interest xxxxxxxx, fees
and other Obligations payable hereunder; provided, however, that the failure of
the Agent to so debit such account shall not in any manner or to any extent
affect the obligation of the Company to pay such Obligations as provided herein
and in the other Loan Documents.
2(e) Default Interest. Notwithstanding anything to the contrary
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contained herein, on any date that there shall have occurred and be continuing
an Event of Default, any and all Obligations outstanding shall bear interest, at
the Agent's discretion, at a per annum rate equal to two percent (2%) in excess
of the higher of the Applicable Reference Rate and the highest Applicable COF
Rate then in effect under this Agreement.
2(f) Computations. All computations of interest and fees payable
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hereunder shall be based upon a year of 360 days for the actual number of days
elapsed.
2(g) Prepayments.
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(1) The Company may prepay Reference Rate Loans in whole or in
part at any time, without premium or penalty, it being acknowledged and
agreed that COF Rate Loans may not be voluntary prepaid prior to the last
day of their applicable Interest Periods.
(2) Loans hereunder are subject to mandatory prepayment
pursuant to Paragraph 2(c) above.
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(3) The Company shall pay in connection with any prepayment
hereunder, whether voluntary or mandatory, all interest accrued but unpaid
on Loans to which such prepayment is applied, and all prepayment premiums,
if any, on COF Rate Loans to which such prepayment is applied, concurrently
with payment to the Agent of any principal amounts.
2(h) Allocation of Payments Received. Prior to the occurrence of an
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Event of Default and acceleration of the Obligations, all amounts received by
the Agent on account of the Loans shall be disbursed by the Agent to the Lenders
pro rata in accordance with their respective Percentage Shares by wire transfer
on the date of receipt if received by the Agent before 12:00 noon (Los Angeles
time) or if received later, by 12:00 noon (Los Angeles time) on the next
succeeding Business Day, without further interest payable by the Agent.
Following the occurrence of an Event of Default and acceleration of the
Obligations, all amounts received by the Agent on account of the Obligations
shall be disbursed by the Agent as follows:
(1) First, to the payment of expenses incurred by the Agent in
the performance of its duties and enforcement of its rights under the Loan
Documents, including, without limitation, all costs and expenses of collection,
attorneys' fees, court costs and foreclosure expenses;
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(2) Then, to the Lenders, pro rata in accordance with their
respective Percentage Shares, until all outstanding Loans and interest
accrued thereon and all other Obligations have been paid in full; and
(3) Then to such Persons as may be legally entitled thereto.
2(i) Fees. The Company shall pay to the Agent for the pro rata benefit
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of the Lenders in accordance with their respective Percentage Shares:
(1) On or before the date of funding of the first Loan
hereunder, a commitment fee equal to one eighth of one percent (0.125%) of
the Credit Limit on such date; and
(2) On the first Business Day of the first month of each calendar
quarter commencing July 1, 1997 (and on the Maturity Date) for the
immediately preceding calendar quarter, a non-usage fee in the amount set
forth in a fee billing delivered by the Agent to the Company, which non-
usage fee shall be computed at the per annum rate of one-quarter of one
percent (0.25%) against: (i) the average daily Credit Limit in effect
during such calendar quarter (or portion thereof), minus (ii) the daily
average amount of Loans outstanding during such calendar quarter (or
portion thereof).
3. Security: Guaranty: Subordination: Additional Documents.
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3(a) Security Agreement. As collateral security for the Obligations
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the Company shall execute and deliver to the Agent: (i) a security agreement in
the form of that attached hereto as Exhibit B (the "Security Agreement"),
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pursuant to which the Company shall pledge, assign and grant to the Agent for
the pari passu benefit of the Lenders a first priority, perfected security
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interest in and lien upon the Collateral, and (2) such UCC-1 financing
statements as the Agent may request.
3(b) Guaranty: Subordination Agreement. As additional credit support
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for the Obligations, the Company shall cause the Guarantor to execute and
deliver to the Agent: (1) a guaranty in the form of that attached hereto as
Exhibit C (the "Guaranty"), and (2) a subordination agreement in the form of
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that attached hereto as Exhibit D (the "Subordination Agreement").
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3(c) Additional Documents. The Company agrees to execute and deliver
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or to cause to be executed and delivered to the Agent from time to time such
confirmatory or supplementary security agreements, financing statements,
notices to and consents of third parties and such other documents, instruments
or agreements as the Agent may reasonably request, which are in the Agent's
judgment necessary or desirable to obtain for the Agent on behalf of the
Lenders, the benefit of the Loan Documents and the Collateral.
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4. Conditions to Making Loans.
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4(a) First Loan(s). As conditions precedent to the funding of the
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first Loan(s) hereunder:
(1) The Company shall have delivered or shall have had delivered
to the Agent, in form and substance satisfactory to the Agent and its counsel,
each of the following (with sufficient copies for each of the Lenders):
(i) A duly executed copy of this Agreement;
(ii) A duly executed copy of the Security Agreement;
(iii) Duly executed copies of each of the Notes;
(iv) Duly executed copies of the Guaranty and the
Subordination Agreement;
(v) A duly executed Borrowing Base Certificate evidencing
that the Aggregate Collateral Value of the Borrowing Base is sufficient to
support such Loan(s);
(vi) Duly executed copies of all financing statements and
other documents, instruments and agreements, properly executed, deemed
necessary or appropriate by the Agent to create in favor of the Lenders a first
perfected security interest in and lien upon the Collateral;
(vii) Such credit applications, financial statements,
authorizations and such information concerning the Company and its business,
operations and condition (financial and otherwise) as any Lender may reasonably
request;
(viii) Certified copies of resolutions of the Boards of
Directors of the Company and the Guarantor approving the execution, delivery and
performance of the Loan Documents to which such Person is a party;
(ix) A certificate of the Secretary or an Assistant
Secretary of each of the Company and the Guarantor certifying the names and true
signatures of the officers of such Person authorized to sign the Loan Documents
to which such Person is a party;
(x) A copy of the Articles of Organization of the Company
and the Certificate of Incorporation of the Guarantor, certified by the
Secretary of State of the State or other official of the state or jurisdiction
of formation of such Person as of a recent date;
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(xi) A copy of each of the Articles of Organization of the
Company and its Operating Agreement, if any, and a copy of the Certificate of
Incorporation and Bylaws of the Guarantor, certified in each case by the
Secretary or an Assistant Secretary of such Person as of the date of this
Agreement as being accurate and complete;
(xii) A certificate of good standing for each of the Company
and the Guarantor from the Secretary of State of the State of California;
(xiii) A certificate of a Responsible Financial Officer of:
a. the Company in the form of that attached hereto as Exhibit E-1 dated as of
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the date of this Agreement confirming the accuracy and completeness of the
representations and warranties of the Company set forth in the Loan Documents
and the fact that there does not exist a Potential Default or an Event of
Default and demonstrating compliance with the financial tests set forth under
Paragraphs 7(g) through 7(j) at and as of September 30, 1996, and b. the
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Guarantor in the form of that attached hereto as Exhibit E-2 dated as of the
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date of this Agreement confirming the accuracy and completeness of the
representations and warranties of the Guarantor set forth in the Guaranty and
demonstrating compliance with the financial tests set forth in Paragraph 10 of
the Guaranty at and as of September 30, 1996;
(xiv) An opinion of counsel to each of the Company and the
Guarantor, in form and substance and rendered by counsel satisfactory to the
Agent; and
(xv) A copy, certified by a Responsible Financial Officer of
the Company as accurate and complete, of the final form of the SPTL Asset
Purchase Agreement, which SPTL Asset Purchase Agreement shall be reasonably
acceptable to the Agent.
(2) All acts and conditions (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any
required filings, recordings or registrations) required to be done and performed
and to have happened precedent to the execution, delivery and performance of the
Loan Documents and to constitute the same legal, valid and binding obligations,
enforceable in accordance with their respective terms, shall have been done and
performed and shall have happened in due and strict compliance with all
applicable laws.
(3) All documentation, including, without limitation, documentation
for corporate and legal proceedings in connection with the transactions
contemplated by the Loan Documents shall be reasonably satisfactory in form and
substance to the Agent and its counsel.
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4(b) All Loans. As conditions precedent to each Lender's obligation to
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fund its Percentage Share of any Loan, including the first Loan and including
the conversion of any Loan to another type of Loan or the continuation of any
COF Rate Loan after the end of its applicable Interest Period, at and as of the
date of the funding, conversion or continuation:
(1) There shall have been delivered to the Agent a Loan Request
therefor and the Required Documents for the Related Program Contract;
(2) The representations and warranties of the Company and the
Guarantor contained in the Loan Documents shall be accurate and complete in
all respects as if made on and as of the date of such advance, conversion
or continuance;
(3) There shall not have occurred an Event of Default or
Potential Default; and
(4) Following the funding of such Loan, neither the amount of
such Loan nor the aggregate principal amount of Loans outstanding will not
exceed the limitations of Paragraph 1(a) above.
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By delivering a Loan Request to the Agent hereunder, the Company shall be deemed
to have represented and warranted the accuracy and completeness of the
statements set forth in subparagraphs (b)(2) through (b)(4) above.
5. Representations and Warranties of the Company.
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As an inducement to the Agent and each Lender to enter into this
Agreement and to make Loans as provided herein, the Company represents and
warrants to the Agent and each Lender that:
5(a) Financial Condition. The financial statements, dated the
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Statement Date and the Interim Date, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly in
accordance with GAAP the financial condition of the Company and its
consolidated Subsidiaries at such dates and the consolidated and consolidating
results of their operations and changes in financial position for the fiscal
periods then ended.
5(b) No Change. Since the Statement Date there has been no material
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adverse change in the business, operations, assets or financial or other
condition of the Company or the Company and its consolidated Subsidiaries taken
as a whole, nor has the Company entered into, incurred or assumed any long-term
debt, mortgages, material leases or oral or written commitments, nor commenced
any significant project, nor made any purchase or acquisition of any significant
property.
5(c) Corporate Existence; Compliance with Law. The Company: (1) is
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duly organized, validly existing and in good standing as a limited liability
company under the laws of the State of California and is qualified to do
business in each jurisdiction where its ownership of property or conduct of
business requires such qualification and where failure to
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qualify would have a material adverse effect on the Company or its property
and/or business or on the ability of the Company to pay or perform the
Obligations, (2) has the corporate power and authority and the legal right to
own and operate its property and to conduct business in the manner which it does
and proposes so to do, and (3) is in compliance with all Requirements of Law and
Contractual Obligations, the failure to comply with which could have a material
adverse effect on the business, operations, assets or financial or other
condition of the Company or the Company and its consolidated Subsidiaries taken
as a whole or on the Collateral or the Aggregate Collateral Value of the
Borrowing Base.
5(d) Corporate Power; Authorization; Enforceable Obligations. The
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Company has the corporate power and authority and the legal right to execute,
deliver and perform the Loan Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of such Loan Documents. The Loan Documents to which the Company is party have
been duly executed and delivered on behalf of the Company and constitute legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of creditors generally
and the effect of equitable principles whether applied in an action at law or a
suit in equity.
5(e) No Legal Bar. The execution, delivery and performance of the Loan
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Documents to which the Company is party, the borrowing hereunder and the use of
the proceeds thereof, will not violate any Requirement of Law or any Contractual
Obligation of the Company or create or result in the creation of any Lien
(except the Lien created by the Security Agreement) on any assets of the
Company.
5(f) No Material Litigation. Except as disclosed on Exhibit F hereto,
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no litigation, investigation or proceeding of or before any arbitrator, court or
Governmental Authority is pending or, to the knowledge of the Company,
threatened by or against the Company or any of its Subsidiaries or against any
of such parties' properties or revenues which is likely to be adversely
determined and which, if adversely determined, is likely to have a material
adverse effect on the business, operations, property or financial or other
condition of the Company or any of its Subsidiaries or on the Collateral or the
Aggregate Collateral Value of the Borrowing Base.
5(g) Taxes. The Company and each of its Subsidiaries have filed or
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caused to be filed all tax returns that are required to be filed and have paid
all taxes shown to be due and payable on said returns or on any assessments made
against them or any of their property other than taxes which are being contested
in good faith by appropriate proceedings and as to which the Company or
applicable Subsidiary has established adequate reserves in conformity with
GAAP.
5(h) Investment Company Act. Neither the Company or any Person
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controlling the Company or any Subsidiary is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
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5(i) Subsidiaries. Attached hereto as Exhibit G is an accurate and
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complete list of all presently existing Subsidiaries of the Company, their
respective jurisdictions of incorporation and the percentage of their capital
stock owned by the Company or other Subsidiaries. All of the issued and
outstanding shares of capital stock of such Subsidiaries have been duly
authorized and issued and are fully paid and non-assessable.
5(j) Federal Reserve Board Regulations. Neither the Company nor any of
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its Subsidiaries is engaged or will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" and "margin stock" within the respective meanings of
such terms under Regulation U. No part of the proceeds of any Loan issued
hereunder will be used for "purchasing" or "carrying" "margin stock" as so
defined or for any purpose which violates, or which would be inconsistent with,
the provisions of the Regulations of the Board of Governors of the Federal
Reserve System.
5(k) ERISA. The Company and each of its Subsidiaries are in compliance
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in all respects with the requirements of ERISA and no Reportable Event has
occurred under any Plan maintained by the Company or any of its Subsidiaries
which is likely to result in the termination of such Plan for purpose of Title
IV or ERISA.
5(l) Assets. The Company and each of its Subsidiaries has good and
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marketable title to all property and assets reflected in the financial
statements referred to in Paragraph 5(a) above, except property and assets sold
--------------
or otherwise disposed of in the ordinary course of business subsequent to the
respective dates thereof. Neither the Company nor any of its Subsidiaries has
outstanding Liens on any of its properties or assets nor are there any security
agreements to which the Company or any of its Subsidiaries is a party, or title
retention agreements, whether in the form of leases or otherwise, of any
personal property except as reflected in the financial statements referred to
in Paragraph 5(a) above or as permitted under Paragraph 7(a) below.
-------------- --------------
5(m) Securities Acts. The Company has not issued any unregistered
---------------
securities in violation of the registration requirements of Section 5 of the
Securities Act of 1933, as amended, or any other law, and is not violating any
rule, regulation or requirement under the Securities Act of 1933, as amended, or
the Securities and Exchange Act of 1934, as amended. The Company is not required
to qualify an indenture under the Trust Indenture Act of 1939, as amended, in
connection with its execution and delivery of the Notes.
5(n) Consents, Etc. No consent, approval, authorization of, or
--------------
registration, declaration or filing with any Person is required on the part of
the Company in connection with the execution and delivery of the Loan Documents
(other than filings to perfect the Lien granted by it to the Agent on behalf of
the Lenders under the Security Agreement) or the performance of or compliance
with the terms, provisions and conditions hereof or thereof.
5(o) Copyrights, Patents, Trademarks and Licenses, etc. The Company
--------------------------------------------------
owns or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of its business, without conflict with the rights of any
12
other Person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company infringes upon
any rights held by any other Person. Except as specifically disclosed in
Exhibit F. hereto, no claim or litigation regarding any of the foregoing is
---------
pending or, to the knowledge of the Company, threatened, and, to the knowledge
of the Company, no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or proposed, which,
in either case, could, reasonably be expected to have a material adverse effect
on the Company or any of its Subsidiaries or on the Collateral or the Borrowing
Base.
5(p) Regulated Entities. The Company is not subject to
------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
6. Affirmative Covenants. The Company hereby covenants and agrees
---------------------
with the Agent and each Lender that, as long as any Obligations remain unpaid or
any Lender has any obligation to make Loans hereunder, the Company shall:
6(a) Financial Statements. Furnish or cause to be furnished to
--------------------
the Agent and each of the Lenders directly:
(1) Within one hundred twenty (120) days after the last day
of each fiscal year of the Company, consolidated and consolidating statements of
income and statements of changes in financial position of the Company for such
year and balance sheets as of the end of such year presented fairly in
accordance with GAAP and accompanied in each case by an unqualified report of a
firm of independent certified public accountants acceptable to the Agent and
including therewith a copy of the management letter form such certified public
accountants and a certificate of a Responsible Financial Officer of the Company
setting forth calculations, certified to be true, complete and correct, showing
compliance of the Company with the financial covenants set forth in Paragraphs
----------
7(g) through 7(i) below; and
---- ----
(2) Within one hundred twenty (120) days after the last
day of each calendar quarter of the Company, unaudited consolidated and
consolidating statements of income and changes in financial position for such
calendar quarter and balance sheets as of the end of such calendar quarter,
accompanied in each case by a certificate of a Responsible Financial Officer of
the Company stating that such financial statements are presented fairly in
accordance with GAAP, confirming the continuing accuracy and completeness of
all representations and warranties of the Company set forth in the Loan
Documents and the fact that there does not exist a Potential Default or an
Event of Default hereunder and setting forth calculations, certified to be
true, complete and correct, showing compliance of the Company with the financial
covenants set forth in Paragraphs 7(i) through 7(l) below.
--------------- ----
13
6(b) Certificates; Reports; Other Information. Furnish or
----------------------------------------
cause to be furnished to the Agent and each of the Lenders directly:
(1) No later than the tenth calendar day following
the end of each calendar month, as of the close of business of the
Company on the last Business Day of the immediately preceding calendar
month, and at such other times as the Agent may reasonably request: (i)
a Borrowing Base Certificate, and (ii) a monthly servicing and portfolio
report, in form and detail satisfactory to the Agent;
(2) Prior to the implementation thereof, written
notice of any proposed changes to the Underwriting Guidelines;
(3) Promptly upon the filing or sending thereof,
copies of all proxy statements, financial statements, and reports which
the Guarantor sends to its stockholders, and copies of all regular,
periodic and special reports, and all registration statements under the
Securities Act of 1933, as amended (the "Act"), which the Guarantor
files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national
securities exchange; provided, however, that there shall not be required
to be delivered hereunder to any Lender copies of prospectuses relating
to future series of offerings under registration statements filed under
Rule 415 of the Act or other items which such Lender has indicated in
writing to the Guarantor or the Company from time to time need not be
delivered to such Lender; and
(4) Promptly, such additional financial and other
information, including, without limitation, financial statements of the
Company and the Guarantor, and information regarding the Collateral as
the Agent or any Lender may from time to time reasonably request,
including, without limitation, such information as is necessary for any
Lender to participate out any of its interests in the Loans hereunder or
to enable other financial institutions to become signatories hereto.
6(c) Payment of Indebtedness. And shall cause each of its
-----------------------
Subsidiaries, to pay, discharge or otherwise satisfy at or before maturity or
before it becomes delinquent, defaulted or accelerated, as the case may be, all
its Indebtedness (including taxes), except Indebtedness being contested in good
faith and for which provision is made to the satisfaction of the Agent for the
payment thereof in the event the Company or such Subsidiary is found to be
obligated to pay such Indebtedness and which Indebtedness is thereupon promptly
paid by the Company.
6(d) Maintenance of Existence and Properties. And shall cause
---------------------------------------
each of its Subsidiaries, to maintain its corporate existence and maintain all
rights, privileges, licenses, approvals, franchises, properties and assets
necessary or desirable in the normal conduct of its business, and comply with
all Contractual Obligations and Requirements of Law.
6(e) Inspection of Property; Books and Records; Discussions.
------------------------------------------------------
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to
14
its business and activities, and permit representatives of the Agent or any
Lender (at no cost or expense to the Company (other than costs and expenses
associated with the semi-annual audit referred to in Paragraph 6(g)(2) below)
-----------------
unless there shall have occurred and be continuing an Event of Default) to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired by the Agent or any Lender, to contact Obligors for verification
purposes and to discuss the business, operations, properties and financial and
other condition of the Company and any of its Subsidiaries with officers and
employees of such parties, and with their independent certified public
accountants.
6(f) Notices. Promptly give written notice to the Agent and each
-------
Lender of:
(1) The occurrence of any Potential Default or Event of Default;
(2) Any litigation or proceeding affecting the Company or any of
its Subsidiaries, the Guarantor or the Collateral which could have a
material adverse effect on the Collateral or the business, operations,
property, or financial or other condition of the Company or any of its
Subsidiaries or the Guarantor; and
(3) A material adverse change in the business, operations,
property or financial or other condition of the Company or any of its
Subsidiaries or the Guarantor.
6(g) Expenses. Pay all reasonable out-of-pocket expenses (including
--------
fees and disbursements of counsel): (1) of the Agent incident to the
preparation, negotiation and administration of the Loan Documents and the
protection of the rights of the Lenders and the Agent under the Loan Documents,
(2) of the Agent incident audits of the Company's servicing activities records
conducted by the Agent (provided that prior to the occurrence of an Event of
Default and acceleration of the Obligations, the Company shall not be obligated
to pay costs and expenses for more than two audits conducted during any fiscal
year of the Company), and (3) of the Agent and each of the Lenders incident to
the enforcement of payment of the Obligations, whether by judicial proceedings
or otherwise, including, without limitation, in connection with bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar proceedings
involving the Company or a "workout" of the Obligations. The obligations of the
Company under this Paragraph 6(g) shall be effective and enforceable whether or
--------------
not any Loan is funded hereunder and shall survive payment of all other
Obligations.
6(h) Loan Documents. Comply with and observe all terms and conditions
--------------
of the Loan Documents.
6(i) Insurance. Obtain and maintain insurance with responsible
---------
companies in such amounts and against such risks as are usually carried by
corporations engaged in similar businesses similarly situated, which shall name
the Agent as loss payee and an
15
additional insured for the benefit of itself and the Lenders as their interests
may appear, and furnish any of the Lenders on request full information as to all
such insurance.
6(j) Hazardous Materials. And shall cause each of its Subsidiaries
-------------------
to:
(1) Keep and maintain all Property in compliance with, and
shall not cause or permit any Property to be in violation of, any
federal, state or local laws, ordinances or regulations relating to
industrial hygiene or to the environmental conditions on, under or about
any Property, including, but not limited to, soil and ground water
conditions.
(2) Immediately advise the Agent in writing if any Hazardous
Materials Claims are hereafter asserted, and of any discharge, release
or disposal of any Hazardous Materials in, on, under or about any
Property. The Agent and the Lenders shall have the right to join and
participate in, as parties if they so elect, any legal proceedings or
actions initiated in connection with any Hazardous Materials Claims and
to have their reasonable attorney's fees in connection therewith paid by
the Company.
(3) Without the prior written consent of the Agent and the
Lenders, not take any remedial action in response to the presence of any
Hazardous Materials in, on, under or about any Property, nor enter into
any settlement agreement, consent decree or other compromise in respect
to any Hazardous Material Claims, which remedial action, settlement,
consent or compromise might, in the reasonable judgment of the Agent and
the Lenders impair the value of any Property; provided, however, that
the prior consent of the Agent and the Lenders shall not be necessary in
the event that the presence of Hazardous Materials in, on, under or
about the Property either poses an immediate threat to the health,
safety or welfare of any individual or is of such a nature that an
immediate remedial response is necessary and it is not possible to
obtain the consent of the Agent and the Lenders before taking such
action, provided that in such event the Company shall notify the Agent
as soon as practicable of any action so taken. The Agent and the Lenders
agree not to withhold their consent, where such consent is required
hereunder, if either (i) a particular remedial action is ordered by a
court of competent jurisdiction,or (ii) the Company establishes to the
reasonable satisfaction of the Agent and the Lenders that there is no
reasonable alternative to such remedial action which would result in
less impairment of the value of any Property.
6(k) Compliance with Laws. And shall cause each of its Subsidiaries
--------------------
to, comply in all material respects with all Requirements of Law and Contractual
Obligations the failure to comply with which could have a material adverse
effect on the business, operations, assets or financial or other condition of
the Company or the Company and its consolidated Subsidiaries taken as a whole or
on the Collateral or the Aggregate Collateral Value of the Borrowing Base.
6(l) Further Assurances. Promptly upon the reasonable request by the
------------------
Agent or any Lender, do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements.
16
mortgages, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments the Agent or such Lender, as the
case may be, may reasonably require from time to time in order (1) to carry out
more effectively the purposes of this Agreement or any other Loan Document, (2)
to perfect and maintain the validity, effectiveness and priority of the Lien
intended to be created by the Security Agreement, and (3) to better assure,
convey, grant, assign, transfer, preserve, protect and confirm to the Agent and
Lenders the rights granted or now or hereafter intended to be granted to Agent
and the Lenders under any Loan Document or under any other document executed in
connection therewith.
7. Negative Covenants. The Company hereby agrees that, as long as any
------------------
Obligations remain unpaid or any Lender has any obligation to make Loans
hereunder, the Company shall not, directly or indirectly:
7(a) Liens. Create, incur, assume or suffer to exist, any Lien upon
-----
the Collateral except as contemplated by the Security Agreement or create,
incur, assume or suffer to exist any Lien upon any of its other property and
assets except:
(1) Liens or charges for current taxes, assessments or other
governmental charges which are not delinquent or which remain payable
without penalty, or the validity of which are contested in good faith by
appropriate proceedings upon stay of execution of the enforcement thereof,
provided the Company shall have set aside on its books and shall maintain
adequate reserves for the payment of same in conformity with GAAP;
(2) Liens, deposits or pledges made to secure statutory
obligations, surety or appeal bonds, or bonds for the release of
attachments or for stay of execution, or to secure the performance of bids,
tenders, contracts (other than for the payment of borrowed money), leases
or for purposes of like general nature in the ordinary course of the
Company's business;
(3) Purchase money security interests for property hereafter
acquired, conditional sale agreements, or other title retention agreements,
with respect to property hereafter acquired; provided, however, that no
such security interest or agreement shall extend to any property other than
the property acquired;
(4) Statutory Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens imposed by law and created in the
ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained in conformity with GAAP;
(5) Attachment and judgment Liens not otherwise constituting an
Event of Default each of which lien is in existence less than thirty (30)
days after the entry thereof or with respect to which execution has been
stayed, payment is covered in full by insurance, or the Company shall in
good faith be prosecuting an appeal or
17
proceedings for review and shall have set aside on its books such reserves
as may be required by GAAP with respect to such judgment or award;
(6) Liens securing warehousing lines of credit entered into in
the normal course of the Company's business; and
(7) Permitted Other Liens.
7(b) Indebtedness. Create, incur, assume or suffer to exist, or
------------
otherwise become or be liable, or cause any Subsidiary to create, incur, assume
or suffer to exist, or otherwise become or be liable, in respect of any
Indebtedness except:
(1) The Obligations;
(2) Indebtedness reflected in the financial statements referred
to in Paragraph 5(a) above;
--------------
(3) Trade debt incurred in the ordinary course of business and
outstanding less than sixty (60) days after the same has become due and
payable or which is being contested in good faith, provided provision is
made to the satisfaction of the Lenders for the eventual payment thereof in
the event it is found that such contested trade debt is payable by the
Company;
(4) Indebtedness secured by Liens permitted under Paragraph 7(a)
--------------
above; and
(5) Permitted Other Debt.
7(c) Consolidation and Merger. Liquidate or dissolve or enter into any
------------------------
consolidation, merger, partnership, joint venture, syndicate or other
combination.
7(d) Acquisitions. Purchase or acquire or incur liability for the
------------
purchase or acquisition of any or all of the assets or business of any person,
firm or corporation, other than in the normal course of business as presently
conducted.
7(e) Investments; Advances. Make or commit to make any advance, loan or
---------------------
extension of credit other than in connection with the origination of Program
Contracts in the ordinary course of business or make any capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities of, or
make any other investment in, any Person other than in the ordinary course of
the Company's business.
7(f) Sale of Assets. Sell, lease, assign, transfer or otherwise
--------------
dispose of any of its assets (other than obsolete or worn out property),
whether now owned or hereafter acquired, other than in the ordinary course of
business as presently conducted and at fair market value.
18
7(g) Minimum Tangible Net Worth. Permit the Company's Tangible Net
--------------------------
Worth as of the last day of any calendar quarter to be less than $6,300,000.
7(h) Minimum Current Ratio. Permit the Company's ratio of Current
---------------------
Assets to Current Liabilities (which Current Liabilities shall include for
purposes hereof the aggregate principal amount of Loans outstanding hereunder on
the applicable calculation date) as of the last day of any calendar quarter to
be less than 1.03:1.00.
7(i) Minimum Interest Coverage Ratio. Permit as of the last day of any
-------------------------------
calendar quarter the ratio of EBITDA of the Company during such quarter and the
immediately preceding three calendar quarters to Interest Expense of the Company
during such four calendar quarters to be less than 1.50:1.00.
7(j) Profitability. Permit its Net Profit after Taxes, as of the last
-------------
day of any calendar quarter, for such quarter and the immediately preceding
three calendar quarters, to be less than $1.00.
7(k) Limitation on Transactions with Affiliates. Purchase, acquire or
------------------------------------------
lease any property from, or sell, transfer or lease any property to, or lend or
advance any money to, or borrow any money from, or guarantee any obligation of,
or acquire any stock, obligations or securities of, or enter into any merger or
consolidation agreement, or any management or similar fee, agreement with, any
Affiliate, or enter into any other transaction or arrangement or make any
payment to (including, without limitation, on account of any management fees,
service fees, home office charges, consulting fees, technical services charges
or tax sharing charges) or otherwise deal with, in the ordinary course of
business or otherwise, any Affiliate other than on terms no less favorable to
the Company as would be obtained in an arms-length transaction with a non-
Affiliate.
8. Events of Default. Upon the occurrence of any of the following events
-----------------
(an "Event of Default"):
8(a) The Company shall fail to pay any principal on the Loans on the
date when due or fail to pay within five days of the date when due any other
Obligation under the Loan Documents; or
8(b) Any representation or warranty made by the Company or the
Guarantor in any Loan Document or in connection with any Loan Document shall be
inaccurate or incomplete in any respect on or as of the date made; or
8(c) The Company shall fail to maintain its corporate existence or
shall default in the observance or performance of any covenant or agreement
contained in Paragraph 7 above or in the Security Agreement; or
-----------
8(d) The Company shall fail to observe or perform any other term or
provision contained in the Loan Documents and such failure shall continue for
thirty (30) days; or
19
8(e) The Company shall default in any payment of principal of or
interest on any Indebtedness (other than the Obligations) or any other event
shall occur, the effect of which is to permit such Indebtedness to be declared
or otherwise to become due prior to its stated maturity; or
8(f) (1) The Company or any of its Subsidiaries or the Guarantor,
shall commence any case, proceeding or other action (i) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or the
Company or any of its Subsidiaries or the Guarantor shall make a general
assignment for the benefit of its creditors; or (2) there shall be commenced
against the Company or any of its Subsidiaries or the Guarantor, any case,
proceeding or other action of a nature referred to in clause (1) above which (i)
results in the entry of an order for relief or any such adjudication or
appointment, or (ii) remains undismissed, undischarged or unbonded for a period
of sixty (60) days; or (3) there shall be commenced against the Company or any
of its Subsidiaries or the Guarantor, any case, proceeding or other action
seeking issuance or a warrant of attachment, execution, distraint or similar
process against all or substantially all of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, stayed, satisfied or bonded pending appeal within sixty (60) days
from the entry thereof; or (4) the Company or any of its Subsidiaries or the
Guarantor, shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in (other than in connection with a final
settlement), any of the acts set forth in clause (1), (2), or (3) above; or (5)
the Company or any of its Subsidiaries or the Guarantor, shall generally not, or
shall be unable to, or shall admit in writing its inability to pay its debts as
they become due; or
8(g) (1) Any Person shall engage in any "prohibited transaction" (as
defined in section 406 of ERISA or Section 4975 or the Code) involving any Plan,
(2) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, (3) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution of
proceedings is, in the reasonable opinion of the agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, and, in the case of
a Reportable Event, the continuance of such Reportable Event unremedied for ten
days after notice of such Reportable Event pursuant to section 4043(a), (c) or
(d) of ERISA is given or the continuance of such proceedings for ten days after
commencement thereof, as the case may be, (4) any single Employer Plan shall
terminate for purposes of Title IV of ERISA, (5) any withdrawal liability to a
Multiemployer Plan shall be incurred by the Company or (6) any other event or
condition shall occur or exist; and in each case in clauses (1) through (6)
above, such event or condition, together with all other such events or
conditions, if any, is likely to subject the Company or any of its subsidiaries
or the Guarantor to any tax, penalty or other liabilities in the aggregate
material in relation to the
20
business, operation, property or financial or other condition of the Company or
any of its Subsidiaries or the Guarantor; or
8(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries or the Guarantor and all such judgments or
decrees shall not have been vacated, discharged, stayed, satisfied or bonded
pending appeal within thirty (30) days from the entry thereof or in any event
later than five days prior to the date of any proposed sale thereunder; or
8(i) The Company shall voluntarily suspend the transaction of business
for more than five days in any calendar year commencing in fiscal year 1997;
8(j) The Guarantor shall attempt to rescind or revoke the Guaranty or
the Subordination Agreement, with respect to future transactions or otherwise,
or shall fail to observe or perform any term or provision of the Guaranty or the
Subordination Agreement; or
8(k) The Lien of the Agent for the benefit of the Lenders on the
Collateral shall for any reason cease to be a first priority, perfected Lien; or
8(l) SPTL shall become "Undercapitalized," "Significantly
Undercapitalized," or "Critically Undercapitalized" within the context of 12
U.S.C. (S) 1831o as amended, restated or redesignated; or
8(m) SPTL shall submit to a "Capital Restoration Plan" or "Capital
Management Agreement" under 12 U.S.C. (S) 1831o(b)(2)(C), as amended, restated
or redesignated; or
8(n) SPTL's Net Profit after Taxes, during any calendar quarter shall
be less than $1.00; or
8(o) The Guarantor shall cease to own or control, directly or
indirectly, at least fifty one percent (51%) of the outstanding capital stock of
the Company or Xxxxx X. Xxxxx shall cease to be actively involved in the
operations of the Company;
THEN:
Automatically upon the occurrence of an Event of Default under Paragraph 8(f)
--------------
above, at the option of any Lender upon the occurrence of an Event of Default
under Paragraph 8(a) above and, in all other cases, at the option of the
--------------
Majority Lenders, each Lender's obligation to make Loans shall terminate and the
principal balance of outstanding Loans and interest accrued but unpaid thereon
shall become immediately due and payable, without demand upon or presentment to
the Company, which are expressly waived by the Company and the Agent and the
Lenders may immediately exercise all rights, powers and remedies available to
them at law, in equity or otherwise, including, without limitation, under the
Security Agreement, the Guaranty and the other Loan Documents.
21
9. The Agent.
---------
9(a) Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Agent as the agent of such Lender under the Loan Documents and each
such Lender hereby irrevocably authorizes the Agent, as the agent for such
Lender, to take such action on its behalf under the provisions of the Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in the Loan Documents, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein or therein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into the Loan Documents or otherwise exist against the Agent. The Company shall
pay to the Agent an agency fee in such amount and at such times as the Agent and
the Company may from time to time agree in writing.
9(b) Delegation of Duties. The Agent may execute any of its
--------------------
duties under the Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence of misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
9(c) Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(1) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with the Loan Documents (except for its or such
Person's own gross negligence or willful misconduct), or (2) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by the Company or any officer thereof contained in the Loan
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with the
Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Loan Documents or for any failure of the
Company to perform its obligations hereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements continued in, or conditions of, the Loan
Documents or to inspect the properties, books or records of the Company.
9(d) Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certification, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company),
independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any note as the owner thereof for all purposes. As
to the Lenders: (1) the Agent shall be fully justified in failing or refusing to
take any action under the Loan Documents unless it shall first receive such
advice or concurrence of the Majority Leaders or all of the Lenders, as
appropriate, or it shall
22
first be indemnified to its satisfaction by the Lenders ratably in accordance
with their respective Percentage Shares against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any action (except for liabilities and expenses resulting from the Agent's gross
negligence or willful misconduct), and (2) the Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents in
accordance with a request of the Majority Lenders or all of the Lenders, as
appropriate, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.
9(e) Notice of Default. The Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Potential Default or Event
of Default hereunder unless the Agent has received notice from a Lender or the
Company referring to the Loan Documents, describing such Potential Default or
Event of Default and stating that such notice is a "notice of default." In the
event that the Agent receives such a notice, the Agent shall give notice thereof
to the Lenders. The Agent shall take such action with respect to such Potential
Default or Event of Default as shall be reasonably directed by the Majority
Lenders (or any Lender with respect to an Event of Default under Paragraph 8(a)
--------------
above); provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Potential Default or Event
of Default as it shall deem advisable in the best interest of the Lenders.
9(f) Non-Reliance on Agent and Other Lenders. Each Lender
---------------------------------------
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Company, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Company and made its own decision to make its loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9(g) Indemnification. The Lenders agree to indemnify the
---------------
Agent in its capacity as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably according to
the respective amounts of their Percentage Shares, from and against any and all
liabilities, obligations, losses, damages,
23
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including without limitation at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of the Loan Documents or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Obligations.
9(h) Agent in Its Individual Capacity. The Agent and its
--------------------------------
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Company as though the Agent were not the Agent
hereunder. With respect to such loans made or renewed by them and any Note
issued to them, the Agent shall have the same rights and powers under the Loan
Documents as any Lender and may exercise the same as though it were not the
Agent, and the terms "Lender" and "Lenders" shall include the Agent in its
individual capacity.
9(i) Successor Agent. The Agent may resign as Agent under the
---------------
Loan Documents upon thirty (30) days' notice to the Lenders and agrees that it
will so resign in the event it ceases to hold any Percentage Share of the
Obligations. If the Agent shall resign, then the Majority Lenders shall appoint
from among the Lenders a successor agent or, if the Majority Lenders are unable
to agree on the appointment of a successor agent, the Agent shall appoint a
successor agent for the Lenders (which successor agent shall, in either case and
assuming that there does not exist a Potential Default or Event of Default, be
reasonably acceptable to the Company), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any of the Loan Documents or successors thereto.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Paragraph 9 shall inure to its benefit as to any actions taken or omitted
-----------
to be taken by it while it was Agent under the Loan Documents.
9(j) Collateral Matters.
------------------
(1) The Agent is authorized on behalf of the Lenders,
without the necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any Collateral or the Loan
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon Collateral granted pursuant to the Security
Agreement.
(2) The Lenders irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Credit Limit and payment
in full of all Loans and all other Obligations payable under this Agreement and
under any other Loan
24
Documents; (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder; (iii)
constituting property in which the Company owned no interest at the time the
Lien was granted or at any time thereafter; (iv) constituting property
leased to the Company under a lease which has expired or been terminated in
a transaction permitted under this Agreement or is about to expire and which
has not been, and is not intended by the Company to be, renewed or extended;
(v) consisting of an instrument evidencing Indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by all the Lenders.
Upon request by the Agent at any time, the Lenders will confirm in writing
the Agent's authority to release particular types or items of Collateral
pursuant to this subsection.
(3) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any of its
Subsidiaries) that the Company's obligation to such Lender under this
Agreement and the other Loan Documents is not and shall not be secured by any
real property collateral now or hereafter acquired by such Lender.
10. Miscellaneous Provisions.
------------------------
10(a) No Assignment. The Company may not assign its rights or
-------------
obligations under this Agreement without the prior written consent of one
hundred percent (100%) of the Agent and the Lenders. Subject to the foregoing,
all provisions contained in this Agreement or any document or agreement referred
to herein or relating hereto shall inure to the benefit of each Lender, its
successors and assigns, and shall be binding upon the Company, its successors
and assigns.
10(b) Amendment. This Agreement may not be amended or terms or
---------
provisions hereof waived unless such amendment or waiver is in writing and
signed by the Majority Lenders, the Agent and the Company; provided, however,
that without the prior written consent of one hundred percent (100%) of the
Agent and the Lenders and (other than with respect to subparagraph (3) below)
the Company, no amendment or waiver shall: (1) reduce the principal of, or rate
of interest or fees on, the Loans, (2) modify the Credit Limit, (3) modify any
Lender's Percentage Share thereof, (4) modify the definition of "Majority
Lenders," (5) extend the Maturity Date or (6) amend this Paragraph 10(b). It is
---------------
expressly agreed and understood that the failure by the required Lenders to
elect to accelerate amounts outstanding hereunder and/or to terminate the
obligation of the Lenders to make Loans hereunder shall not constitute an
amendment or waiver of any term or provision of this Agreement.
10(c) Cumulative Rights; No Waiver. The rights, powers and
----------------------------
remedies of the Lenders hereunder are cumulative and in addition to all rights,
power and remedies provided under any and all agreements between the Company and
the Lenders relating hereto, at law, in equity or otherwise. Any delay or
failure by the Lenders to exercise any right, power or remedy shall not
constitute a waiver thereof by the Lenders, and no single or partial exercise by
25
the Lenders of any right, power or remedy shall preclude other or further
exercise thereof or any exercise of any other rights, powers or remedies.
10(d) Entire Agreement. This Agreement and the documents and
----------------
agreements referred to herein embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof and thereof.
10(e) Survival. All representations, warranties, covenants and
--------
agreements herein contained on the part of the Company shall survive the
termination of this Agreement and shall be effective until the Obligations are
paid and performed in full or longer as expressly provided herein.
10(f) Notices. All notices given by any party to the others shall
-------
be in writing unless otherwise provided for herein, delivered by facsimile
transmission, personally or by depositing the same in the United States mail,
registered or certified, with postage prepaid, addressed to the party as set
forth on Schedule 1 attached hereto, as such Schedule 1 may be amended from
---------- ----------
time to time. Any party may change the address to which notices are to be sent
by notice of such change to each other party given as provided herein. Such
notices shall be effective on the date received or, if mailed, on the third
Business Day following the date mailed.
10(g) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
10(h) Assignments, Participations, Etc.
--------------------------------
(1) Any Lender may at any time, with the consent of the Agent
and, but only so long as there does not exist an Event of Default, the
Company, assign and delegate to one or more financial institutions (each an
"Assignee") all, or any ratable part of all, of the Loans and the other
rights and obligations of such Lender hereunder in a minimum amount of
$5,000,000.00; provided, however, that the Company and the Agent may
continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment institutions, addresses and related
information with respect to the Assignee, shall have been given to the
Company and the Agent by such Lender and the Assignee; (ii) such Lender and
its Assignee shall have delivered to the Company and the Agent an
Assignment and Acceptance Agreement together with any Note or Notes subject
to such assignment; and (iii) the Agent shall have been paid a fee on
account of such assignment in the amount of $2,500.00. From and after the
date that the Agent notifies the assignor Lender that it has received an
executed Assignment and Acceptance Agreement, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned to it
pursuant to such Assignment and Acceptance Agreement, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under
the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance Agreement, relinquish its rights and be
26
released from its obligations under the Loan Documents. Within five Business
Days after its receipt of notice by the Agent that it has received an executed
Assignment and Acceptance Agreement, which notice shall also be sent by the
Agent to each Lender, the Company shall execute and deliver to the Agent, new
Notes evidencing such Assignee's assigned Loans and Loan funding commitment.
Upon the effective date of such assignment, this Agreement and the other Loan
Documents shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Percentage Share arising therefrom.
(2) Any Lender may at any time sell to one or more financial
institutions or other Persons (each a "Participant") participating interests in
any Loans, the funding commitment of that Lender and the other interests of that
Lender (the "originating Lender") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Company
and the Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and obligations under
this Agreement and the other Loan Documents, and (iv) following such sale that
Lender shall continue to hold a Percentage Share of the Credit Limit of not less
than $5,000,000.00.
(3) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Lender may assign all
or any portion of the Loans or Notes held by it to any Federal Reserve Lender or
the United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Lender.
10(i) Counterparts. This Agreement and the other Loan Documents may be
------------
executed in any number of counterparts, all of which together shall constitute
one agreement.
11(j) Sharing of Payments. If any Lender shall receive and retain any
-------------------
payment, whether by setoff, application of deposit balance or security, or
otherwise, in respect of the Obligations in excess of such Lender's Percentage
Share thereof, then such Lender shall purchase from the other Lenders for cash
and at face value and without recourse, such participation in the Obligations
held by them as shall be necessary to cause such excess payment to be shared
ratably as aforesaid with each of them; provided, that if such excess payment or
part thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest. Each Lender is hereby authorized by the Company to exercise
any and all rights of setoff, counterclaim or bankers' lien against the full
amount of the Obligations, whether or not held by such Lender. Each Lender
hereby agrees to exercise any such rights first against the Obligations and only
then to any other Indebtedness of the Company to such Lender.
27
10(k) Consent to Jurisdiction. SUBJECT TO PARAGRAPH 10(m) BELOW, ANY
----------------------- ---------------
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE
LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10(l) Waiver of Jury Trial. SUBJECT TO PARAGRAPH 10(m) BELOW, THE
-------------------- ---------------
COMPANY, THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
10(m) Dispute Resolution. It is understood and agreed that upon the
------------------
request of any party hereto any dispute, claim, or controversy of any kind,
whether in contract or in tort, statutory or common law, legal or equitable now
existing or hereinafter arising out of, pertaining to or in connection with this
Agreement or the other Loan Documents, or any related agreements, documents, or
instruments, shall be resolved through final and binding arbitration
administered by Judicial Arbitration & Mediation Services, Inc. ("J.A.M.S.").
The hearing shall be conducted at a location determined by the arbitrator in Los
Angeles, California and shall be administered by and in accordance with the then
existing Rules of Practice and Procedure of
28
Judicial Arbitration & Mediation Services, Inc., and judgment upon any award
rendered by the arbitrator may be entered by any State or Federal Court having
jurisdiction thereof. The arbitrator shall determine which is the prevailing
party or parties and shall include in the award that party's or parties'
reasonable attorney's fees and costs. As soon as practicable after selection of
the arbitrator, the arbitrator or his/her designated representative shall
determine a reasonable estimate of anticipated fees and costs of the arbitrator,
and render a statement to each party setting forth that party's pro-rata share
of said fees and costs. Thereafter each party shall, within ten days of receipt
of said statement, deposit said sum with the arbitrator. Failure of any party to
make such a deposit shall result in a forfeiture by the non-depositing party of
the right to prosecute or defend that claim which is the subject of the
arbitration, but shall not otherwise serve to xxxxx, stay under this paragraph,
nor any other provision of this dispute resolution provision, shall limit the
right of any party to obtain provisional or ancillary remedies such as
injunctive relief from any court having jurisdiction before, during or after the
pendency of any arbitration. The institution and maintenance of an action for
the pursuit of provisional or ancillary remedies shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration.
10(n). Indemnity.
---------
(1) Whether or not the transactions contemplated hereby are
consummated, the Company shall indemnify and hold the Agent and each Lender
and each of their respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including attorney's fees and expenses, including the
allocated cost of internal counsel) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the Loans and
the termination, resignation or replacement of the Agent or replacement of
any Lender) be imposed on, incurred by or asserted against any such Person
in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any insolvency
proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively,
the "Indemnified Liabilities"); provided, however, that the Company shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this
Paragraph 10(n)(1) shall survive payment of all other Obligations.
------------------
(2) Any agreement of the Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Company. The Agent and the Lenders
shall be entitled to rely on the authority of any Person purporting to be
an authorized Person and the Agent and the Lenders shall not have any
liability to the Company or other Person on account of any
29
action taken or not taken by the Agent or the Lenders in reliance upon such
telephonic or facsimile notice. The obligation of the Company to repay the
Loans shall not be affected in any way or to any extent by any failure by
the Agent and the Lenders to receive written confirmation of any telephonic
or facsimile notice or the receipt by the Agent and the Lenders of a
confirmation which is at variance with the terms understood by the Agent
and the Lenders to be contained in the telephonic or facsimile notice.
10(o) Marshalling: Payments Set Aside. Neither the Agent nor the
-------------------------------
Lenders shall be under any obligation to xxxxxxxx any assets in favor of the
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment or payments to the
Agent or the Lenders, or the Agent or the Lenders enforce their Liens or
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent in its discretion) to be
repaid to a trustee, receiver or any other party in connection with any
insolvency proceeding, or otherwise, then (1) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or set-off had not occurred, and (2) each Lender severally
agrees to pay to the Agent upon demand its ratable share of the total amount so
recovered from or repaid by the Agent.
10(p) Set-off. In addition to any rights and remedies of the Lenders
-------
provided by law, if an Event of Default exists, each Lender is authorized at any
time and from time to time, without prior notice to the Company, any such notice
being waived by the Company to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at any time owing to, such
Lender to or for the credit or the account of the Company against any and all
Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not the Agent or such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Lender agrees promptly to notify the Company and the Agent
after any such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
10(q) Severability. The illegality or unenforceability of any
------------
provision of this Agreement or any other Loan Document or any instrument or
agreement required hereunder or thereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions hereof or thereof.
10(r) No Third Parties Benefited. This Agreement and the other Loan
--------------------------
Documents are made and entered into for the sole protection and legal benefit of
the Company, the Lenders and the Agent, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary of,
or have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Agent nor
30
any Lender shall have any obligation to any Person not a party to this Agreement
or other Loan Documents.
11. Definitions. For purposes of this Agreement, the terms set forth
-----------
below shall have the following meanings:
"Affiliate" shall mean, as to any Person, any other Person directly or
---------
indirectly controlling, controlled by or under direct or indirect common control
with, such Person. "Control" as used herein means with respect to any business
entity the power to direct the management and policies of such business entity.
"Agent" shall have the meaning given such term in the introductory
-----
paragraph hereof and shall include any successor to Sanwa as the initial "Agent"
hereunder.
"Aggregate Collateral Value of the Borrowing Base" shall mean at any
------------------------------------------------
date the sum of the Collateral Values of all Eligible Program Contracts included
in the Borrowing Base at such date.
"Agreement" shall mean this Agreement, as the same may be amended,
---------
extended or replaced from time to time.
"Applicable COF Rate" shall mean with respect to any Interest Period,
-------------------
the COF Rate for such Interest Period plus two percent (2.00%).
"Assignee" shall have the meaning given such term in
--------
Paragraph 10(h)(1) above.
------------------
"Assignment and Acceptance Agreement" shall mean an agreement in the
-----------------------------------
form of that attached hereto as Exhibit H.
---------
"Borrowing Base" shall mean at any date all Eligible Program Contracts
--------------
in which the Agent holds for the benefit of the Lenders a first priority,
perfected security interest at such date.
"Borrowing Base Certificate" shall mean a report in form acceptable to
--------------------------
the Agent, duly certified by a responsible officer of the Company.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
------------
day on which banks in Los Angeles, California are authorized or obligated to
close their regular banking business.
"COF Rate" shall mean, with respect to any Interest Period for a COF
--------
Loan, a percentage equivalent to the rate per annum quoted in London by banks in
the interbank eurocurrency market for deposits in immediately available U.S.
dollars in an amount equal to the amount of such COF Loan for a period of time
equal to such Interest Period on the first day of such Interest Period which
Sanwa determines in its sole and absolute discretion to be equal to Sanwa's
cost of acquiring funds (adjusted for any and all assessments, surcharges and
reserve requirements pertaining to the borrowing or purchase by Sanwa of such
funds) in an amount
31
approximately equal the amount of the relevant COF Loan for a period of time
approximately equal to the relevant Interest Period.
"COF Rate Loans" shall mean Loans hereunder during such time as they
--------------
are made and/or being maintained at a rate of interest based upon the COF Rate.
"Collateral" shall mean, collectively and severally, the personal
----------
property collateral described as such in the Security Agreement.
"Collateral Value" shall mean at any date with respect to any Eligible
----------------
Program Contract, ninety five percent (95%) of: (a) in the case of each
Equipment Sale Contract, the outstanding principal balance of the promissory
note evidencing the same at such date, and (b) in the case of each Equipment
Lease, the net lease receivable thereunder, computed in accordance with GAAP.
"Commonly Controlled Entity" of a Person shall mean a Person, whether
--------------------------
or not incorporated, which is under common control with such Person within the
meaning of Section 414(c) of the Internal Revenue Code.
"Contact Office" shall mean the office of Sanwa located at 601 South
--------------
Xxxxxxxx Street, W8-6, Xxx Xxxxxxx, Xxxxxxxxxx 00000 or such other office as
Sanwa may notify the Company and the Lenders from time to time in writing.
"Contractual Obligation" as to any Person shall mean any provision of
----------------------
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Limit" shall mean $15,000,000.00, as such amount may be
------------
increased or decreased by written agreement of the Agent, the Company and one
hundred percent (100%) of the Lenders.
"Current Assets" shall mean for any Person, as of any date of
--------------
determination, all amounts which would, in accordance with GAAP, be included
under current assets on a balance sheet of such Person; provided, however, that
such amounts shall not include (a) any amounts for any Indebtedness owing by an
Affiliate of such Person unless such Indebtedness arose in connection with the
sale of goods or other property in the ordinary course of business and would
otherwise constitute current assets in conformity with GAAP, (b) the equity
value of any shares of stock issued by an Affiliate of such Person, (c) the cash
surrender value of any life insurance policy, or (d) any intangibles.
"Current Liabilities" shall mean for any Person, as of any date of
-------------------
determination, all amounts which would, in accordance with GAAP, be included
under current liabilities on a balance sheet of such Person.
"EBITDA" shall mean for any period the sum of (a) net income (or net
------
loss) plus (b) all amounts treated as expenses for interest, amortization,
depreciation, taxes (to the extent
32
included in the determination of net income (or net loss)), and other non-cash
charges for such period.
"Eligible Program Contract" shall mean a Program Contract for which each
-------------------------
of the following statements is accurate and complete (and the Company by
including such Program Contract in any computation of the Aggregate Collateral
Value of the Borrowing Base shall be deemed to represent and warrant to the
Agent and the Lenders the accuracy and completeness of such statements):
(a) Said Program Contract is a binding and valid obligation of the
Obligor thereon, in full force and effect and enforceable in accordance with its
terms;
(b) Said Program Contract is genuine, in all respects as appearing on
its face or as represented in the books and records of the Company, and all
information set forth therein is true and correct;
(c) Except to the extent permitted pursuant to subparagraph (d)
below, said Program Contract is free of all default of any party thereto,
including, without limitation, the Company, counterclaims, offsets and defenses
and from any rescission, cancellation or avoidance, and all right thereof,
whether by operation of law or otherwise;
(d) No payment under said Program Contract is more than thirty (30)
days past due;
(e) Said Program Contract is free of waivers, concessions and
understandings with the Obligor thereon of any kind other that such as have been
disclosed to and approved by the Agent in writing;
(f) Said Program Contract is, and at all times will be, free and
clear of all liens, encumbrances, charges, rights and interests of any kind,
except in favor of the Agent for the benefit of the Lenders;
(g) Said Program Contract was originated in the ordinary course of
the Company's business, consistent in all respects with Requirements of Law,
including, without limitation, usury laws;
(h) The Obligor on said Program Contract: (1) is located within the
United States of America or the District of Columbia; (2) is not the subject of
any bankruptcy or insolvency proceeding, nor has a trustee or receiver been
appointed for all or a substantial part of its property, nor has said Obligor
made an assignment for the benefit of creditors, admitted its inability to pay
its debts as they mature or suspended its business; (3) is not affiliated,
directly or indirectly, with the Company, as a Subsidiary or other Affiliate,
employee or otherwise; (4) is not a state or federal governmental department,
commission, board, bureau or agency; and (5) is not in default or delinquent
under any other Program Contract held by the Company;
33
(i) The aggregate amount payable by the Obligor on said Program
Contract at the date of origination was not less than $50,000.00 nor more than
$500,000.00 unless otherwise approved by the Agent in writing;
(j) The aggregate amount payable by the Obligor on said Program
Contract when added to the aggregate amount payable by such Obligor on all other
Program Contracts held by the Company from such Obligor does not exceed the
greater of: (1) $1,500,000.00, and (2) ten percent (10%) of the Credit Limit;
(k) The term of said Program Contract at origination and after giving
effect to any renewals and extensions contemplated thereby did not exceed eighty
four (84) months;
(l) The Required Documents for such Program Contract have been
delivered to the Agent;
(m) If the Obligor on said Program Contract is a franchisee under a
"Tier 2 Concept" or "Tier 3 Concept" (as set forth in the Underwriting
Guidelines), the Collateral Value of said Program Contract when added to the
Collateral Value of all other Program Contracts of similar Obligors included in
the calculation of the Aggregate Collateral Value of the Borrowing Base does not
exceed the greater of: (1) $1,500,000.00, and (2) thirty percent (30%) of the
aggregate dollar amount of Loans outstanding;
(n) Unless said Program Contract is an Equipment Lease which is a
"true" or "operating" lease, said Program Contract is secured by a validly
perfected, first priority security interest in favor of the Company as secured
party in the equipment which is the subject of such Program Contract;
(o) There is only one original executed copy of such Program Contract;
(p) Said Program Contract constitutes "chattel paper" as defined in the
Uniform Commercial Code of the jurisdiction under which the perfection of the
Agent's security interest therein will be determined;
(q) The Company has indicated in its books and records, including,
without limitation, in its computer files, that said Program Contract has been
pledged to the Agent for the benefit of the Lenders; and
(r) Said Program Contract is otherwise satisfactory to the Agent, in
its sole discretion.
"Equipment Lease" shall mean a written lease or rental agreement entered
---------------
into by the Company in the ordinary course of its business pursuant to which the
Company leases equipment included in the Company's inventory to the Obligor
thereon, which lease may be a "true" or "cooperating" lease or a "financing"
lease.
34
"Equipment Sale Contract" shall mean a written agreement pursuant to
-----------------------
which the Company in the ordinary course of its business sells equipment
included in the Company's inventory to the Obligor thereunder, including,
without limitation, the promissory note evidencing the obligor's agreement to
pay for such equipment and a security agreement covering the subject equipment
as collateral security for such note.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may from time to time be supplemented or amended.
"Event of Default" shall have the meaning given such term in
----------------
Paragraph 8 above.
-----------
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantor" shall mean Imperial Credit Industries, Inc., a California
---------
corporation.
"Guaranty" shall have the meaning given such term in Paragraph 3(b)
-------- --------------
above.
"Hazardous Materials" shall mean any flammable materials (excluding
-------------------
wood products normally used in construction), explosives, radioactive materials,
hazardous wastes, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definitions of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal, state, or local laws or regulations.
"Hazardous Materials Claims" shall mean any enforcement, cleanup,
--------------------------
removal or other governmental or regulatory action or order with respect to the
Property, pursuant to any Hazardous Materials Laws, and/or any claim asserted in
writing by any third party relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials.
"Hazardous Materials Laws" shall mean any applicable federal, state or
------------------------
local laws, ordinances or regulations relating to Hazardous Materials.
"Indebtedness" of any Person shall mean all items of indebtedness
------------
which, in accordance with GAAP and practices, would be included in determining
liabilities as shown on the liability side of a statement of condition of such
Person as of the date as of which indebtedness is to be determined, including,
without limitation, all obligations for money borrowed and capitalized lease
obligations, and shall also include all indebtedness and liabilities of others
assumed or guaranteed by such Person or in respect of which such Person is
secondarily or contingently liable (other than by endorsement of instruments in
the course of collection) whether by reason of any agreement to acquire such
indebtedness or to supply or advance sums or otherwise.
35
"Interest Expense" shall mean for any period all interest and similar
----------------
charges actually paid on account of Indebtedness of the Company and its
Subsidiaries during such period.
"Interest Period" shall mean with respect to any Loan which is a
---------------
COF Loan, the period commencing on the date such Loan is advanced and ending 30,
60, 90 or 180 days thereafter, as designated in the related Loan Request;
provided, however, that (a) any Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to the next succeeding
Business Day, and (b) no Interest Period shall end after date set forth in
subparagraph (a) of the definition of the "Maturity Date".
"Interim Date" shall mean September 30, 1996.
------------
"Lien" shall mean any security interest, mortgage, pledge, lien, claim
----
on property, charge or encumbrance (including any conditional sale or other
title retention agreement), any lease in the nature thereof, and the filing of
or agreement to give any financial statement under the Uniform Commercial Code
of any jurisdiction.
"Loan Documents" shall mean this Agreement, the Security Agreement,
--------------
the Notes, the Guaranty, the Subordination Agreement and each other document,
instrument or agreement executed by the Company and the Guarantor in connection
herewith or therewith, as any of the same may be amended, extended or replaced
from time to time.
"Loan Request" shall mean a request for a Loan in form satisfactory to
------------
the Agent.
"Loans" shall have the meaning given in Paragraph 1(a) above.
----- --------------
"Majority Lenders" shall mean the Lenders holding not less than fifty
----------------
one percent (51%) of the Percentage Shares; provided, however, that at any time
during which the number of Lenders hereunder are less than three, the term
"Majority Lenders" shall mean one hundred percent (100%) of the Lenders.
"Maturity Date" shall mean the earlier of: (a) September 30, 1997, as
-------------
such date may be extended from time to time in writing by one hundred percent
(100%) of the Lenders, in their sole discretion, and (b) the date the Lenders
terminate their obligation to make further Loans hereunder pursuant to
Paragraph 8 above.
-----------
"Multiemployer Plan" as to any Person shall mean a Plan of such Person
------------------
which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Profit After Taxes" shall mean for any Person for any period, the
----------------------
pre-tax net income (or net loss) of such Person for such period, determined in
accordance with GAAP, less all accrued taxes on or measured by income to the
----
extent included in the determination of such net income (or loss); provided,
however, that net income (or net loss) shall be computed for these purposes
without giving effect to extraordinary losses or extraordinary gains, as
determined under GAAP.
36
"Notes" shall have the meaning given such term in Paragraph 2(b)
----- --------------
above.
"Obligations" shall mean any and all debts, obligations and
-----------
liabilities of the Company to the Lenders (whether now existing or hereafter
arising, voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred), arising out of or related to the Loan Documents.
"Obligor" shall mean the Person or Persons obligated to pay the
-------
indebtedness which is the subject of a Program Contract.
"Participant" shall have the meaning given such term in
-----------
Paragraph 10(h)(2) above.
------------------
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"Percentage Share" shall mean, for any Lender at any date that
----------------
percentage which the dollar commitment of such Lender bears to the aggregate
dollar commitment of all Lenders hereunder, as set forth on Schedule 2 attached
----------
hereto, as said Schedule 2 may be amended from time to time.
----------
"Permitted Other Debt" shall mean that Indebtedness described on
--------------------
Exhibit I attached hereto.
---------
"Permitted Other Liens" shall mean Liens securing Indebtedness
---------------------
described as "Permitted Other Secured Debt" on Exhibit I attached hereto.
---------
"Person" shall mean any corporation, natural person, firm, joint
------
venture, partnership, trust, unincorporated organization, government or any
department or agency of any government.
"Plan" shall mean as to any Person, any pension plan that is covered
----
by Title IV of ERISA and in respect of which such Person or a Commonly
Controlled Entity of such Person is an "employer" as defined in Section 3(5) of
ERISA.
"Potential Default" shall mean an event which but for the lapse of
-----------------
time or the giving of notice, or both, would constitute an Event of Default.
"Proceeds" shall mean whatever is receivable or received when
--------
Collateral or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes, without
limitation, all rights to payment, including return premiums, with respect to
any insurance relating thereto.
"Program Contract" shall mean an Equipment Lease or an Equipment Sale
----------------
Contract originated by the Company in the ordinary course of the Company's
business.
37
"Property" shall mean, collectively and severally, any and all real
--------
property, including all improvements and fixtures thereon, owned or occupied by
the Company.
"Reference Rate" shall mean the fluctuating per annum rate announced from
--------------
time to time by Sanwa in Los Angeles, California, as its "Reference Rate". The
Reference Rate is a rate set by Sanwa based upon various factors including
Sanwa's costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above or below the Reference Rate.
"Reference Rate Loans" shall mean Loans hereunder during such time as they
--------------------
are made and/or being maintained at a rate of interest based upon the Reference
Rate.
"Related Program Contract" shall mean with respect to any Loan, the
------------------------
Eligible Program Contract presented for inclusion in the Borrowing Base at the
time of, and as a condition to, the funding of such Loan.
"Reportable Event" shall mean a reportable event as defined in Title IV of
----------------
ERISA, except actions of general applicability by the Secretary of Labor under
Section 110 of ERISA.
"Required Documents" shall mean with respect to any Program Contract those
------------------
documents, instruments and agreements described on Exhibit J attached hereto.
---------
"Requirements of Law" shall mean as to any Person the Certificate of
-------------------
Incorporation and ByLaws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or a final and binding
determination of an arbitrator or a determination of a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Responsible Financial Officer" of any Person shall mean the chief
-----------------------------
financial officer or treasurer of such Person or any other officer of such
Person who is actively involved in the day to day financial operations of such
Person.
"Security Agreement" shall have the meaning given such term in
------------------
Paragraph 3(a) above.
--------------
"Single Employer Plan" shall mean as to any Person any Plan of such Person
--------------------
which is not a Multiemployer Plan.
"SPTL" shall mean Southern Pacific Thrift and Loan, a California industrial
----
loan company.
"SPTL Asset Purchase Agreement" shall mean that certain Master Loan Sale
-----------------------------
Agreement dated as of August 23, 1995 by and between SPTL and the Company
pursuant to which the Company agreed to purchase certain assets of SPTL as
provided more particularly therein.
"Statement Date" shall mean December 31, 1995.
--------------
38
"Subordination Agreement" shall have the meaning given such term in
-----------------------
Paragraph 3(b) above.
---
"Subsidiary" shall mean any corporation more than fifty percent (50%) of
----------
the stock of which having by the terms thereof ordinary voting power to elect
the board of directors, managers or trustees of the corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) shall, at the time as of which any determination is being made,
be owned, either directly or through Subsidiaries and any other partnership,
joint venture or other business combination whose management and policies are
controlled by or under common control with the Company or any of its
Subsidiaries.
"Tangible Net Worth" shall mean for any Person at any time of
------------------
determination, total assets (exclusive of equity investments in Subsidiaries and
other Persons, notes receivable from Affiliates, goodwill, patents, trademarks,
trade names, organization expense, treasury stock, unamortized debt discount and
premium, deferred charges and other like intangibles) less Total Liabilities
(including accrued and deferred income taxes but excluding subordinated debt),
at such time.
"Total Liabilities" shall mean for any Person at any time of determination,
-----------------
all liabilities of such Person which in accordance with GAAP would be shown on
the liability side of a balance sheet of such Person but excluding subordinated
debt, as determined in accordance with GAAP.
39
"Underwriting Guidelines" shall mean the underwriting guidelines
-----------------------
of the Company dated as of August 22, 1996, a copy of which are attached hereto
as Exhibit K, as the same may be amended form time to time with prior written
---------
notice to the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year above written.
SANWA BANK CALIFORNIA, as Agent and
a Lender
By:
---------------------------------
Xxxx X. Xxxxx, Vice President
By:
----------------------------------
Xxxxxxxx X. Xxxxxx, Vice President
FRANCHISE MORTGAGE ACCEPTANCE
COMPANY, L.L.C., a California limited
liability company
By: /s/ Xxxx Xxxxxxx
----------------------------------
Xxxx Xxxxxxx, Senior Vice President
40
SCHEDULE OF EXHIBITS
--------------------
EXHIBIT DOCUMENT
------- --------
A Form of Note
B Form of Security Agreement
C Form of Guaranty
D Form of Subordination Agreement
E-1 Form of Officer's Certificate (Company)
E-2 Form of Officer's Certificate (Guarantor)
F Litigation Schedule
G Schedule of Subsidiaries
H Form of Assignment and Acceptance Agreement
I Schedule of Permitted Other Debt
J Schedule of Required Documents
K Underwriting Guidelines
Schedule 1: Schedule of Addresses for Notice Purposes
Schedule 2: Schedule of Percentage Shares
41
EXHIBIT A
---------
TO CREDIT AGREEMENT
-------------------
FORM OF
NOTE
----
February 28, 1997
FOR VALUE RECEIVED, the undersigned, FRANCHISE MORTGAGE ACCEPTANCE COMPANY,
L.L.C., a limited company organized under the laws of the State of California
(the "Company"), hereby-unconditionally promises to pay to the order of
_____________________(the "Lender"), at the office of SANWA BANK CALIFORNIA
(the "Agent"), located at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000, or such other place as the Agent may designate in writing, in lawful
money of the United States, on the dates required under that certain Credit
Agreement dated as of February 28, 1997 among the Company, the Agent, and the
lenders signatory thereto, including the Lender (as the same may be amended,
extended or replaced from time to time, the "Credit Agreement," and with
capitalized terms not otherwise defined herein used with the meanings given such
terms in the Credit Agreement), the principal amount of Lender's Percentage
Share of each Loan outstanding under the Credit Agreement.
The Company further agrees to pay interest in like money and funds to the
Agent at the location indicated above, on the unpaid principal amount hereof
from the date advanced on the dates and at the applicable rates set forth in the
Credit Agreement.
The holder of this Note is hereby authorized to record the date and amount
of the Lender's Loans, the date and amount of each payment of principal and
interest, and applicable interest rates and other information with respect
thereto, on the schedules annexed to and constituting a part of this Note (or
record such information by any analogous method the holder hereof may elect
consistent with its customary practices) and any such recordation shall
constitute prima facie evidence, absent manifest error, of the accuracy of the
-----------
information so recorded; provided, however, that the failure to make a notation
or the inaccuracy of any notation shall not limit or otherwise affect the
obligations of the Company under the Loan Documents.
This Note is one of the Notes referred to in, and entitled to all the
benefits of, the Credit Agreement and the other Loan Documents. Reference is
hereby made to the Loan Documents for rights and obligations of payment and
prepayment, collateral security, Events of Default and the rights of
acceleration of the maturity hereof upon the occurrence of an Event of Default.
This Note shall be governed by and construed in accordance with
the laws of the State of California.
FRANCHISE MORTGAGE ACCEPTANCE
COMPANY, L.L.C., a California limited liability
Company
By: /s/
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
2
EXHIBIT B
---------
TO CREDIT AGREEMENT
-------------------
FORM OF
SECURITY AND COLLATERAL AGENCY AGREEMENT
----------------------------------------
THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (the "Security Agreement") is
made and dated this 28th day of February, 1997, by and between FRANCHISE
MORTGAGE ACCEPTANCE COMPANY, L.L.C., a limited liability company organized under
the laws of the State of California (the "Company"), and SANWA BANK CALIFORNIA,
acting in its capacity as Agent for the Lenders participating in (and as the
terms "Agent," "Lenders" and capitalized terms not otherwise defined herein are
defined in) that certain Credit Agreement dated as of February 28, 1997 by and
among the Company, the Agent and the Lenders (as the same may be amended,
extended and replaced from time to time, the "Credit Agreement").
RECITALS
--------
A. Pursuant to the Credit Agreement the Lenders have agreed to extend
credit to the Company on the terms and subject to the conditions set forth in
therein and in the other Loan Documents.
B. As a condition precedent to the agreement of the Lenders to enter into
the Credit Agreement and to make Loans thereunder, the Company is required to
execute and deliver to the Agent for the benefit of the Lenders this Security
Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
---------
1. Appointment. By executing a copy of or otherwise becoming a "Lender"
-----------
under the Credit Agreement, each Lender shall automatically be deemed to appoint
the Agent to act as secured party, agent, custodian and bailee for the exclusive
benefit of Lenders with respect to the Collateral (as defined in Paragraph 2
-----------
below). The Agent hereby accepts such appointment and agrees to maintain and
hold all Collateral as secured party, agent, custodian and bailee for the
exclusive benefit of Lenders. The Agent agrees to act in accordance with this
Security Agreement and acknowledges and agrees that the Agent is not, and shall
not at any time in the future be, subject, with respect to the Collateral, in
any manner or to any extent, to the direction or control of the Company except
as expressly permitted hereunder and under the other Loan Documents.
2. Grant of Security Interest. The Company hereby pledges, mortgages,
--------------------------
assigns and grants to the Agent for the equal, ratable benefit of the Lenders in
accordance with their respective Percentage Shares, and to the Lenders, a first
priority perfected security interest in the property described in Paragraph 3
-----------
below (collectively and severally, the "Collateral") to secure payment and
performance of the Obligations.
3. Collateral. The Collateral shall consist of all now existing and
----------
hereafter arising right, title and interest of the Company in each of the
following:
(a) All Program Contracts, now existing and hereafter arising, the
Required Documents for which have been delivered to the Agent or which are
otherwise included in the calculation of the Aggregate Collateral Value of the
Borrowing Base ("Subject Program Contracts"), including, without limitation, all
Equipment Leases and Equipment Sales Contracts and the documents, instruments
and agreements evidencing the same, as the same may be amended, extended or
replaced from time to time;
(b) All now existing and hereafter arising rights to payment under or
with respect to the Subject Program Contracts, including, without limitation,
all rental and lease payments, sales payments, early termination payments,
casualty loss payments and indemnity payments, whether payable by the Obligors
under such Subject Program Contracts or by third parties, including without
limitation under policies of insurance and guaranties;
(c) All now existing and hereafter acquired inventory of the Company
which at any time is covered by a Subject Program Contract and all additions and
accessions thereto and replacements therefor and all rights of the Company in
the personal property which is at any time covered by a Subject Program Contract
which property does not constitute inventory of the Company and all additions
and accessions thereto;
(d) All Liens, including, without limitation, consensual security
interests, on personal property (tangible and intangible) now existing or
hereafter arising held by the Company as collateral security for the obligations
of the Obligors under the Subject Program Contracts and all property which is
the subject of such Liens;
(e) All now existing and hereafter arising rights of the Company
against vendors of the properties which are covered by Subject Program
Contracts;
(f) Account No. 0493-24551 maintained at Sanwa Bank California and any
and all funds at any time held therein;
(g) All now existing and hereafter acquired books and records relating
to the foregoing Collateral and all equipment containing such books and records
(including, without limitation, computer data and storage media); and
(h) All products and all Proceeds of any of the foregoing.
2
4. Representations and Warranties. In addition to all representations and
------------------------------
warranties of the Company set forth in the Loan Documents, which are
incorporated herein by the reference, the Company hereby represents and warrants
that:
(a) The Company is the sole owner of and has good and marketable title
to the Collateral (or, in the case of after-acquired Collateral, at the time the
Company acquires rights in the Collateral, will be the sole owner thereof);
(b) No person has (or, in the case of after-acquired Collateral, at the
time the Company acquires rights therein, will have) any right, title, claim or
interest (by way of security interest or other lien or charge) in, against or
to the Collateral;
(c) All information heretofore, herein or hereafter supplied to the
Agent or any Lender by or on behalf of the Company with respect to the
Collateral is or will be accurate and complete; and
(d) The Company has delivered to the Agent all instruments, chattel
paper and other items of Collateral in which a security interest is or may be
perfected by possession, together with such additional writings, including,
without limitation, assignments, with respect thereto as are deemed necessary by
the Agent to perfect the security interest granted hereunder therein.
(e) There exists only one executed original for each document,
instrument or agreement in connection with the Subject Program Contracts
delivered by the Company to the Agent.
5. Convenants and Agreements of the Company. In addition to all covenants
----------------------------------------
and agreements of the Company set forth in the Loan Documents, which are
incorporated herein by this reference, the Company hereby agrees:
(a) To do all acts that may be necessary to maintain, preserve and
protect the Collateral;
(b) Not to use or permit any Collateral to be used unlawfully or in
violation of any provision of this Security Agreement, any other agreement with
the Agent and/or the Lenders related hereto, or any Requirement of Law or
Contractual Obligation affecting the Collateral;
(c) To pay promptly when due all taxes, assessments, charges,
encumbrances and Liens now or hereafter imposed upon or affecting any
Collateral;
(d) To appear in and defend any action or proceeding which may affect
its title to or the Agent's interest on behalf of the Lenders in the Collateral;
(e) Not to surrender or lose possession of (other than to the Agent),
sell, encumber, lease, rent, or otherwise dispose of or transfer any Collateral
or right or interest
3
therein except as expressly provided herein and in the other Loan Documents, and
to keep the Collateral free of all levies and security interests or other Liens
or charges except those approved in writing by the Agent and the Lenders;
provided, however, that, unless an Event of Default shall have occurred and be
continuing, the Company may, in the ordinary course of business, sell or lease
any Collateral consisting of inventory and transfer funds from deposit accounts
included in the Collateral;
(f) To account fully for and promptly deliver to the Agent, in the form
received, all documents, chattel paper, instruments and agreements constituting
Collateral hereunder and all proceeds of the Collateral received, all endorsed
or assigned to the Agent or in blank, as requested by the Agent, and until so
delivered all such documents, instruments, agreements and proceeds shall be held
by the Company in trust for the Lenders, separate from all other property of the
Company.
(g) To keep separate, accurate and complete records of the Collateral
and to provide the Agent and each of the Lenders with such records and such
other reports and information relating to the Collateral as the Agent or any
Lender may reasonably require from time to time;
(h) To give the Agent thirty (30) days prior written notice of any
change in the Company's chief place of business or legal name or trade name(s)
or style(s) referred to in Paragraph 9 below;
-----------
(i) To keep the records concerning the Collateral at the location(s)
referred to in Paragraph 9 below and not to remove such records from such
-----------
location(s) without the prior written consent of the Agent;
(j) To keep the Collateral consisting of inventory at the location(s)
referred to in Paragraph 9 below prior to the sale thereof in the ordinary
-----------
course of business; and
(k) To keep the Collateral in good condition and repair and not to
cause or permit any waste or unusual or unreasonable depreciation of the
Collateral.
6. Authorized Action by Secured Party. The Company hereby agrees that
----------------------------------
from time to time, without presentment, notice or demand, and without affecting
or impairing in any way the rights of the Agent with respect to the Collateral,
the obligations of the Company hereunder or the Obligations, the Agent may, but
shall not be obligated to and shall incur no liability to the Company, any
Lender or any third party for failure to, take any action which the Company is
obligated by this Security Agreement to do and to exercise such rights and
powers as the Company might exercise with respect to the Collateral, and the
Company hereby irrevocablY appoints the Agent as its attorney-in-fact to
exercise such rights and powers, including, without limitation, to: (a) collect
by legal proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (e) insure, process
4
and preserve the Collateral; (d) transfer the Collateral to its own or its
nominee's name; (e) make any compromise or settlement, and take any action it
deems advisable, with respect to the Collateral; and (f) subject to the
provisions of Paragraph 7 below, notify any Obligor on any Collateral to make
-----------
payment directly to the Agent. The Company hereby grants to the Agent for the
benefit of the Lenders an exclusive, irrevocable power of attorney, with full
power and authority in the place and stead of the Company to take all such
action permitted under this Paragraph 6.
-----------
7. Collection of Collateral Payments.
---------------------------------
(a) The Company shall, at its sole cost and expense, endeavor to
obtain payment, when due and payable, of all sums due or to become due with
respect to any Collateral ("Collateral Payments" or a "Collateral Payment"),
including, without limitation, the taking of such action with respect thereto
as the Agent or any Lender may reasonably request, or, in the absence of such
request, as the Company may reasonably deem advisable; provided, however, that
the Company shall not, without the prior written consent of the Lenders, grant
or agree to any rebate, refund, compromise or extension with respect to any
Collateral Payment or accept any prepayment on account thereof except in the
ordinary course of business. Following the occurrence of an Event of Default,
upon the request of the Agent, the Company will notify and direct any party who
is or might become obligated to make any Collateral Payment, to make payment
thereof directly to the Agent to such account or accounts as the Agent may
designate in writing and to execute all instruments and take all action required
by the Agent to ensure the rights of the Agent for the benefit of the Lenders
in the Collateral.
(b) Upon the request of the Agent at the direction of all the Lenders,
the Company will, forthwith upon receipt, transmit and deliver to the Agent, in
the form received, all cash, checks, drafts and other instruments for the
payment of money (properly endorsed where required so that such items may be
collected by the Agent) which may be received by the Company at any time as
payment on account of any Collateral Payment and if such request shall be made,
until delivery to the Agent, such items will be held in trust for the Agent and
the Lenders and will not be commingled by the Company with any of its other
funds or property. Thereafter, the Agent is hereby authorized and empowered to
endorse the name of the Company on any check, draft or other instrument for the
payment of money received by the Agent on account of any Collateral Payment if
the Agent believes such endorsement is necessary or desirable for purpose of
collection.
(c) The Company will indemnify and save harmless the Agent from and
against all reasonable liabilities and expenses on account of any adverse claim
asserted against the Agent relating to any moneys received by the Agent on
account of any Collateral Payment and such obligation of the Company shall
continue in effect after and notwithstanding the discharge of the Obligations
and the release of the security interest granted in Paragraph 2 above.
-----------
8. Remedies. Upon the occurrence of an Event of Default the Agent shall,
--------
at the direction of all the Lenders, and without notice to or demand on the
Company and in addition
5
to all rights and remedies available to the Lenders under the Loan Documents, at
law, in equity or otherwise, do any one or more of the following:
(a) Foreclose or otherwise enforce the Agent's security interest in
any manner permitted by law, or provided for in this Security Agreement;
(b) Sell, lease or otherwise dispose of any Collateral at one or more
public or private sales at the Agent's place of business or any other place or
places, including, without limitation, any broker's board or securities
exchange, whether or not such Collateral is present at the place of sale, for
cash or credit or future delivery, on such terms and in such manner as the Agent
may determine;
(c) Recover from the Company all costs and expenses, including,
without limitation, reasonable attorneys' fees (including the allocated cost of
internal counsel), incurred or paid by the Agent or any Lender in exercising any
right, power or remedy provided by this Security Agreement;
(d) Require the Company to assemble the Collateral and make it
available to the Agent at a place to be designated by the Agent;
(e) Enter onto property where any Collateral is located and take
possession thereof with or without judicial process; and
(f) Prior to the disposition of the Collateral, store, process,
repair or recondition it or otherwise prepare it for disposition in any manner
and to the extent the Agent deems appropriate and in connection with such
preparation and disposition, without charge, use any trademark, tradename,
copyright, patent or technical process used by the Company.
The Company shall be given five (5) business days' prior notice of the
time and place of any public sale or of the time after which any private sale or
other intended disposition of Collateral is to be made, which notice the Company
hereby agrees shall be deemed reasonable notice thereof. Upon any sale or other
disposition pursuant to this Security Agreement, the Agent shall have the right
to deliver, assign and transfer to the purchaser thereof the Collateral or
portion thereof so sold or disposed of. Each purchaser at any such sale or other
disposition (including the Agent) shall hold the Collateral free from any claim
or right of whatever kind, including any equity or right of redemption of the
Company and the Company specifically waives (to the extent permitted by law) all
rights of redemption, stay or appraisal which it has or may have under any rule
of law or statute now existing or hereafter adopted.
9. Residence; Collateral Location; Records Location. The Company
------------------------------------------------
represents that its chief place of business is as set forth on Schedule 1
----------
attached hereto; that the only trade name(s) or style(s) used by the Company are
set forth on said Schedule 1; that, except as otherwise disclosed to the Agent
----------
in writing, the Company's records concerning the Collateral
6
are located at its chief place of business; and that Collateral consisting of
inventory is located at the addresses set forth in said Schedule 1.
----------
EXECUTED as of the 28th day of February, 1997.
FRANCHISE MORTGAGE ACCEPTANCE
COMPANY, L.L.C., a California limited liability
company
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
SANWA BANK CALIFORNIA, a California
banking corporation, as Agent for the benefit
of the Lenders
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
7
SCHEDULE 1
----------
to Borrower Security Agreement
CHIEF PLACE OF BUSINESS; TRADENAMES;
LOCATION OF BOOKS AND RECORDS AND INVENTORY
Chief Place of Business: Five Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Tradenames: FMAC
Imperial Golf
Location of Books and Records and Inventory: Five Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
EXHIBIT C
---------
TO CREDIT AGREEMENT
-------------------
FORM OF
-------
CONTINUING GUARANTY
THIS CONTINUING GUARANTY (the "Guaranty") is made and dated as of the
28th day of February, 1997, by IMPERIAL CREDIT INDUSTRIES, INC., a California
corporation ("Guarantor").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of February 28,
1997 (as the same may be amended, extended or replaced from time to time, the
"Credit Agreement," and with capitalized terms not otherwise defined herein used
with the meanings given such terms in the Credit Agreement) by and among
Franchise Mortgage Acceptance Company, L.L.C. (the "Company"), the Lenders party
thereto from time to time, and Sanwa Bank California, as agent for the Lenders
(in such capacity, the "Agent"), the Lenders have agreed to make Loans to the
Company on the terms and subject to the conditions set forth in the Credit
Agreement.
B. Pursuant to the Credit Agreement and as a condition precedent to the
obligation of the Lenders to make Loans thereunder, Guarantor is required to
execute and deliver this Guaranty to the Agent for the benefit of the Lenders.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees as follows:
AGREEMENT
1. Guarantor hereby irrevocably and unconditionally guarantees the
payment when due, upon maturity, acceleration or otherwise, of the Obligations,
whether heretofore, now, or hereafter made, incurred or created, whether
voluntary or involuntary and however arising, absolute or contingent, liquidated
or unliquidated, determined or undetermined, whether or not such Obligations are
from time to time reduced, or extinguished and thereafter increased or incurred,
whether the Company may be liable individually or jointly with others, whether
or not recovery upon such Obligations may be or hereafter become barred by any
statute of limitations, and whether or not such Obligations may be or hereafter
become otherwise invalid or unenforceable. This is a continuing guaranty
relating to any and all Obligations including those arising under successive
transactions which shall either continue the Obligations or from time to time
renew the same after such have been satisfied.
2. Guarantor irrevocably and unconditionally guarantees the payment of the
Obligations whether or not due or payable by the Company upon: (a) the
dissolution, insolvency or business failure of, or any assignment for benefit of
creditors by, or commencement of any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceedings by or against, the Company or
Guarantor, or (b) the appointment of a receiver for, or the attachment,
restraint of or making or levying of any order of court or legal process
affecting, the property of the Company or Guarantor, and unconditionally
promises to pay such Obligations to Agent for the benefit of Lenders, or order,
on demand, in lawful money of the United States.
3. The liability of Guarantor hereunder is exclusive and independent of
any security for or other guaranty of the Obligations, whether executed by
Guarantor or by any other party, and the liability of Guarantor hereunder is not
affected or impaired by (a) any direction of application of payment by the
Company or by any other party, or (b) any other guaranty, undertaking or maximum
liability of Guarantor or of any other party as to the Obligations, or (c) any
payment on or in reduction of any such other guaranty or undertaking, or (d) any
revocation or release of any obligations of any other guarantor of the
Obligations, or (e) any dissolution, termination or increase, decrease or change
in personnel of Guarantor, or (f) any payment made to Lenders or Agent on the
Obligations which any of such Persons repay to the Company pursuant to court
order in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and Guarantor waives any right to the deferral or
modification of Guarantor's obligations hereunder by reason of any such
proceeding.
4. (a) The obligations of Guarantor hereunder are independent of the
Obligations of the Company, and a separate action or actions may be brought and
prosecuted against Guarantor whether or not action is brought against the
Company and whether or not the Company be joined in any such action or actions.
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Company or other circumstance which operates to toll
any statute of limitations as to the Company shall operate to toll the statute
of limitations as to Guarantor.
(b) All payments made by Guarantor under this Guaranty shall be made
without set-off or counterclaim and free and clear of and without deductions for
any present or future taxes, fees, withholdings or conditions of any nature
("Taxes"). Guarantor shall pay any such Taxes, including Taxes on any amounts so
paid, and will promptly furnish each Lender with copies of any tax receipts or
such other evidence of payment as Lenders or Agent may require. Guarantor shall
not be liable for such taxes (including income taxes or franchise taxes) as are
imposed on or measured by each Lender's net income by the jurisdiction (or any
political subdivision thereof) under the laws of which such Lender is organized
or maintains a lending office.
5. Guarantor authorizes Lenders and Agent (whether or not after
termination of this Guaranty), without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to
2
(a) renew, compromise, extend, increase, accelerate or otherwise change the time
for payment of, or otherwise change the terms of, the Obligations or any part
thereof, including increase or decrease of the rate of interest thereon; (b)
take and hold security for the payment of this Guaranty or the Obligations and
exchange, enforce, waive and release any such security; (c) apply such security
and direct the order or manner of sale thereof as Lenders and Agent in their
discretion may determine; and (d) release or substitute any one or more
endorsers, guarantors, the Company or other obligors. Lenders and Agent may
without notice to or the further consent of the Company or Guarantor assign this
Guaranty in whole or in part to any person acquiring an interest in the
Obligations.
6. It is not necessary for Lenders or Agent to inquire into the capacity
or power of the Company or the officers acting or purporting to act on its
behalf, and Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
7. Guarantor waives any right to require Lenders or Agent to: (a) proceed
against the Company or any other party; (b) proceed against or exhaust any
security held from the Company; or (c) pursue any other remedy in Lenders' power
whatsoever. Guarantor waives any personal defense based on or arising out of any
personal defense of the Company other than payment in full of the Obligations,
including, without limitation, any defense based on or arising out of the
disability of the Company, or the invalidity or unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Company other than payment in full of the Obligations.
Lenders and Agent may, at their election, foreclose on any security held for the
Obligations by one or more judicial or nonjudicial sales, or exercise any other
right or remedy Lenders and Agent may have against the Company, or any security,
without affecting or impairing in any way the liability of Guarantor hereunder
except to the extent the Obligations have been paid. Guarantor waives any
defense arising out of any such election, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or other right or
remedy of Guarantor against the Company or any security. Guarantor hereby waives
any claim or other rights which Guarantor may now have or may hereafter acquire
against the Company or any other Guarantor of all or any of the Obligations that
arise from the existence or performance of Guarantor's obligations under this
Guaranty or any other of the Loan Documents (as such claims and rights being
referred to as the "Guarantor's Conditional Rights"), including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
or indemnification, or any right to participate in any claim or remedy which the
Lenders or Agent have against the Company or any collateral which the Lenders
and Agent now have or hereafter acquire for the Obligations, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, by any payment made hereunder or otherwise, including, without limitation,
the right to take or receive from the Company, directly or indirectly, in cash
or other property or setoff or in any other manner, payment or security on
account of such claim or other rights. If, notwithsanding the foregoing
provisions, any amount shall be paid to Guarantor on account of Guarantor's
Conditional Rights and either (a) such amount is paid to Guarantor at any time
when the Obligations shall not have been paid or performed in full, or (b)
regardless of when such amount is paid to Guarantor any payment made by the
Company to the Lenders or Agent is at any time determined to be a preferential
payment, then such amount paid to Guarantor shall be deemed to be held in trust
for the benefit
3
of the Lenders or Agent and shall forthwith be paid to the Lenders or Agent to
be credited and applied upon the Obligations, whether matured or unmatured, in
such order and manner as the Lenders or Agent shall determine. To the extent
that any of the provisions of this Paragraph shall not be enforceable, Guarantor
agrees that until such time as the Obligations have been paid and performed in
full and the period of time has expired during which any payment made by the
Company or Guarantor to the Lenders or Agent may be determined to be a
preferential payment, Guarantor's Conditional Rights to the extent not validly
waived shall be subordinate to the Lenders' or Agent's right to full payment and
performance of the Obligations and Guarantor shall not seek to enforce
Guarantor's Conditional Rights during such period. Guarantor waives all
presentments, demands for performance, protests and notices, including, without
limitation, notices of nonperformance, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty, and notices of the existence, creation
or incurring of new or additional Obligations. Guarantor assumes all
responsibility for being and keeping itself informed of the Company's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks
which Guarantor assumes and incurs hereunder, and agrees that neither Lenders
nor Agent shall have any duty to advise Guarantor of information known to any of
them regarding such circumstances or risks. The Agent hereby agrees to use
reasonable efforts to give a copy to Guarantor of any formal written notice to
the Company of the occurrence of an Event of Default under the Credit Agreement;
provided; however, that the failure of the Agent to provide any such notice
shall not in any manner or to any extent affect the obligations of Guarantor
hereunder.
8. In addition to the Obligations, Guarantor agrees to pay reasonable
attorneys' fees (including the allocated costs of internal counsel) and all
other costs and expenses incurred by Lenders and Agent in enforcing this
Guaranty in any action or proceeding arising out of, or relating to, this
Guaranty. This Guaranty and the liability and obligations of Guarantor hereunder
are binding upon Guarantor and its successors and assigns, and this Guaranty
inures to the benefit of and is enforceable by Lenders and Agent and their
successors, transferees, and assigns.
9. Guarantor hereby represents and warrants to the Agent and the Lenders
as follows:
(a) Guarantor: (1) is duly organized, validly existing and in good
standing as a corporation under the laws of the State of California and is
qualified to do business in each jurisdiction where its ownership of property or
conduct of business requires such qualification and where failure to qualify
would have a material adverse effect on Guarantor or its property and/or
business or on the ability of Guarantor to pay or perform the Obligations, (2)
has the corporate power and authority and the legal right to own and operate its
property and to conduct business in the manner in which it does and proposes so
to do, and (3) is in compliance with all Requirements of Law and Contractual
Obligations, the failure to comply with which could have a material adverse
effect on the business, operations, assets or financial or other condition of
Guarantor or Guarantor and its consolidated Subsidiaries taken as a whole.
(b) Guarantor has the corporate power and authority and the legal
right to execute, deliver and perform this Guaranty and has taken all necessary
corporate action to
4
authorize the execution, delivery and performance of this Guaranty. This
Guaranty has been duly executed and delivered on behalf of Guarantor and
constitutes the legal, valid and binding obligation of Guarantor enforceable
against Guarantor in accordance with its terms, subject to the effect of
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and the effect of equitable principles whether applied in an action at
law or a suit in equity.
(c) The execution, delivery and performance of this Guaranty will not
violate any Requirement of Law or any Contractual Obligation of Guarantor or
create or result in the creation of any Lien on any assets of Guarantor.
(d) No consent, approval, authorization of, or registration,
declaration or filing with any Person is required on the part of Guarantor in
connection with the execution and delivery of this Guaranty or the performance
of or compliance with the terms, provisions and conditions hereof.
10. Guarantor hereby covenants and agrees with the Agent and the Lenders
that as long as any Obligations remain unpaid or any Lender has any obligation
to make Loans under the Credit Agreement, Guarantor shall not:
(a) Permit Guarantor's consolidated Tangible Net Worth as of the last
day of any calendar quarter to be less than the sum of: (1) $180,000,000.00,
plus (2) on a cumulative basis (with no deduction for losses) for each calendar
quarter after September 30, 1996, fifty percent (50%) of Net Profit After Taxes
during such calendar quarter; or
(b) Permit Guarantor's consolidated Net Profit After Taxes for any
calendar quarter to be less than $1.00.
11. Guarantor shall furnish or cause to be furnished to the Agent and each
of the Lenders directly:
(a) Within ninety (90) days after the last day of each fiscal year of
Guarantor, consolidated and consolidating statements of income and statements of
changes in financial position of Guarantor for such year and balance sheets as
of the end of such year presented fairly in accordance with GAAP and accompanied
in each case by an unqualified report of a firm of independent certified public
accountants acceptable to the Agent and including therewith a copy of the
management letter from such certified public accountants and a certificate of
the chief financial officer of Guarantor setting forth calculations certified to
be true, complete and correct showing compliance of Guarantor with the financial
covenants set forth in Paragraph 10 above;
(b) Within sixty (60) days after the last day of each calendar
quarter of Guarantor, unaudited consolidated and consolidating statements of
income and changes in financial position for such calendar quarter and balance
sheets as of the end of such calendar quarter, accompanied in each case by a
certificate of the chief financial officer of Guarantor stating that such
financial statements are presented fairly in accordance with GAAP and setting
5
forth calculations certified to be true, complete and correct showing compliance
of Guarantor with the financial covenants set forth in Paragraph 10 above; and
(c) Promptly upon the filing or sending thereof, copies of all proxy
statements, financial statements and reports which Guarantor sends to its
stockholders, and copies of all regular, periodic and special reports, and all
registration statements under the Securities Act of 1933, as amended (the
"Act"), which Guarantor files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange; provided, however, that there shall not be required to be
delivered hereunder to any Lender copies of prospectuses relating to future
series of offerings under registration statements filed under Rule 415 of the
Act or other items which such Lender has indicated in writing to Guarantor from
time to time need not be delivered to such Lender.
12. No right or power of Lenders or Agent hereunder shall be deemed to
have been waived by any act or conduct on the part of such Persons, or by any
neglect to exercise such right or power, or by any delay in so doing; and every
right or power shall continue in full force and effect until specifically waived
or released by an instrument in writing executed by Lenders and Agent.
13. Guarantor agrees to execute any and all further documents, instruments
and agreements as Agent from time to time reasonably requests to evidence
Guarantor's obligations hereunder.
14. This Guaranty shall be deemed to be made under and shall be governed
by the laws of the State of California.
15. If any of the provisions of this Guaranty shall contravene or be held
invalid under the laws of any jurisdiction, this Guaranty shall be construed as
if not containing those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
16. Neither this Guaranty nor any provision hereof may be amended,
modified, waived, discharged, or terminated except by an instrument in writing
duly signed by or on behalf of the Lenders.
17. The rights, powers and remedies of the Lenders or Agent hereunder are
cumulative and not exclusive of any other right, power, or remedy which Lender
or Agent would otherwise have.
18. All notices, requests, demands, directions, and other communications
provided for hereunder must be in writing and must be personally delivered, sent
by overnight courier or mailed to Guarantor at the address set forth on the
signature page of this Guaranty or at any other address as may be designated by
Guarantor in a written notice sent to Agent in accordance with the Credit
Agreement. Any notice, request, demand, direction, or other communication given
by mail will be deemed effective on the third calendar day after deposited in
the United States mails
6
with first class postage prepaid, on the next business day after deposited with
a reputable overnight courier, or when delivered if given by personal delivery.
Executed as of the day and year first above written.
IMPERIAL CREDIT INDUSTRIES, INC., a California
corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address: 23550 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
7
EXHIBIT D
---------
TO CREDIT AGREEMENT
-------------------
SUBORDINATION AGREEMENT
-----------------------
THIS SUBORDINATION AGREEMENT is made and dated as of the 28th day of
February, 1997 by and among FRANCHISE MORTGAGE ACCEPTANCE COMPANY, L.L.C., a
limited liability company organized under the laws of the State of California
(the "Company"), IMPERIAL CREDIT INDUSTRIES, INC., a California corporation (the
"Creditor"), and SANWA BANK CALIFORNIA, as Agent for the LENDERS participating
in (and as the term "Lenders" and capitalized terms not otherwise defined herein
are defined in) that certain Credit Agreement dated as of February 28, 1997 (as
the same may be amended, extended and replaced from time to time, the "Credit
Agreement") (in such capacity, the "Agent").
RECITALS
--------
Lenders have agreed to extend credit to the Company pursuant to the terms
and subject to the conditions set forth in the Credit Agreement, including,
without limitation, the condition that Creditor execute and deliver to Lenders a
continuing guaranty of the Obligations of Company to Lenders under the Credit
Agreement and this Subordination Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
---------
1. Creditor has extended and will in the future extend credit to Company
from time to time. The principal of all now existing and hereafter arising
indebtedness of Company to Creditor together with accrued but unpaid interest
thereon is hereinafter referred to as "the Claim."
2. Creditor is the sole and absolute owner of the Claim and has not sold,
assigned, transferred or otherwise disposed of any right it may have to
repayment of the Claim or any security therefor.
3. The Claim and all rights and remedies of Creditor with respect thereto
and any lien securing payment thereof are and shall continue to be subject,
subordinate and rendered junior in the right of payment to the Obligations, as
the same may be extended, amended or replaced from time to time; provided,
however, that unless and until there shall occur an Event of Default or
Potential Default Borrower may make and Creditor may receive payments on account
of the Claim made in the normal course of Borrower's business.
4. Unless and until the Obligations shall have been fully paid and
discharged and any agreement by Lenders to make further loans or advances to
Company shall have terminated, except as expressly permitted pursuant to
Paragraph 3 above:
1
(a) Company will not make or give, and Creditor will not receive,
directly or indirectly, any payment, advance, credit or further security of any
kind whatsoever on account of the Claim, or any new or further evidence thereof;
(b) Creditor will not sell, assign, transfer or endorse the Claim or
any part or evidence thereof;
(c) Creditor will pay to Agent for the benefit of the Lenders
promptly upon receipt, for application against the Obligations, any and all
amounts which may be received by Creditor on account of the Claim; and
(d) Creditor will not take, or permit any action to be taken, to
assert, collect or enforce the Claim or any part thereof.
5. Each of Company and Creditor waives notice of acceptance of this
Subordination Agreement by Lenders and Agent, and Creditor waives notice of and
consent to the making, among and terms of any loan or loans which Lenders may
from time to time make to Company and any renewal or extension thereof and any
action which Lenders or Agent in their sole and absolute discretion may take or
omit to take with respect thereto.
6. This Subordination Agreement shall constitute a continuing agreement
of subordination and Lenders may, from time to time and without notice to
Creditor, lend money to or make other financial arrangements with Company in
reliance hereon until written notice of termination shall be delivered by
Creditor to Agent and Lenders by certified mail, return receipt requested. The
receipt by Agent and Lenders of such notice shall not affect this Subordination
Agreement as it relates to any Obligations then existing, to any Obligations
incurred thereafter pursuant to a previous commitment by Lenders or to any
amendments to, or extensions or renewals of, any such Obligations.
7. In the event of a default in the performance or observance of any of
the foregoing, the Obligations shall forthwith become due and payable at the
election of Agent and Lenders, without presentment, demand or notice of any
kind, all of which are hereby waived.
8. Creditor agrees as follows:
(a) Upon any distribution of all of the assets of Company to
creditors of Company upon the dissolution, winding up, liquidation, arrangement,
or reorganization of Company, whether in any bankruptcy, insolvency,
arrangement, reorganization or receivership proceeding or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of Company or otherwise, any payment or distribution of any kind (whether in
cash, property or securities) which otherwise would be payable or deliverable
upon or with respect to the Claim shall be paid or delivered directly to Agent
for the benefit of Lenders for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for, the payment or
prepayment of the Obligations until the Obligations shall have been paid in
full.
2
(b) If any proceeding referred to in subsection (a) above is
commenced by or against Company:
(1) Agent and Lenders is hereby irrevocably authorized and
empowered (in their own name or in the name of Creditor or otherwise), but shall
have no obligation, to demand, xxx for, collect and receive every payment or
distribution referred to in subsection (a) above and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the Claim or enforcing any security interest or other
lien securing payment of the Claim) as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of Lenders
hereunder; and
(2) Creditor shall duly and promptly take such action as Agent
or Lenders may request (i) to collect the Claim for account of Lenders and to
file appropriate claims or proofs of claim in respect of the Claim, (ii) to
execute and deliver to Agent and Lenders such powers of attorney, assignments,
or other instruments as it may request in order to enable it to enforce any and
all claims with respect to, and any security interests and other liens securing
payment of, the Claim, and (iii) to collect and receive any and all payments or
distributions which may be payable or deliverable upon or with respect to the
Claim.
(c) All payments or distributions upon or with respect to the Claim
which are received by Creditor contrary to the provisions of this Subordination
Agreement shall be received in trust for the benefit of Lenders, shall be
segregated from other funds and property held by Creditor and shall be forthwith
paid over to Agent for the benefit of Lenders in the same form as so received
(with any necessary endorsement) to be applied (in the case of cash) to, or held
as collateral (in the case of non-cash property or securities) for, the payment
or prepayment of the Obligations.
(d) Agent and Lenders are hereby authorized to demand specific
performance of this Subordination Agreement, whether or not the Company shall
have complied with any or all of the provisions hereof applicable to it, at any
time when the Creditor shall have failed to comply with any of the provisions of
this Subordination Agreement applicable to it.
9. It is the intent of Creditor to create by this Subordination Agreement
a security interest in favor of Agent for the benefit of Lenders in the Claim
and in Creditor's other rights to receive money or other property from Company,
whether such rights shall constitute accounts, contract rights, chattel paper,
instruments, general intangibles or otherwise. Creditor hereby grants to Agent
for the benefit of Lenders a security interest in the Claim in order to secure
the payment and performance of the Creditor's obligations pursuant to this
Subordination Agreement.
10. Creditor authorizes Agent and Lenders (whether or not after revocation
of this Subordination Agreement), without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing Creditor's obligations hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Obligations or any part
thereof, including without limitation to increase or decrease the rate of
interest thereon;
3
(b) take and hold security for the payment of the Obligations and exchange,
enforce, waive and release any such security; (c) apply such security and
direct the order or manner of sale thereof as Agent and Lenders in their sole
discretion may determine; and (d) release and substitute any one or more
endorsers, warrantors, Company or other obligor. Agent and Lenders may without
notice assign this Subordination Agreement in whole or in part.
11. This Subordination Agreement shall extend to and be
binding upon the successors and assigns of each of the parties hereto.
12. This Subordination Agreement may be executed in any
number of counterparts all of which taken together shall constitute one
agreement and any party hereto may execute this Subordination agreement by
signing any such counterpart.
FRANCHISE MORTGAGE ACCEPTANCE
COMPANY, L.L.C., a California limited liability
company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SANWA BANK CALIFORNIA, a California
banking corporation, as Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IMPERIAL CREDIT INDUSTRIES, INC., a
California corporation, as Creditor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
4
EXHIBIT E-1
-----------
TO CREDIT AGREEMENT
-------------------
FORM OF
OFFICER'S CERTIFICATE
---------------------
I,_________________, the duly appointed and acting Chief Financial
Officer of FRANCHISE MORTGAGE ACCEPTANCE COMPANY, L.L.C., a limited liability
company organized under the laws of the State of California (the "Company"), DO
HEREBY CERTIFY, to the best of my knowledge in the reasonable conduct of my
duties, as follows:
1. The representations and warranties set forth in Paragraph 5 of that
certain Credit Agreement, dated as of February 28, 1997, among the Company,
SANWA BANK CALIFORNIA, as Agent, and the Lenders named therein (the
"Agreement") and Paragraph 4 of the Security Agreement referred to therein,
are accurate and complete on and as of the date hereof with the same effect as
though such representations and warranties had been made on and as of the date
hereof.
2. The Company is in compliance with all the terms and provisions set
forth in the Agreement on its part to be observed and performed, and no Event
of Default or Potential Default (as those terms are defined in the Agreement)
has occurred and is continuing.
3. The calculations attached hereto showing the Company's compliance
with the financial covenants set forth in Paragraphs 7(i) through 7(l) of the
Agreement are true, accurate and complete in all respects and were prepared in
accordance with GAAP.
IN WITNESS WHEREOF, the undersigned has hereunto signed his name this
___ day of _______, 1997.
-----------------------------------
Name: Illegible signature
------------------------------
Title:
-----------------------------
1
EXHIBIT E-2
-----------
TO CREDIT AGREEMENT
-------------------
FORM OF
OFFICER'S CERTIFICATE
---------------------
I, _________________, the duly appointed and acting Chief Financial
Officer of IMPERIAL CREDIT INDUSTRIES, INC., a California corporation (the
"Guarantor"), DO HEREBY CERTIFY, to the best of my knowledge in the reasonable
conduct of my duties, as follows:
1. The representations and warranties set forth in Paragraph 9 of that
certain Continuing Guaranty, dated as of February 28, 1997, executed by the
Guarantor in favor of SANWA BANK CALIFORNIA, as Agent, and the Lenders named
therein (the "Guaranty") are accurate and complete on and as of the date hereof
with the same effect as though such representations and warranties had been made
on and as of the date hereof.
2. The Guarantor is in compliance with all the terms and provisions set
forth in the Guaranty on its part to be observed and performed.
3. The calculations attached hereto showing the Guarantor's compliance
with the financial covenants set forth in Paragraph 10 of the Guaranty are true,
accurate and complete in all respects and were prepared in accordance with GAAP.
IN WITNESS WHEREOF, the undersigned has hereunto signed his name this
_____day of _____, 1997.
------------------------------------
Name:
-------------------------------
Title:
------------------------------
1
EXHIBIT F
---------
TO CREDIT AGREEMENT
-------------------
LITIGATION SCHEDULE
Noblestar Systems Corp. v. FMAC and Imperial Credit Industries, Inc.
--------------------------------------------------------------------
Noblestar filed the case in September 1996 in the United States District Court
for the District of Connecticut. The suit arises out of a contract between FMAC
and Noblestar for a computerized information and servicing system for processing
and servicing franchise loans. Noblestar alleges breach of contract and seeks
$211,000 in compensatory damages and punitive damages under the Connecticut
Uniform Trade Practices Act. FAMC has answered, denying any debt to Noblestar
and counterclaimed for $122,000 for breach of contract. No discovery has taken
place and any assessment at this point concerning the outcome of the case is
premature. The parties have agreed to engage in a one-day mediation with a
retired magistrate of the Connecticut District Court in an attempt to settle the
matter. The mediation is tentatively scheduled for mid-March and, in the
meantime, discovery is on hold.
EXHIBIT G
---------
TO CREDIT AGREEMENT
-------------------
SCHEDULE OF SUBSIDIARIES
1. Franchise Equity Fund, L.L.C., a Delaware limited liability company having
a registered office in the State of Delaware, as follows:
Franchise Equity Fund, L.L.C.
c/o National Corporate Research, Ltd.
0 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxx Xxxxxx, XX 00000
2. CVB, L.L.C., a Delaware limited liability company having a registered office
in the State of Delaware, as follows:
CVB, L.L.C.
c/o National Corporate Research, Ltd.
0 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxx Xxxxxx, XX 00000
The members of each of the above entities are the same: 99% to FMAC, 0.67% to
Imperial Credit Industries, Inc., and 0.33% to Xxx Xxxxx.
EXHIBIT H
---------
TO CREDIT AGREEMENT
-------------------
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (the "Assignment Agreement") is
made and dated as of _____________, 19__, between ____________________________
(the "Assignor") and _____________________(the "Assignee"). The parties hereto
agree as follows:
1. The Assignor is a Lender under that certain Credit Agreement dated as
of February 28, 1997 (as amended, extended and restated from time to time, the
"Credit Agreement," and with capitalized terms used herein and not otherwise
defined herein used with the same meanings attributed to them in the Credit
Agreement).
2. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, a portion of the Obligations
held by the Assignor consistent with the commitment schedule attached hereto as
Schedule I.
----------
3. By executing this Assignment Agreement in the space provided below, the
Company and the Agent approve the inclusion of the Assignee as a Lender under
the Credit Agreement and agree with the Assignor and the Assignee that the
effective date therfor shall be _______________,199__ (the "Effective Date").
4. On and after the Effective Date: (a) the Assignee shall have the rights
and obligations of a Lender under the Credit Agreement and the other Loan
Documents with respect to the rights and obligations assigned to the Assignee
hereunder arising on and after such Effective Date, and (b) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Credit Agreement and the other Loan Documents with respect to the rights and
obligations assigned to Assignee hereunder arising prior to such Effective Date.
5. The Assignee shall be entitled to receive from the Agent all payments
of principal, interest and fees with respect to the interest assigned hereby
accruing on and after such Effective Date. In the event that either the
Assignee or the Assignor receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
6. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim. It is understood and agreed
that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation of warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for: (a) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Documents, (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of the Company,
(d) the performance of or compliance with any of the terms or provisions of any
of the Loan Documents, (e) inspecting any of the property, books or records of
the Company, (f) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Obligations or (g) any mistake, error of judgment, or action taken or omitted to
be taken in connection with the Loan Documents.
7. The Assignee: (a) confirms that it has received a copy of the Loan
Documents, together with copies of any financial statements requested by the
Assignee and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment
Agreement, (b) agrees that it will, independently and without reliance upon the
Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, (c)
appoints and authorizes the Agent to take such actions as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms thereof on the terms set forth therein, including, without
limitation, the terms set forth in Paragraph 9 of the Credit Agreement entitled
"The Agent," (d) agrees that on and after the Effective Date it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender, and (c) agrees
that its payment instructions and notice instructions are as set forth in
Schedule II attached hereto.
-----------
8. The Assignee agrees to indemnify and hold harmless the Assignor against
any and all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment Agreement.
9. This Assignment Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
10. This Assignment Agreement shall be deemed to be a contract made under
the laws of the State of California and for all purposes shall be construed in
accordance with the laws of said State, without regard to principles of
conflicts of law.
11. Notices shall be given under this Assignment Agreement in the manner
set forth in the Credit Agreement. For the purpose hereof and of the Loan
Documents, the address of the Assignee (until notice of a change is delivered
pursuant to the provisions of the Credit Agreement) shall be the address set
forth beneath the Assignee's signature below.
2
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By:
------------------------
Name:
------------------------
Title:
------------------------
[NAME OF ASSIGNEE]
By:
------------------------
Name:
------------------------
Title:
------------------------
Address:
-----------------------
-----------------------
-----------------------
Attn:
------------------
ACKNOWLEDGED AND AGREED TO
this ___ day of _________, 199_:
SANWA BANK CALIFORNIA,
as Agent
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
FRANCHISE MORTGAGE ACCEPTANCE COMPANY, L.L.C.,
a ___________ limited liability company
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
3
SCHEDULE I
----------
COMMITMENT SCHEDULE
4
SCHEDULE II
-----------
PAYMENT AND NOTICE INSTRUCTIONS
5
EXHIBIT 1
---------
TO CREDIT AGREEMENT
-------------------
PERMITTED OTHER DEBT
LENDER COMMITMENT AMOUNT EXPIRATION DATE
------ ----------------- ---------------
C.S. First Boston $200,000,000 December 31, 1997
Banco Santander $ 50,000,000 December 31, 1997
Greenwich Financial $ 33,766,000 30 days on demand
Capital Products, Inc.
In addition to the above outstanding warehouse facilities, FMAC is nearing
completion of a warehouse facility with KeyCorp in amount of $125,000,000, which
would be an additional warehouse line for franchise loans and golf course loans
made by FMAC. Finally, a $20,000,000 warehouse facility for franchise loans and
leases is being negotiated with Bank of Boston.
EXHIBIT J
---------
TO CREDIT AGREEMENT
-------------------
REQUIRED DOCUMENTS
With respect to any Equipment Lease:
1. Copy of the written master lease agreement between the Company and the
Obligor thereunder, and the original of any amendment, addendum or supplement
thereto or extension thereof, and the original of any document (including,
without limitation, any receipt) executed in connection with such amendment,
addendum, supplement or extension; and
2. Filed and stamped acknowledgement copy of the financing statement(s) covering
the property or properties subject to such Equipment Lease filed in each
jurisdiction where such filing is required to perfect the relevant security
interest, naming the Agent (for the benefit of the Lenders) as the secured
party and the Obligor under such Equipment Lease as the debtor, and any
amendments or supplements thereto or extensions thereof; or
3. In lieu of item 2 above, (a) filed and stamped acknowledgement copy of the
financing statement(s) covering the property or properties subject to such
Equipment Lease filed in each jurisdiction where such filing is required to
perfect the relevant security interest, naming the Company as the secured
party and the Obligor under such Employment Lease as the debtor, and any
amendments or supplements thereto or extensions thereof, and (b) executed
assignment of each such financing statement by the Company to the Agent for
the benefit of the lenders for each applicable jurisdiction.
With respect to any Equipment Sale Contract:
1. The original written agreement for the sale of equipment between the Company
and the Obligor thereunder, and any amendments or supplements thereto or
extensions thereof; and
2. The original promissory note evidencing such Obligor's agreement to pay for
such equipment; and
3. The original security agreement covering the subject equipment as collateral
security for such promissory note; and
4. Filed and stamped acknowledgment copy of the financing statement(s) covering
the property or properties subject to such Equipment Sale Contract field in
each
jurisdiction where such filing is required to perfect the relevant security
interest, naming the Agent (for the benefit of the Lenders) as the secured
party and the Obligor under such Equipment Sale Contract as the debtor, and
any amendments or supplements thereto or extensions thereof; or
5. In lieu of item 4 above, (a) filed and stamped acknowledgement copy of the
financing statement(s) covering the property or properties subject to such
Equipment Sale Contract filed in each jurisdiction where such filing is
required to perfect the relevant security interest, naming the Company as the
secured party and the Obligor under such Equipment Sale Contract as the
debtor, and any amendments or supplements thereto or extensions thereof, and
(b) executed assignment of each such financing statement by the Company to
the Agent for the benefit of the Lenders for each applicable jurisdiction.
EXHIBIT K
---------
TO CREDIT AGREEMENT
-------------------
UNDERWRITING GUIDELINES
[To come from the Company]
SCHEDULE 1
----------
TO CREDIT AGREEMENT
-------------------
SCHEDULE OF ADDRESSES FOR NOTICE PURPOSES
(As at February 28, 1997)
COMPANY: Franchise Mortgage Acceptance Company, L.L.C.
Five Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
AGENT: Sanwa Bank California
000 Xxxxx Xxxxxxxx Xxxxxx, X0-00
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
LENDERS: Sanwa Bank California
000 Xxxxx Xxxxxxxx Xxxxxx, X0-00
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X Xxxxx, Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE 2
----------
TO CREDIT AGREEMENT
-------------------
SCHEDULE TO PERCENTAGE SHARES
(As of February 28, 1997)
LENDER PERCENTAGE SHARE
------ ----------------
Sanwa Bank California 100%
SECURITY AND COLLATERAL AGENCY AGREEMENT
----------------------------------------
THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (the "Security Agreement") is
made and dated this 28th day of February, 1997 by and between FRANCHISE MORTGAGE
ACCEPTANCE COMPANY, L.L.C., a limited liability company organized under the laws
of the State of California (the "Company"), and SANWA BANK CALIFORNIA, acting in
its capacity as Agent for the Lenders participating in (and as the terms
"Agent," "Lenders" and capitalized terms not otherwise defined herein are
defined in) that certain Credit Agreement dated as of February 28, 1997 by and
among the Company, the Agent and the Lenders (as the same may be amended,
extended and replaced from time to time, the "Credit Agreement").
RECITALS
--------
A. Pursuant to the Credit Agreement the Lenders have agreed to extend
credit to the Company on the terms and subject to the conditions set forth in
therein and in the other Loan Documents.
B. As a condition precedent to the agreement of the Lenders to enter into
the Credit Agreement and to make Loans thereunder, the Company is required to
execute and deliver to the Agent for the benefit of the Lenders this Security
Agreement.
NOW THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
---------
1. Appointment. By executing a copy of or otherwise becoming a "Lender"
-----------
under the Credit Agreement, each Lender shall automatically be deemed to appoint
the Agent to act as secured party, agent, custodian and bailee for the exclusive
benefit of Lenders with respect to the Collateral (as defined in Paragraph 2
-----------
below). The Agent hereby accepts such appointment and agrees to maintain and
hold all Collateral as secured party, agent, custodian and bailee for the
exclusive benefit of Lenders. The Agent agrees to act in accordance with this
Security Agreement and acknowledges and agrees that the Agent is not, and shall
not at any time in the future be, subject, with respect to the Collateral, in
any manner or to any extent, to the direction or control of the Company except
as expressly permitted hereunder and under the other Loan Documents.
2. Grant of Security Interest. The Company hereby pledges, mortgages,
--------------------------
assigns and grants to the Agent for the equal, ratable benefit of the Lenders in
accordance with their respective Percentage Shares, and to the Lenders, a first
priority perfected security interest in the property described in Paragraph 3
-----------
below (collectively and severally, the "Collateral") to secure payment and
performance of the Obligations.
3. Collateral. The Collateral shall consist of all now existing and
----------
hereafter arising right, title and interest of the Company in each of the
following:
(a) All Program Contracts, now existing and hereafter arising, the
Required Documents for which have been delivered to the Agent or which are
otherwise included in the calculation of the Aggregate Collateral Value of the
Borrowing Base ("Subject Program Contracts"), including, without limitation, all
Equipment Leases and Equipment Sales Contracts and the documents, instruments
and agreements evidencing the same, as the same may be amended, extended or
replaced from time to time;
(b) All now existing and hereafter arising rights to payment under or
with respect to the Subject Program Contracts, including, without limitation,
all rental and lease payments, sales payments, early termination payments,
casualty loss payments and indemnity payments, whether payable by the Obligors
under such Subject Program Contracts or by third parties, including, without
limitation under policies of insurance and guaranties;
(c) All now existing and hereafter acquired inventory of the Company
which at any time is covered by a Subject Program Contract and all additions and
accessions thereto and replacements therefor and all rights of the Company in
the personal property which is at any time covered by a Subject Program Contract
which property does not constitute inventory of the Company and all additions
and accessions thereto;
(d) All Liens, including, without limitation, consentual security
interests, on personal property (tangible and intangible) now existing or
hereafter arising held by the Company as collateral security for the obligations
of the Obligors under the Subject Program Contracts and all property which is
the subject of such Liens;
(e) All now existing and hereafter arising rights of the Company
against vendors of the properties which are covered by Subject Program
Contracts;
(f) Account No. 0493-24551 maintained at Sanwa Bank California and any
and all funds at any time held therein;
(g) All now existing and hereafter acquired books and records relating
to the foregoing Collateral and all equipment containing such books and records
(including, without limitation, computer data and storage media); and
(h) All products and all Proceeds of any of the foregoing.
4. Representations and Warranties. In addition to all representations
------------------------------
and warranties of the Company set forth in the Loan Documents, which are
incorporated herein by this reference, the Company hereby represents and
warrants that:
(a) The Company is the sole owner of and has good and marketable title
to the Collateral (or, in the case of after-acquired Collateral, at the time the
Company acquires rights in the Collateral, will be the sole owner thereof);
(b) No person has (or, in the case of after-acquired Collateral, at
the time the Company acquires rights therein, will have) any right, title, claim
or interest (by way of security interest or other lien or charge) in, against or
to the Collateral;
(c) All information heretofore, herein or hereafter supplied to the
Agent or any Lender by or on behalf of the Company with respect to the
Collateral is or will be accurate and complete; and
(d) The Company has delivered to the Agent all instruments, chattel
paper and other items of Collateral in which a security interest is or may be
perfected by possession, together with such additional writings, including,
without limitation, assignments, with respect thereto as are deemed necessary by
the Agent to perfect the security interest granted hereunder therein.
(e) There exists only one executed original for each document,
instrument or agreement in connection with the Subject Program Contracts
delivered by the Company to the Agent.
5. Covenants and Agreements of the Company. In addition to all covenants
---------------------------------------
and agreements of the Company set forth in the Loan Documents, which are
incorporated herein by this reference, the Company hereby agrees:
(a) To do all acts that may be necessary to maintain, preserve and
protect the Collateral;
(b) Not to use or permit any Collateral to be used unlawfully or in
violation of any provision of this Security Agreement, any other agreement with
the Agent and/or the Lenders related hereto, or any Requirement of Law or
Contractual Obligation affecting the Collateral;
(c) To pay promptly when due all taxes, assessments, charges,
encumbrances and Liens now or hereafter imposed upon or affecting any
Collateral;
(d) To appear in and defend any action or proceeding which may affect
its title to or the Agent's interest on behalf of the Lenders in the Collateral;
(e) Not to surrender or lose possession of (other than to the Agent),
sell, encumber, lease, rent, or otherwise dispose of or transfer any Collateral
or right or interest therein except as expressly provided herein and in the
other Loan Documents, and to keep the Collateral free of all levies and security
interests or other Liens or charges except those approved in writing by the
Agent and the Lenders; provided, however, that, unless an Event of Default shall
have occurred and be continuing, the Company may, in the ordinary course of
business, sell or lease any Collateral consisting of inventory and transfer
funds from deposit accounts included in the Collateral;
3
(f) To account fully for and promptly deliver to the Agent, in the
form received, all documents, chattel paper, instruments and agreements
constituting Collateral hereunder and all proceeds of the Collateral received,
all endorsed or assigned to the Agent or in blank, as requested by the Agent,
and until so delivered all such documents, instruments, agreements and proceeds
shall be held by the Company in trust for the Lenders, separate from all other
property of the Company;
(g) To keep separate, accurate and complete records of the Collateral
and to provide the Agent and each of the Lenders with such records and such
other reports and information relating to the Collateral as the Agent or any
Lender may reasonably request from time to time;
(h) To give the Agent thirty (30) days prior written notice of any
change in the Company's chief place of business or legal name or trade name(s)
or style(s) referred to in Paragraph 9 below;
-----------
(i) To keep the records concerning the Collateral at the location(s)
referred to in Paragraph 9 below and not to remove such records from such
-----------
location(s) without the prior written consent of the Agent;
(j) To keep the Collateral consisting of inventory at the location(s)
referred to in Paragraph 9 below prior to the sale thereof in the ordinary
-----------
course of business; and
(k) To keep the Collateral in good condition and repair and not to
cause or permit any waste or unusual or unreasonable depreciation of the
Collateral.
6. Authorized Action by Secured Party. The Company hereby agrees that
----------------------------------
from time to time, without presentment, notice or demand, and without affecting
or impairing in any way the rights of the Agent with respect to the collateral,
the obligations of the Company hereunder or the Obligations, the Agent may, but
shall not be obligated to and shall incur no liability to the Company, any
Lender or any third party for failure to, take any action which the Company is
obligated by this Security Agreement to do and to exercise such rights and
powers as the Company might exercise with respect to the Collateral, and the
Company hereby irrevocably appoints the Agent as its attorney-in-fact to
exercise such rights and powers, including, without limitation, to: (a) collect
by legal proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) insure, process and preserve the Collateral;
(d) transfer the Collateral to its own or its nominee's name; (e) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; and (f) subject to the provisions of Paragraph 7 below,
-----------
notify any Obligor on any Collateral to make payment directly to the Agent. The
Company hereby grants to the Agent for the benefit of the Lenders an exclusive,
irrevocable power of attorney, with full power and authority in the place and
stead of the Company to take all such action permitted under this Paragraph 6.
-----------
4
7. Collection of Collateral Payments.
---------------------------------
(a) The Company shall, at its sole cost and expense, endeavor to obtain
payment, when due and payable, of all sums due or to become due with respect to
any Collateral ("Collateral Payments" or a "Collateral Payment"), including,
without limitation, the taking of such action with respect thereto as the Agent
or any Lender may reasonably request, or, in the absence of such request, as the
Company may reasonably deem advisable; provided, however, that the Company shall
not, without the prior written consent of the Lenders, grant or agree to any
rebate, refund, compromise or extension with respect to any Collateral Payment
or accept any prepayment on account thereof except in the ordinary course of
business. Following the occurrence of an Event of Default, upon the request of
the Agent, the Company will notify and direct any party who is or might become
obligated to make any Collateral Payment, to make payment thereof directly to
the Agent to such account or accounts as the Agent may designate in writing and
to execute all instruments and take all action required by the Agent to ensure
the rights of the Agent for the benefit of the Lenders in the Collateral.
(b) Upon the request of the Agent at the direction of all the Lenders,
the Company will, forthwith upon receipt, transmit and deliver to the Agent, in
the form received, all cash, checks, drafts and other instruments for the
payment of money (properly endorsed where required so that such items may be
collected by the Agent) which may be received by the Company at any time as
payment on account of any Collateral Payment and if such request shall be made,
until delivery to the Agent, such items will be held in trust for the Agent and
the Lenders and will not be commingled by the Company with any of its other
funds or property. Thereafter, the Agent is hereby authorized and empowered to
endorse the name of the Company on any check, draft or other instrument for the
payment of money received by the Agent on account of any Collateral Payment if
the Agent believes such endorsement is necessary or desirable for purposes of
collection.
(c) The Company will indemnify and save harmless the Agent from and
against all reasonable liabilities and expenses on account of any adverse claim
asserted against the Agent relating to any moneys received by the Agent on
account of any Collateral Payment and such obligation of the Company shall
continue in effect after and notwithstanding the discharge of the Obligations
and the release of the security interest granted in Paragraph 2 above.
-----------
8. Remedies. Upon the occurrence of an Event of Default the Agent shall,
--------
at the direction of all the Lenders, and without notice to or demand on the
Company and in addition to all rights and remedies available to the Lenders
under the Loan Documents, at law, in equity or otherwise, do any one or more of
the following:
(a) Foreclose or otherwise enforce the Agent's security interest in
any manner permitted by law, or provided for in this Security Agreement;
(b) Sell, lease or otherwise dispose of any Collateral at one or more
public or private sales at the Agent's place of business or any other place or
places, including, without limitation, any broker's board or securities
exchange, whether or not such Collateral is
5
present at the place of sale, for cash or credit or future delivery, on such
terms and in such manner as the Agent may determine;
(c) Recover from the Company all costs and expenses, including,
without limitation, reasonable attorneys' fees (including the allocated cost of
internal counsel), incurred or paid by the Agent or any Lender in exercising
any right, power or remedy provided by this Security Agreement;
(d) Require the Company to assemble the Collateral and make it
available to the Agent at a place to be designated by the Agent;
(e) Enter onto property where any Collateral is located and take
possession thereof with or without judicial process; and
(f) Prior to the disposition of the Collateral, store, process,
repair or recondition it or otherwise prepare it for disposition in any manner
and to the extent the Agent deems appropriate and in connection with such
preparation and disposition, without charge, use any trademark, tradename,
copyright, patent or technical process used by the Company.
The Company shall be given five (5) business days' prior notice of the
time and place of any public sale or of the time after which any private sale or
other intended disposition of Collateral is to be made, which notice the Company
hereby agrees shall be deemed reasonable notice thereof. Upon any sale or other
disposition pursuant to this Security Agreement, the Agent shall have the right
to deliver, assign and transfer to the purchaser thereof the Collateral or
portion thereof so sold or disposed of. Each purchaser at any such sale or
other disposition (including the Agent) shall hold the Collateral free from any
claim or right of whatever kind, including any equity or right or redemption of
the Company and the Company specifically waives (to the extent permitted by law)
all rights of redemption, stay or appraisal which it has or may have under any
rule of law or statute now existing or hereafter adopted.
9. Residence; Collateral Location; Records Location. The Company
------------------------------------------------
represents that its chief place of business is as set forth on Schedule 1
----------
attached hereto; that the only trade name(s) or style(s) used by the Company are
set forth on said Schedule 1; that, except as otherwise disclosed to the Agent
----------
in writing, the Company's records concerning the Collateral
6
are located at its chief place of business; and that Collateral consisting of
inventory is located at the addresses set forth in said Schedule 1.
----------
EXECUTED as of the 28th day of February, 1997.
XXXXXXXX MORTGAGE ACCEPTANCE
COMPANY, L.L.C., a California limited liability
company
By: illegible signature
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SANWA BANK CALIFORNIA, a California
banking corporation, as Agent for the benefit
of the Lenders
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
7
SCHEDULE 1
----------
to Borrower Security Agreement
CHIEF PLACE OF BUSINESS; TRADENAMES;
LOCATION OF BOOKS AND RECORDS AND INVENTORY
Chief Place of Business: Five Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Tradenames: FMAC
Imperial Golf
Location of Books and Records and Inventory: Five Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
8
SUBORDINATION AGREEMENT
-----------------------
THIS SUBORDINATION AGREEMENT is made and dated as of the 28th day of
February, 1997 by and among FRANCHISE MORTGAGE ACCEPTANCE COMPANY, L.L.C., a
limited liability company organized under the laws of the State of California
(the "Company"), IMPERIAL CREDIT INDUSTRIES, INC., a California corporation (the
"Creditor"), and SANWA BANK CALIFORNIA, as Agent for the LENDERS participating
in (and as the term "Lenders" and capitalized terms not otherwise defined herein
are defined in) that certain Credit Agreement dated as of February 28, 1997 (as
the same may be amended, extended and replaced from time to time, the "Credit
Agreement")(in such capacity, the "Agent").
RECITALS
--------
Lenders have agreed to extend credit to the Company pursuant to the
terms and subject to the conditions set forth in the Credit Agreement,
including, without limitation, the condition that Creditor execute and deliver
to Lenders a continuing guaranty of the Obligations of Company to Lenders under
the Credit Agreement and this Subordination Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
---------
1. Creditor has extended and will in the future extend credit to
Company from time to time. The principal of all now existing and hereafter
arising indebtedness of Company to Creditor together with accrued but unpaid
interest thereon is hereinafter referred to as "the Claim."
2. Creditor is the sole and absolute owner of the Claim and has not
sold, assigned, transferred or otherwise disposed of any right it may have to
repayment of the Claim or any security therefor.
3. The Claim and all rights and remedies of Creditor with respect
thereto and any lien securing payment thereof are and shall continue to be
subject, subordinate and rendered junior in the right of payment to the
Obligations, as the same may be extended, amended or replaced from time to time;
provided, however, that unless and until there shall occur an Event of Default
or Potential Default Borrower may make and Creditor may receive payments on
account of the Claim made in the normal course of Borrower's business.
4. Unless and until the Obligations shall have been fully paid and
discharged and any agreement by Lenders to make further loans or advances to
Company shall have terminated, except as expressly permitted pursuant to
Paragraph 3 above:
1
(a) Company will not make or give, and Creditor will not receive,
directly or indirectly, any payment, advance, credit or further security of any
kind whatsoever on account of the Claim, or any new or further evidence thereof;
(b) Creditor will not sell, assign, transfer or endorse the Claim or
any part or evidence thereof;
(c) Creditor will pay to Agent for the benefit of the Lenders
promptly upon receipt, for application against the Obligations, any and all
amounts which may be received by Creditor on account of the Claim; and
(d) Creditor will not take, or permit any action to be taken, to
assert, collect or enforce the Claim or any part thereof.
5. Each of Company and Creditor waives notice of acceptance of this
Subordination Agreement by Lenders and Agent, and Creditor waives notice of and
consent to the making, amount and terms of any loan or loans which Lenders may
from time to time make to Company and any renewal or extension thereof and any
action which Lenders or Agent in their sole and absolute discretion may take or
omit to take with respect thereto.
6. This Subordination Agreement shall constitute a continuing agreement
of subordination and Lenders may, from time to time and without notice to
Creditor, lend money to or make other financial arrangements with Company in
reliance hereon until written notice of termination shall be delivered by
Creditor to Agent and Lenders by certified mail, return receipt requested. The
receipt by Agent and Lenders of such notice shall not affect this Subordination
Agreement as it relates to any Obligations then existing, to any Obligations
incurred thereafter pursuant to a previous commitment by Lenders or to any
amendments to, extensions or renewals of, any such Obligations.
7. In the event of a default in the performance or observance of any of
the foregoing, the Obligations shall forthwith become due and payable at the
election of Agent and Lenders, without presentment, demand or notice of any
kind, all of which are hereby waived.
8. Creditor agrees as follows:
(a) Upon any distribution of all of the assets of Company to creditors
of Company upon the dissolution, winding up, liquidation, arrangement, or
reorganization of Company, whether in any bankruptcy, insolvency, arrangement,
reorganization or receivership proceeding or upon an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of Company
or otherwise, any payment or distribution of any kind (whether in cash, property
or securities) which otherwise would be payable or deliverable upon or with
respect to the Claim shall be paid or delivered directly to Agent for the
benefit of Lenders for application (in the case of cash) to, or as collateral
(in the case of non-cash property or securities) for, the payment or prepayment
of the Obligations shall have been paid in full.
2
(b) If any proceeding referred to in subsection (a) above is
commenced by or against Company:
(1) Agent and Lenders is hereby irrevocably authorized and
empowered (in their own name or in the name of Creditor or otherwise), but shall
have no obligation, to demand, xxx for, collect and receive every payment or
distribution referred to in subsection (a) above and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the Claim or enforcing any security interest or other
lien securing payment of the Claim) as it may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of Lenders
hereunder; and
(2) Creditor shall duly and promptly take such action as Agent
or Lenders may request (i) to collect the Claim for account of Lenders and to
file appropriate claims or proofs of claim in respect of the Claim, (ii) to
execute and deliver to Agent and Lenders such powers of attorney, assignments,
or other instruments as it may request in order to enable it to enforce any and
all claims with respect to, and any security interests and other liens securing
payment of, the Claim, and (iii) to collect and receive any and all payments or
distributions which may be payable or deliverable upon or with respect to the
Claim.
(c) All payments or distributions upon or with respect to the Claim
which are received by Creditor contrary to the provisions of this Subordination
Agreement shall be received in trust for the benefit of Lenders, shall be
segregated from other funds and property held by Creditor and shall be forthwith
paid over to Agent for the benefit of Lenders in the same form as so received
(with any necessary endorsement) to be applied (in the case of cash) to, or held
as collateral (in the case of non-cash property or securities) for, the payment
or prepayment of the Obligations.
(d) Agent and Lenders are hereby authorized to demand specific
performance of this Subordination Agreement, whether or not the Company shall
have complied with any or all of the provisions hereof applicable to it, at any
time when the Creditor shall have failed to comply with any of the provisions of
this Subordination Agreement applicable to it.
9. It is the intent of Creditor to create by this Subordination Agreement
a security interest in favor of Agent for the benefit of Lenders in the Claim
and in Creditor's other rights to receive money or other property from Company,
whether such rights shall constitute accounts, contract rights, chattel paper,
instruments, general intangibles or otherwise. Creditor hereby grants to Agent
for the benefit of Lenders a security interest in the Claim in order to secure
the payment and performance of the Creditor's obligations pursuant to this
Subordination Agreement.
10. Creditor authorizes Agent and Lenders (whether or not after revocation
of this Subordination Agreement), without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing Creditor's obligations hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Obligations or any part
thereof, including without limitation to increase or decrease the rate of
interest thereon;
3
(b) take and hold security for the payment of the Obligations and exchange,
enforce, waive and release any such security; (c) apply such security and direct
the order or manner of sale thereof as Agent and Lenders in their sole
discretion may determine; and (d) release and substitute any one or more
endorsers, warrantors, Company or other obligor. Agent and Lenders may without
notice assign this Subordination Agreement in whole or in part.
11. This Subordination Agreement shall extend to and be binding upon the
successors and assigns of each of the parties hereto.
12. This Subordination Agreement may be executed in any number of
counterparts all of which taken together shall constitute one agreement and any
party hereto may execute this Subordination Agreement by signing any such
counterpart.
FRANCHISE MORTGAGE ACCEPTANCE
COMPANY, L.L.C., a California limited
liability company
By: /s/ [ILLEGIBLE SIGNATURE]
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SANWA BANK CALIFORNIA, a California
banking corporation, as Agent
By:
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
IMPERIAL CREDIT INDUSTRIES, INC., a
California corporation, as Creditor
By:
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
4
EXHIBIT B TO UCC-1
------------------
REVISED COLLATERAL DESCRIPTION
DEBTOR: FRANCHISE MORTGAGE ACCEPTANCE COMPANY, L.L.C.
SECURED PARTY: SANWA BANK CALIFORNIA, as agent
Item 4 (Collateral Description):
-------------------------------
The Collateral shall consist of all now existing and hereafter arising right,
title and interest of the Debtor in, under and to each of the following:
(a) All written leases or rental agreements entered into by Debtor in the
ordinary course of its business pursuant to which the Debtor leases equipment
included in the Debtor's inventory to the obligor thereon (which leases may be a
"true" or "operating" lease or a "financing" lease), and all written agreements
pursuant to which the Debtor in the ordinary course of its business sells
equipment included in the Debtor's inventory to the obligors thereunder
(including, without limitation, the promissory note evidencing the obligor's
agreement to pay for such equipment and a security agreement covering the
subject equipment as collateral security for such note), in each case whether
now existing or hereafter arising, the required documents for which have been
delivered to the Agent or which are otherwise identified as "Collateral" under
the Security Agreement ("Subject Program Contracts"), including, without
limitation, all the documents, instruments and agreements evidencing the same,
as the same may be amended, extended or replaced from time to time;
(b) All now existing and hereafter arising rights to payment under or with
respect to the Subject Program Contracts, including, without limitation, all
rental and lease payments, sales payments, early termination payments, casualty
loss payments and indemnity payments, whether payable by the obligors under such
Subject Program Contracts or by third parties, including, without limitation,
under policies of insurance and guaranties;
(c) All now existing and hereafter acquired inventory of the Debtor which
at any time is covered by a Subject Program Contract and all additions and
accessions thereto and replacements therefor and all rights of the Debtor in the
personal property which is at any time covered by a Subject Program Contract
which property does not constitute inventory of the Debtor and all additions and
accessions thereto;
(d) All liens, including, without limitation, consentual security
interests, on personal property (tangible or intangible) now existing or
hereafter arising held by the Debtor as collateral security for the obligations
of the obligors under the Subject Program Contract and all property which is the
subject of such liens;
(e) All now existing and hereafter arising rights of the Company against
vendors of the properties which are covered by Subject Program Contracts; and
(f) Account No. 0493-24551 maintained at Sanwa Bank California and any and
all funds at any time held therein;
(g) All now existing and hereafter acquired books and records relating to
the foregoing Collateral and all equipment containing such books and records
(including, without limitation, computer data and storage media); and
(h) All products and proceeds of any of the foregoing.
As used herein, the following capitalized terms shall have the following
meanings:
"Agent" shall mean Sanwa Bank California, as Agent under the Security
-----
Agreement, and any successor thereto.
"Security Agreement" shall mean that certain Security and Collateral Agency
------------------
Agreement dated as of February 28, 1997 by and among Debtor and Secured Party,
as the same may be amended, extended or replaced from time to time.
