EXHIBIT 99.1
SUBORDINATED DEBT FORBEARANCE AGREEMENT
This Subordinated Debt Forbearance Agreement dated as of May 14, 1998(this
"Agreement"), is between Mercury Finance Company, a Delaware corporation (the
"Company"), and Credit Suisse First Boston Management Corporation ("CS/FB"),
holder of $22,500,000 in Mercury Subordinated Notes as listed on Schedule 1
hereto (the "Subordinated Notes").
PRELIMINARY STATEMENTS:
1. CS/FB is a party to certain note agreements governing the Subordinated
Notes executed by the Company, including, without limitation, those listed on
Schedule 1, under which credit was extended to the Company (the note agreements
and the Subordinated Notes are collectively referred to herein as the
"Subordinated Debt Documents").
2. One or more defaults or events of default presently exist under the
Subordinated Debt Documents (collectively, the "Existing Events of Default")
which, subject to the terms of the Subordinated Debt Documents, entitle CS/FB to
pursue its rights and remedies with respect to such Existing Events of Default
and the Company has acknowledged that certain other events of default may occur
under the Subordinated Debt Documents during the Forbearance Period (as defined
below).
3. The Company has requested that during the Forbearance Period, CS/FB
forbear from exercising certain of its rights and remedies, as more particularly
set forth in this Agreement.
4. Subject to the terms and conditions of this Agreement, CS/FB is
willing to agree to the requested forbearance terms, as more particularly set
forth in this Agreement.
AGREEMENT:
In consideration of the premises and mutual agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties to this agreement agree as
follows:
1. DEFINED TERMS; INTERPRETATION.
1.1 DEFINITIONS. When used in this Agreement, the following terms have
the following meanings:
"Agreement" has the meaning set forth in the preamble.
"Company" has the meaning set forth in the preamble.
"Effective Date" means the date of this Agreement.
"Existing Events of Default" has the meaning set forth in the second
preliminary statement.
"Forbearance Period" means the period between the Effective Date and
the Termination Date, inclusive.
"Forbearance Period Default" means any event of default under a
Subordinated Debt Document that does not give rise to a Termination Event.
"Last Prepetition Date" means the last business day preceding the
filing of the Chapter 11 Proceedings (as defined in the Consent Agreement).
"Senior Default Notice" means a Senior Default Notice as referred to
in Section 11.4 of the Company's Senior Subordinated Note Agreements dated
as of December 1, 1989 and May 15, 1990, respectively.
"Subordinated Debt Documents" has the meaning set forth in the first
preliminary statement.
"Subsidiary" means a corporation of which the Company owns, directly
or indirectly, more than 50% of any class of securities of which the
holders are entitled to vote.
"Termination Date" means the earlier to occur of (i) 11:59(pm) central
standard time on July 15, 1998, (ii) the date the Forbearance Period is
terminated under Section 4.2 or (iii) the date a Senior Default Notice is
received by the Company.
"Termination Event" has the meaning set forth in Section 4.1.
1.2 REFERENCE TO AGREEMENTS. All references in this Agreement to other
agreements refer to such agreements as amended, restated, supplemented or
otherwise modified from time to time, unless such reference specifically states
otherwise.
1.3 INTERPRETATION.
(A) The words "hereof", "herein", "hereunder" and "hereto" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not any particular provision of this Agreement and section, subsection,
clause, exhibit and schedule references are to this Agreement, unless otherwise
specified.
(B) All terms defined in this Agreement in the singular have comparable
meanings when used in the plural and vice versa, unless otherwise specified.
2. FORBEARANCE PROVISIONS.
2.1 FORBEARANCE. During the Forbearance Period, CS/FB will forbear from
exercising any rights or remedies it may have under the Subordinated Debt
Documents, applicable law or otherwise against the Company, any Subsidiary or
their assets with respect to any Existing Event of Default and any Forbearance
Period Default.
2.2 EFFECT OF TERMINATION DATE. The Termination Date shall occur
automatically at 11:59(pm) central standard time on July 15, 1998 or pursuant to
Section 4.2 hereof. The Existing Events of Default and any Forbearance Period
Default will be deemed to exist on the Termination Date and, unless all of such
Existing Events of Default and Forbearance Period Defaults have been cured (if
curable), CS/FB may, at its option and subject to the terms of the Subordinated
Debt Documents, exercise any rights and remedies that it may have under any of
the Subordinated Debt Documents, applicable law or otherwise, all of such rights
and remedies being expressly reserved by CS/FB.
2.3 ACKNOWLEDGEMENT. THE COMPANY EXPRESSLY ACKNOWLEDGES AND AGREES THAT
THE FORBEARANCE PROVISION SET FORTH IN SECTION 2.1 IS EFFECTIVE ONLY DURING THE
FORBEARANCE PERIOD AND THAT, ON AND AFTER THE TERMINATION DATE, UNLESS ALL
EXISTING EVENTS OF DEFAULT AND ANY FORBEARANCE PERIOD DEFAULTS HAVE BEEN CURED
(IF CURABLE), THE SUBORDINATED DEBT DOCUMENTS WILL BE IN DEFAULT AND, SUBJECT TO
THE TERMS OF THE SUBORDINATED DEBT DOCUMENTS, CS/FB WILL BE FULLY ENTITLED TO
EXERCISE ANY OF ITS RIGHTS AND REMEDIES UNDER THE SUBORDINATED DEBT DOCUMENTS,
UNDER APPLICABLE LAW OR OTHERWISE. THE COMPANY UNDERSTANDS THAT CS/FB IS
EXPRESSLY RELYING ON THE TERMS OF THIS SECTION 2.3 AND WOULD NOT HAVE ENTERED
INTO THIS AGREEMENT BUT FOR THE COMPANY'S ACKNOWLEDGEMENT AND AGREEMENT IN THIS
SECTION 2.3.
2.4 NO OTHER WAIVERS OR AGREEMENTS. Except for the forbearance agreed to
herein as specifically set forth herein, CS/FB has not agreed to any waiver,
modification or amendment of the Subordinated Debt Documents, or its rights in
respect thereof and the Subordinated Debt Documents remain in full force and
effect and are the valid and binding obligations of the Company, enforceable in
accordance with their respective terms except as limited by bankruptcy,
insolvency or similar laws generally affecting the enforcement of creditors'
rights generally.
2.5 NATURE OF PAYMENTS; RESERVATION OF RIGHTS. All payments to be made by
the Company hereunder to CS/FB shall be free from any offset, defense,
recoupment or counterclaim, at law or in equity, of any kind or nature, subject
to the reservation of rights contained herein. The Company does not waive and
expressly reserves any right it may have to contest the applicable interest rate
to CS/FB, if any.
3. AGREEMENTS BY THE COMPANY.
To induce CS/FB to enter into this Agreement and to make the forbearances
as contemplated by this Agreement, the Company agrees that:
3.1 PAYMENT OF INTEREST.
(A) During the Forbearance Period, interest accrued by CS/FB on the
aggregate principal balances owing to it under the Subordinated Debt Documents
(whether or not due by reason of acceleration or otherwise) will be paid to
CS/FB by the Company on (x) May 29, 1998, (y) the earlier of the Last
Prepetition Date and June 30, 1998 and (z) the earlier of the Last Prepetition
Date and July 14, 1998 at the rate of 5.50% per annum.
(B) CS/FB expressly retains and reserves any and all of its rights against
the Company under the Subordinated Debt Documents or applicable law with respect
to interest accrued and not paid pursuant to the terms of this Agreement and/or
the Subordinated Debt Documents.
3.2 REVIVAL OF OBLIGATIONS. If all or any part of any payment on account
of the Subordinated Debt Documents or this Agreement shall be invalidated, set
aside, declared or found to be void or voidable or required to be repaid to the
issuer or to any trustee, custodian, receiver, conservator, master, liquidator
or any other person pursuant to any bankruptcy law or pursuant to any common law
or equitable cause then, to the extent of such invalidation, set aside,
voidness, voidability or required repayment, such payment shall be deemed to not
have been paid, and the obligations of the Company in respect thereof shall be
immediately and automatically revived without the necessity of any action by
CS/FB.
3.3 TOLLING. The Company agrees that any and all statute of limitations,
repose, or similar legal constraints on the time by which a claim must be filed,
a person given notice thereof, or asserted, that expire, run or lapse during the
Forbearance Period on any claims that CS/FB may have against the Company or any
other persons relating to the Company (collectively, the "Forbearance Period
Statutes of Limitation") shall be tolled during the Forbearance Period and not
expire prior to August 31, 1998. The Company waives any defense it may have
against CS/FB under the Forbearance Period Statutes of Limitation, applicable
law or otherwise solely as to the expiration, running or lapsing of the
Forbearance Period Statutes of Limitation during the Forbearance Period, so long
as CS/FB takes the action required by any applicable Forbearance Period Statute
of Limitation by no later than August 31, 1998.
4. TERMINATION EVENTS; REMEDIES.
4.1 TERMINATION EVENTS. If any of the following events ("Termination
Events") has occurred and is continuing during the Forbearance Period, CS/FB has
the rights and remedies available to it in Sections 4.2 and 4.3:
(B) the Company fails to make any payment required by this Agreement on or
before the date such payment is due;
(C) a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute
is filed by or against the Company, the Company makes an assignment
for the benefit of creditors or the Company takes any corporate action
to authorize any of the foregoing;
(D) the Company voluntarily or involuntarily dissolves or is dissolved;
and
(E) the Agreement dated as of May 14, 1998 attached hereto as ("Consent
Agreement") shall have been terminated.
4.2 TERMINATION OF THE FORBEARANCE PERIOD. Upon the occurrence of any
Termination Event and at any time after such occurrence during which a
Termination Event is continuing, CS/FB is entitled by written notice to the
Company to terminate the Forbearance Period with immediate effect unless such
Termination Event is of the type described in Section 4.1(B) or (C), in which
case the Forbearance Period automatically terminates without demand or notice of
any kind; provided, however, that any termination of the Forbearance Period
under this Section 4.2 does not terminate any other provision of this Agreement
that is not by its terms limited in application to the Forbearance Period. The
Company shall provide CS/FB with written notice of a Termination Event
immediately upon learning thereof.
4.3 CONSEQUENCES OF TERMINATION. If the Forbearance Period has been
terminated under Section 4.2, then the provisions of Section 2.2 hereof shall
apply and, subject to the terms of the Subordinated Debt Documents, CS/FB is
fully entitled to exercise any rights and remedies it may have under the
Subordinated Debt Documents, under applicable law or otherwise without regard to
any matters transpiring prior to such date of termination or the financial
condition or prospects of the Company as of such date.
5. MISCELLANEOUS.
5.1 SECTION TITLES. The preliminary statements to this Agreement (except
for definitions) and the section titles used in this Agreement are for
convenience only and do not affect the construction of this Agreement.
5.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which together constitute one instrument.
5.3 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding of the Company and CS/FB with respect to the subject matter of
this Agreement.
5.4 NOTICES. Any notice required or desired to be given or delivered
under this Agreement must be in writing and is deemed to have been validly given
or delivered (i) five days after deposit in the United States mails, with proper
postage prepaid, (ii) when sent after receipt of confirmation if sent by
telecopy or other similar facsimile transmission, (iii) one business day after
deposit with a reputable overnight courier with all charges prepaid or (iv) when
delivered, if hand delivered by messenger, all of which must be properly
addressed to the party to be notified and sent to the address or number for such
party as indicated on the signature page(s) to this Agreement or to such other
address or number as each party designates to the other in the manner prescribed
in this Section 5.4.
5.5 SUCCESSORS AND ASSIGNS. This Agreement inures to the benefit of, and
is binding upon the successors and assigns of, each of the Company and CS/FB.
In addition, CS/FB hereby agrees that, so long as this Agreement has not been
terminated, it shall not sell, transfer or assign any of its claims under any of
the Subordinated Debt Documents, or any voting interest therein, unless the
transferee thereof agrees in writing to be bound by all the terms of this
Agreement (which writing may include a trade confirmation issued by a broker or
dealer, acting as principal or as agent for the transferee, stating that such
agreement is a term of such transfer), and the CS/FB provides the Company with a
copy of such writing, in which event the Company shall be deemed to have
acknowledged that its obligations to CS/FB hereunder shall be deemed to
constitute obligations in favor of such transferee, and the Company shall
confirm that acknowledgment in writing.
5.6 GOVERNING LAW. This Agreement will be interpreted, and the rights and
liabilities of the Company and CS/FB determined, in accordance with the internal
laws of the State of Illinois.
5.7 SEVERABILITY. Wherever possible, each provision of this Agreement
will be interpreted in a manner as to be effective and valid under applicable
law. If any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision is ineffective only to the extent of such
prohibition or invalidity and the remaining provisions of this Agreement remain
unaffected and in full force and effect.
* * *
Delivered at Chicago, Illinois as of the date and year above first
mentioned.
MERCURY FINANCE COMPANY
By:__________________________
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: President
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By:__________________________
Name: Xxxxx X. Xxxxxx
Title: Managing Director
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SCHEDULE 1
Senior Subordinated Note Agreement dated as of December 1, 1989, as amended
$12,000,000 9.76% Senior Subordinated Notes, Series C, due December 15, 1997
Senior Subordinated Note Agreement dated as of May 15, 1990, as amended -
$10,500,000
10.86% Senior Subordinated Notes, Series D, due May 15, 1998
