Exhibit 10.18
FINOVA Capital Corporation
Rediscount Finance
SECOND AMENDED AND RESTATED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
Borrower: THE XXXXXXX GROUP, INC.
Address: 0000 XXXXXXXX XXXXXXX
XXXXXXXXX, XXXXX XXXXXXXX 00000
Date: JULY 29, 1996
This Second Amended and Restated Schedule to Loan and Security
Agreement ("Second Amended Schedule") is executed in conjunction with a certain
Amended and Restated Loan and Security Agreement ("Agreement"), dated March, 27,
1995, by and between FINOVA Capital Corporation, as Lender, and the above
Borrower, formerly known as X.X. Xxxxxxx & Sons, Inc., as Borrower and as an
amendment and restatement of that certain Schedule to Loan and Security
Agreement, dated March 27, 1995 and that certain First Amended and Restated
Schedule, dated February 23, 1996 (collectively referred to herein as "Prior
Schedules"). The terms and provisions of this Second Amended Schedule shall
supersede all terms and provisions contained in the Prior Schedules. All
references to Section numbers herein refer to Sections in the Agreement.
1.9.A. MAXIMUM AMOUNT OF AN ELIGIBLE RECEIVABLE (SECTION 1.9).
The term "Maximum Amount of an Eligible Receivable"
shall mean for each Receivable Category as set forth
below:
Category One (Direct Loan Receivable) - the sum of
Seven Thousand Five Hundred Dollars ($7,500.00)
remaining due thereon at any date of determination.
Category Three (Vehicle Receivable) - the sum of
Twenty Thousand Dollars ($20,000.00) remaining due
thereon at any date of determination.
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1.9.B. MAXIMUM TERM OF AN ELIGIBLE RECEIVABLE (SECTION 1.9).
The "Maximum Term of an Eligible Receivable" shall be
for each Receivable Category as set forth below:
Category One (Direct Loan Receivable) - the period of
Forty-Eight (48) months remaining until the due date
of such Eligible Receivable at any date of
determination.
Category Two (Insurance Premium Receivable) - the
period of Twelve (12) months remaining until the due
date of such Eligible Receivable at any date of
determination.
Category Three (Vehicle Receivable) - the period of
Forty-Eight (48) months remaining until the due date
of such Eligible Receivable at any date of
determination.
1.9.C. RECEIVABLE LIMITATIONS - EXPANDED (SECTION 1.9).
Notwithstanding the provisions of Section 1.9, up to
Ten percent (10%) of the aggregate dollar amount of
Eligible Receivables may be composed of Category One
Receivables (Direct Loan Receivables) and/or Category
Three (Vehicle Receivables) which exceed the Maximum
Amount of an Eligible Receivable and the Maximum Term
of an Eligible Receivable applicable to Category One
Receivables (Direct Loan Receivables) and/or Category
Three (Vehicle Receivables), provided said
Receivables satisfy all other requirements of this
Section 1.9. and the balance remaining due on any
such Receivable does not exceed Thirty Thousand
Dollars and the term remaining until the due date of
such Receivable does not exceed Sixty (60) months, at
any date of determination.
1.9.D. AGING PROCEDURES AND ELIGIBILITY TEST (SECTION 1.9).
AGING PROCEDURES FOR A CONTRACTUAL AGING FOR THE FOLLOWING RECEIVABLE
CATEGORIES:
CATEGORY ONE (DIRECT LOAN RECEIVABLES)
1. No payment missed or due = Current.
2. 1 to 30 days past due = "30 day Account".
3. 31 to 60 days past due = "60 day Account".
4. 61 to 90 days past due = "90 day Account".
5. 91 or more days past due = "90 + day Account"
CATEGORY TWO (INSURANCE PREMIUM RECEIVABLES)
1. No payment missed or due = Current.
2. 1 to 30 days past due = "30 day NC Account".
(financing contract not canceled)
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3. 31 or more days past due = "30+ day NC Account".
(financing contract not canceled)
4. 1 to 30 days past due = "30 day Canceled Account".
(financing contract canceled)
5. 31 to 60 days past due = "60 day Canceled Account".
(finance contract canceled)
6. 61 or more days past due = "60 + day Canceled Account".
(finance contract canceled)
For the purposes of the Loan Documents the cancellation of an insurance
receivable shall be immediately effective upon the effective cancellation date
of the associated insurance policy.
CATEGORY THREE (VEHICLE RECEIVABLES)
1. No payment missed or due = Current.
2. 1 to 30 days past due = "30 day Account".
3. 31 to 60 days past due = "60 day Account".
4. 61 or more days past due = "60 + day Account".
ELIGIBILITY TEST:
The term "Eligibility Test" shall mean the test to determine the eligibility of
a Receivable for the purposes of Section 1.9 hereof, that test, being as follows
for each Receivable Category:
Category One (Direct Loan Receivables)
(1) No payment due on said Receivable remains unpaid
more than ninety (90) days from the specific date on
which such payment was due pursuant to the terms of
said Receivable;
(2) If the initial advance of said Receivable was
greater than One Thousand Dollars ($1,000.00), the
payment of said Receivable shall be secured by
collateral; and
(3) If said Receivable is purchased from a third party
wherein the Borrower is or will become obligated to
such third party in conjunction with the purchase of
such Receivable through a "reserve" or other
liability arrangement, all of such third party's
rights in and to the "reserve" or other liability
shall subordinated to Lender in all respects, except
as set forth below, in a form and substance
satisfactory to Lender. This provision shall not
restrict Borrower from making a payment or payments
to a third party for a reserve or other liability
arrangement, or a part thereof, provided such payment
is then contractually due to such third party,
pursuant to a written agreement executed at or prior
to the time the respective Receivable was purchased
by Borrower, and an Event of Default does not then
exist.
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Category Two (Insurance Premium Receivables)
(1) No payment due on said Receivable remains unpaid more
than (i) thirty (30) days for Category Two
Receivables that the contractual obligation
evidencing such Receivable has not been canceled
according to the terms of such Receivable and (ii)
sixty (60) days for Category Two Receivables that the
contractual obligation evidencing such Receivable has
been canceled according to the terms of such
Receivable, from the specific date on which such
payment was due pursuant to the terms of said
Receivable.
(2) The insurance company issuing the insurance policy of
which said Receivable evidences the financing of the
payment of the premiums with respect to such
insurance policy meets one of the following criteria:
(i) rated "C+" or better pursuant to the
current edition of "Best's Key Rating Guide -
Property and Casualty" as published by the A.M.
Best Company ("A.M. Best"); or
(ii) a member of a state reinsurance facility
or shared pool.
(3) No more than twenty percent (20%) of the aggregate
outstanding balance of all Category Two Receivables
can evidence the financing of the payment of premiums
for insurance policies for any one insurance company
is not one of the following:
(i) rated "A-" or better by A.M. Best; or
(ii) a member of a state reinsurance facility or
shared pool.
Category Three (Vehicle Receivables)
(1) No payment due on said Receivable remains unpaid more
than sixty (60) days from the specific date on which
such payment was due pursuant to the terms of said
Receivable.
(2) If said Receivable is purchased from a third party
wherein the Borrower is or will become obligated to
such third party in conjunction with the purchase of
such Receivable through a "reserve" or other
liability arrangement, all of such third party's
rights in and to the "reserve" or other liability
shall subordinated to Lender in all respects, except
as set forth below, in a form and substance
satisfactory to Lender. This provision shall not
restrict Borrower from making a payment or payments
to a third party for a reserve or other liability
arrangement, or a part thereof, provided such payment
is then contractually due to such third party,
pursuant to a written agreement executed at or prior
to the time the respective Receivable was purchased
by Borrower, and an Event of Default does not then
exist.
1.27 ADDITIONAL DEFINITIONS (SECTION 1.27, 1.28, 1.29, 1.30, 1.31, 1.32, 1.33,
1.34, 1.35, 1.36, 1.37, 1.38 AND 1.39)
The following definitions are hereby added in their entirety as Section
1.27, 1.28, 1.29, 1.30, 1.31, 1.32, 1.33, 1.34, 1.35, 1.36, 1.37, 1.38 and
1.39:
" 1.27 DIRECT LOAN RECEIVABLE . The term "Direct Loan
Receivable" shall mean any Receivable of Borrower, except any
Receivable that the proceeds of such Receivable were used to
purchase a motor vehicle and such Receivable is secured by
such motor vehicle, including but not limited to vehicles
purchased from any entity affiliated, directly or indirectly,
with Borrower, or a Receivable that evidences the financing of
the payment of insurance premiums. Direct Loan Receivables
shall be deemed "Category One Receivables" herein.
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" 1.28 INSURANCE PREMIUM RECEIVABLE. The term "Insurance
Premium Receivable" shall mean a Receivable that evidences the
financing of the payment of insurance premiums. Insurance
Premium Receivables shall be deemed "Category Two Receivables"
herein.
" 1.29 VEHICLE RECEIVABLE. The term "Vehicle Receivable" shall
mean a Receivable that the proceeds of such Receivable were
used to purchase a motor vehicle and such Receivable is
secured by such motor vehicle purchase by Borrower from
unaffiliated third parties. Vehicle Receivables shall be
deemed "Category Three Receivables" herein.
" 1.30 BULK PURCHASE RESERVES. The term "Bulk Purchase
Reserves" shall mean the unearned purchase discount of a group
(more than one) of Receivables that are purchased by Borrower
with respect to such Receivables.
" 1.31 DEALER RESERVE. The term "Dealer Reserve" shall mean
the amount due to a dealer with respect to a Receivable
wherein the Borrower is or will become obligated to such
dealer in conjunction with the purchase or transfer of such
Receivable, through an agreement in writing, containing a
"reserve" or other liability arrangement between the dealer
and Borrower.
" 1.32 CHARGE OFFS. The term "Charge Offs" shall mean the
amount due (including the principal balance plus all earned
fees and charges) pursuant to a Receivable on the date that
Borrower charges off such Receivable as uncollectible,
pursuant to Borrower's policies and/or procedures.
" 1.33 COLLATERAL RECOVERY RATE. The term "Collateral Recovery
Rate" shall mean, for twelve (12) calendar months immediately
preceding any date of determination, (i) the total cash
collected from all Receivables (including but not limited to
all cash proceeds from charge off recoveries), divided by (ii)
the sum of (a) the Included Rebates plus (b) the total cash
collected from all Receivables (excluding all cash proceeds
from charge off recoveries) plus (c) the aggregate of all
Charge Offs for that period.
" 1.34 INCLUDED REBATE PERCENTAGE. The term "Included Rebate
Percentage" shall mean, for any period of determination, the
percentage determined by (i) the aggregate of all Charge Offs
for that period, divided by (ii) the Nonpayment Net Receivable
Reductions for that period.
" 1.35 INCLUDED REBATES. The term "Included Rebates" shall
mean, for any period of determination, (i) the aggregate of
all rebates of interest for that period, multiplied by (ii)
the Included Rebate Percentage.
" 1.36 NONPAYMENT NET RECEIVABLE REDUCTIONS. The term
"Nonpayment Net Receivable Reductions" shall mean, for any
period of determination, the sum of (i) the aggregate of all
Charge Offs for that period, plus (ii) the aggregate of all
net refinanced balances of a Receivable for that period.
" 1.37 TRANCHE "A" CREDIT FACILITY. The term "Tranche "A"
Credit Facility" shall mean that certain portion of the
availability of the Loan as determined pursuant to the
provision of Section 2.16 hereof.
" 1.38 TRANCHE "B" CREDIT FACILITY. The term "Tranche "B"
Credit Facility" shall mean that certain portion of the
availability of the Loan as determined pursuant to the
provision of Section 2.17 hereof.
" 1.39 CRR ADVANCE RATE. The term "CRR Advance Rate" shall
mean, on any date of determination, the Collateral Recovery
Rate percentage less fifteen percentage points (.15).
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The definitions set forth below are hereby amended in their entirety as
follows:
" 1.16 LEVERAGE RATIO. The term "Leverage Ratio" shall mean,
at any date of determination, the remainder of the total
liabilities of Borrower, including the outstanding balance of
the Indebtedness, less the outstanding balance of all
Subordinated Debt divided by the sum of the amount of
Borrower's Tangible Net Worth plus the outstanding balance of
all Subordinated Debt plus the outstanding balance of that
portion of the Indebtedness outstanding pursuant to the
Tranche "B" Credit Facility.
2.1. AMOUNT OF LOAN (SECTION 2.1)
Section 2.1, AMOUNT OF LOAN, is hereby deleted and the following is
substituted in lieu thereof:
"2.1 AMOUNT OF LOAN. Subject to the terms, covenants and
conditions hereinafter set forth, Lender agrees upon the
Borrower's request from time to time, until the Maturity Date,
to make advances to Borrower (collectively, the "Loan"), in an
aggregate amount not to exceed at any time outstanding the
lesser of the following: (a) the Amount of Revolving Credit
Line (Schedule Section 2.1.A.), (b) the sum of the Amount of
the Tranche "A" Credit Facility plus the Amount of the Tranche
"B" Credit Facility (Schedule Section 2.1.A.) or (c) the
Availability on Eligible Receivables (Schedule Section
2.1.B.). Within the limits of this Section 2.1, Borrower may
borrow, repay and reborrow the advances. The Loan is a renewal
and extension, and not an extinguishment, of the indebtedness
due to Lender by Borrower as of the date hereof. The Loan
shall be evidenced by the Note.
2.1.A. AMOUNT OF REVOLVING CREDIT LINE, AMOUNT OF THE TRANCHE "A" CREDIT
FACILITY AND AMOUNT OF THE TRANCHE "B" CREDIT FACILITY (SECTION 2.1):
The "Amount of the Revolving Credit Line" is Eighty Million
Dollars ($80,000,000.00).
The "Amount of the Tranche "A" Credit Facility" is Seventy
Million Dollars ($70,000,000.00).
The "Amount of the Tranche "B" Credit Facility" is Ten Million
Dollars ($10,000,000.00).
2.1.B. AVAILABILITY ON ELIGIBLE RECEIVABLES (SECTION 2.1):
The "Availability on Eligible Receivables" shall be the sum of
the following:
(i) with respect to the Tranche "A" Credit Facility, an amount
equal to the lesser of:
(a) eighty-five percent (85%) of the
aggregate unmatured and unpaid amount due to
Borrower from the Account Debtor named
thereon, excluding all unearned finance
charges, Bulk Purchase Reserves and Dealer
Discounts pursuant to the Eligible
Receivables, or
(b) the Amount of the Tranche "A" Credit Facility;
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(ii) with respect to the Tranche "B" Credit Facility, an
amount equal to the lesser of:
(c) one hundred percent (100%) of the
aggregate unmatured and unpaid amount due to
Borrower from the Account Debtor named
thereon, excluding all unearned finance
charges, Bulk Purchase Reserves and Dealer
Discounts pursuant to the Eligible
Receivables less the amount of the
availability for the Tranche "A" pursuant to
Schedule Section 2.1.B.(i) hereinabove; or
(d) one hundred percent (100%) of the
aggregate unmatured and unpaid amount due to
Borrower from the Account Debtor named
thereon, including all unearned finance
charges, Bulk Purchase Reserves and Dealer
Discounts pursuant to the Eligible
Receivables multiplied by the CRR Advance
Rate, less the amount of the availability
for the Tranche "A" pursuant to Schedule
Section 2.1.B.(i) hereinabove, or
(e) the Amount of the Tranche "B" Credit Facility.
2.2. STATED INTEREST RATE (SECTION 2.2).
TRANCHE "A" CREDIT FACILITY STATED INTEREST RATE
The "Tranche "A" Credit Facility Stated Interest
Rate" shall be lesser of (i) the Governing Rate plus One
percent (1.00%) per annum; or (ii) the Maximum Rate.
TRANCHE "B" CREDIT FACILITY STATED INTEREST RATE
The "Tranche "B" Credit Facility Stated Interest
Rate" shall be lesser of (i) the Governing Rate plus Five
percent (5.00%) per annum; or (ii) the Maximum Rate.
2.2.A. INTEREST RATE (SECTION 2.2)
"2.2 INTEREST RATE. The outstanding principal balance of the
Indebtedness allocated hereunder to the Tranche "A" Credit Facility
shall bear interest at the Tranche "A" Credit Facility Stated Interest
Rate (Schedule Section 2.2). The portion of the outstanding principal
balance of the Indebtedness allocated hereunder to the Tranche "B"
Credit Facility shall bear interest at the Tranche "B" Credit Facility
Stated Interest Rate (Schedule Section 2.2). If the aggregate
outstanding balance of the Indebtedness allocated to the Tranche "A"
Credit Facility is or becomes more than the Tranche "A" Credit Facility
Availability, then in that event, the amount of the balance in excess
of the Tranche "A" Credit Facility Availability shall be allocated to
the Tranche "B" Credit Facility hereunder. Each request for advance
hereunder shall set forth the most current availability calculation for
the Tranche "A" and the Tranche "B" availability and the portion of
such requested advance that is to be allocated to increase the
outstanding balance of either the Tranche "A" Credit Facility and/or
the Tranche "B" Credit Facility.
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If Lender is ever prevented from charging or collecting
interest at the rates set forth in Tranche "A" Credit Facility Stated
Interest Rate Section (i) or the Tranche "B" Credit Facility Stated
Interest Rate Section (i) because interest at such rates when applied
to the outstanding balance of the Indebtedness would exceed interest at
the Maximum Rate, then such restricted rate or rates shall continue to
be the Maximum Rate until Lender has charged and collected the full
amount of interest chargeable and collectable had interest at the rate
set forth in such Stated Interest Rate Sections (i) always been
lawfully chargeable and collectible. As the Governing Rate changes, the
rate set forth in each Stated Interest Rate Section (i) shall be
increased or decreased (subject to the Maximum Rate) on the first day
of each calendar month to correspond with the change in the Governing
Rate then in effect and shall remain fixed at such rate until the first
day of the next succeeding calendar month, notwithstanding fluctuations
in the Governing Rate during the month. All changes in the Governing
Rate shall be made without notice to Borrower. The monthly interest due
on the principal balance of the Indebtedness allocated to Tranche "A"
Credit Facility and Tranche "B" Credit Facility outstanding shall be
computed for the actual number of days elapsed during the month in
question on the basis of a year consisting of three hundred sixty (360)
days and shall be calculated by determining the average daily principal
balance outstanding allocated to the Tranche "A" Facility and the
Tranche "B" Credit Facility for each day of the month in question. The
daily rate shall be equal to 1/360th times the Stated Interest Rate
(but shall not exceed the Maximum Rate).
2.3. MATURITY DATE (SECTION 2.3.C).
The primary term of this Agreement shall expire on July 31,
1998. If Borrower desires to extend the primary term or any
term thereafter of this Agreement, Borrower shall give Lender
notice of its intent to extend the term no earlier than one
hundred and eighty (180) days and no later than one hundred
and fifty (150) days prior to any expiration date of this
Agreement. Upon the receipt by Lender of Borrower's notice to
extend the term of this Agreement, if Lender desires to renew
and extend the term of this Agreement, Lender shall give
Borrower notice of Lender's intent to extend the term of this
Agreement, within sixty (60) days of Lender's receipt of
Borrower's notice to extend. If Lender does not give Borrower
notice of Lender's intent to extend the term of this Agreement
within the sixty (60) days period, then it shall be deemed
that Lender does not intend to renew and extend the term of
this Agreement. Notwithstanding the foregoing, this Agreement
shall remain in full force and effect until the Indebtedness
due and owing to Lender has been paid in full.
2.6 VOLUNTARY PREPAYMENTS (SECTION 2.6)
Section 2.6 of the Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"2.6 VOLUNTARY PREPAYMENTS. Borrower may, at its option,
voluntarily prepay the Indebtedness in full and terminate
Lender's security interest in the Collateral hereunder at any
time, provided, however, that Borrower has given Lender ninety
(90) days written notice of any such intention to prepay the
Indebtedness in full and Borrower pays to Lender the
"Liquidated Damages" (Schedule Section 2.6) as liquidated
damages and not as a penalty for such prepayment. Borrower may
not make such prepayment prior to the expiration of such
ninety (90) day period. Upon written notice of prepayment of
the Indebtedness in full, the commitment by Lender to advance
funds to Borrower and all the obligations of Lender shall
terminate on the expiration of said ninety (90) day notice
period, and the entire amount of the Indebtedness, including
the amount of the Liquidated Damages, shall be due and payable
on such date.
The amount of "Liquidated Damages" shall be, if Borrower
notifies the Lender of Borrower's intention to pay the
Indebtedness in full and requests a termination of Borrower
security interest in the Collateral hereunder (i) on or before
July 31, 1997, the amount of "Liquidated Damages" shall be an
amount equal to one percent (1.00%) multiplied by the Amount
of the Revolving Credit Facility, or (ii) if after July 31,
1997, but on or before January 31, 1998, the amount of
"Liquidated Damages" shall be one-half percent (.50%)
multiplied by the Amount of the Revolving Credit Facility.
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2.7. MAXIMUM INTEREST; CONTROLLING AGREEMENT (SECTION 2.7)
Section 2.7 of the Agreement is hereby deleted and the following is
substituted in lieu thereof:
"2.7 MAXIMUM INTEREST; CONTROLLING AGREEMENT. If a court of
competent jurisdiction determines that the laws of any state
other than the State of Arizona apply to this Agreement then
the following paragraph A. shall be applicable to this
Agreement and paragraph 2.7.B. hereinbelow shall be of no
force or effect.
A. It is the intent of the parties hereto to conform
strictly to the usury laws in force that apply to this
transaction. Accordingly, all agreements between Lender and
Borrower, whether now existing or hereafter arising and
whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of
the maturity of the Indebtedness or otherwise, shall the
interest (and all other sums that are deemed to be interest)
contracted for, charged, received, paid or agreed to be paid
to Lender exceed interest computed at the Maximum Rate. If,
from any circumstance whatsoever, interest would otherwise be
payable to Lender in excess of interest computed at the
Maximum Rate and, if from any circumstance Lender shall ever
receive anything of value deemed interest by applicable law in
excess of interest computed at the Maximum Rate, then Lender's
receipt of the same shall be deemed unintentional, the
interest payable to Lender shall be reduced to interest
computed at the Maximum Rate; and so long as no Event of
Default shall be continuing, such excess interest received by
Lender shall, at the option of Lender, be repaid to Borrower
or credited to the unpaid principal balance of the
Indebtedness. If the Indebtedness is prepaid or the maturity
of the Indebtedness is accelerated by reason of an election of
Lender, then the unearned interest, if any, shall be canceled
and, if theretofore paid, shall be either refunded to Borrower
or credited on the Indebtedness as the Lender elects. All
interest paid or agreed to be paid to Lender shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment
in full of the principal (including the period of any renewal
and extension thereof) so that the interest so computed shall
not exceed the Maximum Rate. Notwithstanding that the parties
hereto in good xxxxx xxxx each and every fee provided by this
Agreement or paid to Lender in connection with this Agreement
to be a bona fide fee for services rendered and to be rendered
separate and apart from the lending of money or the provision
of credit, if any such fee is ever determined by a court of
competent jurisdiction or other tribunal or by Lender to
constitute interest, then the treatment of such fee for usury
purposes shall be controlled by the provisions of this Section
2.7. This paragraph shall control all agreements between
Borrower and Lender.
If a court of competent jurisdiction determines that
the laws of the State of Arizona apply to this Agreement then
the following paragraph B. shall be applicable to this
Agreement and paragraph 2.7.A. hereinabove shall be of no
force or effect.
B. The contracted for rate of interest of the Loan without
limitation, shall consist of the following: (i) the Tranche
"A" Credit Facility Stated Interest Rate and the Tranche "B"
Credit Facility Stated Interest Rate, calculated and applied
to the principal balance of the Note in accordance with the
provisions of the Note and this Agreement; (ii) all interest
after an Event of Default or due date hereof, if any,
calculated and applied to the amounts due under the Note in
accordance with the provisions thereof; and (iii) all
Additional Sums (as herein defined), if any. Borrower agrees
to pay an effective contracted for rate of interest which is
the sum of the above-referenced elements.
All fees, charges, goods, things in action or any other sums
or things of value (other than amounts described in the
immediately previous paragraph), paid or payable by Borrower
(collectively, the "Additional Sums"), whether pursuant to the
Note, this Agreement or any other documents or instruments in
any way pertaining to this lending transaction, or otherwise
with respect to this lending transaction, that under any
applicable law may be deemed to be interest with respect to
this lending transaction, for the purpose of any applicable
law that may limit the maximum amount of interest to be
charged with respect to this lending transaction, shall be
payable by Borrower as, and shall be deemed to be, additional
interest and for such purposes only, the agreed upon and
"contracted for rate of interest" of this lending transaction
shall be deemed to be increased by the rate of interest
resulting from the inclusion of the Additional Sums.
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It is the intent of the parties to comply with the usury law
("Applicable Usury Law") applicable pursuant to the terms of
the preceding paragraph or such other usury law which is
applicable if the law chosen by the parties is not applicable.
Accordingly, it is agreed that notwithstanding any provisions
to the contrary in the Loan Documents, or in any of the
documents securing payment hereof or otherwise relating
hereto, in no event shall the Loan Documents or such documents
require the payment or permit the collection of interest in
excess of the maximum contract rate permitted by the
Applicable Usury Law. In the event (a) any such excess of
interest otherwise would be contracted for, charged or
received from Borrower or otherwise in connection with the
loan evidenced hereby, or (b) the maturity of the indebtedness
evidenced by the Loan Documents is accelerated in whole or in
part, or (c) all or part of the principal or interest of the
Loan Documents shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, shared or
received in connection with the loan evidenced hereby, would
exceed the maximum contract rate permitted by the Applicable
Usury Law, then in any such event (1) the provisions of this
paragraph shall govern and control, (2) neither Borrower nor
any other person or entity now or hereafter liable for the
payment hereof will be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum
contract rate permitted by the Applicable Usury Law, (3) any
such excess which may have been collected shall be either
applied as a credit against the then unpaid principal amount
hereof or refunded to Borrower, at Lender's option, and (4)
the effective rate of interest will be automatically reduced
to the maximum amount of interest permitted by the Applicable
Usury Law. It is further agreed, without limiting the
generality of the foregoing, that to the extent permitted by
the Applicable Usury Law; (x) all calculations of interest
which are made for the purpose of determining whether such
rate would exceed the maximum contract rate permitted by the
Applicable Usury Law shall be made by amortizing, prorating,
allocating and spreading during the period of the full stated
term of the loan evidenced hereby, all interest at any time
contracted for, charged or received from Borrower or otherwise
in connection with such loan; and (y) in the event that the
effective rate of interest on the loan should at any time
exceed the maximum contract rate allowed under the Applicable
Usury Law, such excess interest that would otherwise have been
collected had there been no ceiling imposed by the Applicable
Usury Law shall be paid to Lender from time to time, if and
when the effective interest rate on the loan otherwise falls
below the maximum amount permitted by the Applicable Usury
Law, to the extent that interest paid to the date of
calculation does not exceed the maximum contract rate
permitted by the Applicable Usury Law, until the entire amount
of interest which would have otherwise been collected had
there been no ceiling imposed by the Applicable Usury Law has
been paid in full. Borrower further agrees that should the
maximum contract rate permitted by the Applicable Usury Law be
increased at any time hereafter because of a change in the
law, then to the extent not prohibited by the Applicable Usury
Law, such increases shall apply to all indebtedness evidenced
hereby regardless of when incurred; but, again to the extent
not prohibited by the Applicable Usury Law, should the maximum
contract rate permitted by the Applicable Usury Law be
decreased because of a change in the law, such decreases shall
not apply to the indebtedness evidenced hereby regardless of
when incurred.
2.15 UNUSED CREDIT LINE FEE (SECTION 2.15)
The following Section 2.15 is hereby added to the Agreement, in its
entirety:
"2.15 UNUSED CREDIT LINE FEE. Borrower hereby agrees to pay to
Lender monthly, on the fifteenth (15th) day of each month
during the term hereof, for the immediately preceding month,
an amount equal to (i) the outstanding balance of the
Indebtedness subtracted from the Amount of the Revolving
Credit Line multiplied by one-eighth percent (0.125%) per
annum (0.0104% per month)."
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2.16 TRANCHE "A" CREDIT FACILITY (SECTION 2.16)
The following Section 2.16 is hereby added to the Agreement:
"2.16 TRANCHE "A" CREDIT FACILITY. The "Tranche "A" Credit
Facility" shall be that portion of the outstanding balance of
the Indebtedness as designated by Borrower as allocated to
Tranche "A" Credit Facility, pursuant to the most current
Request for Advance Form received by Lender, up to and
including an amount, on any date of determination, equal to
the "Tranche "A" Credit Facility Availability" (Schedule
Section 2.1.B.), but shall not exceed the Amount of the
Tranche "A" Credit Facility (Schedule Section 2.1.A.).
2.17 TRANCHE "B" CREDIT FACILITY (SECTION 2.17)
The following Section 2.17 is hereby added to the Agreement:
"2.17 TRANCHE "B" CREDIT FACILITY. The "Tranche "B" Credit
Facility" shall be that portion of the outstanding balance of
the Indebtedness as designated by Borrower as allocated to
Tranche "B" Credit Facility, pursuant to the most current
Request for Advance Form received by Lender, up to and
including an amount, on any date of determination, equal to
the "Tranche "B" Credit Facility Availability" (Schedule
Section 2.1.B.), but shall not exceed the Amount of the
Tranche "B" Credit Facility (Schedule Section 2.1.A.).
3.2. BUSINESS LOCATIONS OF BORROWER (SECTIONS 3.2, 3.6 and 5.1.N.).
All locations are as set forth on a list of locations attached
hereto.
4.4. ANNUAL FINANCIAL STATEMENTS (SECTION 4.4).
Annual audited financial statements to be prepared by a
independent certified public accountant, satisfactory
to Lender.
4.5. GUARANTOR (whether one or more) (SECTION 4.5).
Xxxxx X. Xxxxxxx (Validity and Support Agreement)
5.1. BORROWER'S TRADENAMES (whether one or more)(SECTION 5.1.B.)
TICO Credit Company
Eagle Premium Finance Company
TICO Premium Finance Company
32
6.2.A. LEVERAGE RATIO LIMIT (SECTION 6.2.J).
The term "Leverage Ratio Limit" shall mean 7.00 to 1.00.
6.2.B. MINIMUM NET INCOME (SECTION 6.2.K).
The Minimum Net Income shall be One Dollar ($1.00) for any
fiscal year of Borrower.
6.2.C. DISTRIBUTIONS LIMITATION (SECTION 6.2.L).
The Distributions shall not exceed fifty percent (50%) of Net
Income for each fiscal year of Borrower based upon Borrower's
annual audited financial.
6.2.D. MINIMUM TANGIBLE NET WORTH (SECTION 6.2.M.)
The Minimum Tangible Net Worth shall not be less than Six
Million Dollars ($6,000,000.00) during the term hereof.
6.2.E. MODIFICATION TO NEGATIVE COVENANT (SECTION 6.2.C.)
Section 6.2.C. and 6.2.F. are hereby deleted in their entirety
and the following are substituted in lieu thereof:
"C. Be a party to or participate in: (i) any merger
or consolidation; (ii) any purchase or other acquisition of
all or substantially all of the assets or properties or shares
of any class of, or any partnership or joint venture interest
in, any other corporation or entity with an aggregate purchase
price for any acquisition in excess of One Million Dollars
($1,000,000.00), without Lender's prior written consent; (iii)
any sale, transfer, conveyance or lease of all or
substantially all of Borrower's assets or properties; or (iv)
any sale or assignment with or without recourse of any
Receivables. With respect to any acquisition with a purchase
price in excess of One Million Dollars ($1,000,000.00), Lender
shall have the right, but not the obligation to perform its
own audit of the assets or entity to be acquired by Borrower."
"F. Incur, assume or suffer to exist any debt
(including capitalized leases) other than (i) the
Indebtedness, (ii) accounts payable incurred in the ordinary
course of business, (iii) Subordinated Debt, (iv) debt secured
solely by the Premium Finance Receivables, which shall include
an intercreditor agreement between such secured creditor and
Lender in a form and substance acceptable to Lender or (iv)
other Debt consented to in writing by Lender.
8.1. REIMBURSEMENT OF EXPENSES (SECTION 8.1).
Borrower's shall reimburse Lender for Lender expenses incurred
in Lender's attorneys fees and expenses incurred in the
negotiation, preparation and execution of this Schedule and
the other Loan Documents executed in conjunction therewith.
33
8.2. NOTICES (SECTION 8.2).
Lender: FINOVA Capital Corporation
(copy each office below with all notices)
Corporate Finance Office:
FINOVA Capital Corporation
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Corporate Office:
FINOVA Capital Corporation
Dial Tower
Dial Corporate Center
Xxxxxxx, XX 00000
Attn: Xxxxxx X. X'Xxxxx, Senior Counsel
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Rediscount Finance Office:
FINOVA Capital Corporation
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Cash Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Borrower: The Xxxxxxx Group, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone:
Telecopy No.:
Guarantor: Xxxxx X. Xxxxxxx
413 X. Xxxx
P. O. Xxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone:
Telecopy No.:
8.17. AGENT FOR SERVICE OF PROCESS (SECTION 8.17).
Xxxxx X. Xxxxxxx, whose address is 0000 Xxxx Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000.
(Agent)
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IN WITNESS WHEREOF, the parties have executed this Schedule on the day and
year first set forth above.
LENDER:
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By:
-------------------------------------------------
(Signature)
-------------------------------------------------
(Printed Name and Title) (Date)
BORROWER:
THE XXXXXXX GROUP, INC.
a South Carolina corporation
By:
-------------------------------------------------
Xxxxx X. Xxxxxxx, President (Date)
GUARANTORS:
-------------------------------------------------
Xxxxx X. Xxxxxxx
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