FOURTH AMENDMENT dated as of August 19, 1999
(this "Amendment") to the Amended and Restated Letter
of Credit and Reimbursement Agreement, dated as of
August 21, 1998 (as heretofore amended, the
"Reimbursement Agreement"), among ContiFinancial
Corporation, a Delaware corporation (the "Company"),
the Participating Banks party thereto, Credit Suisse
First Boston, New York Branch, as Agent, and Dresdner
Bank AG, New York Branch, as Issuing Bank.
A. Pursuant to the Reimbursement Agreement, the Participating
Banks have extended credit to the Company on the terms and subject to the
conditions set forth therein.
B. The Company has requested that the Participating Banks extend
the Termination Date and amend certain other provisions of the Reimbursement
Agreement as set forth herein. The undersigned Participating Banks are willing
to amend such provisions on the terms and subject to the conditions set forth
herein.
Accordingly, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Each capitalized term used but not
defined herein shall have the meaning assigned to it in the Reimbursement
Agreement as amended hereby. The principles of construction set forth in Section
1.03 of the Reimbursement Agreement shall apply equally to this Amendment.
SECTION 2. Amendments to Article I.
(a) Amendment of Section 1.01. Section 1.01 of the Reimbursement
Agreement is hereby amended by:
(i) inserting in the appropriate alphabetical order the following
definitions:
"Act of Insolvency" means, with respect to the Company and
its Restricted Subsidiaries, (i) the filing of a petition,
commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law relating to the
protection of creditors of the Company or any of its Restricted
Subsidiaries, or suffering any such petition or proceeding to be
commenced by another; provided, however, that any involuntary
proceeding filed against the Company or a Restricted Subsidiary
shall not constitute an Act of Insolvency unless such petition or
proceeding is not dismissed within 30 days of its commencement,
(ii) seeking the appointment of a receiver, trustee, custodian or
similar official for the
Company or a Restricted Subsidiary or any substantial part of its
property, (iii) the appointment of a receiver, conservator, or
manager for the Company or a Restricted Subsidiary or any
substantial part of the property of either by any governmental
agency or authority having the jurisdiction to do so, (iv) the
making or offering by the Company or a Restricted Subsidiary of a
composition with its respective creditors or a general assignment
for the benefit of creditors, (v) the admission in writing by the
Company or a Restricted Subsidiary of such party's inability to
pay its ordinary course trade debts as they become due or mature,
or (vi) any Governmental Authority or agency or any person,
agency or entity acting or purporting to act under Governmental
Authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any
substantial part of the property of the Company or a Restricted
Subsidiary, or shall have taken any action to displace the
management of such party or to curtail its authority in the
conduct of the business of such party.
"Affiliate Transaction" shall have the meaning assigned
thereto in Section 6.06 hereof.
"Average Liquidity Test" means for any month (A) the sum of
(i) the Company's consolidated cash plus unencumbered mortgage
loans on the last Business Day of such month and (ii) the
Company's consolidated cash plus unencumbered mortgage loans on
the first Business Day of the following month, (B) divided by
two.
"Collateral" has the meaning specified in the Security
Agreement.
"Consolidated Restricted Subsidiary" means a Restricted
Subsidiary (i) 80% of the Capital Stock and 80% of the Voting
Stock of which is owned by the Company or one or more
Consolidated Restricted Subsidiaries and (ii) which is treated as
a consolidated subsidiary for the purpose of the Company's U.S.
Federal income tax reporting.
"Contractual Obligation" means as to any Person, any
provision of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its
property is bound or any provision of any security issued by such
Person.
"Excluded Subsidiary" means each of Royal Mortgage Partners,
L.P., Resource One Consumer Discount Company, Inc., Resource One
Mortgage of Oxford Valley, Inc., Resource One of Delaware Valley,
Inc., Resource Corporation Financial Inc., Crystal Mortgage
Company, Inc., Lenders M.D., Inc., Keystone Mortgage Partners
LLC, Keystone Mortgage Partners, Inc., Keystone Mortgage Funding,
Inc., Keystone
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Mortgage Investments, Inc., Keystone Capital Group, Inc. and
California Lending Group.
"Fourth Amendment Date" means August 19, 1999.
"Greenwich" means Greenwich Capital Financial Products, Inc.
"Indentures" means the Indenture, dated as of August 15,
1996, between the Company and The Chase Manhattan Bank, as
Trustee, the Indenture, dated as of March 1, 1997, between the
Company and The Chase Manhattan Bank, as Trustee, and the
Indenture, dated as of March 4, 1998, between the Company and The
Bank of New York, as Trustee, pursuant to the terms of each of
which the Company has issued Senior Notes.
"Material Adverse Effect" means a material adverse effect
upon (i) the business operations, properties or assets of the
Company and its Subsidiaries, taken as a whole, (ii) the ability
of the Company to perform its obligations, or of the Agent, the
Issuing Bank or the Participating Banks to enforce any of their
respective rights or remedies, under this Agreement or any of
documents to be executed and/or delivered hereunder, (iii) the
validity or enforceability of any of the Security Documents or
(iv) the Collateral taken as a whole (provided that any fair
value adjustments to Excess Spread Receivables as required by
GAAP shall not be deemed a "Material Adverse Effect"), in the
case of clauses (i), (ii), (iii) and (iv) above (A) taking into
consideration the financial condition of the Company and its
Subsidiaries as of the date of this Agreement and (B) without
taking into consideration any further deterioration of the
financial condition of the Company and its Subsidiaries after the
date of this Agreement.
"Permitted Holders" means lineal descendants of Xxxxx
Xxxxxxxx, including any individual legally adopted; spouses of
such descendants; trusts, the beneficiaries of which are any of
the foregoing; partnerships, corporations, or other entities in
which any of the foregoing (individually or collectively) has a
controlling interest; and charitable organizations established by
any of the foregoing.
"Requirement of Law" means as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or 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.
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"Responsible Officer" means, as to any Person, the chief
executive officer, vice president and treasurer, or with respect
to financial matters, the chief financial officer or treasurer of
such Person; provided, however, that in the event any such
officer is unavailable at any time he or she is required to take
any action hereunder, Responsible Officer shall mean any officer
authorized to act on such officer's behalf as demonstrated to the
Buyer to its reasonable satisfaction.
"Restricted Payment" means (i) the declaration or payment of
any dividends or any other distributions of any sort in respect
of its Capital Stock or similar payment to the direct or indirect
holders of its Capital Stock (other than (A) dividends or
distributions payable solely in its Capital Stock (other than
Disqualified Stock), (B) dividends or distributions payable
solely to the Company or a Subsidiary and (C) pro rata dividends
or other distributions made by an Unrestricted Subsidiary to
minority shareholders (or owners of an equivalent interest in the
case of a Subsidiary that is an entity other than a
corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held
by any Person or of any Capital Stock of a Subsidiary held by any
Affiliate of the Company (other than a Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than
into Capital Stock of the Company that is not Disqualified
Stock), (iii) the purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment
of any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of such Subordinated Obligations
purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition).
"Secured Parties" has the meaning given to such term in the
Security Agreement.
"Security Agreement" means the Pledge and Security
Agreement, dated as of the Fourth Amendment Date, by the Company
in favor of Credit Suisse First Boston, New York Branch, as
Collateral Agent.
"Security Documents" means the Security Agreement and all
other documents executed and delivered in connection therewith.
"Senior Indebtedness" means (i) Indebtedness of any Person
and (ii) accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent post-filing
interest is allowed in such proceeding) in respect of (A)
indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other
similar
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instruments for the payment of which such Person is responsible
or liable unless, in the case of either clause (i) or (ii), in
the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such
obligations are subordinate in right of payment to the Company's
obligations hereunder; provided, however, that Senior
Indebtedness shall not include (1) any obligation of such Person
to any Subsidiary of such Person, (2) any liability for Federal,
state, local or other taxes owed or owing by such Persons, (3)
any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities), (4) any
obligation in respect of Capital Stock of such Person or (5) that
portion of any Indebtedness which at the time of Incurrence is
Incurred in violation of this Agreement.
"Senior Notes" means any and all notes issued by the Company
under the terms of the Indentures.
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the date hereof or thereafter
incurred) which is subordinate or junior in right of payment to
the obligations of the Company under this Agreement pursuant to a
written agreement to that effect.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof, (ii) investments
in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is not
an Affiliate of the Company and which is organized under the laws
of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust
company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent
thereof) and has outstanding debt which is rated "A" (or such
similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule
436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii)
repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) investments in commercial paper, maturing
not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Company) organized
and in existence under the laws of the United States of America
or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is
5
made of "P-1" (or higher) according to Xxxxx'x Investors Service,
Inc. or "A-1" (or higher) according to Standard and Poor's
Ratings Group, and (v) investments in securities with maturities
of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the
United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Xxxxx'x Investors Service, Inc.
(ii) Deleting the definition of "Asset Disposition" in its
entirety and replacing it with the following:
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or
dispositions) by the Company or any Restricted Subsidiary,
including any disposition by means of a merger, consolidation or
similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors'
qualifying shares or shares required by applicable law to be held
by a Person other than the Company or a Restricted Subsidiary),
(ii) all or substantially all the assets of any division or line
of business of the Company or any Restricted Subsidiary, (iii)
any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary, (iv) any Investment in a Strategic
Alliance Client or (v) any Excess Spread Receivables (other than,
in the case of (i), (ii), (iii), (iv) and (v) above, (x) a
disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Consolidated Restricted
Subsidiary, (y) a disposition that constitutes a permitted
Restricted Payment or (z) a disposition of assets (including
related assets) for an aggregate consideration of $1.0 million or
less).
(iii) Deleting the definition of "Change of Control" in its
entirety and replacing it with the following:
"Change in Control" means the occurrence of any of the
following events:
(i) Any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act), other than any Permitted Holder, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such person shall be
deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting
power of the Voting Stock of such Person; provided, however, that
the Permitted Holders beneficially own (as defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly,
in the aggregate a
6
lesser percentage of the total voting power of the Voting Stock
of the Company or any Restricted Subsidiary than such other
person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a
majority of the Board of Directors (for the purposes of this
clause (i), such other person shall be deemed to beneficially own
any Voting Stock of a corporation held by another corporation (a
"parent corporation"), if such other person is the beneficial
owner (as defined above for such person), directly or indirectly,
of more than 35% of the voting power of the Voting Stock of such
parent corporation and the Permitted Holders beneficially own (as
defined above for the Permitted Holders), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation and do not have the right
or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of
such parent corporation);
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election by such
Board of Directors or whose nomination for election by the
shareholders of the Company or any Restricted Subsidiary was
approved by a vote of 66-2/3% of the directors of the Company or
any Restricted Subsidiary then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in
office; or
(iii) the merger or consolidation of the Company or any
Restricted Subsidiary with or into another Person or the merger
of another Person with or into the Company or any Restricted
Subsidiary, as the case may be, or the liquidation, wind-up or
dissolution of the Company or any Restricted Subsidiary, as the
case may be, or the sale of all or substantially all the assets
of the Company or any Restricted Subsidiary, as the case may be,
to another Person (other than a Person that is controlled by the
Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Company or any Restricted
Subsidiary, as the case may be, that are outstanding immediately
prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Company or any
Restricted Subsidiary, as the case may be, are changed into or
exchanged for cash, securities or property, unless pursuant to
such transaction such securities are changed into or exchanged
for, in addition to any other consideration, securities of the
surviving corporation that represent immediately after such
transaction, at least a majority of the aggregate voting power of
the Voting Stock of the surviving corporation; provided, however,
that the sale by the Company or its Subsidiaries from
7
time to time solely of receivables to a trust for the purpose
solely of effecting one or more securitizations shall not be
treated hereunder as a sale of all or substantially all the
assets of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, a Change of Control accompanied by an equity infusion in the
Company of not less than $100,000,000 shall not constitute an Event of
Default under this Agreement for 60 days after the date of such equity
infusion, unless an additional Change of Control shall occur during
such 60-day period.
(iv) Deleting the definition of "Interest Payment Date" in its
entirety and replacing it with the following:
"Interest Payment Date" means with respect to any Loan, the
third Business Day of each month.
(v) Deleting the words "one, two or three months" in the
definition of "Interest Period" and replacing them with the words "one
month."
(vi) Deleting the definition of "Net Available Cash" in its
entirety and replacing it with the following:
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received
by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Indebtedness or
other obligations relating to such properties or assets or
received in any other noncash form) in each case net of (i) all
legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be accrued as a liability
under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms
of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or in order
to obtain a necessary consent to such Asset Disposition, or by
applicable law be, repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required
to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition and (iv) the
deduction of appropriate amounts provided by the Company as a
reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such
Asset Disposition and retained by the Company or any Restricted
Subsidiary after such Asset Disposition.
8
(vii) deleting the definition of "Termination Date" in its
entirety and replacing it with the following:
"Termination Date" means March 31, 2000, as such date may be
extended from time to time pursuant to Section 2.11.
SECTION 3. Amendments to Article II.
(a) Section 2.04(a) is hereby amended by deleting the words "(a
"Loan")" at the end of the first sentence and adding the words ", and on the
Fourth Amendment Date, amounts outstanding under Section 2.03 of this Agreement
shall be deemed converted by the Company into a term loan (each such loan
pursuant to this Section 2.04(a), a "Loan")" at the end of the first sentence.
(b) The second and third sentences of Section 2.04(b) are hereby
deleted in their entirety.
(c) Section 2.04(c) is hereby amended by (i) deleting the words
from "The Company shall pay interest on the unpaid principal amounts" through
"(ii) Eurodollar Loans;" and (ii) deleting clause (B) in the proviso thereto and
lettering clause (C) so that it is clause (B).
(d) Section 2.04(c)(ii) is hereby amended by adding the following
proviso at the end of such clause: "; provided, however, that the Company shall
not be required to pay any such accrued interest on any Interest Payment Date
when the Average Liquidity Test for the prior month is less than $40,000,000;
any such unpaid interest shall be due and payable on the Termination Date
(provided further that no interest shall accrue on any such deferred interest).
(e) Section 2.04(d) and (e) are hereby deleted in their entirety.
SECTION 4. Amendments to Article III. Article III of the
Reimbursement Agreement is hereby amended to delete the words "September 30,
1996" in clause (ii) of Section 3.04(a) and replacing it with the words "March
31, 1999" and to add the words "and subject to any qualifications contained
therein" at the end of Section 3.04(a). Section 3.04(b) is amended by deleting
it in its entirety and replacing it with the following clause: "(b) Since March
31, 1999, there has been no Material Adverse Effect, except as otherwise
disclosed to the Participating Banks."
SECTION 5. Amendments to Article V. Article V of the
Reimbursement Agreement is hereby amended by:
(a) Deleting the following words in the parenthetical in Section
5.01(a)(i): "without a "going concern" or like qualification or exception and";
and adding the following at the end of the Section 5.01:
9
"(i) the following additional financial information (A) the
Company's consolidated cash flow information for each month
within 15 Business Days after the end of such month; (B)
rolling three month financial projections for the Company at
the beginning of each month starting on December 1, 1999
through the Termination Date; (C) the Company's actual cash
position as of the preceding Business Day on the first
Business Day of each week; (D) quarterly Excess Spread
Receivables valuations when quarterly financial statements
are provided pursuant to Section 5.01(a) or (b), as
applicable; (E) monthly static pool performance summaries on
a pool-by-pool basis with respect to each Excess Spread
Receivable comprising the Collateral within five Business
Days of receipt thereof by the Company and (F) monthly deal
trigger report (including, without limitation, loss and
delinquency triggers) on or before the 25th day of the month
or the next Business Day thereafter.
(j) on the second Business Day of each month, a certificate
of a Financial Officer setting forth reasonably detailed
calculations of the Average Liquidity Test for the prior
month."
(b) Deleting the number "(i)" in Section 5.01(a) and also
deleting the following words in such Section: ", and (ii) a letter from such
independent public accountants certifying that during the course of their audit
nothing came to their attention that would indicate that the Borrowing Base
Certificate, if any, relating to the last day of such fiscal year is inaccurate
in any material respect."
(c) Deleting Section 5.01(g) in its entirety and replacing it
with the words "(g) [Reserved]."
SECTION 6. Amendments to Article VI. Article VI of the
Reimbursement Agreement is hereby amended by deleting Section 6.01 and Sections
6.03 through 6.13 thereof in their entirety and substituting therefor the
following:
SECTION 6.01. Restricted Payments. Neither the Company nor any
Restricted Subsidiary shall make any Restricted Payment.
SECTION 6.03. Collateral. Neither the Company nor any Restricted
Subsidiary shall take any action which would directly or indirectly
impair or adversely affect (i) the Agent's lien on any Collateral or
(ii) the value of such Collateral except, in the case of this clause
(ii), (x) any action solely relating to, resulting solely from, or
arising solely out of the financial condition of the Company or (y)
any action taken in the ordinary course of business.
10
SECTION 6.04. Material Adverse Effect. Neither the Company nor
any Restricted Subsidiary shall take any action which could reasonably
be expected to have a Material Adverse Effect.
SECTION 6.05. Business Activities. Neither the Company nor any
Restricted Subsidiary shall engage, to any substantial extent, in any
line or lines of business activity other than the businesses now
generally carried out by it, or cease or take any action to cease (or
permit any Subsidiary which is not an Excluded Subsidiary of the
Company to cease) to be in the business of originating mortgage loans.
SECTION 6.06. Affiliate Transactions. (A) The Company shall not
permit any of its Subsidiaries to sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions
with, any of its Affiliates (an "Affiliate Transaction") unless the
terms thereof (i) are no less favorable to the Company or such
Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an
Affiliate, (ii) if such Affiliate Transaction involves an amount in
excess of $2,000,000 (or the equivalent amount in any foreign
currency), (x) are set forth in writing and (y) have been approved by
a majority of the members of the Board of Directors having no personal
stake in such Affiliate Transaction and (iii) if such Affiliate
Transaction involves an amount in excess of $10,000,000 (or the
equivalent amount in any foreign currency), have been determined by a
nationally recognized investment banking firm to be fair from a
financial standpoint, to the Company and its Subsidiaries.
(B) Without limiting the generality of any other provisions set
forth in this Agreement, the provisions of Section 6.06(A)(i) shall
not prohibit (i) any Permitted Investment, (ii) any issuance of
securities, or other payments, awards or grants in cash, securities or
otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans approved by the Board of
Directors, (iii) the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by
the Board of Directors, (iv) loans or advances to employees in the
ordinary course of business in accordance with the past practices of
the Company or its Subsidiaries, but in any event not to exceed
$1,000,000 (or the equivalent amount in any foreign currency) in
aggregate principal amount outstanding at any one time; provided that
the $2,882,488 of employee loans existing as of June 30, 1999 shall
not be included in calculating such $1,000,000 limit, (v) the payment
of reasonable fees to directors of the Company and its Subsidiaries
who are not employees of the Company or its Subsidiaries, (vi) any
Affiliate Transactions between the Company and a Subsidiary or between
consolidated Subsidiaries (in each case other than any Subsidiary that
is an "affiliate" (as such term is defined in the Exchange Act)) of
any Affiliate (other than any Subsidiary) of the Company and (vii)
transactions pursuant to any agreement as in existence as of the date
hereof
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between the Company or its Subsidiaries and Continental Grain Company,
a Delaware corporation, or one of its Subsidiaries or any extensions
or renewals thereof.
SECTION 6.07. Investment Company. Neither the Company nor any
Restricted Subsidiary shall become an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act, as amended.
SECTION 6.08. Average Liquidity Test. The Company shall not
permit the Average Liquidity Test for any month to be less than
$20,000,000.
SECTION 6.09. Asset Dispositions. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly,
consummate any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to
the value of all non-cash consideration), as determined in good faith
by the Board of Directors of the Company, of the shares and assets
subject to such Asset Disposition and at least 85% of the
consideration thereof received by the Company or such Restricted
Subsidiary is in the form of cash or cash equivalents and (ii) an
amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be) either (x) for working capital purposes or (y) to
prepay, repay, redeem or purchase, on a ratable basis, Senior
Indebtedness of the Company or any Indebtedness of a Restricted
Subsidiary, as the case may be (other than in either case Indebtedness
owed to the Company or an Affiliate of the Company), provided that the
Company may prepay, repay, redeem or purchase any Senior Indebtedness
owed to the Company's warehouse lenders without such ratable payments
to the holders of any other Senior Indebtedness, in either case within
180 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; provided, however, that in
connection with any prepayment, repayment or purchase of Indebtedness
pursuant to this Section, the Company or such Restricted Subsidiary
shall retire such Indebtedness and shall cause the related loan
commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased, and (iii) at the
time of such Asset Disposition no Default shall have occurred and be
continuing (or would result therefrom). Notwithstanding the foregoing
provisions of this Section 6.09, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash in
accordance with this Section except to the extent that the aggregate
Net Available Cash from all Asset Dispositions which are not applied
in accordance with this paragraph exceeds $10 million; provided,
however, pending application of Net Available Cash pursuant to this
Section 6.09, such Net Available Cash shall be invested in Temporary
Cash Investments.
12
For the purposes of this Section 6.09, the following are deemed
to be cash or cash equivalents: (x) the assumption of Indebtedness of
the Company or any Restricted Subsidiary, and the release of the
Company and its continuing Restricted Subsidiaries from all liability
on such Indebtedness, in connection with such Asset Disposition and
(y) securities received by the Company or any Restricted Subsidiary
from the transferee that are promptly converted by the Company or such
Restricted Subsidiary into cash.
SECTION 6.10. Senior Note Payments. The Company shall timely make
all required payments to holders of its Senior Notes that are due in
each of September and October 1999.
SECTION 7. Amendments to Article VII. (a) Article VII of the
Reimbursement Agreement is hereby amended by deleting clauses (f) through (n)
thereof in their entirety and substituting therefor the following:
"(f) an Act of Insolvency occurs with respect to the Company;
(g) any governmental, regulatory, or self-regulatory authority
takes any action to remove, limit, restrict, suspend or terminate the
rights, privileges, or operations of the Company or any of its Restricted
Subsidiaries which in any case has a Material Adverse Effect;
(h) any Change of Control of the Company shall have occurred
without the prior consent of the Required Banks which consent shall not be
unreasonably withheld;
(i) the Required Banks, in their good faith judgment, believe
that there has been a Material Adverse Effect;
(j) the occurrence and continuance of a material "event of
default" or of an "event of termination" on the part of the Company (x)
under any agreement between the Company (or an Affiliate thereof) on the
one hand, and Greenwich (or an Affiliate thereof) on the other hand, which
has not been waived by Greenwich (or its Affiliate) or (y) under any of the
Indentures;
(k) there ceases to be a valid, first priority perfected security
interest in the Collateral (as defined in the Security Agreement)."
(b) Article VII of the Reimbursement Agreement is hereby amended
by deleting the words "and in the case of any event with respect to the Company
described in clause (h) or (i)" in the provision following paragraph (n) and
inserting the words "and in the case of any event with respect to the Company in
clause (f)."
SECTION 8. Amendments to Article VIII. The first paragraph of
Article VIII of the Reimbursement Agreement is hereby amended so that the words
"and as
13
Collateral Agent (as defined in the Security Agreement)" are inserted after the
word "agent" in the third sentence of such paragraph and so that the words "and
of the Security Agreement" are added after the word "hereof" in the fifth
sentence of such paragraph.
SECTION 9. Amendments to Article IX. Article IX of the
Reimbursement Agreement is hereby amended by (a) deleting the words "each of the
Borrower and" from clauses (i) and (ii) of the proviso to Section 9.04(b) and
adding the following proviso at the end of clause (i) in such Section 9.04(b):
"; provided that the Borrower receives prior written notice of such
assignment."; and (b) adding the following Section 9.13 to the end thereof:
"SECTION 9.13. Collateral Proceeds. Each Participating Bank
agrees that if it receives greater than its pro rata share of the
proceeds of Collateral (as defined in the Security Agreement), such
Participating Bank shall return such excess proceeds to the Collateral
Agent (as defined in the Security Agreement) for redistribution among
the Secured Parties so that each Secured Party receives proceeds of
Collateral equal to the same percentage of the total Obligations (as
defined in the Security Agreement) owed to it. This Section 9.13 may
not be amended without the written consent of all of the Secured
Parties."
SECTION 10. Representations and Warranties. The Company
represents and warrants to the Agent and each Participating Bank that:
(a) The representations and warranties set forth in the
Reimbursement Agreement and the Security Documents are true and
correct in all material respects as of and with the same effect as if
made on the date hereof (except to the extent such representations and
warranties expressly relate to an earlier date) after giving effect to
this Amendment, and with all references in such representations to (i)
the "Transactions" being deemed to include the execution, delivery and
performance by the Company of this Amendment and (ii) "this Agreement"
being deemed to include this Amendment.
(b) (i) The Company's identification and description is a
complete listing of all Eligible Excess Spread Receivable pools as of
June 30, 1999 and (ii) subject to retention by the Company of
reasonable reserves, the Company cannot grant a security interest in
favor of the Agent and the Participating Banks in more than
$147,004,342 in book value of the Company's Eligible Excess Spread
Receivables pursuant to the terms of the Indentures without also
granting a ratable Lien to the holders of Senior Notes.
(c) The Company has made a full and complete assessment of all
issues which may be related to the occurrence of the year 2000,
including all issues related to its computer program and software (the
"Year 2000 Issues"), and has a realistic and achievable program for
remediating the Year 2000 Issues on a timely basis (the "Year 2000
Program"). Based on such assessment and on the
14
Year 2000 Program, the Company does not reasonably anticipate that
Year 2000 Issues will have a Material Adverse Effect.
(d) After giving effect to this Amendment, the Company is in
compliance in all material respects with all the terms and provisions
contained in the Reimbursement Agreement required to be observed or
performed by it.
(e) After giving effect to this Amendment, no Default has
occurred and is continuing to the best of the Company's knowledge.
The foregoing representations and warranties shall survive the execution and
delivery of this Amendment.
SECTION 11. Effectiveness. This Amendment shall become effective
on the date (the "Amendment Effective Date") on which each of the following
conditions is met:
(a) the Agent shall have received counterparts of this Amendment
that, when taken together, bear the signatures of the Company and the
Participating Banks;
(b) the Agent shall have received an opinion of the Company's
in-house counsel and Xxxxx Xxxxxxxxxx LLP, in form and substance
satisfactory to the Agent and the Issuing Bank and covering such
matters relating to this Amendment and the Security Documents, as the
Agent shall reasonably request;
(c) the Agent shall have received such documents and certificates
as the Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Company or the
authorization of this Amendment and Security Documents and any other
legal matters relating to the Company or this Amendment or the
Security Documents, all in form and substance reasonably satisfactory
to the Agent and its counsel; and
(d) an amendment to the Credit Agreement, substantially in the
form of this Amendment, shall have been executed and delivered by the
Company and of all the "Lenders" (as defined in the Credit Agreement),
and the amendments set forth therein shall have become effective (or
shall become effective concurrently with the effectiveness of the
amendments set forth herein).
(e) the Collateral Agent shall have received the Security
Agreement, dated as of the date hereof, duly executed by an authorized
officer of the Company, together with certificates evidencing all of
the Collateral, which certificates shall be accompanied by undated
certificate powers duly executed in blank.
15
The Agent shall promptly notify the Company and the Participating
Banks of the Amendment Effective Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 12. Fees and Expenses. Without limiting the Company's
obligations under Section 9.03 of the Reimbursement Agreement, the Company
agrees to pay all reasonable out-of-pocket expenses incurred by the Agent, the
Issuing Bank, the Co-Arrangers identified on the cover page of the Reimbursement
Agreement and their respective Affiliates, including the reasonable fees and
disbursements of all counsel and advisors for such parties, in connection with
the preparation, negotiation, execution and delivery of this Amendment and the
Security Documents and the evaluation by such parties of their rights and the
rights of the Participating Banks under the Reimbursement Agreement, the
Security Documents or any related documentation.
SECTION 13. Miscellaneous.
(a) Except as expressly set forth herein, this Amendment shall
not by implication or otherwise limit, impair, constitute a waiver of
or otherwise affect the rights and remedies of the Participating
Banks, the Agent or the Issuing Bank under the Reimbursement
Agreement, and shall not alter, modify, amend or in any way affect any
of the terms, conditions, obligations, covenants or agreements
contained in the Reimbursement Agreement, all of which are ratified
and affirmed in all respects and shall continue in full force and
effect. Nothing herein shall be deemed to entitle the Company or any
Subsidiary to a consent to, or a waiver, amendment, modification or
other change of, any of the terms, conditions, obligations, covenants
or agreements contained in the Reimbursement Agreement in similar or
different circumstances. This Amendment shall apply and be effective
only with respect to the provisions of the Reimbursement Agreement
specifically referred to herein. The Company hereby ratifies, affirms,
acknowledges and agrees that the Reimbursement Agreement and the Loans
and reimbursement obligations thereunder represent the valid,
enforceable and collectible obligations of the Company, and
acknowledges that there are no existing claims, defenses, personal or
otherwise, or rights of setoff whatsoever with respect to the
Reimbursement Agreement or the Loans or reimbursement obligations
thereunder.
(b) As used in the Reimbursement Agreement, the terms
"Agreement", "herein", "hereinafter", "hereunder", "hereto", and words
of similar import shall mean, from and after the date hereof, the
Reimbursement Agreement as amended by this Amendment.
(c) Section headings used herein are for convenience of reference
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Amendment.
16
(d) THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(e) This Amendment may be executed in any number of counterparts,
each of which shall be an original but all of which, when taken
together, shall constitute but one instrument.
(f) The Participating Banks hereby waive any Default resulting
from (i) the failure by the Company to timely provide to the Agent the
Company's March 31, 1999 financial statements as required in Section
5.01(a) of the Reimbursement Agreement and (ii) the "going concern"
qualification contained in the report of the Company's independent
public accountants given in connection with such financial statements.
17
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective duly authorized officers
as of the date first above written.
CONTIFINANCIAL CORPORATION
by
-----------------------------------
Name:/s/ Xxxx Xxxxxxx
Title: Authorized Signatory
by
-----------------------------------
Name:/s/ Xxxxx Xxxxx
Title: Authorized Signatory
CREDIT SUISSE FIRST BOSTON, NEW
YORK BRANCH Individually and as
Administrative Agent,
by
-----------------------------------
Name:/s/ Xxxxxx X. Xxxxxx
Title: Managing Director
by
-----------------------------------
Name:/s/ Xxx Xxxxx
Title: Director
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
by
-----------------------------------
Name:/s/ X. Xxxxxx Xxxxxxxxx
Title: First Vice President
by
-----------------------------------
Name:/s/ Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
THE BANK OF NOVA SCOTIA,
by
-----------------------------------
Name:/s/ A.T.D. Xxxxxx
Title: Senior Manager
THE CHASE MANHATTAN BANK,
by
-----------------------------------
Name:/s/ Xxxxxxxxx X. Xxxxxx
Title: Managing Director
BANK OF AMERICA, N.A. (formerly
NATIONSBANK, N.A.)
by
-----------------------------------
Name:/s/ Xxxxxxx Xxxx
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:/s/ Xxxxx Xxxxxxxxx
Title: Vice President
SOCIETE GENERALE,
by
-----------------------------------
Name:/s/ Xxxxxxx X. Xxxxxxx, Xx.
Title: Vice President
COMERICA BANK,
by
-----------------------------------
Name:/s/ Von X. Xxxxxxx
Title: First Vice President
UBS AG, NEW YORK BRANCH,
by
-----------------------------------
Name:/s/ W. Xxxxx Xxxxx
Title: Managing Director
by
-----------------------------------
Name:/s/ Xxxx Xxxxxxxxx
Title: Associate Director
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH,
by
-----------------------------------
Name:/s/Xxxxxx X. Tata
Title: Senior Vice President
BADEN-WUERTTEMBERGISCHE BANK AG,
by
-----------------------------------
Name:/s/ Xxxxxx X. Xxxxxx
Title: Authorized Signatory
by
-----------------------------------
Name:/s/ Xxxxxx X. Xxxx
Title: Authorized Signatory
SOUTHTRUST BANK, NATIONAL
ASSOCIATION,
by
-----------------------------------
Name:/s/ Xxxx Xxxxx
Title: Assistant Vice President
MANUFACTURERS AND TRADERS
TRUST COMPANY,
by
-----------------------------------
Name:/s/ Xxxxx X. Xxxxx
Title: Assistant Vice President
CREDIT AGRIEOLE INDOSUEZ,
by
-----------------------------------
Name:/s/ Xxxxxxx Xxxxx
Title: First Vice President
-----------------------------------
Name:/s/ Wha Xxxxx Xxx
Title: Vice President
