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EXHIBIT 99.22
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (the "Amendment") dated
as of October 4, 1999, among GAINSCO, INC. and GAINSCO SERVICE CORP.
("Borrowers") and BANK ONE, NA ("Lender"), a national banking association with
its principal office in Chicago, Illinois.
R E C I T A L S:
1. Borrowers and Bank One, Texas, N.A. ("Bank One Texas") have entered
into the Revolving Credit Agreement dated November 13, 1998 (the "Loan
Agreement") wherein Bank One Texas made the Loan to Borrowers for the purposes
described in the Loan Agreement.
2. Immediately before the execution of this Amendment, Bank One Texas
has sold and assigned to Lender (the "Assignment") all right, title and interest
of Bank One Texas in the Loan and all rights and obligations of Bank One Texas
under the Loan Agreement and Loan Documents.
3. GAINSCO has as of the date of this Amendment, pursuant to the
Securities Purchase Agreement dated as of June 29, 1999 (the "Purchase
Agreement") between GAINSCO and Xxxx Xxxxx Strategic Partners, L.P.("GMSP"),
issued and sold 31,620 shares of its Series A Convertible Preferred Stock and
warrants to purchase up to 3,100,000 shares of GAINSCO common stock to GMSP (the
"Transaction"), which constitutes a Change in Control.
4. Borrowers have requested Lender to consent to the Transaction and to
make certain amendments to the Loan Agreement, which Lender is willing to do
upon the conditions and subject to the provisions hereof.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Loan Agreement, as amended hereby.
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT - PAGE 1
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ARTICLE II
Amendments
Section 2.1 Definitions. Effective as of the date hereof,
(a) the following definitions in Section 1.1 of the Loan
Agreement are amended to read in their entirety as follows:
"Acquired Companies" means National Specialty Lines,
Inc., Lalande Financial Group, Inc. and DLT Insurance
Adjusters, Inc.
"Agreement" means the Loan Agreement, as amended by
the First Amendment.
"Lender" means Bank One, NA, a national banking
association.
(b) the definition of "Change in Control" is amended by adding
a sentence at the end thereof to read as follows:
Notwithstanding any other provision hereof, except for
additional purchases of Common Stock by GMSP of up to an
aggregate of 35% of the issued and outstanding Common Stock to
the extent permitted by Section 6.9 of the GMSP Purchase
Agreement as in effect on the date of the First Amendment, any
acquisition by GMSP or any Affiliate of GMSP of any Common
Stock, preferred stock or other equity securities of GAINSCO,
any warrants or other rights to purchase or otherwise acquire
any such securities or any securities or instruments
convertible into such securities, other than the securities
purchased in the GMSP Transaction, shall constitute a Change
in Control.
(c) the following definitions are added to Section 1.1 of the
Loan Agreement:
"First Amendment" means the First Amendment to
Revolving Credit Agreement dated as of October 4, 1999 among
Borrowers and Lender.
"GMSP" means Xxxx Xxxxx Strategic Partners, L.P.
"GMSP Purchase Agreement" means the Securities
Purchase Agreement dated as of June 29, 1999 between GAINSCO
and GMSP.
"GMSP Transaction" means the purchase by GMSP on
October 4, 1999 of 31,620 shares of Series A Convertible
Preferred Stock of
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GAINSCO and warrants to purchase up to 3,100,000 shares of
Common Stock pursuant to the GMSP Purchase Agreement.
"Net Worth" means net worth as shown on a balance
sheet prepared in accordance with GAAP.
Section 2.2 Limitation on Indebtedness. Section 7.1 of the Loan
Agreement is amended to read in its entirety as follows:
7.1 LIMITATION ON INDEBTEDNESS. Borrowers shall not,
and shall not permit any of the other Companies to, incur,
guarantee, or otherwise be or become, directly or indirectly,
liable in respect of any Indebtedness, except (a) Indebtedness
arising out of this Agreement and (b) other Indebtedness not
exceeding $1,000,000 in the aggregate outstanding at any date.
Section 2.3 Investments. Section 7.5 of the Loan Agreement is amended
by adding new subsections (h) and (i) thereto to read in their entirety as
follows:
(h) with respect to GAINSCO, Investments and
re-Investments of the proceeds of the sale by it of the
securities to GMSP in the GMSP Transaction and of the type
described in the Policy Letter dated October 4, 1999 between
GAINSCO and GMSP (it being understood that this subsection (h)
shall not permit any Investments by GAINSCO of any assets
other than such proceeds),
(i) the acquisition disclosed to Lender in connection
with the execution and delivery of the First Amendment for a
purchase price of up to $7,000,000.
Section 2.4 Surplus Debenture. Section 7.13 of the Loan Agreement is
amended to read in its entirety as follows:
7.13 SURPLUS DEBENTURE. GSC shall not at any time
amend, modify, cancel, terminate or discharge, or waive
compliance with, or fail to enforce, the terms of the Surplus
Debenture; provided, however, that GCMIC may make prepayments
thereon in the aggregate amount of up to $1,000,000.
Section 2.5 Minimum Consolidated Net Worth. Section 7.15 of the Loan
Agreement is amended by deleting the dollar amount "$85,000,000" in subsection
(a) thereof and inserting "$100,000,000" in the place thereof.
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Section 2.6 Risk-Based Capital Ratio. Section 7.18 of the Loan
Agreement is amended by deleting the ratio "2.25 to 1.0" where it appears in
such section and inserting "2.00 to 1.0" in the place thereof.
Section 2.7 Statutory Surplus. Section 7.19 of the Loan Agreement is
amended to read in its entirety as follows:
7.19 MINIMUM STATUTORY SURPLUS. Borrowers shall not
permit, (a) as of the end of the fiscal quarters ending
September 30, 1999 and December 31, 1999, the Statutory
Surplus of GAIC to be less than $64,700,000 or (b) as of the
end of the fiscal quarter ending March 31, 2000 and of each
fiscal quarter thereafter, the Statutory Surplus of GAIC to be
less than the sum of (i) $64,700,000, (ii) an amount equal to
50% of the cumulative Statutory Earnings of GAIC beginning
with the fiscal quarter which begins on April 1, 2000 through
the last day of the most recent fiscal quarter ending on or
prior to the determination date and (iii) an amount equal to
100% of all capital contributions and other Investments made
in GAIC after the date of the First Amendment.
Section 2.8 Events of Default. Section 8.1(j) of the Loan Agreement is
amended to read in its entirety as follows:
(j) GCMIC shall fail to request, on a timely basis
and in proper form, the approval of the Commissioner of
Insurance of the State of Texas to make scheduled payments on
the Surplus Debenture.
Section 2.9 Limitation on Creation of Subsidiaries. A new Section 7.23
is added to the Loan Agreement to read in its entirety as follows:
7.23 LIMITATION ON CREATION OF SUBSIDIARIES.
Notwithstanding anything to the contrary contained in this
Agreement, Borrowers shall not, and shall not permit any of
the other Companies to, establish, create, acquire or permit
to exist any new Material Subsidiary unless (a) at least 10
Business Days prior written notice thereof is given to Lender,
(b) such new Material Subsidiary is a wholly owned Subsidiary
of GAINSCO or another Subsidiary that is a wholly owned
Subsidiary of GAINSCO, (c) each such new Material Subsidiary
that is not an insurance company shall, concurrently with the
creation or acquisition thereof enter into a guaranty of the
full payment and performance of the Obligation in form and
substance satisfactory to
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Lender and (d) GAINSCO and/or each Subsidiary directly owning
all or any portion of the capital stock of such new Material
Subsidiary shall execute and deliver to Lender a pledge
agreement in form and substance satisfactory to Lender wherein
such owner(s) shall grant to Lender a security interest in all
such capital stock together with the delivery to Lender of
certificates representing 100% of such capital stock, with
stock powers duly executed in blank. In addition, such new
Material Subsidiary shall execute and deliver or cause to be
executed and delivered, all other relevant documentation
(including, without limitation, such legal opinions as shall
have been reasonably requested by Lender) of the type as such
new Material Subsidiary would have had to deliver if such new
Subsidiary were a Subsidiary on the Closing Date. All actions
required by this Section 7.23 shall be taken to the
satisfaction of Lender and shall be at the sole cost and
expense of Borrowers. As used herein, "Material Subsidiary"
shall mean a Subsidiary of GAINSCO having assets with a fair
market value of $1,500,000 or a Net Worth of $1,500,000.
Section 2.10 Notice Address. The address for notices to Lender referred
to in Section 9.4 of the Loan Agreement is amended to read as set forth on the
signature page to this Amendment.
Section 2.11 Assignment. In order to acknowledge the Assignment,
Lender, Bank One Texas, Borrowers and the other parties thereto shall have
executed the Notice of Assignment (the "Assignment Acknowledgment") in the form
of Exhibit 1 hereto.
Section 2.12 Exhibits and Schedules; Modifications to Representations
and Warranties. Exhibits A and E and Schedule 5.20 to the Loan Agreement are
amended to read in their entirety in the forms of Exhibits 2 , 3 and 4 hereto.
With respect to Section 5.19 of the Loan Agreement, Lender acknowledges the De
La Torre Insurance Adjusters, Inc. has changed its name to DLT Insurance
Adjusters, Inc. Section 5.23 of the Loan Agreement is modified to reflect the
Purchase Agreement as a material contract.
ARTICLE III
Limited Waiver
Section 3.1 Limited Waiver. By its execution of this Amendment, Lender
hereby consents to GAINSCO entering into the Transaction and hereby waives any
Event of Default that would otherwise occur under Section 8.1(m) of the Loan
Agreement solely by reason of the consummation of the Transaction, the
conversion of the Series A Preferred Stock (as such term is defined in the
Purchase Agreement) into GAINSCO Common Stock or the exercise of the Series A
Warrant or the Series B Warrant (as such terms are defined in the Purchase
Agreement) in accordance with their terms and additional purchases of Common
Stock by GMSP of up to an aggregate of 35% of the issued and
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outstanding Common Stock to the extent permitted by Section 6.9 of the Purchase
Agreement as in effect on the date of this Amendment.
ARTICLE IV
Conditions Precedent
Section 4.1 Conditions Precedent. The obligation of Lender to enter
into this Amendment is subject to the conditions precedent that on or before the
date hereof Lender shall have received all of the following in form and
substance acceptable to it and its counsel: (a) this Amendment, duly executed by
Borrowers and the other parties hereto; (b) the Assignment Acknowledgment, duly
executed by Borrowers and the other parties thereto; (c) a certificate of the
secretary of each Borrower setting forth resolutions of its board of directors
with respect to the authorization, execution, delivery and performance of this
Amendment and the other loan documents to which Borrowers are a party, the
officers of Borrowers authorized to sign such instruments, and specimen
signatures of the officers so authorized; (d) evidence satisfactory to Lender
that the Transaction has been consummated in accordance with the Purchase
Agreement, including evidence of the receipt of all necessary regulatory
approvals, together with copies of the Purchase Agreement and all documents and
agreements executed in connection therewith, including all Investment Management
Agreements and Policy Letters, certified to be true and correct by an officer of
Borrowers; (e) a legal opinion of counsel to Borrowers in form and substance
satisfactory to Lender; (f) Uniform Commercial Code financing statement
amendments executed by the Borrowers reflecting the Assignment and the name
change of De La Torre Insurance Adjusters, Inc.; (g) payment of all reasonable
fees and out-of-pocket expenses incurred by Lender, including without limitation
the reasonable fees and expenses of Lender's counsel, in connection with the
preparation and negotiation of this Amendment; and (h) such other documents,
opinions, certificates, agreements, instruments and evidences as Lender may
reasonably request.
ARTICLE V
Ratifications, Representations and Warranties
Section 5.1 Ratifications. The terms and provisions of the Loan
Agreement, as modified by this Amendment, and the other Loan Papers are hereby
ratified and confirmed and shall continue in full force and effect. By executing
this Amendment, Borrowers and each other party hereto acknowledges and agrees
that (a) the term "Loan" as defined in the Loan Agreement includes without
limitation all obligations, liabilities and indebtedness of Borrowers under the
Loan Agreement, as amended hereby; (b) each of the security and pledge
agreements included in the Loan Documents secures, among other indebtedness, the
payment and performance of all indebtedness, liabilities and obligations of
Borrowers under the Loan Agreement as amended by this Amendment; (c) each of the
Loan Agreement, as amended hereby, and the other Loan Documents is and shall
remain in full force and effect and is and shall continue to be the legal, valid
and binding obligation of Borrowers, enforceable against it in accordance with
its terms except to the extent such enforcement may be limited by applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally.
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Section 5.2 Representations and Warranties. Borrowers hereby represents
and warrants to Lender that (a) the execution, delivery and performance of this
Amendment and all other documents executed and/or delivered in connection
herewith and all transactions and documents contemplated hereby and thereby have
been authorized by all requisite corporate action on the part of Borrowers; (b)
each of this Amendment and all other documents executed and/or delivered in
connection herewith constitute legal, valid and binding obligations of
Borrowers, as applicable, enforceable against each of them in accordance with
its terms, except to the extent such enforcement may be limited by applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally; (c) there is no provision of law, in the articles of incorporation or
bylaws of either Borrower and no provision of any existing mortgage, contract,
lease, indenture or agreement binding on either Borrower which would be
contravened by the making or delivery of this Amendment, or any other document
executed and/or delivered in connection herewith, or by the performance or
observance of any of the terms hereof or thereof; (d) the execution, delivery
and performance of this Amendment and the transactions contemplated hereby and
thereby do not require any approval or consent of, or filing or registration
with, any governmental or any other agency or authority, of stockholders, or of
any other party or, if such approval or consent is required, the same has been
obtained; (e) each of the representations and warranties of Borrowers contained
in Article 5 of the Loan Agreement, as amended hereby, are true and correct on
and as of the date hereof as though made on such date; (f) as of the date hereof
no Default or Event of Default is in existence and Borrowers is not otherwise in
default of any provision of the Loan Agreement or the other Loan Documents; (g)
as of the date hereof, there has been no material adverse change in the
financial condition or operations of Borrowers or any Subsidiary since December
31, 1998.
ARTICLE VI
Miscellaneous
Section 6.1 Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants made in this Amendment or any other
document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment, and no investigation by Lender or any closing
shall affect the representations, warranties and covenants or the right of
Lender to rely upon them.
Section 6.2 References to Loan Agreement. The Loan Agreement and any
and all other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Loan
Agreement, as amended hereby, are hereby amended so that any reference therein
to the Loan Agreement shall mean a reference to the Loan Agreement as amended
hereby.
Section 6.3 Further Assurances. Borrowers agrees that at any time and
from time to time, upon the written request of Lender, it will execute and
deliver such further documents and do such further acts and things as Lender may
reasonably request in order to fully effect the purposes of this Amendment and
to provide for the continued perfection and priority of the security interests
granted to Lender in the Loan Papers.
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Section 6.4 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 6.5 Applicable Law. This Amendment and all other documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Dallas, Dallas County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas except to the extent that federal
laws governing national banks shall have superseding application.
Section 6.6 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrowers, and their respective
successors and assigns, except Borrowers may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
Section 6.7 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
Section 6.8 Effect of Waiver. No consent or waiver, express or implied,
by Lender to or for any breach of or deviation from any covenant, condition or
duty by Borrowers shall be deemed a consent or waiver to or of any other breach
of the same or any other covenant, condition or duty.
SECTION 6.9 ENTIRE AGREEMENT. THE LOAN AGREEMENT AS AMENDED HEREBY, THE
OTHER LOAN DOCUMENTS PROVIDED FOR HEREIN AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 6.10 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
[SIGNATURE PAGE FOLLOWS]
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EXECUTED as of the date first written above.
GAINSCO, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Its: President
GAINSCO SERVICE CORP.
By: /s/ Xxxxx X. Xxxxxxxx
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Its: President
BANK ONE, NA
By: /s/ Xxxxxx X. Xxxxxxxxx
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Its: First Vice President
Address for Notices:
0 Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx XX0-0000
Facsimile: (000) 000-0000
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT - PAGE 9
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ACKNOWLEDGMENT AND AGREEMENT
Each of the undersigned, a party to a Security Agreement dated as of
November 13, 1998, does hereby (i) consent to the amendments made in the
foregoing First Amendment to Revolving Credit Agreement, (ii) confirm its
continuing obligations under such Security Agreement for the benefit of Lender,
and (iii) agree that such Security Agreement shall continue in full force and
effect as to it.
AGENTS PROCESSING SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Its: President
RISK RETENTION ADMINISTRATORS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Its: President
GENERAL AGENTS PREMIUM FINANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Its: President
MGA PREMIUM FINANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Its: President
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT - PAGE 10
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NATIONAL SPECIALTY LINES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: President
DLT INSURANCE ADJUSTERS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: President
LALANDE FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: President
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT - PAGE 11
