Exhibit 10(g)
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second
Amendment") is made and entered into as of November 30, 1996 by and among
NATIONAL CONSUMER SERVICES CORP., L.L.C., a Georgia limited liability company
(NCS"), NATIONAL CONSUMER SERVICES CORP. II, L.L.C., a Georgia limited liability
company ("NCS II"), and BLOCK FINANCIAL CORPORATION, a Delaware corporation
("BFC").
Recitals
A. BFC, NCS and NCS II are parties to that certain Credit
Agreement dated as of December 19, 1995, as amended by the First Amendment to
Credit Agreement dated as of January 1, 1996 (as amended, the "Credit
Agreement"), pursuant to which BFC agree to extend credit to NCS and NCS II
subject to the terms and conditions set forth therein.
B. The parties hereto desire to amend the Credit Agreement to
modify the provisions pertaining to the delivery of Mortgage Notes to BFC.
Agreements
IN CONSIDERATION of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which being hereby acknowledged
and accepted, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Definitions. Unless otherwise expressly defined herein, all
capitalized terms used in this Second Amendment shall have the respective
meanings ascribed to such terms in the Credit Agreement.
2. Amendment to Credit Agreement. (a) Section 1.1 of the
Credit Agreement is hereby amended by deleting the definition of "Exception
Loan" thereof in its entirety and inserting in lieu thereof the following
definition:
"Exception Loan" shall mean a Mortgage Loan that, or with
respect to which, (i) meets the criteria set forth in clauses (b)
through (i) or the definition of "Qualified Mortgage Loan," (ii) is
made in substantial compliance with the underwriting criteria set forth
in Section 6.11 and (iii) any variance from the underwriting criteria
set forth in Section 6.11 is approved in writing by an executive
officer of Borrower in accordance with the policy concerning exceptions
to underwriting standards as set forth in Exhibit F attached hereto (as
such standards may be amended and modified in writing by the parties
from time to time) prior to the origination of such Mortgage Loan or
purchase by Borrower of such Mortgage Loan, as the case may be.
(b) Section 1.1 of the Credit Agreement is hereby amended to
add the following definition:
"Underwriting Exception Loan" shall mean an Exception Loan
other than an Exception Loan that is an Exception Loan for either or
both of the following reasons (but for no other reason): (i) the
underwriting documentation reviewed or procedures utilized in
connection with evaluating the credit risk (including, without
limitation, the adequacy of Property securing the obligations of the
Mortgagor(s) under such Exception Loan) with respect to such Exception
Loan is not in conformity with the Underwriting Criteria (a
"Documentation Exception Loan") or (ii) the interest rate for such
Exception Loan is not in conformity with those set forth in the
Underwriting Criteria for Seller Mortgage Loans that fall within the
same interest rate guideline classification; provided, however, that a
Documentation Exception Loan shall not be an Underwriting Exception
Loan only if alternative underwriting procedures consistent with
industry practices and standards are undertaken with respect to such
Documentation Exception Loan.
(c) Section 2.2(b) of the Credit Agreement is hereby amended in
its entirety to read as follows:
(b) Optional Increase of the Committed Amount. Borrower may
increase the Committed Amount of Lender to (i) $50,000,000 at any time during
the 3-month period ending March 31, 1997 and (ii) $100,000,000 at any time
during the 3-month period commencing 21 months from and after the date of this
Agreement. Increases in the Committed Amount shall be made by providing not less
than 60 days notice (which notice shall be irrevocable) to such effect to
Lender, which notice shall specify the date during the applicable three-month
period on which such increase shall take effect. After the date specified in
such notice the Commitment Fee shall be calculated upon the Committed Amount as
so increased. Upon the increase of the Committed Amount pursuant to this Section
2.2(b), Borrower shall execute and deliver a new Note reflecting such increased
Committed Amount and upon delivery of such Note Lender shall cancel and deliver
to Borrower the Note reflecting the prior Committed Amount.
(d) Section 5.9 of the Credit Agreement is hereby amended in
its entirety to read as follows:
5.9 Use of Proceeds. Borrower shall apply the proceeds of all
Loans hereunder only for the purpose (and for no other purpose) of
(i) funding Qualified Mortgage Loans and Exception Loans originated
by third parties (but only to the extent (A) at least 80% of
such Qualified Mortgage Loans and Exception Loans are purchased by
Borrower within 25 Business Days after the date such Qualified Mortgage
Loans and Exception Loans are funded or (B) the advances, loans or
extensions of credit made by Borrower to fund such Qualified Mortgage
Loans and Exception Loans are repaid to Borrower within 25 Business
Days after the date such Qualified Mortgage Loans and Exception Loans
are funded) and (ii) originating, making or purchasing Qualified
Mortgage Loans and
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Exception Loans. Borrower shall not use the proceeds of any Loans
hereunder directly or indirectly for any unlawful purpose or in any
manner inconsistent with any other provision of any Loan Document.
(e) Section 5.12 of the Credit Agreement is hereby amended in
its entirety to read as follows:
5.12. Delivery of Notes and Mortgage Documents. (a) Borrower
shall cause to be delivered to Lender (or such third party designated
by Lender in writing) each Mortgage Note pertaining to a
Mortgage Loan owned by Borrower and each Mortgage Note in which
Borrower has been granted a security interest. Notwithstanding the
foregoing sentence and in lieu of the foregoing delivery requirement,
Borrower may direct the Person that closed the Mortgage Loan pertaining
to such Mortgage Note (which direction shall be in writing) to either
(i) hold such Mortgage Note in trust on behalf of Lender (and Borrower,
in cases in which Borrower has a security interest in such Mortgage
Note) until the applicable Mortgage Loan is sold to a Person other than
Borrower or (ii) deliver such Mortgage Note to a Person (other than
Borrower) to whom such Mortgage Note is intended to be sold; provided,
however, that the Person to whom such Mortgage Note is delivered shall
execute a "bailment" letter substantially in the form of Exhibit E
attached hereto. Each Mortgage Note delivered pursuant to this Section
5.12(a) shall either be endorsed in blank or endorsed to Lender.
(b) In addition to each Mortgage Note to be delivered
pursuant to Section 5.12(a), Borrower shall cause to be delivered to
Lender (or such third party designated by Lender in writing) (i) either
the original recorded Mortgage or a copy thereof certified by the
applicable recording office (provided that if the Mortgage has not yet
been recorded but has been sent for recording, a copy of the Mortgage
may be delivered in lieu of the foregoing so long as either of the
foregoing is delivered to Lender promptly upon receipt thereof by
Borrower), (ii) copies of each intervening assignment of the Mortgage
(which shall be recorded or shall have been sent for recording in the
applicable recording office) and (iii) an original assignment of
Mortgage in recordable form, assigning the Mortgage from Borrower to
Lender.
(c) Each delivery to be made to Lender pursuant to Sections
5.12(a) and (b) shall be made in the following manner:
(i) In the case of Mortgage Loans purchased by Borrower, either
(A) the Person from whom Borrower purchased the applicable
Mortgage Loan shall deliver the Mortgage Note and other
deliverable documents directly to Lender concurrently with
the purchase by Borrower of such Mortgage Loan or (B)
Borrower shall deliver the Mortgage Note and other
deliverable documents to Lender within five Business Days
after the purchase by Borrower of the applicable Mortgage
Loan.
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(ii) In the case of Mortgage Notes in which Borrower has been
granted a security interest, either (A) the Person that
processed the origination of the applicable Mortgage Loan
shall deliver the Mortgage Note and other deliverable
documents directly to Lender within three Business Days
after the closing of such Mortgage Loan or (B) Borrower
shall deliver the Mortgage Note and other deliverable
documents to Lender within five Business Days after receipt
thereof by Borrower (but in no event later than ten
Business Days after origination of the Mortgage Loan
evidenced by such Mortgage Note).
Lender acknowledges and agrees that any Mortgage Note in Lender's
possession with respect to which Borrower has a security interest
(other than a Mortgage Note pertaining to a Mortgage Loan purchased by
Borrower) shall be held by Lender as a bailee of Borrower and that this
Agreement shall be deemed notification of Borrower's security interest
in such Mortgage Note.
(d) Borrower shall deliver to Lender (or such third
party designated by Lender in writing) each promissory note pertaining
to advances, loans and extensions of credit permitted by Section 6.6.
Each such promissory note shall be delivered directly to Lender within
one day after closing or making of such advance or extension of credit.
(f) Section 6.6 of the Credit Agreement is hereby amended in
its entirety to read as follows:
6.6 Investment, Loans and Advances; Structures. Borrower shall
not make any advance, loan, extension of credit or capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities
or equity interests of, or make any other investments in, any Person
except for (i) Qualified Mortgage Loans and Exception Loans made or
purchased by Borrower in the ordinary course of business (provided,
however, that at no time shall the aggregate outstanding principal
balance of Underwriting Exception Loans owned by Borrower as of the
close of business on any day exceed 10% of the Committed Amount in
effect as of the close of business on such day), (ii) advances, loans
and extensions of credit to third parties solely for the purpose of
funding Qualified Mortgage Loans and Exception Loans and solely
pursuant to written loan agreements in form and substance approved in
writing in advance by Lender, (iii) overnight funds with federally
chartered and federally insured institutions and (iv) other short-term
investments rated A or higher by Standard & Poors, Xxxxx'x, Best, Fitch
or any other appropriate rating agency and that have a maturity of one
year or less. In addition, Borrower shall not form any subsidiary
corporation or limited liability company without the prior written
consent of Lender and Borrower shall not take any action or forbear
from taking any action (including, without limitation, the granting of
consents to actions taken or
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proposed to be taken by others) that would cause Borrower to be taxable
as a corporation for federal income tax purposes.
(g) The Credit Agreement is hereby amended by (i) deleting
Exhibit E thereto in its entirety and inserting in lieu thereof Exhibit E
attached hereto and (ii) adding Exhibit F attached hereto.
3. Credit Agreement Confirmed. The Credit Agreement, as
amended by this Second Amendment, is in all respects ratified, approved and
confirmed by NCS, NCS II and BFC and shall, as so amended, remain in full force
and effect in accordance with its terms. All references to the Credit Agreement
in any of the Loan Documents shall be deemed to refer to the Credit Agreement as
amended by this Second Amendment.
4. Miscellaneous. This Second Amendment shall be governed by
and construed in accordance with the laws of the State of Missouri and shall
be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this First Amendment by their respective officers thereunto duly
authorized, as of the day and year first above written.
BLOCK FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: President
NATIONAL CONSUMER SERVICES, CORP., L.L.C.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
President
NATIONAL CONSUMER SERVICES CORP., II, L.L.C.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxx
President
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