1
PAYMENT DEFERRAL AGREEMENT EXHIBIT 10.17
This Agreement dated March 26, 1999 is between Stanwich Financial
Services Corp. ("SFSC") and NAB Asset Corporation ("NAB").
RECITALS:
1. NAB is indebted to SFSC under the following instruments
(collectively, the "NOTES" and, individually, a "NOTE"):
(1) Promissory Note dated June 27, 1997 in the original
principal amount of $800,000;
(2) Line of Credit Note dated August 28, 1997 in a
principal amount not to exceed $5,000,000;
(3) Promissory Note dated September 30 , 1997 in the
original principal amount of $2,500,000;
(4) Promissory Note dated December 30, 1997 in the
original principal amount of $4,000,000 (acquired by
SFSC by assignment from Consumer Portfolio Services,
Inc.);
(5) Promissory Note dated March 12, 1998 in the original
principal amount of $900,000; and
(6) Promissory Note dated March 13, 1998 in the original
principal amount of $1,100,000.
2. NAB has requested that SFSC agree to amend the Notes to defer
principal and interest payments thereunder, and SFSC is
willing to do so on the terms and conditions hereinafter set
forth.
NOW THEREFORE, the parties agree as follows:
1. Subject to paragraphs 2, 3, 4 and 5, below, each of the Notes
is hereby amended to grant to NAB the option to defer making
any or all Scheduled Payments until January 3, 2000. As used
herein, the term "Scheduled Payments" means payments of
principal and interest under the Notes that are scheduled by
the terms thereof to be paid during the period beginning on
the date hereof and ending on December 31, 1999.
2
2. Each of the Notes is hereby further amended to provide that,
if pursuant to paragraph 1, above, NAB defers any Scheduled
Payment that is an interest payment, the amount thereof shall
itself bear interest, at a rate equal to the rate at which
interest accrues on the principal of such Note, during the
period from the original due date of such deferred payment (as
scheduled in the applicable Note, before giving effect to this
Agreement) to the date such deferred payment is made. Each
item of additional interest provided for in this paragraph 2
shall be payable on the earlier to occur of (i) January 3,
2000 or (ii) the date of which the deferred interest to which
such additional interest relates is paid.
3. As used herein, the term "Corporate Transaction" means any
transaction in which (i) NAB borrows money from a lending
institution and/or (ii) all or substantially all of the
capital stock or assets of a subsidiary of NAB are sold (in
one or more transactions) other than in the ordinary course of
business. If, after the date hereof, NAB consummates one or
more Corporate Transactions prior to the payment of the Notes
in full and if the aggregate net proceeds received therefrom
by NAB and/or its subsidiaries at any time or from time to
time exceeds $400,000 or such lesser amount as NAB's Board of
Directors may determine, then, in such case, NAB shall use the
entire amount of such excess net proceeds (up to but not
exceeding the aggregate amount of NAB's indebtedness under the
Notes, as amended hereby) to pay or prepay its indebtedness
under the Notes, not later than the next business day after
each such receipt of excess net proceeds by NAB and/or its
subsidiaries; provided, however, that NAB shall be obligated
to so use such excess net process only to the extent it can do
so without causing a breach or default by itself or any such
subsidiary under any agreement existing on the date hereof to
which it or any such subsidiary is a party. NAB hereby agrees
to use its best efforts to effect one or more Corporate
Transactions as soon as possible with gross proceeds of at
least $5,000,000; provided that such transactions are
determined by NAB's Board of Directors to be fair to and in
the best interests of NAB and its shareholders. Any failure by
NAB to make any prepayment required by this paragraph 3 shall
constitute a default or event of default under all of the
Notes, with the result that, at SFSC's option, all of the
indebtedness under all of the
3
Notes shall accelerate and become immediately due and payable,
without demand, notice presentment or any other legal
formalities. If the amount prepaid pursuant to this paragraph
is less than the aggregate amount then outstanding under the
Notes, then, in such case, such prepayment shall be applied,
first, towards the payment of interest (including additional
interest, if any, under paragraph 2, above) under the Notes
and, second, towards the payment of principal under the Notes,
in both cases in such order and such manner as may be
determined by SFSC in its discretion.
4. The foregoing amendments to the Notes shall not be construed
to amend, alter, modify, limit, impair or otherwise affect in
any manner SFSC's right under any Note to accelerate the
payment of the indebtedness thereunder upon the occurrence of
a default or event of default thereunder, in accordance with
the terms of such Note.
5. NAB's rights to prepay the Notes without penalty, as provided
for therein, is hereby confirmed.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date
first above written.
STANWICH FINANCIAL SERVICES CORP. NAB ASSET CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx, Xx. By: /s/ Xxxx Xxxxxx
---------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx. Name: Xxxx Xxxxxx
Title: Vice - President Title: Senior Vice President
