WAIVER AND AMENDMENT NO. 1
TO
AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 1 ("Amendment") is entered into as of
August 12, 1998, by and among ALLSTATE FINANCIAL CORPORATION, a corporation
organized under the laws of the Commonwealth of Virginia ("Borrower"), the
undersigned financial institutions (collectively the "Lenders" and individually
a "Lender") and IBJ XXXXXXXX BUSINESS CREDIT CORPORATION as successor to IBJ
Xxxxxxxx Bank & Trust Company ("IBJS"), as agent for the Lenders (IBJS, in such
capacity, the "Agent).
BACKGROUND
Borrower, Agent and Lenders are parties to an Amended and Restated
Revolving Credit Loan and Security Agreement dated as of May 17, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Agent and Lenders provide Borrower with certain
financial accommodations.
Borrower has requested that Agent and Lenders waive certain Events of
Default and amend certain financial covenants and Agent and Lenders are willing
to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrower by Agent
and Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the conditions
precedent set forth in Section 4 below, the Loan Agreement is hereby amended as
follows:
(a) Section 7.19 of the Loan Agreement is amended in its entirety to
provide as follows:
7.19. Financial Covenants. Breach, on a consolidated basis, any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP as in effect on the Effective Date:
(a) (i) On the last day of each Fiscal Quarter commencing with the Fiscal
Quarter ended September 30, 1998, the ratio of (A) EBIT to (B) interest expense
(other than interest expense in respect of the Convertible, Senior Subordinated
Notes) for (w) the Fiscal Quarter ended September 30 1998, (x) the two Fiscal
Quarters ended December 31, 1998 (taken as one accounting period), (y) the three
Fiscal Quarters ended March 31, 1999 (taken as one accounting period), and (z)
the four Fiscal Quarters ended on the last day of each Fiscal Quarter commencing
with the Fiscal Quarter ended June 30, 1999 (taken as one accounting period),
shall not be less than 3:1; and
(ii) On the last day of each Fiscal Quarter commencing with the Fiscal
Quarter ended September 30, 1998, the ratio of (A) EBIT to (B) total interest
expense for (w) the Fiscal Quarter ended September 30 1998, (x) the two Fiscal
Quarters ended December 31, 1998 (taken as one accounting period), (y) the three
Fiscal Quarters ended March 31, 1999 (taken as one accounting period), and (z)
the four Fiscal Quarters (taken as one accounting period) ended on the last day
of each Fiscal Quarter commencing with the Fiscal Quarter ended June 30, 1999,
shall not be less than 2:1.
(b) On the last day of each Fiscal Quarter, the ratio of (i) Total
Liabilities to (ii) Tangible Net Worth plus the aggregate principal amount of
Convertible, Senior Subordinated Notes then outstanding shall not exceed 2:1.
(c) (1) The sum of (i) Tangible Net Worth plus (ii) the aggregate principal
amount of Convertible, Senior Subordinated Notes outstanding shall equal or
exceed $25,200,000 on June 30, 1998, and (2) on the last day of any Fiscal
Quarter thereafter, the sum of (i) Tangible Net Worth plus (ii) the aggregate
principal amount of Convertible, Senior Subordinated Notes then outstanding
shall equal or exceed the sum of (x) $25,200,000 and (y) $10,000 times the
number of Fiscal Quarters elapsed from June 30, 1998 to the end of such Fiscal
Quarter.
(d) (i) Net cash advanced to any Client by Borrower (net of Risk
Participations sold with respect to such Client) shall not at any time exceed
15% of the sum of (x) Borrower's Tangible Net Worth (on a consolidated basis)
and (y) the aggregate principal amount of Convertible, Senior Subordinated Notes
outstanding at such time, except that net cash advances to MGV International
("MGV"), Jarnow Corporation ("Jarnow") and United Plastics International
Corporation ("UPIC") by Borrower (net of Risk Participations sold with respect
to each such Client) may exceed 15% of the sum of clauses (x) and (y), but shall
at no time exceed (A) with respect to Jarnow and UPIC (X) (until December 31,
1998) 25% of the sum of clauses (x) and (y) calculated as of March 31, 1998 or
(y) (after December 31, 1998) 25% of the sum of clauses (x) and (y) calculated
as of the date such determination is made and (B) with respect to MGV,
$6,500,000.00; provided however, that in the event at any time the net cash
advances by Borrower to any two of MGV, Jarnow and UPIC (net of Risk
Participations sold with respect to each such Client) do not exceed 15% of the
sum of clauses (x) and (y), net cash advances to any one other Client by
Borrower (net of Risk Participations sole with respect to such Client) may
exceed 15%, but shall not exceed 20%, of the sum of clauses (x) and (y);
provided further, however, that in the event at any time the net cash advances
by Borrower to every one of MGV, Jarnow and UPIC (net of Risk Participations
sold with respect to each such Client) do not exceed 15% of the sum of clauses
(x) and (y), net cash advances to any two other Clients by Borrower (net of Risk
Participations sold with respect to each such Client) may exceed 15%, but shall
not exceed 20%, of the sum of clauses (x) and (y); and (ii) net cash advanced by
Borrower (net of Risk Participations) with respect to Receivables owed by a
single Account Debtor shall not at any time exceed 25% of the sum of (x)
Borrower's Tangible Net Worth (on a consolidated basis) and (y) the aggregate
principal amount of Convertible, Senior Subordinated Notes outstanding at such
time.
For purposes of this Section 7.19(d), (x) each agency, branch or division
of the Federal government shall be treated as a separate Account Debtor and (y)
each insurance company under state xxxxxxx'x compensation arrangements shall be
treated as a separate Account Debtor.
(b) Any references in the Loan Agreement to the Convertible, Senior
Subordinated Notes shall be deemed to refer to the existing Convertible, Senior
Subordinated Notes as well as to any Convertible, Senior Subordinated Notes
which may be issued in exchange for the original Convertible, Senior
Subordinated Notes, or which are issued to Value Partners in consideration of
Value Partners providing loans to enable Borrower to repay the existing
Convertible, Senior Subordinated Notes which are required to be redeemed at par
pursuant to a Notice of Fundamental Charge mailed to existing holders of
Convertible, Senior Subordinated Notes on June 17, 1998. Any new Convertible,
Senior Subordinated Notes shall be subject to subordination provisions which are
acceptable to Agent and Required Lenders (with the existing subordination
provisions being acceptable to Agent and Lenders), have a maturity date of
September 20, 2003, a fixed interest rate of 10% per annum and be convertible
into common stock of the Borrower at $6.50 per share. All references in the Loan
Agreement and any other documents shall be deemed to refer to the existing
Convertible, Senior Subordinated Notes and to any notes issued in substitution
therefor or issued to Value Partners in exchange for money to be used by
Allstate to redeem any existing Convertible, Senior Subordinated Notes. No
Advances shall be used to redeem the existing Convertible, Senior Subordinated
Notes.
3. Waiver. Subject to satisfaction of the conditions precedent set forth in
Section 4 below, Lender hereby waives the following Events of Default which have
occurred as a result of Borrower's non-compliance with the following provisions
of the Loan Agreement on or prior to June 30, 1998:
(a) Section 7.19, to the extent that such Event of Default arose solely as
a result of Borrower's failure to comply with clauses (a) - (d) thereof at and
for the four Fiscal Quarters ended June 30, 1998.
(b) Section 10.14, but only to the extent that such Event of Default arose
solely as a result of the modification in May 1998 to the Board of Directors of
Borrower.
4. Conditions of Effectiveness. This Amendment shall become effective upon
satisfaction of the following conditions precedent: Agent shall have received
(i) four (4) copies of this Amendment executed by Borrower and Required Lenders
and consented and agreed to by each of the Guarantors, and (ii) an amendment fee
of $15,000 for the ratable benefit of Lenders (such fee may be charged to
Borrower's account).
5. Representations and Warranties. Borrower hereby represents and warrants
as follows:
(a) This Amendment and the Loan Agreement, as amended hereby, constitute
legal, valid and binding obligations of Borrower and are enforceable against
Borrower in accordance with their respective terms.
(b) After given effect to this Amendment, Borrower hereby reaffirms all
covenants, representations and warranties made in the Loan Agreement to the
extent the same are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been remade as of the
effective date of this Amendment.
(c) No Event of Default or Default has occurred and is continuing or would
exist after giving effect to this Amendment.
(d) Borrower has no defense, counterclaim or offset to the Obligations.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
7. Governing Law. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
8. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. Counterparts. This Amendment may be executed by the parties hereto in
one or more counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
ALLSTATE FINANCIAL CORPORATION
By:_______________________________
Name:
Title:
IBJ XXXXXXXX BUSINESS CREDIT CORPORATION, as Agent and Lender
By:_______________________________
Name:
Title:
NATIONAL BANK OF CANADA, as Lender
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
CONSENTED AND AGREED TO:
LIFETIME OPTIONS, INC., A
VIATICAL SETTLEMENT COMPANY
By:
Name:
Title
[SIGNATURES CONTINUED ON NEXT PAGE]
1026981.1/SJS/25254/010 3/31/99
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PREMIUM SALES NORTHEAST, INC.
By:
Name:
Title
RECEIVABLE FINANCING CORPORATION
By:
Name:
Title
BUSINESS FUNDING OF FLORIDA, INC.
By:
Name:
Title
BUSINESS FUNDING OF AMERICA, INC.
By:
Name:
Title
SETTLEMENT SOLUTIONS, INC.
By:
Name:
Title
AFC HOLDING CORPORATION
By:
Name:
Title
1026981.1/SJS/25254/010 3/31/99
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