FOURTH AMENDMENT dated as of August 19, 1999
(this "Amendment") to the Credit Agreement (as
previously amended, the "Credit Agreement") dated as
of January 7, 1997, among ContiFinancial Corporation,
a Delaware corporation (the "Borrower"), the Lenders
party thereto and Credit Suisse First Boston, New
York Branch, as Administrative Agent.
A. Pursuant to the Credit Agreement, the Lenders have extended
credit to the Borrower on the terms and subject to the conditions set forth
therein.
B. The Borrower has requested that the Lenders extend the
Maturity Date and amend certain other provisions of the Credit Agreement as set
forth herein. The undersigned Lenders 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 Credit Agreement as
amended hereby. The principles of construction set forth in Section 1.03 of the
Credit Agreement shall apply equally to this Amendment.
SECTION 2. Amendments to Article I.
(a) Amendment of Section 1.01. Section 1.01 of the Credit
Agreement is hereby amended by:
(i) inserting in the appropriate alphabetical order the
following definitions:
"Act of Insolvency" means, with respect to the Borrower 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 Borrower 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 Borrower 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 Borrower or a Restricted Subsidiary or
any substantial part of its property, (iii) the appointment of a
receiver, conservator, or manager for the Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower's consolidated cash plus unencumbered mortgage
loans on the last Business Day of such month and (ii) the
Borrower'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 Borrower or one or more
Consolidated Restricted Subsidiaries and (ii) which is treated as
a consolidated subsidiary for the purpose of the Borrower'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 Mortgage Investments, Inc., Keystone Capital
Group, Inc. and California Lending Group.
"Fourth Amendment Date" means August 19, 1999.
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"Greenwich" means Greenwich Capital Financial Products, Inc.
"Indentures" means the Indenture, dated as of August 15,
1996, between the Borrower and The Chase Manhattan Bank, as
Trustee, the Indenture, dated as of March 1, 1997, between the
Borrower and The Chase Manhattan Bank, as Trustee, and the
Indenture, dated as of March 4, 1998, between the Borrower and
The Bank of New York, as Trustee, pursuant to the terms of each
of which the Borrower has issued Senior Notes.
"Material Adverse Effect" means a material adverse effect
upon (i) the business operations, properties or assets of the
Borrower and its Subsidiaries, taken as a whole, (ii) the ability
of the Borrower to perform its obligations, or of the
Administrative Agent or the Lenders 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 Borrower 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 Borrower 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.
"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.
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"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 Borrower 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 Borrower held
by any Person or of any Capital Stock of a Subsidiary held by any
Affiliate of the Borrower (other than a Subsidiary), including
the exercise of any option to exchange any Capital Stock (other
than into Capital Stock of the Borrower 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 Borrower
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 Borrower 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 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
Borrower'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
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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
Borrower under the terms of the Indentures.
"Subordinated Obligation" means any Indebtedness of the
Borrower (whether outstanding on the date hereof or thereafter
incurred) which is subordinate or junior in right of payment to
the obligations of the Borrower 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 Borrower 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 Borrower) 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 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.
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(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 Borrower 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 Borrower or a Restricted Subsidiary),
(ii) all or substantially all the assets of any division or line
of business of the Borrower or any Restricted Subsidiary, (iii)
any other assets of the Borrower or any Restricted Subsidiary
outside of the ordinary course of business of the Borrower 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 Borrower or by the
Borrower 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 lesser percentage of the total voting power of
the Voting Stock of the Borrower 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
6
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
Borrower or any Restricted Subsidiary was approved by a vote of
66-2/3% of the directors of the Borrower 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 Borrower or any
Restricted Subsidiary with or into another Person or the merger of
another Person with or into the Borrower or any Restricted Subsidiary,
as the case may be, or the liquidation, wind-up or dissolution of the
Borrower or any Restricted Subsidiary, as the case may be, or the sale
of all or substantially all the assets of the Borrower 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
Borrower 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 Borrower
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
Borrower or its Subsidiaries from 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 Borrower.
Notwithstanding anything contained in this Agreement to the contrary,
a Change of Control accompanied by an equity infusion in the Borrower 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.
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(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 "Maturity Date" in its entirety
and replacing it with the following:
"Maturity Date" means March 31, 2000, as such date may be
extended from time to time pursuant to Section 2.11.
(vii) 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 Borrower 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 Borrower or any Restricted
Subsidiary after such Asset Disposition.
SECTION 3. Amendments to Article II. Article II of the Credit
Agreement is hereby amended by:
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(a) Deleting the first sentence of Section 2.02(b) in its
entirety and replacing it with the following words: "Each Revolving Borrowing
shall be comprised of Eurodollar Loans only."
(b) Deleting Section 2.02(c) and (d) in their entirety and
replacing it with the following words "(c) [Reserved]." and "(d) [Reserved].",
respectively.
(c) Deleting the following words in Section 2.03: "or (b) in the
case of an ABR Borrowing, not later than 12:00 noon, New York City time, one
Business Day before the date of the proposed Borrowing," deleting clause (iii)
of section 2.03 in its entirety and replacing it with the words "(iii) stating
that the Borrowing is a Eurodollar Borrowing;" and deleting the first sentence
in the paragraph following Section 2.03(v).
(d) Deleting Section 2.04 in its entirety and replacing it with
the following:
SECTION 2.04. Swingline Loans. The Swingline Lender shall
not make any Swingline Loans to the Borrower after the Fourth
Amendment Date.
(e) Deleting clause (ii) in Section 2.05 in its entirety and
replacing it with the following words: "(ii) in the case of the Borrower, the
interest rate then applicable to Eurodollar Loans with a one-month Interest
Period."
(f) Deleting Section 2.06(a) in its entirety and replacing it
with the following words: "After the Fourth Amendment Date, each Revolving
Borrowing shall be a Eurodollar Borrowing with a one-month Interest Period."
(g) Deleting Section 2.06(b), (c), (d) and (e) in their entirety.
(h) Deleting the number "(i)" in Section 2.08(a) and deleting
clause (ii) thereof in its entirety.
(i) Deleting the parenthetical in the first sentence of Section
2.09(b) in its entirety, deleting the number "(i)" in Section 2.09(b), deleting
clauses (ii) and (iii) of Section 2.09(b) in their entirety and deleting the
last sentence of Section 2.09(b) in its entirety.
(j) Deleting Section 2.11(a) in its entirety and replacing it
with the words "(a) [Reserved]."
(k) Adding the following proviso immediately before the proviso
in Section 2.11(e): "provided, however, that the Borrower 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 and
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such deferred interest)" and adding the word "further" after the word "provided"
in such provision.
(l) Deleting Section 2.11(c) in its entirety and replacing it
with the words "(c) [Reserved]."
(m) Deleting clause (ii) of Section 2.11(d) in its entirety and
replacing it with the following words: "(ii) in the case of any other amount, 2%
plus the Alternate Base Rate."
(n) Deleting clause (iii) of Section 2.11(e) in its entirety and
renumbering clause (iv) so that it is clause (iii).
(o) Deleting the following words in Section 2.11(f): "and (solely
with respect to the determination of interest payable on any Swingline Loan) the
applicable Federal Funds Effective Rate shall be determined by the Swingline
Lender."
(p) Deleting Section 2.12 in its entirety and replacing it with
the words "SECTION 2.12. [Reserved]."
(q) Deleting clause (b) of Section 2.14 in its entirety and
renumbering clauses (c) and (d) so that they are clauses (b) and (c),
respectively.
SECTION 4. Amendments to Article III. Article III of the Credit
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 hereby in its entirety and replaced with
the words: "(b) Since March 31, 1999, there has been no Material Adverse Effect,
except as otherwise disclosed to the Lenders."
SECTION 5. Amendments to Article V. Article V of the Credit
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:
"(i) the following additional financial information (A) the
Borrower'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 Borrower
at the beginning of each month starting on December 1, 1999
through the Termination Date; (C) the Borrower'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
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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 Receivables comprising the
Collateral within five Business Days of receipt thereof by
the Borrower 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 Credit
Agreement is hereby amended by deleting Section 6.01 and Sections 6.03 through
6.10 thereof in their entirety and substituting therefor the following:
SECTION 6.01. Restricted Payments. Neither the Borrower nor any
Restricted Subsidiary shall make any Restricted Payment.
SECTION 6.03. Collateral. Neither the Borrower nor any Restricted
Subsidiary shall take any action which would directly or indirectly
impair or adversely affect (i) the Administrative 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 Borrower
or (y) any action taken in the ordinary course of business.
SECTION 6.04. Material Adverse Effect. Neither the Borrower 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 Borrower 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
Borrower to cease) to be in the business of originating mortgage
loans.
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SECTION 6.06. Affiliate Transactions. (A) The Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower and its
Subsidiaries who are not employees of the Borrower or its
Subsidiaries, (vi) any Affiliate Transactions between the Borrower 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
Borrower and (vii) transactions pursuant to any agreement as in
existence as of the date hereof between the Borrower 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 Borrower 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 Borrower shall not
permit the Average Liquidity Test for any month to be less than
$20,000,000.
12
SECTION 6.09. Asset Dispositions. The Borrower shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly,
consummate any Asset Disposition unless (i) the Borrower 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 Borrower, of the shares and assets
subject to such Asset Disposition and at least 85% of the
consideration thereof received by the Borrower 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 Borrower (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 Borrower or any Indebtedness of a Restricted
Subsidiary, as the case may be (other than in either case Indebtedness
owed to the Borrower or an Affiliate of the Borrower), provided that
the Borrower may prepay, repay, redeem or purchase any Senior
Indebtedness owed to the Borrower'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 Borrower 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
Borrower 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.
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 Borrower or any Restricted Subsidiary, and the release of the
Borrower and its continuing Restricted Subsidiaries from all liability
on such Indebtedness, in connection with such Asset Disposition and
(y) securities received by the Borrower or any Restricted Subsidiary
from the transferee that are promptly converted by the Borrower or
such Restricted Subsidiary into cash.
SECTION 6.10. Senior Note Payments. The Borrower shall timely
make all required payments to holders of its Senior Notes that are due
in each of September and October 1999.
13
SECTION 7. Amendments to Article VII. (a) Article VII of the
Credit Agreement is hereby amended by deleting clauses (f) through (m) thereof
in their entirety and substituting therefor the following:
(f) an Act of Insolvency occurs with respect to the Borrower;
(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 Borrower or any of its Restricted
Subsidiaries which in any case has a Material Adverse Effect;
(h) any Change of Control of the Borrower shall have occurred
without the prior consent of the Required Banks which consent shall not be
unreasonably withheld;
(i) the Required Lenders, 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 Borrower (x)
under any agreement between the Borrower (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 Credit Agreement is hereby amended by
deleting the words "and in the case of any event with respect to the Borrower
described in clause (h) or (i)" in the provision following paragraph (m) and
inserting the words "and in the case of any event with respect to the Borrower
in clause (f)."
SECTION 8. Amendments to Article VIII. The first paragraph of
Article VIII of the Credit Agreement is hereby amended so that the words "and as
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.
14
SECTION 9. Amendments to Article IX. Article IX of the Credit
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 any such assignment"; and (b)
Article IX of the Credit Agreement is hereby amended by adding the following
Section 9.13 to the end thereof:
"SECTION 9.13. Collateral Proceeds. Each Lender agrees that if it
receives greater than its pro rata share of the proceeds of Collateral
(as defined in the Security Agreement), such Lender 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 Borrower
represents and warrants to the Administrative Agent and each Lender that:
(a) The representations and warranties set forth in the Credit
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 Borrower of this Amendment and (ii) "this
Agreement" being deemed to include this Amendment.
(b) (i) The Borrower'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 Borrower of
reasonable reserves, the Borrower cannot grant a security interest in
favor of the Administrative Agent and the Lenders in more than
$147,004,342 in book value of the Borrower'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 Borrower 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 Year 2000 Program, the
Borrower does not reasonably anticipate that Year 2000 Issues will
have a Material Adverse Effect.
15
(d) After giving effect to this Amendment, the Borrower is in
compliance in all material respects with all the terms and provisions
contained in the Credit 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 Borrower'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 Administrative Agent shall have received counterparts of
this Amendment that, when taken together, bear the signatures of the
Borrower and the Lenders;
(b) the Administrative Agent shall have received an opinion of
Borrower's in-house counsel and Xxxxx Xxxxxxxxxx LLP, in form and
substance satisfactory to the Administrative Agent and covering such
matters relating to this Amendment and the Security Documents, as the
Administrative Agent shall reasonably request;
(c) the Administrative Agent shall have received such documents
and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good
standing of the Borrower or the authorization of this Amendment and
the Security Documents, and any other legal matters relating to the
Borrower or this Amendment or the Security Documents, all in form and
substance reasonably satisfactory to the Administrative Agent and its
counsel; and
(d) an amendment to the Reimbursement Agreement, substantially in
the form of this Amendment, shall have been executed and delivered by
the Borrower and of all the "Participating Banks" (as defined in the
Reimbursement 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 Borrower, together with certificates evidencing all of
the Collateral, which certificates shall be accompanied by undated
certificate powers duly executed in blank.
16
The Administrative Agent shall promptly notify the Borrower and
the Lenders 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 Borrower's
obligations under Section 9.03 of the Credit Agreement, the Borrower agrees to
pay all reasonable out-of-pocket expenses incurred by the Administrative Agent,
the Co-Arrangers identified on the cover page of the Credit 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 Lenders
under the Credit 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 Lenders or the
Administrative Agent under the Credit Agreement, and shall not alter,
modify, amend or in any way affect any of the terms, conditions,
obligations, covenants or agreements contained in the Credit
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 Borrower 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
Credit Agreement in similar or different circumstances. This Amendment
shall apply and be effective only with respect to the provisions of
the Credit Agreement specifically referred to herein. The Borrower
hereby ratifies, affirms, acknowledges and agrees that the Credit
Agreement and the Loans and reimbursement obligations thereunder
represent the valid, enforceable and collectible obligations of the
Borrower, and acknowledges that there are no existing claims,
defenses, personal or otherwise, or rights of setoff whatsoever with
respect to the Credit Agreement or the Loans or reimbursement
obligations thereunder.
(b) As used in the Credit Agreement, the terms "Agreement",
"herein", "hereinafter", "hereunder", "hereto", and words of similar
import shall mean, from and after the date hereof, the Credit
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.
17
(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 Lenders hereby waive any Default resulting from (i) the
failure by the Borrower to timely provide to the Administrative Agent
the Borrower's March 31, 1999 financial statements as required in
Section 5.01(a) of the Credit Agreement and (ii) the "going concern"
qualification contained in the report of the Borrower's independent
public accountants given in connection with such financial statements.
18
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
CORESTATES BANK, N.A.,
by
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
-----------------------------------
Name:/s/ Xxxxxxx X. Xxxxxx
Title: Vice President
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES,
by
-----------------------------------
Name:/s/ Xxxxx X. Xxxxxxxxxx
Title: Director
by
-----------------------------------
Name:/s/ Xxxx X. XxXxxx
Title: Director
DG BANK,
by
-----------------------------------
Name:/s/ Xxxxxxxx Xxxxxxxx
Title: Senior Vice President
by
-----------------------------------
Name:/s/ Xxxxx XxXxxx
Title: Senior Vice President
THE BANK OF NOVA SCOTIA,
by
-----------------------------------
Name:/s/ A.T.D. Xxxxxx
Title: Senior Manager
CREDIT LYONNAIS NEW YORK BRANCH,
by
-----------------------------------
Name:/s/ Xxxxx Xxxxxxxxx
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
by
-----------------------------------
Name:/s/ Xxxxxxx X. Xxxxxxx, Xx.
Title: Vice President
COMERICA BANK,
by
-----------------------------------
Name:/s/ Von X. Xxxxxxx
Title: First Vice President
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by
-----------------------------------
Name:/s/ Xxxxx X. Xxxxxxxx
Title: Vice President
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
by
-----------------------------------
Name:/s/ Xxxx Xxxxx Xxxxxx
Title: Vice President
PNC BANK NATIONAL ASSOCIATION,
by
-----------------------------------
Name:/s/ Xxxxxx X. Bjoahul
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH,
by
-----------------------------------
Name:/s/ Xxxxxx X. Tata
Title: Senior Vice President
