FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
FIRST AMENDMENT, dated as of August 12, 1996 (this "AMENDMENT")
to the Note Purchase Agreement, dated as of February 14, 1996 (as
amended, supplemented or otherwise modified, the "NOTE PURCHASE
AGREEMENT") between ContiFinancial Corporation, a Delaware corporation
(the "COMPANY") and Continental Grain Company, a Delaware corporation
(the "BUYER").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are parties to the Note
Purchase Agreement;
WHEREAS, the Company has requested that the Buyer amend the
Note Purchase Agreement as more fully set forth herein;
WHEREAS, the Buyer is willing to so amend the Note Purchase
Agreement only upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms
defined in the Note Purchase Agreement shall have such meanings when used
herein.
2. AMENDMENT OF SECTION 1.1. Section 1.1 of the Note
Purchase Agreement hereby is amended by:
(a) adding the following definitions of "Cal Lending" and
"Guaranties" in appropriate alphabetical order:
""CAL LENDING" means California Lending Group, Inc., a
California corporation (d/b/a United Lending Group)."
""GUARANTIES" by any Person shall, without duplication, mean
all obligations (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) of
such Person guaranteeing, or in effect guaranteeing, any
indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an
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agreement, contingent or otherwise, by such Person: (a) to purchase
such indebtedness or obligation or any property or assets
constituting security therefor, (b) to lease property or to purchase
securities or other property or services primarily for the purpose
of assuring the owner of such indebtedness or obligation of the
ability of the primary obligor to make payment of the indebtedness
or obligations or (c) otherwise to assure the owner of the
indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of all computations made under
this Note Purchase Agreement, a Guaranty in respect of any
indebtedness for borrowed money shall be deemed to be indebtedness
equal to the principal amount of such indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any
other obligation or liability or any dividend shall be deemed to be
indebtedness equal to the maximum aggregate amount of such
obligation, liability or dividend."
(b) deleting in their entirety the definitions of
"Consolidated Long-Term Debt" and "Financial Leverage Ratio" and
substituting therefor the following in appropriate alphabetical order:
""CONSOLIDATED LONG-TERM DEBT" means, as at any date of
determination, (i) the non-current portion of long-term debt
(including capitalized leases but excluding the Term Note, the
Four Year Note and the Indenture Note) of the Company and its
Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP plus (ii) Guaranties of the non-current
portion of long-term debt (including capitalized leases) of any
Person other than a Consolidated Subsidiary."
""FINANCIAL LEVERAGE RATIO" means the ratio of
(i) Consolidated Total Liabilities LESS Hedged Exposure to
(ii) Consolidated Net Worth LESS an amount equal to 5% of
Hedged Exposure."
3. ADDITION OF SECTION 6.8. The following Section 6.8 hereby
is added to the Note Purchase Agreement:
"6.8 RANKING. Cause the Indenture Note, the Term
Note and the Four Year Note to rank at least PARI PASSU with
respect to priority of payment with all other existing and
future senior indebtedness of the Company and to rank senior to
all future subordinated indebtedness of the Company (it being
understood that any Lien permitted under Section 7.1 shall not
itself cause the debt secured thereby to be in violation of
this Section 6.8)."
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4. AMENDMENT OF SECTION 7.1. Section 7.1 of the Note
Purchase Agreement hereby is amended by deleting in their entirety
clauses (j) and (n) thereof and substituting therefor the following
clauses (j) and (n):
"(j) Liens on assets acquired by the Company or any of its
Subsidiaries in connection with the origination or acquisition of
such assets by the Company or such Subsidiary in the ordinary course
of its business, for the purpose of enabling the Company or such
Subsidiary to arrange financing in connection with the origination
or acquisition of such assets;"
"(n) Liens on excess spread receivables or subordinated
certificates (or on the stock or other equity interests of any
corporation, limited liability company, or other entity,
substantially all the assets of which consist of excess spread
receivables or subordinated certificates) of the Company or any of
its Subsidiaries, regardless of whether such excess spread
receivables or subordinated certificates are denominated "excess
spread receivables," "residuals," "interest-only certificates,"
"asset backed securities," "subordinated certificates,"
"subordinated interests," "securitization certificates," " `B'
pieces," or otherwise in the financial statements of the Company,
such Liens to secure obligations of the Company or any of its
Subsidiaries, PROVIDED, HOWEVER, that with respect to any Lien
imposed during any period after April 2, 1996 during which the
senior indebtedness of the Company is not rated equal to or higher
than "Baa3" (or the equivalent) by Xxxxx'x Investors Service, Inc.
(or any successor to the rating agency business thereof) and "BBB-"
(or the equivalent) by Standard & Poor's Ratings Group (or any
successor to the rating agency business thereof) (any such period, a
"NON-INVESTMENT GRADE PERIOD"), the book value as of the date such
Lien is imposed of the excess spread receivables and subordinated
certificates subject to such Lien shall not exceed 50% of the book
value as of such date of the aggregate excess spread receivables and
subordinated certificates of the Company and its Subsidiaries which
were created during such Non-Investment Grade Period."
5. DELETION OF SECTION 7.2. Section 7.2 of the Note Purchase
Agreement hereby is amended by deleting such Section in its entirety and
substituting therefor the words "[Intentionally omitted]."
6. AMENDMENT OF SECTION 7.4. Section 7.4 hereby is amended
by deleting the period at the end thereof and adding the following
proviso:
", PROVIDED, HOWEVER, that, with respect to the
Company's fiscal year ending March 31, 1997, the Acquisition by
the Company or any of its Subsidiaries of Cal Lending shall be
excluded from the foregoing limitation, PROVIDED that (i) such
Acquisition is completed on or prior to Xxxxx 00, 0000,
(xx) the cost of such Acquisition does not
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exceed $15,000,000 and (iii) the Company or such Subsidiary
acquires all of the outstanding capital stock of Cal Lending
in such Acquisition."
7. AMENDMENT OF SECTION 8.2. Section 8.2 of the Note
Purchase Agreement hereby is amended by deleting the reference to
"$135,000,000" and substituting therefor "$225,000,000."
8. AMENDMENT OF SECTION 8.3. Section 8.3 of the Note
Purchase Agreement hereby is deleted in its entirety and the following is
substituted therefor:
"8.3 LONG TERM DEBT-TO-EQUITY RATIO. Not permit the
ratio of Consolidated Long-Term Debt to Consolidated Adjusted
Net Worth to exceed 1.1:1 at any time on or prior to
September 30, 1997 and 1:1 at any time thereafter."
9. ADDITIONAL COVENANTS OF THE COMPANY. To induce the Buyer
to execute and deliver this Amendment, the Company shall:
(a) PREPAYMENT OF TERM NOTE. Within two (2) Banking
Days following receipt by the Company of the net proceeds from
the issuance and sale of its Senior Notes due 2003 (the
"CONTIFINANCIAL 2003 SENIOR NOTES") as contemplated by that
certain Preliminary Prospectus dated July 29, 1996, the Company
will, from such net proceeds, prepay $75,000,000 of the
$125,000,000 aggregate principal amount Term Note held by the
Buyer if such net proceeds to be received by the Company from
the issuance and sale of the ContiFinancial 2003 Senior Notes
do not exceed $250,000,000 and will, from such net proceeds to
be received by the Company from the issuance and sale of the
ContiFinancial 2003 Senior Notes in excess of $250,000,000,
prepay an additional $1.00 of the outstanding principal amount
of the Term Note with each dollar of such net proceeds so
received which exceeds $250,000,000.
(b) EXPENSES RELATING TO AMENDMENTS. Pay all
expenses, including, but not limited to, fees and disbursements
of counsel, incurred or to be incurred by the Company and the
Buyer in connection with (i) this Amendment, (ii) the First
Supplemental Indenture to the Indenture, dated as of February
14, 1996, between the Company and Continental Grain Company, as
trustee under the Indenture, (iii) the First Amendment to the
Term Loan Agreement, dated as of October 26, 1995, among the
Buyer, the financial institutions parties thereto and The Chase
Manhattan Bank, N.A., as agent for the banks, (iv) the First
Amendment to the Credit Agreement, dated as of September 30,
1994, among the Buyer, the financial institutions parties
thereto, the co-agents
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parties thereto, The Chase Manhattan Bank, N.A. as
administrative agent, and Union Bank of
Switzerland, as documentation agent, (v) the First Amendment to
the Facility Lease, dated as of December 30, 1991, between
State Street Bank and Trust Company of Connecticut, National
Association, as corporate trustee except to the extent
expressly provided therein, and W. Xxxxxxx Xxxxxx, as
individual trustee, and the Buyer, (vi) the Third Modification
and Amendment to each of the Note Agreements, dated as of
March 22, 1994, as amended, supplemented or otherwise modified,
between the Buyer and The Northwestern Mutual Life Insurance
Company, Xxxx Xxxxxxx Life Insurance Company of America, Xxxx
Xxxxxxx Mutual Life Insurance Company, PFL Life Insurance
Company, Monumental Life Insurance Company, Life Investors
Insurance Company of America, Bankers United Life Assurance
Company, The Life Insurance Company of Virginia and National
Life Insurance Company and (vii) the First Amendment to each of
the Guarantee Agreement, dated as of March 1, 1996, and the
Guarantee Agreement, dated as of March 1, 1995, by the Buyer in
favor of Wilmington Trust Company, as trustee of the
ContiSecurities Residual Funding Trust.
10. CONTINUING EFFECT OF NOTE PURCHASE AGREEMENT. This
Amendment shall not constitute a waiver, amendment or modification of any
other provision of the Note Purchase Agreement not expressly referred to
herein and shall not be construed as a waiver or consent to any further
or future action on the part of the Company that would require a waiver
or consent of the Buyer. Except as expressly amended or modified herein,
the provisions of the Note Purchase Agreement are and shall remain in
full force and effect.
11. COUNTERPARTS. This Amendment may be executed by one or
more of the parties hereto on any number of separate counterparts and all
such counterparts shall be deemed to be one and the same instrument.
Each party hereto confirms that any facsimile copy of such party's
executed counterpart of this Amendment (or its signature page thereof)
shall be deemed to be an executed original thereof.
12. EFFECTIVENESS. This Amendment shall be effective upon
receipt by the Company of counterparts hereof, duly executed and
delivered by the Buyer.
13. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
CONTIFINANCIAL CORPORATION
By:
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Name:
Title:
CONTINENTAL GRAIN COMPANY
By:
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Name:
Title:
By:
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Name:
Title:
