AMENDMENT TO CREDIT DOCUMENTS
This Amendment to Credit Documents is made as of May 24, 1999 (the
"Amendment") by and among Prism Mortgage Company, an Illinois corporation,
Pacific Guarantee Mortgage Corporation, a California corporation, Mortgage
Market, Inc., an Oregon corporation, PointSource Financial, L.L.C., an
Illinois limited liability company, Infiniti Mortgage, L.L.C., an Illinois
limited liability company, First City Financial Corp., a Colorado corporation
("First City"), the lenders identified on the signature pages hereof (the
"Lenders"), The First National Bank of Chicago, a national banking
association, individually as a Lender and as administrative agent for the
Lenders ("Agent"), and BANK ONE, Texas, N.A., as collateral agent for the
Lenders ("Collateral Agent").
1. RECITALS
The Company, the Agent and the Lenders are parties to a certain
Credit Agreement, dated as of March 31, 1999 (the "Credit Agreement"),
pursuant to which the Lenders have agreed to provide a revolving credit
facility to the Borrower and the Borrowing Subsidiaries on the terms and
conditions set forth in the Credit Agreement. Any capitalized term not
expressly defined herein shall have the meaning ascribed to such term in the
Credit Agreement.
The Borrower, the Borrowing Subsidiaries, the Agent and the Collateral
Agent are parties to a certain Security and Collateral Agency Agreement dated as
of March 31, 1999 (the "Security Agreement").
The Borrower has purchased First City, which is now a Wholly-Owned
Subsidiary of the Borrower.
The Borrower (i) has caused the formation of Prism Financial
Corporation, a Delaware corporation (the "Holding Company"), for the purpose of
acquiring all of the shares in the Borrower (at which time the Borrower shall
become a Wholly-Owned Subsidiary of the Holding Company), and (ii) intends to
cause shares in the Holding Company to be offered to the public in connection
with an initial public offering.
The Borrower, the Borrowing Subsidiaries, First City, the Agent, the
Collateral Agent and the Lenders desire to amend the Credit Agreement, the
Security Agreement and the other Loan Documents to allow for the inclusion of
First City as a Borrowing Subsidiary, to allow for the transfer of all shares in
the Borrower to the Holding Company, and to otherwise modify the Loan Documents
in the manner set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. HOLDING COMPANY.
(a) The Lenders hereby consent to the following: (i) the
Borrower's formation of the Holding Company as a Wholly-Owned Subsidiary of the
Borrower, (ii) the entering into of a share exchange agreement by and among the
Borrower, the Holding Company and the Borrower's current shareholders, pursuant
to which the Borrower's current shareholders will
become shareholders of the Holding Company and the Holding Company will become
the sole shareholder of the Borrower, and (iii) the distribution by the Borrower
of promissory notes (the "Retained Earnings Notes") to its current shareholders
in an amount equal to the amount of Borrower's earned and undistributed taxable
S corporation earnings through the date of the closing of the initial public
offering of stock in the Holding Company and the payment of the Retained
Earnings Notes after such initial public offering (so long as, following the
repayment of the Retained Earnings Notes, Borrower is in compliance with the
Leverage Ratio and Net Worth requirements set forth in Section 6.15 of the
Credit Agreement). The majority of the balance of Retained Earnings Notes is to
be repaid immediately after the initial public offering, and the remainder is
payable by August 15, 1999. The Lenders agree that the transactions described in
this paragraph shall not be deemed to violate the provisions of Section 6.11
(Sale of Assets) or 6.14 (Transactions with Affiliates) of the Credit Agreement.
(b) The definition of Change in Control in Article I of the
Credit Agreement is hereby deleted and replaced with the following:
"'Change in Control' means Xxxxx Xxxxxx, Xxxx Xxxxxx and/or
Xxxxx Xxxxxx shall cease to collectively own, free and clear of all
Liens or other encumbrances, more than 50% of the outstanding shares of
voting stock of the Borrower on a fully diluted basis; provided,
however, that if ownership of all of the shares of stock of the
Borrower is transferred to a holding company in connection with an
initial public offering of the stock of such holding company, then
Change of Control shall mean that either (i) Xxxxx Xxxxxx, Xxxx Xxxxxx
and/or Xxxxx Xxxxxx shall cease to collectively own, free and clear of
all Liens or other encumbrances, more than 50% of the outstanding
shares of voting stock of such holding company on a fully diluted
basis, or (ii) the Borrower shall cease to be a Wholly-Owned Subsidiary
of such holding company."
2. FIRST CITY AS BORROWING SUBSIDIARY.
(a) "First City Admission Date" shall mean the date Borrower
has furnished or caused to be furnished to the Agent (with sufficient copies for
the Lenders) the following:
(i) Copies of the articles of incorporation of First
City, together with all amendments, and a certificate
of good standing in its State of formation and (if
different from its State of formation) in the State
in which its principal place of business is located,
each certified by the appropriate governmental
officer.
(ii) Copies, certified by the Secretary or Assistant
Secretary of First City, of its by-laws and of its
Board of Directors' resolutions (and resolutions of
other bodies, if any are deemed necessary by counsel
for any Lender) authorizing the execution, delivery
and performance of this Amendment and performance
under the Credit Agreement as amended hereby.
(iii) An incumbency certificate, executed by the Secretary
or Assistant Secretary of First City, which shall
identify by name and title and bear the signature of
the officers of First City authorized to sign this
Amendment,
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the Notes described below and any other documents to
be executed by First City in connection herewith or
in connection with the Credit Agreement.
(iv) UCC, judgement and lien searches from the
jurisdiction of First City's principal place of
business.
(v) Written opinions of the Borrower's in-house and
outside counsel, addressed to the Agent and the
Lenders and relating to the authority of First City
to enter into this Amendment and the enforceability
of the Loan Documents against First City.
(vi) Notes from First City to each Lender in the form of
Exhibit A hereto.
(vii) UCC-1 financing statements executed by First City.
(viii) Such other documents as Agent or its counsel may have
reasonably requested in writing.
The Agent shall notify the Borrower and the Lenders of the occurrence
of the First City Admission Date.
(b) The Indebtedness of and Liens on the assets of First City
set forth on Exhibit B hereto are hereby added to Schedule 4 to the Credit
Agreement.
(c) First City represents and warrants to the Agent and the
Lenders that its principal place of business is 000 XXX Xxxxxxx, Xxxxxxxxx,
Xxxxxxxx.
(d) From and after the First City Admission Date, First City
shall not make any further borrowings under its existing credit facilities with
Xxxxx Xxxxxx Real Estate Securities, Inc., Firstate Bank of Colorado and First
Collateral Services (the "Existing First City Facilities"). First City shall pay
in full all amounts then outstanding under the Existing First City Facilities,
and shall terminate the Existing First City Facilities, on or before the date
which is sixty days after the First City Admission Date. Promptly following the
termination of the Existing First City Facilities, First City shall provide the
Agent with evidence of such termination along with executed termination
statements for the existing UCC financing statements filed in connection with
the Existing First City Facilities.
(e) From and after the First City Admission Date, First City
shall be a Borrowing Subsidiary for all purposes under the Loan Documents and
shall accordingly be deemed to have made all of the representations made by,
shall be bound by all of the warranties and covenants binding upon, and shall be
entitled to all of the rights conferred upon, Borrowing Subsidiaries under the
Loan Documents. First City agrees that all Advances shall be requested by the
Borrower, and First City irrevocably authorizes (i) the Borrower to request
Advances on its behalf and (ii) the Agent to honor requests for Advances made by
the Borrower.
3. SUPER-JUMBO MORTGAGE LOANS.
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(a) The amount "$1,000,000" in the definition of Jumbo
Mortgage Loan in Article I of the Credit Agreement is hereby deleted and
replaced with "$2,000,000".
(b) The words "but less than $1,000,000" are hereby added
after the words "in excess of $650,000" at the end of the definition of Oversize
Jumbo Loan in Article I of the Credit Agreement.
(c) The following definition is hereby added to Article I of
the Credit Agreement:
"'Super-Jumbo Loan' means a Jumbo Mortgage Loan which has an
original principal balance equal to or greater than $1,000,000."
(d) The following clause is hereby added at the end of the
definition of Eligible Jumbo Mortgage Loan in Article I of the Credit Agreement:
"; and (v) if such Jumbo Mortgage Loan is a Super-Jumbo Loan,
has been individually approved by the Approved Investor issuing the
applicable Approved Investor Commitment".
(e) The following clause is hereby added at the end of Section
2.1.2 of the Credit Agreement:
"; and
(ix) Super-Jumbo Loans shall not exceed two percent (2%) of
the Aggregate Commitment".
(f) The form of Borrowing Base Certificate attached as Exhibit
F to the Credit Agreement is hereby deleted and replaced with the form attached
as Exhibit C hereto.
(g) The form of Collateral Report attached as Exhibit 7 to the
Security Agreement is hereby deleted and replaced with the form attached as
Exhibit D hereto.
4. MAXIMUM HELOC LOAN. The amount "$100,000" in clause (iii) of the
definition of Eligible HELOC Loan in Article I of the Credit Agreement is hereby
deleted and replaced with "$200,000".
5. DELIVERY OF AP LOANS.
(a) The phrase "seven (7) Business Days" in the second line of
clause (2) of clause (iii) of the definition of Eligible Mortgage Loan in
Article I of the Credit Agreement is hereby deleted and replaced with the phrase
"eight (8) Business Days".
(b) The phrase "seventh (7th) Business Day" in the second
sentence of Section 2(b) of the Security Agreement is hereby deleted and
replaced with the phrase "eighth (8th) Business Day".
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6. NET WORTH. The definition of "Equity Infusion" at the end of Section
6.15.2 of the Credit Agreement is hereby deleted and replaced with the
following:
"'Equity Infusion' shall mean the sum of the net proceeds of any sale
or issuance of the Borrower's stock by the Borrower and any other equity
contributions (other than from the Net IPO Proceeds, as defined below, which are
to be separately included as an Equity Infusion as set forth below) made to the
capital of the Borrower after December 31, 1998. If a holding company is created
to be the parent company of the Borrower, Equity Infusion shall also include (i)
the net proceeds of the issuance of the initial public offering of such holding
company's stock, less (ii) the portion (not to exceed $22,000,000) of such
proceeds distributed to the former shareholders of Borrower (i.e. the Persons
who were shareholders immediately prior to transfer of their shares to such
holding company) in payment of notes issued by the Borrower to such shareholders
immediately prior to such public offering (the amount described in (i) less the
amount described in (ii) being the "Net IPO Proceeds"). Any amounts distributed
to the former shareholders of Borrower as described in clause (ii) of the
preceding sentence shall NOT qualify under clause (iv) of the first sentence of
this Section 6.15.2 as dividends paid to the Borrower's shareholders to allow
them to pay their state and federal income taxes (and accordingly shall not
result in a reduction of required Net Worth)."
7. OTHER SECURITY AGREEMENTS. The phrase "or allow any of its
Subsidiaries to enter into" in the third sentence of Section 6.16 of the
Credit Agreement is hereby deleted and replaced with "or allow any of the
Borrowing Subsidiaries to enter into".
8. MISCELLANEOUS.
(a) All references to the Credit Agreement, the Security
Agreement and the other Credit Documents shall be deemed to refer to such
documents as amended by this Amendment.
(b) The Borrower, each Borrowing Subsidiary and First City
each hereby represents and warrants to the Lenders that on the date of execution
hereof, both prior to and after giving effect to this Amendment, (i) the
representations and warranties of the Borrower and the Borrowing Subsidiaries
contained in the Loan Documents are accurate and complete in all respects, and
(ii) no Default or Unmatured Default has occurred and is continuing.
(c) In all other respects, the Credit Agreement, the Security
Agreement and the other Loan Documents are and remain unmodified and in full
force and effect and are hereby ratified and confirmed. This Amendment may be
executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this
Amendment by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
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PRISM MORTGAGE COMPANY, an Illinois
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: Senior Vice President and
Chief Finanical Officer
--------------------------
PACIFIC GUARANTEE MORTGAGE CORPORATION,
a California corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title:
--------------------------
MORTGAGE MARKET, INC., an Oregon
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title:
--------------------------
POINTSOURCE FINANCIAL, L.L.C., an Illinois
limited liability company
By: Prism Mortgage Company, its Manager
By: /s/ Xxxxx X. Xxxxxx
----------------------
Name: Xxxxx X. Xxxxxx
----------------------
Title:
----------------------
INFINITI MORTGAGE, L.L.C., an Illinois
limited liability company
By: Prism Mortgage Company, its Manager
By: /s/ Xxxxx X. Xxxxxx
----------------------
Name: Xxxxx X. Xxxxxx
----------------------
Title:
----------------------
FIRST CITY FINANCIAL CORP., a Colorado
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title:
--------------------------
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THE FIRST NATIONAL BANK OF CHICAGO,
INDIVIDUALLY AND AS AGENT
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President
--------------------------
BANK ONE TEXAS, N.A., AS COLLATERAL AGENT
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title: Vice President
--------------------------
THE BANK OF NEW YORK
By: /s/ Xxxxxxxx X. Dominus
-----------------------------
Name: Xxxxxxxx X. Dominus
-----------------------------
Title: Vice President
--------------------------
COMERICA BANK
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
-----------------------------
Title: Account Officer
--------------------------
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: Vice President
--------------------------
GUARANTY FEDERAL BANK, F.S.B.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx
-----------------------------
Title: Vice President
--------------------------
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HIBERNIA NATIONAL BANK
By: /s/ Xxxxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxxxx X. Xxxxx
-----------------------------
Title: Assistant Vice President
--------------------------
LASALLE NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: V.P.
--------------------------
MERCANTILE BANK
By: /s/ Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
-----------------------------
Title: Asst. Vice President
--------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------
Title: Senior Vice President
--------------------------
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Exhibit A
NOTE
May 24, 1999
First City Financial Corporation, a Colorado corporation
("Maker"), promises (jointly and severally with the Borrower and the other
Borrowing Subsidiaries, as such terms are defined in the Agreement described
below) to pay to the order of ___________ (the "Lender") the lesser of the
Lender's Commitment under the Agreement (as hereinafter defined) or the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower and/or the Borrowing Subsidiaries pursuant to Article II of the
Agreement, in immediately available funds at the main office of The First
National Bank of Chicago in Chicago, Illinois, as Agent, together with
interest on the unpaid principal amount hereof at the rates and on the dates
set forth in the Agreement. Maker shall pay the principal of and accrued and
unpaid interest on the Loans in full on the Termination Date and as otherwise
provided in the Agreement.
Notwithstanding the foregoing, recourse to Maker hereunder shall be
limited to the greater of (i) Maker's interest in the Collateral pledged by
Maker, or (ii) the maximum amount not subject (but for the provisions of this
paragraph) to avoidance under Title 11 of the United States Code, as the same
may be amended from time to time, or any analogous applicable state law.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement dated as of March 31, 1999 (which, as it
may be amended or modified and in effect from time to time, is herein called the
"Agreement"), among Prism Mortgage Company (the "Borrower"), certain affiliates
of the Borrower, the lenders party thereto, including the Lender, and The First
National Bank of Chicago, as Agent, to which Agreement reference is hereby made
for a statement of the terms and conditions governing this Note, including the
terms and conditions under which this Note may be prepaid or its maturity date
accelerated. Maker became a party to the Agreement as a Borrowing Subsidiary
pursuant to an Amendment to Credit Documents dated as of the date hereof. This
Note is secured pursuant to the Security Agreement, all as more specifically
described in the Agreement, and reference is made thereto for a statement of the
terms and provisions thereof. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Agreement.
This Note is to be governed by and construed and enforced in accordance
with the laws of the State of Illinois.
FIRST CITY FINANCIAL CORP., a
Colorado corporation
By: _______________________________
Name:______________________________
Title:_____________________________
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SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF FIRST CITY FINANCIAL CORPORATION,
DATED MAY 24, 1999
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
---- ------- -------- --------
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Exhibit B
Indebtedness and Liens of First City
INDEBTEDNESS OF FIRST CITY
Existing mortgage warehousing credit facility with First Collateral Services*
Existing mortgage warehousing credit facility with Xxxxx Xxxxxx Real Estate
Securities, Inc.*
Existing mortgage warehousing credit facility with Firstate Bank of Colorado*
LIENS ON ASSETS OF FIRST CITY
Liens on mortgages and related assets pledged to secure First City's existing
mortgage warehousing credit facilities*
*The existing facilities shall be terminated and the corresponding liens
released in accordance with the terms of Section 2(d) of the Amendment to Credit
Documents
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Exhibit C
Form of Borrowing Base Certificate
(See Attached)
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Exhibit D
Form of Collateral Report
(See Attached)
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