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EXHIBIT 10.14
National Westminster Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
000 000-0000
Fax 000 000-0000
XXXXXXX X. XXXXXXXX
Vice President
October 26, 1995
Presidential Mortgage Company
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx X. Xxxxxxx
Re: Proposed Modifications to Loan Agreement
Dear Xxxx:
NatWest Bank N.A., formerly known as National Westminster Bank USA
("Bank"), is prepared to modify the Loan Agreement, dated as of August 28,
1990, as amended and restated on May 20, 1992 and September 28, 1994 (the "Loan
Agreement"), between Presidential Mortgage Company, a California limited
partnership ("Borrower"), and Bank as set forth below, subject to the
satisfactory review by Bank of its collateral for the obligations of Borrower
under the Loan Agreement, Bank's senior management approval and receipt and
approval by Bank of certain financial information relating to Borrower. The
proposed modifications to the Loan Agreement are as follows:
1. The maturity date will be extended from June 30, 1996 to June 30,
1997.
2. The existing $4,755,000 principal balance currently due June 30, 1996
will be paid down to: $3,755,000 by June 30, 1996; $2,755,000 by September 30,
1996; $1,755,000 by December 31, 1996; $755,000 by March 31, 1997; and to zero
by June 30, 1997;
3. The interest rate applicable to outstanding principal will be
increased by one-half of one percent (.5%) per annum;
4. Commencing December 31, 1995, the fee note penalties will be
eliminated;
5. Bank will consent to the conversion of Borrower from a limited
partnership to a public stock corporation upon the terms and conditions set
forth in exhibit "A" hereto; with such changes to such provisions as Bank shall
hereafter reasonably request and subject to any other rights of Bank under the
Loan Agreement; and
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Xx. Xxxx X. Xxxxxxx
October 26, 1995
Page Two
6. Borrower will pay Bank a $75,000 extension fee; $25,000 when the
documentation effectuating the above-described loan modifications is executed
and delivered by Borrower and Bank; $25,000 September 30, 1996; and $25,000
January 31, 1997. The existing $50,000 fee due January 31, 1996 will remain in
place.
Please indicate your acceptance of the proposed loan modification
terms set forth above by signing the enclosed copy of this letter and returning
it to the undersigned on or before October 31, 1995.
NATWEST BANK N.A.
By: s/XXXXXXX X. XXX XXXXX
Xxxxxxx X. XxxXxxxx
Vice President
ACKNOWLEDGED AND ACCEPTED:
PRESIDENTIAL MORTGAGE COMPANY,
a California limited partnership
By: Presidential Management Company,
a California limited partnership
Title: General Partner
By: Presidential Services Corporation,
a California corporation
Title: General Partner
By:s/XXXX X. XXXXXXX
Xxxx X. Xxxxxxx
President
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EXHIBIT A
PRESIDENTIAL MORTGAGE COMPANY
Summary of Terms of Restructuring and Rights Offer
Restructuring The Partnership will transfer all of its and
Offer liabilities to Pacific United Group, Inc. (the
"Company"), in exchange for shares of Common Stock of
the Company. The Partnership will then liquidate,
making a final distribution of the Common Stock to
all of the Partners (except the Cashed Out Partners,
as described below), pro rata in accordance with
their existing ownership interests in the
Partnership. The General Partner will receive no
additional compensation for its general partner's
interest or the discontinuation of all compensation
and fees from the Partnership.
Rights The Company will also issue non-transferable
Offering subscription rights to all Partners of the
Partnership entitling the Partners to purchase
$4,000,000 of additional shares of Common Stock of
the Company, for a purchase price per share (the
"Subscription Price") to be determined immediately
prior to the exchange offer based on the tangible
book value of the Partnership. Each Right will
entitle a Partner to subscribe for one share of
Common Stock for a period of 15 days following the
completion of the exchange offer (the "Basic
Subscription Privilege"). Each Partner will also
have the right to subscribe (the "Oversubscription
Privilege") at the Subscription Price for an
unlimited number of shares of Common Stock that are
not otherwise purchased pursuant to the exercise of
the Basic Subscription Privilege, subject to
proration, in the event there are insufficient
additional shares available to satisfy all
oversubscriptions received, in amounts proportionate
to the amount of Basic Subscription Rights
exercised by each Partner.
Cash Buyout Any Limited Partner who does not wish to receive
of Limited Common Stock of the Company may elect to exercise a
Partners Cash Out Option, which will entitle the electing
Electing Not Partner to receive cash from the Partnership equal to
to Exchange the Subscription Price times the number of shares of
Common Stock that each Cashed-Out Partner would
otherwise have received (the "Cash
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Buyout Price"). THE CASH BUYOUT PRICE WILL BE
REVIEWED BY XXXXXXXX XXXXX FOR FAIRNESS.
General To the extent that Subscription Rights are not
Partner exercised by any Limited Partners, the General
Purchase Partner has committed to oversubscribe for a minimum
Commitment of $1,500,000 of additional shares.
Standby The Company will enter into Standby Purchase
Purchase Agreements under which Standby Purchasers (third
Agreements party investors having no affiliation with the
General Partner) have agreed irrevocably to purchase
all shares of Common Stock that are not subscribed
for pursuant to the exercise of the Basic
Subscription Privilege or the Oversubscription
Privilege, plus any additional amount of shares
necessary for the Company to raise a minimum of
$5,000,000 of additional capital. In addition, the
Standby Purchasers have agreed irrevocably to
purchase an additional amount of shares equal to the
amount of shares that would otherwise be issued to
the Cashed Out Limited Partners, the proceeds of
which will be used to pay the Cash Buyout Price. All
shares will be purchased at the same price as the
Subscription Price. The Standby Purchasers will be
guaranteed a minimum purchase of $2,000,000 of
shares, so that a maximum of $6,000,000 in additional
capital will be raised if the existing Partners
exercise all of the Basic Subscription Privilege and
the Oversubscription Privilege and the Company is
required to issue additional shares in order to meet
the guaranteed minimum purchase amount to the Standby
Purchasers.
Market for The Company will file an application for listing on
Common Stock the NASDAQ National Market, which must be approved
as a condition to the closing of the exchange offer
and the subscription rights offer.
General Partner The General Partner will forgive approximately
Warrants $350,000 in outstanding debt owed to it by the
Partnership in exchange for a 2-year Warrant to
purchase 25% of the Company at an exercise price
equal to 125% of the Subscription Price. THE
EXERCISE PRICE WILL BE REVIEWED BY XXXXXXXX FOR
FAIRNESS.
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Extension of NatWest will agree to extend the existing bank debt
Bank Line of (approximately $8,400,000) for one additional year,
Credit with an interest rate increase of fifty basis points
to 1.5% over prime, plus certain modification fees
and a 5-year warrant to purchase 2% of the common
stock of the Company, exercisable at a price equal to
25% of the book value of the stock at December 31,
1995, as adjusted for the increase in book value after
the completion of the exchange and rights offering.
The Company will have the right to redeem the warrant
at any time after one year from the date of issuance
for $200,000.
Use of Proceeds The net proceeds of the additional capital raised in
the rights offering will be used as follows:
$1,000,000 to pay down the bank debt
approximately $1,200,000 to pay the amount
owing to limited partners whose withdrawal
requests were approved prior to June 30, 1993
the balance of the net proceeds will be
added to working capital of the Company,
which may be contributed from time to time
as additional capital of Pacific Thrift, as
management deems appropriate
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