MODIFICATION TO CREDIT AGREEMENT
EXHIBIT
10.1
MODIFICATION
TO CREDIT AGREEMENT
This
Modification to Credit Agreement ("Modification") is made as of October 13,
2009, by and among XXXXX
FINANCIAL GROUP, INC. (“Borrower”) and CALIFORNIA BANK & TRUST, FIRST
BANK, formerly FIRST BANK & TRUST, and CITY NATIONAL BANK (which are
collectively known as “Lenders”).
RECITALS
A. Pursuant
to the terms of a Credit Agreement ("Credit Agreement") between Lenders and
Borrower dated as of August 31, 2001, Lenders agreed to make Revolving Loans to
Borrower up to the credit limit of the principal sum of
$20,000,000. California Bank & Trust is the agent of Lenders
under the Credit Agreement (“Agent”). The Credit Agreement was
amended by a Modification to Credit Agreement, dated February 28, 2002, executed
by the parties that, among other things, added Swing Loans to the
facility. The Revolving Loans and Swing Loans are collectively
referred to as “Loans.” By further Modification to Credit Agreement,
dated August 16, 2002, executed by the parties, the “Amount of Aggregate
Commitment” for each Lender was reduced and the provisions related to Swing
Loans and Borrowing Procedures were amended. By a Modification to
Credit Agreement, dated July 31, 2003, the “Commitment Termination Date” in
Section 1.1 of the Credit Agreement was extended to July 31, 2005. By
a Modification to Credit Agreement, dated September 13, 2004, among other
things, the “Amount of Aggregate Commitment” for the Lenders was adjusted and
financial covenants were changed. By further Modifications to Credit
Agreement, dated July 31, 2005 and September 30, 2005, the Commitment
Termination Date in Section 1.1 of the Credit Agreement was extended first to
September 30, 2005 and then to July 31, 2007 with other
adjustments. By a Modification to Credit Agreement, dated June 1,
2006, section 11.1(e)(iii) of the Credit Agreement was amended. By
another Modification to Credit Agreement, dated August 15, 2006, compliance with
Section 11.25 of the Credit Agreement through September 30, 2006 was
waived. By a further Modification to Credit Agreement, dated August
31, 2006, Section 11.1 of the Credit Agreement, entitled “Financial Statements
and Other Information,” was modified. The Credit Agreement was again
amended by a Modification to Credit Agreement, dated July 20, 2007, by which the
Commitment Termination Date was extended to July 31, 2009. The Credit
Agreement was further amended by a Modification to Credit Agreement, dated
November 7, 2007, by which section 11.15, entitled “Restricted Payments,” was
replaced. The Credit Agreement was again amended by a Modification to
Credit Agreement, dated March 31, 2008, by which the Commitment Termination Date
was extended, and certain covenants were changed, among other
things. The Credit Agreement was most recently amended by a
Modification to Credit Agreement, dated March 27, 2009, by which the interest
rate was adjusted.
B. The
Loans were evidenced by promissory notes executed by Borrower in favor of each
of the Lenders.
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C. In
response to Borrower's request and in reliance upon Borrower's representations
made to Lenders in support thereof, Lenders have agreed to further modify the
terms of the Credit Documents, as set forth in this
Modification. Capitalized terms shall have the meanings assigned to
them in the Credit Agreement except as set forth in this
Modification.
AGREEMENT
NOW,
THEREFORE, Borrower and Lenders agree as follows:
1. Adoption of
Recitals. Borrower hereby represents and warrants that each of
the recitals set forth above is true, accurate and complete.
2. Conditions
Precedent. This Modification shall become effective only upon
Borrower's delivery or satisfaction of the following conditions in form and
substance acceptable to Agent:
(a) There
shall be no Event of Default under the Credit Agreement;
(b)
Borrower
shall execute this Modification;
(c) Borrower
shall pay to Agent all of Agent’s attorneys' fees incurred in the preparation of
this Modification and all out-of-pocket fees incurred by Agent in connection
with this Modification; and
(d) Borrower
shall provide any other items or documents required by Agent in connection with
the consummation of this transaction.
3. Conditions
Subsequent. By
October 30, 2009, Borrower shall perform the following conditions
subsequent;
(a) Borrower
shall deliver Deeds of Trust in form satisfactory to Agent on parcels of real
property owned by Borrower, which Deeds of Trust shall be recorded in the office
of the county recorder for the county in which the real property is
located. Borrower shall also execute and deliver to Agent Assignments
of Promissory Notes and related Assignments of Deeds of Trust (collectively
“Assignments”) in form acceptable to Agent for note receivables in favor of
Borrower. The Assignments shall be accompanied by the original
promissory note for the related note receivable. The real property for which
Deeds of Trust are to be provided and the notes receivable related to the
Assignments shall be selected by Agent in its absolute discretion.
(b) Borrower
shall provide Agent with title insurance for the Deeds of Trust delivered to
Agent under subsection (a) above in form, substance and amount acceptable to
Agent.
4. Representations and
Warranties. Borrower hereby represents and warrants that no
event of default, breach or failure of condition has occurred or exists, or
would exist with notice or lapse of time, or both, under any of the Credit
Documents, and all representations and warranties of Borrower in this
Modification and the other Credit Documents are true and correct as of the date
of this Modification and shall survive the execution of this
Modification.
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5. Modification of Loan
Documents. The Credit Documents are hereby supplemented,
amended and modified according to the following, which changes shall supersede
and prevail over any existing and conflicting provisions thereof:
(a) The
Lenders shall not be required to make further Loans or issue Letters of Credit
under the Credit Agreement;
(b) The
definition of “Commitment Termination Date” in Section 1.1 of the Credit
Agreement is amended by deleting the date “July 31, 2009” and inserting “July
30, 2010” in its place.
(c) The
definition of “Tangible Net Worth” in Section 1.1 of the Credit Agreement is
deleted and replaced with the following:
Tangible Net Worth” means, at
any time, for any Person, the total of shareholders’ equity (including capital
stock, additional paid-in capital and retained earnings after deducting treasury
stock) of such Person prepared in accordance with GAAP, less the sum of
(i) the total amount of any intangible assets, (ii) receivables due from
shareholders, and (iii) advances to Affiliates, plus Subordinate Debt
owed to former shareholders and Borrower’s loans (net of reserves) to and
Investments in OMIF. Intangible assets shall include patents and
trademarks and any investment now existing or later made in non-affiliated
public or private companies .
(d) Although
no further advances are required, the “Amount of Aggregate Commitment” for Loans
as provided on the execution pages of the Credit Agreement for each Lender shall
be modified as follows:
$6,989,000.00
in the case of California Bank & Trust;
$3,494,500.00
in the case of First Bank; and
$3,494,500.00 in the case of City
National Bank.
(e) Article
4 of the Credit Agreement, entitled “Notes Evidencing Loans and Payment of
Principal,” is deleted and replaced with the following:
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ARTICLE
4 NOTES
EVIDENCING LOANS AND PAYMENT OFPRINCIPAL
Revolving
Notes. The Revolving Loans shall be evidenced by the Revolving Notes
executed by Borrower, which shall be made payable to the order of each Lender.
All accrued interest on the Loans will be paid on the first day of each
successive month commencing on November 1, 2009. Principal on the
Loans shall be paid in monthly installments of $110,000 commencing November 1,
2009 with any unpaid principal and interest due on the Commitment Termination
Date. In the event that Borrower liquidates any real estate or other investment
asset, the proceeds thereof, less such seller costs as Agent shall deem
reasonable in the exercise of its absolute discretion, shall be paid to Lenders
for application to principal on the Loans. All payments of principal
received by Borrower on its note receivables, other than the currently due
installment (other than at maturity), shall be remitted to Lenders for
application to the outstanding principal balances on the Loans. All
Revolving Loans and all payments of principal thereof shall be evidenced by each
Lender in its records or, at such Lender’s option, on the schedule attached to
its Revolving Notes, which records or schedules shall be presumptive evidence of
the subject matter thereof.
(f) Section
5.1 of the Credit Agreement, entitled “Interest,” is modified bydeleting subsection (a) thereof and replacing
it with the following:
Loans. The
unpaid principal amount of each Loan shall bear interest prior to maturity at a
rate per annum equal to the Reference Rate plus one and one-half percentage
points (R + 1.50%)in effect from time to time but in no event shall interest
accrue at less than seven and one half percent (7.50%) per annum
(g) Section
11.7 of the Credit Agreement, entitled “Minimum Tangible Net Worth,” is deleted
and replaced with the following:
Minimum Tangible Net
Worth. With respect to Borrower as of the end of each fiscal
quarter, Borrower shall not permit or suffer Tangible Net Worth to be less than
$20,000,000.
(h) Section
11.8 of the Credit Agreement, entitled “Total Funded Debt to Tangible Net Worth
Ratio,” is deleted and replaced with the following:
Total Funded Debt to
Tangible Net Worth Ratio. With respect to Borrower as of the
end of each fiscal quarter, Borrower shall not permit or suffer the ratio of
Total Funded Debt to Tangible Net Worth to exceed 0.75:1.00
(i) Section
11.9 of the Credit Agreement, entitled “Profitability” is deleted and replaced
with the following new covenant:
Cash Flow
Coverage. With respect to Borrower as of the end of each
fiscal quarter, Borrower shall not permit or suffer a trailing twelve month Cash
Flow Coverage of less than 1.50 to 1. “Cash Flow Coverage Ratio”
means the ratio of EBITDA to the sum of the following: interest
expense and non-tax-related dividends.
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(j) Section
11.15 of the Credit Agreement, entitled “Restricted Payments,” is deleted and
replaced with the following:
Restricted
Payments. Borrower shall not purchase or redeem any shares of
its stock, declare or pay any dividends thereon, make any distribution to
stockholders or set aside any funds for any such purpose (except to the extent
necessary to satisfy stockholders’ income tax liability arising from their stock
ownership in Borrower), and not prepay, purchase or redeem any Subordinated Debt
prior to maturity
(k) Section
11.16 of the Credit Agreement, entitled “Indebtedness,” is deleted and replaced
with the following:
Indebtedness. The
Borrower shall not incur or permit to exist any new Indebtedness following the
date of this Agreement except Indebtedness of Borrower incurred under this
Agreement and the Notes, incurred under Borrower’s continuing guaranty of the
indebtedness of OMIF to Lenders, or incurred to pay down the Loans.
(l)
Section 11.1 of the Credit Agreement, entitled “Financial Statements and Other
Information,” is modified by adding the following subsection (vi):
within
fifteen (15)days of the end of each month, a monthly delinquency report and
monthly cash flow forecast in form acceptable to Agent and certified by
Borrower’s chief financial officer, vice president responsible for accounting,
controller or vice president
6. Security
Instruments. The Credit Documents which recite that they are
security instruments shall secure, in addition to any other obligations secured
thereby, the payment and performance by Borrower of all obligations under the
Credit Documents, as modified hereby, and any amendments, modifications,
extensions or renewals of the same which are hereafter agreed to in writing by
the parties.
7. Governing
Law. This Modification shall be construed, governed and
enforced in accordance with the laws of the State of California.
8. Interpretation. No
provision of this Modification is to be interpreted for or against either
Borrower or Lenders because that party, or that party's representative, drafted
such provision.
9. Full Force and
Effect. Except as set forth herein, all other terms and
conditions of the Loan Documents shall remain in full force and
effect.
10.
Reaffirmation. Borrower
hereby acknowledges, reaffirms and confirms its obligations under the Credit
Documents, as amended and modified by this Modification.
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11.
Entire
Agreement. This Modification and the Credit Documents
represent the entire agreement of the parties and supersede all prior oral and
written communication between the parties. If there is any conflict
between this Modification and any documents referred to herein, this
Modification shall prevail. No amendment of this Modification shall
be valid unless it is in writing and is signed by the parties to this
Modification.
IN
WITNESS WHEREOF, the parties have executed this Modification as of the day and
year first above written.
SIGNATURES APPEAR ON THE
FOLLOWING PAGES
XXXXX FINANCIAL GROUP,
INC.,
a
California corporation
By: /s/ Xxxxx X.
Xxxxxx
Name: Xxxxx X.
Xxxxxx
Title: Chief Financial
Officer
0000
Xxxxxxx Xxxxxxxxx
Xxxxxx
Xxxxx, XX 00000
Fax:
(000)
000-0000
{Clients\cbt-ln\0119\agr\07007575.DOC}
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CALIFORNIA BANK & TRUST, a
California
banking
corporation
By: /s/ Xxxxxx
Xxxx
Name: Xxxxxx
Xxxx
Title: Vice
President
By:
Name:
Title:
San
Francisco Corporate Banking
000
Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Fax: 415/000-0000
{Clients\cbt-ln\0119\agr\07007575.DOC}
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FIRST BANK, a Missouri banking
corporation, formerly FIRST
BANK & TRUST
By: /s/ Xxxxxxx X. Xxxxx,
Xx.
Name: Xxxxxxx X. Xxxxx,
Xx.
Title: SVP
By:
Name:
Title:
Commercial
and Private Banking
000
Xxxxxxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
Fax: 415/000-0000
{Clients\cbt-ln\0119\agr\07007575.DOC}
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CITY NATIONAL BANK, a
national
banking
corporation
By: /s/ Xxxxx X.
XxXxxxx
Name: Xxxxx X.
XxXxxxx
Title: Vice
President
By:
Name:
Title:
Address: 000
Xxxxx Xxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
{Clients\cbt-ln\0119\agr\07007575.DOC}
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