SECOND AMENDMENT TO
LOAN AGREEMENT
This SECOND AMENDMENT TO LOAN AGREEMENT (this "Second Amendment") is
entered into effective as of the 1st day of February 2003, between U.S. Global
Investors, Inc. (the "Borrower"), and Bank One, NA, with its main office in
Chicago, Illinois (the "Bank").
RECITALS
A. Effective on February 1, 2001, Borrower and Bank executed a loan agreement
whereby Bank agreed to make available to Borrower a $1,109,827.14 Real
Estate Loan, and a Revolving Credit Loan not to exceed the Commitment
Amount, pursuant to the terms of the Loan Agreement. The Loan Agreement was
subsequently amended by that First Amendment to Loan Agreement between
Borrower and Bank dated effective July 1, 2001. The Loan Agreement and
First Amendment to Loan Agreement are hereafter referred to collectively as
(the "Loan Agreement").
B. Borrower and Bank desire to renew and extend the Revolving Credit Loan and
to modify and amend certain provisions of the Loan Agreement and Bank is
willing to do so on the terms and conditions stated in this Second
Amendment.
C. Each capitalized term used in this Second Amendment shall have the meaning
given to it in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other valuable consideration, Borrower and Bank agree as follows:
AGREEMENT:
1. Article 3 is hereby amended to delete Section 3.03 in its entirety.
2. Section 5.01 is hereby amended to delete subsection (j) in its
entirety.
3. Section 6.01(c) is hereby amended to add the following at the
beginning of the subsection:
"In the event any amount is requested or outstanding under the
Revolving Credit Loan, the..."
4. Section 6.02 is hereby amended to delete subsection (a) "Debt Service
Coverage" in its entirety and replace such subsection with a new
subsection (a) as follows:
"(a) Liquidity. Borrower will maintain, at all times, an aggregate
total of cash, marketable securities and Accounts acceptable to
Bank (net of contra accounts) to be at least $1,000,000.00,
tested on a quarterly basis."
5. Section 6.16 is hereby deleted in its entirety and replaced with the
following:
"6.16 Availability Fee. The Borrower shall pay to Bank an availability
fee (the `Availability Fee") with respect to each calendar quarter
during the term of the Revolving Credit Note, based on the unused
amount of such Note. The Availability Fee shall be an amount equal to
A x (B-C) x (D/E), where A is equal .35%; B equals the original amount
of the Revolving Credit Note; C equals the average daily outstanding
principal balance of the Revolving Credit Loan during the calendar
quarter; D equal the actual number of days elapsed during the calendar
quarter; and E equals 360. Each Availability Fee shall be due and
payable to Bank quarterly, in arrears, within fifteen (15) days after
Borrower's receipt of an invoice for the Availability Fee from Bank."
6. Appendix A item 5 "Borrowing Base" is deleted and replaced with the
following:
"5. "Borrowing Base" shall mean eighty percent (80%) of the
Eligible Accounts."
7. Exhibit A and Exhibit B to the Loan Agreement are hereby replaced with
Exhibit A and Exhibit B attached to this Second Amendment.
8. Conditions Precedent. Paragraphs 1 through 7 above are not effective
until Bank receives (i) a counterpart of this Second Amendment
executed by Borrower, (ii) payment of any and all costs and expenses
(including without limitation, attorneys' fees and expenses) that Bank
may reasonably incur in connection with the preparation and
negotiation of this Second Amendment and all related documents, and
(iii) any other document reasonably required by Bank.
9. Ratifications. Borrower (a) ratifies and confirms all provisions of
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the Loan Documents as amended by this Second Amendment, (b) ratifies
and confirms that all assurances and Liens granted, conveyed, or
assigned to Bank under the Loan Documents are not released, reduced or
otherwise adversely affected by this Second Amendment and continue to
assure, and secure full payment and performance of the present and
future Obligations, and (c) agrees to perform such acts and duly
authorize, execute, acknowledge, deliver, file and record such
additional documents, and certificates and authorizations as Bank may
reasonably request in order to create, perfect, preserve, and protect
those assurances and Liens.
10. Representations. Borrower represents and warrants to Bank that as of
the date of this Second Amendment (a) all representations and
warranties in the Loan Documents are true and correct in all material
respects except to the extent that (i) any of them speak to a
different specific date or to covenants and conditions as are amended
by this Second Amendment or (ii) the facts on which any of them were
based have been changed by transactions contemplated or permitted by
the Loan Agreement, and (b) no undisclosed Event of Default has
occurred or is continuing.
11. Authority; Binding Effect. Each signatory to this Second Amendment
represents and warrants to Bank that (i) it or he has taken all
corporate, partnership or other action required to authorize execution
of this Second Amendment and compliance with its terms, (ii) this
Second Amendment does not and will not violate or conflict with any
law, statute, regulation, order, agreement, document, or instrument
binding on it or him, or its or his property, and (iii) on Bank's
request, it or he shall provide reasonably satisfactory evidence
thereof to Bank.
12. Original Agreements Valid, As Amended. Except as modified by this
Second Amendment, the Loan Agreement and Loan Documents remain in full
force and effect as originally written.
13. Miscellaneous.
(a) Governing Law. This Second Amendment is being executed and
delivered, and is intended to be performed , in the State of
Texas, whose substantive laws govern the validity, construction,
enforcement and interpretation of this Second Amendment.
(b) Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Second
Amendment.
(c) Multiple Counterparts. This Second Amendment may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same agreement, and any of the parties
hereto may execute this Second Amendment by signing such
counterpart.
(d) Texas Business and Commerce Code Section 26.02 Notice. THIS
SECOND AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES CONCERNING THE MATTERS CONTAINED HEREIN (BUT DOES NOT
AFFECT THE LOAN DOCUMENTS EXCEPT AS SPECIFIED HEREIN) AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
"Borrower"
U.S. GLOBAL INVESTORS, INC.
By:
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Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
Date:
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"Bank"
BANK ONE, NA, with its
main office in Chicago, Illinois
By:
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Name: Xxxx X. Xxxx
Title: Vice President - Commercial Banking
Date:
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EXHIBIT A
BORROWING BASE (COVENANT) COMPLIANCE CERTIFICATE
(For the month/quarter/year ending )
Pursuant to the Loan Agreement dated February 1, 2001, as amended by that
First Amendment to Loan Agreement dated to be effective July 1, 2001, and that
Second Amendment to Loan Agreement dated to be effective February 1, 2003 (the
"Loan Agreement") between U.S. Global Investors, Inc. ("Borrower") and Bank One,
NA ("Bank One"), the undersigned hereby certifies as follows. Unless otherwise
defined herein, the terms used in this Certificate have the meaning(s) assigned
to it/them in the Loan Agreement.
1. I am the duly appointed President or Chief Financial Officer or Chief
Accounting Officer or Controller of Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have caused
to be made under my supervision a detailed review of the transactions and
condition of the Borrower during the accounting period covered by the
financial statements being furnished concurrently with this Certificate;
3. The Borrower is in full compliance with all terms, conditions, covenants
and provisions of the Loan Agreement, except as follows:
4. The Borrower reports its compliance with the financial covenants contained
in the Loan Agreement as follows:
Section Covenant Required / Permitted Actual
---------------- -------- ---------------- ------
Current Ratio 2.00:1.00
Ratio of Debt to TNW .75:1.00
Liquidity $1,000,000.00
5. Each of the representations contained in the Loan Agreement are correct as
of this date.
6. The financial statements of Borrower as of ______________, 20____, and for
the fiscal year then ended, and the financial statements as of
______________, 20____, and for the partial fiscal year then ended, present
fairly the financial condition of Borrower and the results of its
operations as of the dates of such statements and for the fiscal periods
then ended, and since the date of the latest of such statements there has
been no Material Adverse Effect in its financial position or its
operations.
7. No Event of Default has occurred and Borrower is not aware of any facts
which might result in an Event of Default.
Date: Borrower:
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U.S. Global Investors, Inc.
By:
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Its:
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EXHIBIT B
BORROWING BASE COMPLIANCE (DRAW) CERTIFICATE
1. Total Accounts Receivable (AR) $_______________________
a) Less: Accounts more than 60 days past DOI $_______________________
b) Less: 100% of uninsured Foreign Accounts $_______________________
c) Less: Other non Eligible Accounts $_______________________
d) Total Eligible Accounts Receivable $_______________________
2. Available borrowing advance
A. Accounts Receivable @ 80% of line 1(e) $_______________________ 3.
Total Eligible Collateral (line 2A) $_______________________ 4. Amount of
Promissory Note $_______________________ 5. Lesser of line 3 or line 4
$_______________________ 6. Present Promissory Note balance
(principal outstanding) $_______________________
7. Principal Balance available for borrowing $_______________________
(line 5 minus line 6) (If line 7 is a negative number, then a "pay down" in
accordance with the Agreement is required)
Pursuant to that certain Loan Agreement dated February 2, 2001, as amended by
that First Amendment to Loan Agreement dated to be effective July 1, 2001 and
that Second Amendment dated to be effective February 1, 2003, ("Agreement") as
entered into by and between U.S. Global, Investors, Inc. ("Borrower") and Bank
One, NA ("Bank One"), Borrower submits the foregoing information for the purpose
of inducing Bank One to advance money to Borrower from the balance of funds
available (if any) under Borrower's Promissory Note dated February 1, 2003 in
the original principal amount of $1,000,000.00. Borrower hereby certifies and
affirms that the information contained in this Borrowing Base Compliance (Draw)
Certificate is true, complete and correct according to the financial records of
the Borrower and is properly available as collateral for advances pursuant to
the Agreement and the representations and warranties set forth therein. As of
the date of this Certificate Borrower is in full compliance with all terms,
conditions, covenants and provisions of the Loan Agreement. Borrower is not
aware of any Event of Default under the Agreement or any facts or circumstances
which might give rise to any Event of Default. The terms used in this
Certificate have the same meaning as assigned to them in the Agreement. Borrower
further certifies that all withholding taxes and FICA Taxes have been paid in
full as of the date of this Certificate.
Borrower:
U.S. Global Investors, Inc.
By:
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Its:
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(date)
