MODIFICATION TO CREDIT AGREEMENT
EXHIBIT
10
This
Modification to Credit Agreement ("Modification") is made as of October 13,
2009, by and among XXXXX
MORTGAGE INVESTMENT FUND, a California limited partnership (“Borrower”)
and CALIFORNIA BANK &
TRUST, FIRST BANK 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 a Modification to Credit Agreement, dated
August 16, 2002, executed by the parties, the “Amount of Aggregate Commitment”
for each Lender was increased. By a Modification to Credit Agreement
dated July 31, 2003, executed by the parties, the “Commitment Termination Date”
was extended to July 31, 2005. By a further Modification to Credit
Agreement dated July 31, 2005, the “Commitment Termination Date” was extended to
September 30, 2005. By another Modification to Credit Agreement,
dated September 30, 2005, the “Commitment Termination Date” was extended to July
31, 2007. By another Modification to Credit Agreement, dated February
9, 2006, the Amount of Aggregate Commitment for each Lender through July 31,
2006 was amended and Second Replacement Revolving Promissory Notes were
executed. By a Modification to Credit Agreement, dated August 15,
2006, compliance with section 11.25 of the Credit Agreement as of September 30,
2006 was waived. By a further Modification to Credit Agreement, dated February
23, 2007, the “Amount of Aggregate Commitment” for Loans was temporarily
increased through July 31, 2007, provision for an Unused Commitment Fee was
added, and Third Replacement Promissory Notes were executed. By another
Modification to Credit Agreement, dated July 20, 2007, the Commitment
Termination Date was further extended to July 31, 2009. The Credit
Agreement was again amended by a Modification to Credit Agreement, dated March
31, 2008, by which the Amount of Aggregate Commitment was changed, the Unused
Commitment Fee was reaffirmed, and the Minimum Tangible Net Worth covenant was
adjusted, among other things. The Credit Agreement was last amended
by a Modification to Credit Agreement, dated March 27, 2009 by which section 5.1
of the Credit Agreement was modified to establish an interest rate
floor
B. 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 Agreement, as set forth in this
Modification. Capitalized terms shall have the meanings assigned to
them in the Credit Agreement, as previously modified, except as set forth in
this Modification.
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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, except as waived
hereby;
(b) Borrower
shall execute this Modification;
(c) Guarantor
shall execute the Acknowledgment and Consent appended to the
Modification;
(d) 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, including recordation fees and title insurance premiums;
and
(e) 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 current performing note
receivables in favor of Borrower. The Assignments shall be
accompanied by the original promissory note for the related note receivable. The
value of the Borrower’s real estate encumbered by the Deeds of Trust and the
value of the notes receivable for which Assignments are provided shall be in a
total amount of not less than two hundred percent (200%) of the Liabilities as
determined by Agent in its absolute discretion. 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 to incorporate the following, which shall supersede and
prevail over any existing and conflicting provisions thereof:
(a) The
Lenders shall not be required to make further Loans 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 “March
31, 2010” in its place.
(c) 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:
$21,516,000.00
in the case of California Bank & Trust;
$10,758,000.00
in the case of First Bank; and
$7,172,000.00 in the case of City
National Bank.
(d) Section
4.1 of the Credit Agreement, entitled “Revolving Loans,” is deleted and replaced
with the following:
Notes. The
Loans shall be (i) evidenced by the Revolving Notes executed by
Borrower, (ii) be made payable to the order of each Lender and (iii)
mature on the Commitment Termination Date when all principal shall be due,
subject to acceleration upon an Event of Default. All 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 Notes, which
records or schedules shall be presumptive evidence of the subject matter
thereof. 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
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.
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(e) 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
(f) Article
8 of the Credit Agreement, entitled “Security,” is deleted andreplaced with the following:
The
Liabilities of the Borrower shall be secured pursuant to the Security Documents,
each of which shall be in form and substance satisfactory to the
Agent. The Security Documents shall include a Security Agreement,
Deeds of Trust encumbering real property owned by Borrower as required by Agent
(“Deeds of Trust”) and Assignments of Deeds of Trust and Assignments of
Promissory Notes related to notes receivable (collectively “Assignments”).
Borrower agrees from time to time to execute all instruments and documents and
to pay all fees necessary or desirable in order for the Agent to perfect and
continue the perfection of the security interests created by the Security
Documents and to otherwise effect the purposes thereof. The Agent and
the Lenders shall not be required to return or release all or any portion of any
collateral granted under any Security Document until such time as the
Liabilities shall have been paid in full and all commitments related thereto
have been terminated except as otherwise expressly provided in this Agreement or
in the Security Documents. Notwithstanding the foregoing, Agent shall
release Deeds of Trust and Assignments on a prorate basis as pay downs are made
to the Liabilities, but in no event shall the value of the Deeds of Trust held
by Agent plus the value of the notes receivable as evidenced by the Assignments
held by the Agent be less than two hundred percent (200%) of the Liabilities as
such value is determined by Agent in its absolute discretion. With
the written consent of the Agent, which may be withheld in the exercise of
Agent’s absolute discretion, Borrower may substitute new Deeds of Trust and
Assignments for those previously executed and delivered to Agent, provided that
Borrower maintains the requisite two hundred percent valuation as determined by
Agent. Any substitutions shall be on such terms as Agent shall
require, including payment of recordation fees and title insurance
premiums.
(g)
Section 11.1 of the Credit Agreement, entitled “Financial Statements and Other
Information,” is modified by adding the following subsections:
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(vi) within
fifteen (15) days of the end of each month, a delinquency report and cash flow
forecast, each of which shall be in a form acceptable to Agent and certified as
accurate by Borrower’s chief financial officer, vice president responsible for
accounting, controller or vice president;
(vii) within
thirty (30) days of the end of each fiscal quarter, a loan loss allowance
analysis and a real estate owned report, each of which shall be in a form
acceptable to Agent and certified as accurate by Borrower’s chief financial
officer, vice president responsible for accounting, controller or vice
president.
(h) Section
11.9 of the Credit Agreement, entitled “Profitability,” is deleted and replaced
with the following:
Maximum Outstanding
Principal to Asset Value Ratio: Borrower shall not permit the
outstanding principal balance on all Loans to exceed sixty-five percent (65%) of
the sum of (a) the value of Borrower real estate and (b) the principal balance
due on Borrower’s non-delinquent notes receivables. For purposes of
this ratio, the value of Borrower’s real estate shall be determined by Agent in
its absolute discretion except in the case of manifest error.
(i) The
following new section 11.15, entitled “Restricted Payments,” is inserted into
the Credit Agreement:
Restricted
Payments. Borrower shall not redeem or repurchase any interest
in Borrower or make any distribution of assets to its partners, whether in cash,
property or securities, except that Borrower may make distributions to its
partners up to a three (3.00%) annual return on their investment in any one
year, provided that no Event of Default is pending and such a distribution will
not cause an Event of Default to occur.
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. Borrower’s Representations
and Warranties. Borrower represents and warrants to Lenders as
of the date of this Modification and until repayment of all indebtedness of
Borrower to Lenders:
(a) Accuracy of Representations
in Modification and Existing Credit Documents. All
representations and warranties made and given by Borrower in this Modification
and the Credit Documents are accurate and correct.
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(b) Enforceable Credit
Documents/No Conflicts. The Credit Documents and this
Modification are legal, valid and binding agreements of Borrower, enforceable in
accordance with their respective terms. This Modification does not
conflict with any law, agreement, or obligation by which Borrower is
bound.
8. Borrower
Acknowledgment. Borrower hereby acknowledges and agrees
that:
(a) No Breach by
Bank. Lenders have not breached any duty to Borrower in
connection with the Credit Documents, and Lenders have fully performed all
obligations that the Lenders may have owed or now owe to Borrower.
(b) Interest, Fees, and Other
Charges. All interest, fees or other charges imposed, accrued,
or collected by Lenders under the Credit Documents or this Modification, and the
method of computing the interest, fees, or other charges, were and are proper
and agreed to by Borrower and were properly computed and collected.
(c) Waiver. By
entering into this Modification, Lenders do not waive any existing defaults or
any defaults hereafter occurring, and Bank does not become obligated to waive
any condition or obligation in any agreement between or among any of the parties
hereto.
(d) No Future
Obligations. Lenders have no obligation to make any additional
Loans or extension of credit to or for the benefit of Borrower, and Lenders have
no obligation to provide additional forbearance or to extend further
accommodations to Borrower.
(e) No Third Party
Beneficiaries. This Modification is not intended for, and
shall not be construed to be for, the benefit of any person not a signatory
hereto.
(f) Fair
Consideration. All payments made by Borrower to Lenders under
the Credit Documents and this Modification are for fair consideration and
reasonably equivalent value.
9. Release. Borrower
hereby forever releases and discharges Lenders and their officers, agents,
employees, attorneys, shareholders, insurers, predecessors, successors in
interest, assigns, from any and all claims, demands, controversies, actions,
causes of action, obligations, liabilities, expense, cost, attorneys' fees and
damages of whatsoever nature and character of any kind, at law or in equity,
past or present, which exist in favor of Borrower on the date of this
Modification.
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(a) Waiver of Civil Code Section
1542. It is the intention of Borrower that the foregoing
release shall be effective as a bar to all actions, fees, damages, losses,
claims, liabilities, demands or debts whatsoever, of any nature or kind, known
or unknown, suspected or unsuspected. It is further the intention of
Borrower to expressly waive any and all rights and benefits conferred upon them
by virtue of Section 1542 of the California Civil Code which provides as
follows:
A general
release does not extend to claims which the creditor does not know or suspect to
exist in his or her favor at the time of executing the release, which if known
by him or her, must have materially affected his settlement with the
debtor.
(b) Borrower
expressly acknowledges that Borrower has separately bargained for the foregoing
waiver of the provisions of Section 1542 of the California Civil
Code. Borrower expressly consents that this release shall be given
full force and effect in accordance with each and all of its express terms and
provisions. Borrower acknowledges that Borrower has the required
knowledge and experience to understand all provisions of this
Modification.
10. Governing
Law. This Modification shall be construed, governed and
enforced in accordance with the laws of the State of California.
11. 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.
12. 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.
13. Reaffirmation. Borrower
hereby acknowledges, reaffirms and confirms its obligations under the Credit
Documents, as amended and modified by this Modification.
14. 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.
15. IN
WITNESS WHEREOF, the parties have executed this Modification as of the day and
year first above written.
SIGNATURES APPEAR ON THE
FOLLOWING PAGES
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XXXXX MORTGAGE INVESTMENT
FUND,
a
California limited partnership,
By: XXXXX FINANCIAL GROUP,
INC.,
a California corporation, its general
partner
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\0118\agr\07007569.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\0118\agr\07007569.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\0118\agr\07007569.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\0118\agr\07007569.DOC}
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ACKNOWLEDGMENT
AND CONSENT
Guarantor
acknowledges and consents to the foregoing Modification to Credit Agreement and
all prior Modifications to Credit Agreement executed by Borrower and Lenders in
connection with the Credit Agreement. Guarantor further acknowledges
that the Continuing Guaranty, dated August 31, 2001, executed by Guarantor in
favor of Agent and Lenders remains in full force and effect without known
defense as to the indebtedness of Borrower under the Credit Agreement, as
previously and as herewith modified.
Dated: October
13, 2009
XXXXX
FINANCIAL GROUP, INC.,
a
California corporation
By:
/s/ Xxxxx X.
Xxxxxx
Printed
Name: Xxxxx X.
Xxxxxx
Title: Chief Financial
Officer
ACCEPTED
AND ACKNOWLEDGED BY:
CALIFORNIA
BANK & TRUST, AS AGENT FOR BANKS
By:
/s/ Xxxxxx
Xxxx
Printed
Name: Xxxxxx
Xxxx
Title:
Vice
President
{Clients\cbt-ln\0118\agr\07007569.DOC}
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