FIRST AMENDMENT TO LOAN AGREEMENT
Exhibit
10.19
FIRST AMENDMENT TO LOAN
AGREEMENT
THIS FIRST AMENDMENT TO LOAN
AGREEMENT (the "Amendment"), dated as
of November 11, 2008, is between CONSOLIDATED MORTGAGE, LLC, a
Nevada limited liability company ("Borrower") and DESERT CAPITAL TRS, INC., a
Delaware corporation (the "Lender").
RECITALS:
| A. | Borrower and Lender entered into that certain Loan Agreement dated as of November 21, 2007 (as the same may be amended or otherwise modified from time to time, the "Agreement"). | |
| B. | Pursuant to the Agreement, Borrower executed that certain Promissory Note dated as of November 21, 2007, payable to the order of Lender in the original principal amount of $15,500,000.00 (as the same may renewed, extended or otherwise modified from time to time, the "Note"). | |
| C. | The payment and performance of the liabilities and obligations of Borrower under the Loan Documents (as defined in the Agreement), including without limitation, the indebtedness evidenced by the Note, are secured by that certain Pledge Agreement dated November 21, 2007 between Sandstone Equity Investors, LLC, a Delaware limited liability company ("Sandstone") (such Pledge Agreement as the same may be amended, supplemented or modified from time to time is hereinafter referred to as the "Pledge Agreement"). | |
| D. | Borrower has requested and Lender has agreed, subject to the terms and conditions set forth herein, to modify certain terms of the Agreement. | |
| E. | Borrower and Lender now desire to amend the Agreement as hereinafter set forth. |
NOW, THEREFORE, in consideration of
the premises herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE
I
Definitions
Section
1.01 Definitions. Capitalized
terms used in this Amendment, to the extent not otherwise defined herein, shall
have the same meanings as in the Agreement, as amended hereby.
ARTICLE
II
Amendments
Section
2.01 Amendment to Section
8. Effective as of the date hereof, Section 8 of the Agreement
is hereby amended and restated to read in its entirety as follows:
|
|
8.
|
Financial
Covenants. Until the Note and all other obligations and
liabilities of Borrower and Buyer under this Loan Agreement, the other
Loan Documents and the Purchase Agreement are indefeasibly paid and
finally satisfied in full, Borrower will maintain the following financial
covenants:
|
| (a) | Net Worth. Borrower will maintain, at all times, its total assets (as adjusted by adding back all non-cash charges) less its total liabilities in an amount not less than $2,500,000. | |
| (b) | Fixed Charge Coverage Ratio. Borrower will maintain as of the end of each fiscal year commencing December 31, 2008, a ratio of (a) net income after taxes plus depreciation, amortization, other non-cash expenses, interest expense, lease expense and installment payments made pursuant to Section 2.2(b) of the Purchase Agreement for the 12 month period ending with such fiscal year, less any Distributions during such 12 month period, to (b) interest expense, lease expense, installment payments made pursuant to Section 2.2(b) of the Purchase Agreement, current maturities of long-term debt and current maturities of long-term leases for such 12 month period, of not less than 1.0 to 1.0. | |
| (c) | Cash Balance. Borrower will maintain an unrestricted available cash balance in an amount not less than $250,000 as of the end of each calendar quarter. |
ARTICLE
III
Conditions
Precedent
Section
3.01 Conditions. The
effectiveness of this Amendment is subject to the satisfaction of the following
conditions precedent:
| (a) | Lender shall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to Lender: | ||
| (i) | Note. The Modification of Note Agreement executed by Borrower in substantially the form of Annex 1 hereto; and | ||
| (ii) | Additional Information. Lender shall have received such additional documents, instruments and information as Lender or its legal counsel, Xxxxx Lord Xxxxxxx & Xxxxxxx LLP may request; and | ||
| (b) | The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof; | ||
| (c) | After giving effect to this Amendment and the Modification of Note Agreement, no default or Event of Default shall be continuing; and | ||
| (d) | All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments, and other legal matters incident thereto shall be satisfactory to Lender and its legal counsel, Xxxxx Lord Bissell & Liddell LLP. | ||
ARTICLE
IV
Ratifications,
Representations and Warranties
Section
4.01 Ratifications. The
terms and provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Agreement and except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. Borrower and Lender agree that the
Agreement as amended hereby and the other Loan Documents shall continue to be
legal, valid, binding and enforceable in accordance with their respective
terms. The Borrower further acknowledges and agrees that the
indebtedness evidenced by the Note constitutes a portion of the Indebtedness,
and is secured by and shall continue to be secured by the
Collateral.
Section
4.02 Representations and
Warranties. Borrower hereby represents and warrants to Lender
that (i) the execution, delivery and performance of this Amendment and any and
all other Loan Documents executed and/or delivered in connection herewith have
been authorized by all requisite action on the part of Borrower and will not
violate the limited liability agreement of Borrower, (ii) the representations
and warranties contained in the Agreement, as amended hereby, and any other Loan
Document are true and correct on and as of the date hereof as though made on and
as of the date hereof, (iii) no Event of Default has occurred and is continuing,
and (iv) Borrower is in full compliance with all covenants and agreements
contained in the Agreement as amended hereby.
ARTICLE
V
Miscellaneous
Section
5.01 Survival of Representations
and Warranties. All representations and warranties made in
this Amendment or any other Loan Document including any Loan Document furnished
in connection with this Amendment shall survive the execution and delivery of
this Amendment and the other Loan Documents, and no investigation by Lender or
any closing shall affect the representations and warranties or the right of
Lender to rely upon them.
Section
5.02 Reference to
Agreement. Each of the Loan Documents, including the Agreement
and any and all other agreements, documents, or instruments now or hereafter
executed and delivered pursuant to the terms hereof or pursuant to the terms of
the Agreement as amended hereby, are hereby amended so that any reference in
such Loan Documents to the Agreement shall mean a reference to the Agreement as
amended hereby.
Section
5.03 Expenses of
Lender. As provided in the Agreement, Borrower agrees to pay
on demand all costs and expenses incurred by Lender in connection with the
preparation, negotiation, and execution of this Amendment and the other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including without limitation the costs and fees of
Lender's legal counsel, and all costs and expenses incurred by Lender in
connection with the enforcement or preservation of any rights under the
Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of Lender's legal counsel.
Section
5.04 Severability. Any
provision of this Amendment held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the provision so held to
be invalid or unenforceable.
Section
5.05 APPLICABLE
LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED
PURSUANT HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEVADA.
Section
5.06 Successors and
Assigns. This Amendment is binding upon and shall inure to the
benefit of Lender and Borrower and their respective successors and assigns,
except Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of Lender.
Section
5.07 Counterparts. This
Amendment may be executed in one or more counterparts, each of which when so
executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same instrument.
Section
5.08 Effect of
Waiver. No consent or waiver, express or implied, by Lender to
or for any breach of or deviation from any covenant, condition or duty by
Borrower or Sandstone shall be deemed a consent or waiver to or of any other
breach of the same or any other covenant, condition or duty.
Section
5.09 Headings. The
headings, captions, and arrangements used in this Amendment are for convenience
only and shall not affect the interpretation of this Amendment.
Section
5.10 ENTIRE
AGREEMENT. THIS AMENDMENT, THE AGREEMENT, THE NOTE, THE PLEDGE
AGREEMENT, THE PURCHASE AGREEMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS AND
AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND THEREWITH EMBODY
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written
above.
BORROWER:
CONSOLIDATED
MORTGAGE, LLC
By: /s/Xxxx X.
Xxxxxxxx
Xxxx X. Xxxxxxxx
President
LENDER:
DESERT
CAPITAL TRS, INC.
By: /s/Xxxxx X.
Xxxxx
Xxxxx X. Xxxxx
Chief Financial Officer
By execution hereof,
Sandstone Equity Investors, LLC, a Delaware limited liability company
(“Sandstone”) hereby consents and agrees to this First Amendment to Loan
Agreement and agrees that the Pledge Agreement dated November 21, 2007 to which
it is a party, is in full force and effect and shall remain in full force and
effect and shall continue to be the legal, valid and binding obligation of
Sandstone enforceable against Sandstone in accordance with its
terms. Sandstone further acknowledges and agrees that the term
“Indebtedness” as defined in the Pledge Agreement includes, without limitation,
the indebtedness, liabilities and obligations of Maker to Payee evidenced by the
Note, as modified pursuant to the Modification of Note Agreement dated of even
date herewith.
SANDSTONE EQUITY
INVESTORS, LLC
By: /s/Xxxx X. Xxxxxxxx
Xxxx X.
Xxxxxxxx
President
