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EXHIBIT 10.2
THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT AND AMENDMENT
TO LOAN DOCUMENTS AND RENEWAL
AND EXTENSION OF LOAN
THIS THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT AND AMENDMENT TO LOAN
DOCUMENTS AND RENEWAL AND EXTENSION OF LOAN (the "AMENDMENT") is made and
entered into to be effective as of the 15th day of March, 1998, by and between
PMC COMMERCIAL TRUST (herein referred to with its successors and assigns as the
"BORROWER") and BANK ONE, TEXAS, N.A., a national banking association (herein
referred to with its successors and assigns as the "LENDER").
RECITALS:
A. Borrower and Lender executed that certain Revolving Credit
Agreement, dated as of May 12, 1995, as amended by that certain First Amendment
to Revolving Credit Agreement dated as of October 18, 1995, and by that certain
Second Amendment to Revolving Credit Agreement and Amendment to Loan Documents
and Renewal and Extension of Loan dated as of May 12, 1996, (the "LOAN
AGREEMENT"), pursuant to which the Lender has made and may hereafter make loans
to the Borrower, as evidenced by that certain Revolving Credit Note executed by
Borrower and dated as of May 12, 1995, payable to the order of Lender in the
maximum principal amount of $10,000,000.00, as increased, restated and
otherwise amended by that certain promissory note executed by the Borrower and
dated as of October 18, 1995, payable to the order of Lender in the maximum
principal amount of $20,000,000.00 (the "EXISTING REVOLVING CREDIT NOTE").
Except as otherwise expressly provided herein, all capitalized terms used
herein shall have the same meanings assigned to such terms in the Loan
Agreement.
B. The Borrower and Lender have agreed, subject to the terms and
conditions outlined herein and subject to the Borrower's agreement with the
terms and provisions hereof and of each and every other instrument and
agreement executed in connection herewith, to restructure the credit facilities
made available pursuant to the Loan Agreement and Existing Revolving Credit
Note.
AGREEMENTS
In consideration of the premises, which are made a part hereof, and the
mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby amend the Loan Agreement and Loan
Documents as follows:
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SECTION I
AMENDMENTS TO THE LOAN AGREEMENT
The Loan Agreement is hereby amended in the following respects:
1.1 AMENDMENT TO SECTION 1.1.
(a) SECTION 1.1 of the Loan Agreement shall be and is hereby
amended to delete the definition of "BUSINESS DAY" contained therein and
to substitute the following definition in lieu thereof:
" 'BUSINESS DAY' shall have the meaning ascribed to such
term in that certain Third Amended and Restated Revolving Credit
Note dated as of March 15, 1998, executed by the Borrower,
payable to the order of the Bank in the maximum principal amount
of $20,000,000.00.
(b) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to delete sub-part (a) from the definition of "Combined
Borrowing Base Availability" and to substitute the following in lieu
thereof:
"...(a) The Combined Borrowing Base Availability
shall never exceed the lesser of (i) $32,500,000.00, or (ii) the
sum of $20,000,000.00 plus the face amount of each Guidance Line
Note executed and delivered by the Borrower and accepted by the
Bank pursuant to SECTION 2.9 of this Agreement which has not
matured (whether by acceleration, the lapse of time or
otherwise)..."
(c) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to add the following as additional definitions thereto:
" 'GUIDANCE LINE OF CREDIT' means an uncommitted credit
facility that may, from time to time, in the sole and absolute
discretion of the Bank, be made available to the Borrower
pursuant to SECTION 2.9 of this Agreement in an aggregate amount
at any time outstanding up to, but not to exceed, the lesser of
(i) $12,500,000.00, or (ii) the sum of the maximum face amounts
of all Guidance Line Notes executed and delivered by the Borrower
and accepted by the Bank pursuant to SECTION 2.9 of this
Agreement which have not matured (whether by acceleration, the
lapse of time or otherwise)."
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" 'GUIDANCE LINE NOTES' shall mean such promissory notes
as may, from time to time, be executed and delivered by the
Borrower in substantially the same form as EXHIBIT J,
appropriately completed and accepted by the Bank pursuant to
SECTION 2.9 of this Agreement, as the same may, from time to
time, be renewed, increased, extended, restated, amended or
otherwise modified."
(d) SECTION 1.1 of the Loan Agreement shall be and is hereby
amended to delete the references to May 12, 1998 contained in the
definitions of "MATURITY DATE" and "TERMINATION DATE" and to substitute
May 15, 2000 in lieu thereof; provided, however, the term "MATURITY
DATE", as applicable to any Guidance Line Note or any Advances or Loans
made or to be made thereunder, shall mean the sooner to occur of the
Maturity Date or Termination Date, as applicable, set forth above, or
the date specified as being the date on which the principal balance then
outstanding thereon and all accrued and unpaid interest shall become due
and payable in full (whether by acceleration, the lapse of time or
otherwise), and the term "TERMINATION DATE", as applicable to such
Guidance Line Note, shall be the same date as its Maturity Date.
(e) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to delete the definition of "MAXIMUM BORROWING BASE
AVAILABILITY" contained therein and to substitute the following
definition in lieu thereof:
" 'MAXIMUM BORROWING BASE AVAILABILITY' shall mean the
lesser of (a) the sum of $20,000,000.00 plus the face amounts of
all Guidance Line Notes executed and delivered by the Borrower
and accepted by the Bank pursuant to SECTION 2.9 of this
Agreement which have not matured (whether by acceleration, the
lapse of time or otherwise), or (b) the Combined Borrowing Base
Availability."
(f) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to delete the definition of "MAXIMUM RATE" contained
therein and to substitute the following definition in lieu thereof:
" 'MAXIMUM RATE' shall have the meaning ascribed to such
term in that certain Third Amended and Restated Revolving Credit
Note dated as of March 15, 1998, executed by the Borrower,
payable to the order the Bank in the maximum principal amount of
$20,000,000.00."
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(g) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to delete the definition of the term "NOTE" contained
therein and to substitute the following definition in lieu thereof:
" 'NOTE' collectively means and refers to (i) the
Revolving Credit Note and (ii) each Guidance Line Note executed
and delivered by the Borrower and accepted by the Bank pursuant
to SECTION 2.9 of this Agreement, evidencing the obligation of
Borrower to repay the Loan, as any of the same may, from time to
time, be renewed, increased, extended, restated, amended or
otherwise modified."
(h) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to add the following as an additional definition
thereto:
" 'REVOLVING CREDIT NOTE' means and refers to that certain
Third Amended and Restated Revolving Credit Note dated as of
March 15, 1998, executed by the Borrower, payable to the order of
Bank in the maximum principal amount of $20,000,000.00, as the
same may, from time to time, be renewed, increased, extended,
restated, amended or otherwise modified."
(i) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to delete from the definition of "ELIGIBLE MORTGAGE
LOAN", SUBSECTION (D) thereof and substitute the following in lieu
thereof:
"...(d) which does not constitute a Non-Performing Loan, a
Renegotiated Loan, a Construction Loan or a Segmented Loan."
(j) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended to delete from the definition of "MORTGAGE LOAN
DOCUMENTS" SUBSECTION (B) thereof, and substitute the following in lieu
thereof:
"...(b) an originally executed copy of the Mortgage which
secures the Mortgage Note, file marked to evidence its filing in
the appropriate county real estate records....."
(k) SECTION 1.1 of the Loan Agreement shall be and is hereby
further amended by the addition of the following definitions:
" 'RENEGOTIATED LOAN' shall mean those Mortgage Loans with
respect to which the Mortgage Loan Obligors have had
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insufficient cash flow and/or negative economic events which have
diminished their ability to make timely and/or complete payments
and Borrower has given its concurrence to an alternative schedule
of repayment."
" 'CONSTRUCTION LOAN' shall mean those Mortgage Loans with
respect to which the loan funds are used to finance the
construction, renovation or improvement of Projects."
" 'SEGMENTED LOAN' shall mean those Mortgage Loans which
have been segmented into parts for securitization purposes."
1.2 AMENDMENT TO SECTION 2.1. SECTION 2.1(A)(I) of the Loan
Agreement shall be and is hereby amended to delete the same in its entirety and
to substitute the following in lieu thereof:
"....(i) the sum of $20,000,000.00 plus the aggregate
face amounts of all Guidance Line Notes executed and delivered by
the Borrower and accepted by the Bank pursuant to SECTION 2.9 of
this Agreement which have not matured (whether by acceleration,
the lapse of time or otherwise); or..."
1.3 AMENDMENT TO SECTION 2.4. SECTION 2.4 of the Loan Agreement
shall be and is hereby amended by adding the following language to the end of
thereof:
"(e) Cleanup. Borrower agrees that for a period of not
less than thirty (30) consecutive days during each calendar year,
Borrower shall have repaid the entire outstanding principal
balance of the Note and other Obligations, together with all
accrued but unpaid interest thereon."
1.4 AMENDMENT TO SECTION 2.7. SECTION 2.7 of the Loan Agreement
shall be and is hereby amended to delete the same in its entirety and to
substitute the following in lieu thereof:
"SECTION 2.7 Fees. Subject to the limitations set forth in
SECTION 9.12, Borrower shall pay to Bank in arrears an unused facility
fee (the "UNUSED FACILITY FEE"). The Unused Facility Fee shall be due
and payable quarterly on the fifteenth (15th) day of each June,
September, January and March of each calendar year which occurs prior to
the Termination Date, with a final payment being due and payable on the
Termination Date. The Unused Facility Fee due on each Unused Facility
Fee payment date (including, without limitation, the Termination Date)
shall be equal to twenty-five percent (25%) of the product obtained by
multiplying .00125 times the amount by which $20,000,000.00 plus the
aggregate
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face amounts of all Guidance Line Notes executed and delivered by the
Borrower and accepted by the Bank pursuant to SECTION 2.9 of this
Agreement which have not matured (whether by acceleration, the lapse of
time or otherwise) exceeds the average daily principal balance
outstanding on the Revolving Credit Note and the Guidance Line Notes
during the three (3) month period which ends on the applicable Unused
Facility Fee payment date. If the Termination Date occurs pursuant to
SECTION 2.1(B) or 8.2 hereof, the Unused Facility Fee shall be
determined prorata, based upon the portion of the three (3) month period
occurring prior to the Termination Date, prorated in accordance with the
actual number of days elapsing during such period (including the first
day of such period but excluding the last day). In the event that
interest accrued and paid on the Revolving Credit Note and any Guidance
Line Notes during the consecutive twelve (12) month period which follows
March 15, 1998 (or during any consecutive twelve (12) month period which
follows any anniversary date of March 15, 1998) exceeds $250,000.00,
provided that no Default [other than a Default described in SECTION
8.1(C)] or Event of Default is then existing, then the Bank shall within
thirty (30) days following written request by Borrower, refund to
Borrower the full amount of unused facility fees paid by Borrower with
respect to such twelve (12) month period."
1.5 AMENDMENT TO ARTICLE 2. ARTICLE 2 of the Loan Agreement
shall be and is hereby amended to add, as an addition thereto, a new SECTION
2.9 which shall read in its entirety as follows:
"SECTION 2.9 GUIDANCE LINE OF CREDIT. The Borrower may, from
time to time, give the Bank at least fifteen (15) business days prior
written notice of the Borrower's desire to increase the maximum amount
of the Commitment by executing and delivering to the Bank a Guidance
Line Note. Such notice shall be signed by an authorized officer of the
Borrower, shall specify the proposed effective date for the Guidance
Line Note, the maximum principal amount thereof, and the Maturity Date
and Termination Date to be applicable thereto (which shall not extend
beyond the Maturity Date and Termination Date of the Revolving Credit
Note). No Guidance Line Note shall, however, be in a maximum amount
less than $2,500,000.00 or shall provide for a Maturity Date less than
thirty (30) days following the date on which the Bank shall make an
Advance thereunder, and no Guidance Line Note shall be accepted by the
Bank if a Default or Event of Default shall then exist. Any Loan made
pursuant to a Guidance Line Note shall be made in a single Advance in
the full face amount of such Note. THE BANK MAY DECLINE TO INCREASE THE
AMOUNT OF THE COMMITMENT BY ACCEPTING ANY GUIDANCE LINE NOTE FOR ANY
REASON OR FOR NO REASON, IN ITS SOLE AND ABSOLUTE DISCRETION. THE
BORROWER ACKNOWLEDGES AND
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AGREES THAT THE BANK IS UNDER NO OBLIGATION TO MAKE ANY LOAN OR ADVANCE
PURSUANT TO THE GUIDANCE LINE OF CREDIT UNLESS AND UNTIL THE BANK SHALL,
IN ITS SOLE AND ABSOLUTE DISCRETION, ACCEPT A GUIDANCE LINE NOTE, AND IN
SUCH EVENT, THE BANK'S OBLIGATION TO MAKE LOANS AND ADVANCES PURSUANT TO
THE GUIDANCE LINE OF CREDIT SHALL BE LIMITED TO THE MAXIMUM AMOUNTS OF
EACH GUIDANCE LINE NOTE EXECUTED AND DELIVERED BY THE BORROWER AND
ACCEPTED BY THE BANK PURSUANT TO THIS SECTION WHICH HAS NOT MATURED
(WHETHER BY ACCELERATION, THE LAPSE OF TIME OR OTHERWISE). If the Bank
is willing to increase the amount of the Commitment by accepting a
Guidance Line Note on the terms specified in the notice given by the
Borrower to the Bank, the Bank shall notify the Borrower, whereupon the
Borrower shall execute and deliver to the Bank a Guidance Line Note in
the form of EXHIBIT "J" attached hereto appropriately completed to
specify the maximum amount, the Maturity Date and Termination Date for
such Note together with such other instruments, agreements,
certificates, documents and information as the Bank may request
including, but not limited to, a Compliance Certificate completed in all
appropriate respects and executed by the president or any executive vice
president or the chief executive or chief financial officer of the
Borrower. Loans and Advances made pursuant to any Guidance Line Note
shall be subject to all terms and conditions of this Agreement and each
other Loan Document including, without limitation, those set forth in
this ARTICLE 2 and in ARTICLE 4. Upon the execution and delivery of
each Guidance Line Note, the Borrower shall be deemed to represent and
warrant that all representations and warranties of Borrower set forth in
the Loan Documents and in the Compliance Certificate are true, complete
and correct in all material respects and that nothing is omitted
therefrom which would cause the same to be misleading in any material
respect. Without limiting the generality of the forgoing, the Borrower
shall be deemed to represent and warrant to the Bank that it has neither
received notice of nor is aware of any Default or Event of Default.
Payments of principal and interest upon the Loans (including, without
limitation, prepayments) may be applied by the Bank, at its sole option,
first toward payment of the Obligations evidenced by the Guidance Line
Notes, or any one or more of them, in such order of priority as the
Bank, in its sole discretion, may elect."
1.6 AMENDMENT TO SECTION 7.3. SECTION 7.3 of the Loan Agreement
shall be and is hereby amended to delete the same in its entirety and to
substitute the following in lieu thereof:
SECTION 7.3 MINIMUM NET WORTH. Borrower shall not, at
any time, permit its Net Worth to be less than the sum of
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$80,000,000.00 plus ninety percent (90%) of the total amount of
any of the following contributed to the Borrower as consideration
for or with respect to any shares of (or other ownership or
beneficial interests in) the Borrower: (a) cash or other legal
tender of the United States , and (b) the fair market value of
any property, real or personal, tangible or intangible (including
any legal or equitable interest in such property), contributed to
the Borrower as consideration for or with respect to any shares
of (or other ownership or beneficial interests in) the Borrower.
In the event Borrower's required minimum Net Worth shall exceed
$80,000,000.00 pursuant to the foregoing sentence, and thereafter
Borrower shall repurchase its own shares or other ownership or
beneficial interests as treasury stock or otherwise, then
Borrower's required minimum Net Worth shall be reduced by ninety
percent (90%) of the lesser of (i) the purchase price or (ii) the
fair market value of such shares or other ownership or beneficial
interests purchased by Borrower, provided, however, that Borrower
shall not at any time permit its Net Worth to be less than
$80,000,000.00.
1.7 NOTICES, CERTIFICATES AND EXHIBITS. The forms of Notice of
Borrowing, Compliance Certificate and Borrowing Base Report shall be amended so
that, in each insistence where the amount of $20,000,000.00 appears, the sum of
(a) $20,000,000.00 plus (b) the sum of the maximum face amounts of all Guidance
Line Notes which have been executed and delivered by the Borrower and accepted
by the Bank in accordance with SECTION 2.9 of the Loan Agreement and which have
not matured (whether by acceleration, the lapse of time or otherwise) is
substituted for $20,000,000.00. The schedule of exhibits to the Loan Agreement
shall be amended to add as a new EXHIBIT "J" thereto, the form of the Guidance
Line Note which is attached to this Amendment as EXHIBIT "A" and made a part
hereof for all purposes, and said form of the Guidance Line Note shall be, and
hereby does become, a part of the Loan Agreement.
SECTION II
AMENDMENT TO THE REVOLVING CREDIT NOTE
2.1 Third Amended and Restated Revolving Credit Note.
Contemporaneously with the execution hereof, Borrower shall execute and deliver
to Bank a Third Amended and Restated Revolving Credit Note (herein so called)
dated as of March 15, 1998, in the maximum principal amount of $20,000,000.00
which shall, from and after March 15, 1998, constitute the "REVOLVING CREDIT
NOTE" contemplated by the Loan Agreement and Loan Documents.
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SECTION III
AMENDMENT TO LOAN DOCUMENTS
3.1 Reference to the Loan Agreement. Each of the Loan Documents is
hereby amended so that any reference in any Loan Document to the Loan Agreement
or to any other Loan Document shall mean a reference to the Loan Agreement or
such other Loan Document as amended hereby, and any reference in the Loan
Agreement or any other Loan Document to the Revolving Credit Note shall mean a
reference to the Third Amended and Restated Revolving Credit Note executed
contemporaneously herewith.
SECTION IV
MISCELLANEOUS
4.1 Authority. The Borrower hereby represents and warrants that
the execution, delivery and performance of this Amendment, all instruments,
agreements and other documents executed in connection herewith and all other
instruments, agreements and documents executed in connection with the Loan
Agreement have been duly authorized by all necessary action of the Borrower
and do not and will not: (a) violate any provisions of any agreement, law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect to which Borrower is a party or to which it or any of
its assets may be subject; (b) result in, or require the creation or imposition
of any Lien (other than a Permitted Lien) upon or with respect to any asset now
owned by Borrower or any Collateral; or (c) result in a breach of or constitute
a default by Borrower (and Borrower is not in default) under any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its assets is bound or affected. Borrower
further warrants and represents that no approval, authorization, order,
license, permit, franchise or consent of or registration, declaration,
qualification or filing with any governmental authority is required in
connection with the execution, delivery or performance by Borrower of this
Amendment or any other Loan Document. Such instruments and agreements
constitute the legal, valid and binding obligations of the Borrower,
enforceable against Borrower in accordance with their respective terms, subject
only to the applicable debtor relief laws.
4.2 Ratification. Borrower hereby ratifies and confirms the
Loan Agreement and Loan Documents, as renewed, extended, modified and otherwise
amended hereby, in all respects, and acknowledges and agrees that all of the
terms, provisions and covenants thereof, as renewed, extended, modified and
otherwise amended hereby and by the Third Amended and Restated Revolving Credit
Note, do and shall remain and continue in full force and effect, enforceable
against the Borrower and its assets in accordance with their terms.
4.3 Further Assurances. The Borrower covenants and agrees from time
to time to
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promptly execute, assign, endorse, and deliver to Lender all documents,
instruments, notices, agreements, assignments, pledges, statements, and
writings, and to do all other acts and things as the Lender may reasonable
request in order to more fully evidence and/or to carry out more fully the
intent and purposes of this Amendment, the Loan Agreement and other Loan
Documents.
4.4 Multiple Counterparts. Multiple counterparts of this
Amendment may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
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4.5 Representations and Warranties. The Borrower hereby
represents and warrants that all representations and warranties contained in
the Loan Agreement and other Loan Documents are and continue to be true and
correct in all material respects, as if made on the date hereof, and nothing is
omitted therefrom that would cause the same to be misleading in any material
respect.
4.6 Applicable Laws. THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED
AND ENFORCEABLE UNDER AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE LAWS OF THE UNITED STATES.
4.7 No Oral Agreements. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Amendment to be executed effective as of the date specified above.
BORROWER:
PMC COMMERCIAL TRUST
By:
-------------------------------
Printed Name:
---------------------
Title:
----------------------------
LENDER:
BANK ONE TEXAS, N.A.
By:
-------------------------------
Printed Name:
---------------------
Title:
----------------------------
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EXHIBIT "A"
TO
THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT
AND AMENDMENT TO LOAN DOCUMENTS AND RENEWAL
AND EXTENSION OF LOAN
EXHIBIT "J"
TO
REVOLVING CREDIT AGREEMENT
GUIDANCE LINE NOTE NO.
$ ,
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FOR VALUE RECEIVED, PMC COMMERCIAL TRUST ("BORROWER"), does hereby
unconditionally promise to pay to the order of BANK ONE, TEXAS, NATIONAL
ASSOCIATION ("BANK"), at its offices in Dallas County, Texas at 0000 Xxxx
Xxxxxx, Xxxxxx, Xxxxx 00000, Attention: Xxxx Xxxxxx. The principal amount of
________________________________________________________________________________
AND _____/100 DOLLARS ($______________________) ("TOTAL PRINCIPAL AMOUNT"), or
such amount less than the Total Principal Amount which is outstanding from time
to time if the total amount outstanding hereunder is less than the Total
Principal Amount, in lawful money of the United States of America, together
with interest on such portion of the Total Principal Amount which has been
drawn until paid at the rates per annum provided below.
1. Definitions. For purposes of this Note, unless the context
otherwise requires, the following terms shall have the definitions assigned to
such terms as follows:
"ADJUSTED BASE RATE" shall mean a rate equal to the remainder of
(a) the Base Rate, less (b) one-half of one percent (.5%) per annum.
"ADJUSTED LIBOR RATE" shall mean with respect to each Interest
Period, on any day thereof, an amount equal to the sum of (a) one and
three fourths percent (1.75%), plus, (b) the quotient of (i) the LIBOR
Rate with respect to such Interest Period, divided by (ii) the remainder
of 1.0 less the Reserve Requirement in effect on such day. Each
determination by Bank of the Adjusted LIBOR Rate shall, in the absence
of manifest error, be conclusive and binding.
"ADVANCE" shall have the meaning ascribed to such term in the
Loan Agreement.
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"BASE RATE" shall mean the Prime Rate of interest per annum as
published from time to time in Money Rates in The Wall Street Journal
(or if such Prime Rate is not published in The Wall Street Journal, such
other comparable rate of interest selected by the Bank in its sole
discretion and published in a comparable financial publication).
"BASE RATE BALANCE" shall mean that portion of the principal
balance of this Note bearing interest at a rate based upon the Adjusted
Base Rate.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or any other day on which national banking associations are authorized
to be closed.
"CONSEQUENTIAL LOSS" shall mean, with respect to Borrower's
payment of all or any portion of the then outstanding principal amount
of any LIBOR Balance on a day other than the last day of the Interest
Period related thereto, any loss, cost or expense incurred by Bank in
redepositing such principal amount, including the sum of (a) the
interest which, but for such payment, Bank would have earned in respect
of such principal amount so paid, for the remainder of the Interest
Period applicable to such sum, reduced, if Bank is able to redeposit
such principal amount so paid for the balance of such Interest Period,
by the interest earned by Bank as a result of so redepositing such
principal amount plus (b) any expense or penalty incurred by Bank on
redepositing such principal amount.
"CONTRACT RATE" shall mean a rate of interest based upon the
Adjusted LIBOR Rate or Adjusted Base Rate in effect at any time pursuant
to an Interest Notice.
"DEFAULT" shall have the meaning ascribed to such term in the
Loan Agreement.
"DEFAULT RATE" shall have the meaning ascribed to such term in
the Loan Agreement.
"DOLLARS" shall mean lawful currency of the United States of
America.
"EVENT OF DEFAULT" shall have the meaning ascribed to such term
in the Loan Agreement.
"EXCESS INTEREST AMOUNT" shall mean, on any date, the amount by
which (a) the amount of all interest which would have accrued prior to
such date on the principal of this Note, had the applicable Contract
Rate at all times been in effect without limitation by the Maximum Rate,
exceeds (b) the aggregate amount of interest accrued on this Note on or
prior to such date.
"INTEREST NOTICE" shall mean a notice given by Borrower to Bank
of an Interest Option selected hereunder. Each Interest Notice shall
specify the Interest Option selected, the amount of the unpaid principal
balance of this Note to bear interest at the rate selected and, if the
Adjusted LIBOR Rate is specified, the length of the applicable Interest
Period. An Interest Notice may be written or oral (if promptly
confirmed thereafter in writing), and Bank is hereby authorized and
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directed to honor all telephonic Interest Notices from any person
authorized to request advances hereunder.
"INTEREST OPTION" shall have the meaning assigned to such term in
PARAGRAPH 6 hereof.
"INTEREST PAYMENT DATE" shall mean (a) in the case of the Base
Rate Balance, the first day of each October, January, April and July
occurring prior to the Maturity Date and (b) in the case of any LIBOR
Balance, the last day of the corresponding Interest Period with respect
to such LIBOR Balance and the Maturity Date.
"INTEREST PERIOD" shall mean with respect to any LIBOR Balance, a
period commencing: (a) on any date which, pursuant to an Interest
Notice, the principal amount of such LIBOR Balance begins to accrue
interest at the Adjusted LIBOR Rate, or (b) the Business Day following
the last day of the immediately preceding Interest Period in the case of
a rollover to a successive Interest Period and ending 30, 60 or 90 days
thereafter as Borrower shall elect in accordance with the provisions
hereof; provided, that: (i) any Interest Period which would otherwise
end on a day which is not a LIBOR Business Day shall be extended to the
succeeding LIBOR Business Day; and (ii) any Interest Period which would
otherwise end after the Maturity Date shall end on the Maturity Date.
"LIBOR BALANCE" shall mean any principal balance of this Note
which, pursuant to an Interest Notice, bears interest at a rate based
upon the Adjusted LIBOR Rate for the Interest Period specified in such
Interest Notice.
"LIBOR BUSINESS DAY" shall mean a day on which dealings in
Dollars are carried out in the London interbank Eurodollar market.
"LIBOR RATE" shall mean with respect to each Interest Period, the
offered rate for U.S. Dollar deposits of not less than $1,000,000.00 as
of 11:00 a.m., City of London, England time two LIBOR Business Days
prior to the first date of each Interest Period of this Note as shown on
the display designated as "BRITISH BANKERS ASSOC. INTEREST SETTLEMENT
RATES" on the Telerate System ("TELERATE"), Page 3750 or Page 3740, or
such other page or pages as may replace such pages on Telerate for the
purpose of displaying such rate. Provided, however, that if such rate
is not available on Telerate then such offered rate shall be otherwise
independently determined by Bank from an alternate, substantially
similar independent source available to Bank or shall be calculated by
Bank by a substantially similar methodology as that theretofore used to
determine such offered rate in Telerate.
"LOAN AGREEMENT" shall mean that certain Revolving Credit
Agreement dated as of May 12, 1995, by and between Bank and Borrower, as
amended by that certain First Amendment to Revolving Credit Agreement
dated as of October 18, 1995, that certain Second Amendment to Revolving
Credit Agreement and Amendment to Loan Documents and Renewal and
Extension
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of Loan dated to be effective as of May 12, 1996, and that certain Third
Amendment to Revolving Credit Agreement and Amendment to Loan Documents
and Renewal and Extension of Loan dated to be effective March 15, 1998,
each of which was entered into by the Bank and the Borrower, as the
foregoing may, from time to time hereafter, be further renewed,
extended, increased, restated, supplemented, amended or otherwise
modified.
"LOAN DOCUMENTS" shall have the meaning ascribed to such term in
the Loan Agreement.
"MATURITY DATE" shall mean the sooner to occur of (a) the
Maturity Date (as such term is defined in the Loan Agreement), (b) May
15, 2000, or (c) the date on which this Note, both principal and
interest, shall become due and payable whether the same results from
termination of the Bank's Commitment (as such term is defined in the
Loan Agreement), as contemplated by SECTION 2.1(B) or SECTION 8.2 of the
Loan Agreement, acceleration of this Note or the other Obligations (as
such term is defined in the Loan Agreement), or otherwise.
"MAXIMUM RATE" shall mean, with respect to the holder hereof, the
maximum nonusurious interest rate, if any, that at any time, or from
time to time may be contracted for, taken, reserved, charged, or
received on the indebtedness evidenced by this Note under the laws which
are presently in effect in the United States and the State of Texas
applicable to such holder and such indebtedness or, to the extent
permitted by law, under such applicable laws of the United States and
the State of Texas which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.
To the extent that Chapter 303 of the Texas Finance Code, is relevant to
any holder of this Note for the purposes of determining the Maximum
Rate, each such holder elects to determine such applicable legal rate
pursuant to the "weekly ceiling" from time to time in effect, as
specified in Chapter 303, subject to any right such holder may have
subsequently, under applicable law, to change the method of determining
the Maximum Rate. If no Maximum Rate is established by applicable law,
then the Maximum Rate shall be equal to eighteen percent (18%) per
annum.
"REGULATION D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System from time to time in effect and shall
include any successor or other regulation relating to reserve
requirements applicable to member banks of the Federal Reserve System.
"RESERVE REQUIREMENT" shall, on any day, mean that percentage
(expressed as a decimal fraction) which is in effect on such day, as
provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) for determining the reserve requirements
(including, without limitation, basic, supplemental, marginal and
emergency reserves) under Regulation D with respect to "Eurocurrency
liabilities" as currently defined in Regulation D, or under any similar
or successor regulation. For purposes of this definition, any LIBOR
Balances hereunder shall be deemed "Eurocurrency liabilities" under
Regulation D without benefit of or credit for prorations, exemptions or
offsets under Regulation D. Bank's determination of the
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Reserve Requirement shall be conclusive.
2. Payments of Interest and Principal. Interest on the unpaid
principal balance of this Note shall be due and payable on each Interest
Payment Date as it accrues. The principal of this Note, together with all
accrued but unpaid interest, shall be due and payable on the Maturity Date.
Mandatory prepayments of the unpaid principal balance of this Note shall be due
and payable on the fifteenth (15th) day of each calendar month until this Note
is fully and finally paid in an amount equal to that portion of the Excess Debt
(as such term is defined in the Loan Agreement) outstanding on the immediately
preceding Borrowing Base Determination Date (as such term is defined in the
Loan Agreement), as provided in SECTION 2.6(E) of the Loan Agreement which the
Bank elects to apply toward payment of this Note. The entire unpaid principal
balance of this Note, and all accrued but unpaid interest hereon, shall be due
and payable on the Maturity Date.
3. Rates of Interest. The unpaid principal of the Base Rate Balance
shall bear interest at a rate per annum which shall from day to day be equal to
the lesser of (a) the Adjusted Base Rate in effect from day to day, or (b) the
Maximum Rate. The unpaid principal of each LIBOR Balance shall bear interest
at a rate per annum which shall from day to day be equal to the lessor of (i)
the Adjusted LIBOR Rate for the Interest Period in effect with respect to such
LIBOR Balance, or (ii) the Maximum Rate. Each change in the interest rate
applicable to a Base Rate Balance shall become effective without prior notice
to Borrower automatically as of the opening of business on the date of such
change in the Adjusted Base Rate. Interest on this Note shall be calculated on
the basis of the actual days elapsed in a year consisting of 365/366 days.
4. Interest Recapture. If on each Interest Payment Date or any
other date on which interest payments are required hereunder, Bank does not
receive interest on this Note computed at the Contract Rate because such
Contract Rate exceeds or has exceeded the Maximum Rate, then Borrower shall,
upon the written demand of Bank, pay to Bank in addition to the interest
otherwise required to be paid hereunder, on each Interest Payment Date
thereafter, the Excess Interest Amount (calculated as of such later Interest
Payment Date); provided that in no event shall Borrower be required to pay, for
any Interest Period, interest at a rate exceeding the Maximum Rate effective
during such period.
5. Interest on Past Due Amounts. Subject to the limitations on
interest, if applicable, set forth in this Note and the Loan Agreement, to the
extent any interest is not paid on or before the fifth (5) day after it becomes
due and payable, Bank may, at its option, add such accrued but unpaid interest
to the principal of this Note. Notwithstanding anything herein to the
contrary, all past due principal of this Note and, to the extent permitted by
applicable law, past due interest on this Note shall, at the option of Bank,
bear interest at the Default Rate until paid.
6. Interest Option. Subject to the provisions hereof, Borrower
shall have the option (an "INTEREST OPTION") of having designated portions of
the unpaid principal balance of this Note bear interest at a rate based upon
the Adjusted LIBOR Rate or Adjusted Base Rate as provided in PARAGRAPH
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3 hereof; provided, however, that the selection of the Adjusted LIBOR Rate for
a particular Interest Period shall not be for less than $100,000.00 of unpaid
principal or an integral multiple thereof. The Interest Option shall be
exercised in the manner provided below:
a. At Time of Borrowing. Contemporaneously with each request
for an advance by Borrower under PARAGRAPH 9 herein, Borrower shall give
Bank an Interest Notice indicating the initial Interest Option selected
with respect to the principal balance of such advance.
b. At Expiration of Interest Periods. On or before the day
of termination of any Interest Period, Borrower shall give Bank an
Interest Notice indicating the Interest Option to be applicable to the
corresponding LIBOR Balance upon the expiration of such Interest Period.
If the required Interest Notice shall not have been timely received by
Bank prior to the expiration of the then relevant Interest Period,
Borrower shall be deemed to have selected a rate based upon the Adjusted
Base Rate to be applicable to such LIBOR Balance upon the expiration of
such Interest Period and to have given Bank notice of such selection.
c. Conversion From Adjusted Base Rate. During any period in
which any portion of the principal hereof bears interest at a rate based
upon the Adjusted Base Rate, Borrower shall have the right, on any
Business Day (the "CONVERSION DATE"), to convert all or a portion of
such principal amount from the Base Rate Balance to a LIBOR Balance by
giving Bank an Interest Notice of such selection on or before such
Conversion Date.
An Interest Notice may be in writing. All written Interest Notices are
effective only upon receipt by Bank. Each Interest Notice shall be irrevocable
and binding upon Borrower.
7. Special Provisions For LIBOR Pricing.
a. Inadequacy of LIBOR Loan Pricing. If Bank determines
that, by reason of circumstances affecting the interbank Eurodollar
market generally, deposits in Dollars (in the applicable amounts) are
not being offered to United States financial institutions in the
interbank Eurodollar market for such Interest Period, or that the rate
at which such Dollar deposits are being offered will not adequately and
fairly reflect the cost to Bank of making or maintaining a LIBOR Balance
for the applicable Interest Period. Bank shall forthwith give notice
thereof to Borrower, whereupon until Bank notifies Borrower that the
circumstances giving rise to such suspension no longer exist, (i) the
right of Borrower to select an Interest Option based upon the LIBOR Rate
shall be suspended, and (ii) Borrower shall be deemed to have converted
each LIBOR Balance to the Base Rate Balance in accordance with the
provisions hereof on the last day of the then-current Interest Period
applicable to such LIBOR Balance.
b. Illegality. If the adoption of any applicable law, rule,
regulation, or any change therein, or any change in the interpretation
or administration thereof by any Governmental Authority (as such term is
defined in the Loan Agreement), central bank or comparable agency
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charged with the interpretation or administration thereof, or compliance
by Bank with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for Bank to make or maintain a LIBOR
Balance, Bank shall notify Borrower. Upon receipt of such notice,
Borrower shall be deemed to have converted any LIBOR Balance to the Base
Rate Balance, on either (i) the last day of the then-current Interest
Period applicable to such LIBOR Balance if Bank may lawfully continue to
maintain and fund such LIBOR Balance to such day, or (ii) immediately,
if Bank may not lawfully continue to maintain such LIBOR Balance to such
day.
8. Extension, Place and Application of Payments. Should the
principal of, or any interest on, this Note become due and payable on any day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day, and interest shall be payable with respect to such
extension. All payments of principal of, and interest on, this Note shall be
made in lawful money of the United States of America in immediately available
funds. Payments made to Bank by Borrower hereunder shall be applied in such
order of priority as Bank, in its sole discretion, may elect including, without
limitation, first to accrued but unpaid interest and then to outstanding
principal.
9. Advances. Subject to the terms of this Note and the Loan
Agreement, Borrower may request Advances hereunder and make payments from time
to time during the term of this Note, provided that it is understood and agreed
that the aggregate principal amount outstanding from time to time hereunder
shall not exceed the Commitment (as such term is defined in the Loan
Agreement). The unpaid balance of this Note shall increase and decrease with
each new Advance or payment hereunder as the case may be. This Note shall not
be deemed terminated or cancelled prior to the Maturity Date although the
entire principal balance hereof may from time to time be paid in full. Subject
to the provisions of this Note and the Loan Agreement, Borrower may borrow,
repay and reborrow hereunder from the date hereof until the earlier to occur of
the Termination Date (as such term is defined in the Loan Agreement) or the
Maturity Date. Each Advance hereunder shall be in an amount not less than
$100,000.00 or an integral multiple thereof. Requests for Advances shall be
submitted to Bank in accordance with SECTION 2.5 of the Loan Agreement. In
addition to the Notice of Borrowing (as such term is defined in the Loan
Agreement) required by SECTION 2.5 of the Loan Agreement, each request for an
Advance hereunder must be accompanied by an Interest Notice for the funds to be
advanced hereunder; provided, however, if an Interest Notice does not accompany
an Advance request, Borrower shall be deemed to have designated the Adjusted
Base Rate. Each request for an Advance by Borrower hereunder shall be
irrevocable and binding on Borrower.
10. Loan Agreement. This Note is subject to the terms and provisions
of the Loan Agreement, which is incorporated herein by reference for all
purposes. The holder of this Note is entitled to the benefits provided in the
Loan Agreement and to all of the Liens, benefits, rights and privileges set
forth in or otherwise arising under any and all Loan Documents. Unless
otherwise expressly defined herein, terms that are used in this Note which
begin with an initial capital letter (including, without limitation, the term
"LOAN DOCUMENTS" shall have the meanings ascribed to such terms in the Loan
Agreement. Reference is made to the Loan Agreement for a description of the
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Collateral securing the payment of this Note , a statement of certain of the
rights of the holder of this Note, certain terms and conditions, if applicable,
upon which the Maturity Date may be extended and for other purposes provided
herein. Reference is also made to the Loan Agreement for a statement of
certain terms and provisions relevant to this Note but not contained herein,
including, without limitation, Defaults and Events of Default and prepayment
terms. Neither the reference to the Loan Agreement nor the reference to any
terms or provisions thereof shall, however, affect or impair the absolute and
unconditional obligation of the Borrower to pay the principal of and interest
on this Note when due and payable.
11. Prepayments; Consequential Loss. Any prepayment made hereunder
shall be made together with all interest accrued but unpaid on this Note
through the date of such prepayment. Contemporaneously with each prepayment of
principal, Borrower shall give Bank written notice indicating whether such
prepayment is to be applied to the Base Rate Balance or a particular LIBOR
Balance. If such notice is not timely received by Bank, Borrower shall be
deemed to have selected to prepay the Base Rate Balance and, if any sums remain
after satisfying all of the Base Rate Balance, the remaining sums shall be
applied to any LIBOR Balance(s) that Bank determines in its sole discretion.
If Borrower makes any payment of principal with respect to any LIBOR Balance on
any day prior to the last day of the Interest Period applicable to such LIBOR
Balance, Borrower shall reimburse Bank on demand for the Consequential Loss
incurred by Bank as a result of the timing of such payment. A certificate of
Bank setting forth the basis for the determination of a Consequential Loss
shall be delivered to Borrower and shall, in the absence of manifest error, be
conclusive and binding as to such determination and amount.
12. Additional Costs. Borrower agrees to pay to Bank all Additional
Costs within ten (10) days of receipt by Borrower from Bank of a statement
setting forth the amount or amounts due and the basis for the determination
from time to time of such amount or amounts, which statement shall be
conclusive and binding upon Borrower absent manifest error. Failure on the
part of Bank to demand compensation for any Additional Costs in any Interest
Period shall not constitute a waiver of Bank's right to demand compensation for
any Additional Costs incurred during any such Interest Period or in any other
subsequent or prior Interest Period. The term "ADDITIONAL COSTS" shall mean
such additional amount or amounts as Bank shall reasonably determine will
compensate Bank for actual costs incurred by Bank in maintaining LIBOR Rates on
the LIBOR Balances or any portion thereof as a result of any change after the
date of this Note in any applicable law, rule or regulation or in the
interpretation or administration thereof by, or the compliance by Bank with any
request or directive from any domestic or foreign court changing the basis of
taxation of payments to Bank of the LIBOR Balances or interest on the LIBOR
Balances or any portion thereof at an Adjusted LIBOR Rate or any other fees or
amounts payable under this Note or the Loan Agreement (other than taxes imposed
on all or any portion of the overall net income of Bank by the State of Texas
or the Federal government), or imposing, modifying or applying any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, credit extended by, or any other acquisition of funds for loans
by Bank, or imposing on Bank, as the case may be, or on the London interbank
market any other condition affecting this Note, the Loan Agreement or the LIBOR
Balances so as to increase the cost of Bank making or maintaining
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Adjusted LIBOR Rates with respect to the LIBOR Balances or any portion thereof
or to reduce the amount or any sum received or receivable by Bank under this
Note or the Loan Agreement (whether of principal, interest or otherwise), by an
amount deemed by Bank in good faith to be material, but without duplication for
Reserve Requirement.
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13. Notices. Except as otherwise specified herein, all notices and
requests required or permitted hereunder shall be given in accordance with
SECTION 9.1 of the Loan Agreement.
14. Legal Fees. If this Note is placed in the hands of any attorney
for collection, or if it is collected through any legal proceeding at law or in
equity or in bankruptcy, receivership or other court proceedings, Borrower
agrees to pay all costs of collection including, but not limited to, court
costs and reasonable attorneys' fees.
15. Waivers. Borrower and each surety, endorser, guarantor and any
other party ever liable for payment of any sums of money payable on this Note,
jointly or severally, waive presentment and demand for payment, protest, notice
of protest, intention to accelerate, acceleration and non-payment, or other
notice of default, and agree that their liability under this Note shall not be
affected by any renewal or extension in the time of payment hereof, or in any
indulgences, or by any release or change in any security for the payment of
this Note, and hereby consent to any and all renewals, extensions, indulgences,
releases or changes, regardless of the number of such renewals, extensions,
indulgences, releases or changes; provided, however, this Note may not be
amended or modified except by a written instrument signed by the Borrower and
the holder hereof. No waiver by Bank of any of its rights or remedies
hereunder or under any other Loan Document or otherwise shall be considered a
waiver of any other subsequent right or remedy of Bank; no delay or omission in
the exercise or enforcement by Bank of any rights or remedies shall ever be
construed as a waiver of any right or remedy of Bank, and no exercise or
enforcement of any such rights or remedies shall ever be held to exhaust any
right or remedy of Bank.
16. Remedies. Upon the occurrence of any Default or Event of Default
that is not cured within the time, if any, provided for in the Loan Documents,
the holder hereof shall be entitled to exercise any or all rights and remedies
available to the holder under the Loan Agreement and other Loan Documents and
at law and in equity including, without limitation, at its option, (a)
following the occurrence of an Event of Default, the right to declare the
entire unpaid balance of principal and accrued but unpaid interest on this Note
to be immediately due and payable, and (b) following the occurrence of a
Default, the right to refuse to advance additional amounts under this Note.
17. Spreading. Any provision herein, or in any document securing
this Note, or any other document executed or delivered in connection herewith,
or in any other agreement or commitment, whether written or oral, expressed or
implied, to the contrary notwithstanding, neither Bank nor any holder hereof
shall in any event be entitled to receive or collect, nor shall or may amounts
received hereunder be credited, so that Bank or any holder hereof shall be
paid, as interest, a sum greater than the maximum amount permitted by
applicable law to be charged to the person, partnership, firm or corporation
primarily obligated to pay this Note at the time in question. If any
construction of this Note or any document securing this Note, or any and all
other papers, agreements or commitments, indicate a different right given to
Bank or any holder hereof to ask for, demand or receive any larger sum as
interest, such is a mistake in calculation or wording which this clause shall
override and control, it being the intention of the parties that this Note, and
all other instruments securing the payment of this Note or
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executed or delivered in connection herewith shall in all things comply with
the applicable law and proper adjustments shall automatically be made
accordingly. In the event that Bank or any holder hereof ever receives,
collects or applies as interest, any sum in excess of the Maximum Rate, if any,
such excess amount shall be applied to the reduction of the unpaid principal
balance of this Note, and if this Note is paid in full, any remaining excess
shall be paid to Borrower. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Maximum Rate, if any,
Borrower and Bank or any holder hereof shall, to the maximum extent permitted
under applicable law: (a) characterize any non-principal payment as an expense
or fee rather than as interest; (b) exclude voluntary prepayments and the
effects thereof; (c) "spread" the total amount of interest throughout the
entire term of this Note; provided that if this Note is paid and performed in
full prior to the end of the actual period of existence thereof exceeds the
Maximum Rate, if any, Bank or any holder hereof shall refund to Borrower (or to
such other person who may be entitled thereto by law) the amount of such
excess, or credit the amount of such excess against the aggregate unpaid
principal balance of all advances made by the Bank or any holder hereof under
this Note at the time in question.
18. CHOICE OF LAW. THIS NOTE IS BEING EXECUTED AND DELIVERED, AND IS
INTENDED TO BE PERFORMED IN THE STATE OF TEXAS. EXCEPT TO THE EXTENT THAT THE
LAWS OF THE UNITED STATES MAY APPLY TO THE TERMS HEREOF, THE SUBSTANTIVE LAWS
OF THE STATE OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THIS NOTE. IN THE EVENT OF A DISPUTE INVOLVING THIS NOTE OR
ANY OTHER LOAN DOCUMENT, THE UNDERSIGNED IRREVOCABLY AGREES THAT VENUE FOR SUCH
DISPUTE SHALL LIE IN ANY COURT OF COMPETENT JURISDICTION IN DALLAS COUNTY,
TEXAS.
PMC COMMERCIAL TRUST
By:
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Name:
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Title:
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