FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT
Exhibit
99.1
FIRST
AMENDMENT AND WAIVER
This
FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT, dated as of February 28, 2006
(this “Amendment”),
to
the Credit Agreement referred to below, by and among NEWTEK SMALL BUSINESS
FINANCE, INC., a New York corporation (“Borrower”),
the
other Credit Parties signatory hereto and GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation (“Lender”).
W
I T N E S S E T H
WHEREAS,
Borrower, the other Credit Parties signatory thereto and Lender are parties
to
that certain Credit Agreement, dated as of August 31, 2005, (as amended,
restated, supplemented or otherwise modified from time to time, the
“Credit
Agreement”);
and
WHEREAS,
Borrower
and Lender have agreed to amend certain provisions of the Credit Agreement,
in
the manner, and on the terms and conditions, provided for herein;
NOW
THEREFORE, in
consideration of the premises and for other good and valuable consideration,
the
receipt, adequacy and sufficiency of which are hereby acknowledged, Borrower
and
Lender hereby agree as follows:
1. Definitions.
Capitalized terms not otherwise defined herein (including the Recitals) shall
have the meanings ascribed to them in the Credit Agreement or Annex
A
thereto.
2. Waivers.
Lender
hereby waives as of the Effective Date (as defined below), the existing Events
of Default under Section
8.1(b)
and
Annex
G
of the
Credit Agreement resulting from Borrower’s failure to comply with the Net Worth
covenant as of October 31, 2005, November 30, 2005, December 31, 2005 and
January 31, 2006.
3. Amendment
to Section 6.5 of the Credit Agreement.
Section
6.5
of the
Credit Agreement is hereby amended and restated as of the Effective Date in
its
entirety as follows:
“6.5 Capital
Structure and Business.
If all
or part of a Credit Party’s Stock is pledged to Lender, that Credit Party shall
not issue additional Stock; provided
that (i)
Intermediate Parent may issue Permitted Preferred Stock, (ii) Borrower shall
issue $3,000,000 of Permitted Borrower Preferred Stock to Parent as repayment
of
$3,000,000 in principal of Parent Subordinated Debt on February 28, 2006, and
(iii) Borrower may issue additional Permitted Borrower Preferred Stock (in
addition to the issuance permitted by the preceding clause (ii)), provided
that (x)
no less that 50% of the amount of such Permitted Borrower Preferred Stock is
purchased by Parent from Borrower in cash, and (y) the remaining amount of
such
Permitted Borrower Preferred Stock is used solely to repay an equal principal
amount of Parent Subordinated Debt. No Credit Party shall amend its charter
or
bylaws in a manner that would adversely affect Lender or such Credit Party’s
duty or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it, including,
without limitation, making SBA 7(a) Loans to small and medium-sized
businesses.”
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4. Amendment
to Section 6.8 of the Credit Agreement.
Section
6.8
of the
Credit Agreement is hereby amended and restated as of the Effective Date in
its
entirety as follows:
“6.8 Sale
of Stock and Assets.
No
Credit Party shall sell, transfer, convey, assign or otherwise dispose of any
of
its properties or other assets including the Stock of any of its Subsidiaries
(whether in a public or a private offering or otherwise) or any of its Accounts,
other than (a) the sale or other disposition by a Credit Party of Equipment
or
Fixtures that are obsolete or no longer used or useful in such Credit Party’s
business and having a book value not exceeding $50,000 in the aggregate in
any
Fiscal Year, (b) the sale or other disposition of other Equipment and Fixtures
having a book value not exceeding $50,000 in the aggregate in any Fiscal Year,
and (c) Permitted Dispositions.”
5. Amendment
to Section 6.13 of the Credit Agreement.
Section
6.13
of the
Credit Agreement is hereby amended and restated as of the Effective Date in
its
entirety as follows:
“6.13 Restricted
Payments.
No
Credit Party shall make any Restricted Payment, except (a) intercompany loans
and advances between Borrower and Borrower Affiliates to the extent permitted
by
Section
6.3;
(b)
dividends and distributions by Subsidiaries of Borrower paid to Borrower; (c)
dividends and distributions by Subsidiaries of Intermediate Parent paid to
Intermediate Parent; (d) dividends and distributions by Intermediate Parent
paid
to Parent and its other Stockholders on a ratable basis based on each such
Stockholder’s ownership of Intermediate Parent; (e) employee loans permitted
under Section
6.4(b);
(f)
payments of principal and interest on Intercompany Notes issued by Borrower
in
accordance with Section
6.3
to any
Borrower Affiliate that is a Guarantor; (g) payments of principal and interest
on Intercompany Notes issued by Borrower in accordance with Section
6.3
to any
Borrower Affiliate that is not a Guarantor; (h) redemptions or repurchases
by
Borrower of Permitted Borrower Preferred Stock; (i) payments of interest with
respect to Parent Subordinated Debt that accrues at a rate not in excess of
12%
per annum, plus an additional 1% upon a default under the terms of the Parent
Subordinated Debt; and (j) payments by a Credit Party to Parent or any of its
Affiliates for goods and services provided pursuant to written agreements,
in
each case, as described in Disclosure
Schedule (6.13),
that
are in the normal course of such Credit Party’s business and consistent with
past practice, are consistent with the cost that would be payable to unrelated
third parties, and have terms and conditions no less favorable to such Credit
Party than would be available from unrelated third parties, and the amount
of
such Restricted Payments described in this clause (j) does not exceed in any
Fiscal Year the greater of (x) $1,500,000 in the aggregate, or (y) fifteen
percent (15%) of the total expenses paid by Intermediate Parent for such Fiscal
Year (other than with respect to referral and packaging services provided to
Borrower which shall not exceed the greater of (1) 1% of the amount of the
related commitment for such services, and (2) the current market rate for such
services); provided
that,
(i) with respect to clauses (d), (g) and (h), (A) no Default or Event of Default
has occurred and is continuing or would result after giving effect to any such
Restricted Payment; (B) the average daily Borrowing Availability of Borrower
for
the 30-day period preceding the consummation of such Restricted Payment (after
giving effect to such Restricted Payment and all Revolving Credit Advances
funded in connection therewith as if made on the first day of such period)
would
have exceeded the greater of (x) $3,000,000, or (y) ten percent (10%) of the
Revolving Loan on the date of such Restricted Payment (after giving effect
to
such Restricted Payment); (C) the Projections shall reflect that such Borrowing
Availability (the greater of (x) $3,000,000, or (y) ten percent (10%) of the
Revolving Loan on the date of such Restricted Payment (after giving effect
to
such Restricted Payment)) shall continue for at least 30 days after any such
Restricted Payment; and (D) the Fixed Charge Coverage Ratio determined on a
pro
forma basis for the twelve month period ended on the last day of the immediately
preceding Fiscal Quarter for which financial information has been provided
in
accordance with Annex
E
hereto,
determined as if such Restricted Payment had been made on the first day of
such
period, is at least 1.50:1.00; (ii) with respect to clause (h), the amount
of
such Restricted Payments does not exceed $3,000,000 in the aggregate from the
Closing Date; and (iii) with respect to clause (i), (A) no Default or Event
of
Default has occurred and is continuing or would result after giving effect
to
any such Restricted Payment; (B) the average daily Borrowing Availability of
Borrower for the 30-day period preceding the consummation of such Restricted
Payment (after giving effect to such Restricted Payment and all Revolving Credit
Advances funded in connection therewith as if made on the first day of such
period) would have exceeded $1,000,000; (C) the Projections shall reflect that
Borrowing Availability (after giving effect to such Restricted Payment) in
excess of $1,000,000 shall continue for at least 30 days after any such
Restricted Payment; and (D) the Fixed Charge Coverage Ratio determined on a
pro
forma basis for the twelve month period ended on the last day of the immediately
preceding Fiscal Quarter for which financial information has been provided
in
accordance with Annex
E
hereto,
determined as if such Restricted Payment had been made on the first day of
such
period, is at least 1.25:1.00. Notwithstanding anything to the contrary
contained herein, Borrower may repay Parent Subordinated Debt with Permitted
Borrower Preferred Stock to the extent permitted by Section 6.5.”
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6. Amendments
to Annex A of the Credit Agreement.
(a) Annex
A
of the
Credit Agreement is hereby amended as of the Effective Date by amending and
restating the following definitions:
“‘Change
of Control’
means
any of the following: (a) any person or group of persons (within the meaning
of
the Securities Exchange Act of 1934) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 20% or more of the
issued and outstanding shares of capital Stock of Parent having the right to
vote for the election of directors of Parent under ordinary circumstances (other
than a Person owning 10% or more of such Stock on the Closing Date); (b) during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of Parent (together
with any new directors whose election by the board of directors of Parent or
whose nomination for election by the Stockholders of Parent was approved by
a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason other than death
or disability to constitute a majority of the directors then in office; (c)
Parent and its Subsidiaries cease to own and control at least eighty percent
(80%) of the economic and voting rights associated with ownership of all classes
of the outstanding Stock of Intermediate Parent on a fully diluted basis; (d)
Intermediate Parent ceases to own and control all of the economic and voting
rights associated with all of the outstanding Stock of Borrower and its other
Subsidiaries (other than the preferred stock issued to Parent pursuant to
Section
6.5)
or
Parent ceases to own and control all of the economic and voting rights
associated with all of the Permitted Borrower Preferred Stock issued to it
pursuant to Section
6.5
(except
to the extent any such Permitted Borrower Preferred Stock is redeemed or
repurchased by Borrower to the extent permitted by Section
6.13);
(e)
Borrower ceases to own and control all of the economic and voting rights
associated with all of the outstanding Stock of any of its Subsidiaries; or
(f)
Xxxxx Xxxxx or Xxxxx Xxxxxx shall cease to be employed in their current capacity
with Borrower and is not replaced by Borrower within 120 days of such
termination of employment with an individual of comparable
credentials.
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‘EBITDA’
means
with respect to any Person for any fiscal period, without duplication, an amount
equal to (a) consolidated net income of such Person for such period determined
in accordance with GAAP, minus (b) the sum of (i) income tax credits, (ii)
interest income not received in the ordinary course of such Person’s business in
connection with the making of SBA 7(a) Loans, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain (but not any aggregate net
loss) during such period arising from the sale, exchange or other disposition
of
capital assets by such Person (including any fixed assets, whether tangible
or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), other than any gains resulting from the recovery
of
non-cash discounts attributable to the sale of SBA 7(a) Loans in the ordinary
course of such Person’s business, (v) any other non-cash gains that have been
added in determining consolidated net income, (vi) commencing with the Fiscal
Quarter ended December 31, 2005, an amount equal to the difference (to the
extent such difference is positive) between (x) the amount of the reserve for
estimated servicing asset impairment recorded in any Fiscal Quarter, and (y)
the
actual servicing asset impairment in such Fiscal Quarter, as reflected as an
expense on such Person’s profit and loss statements (it being recognized that
such difference shall be calculated upon availability of the applicable
financial information for such Fiscal Quarter), and (vii) an amount equal to
the
difference (to the extent such difference is positive) between (x) the amount
of
the provision for the loan loss reserve of $2,364,000 for the Fiscal Year ended
December 31, 2005 and $1,428,000 for the Fiscal Year ended December 31, 2006,
and (y) the actual provision for loan losses recorded in each such applicable
Fiscal Year (it being recognized that such difference shall only be calculated
in the last Fiscal Quarter of each such Fiscal Year), in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication, plus (c) the sum of
(i)
any provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) depreciation and amortization for
such
period, (v) amortized debt discount for such period, (vi) the amount of any
deduction to consolidated net income as the result of any grant to any members
of the management of such Person of any Stock, (vii) the amount of any reserve
for estimated servicing asset impairment in any period, as reflected as an
expense on such Person’s profit and loss statements, and (viii) $700,000 of the
provision for loan loss reserves established in September of 2005, in each
case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication. For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit)
of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person’s Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms
of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection
of
the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person; (8) in the case of a successor to such Person
by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets; and (9)
any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
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‘Free
Cash Flow’
means,
with respect to any Person for any period, EBITDA for such period, minus
(a)
Capital Expenditures during such period, minus
(b) cash
taxes paid (or which would have been paid in the absence of any set-off or
credit resulting from the previous over payment of $276,000 of income taxes
referred to in (d) below) during such period (without giving effect to any
income tax refund received by such Person during such period resulting from
the
previous over payment of $276,000 of income taxes referred to in (d) below),
minus
(c) any
cash dividends paid during such period, plus
(d) to
the extent applicable for such period, $276,000 for income taxes payable in
the
Fiscal Month ended March 31, 2005, minus
(e) for
the Fiscal Month ended September 30, 2006, an amount equal to the difference
(to
the extent the difference is positive) between (x) $276,000, and (y) the
aggregate amount of tax refunds (payable as a result of the previous over
payment of $276,000 of income taxes referred to in (d) above) received by such
Person by September 30, 2006.
‘Write-Off
Percentage’
means
on any date of determination a fraction (a) the numerator of which is the
Borrower’s gross charge-offs (whether of principal, interest or otherwise), less
recoveries, relating to the Borrower’s SBA 7(a) Note Receivables for the twelve
month period ending on such date of determination, and (b) the denominator
of
which is the outstanding principal and interest balance of the Borrower’s SBA
7(a) Note Receivables on the date of determination; provided
that in
respect of Permitted Dispositions the amount in clause (b) shall only be reduced
by the aggregate amount of Permitted Dispositions for the twelve month period
ending on such date of determination that is in excess of the aggregate
principal amount of SBA 7(a) Note Receivables originated and retained by
Borrower during such twelve month period.”
(b) Annex
A
of the
Credit Agreement is hereby amended as of the Effective Date adding the following
definitions in appropriate alphabetical order therein:
“‘Permitted
Borrower Preferred Stock’
means
preferred stock or other preferred equity interests of Borrower issued or sold
to Parent, the express terms of which preferred stock shall provide that no
dividends thereon shall be required to be paid at any time in cash or other
property (other than payments in additional preferred stock with the same terms)
and which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event
(including any change of control event), cannot mature and is not mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, and is not
redeemable, or required to be repurchased, at the sole option of the holder
thereof (including upon the occurrence of a change of control event or pursuant
to any put right), in whole or in part, prior to payment in full of all
Obligations under the Loan Documents or all loans and other obligations with
respect to any refinancing thereof, and which is pledged to Lender by Parent
pursuant to the Pledge Agreement.
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‘Senior
Charges’
means,
with respect to any Person for any fiscal period, (a) the aggregate of all
Interest Expense paid or accrued during such period, plus (b) scheduled payments
of principal with respect to Indebtedness during such period, less (c) the
amount of interest accrued on any Subordinated Debt during such period.
‘Senior
Charges Coverage Ratio’
means,
with respect to any Person for any fiscal period, the ratio of Free Cash Flow
to
Senior Charges.”
7. Amendment
to Annex E of the Credit Agreement.
Annex
E
of the
Credit Agreement is hereby amended as of the Effective Date by adding the
following as paragraph (q) and relettering the existing paragraph (q) as
paragraph (r):
“(q) At
least
three (3) Business Days prior to the incurrence thereof, notice to Lender of
the
purpose and terms of any Indebtedness to be incurred after the Closing Date
pursuant to Section
6.3(a),
other
than Indebtedness permitted by clauses (ii) and (iii) thereof.”
8. Amendment
to Annex F of the Credit Agreement.
Annex
F
of the
Credit Agreement is hereby amended as of the Effective Date by amended and
restating paragraph (b) thereof as follows:
“(b) Upon
Lender’s request, and in any event no less frequently than noon (New York time)
on the first Business Day of each week, a Borrowing Base Certificate accompanied
by such supporting detail and documentation as shall be requested by Lender
in
its reasonable discretion, including, without limitation, (i) detailed
information regarding SBA 7(a) Note Receivables and Borrower’s Accounts,
including balance, status and collateral relating thereto, and (ii) with respect
to any SBA 7(a) Loans originated by Borrower since delivery of the most recent
Borrowing Base Certificate previously delivered hereunder, copies of financing
statements to be filed with respect to the SBA 7(a) Loan Obligors for such
SBA
7(a) Loans, a copy of the related security agreement, copies of the SBA
authorization with respect to such SBA 7(a) Loans and copies of the
organizational documents for the applicable SBA 7(a) Loan Obligors; provided
that
changes with respect to the determination of the amount of SBA 7(a) Note
Receivables that are Eligible SBA 7(a) Note Receivables shall only be reflected
in the Borrowing Base Certificates delivered in accordance with paragraph (e)(i)
of this Annex
F;”
9. Amendment
to Annex G of the Credit Agreement.
Paragraph
(b)
of
Annex
G
of the
Credit Agreement is hereby amended and restated as of the Effective Date as
follows:
“(b) Minimum
Senior Charge Coverage Ratio.
Borrower and its Subsidiaries shall have on a consolidated basis at the end
of
each Fiscal Quarter set forth below, a Senior Charge Coverage Ratio for the
12-month period then ended of not less than the following:
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1.05
for
the Fiscal Quarter ending December 31, 2005;
1.25
for
the Fiscal Quarter ending March 31, 2006;
1.10
for
the Fiscal Quarter ending June 30, 2006;
1.35
for
the Fiscal Quarter ending September 30, 2006;
1.65
for
the Fiscal Quarter ending December 31, 2006;
1.70
for
the Fiscal Quarter ending March 31, 2007; and
1.75
for
each Fiscal Quarter ending thereafter.”
10. Representations
and Warranties.
To
induce Lender to enter into this Amendment, Borrower and the other Credit
Parties make the following representations and warranties to
Lender:
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(a)
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The
execution, delivery and performance of this Amendment and the performance
of the Credit Agreement as amended by this Amendment (the "Amended
Credit Agreement"),
by the Credit Parties: (i) are within each Credit Party's organizational
power; (ii) have been duly authorized by all necessary or proper
organizational and shareholder action; (iii) do not contravene any
provision of any Credit Party's charter or bylaws or other constituent
documents; (iv) do not violate any law or regulation, or any order
or
decree of any court or Governmental Authority; (v) do not conflict
with or
result in the breach or termination of, constitute a default under
or
accelerate or permit the acceleration of any performance required
by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument
to which any Credit Party is a party or by which any Credit Party
or any
of its property is bound; (vi) do not result in the creation or imposition
of any Lien upon any of the property of any Credit Party other than
those
in favor of Lender, pursuant to the Loan Documents; and (vii) do
not
require the consent or approval of any Governmental Authority or
any other
Person.
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(b)
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This
Amendment has been duly executed and delivered by or on behalf of
Borrower
and each other Credit Party.
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(c)
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This
Amendment and the Amended Credit Agreement constitutes a legal, valid
and
binding obligation of Borrower and each other Credit Party enforceable
against Borrower and each other Credit Party in accordance with its
terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at
law).
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(d)
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After
giving effect to this Amendment, no Default or Event of Default has
occurred and is continuing.
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(e)
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No
action, claim or proceeding is now pending or, to the knowledge of
Borrower, threatened against Borrower or any other Credit Party,
at law,
in equity or otherwise, before any court, board, commission, agency
or
instrumentality of any federal, state, or local government or of
any
agency or subdivision thereof, or before any arbitrator or panel
of
arbitrators, which (i) challenges Borrower's or, to the extent applicable,
any other Credit Party's right, power, or competence to enter into
this
Amendment or perform any of their respective obligations under this
Amendment, the Amended Credit Agreement or any other Loan Document,
or the
validity or enforceability of this Amendment, the Amended Credit
Agreement
or any other Loan Document or any action taken under this Amendment,
the
Amended Credit Agreement or any other Loan Document or (ii) if determined
adversely, is reasonably likely to have or result in a Material Adverse
Effect. To the knowledge of Borrower, there does not exist a state
of
facts which is reasonably likely to give rise to such
proceedings.
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(f)
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After
giving effect to this Amendment, the representations and warranties
of
Borrower and the other Credit Parties contained in the Amended Credit
Agreement and each other Loan Document are true and correct on and
as of
the Amendment Effective Date with the same effect as if such
representations and warranties had been made on and as of such date,
except that any such representation or warranty which is expressly
made
only as of a specified date need be true only as of such
date.
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11. Remedies.
This
Amendment shall constitute a Loan Document. The breach by Borrower or any other
Credit Party of any representation, warranty, covenant or agreement in this
Amendment shall constitute an immediate Event of Default hereunder and under
the
other Loan Documents.
12. No
Other Amendments or Waivers.
Except
as expressly provided herein, the Credit Agreement and the other Loan Documents
shall be unmodified and shall continue to be in full force and effect in
accordance with their terms. In addition, except as specifically provided
herein, this Amendment shall not be deemed a waiver with respect to any term
or
condition of any Loan Document and shall not be deemed to prejudice any right
or
rights which Lender may now have or may have in the future under or in
connection with any Loan Document or any of the instruments or agreements
referred to therein, as the same may be amended from time to time.
13. Continuation
of Obligations and Liens.
Borrower and each other Credit Party hereby acknowledges, agrees and affirms
(a)
its obligations under the Credit Agreement and the other Loan Documents,
including, without limitation, if applicable, its guaranty obligations
thereunder, (b) that such guaranty shall apply to all Obligations, (c) the
grant
of the security interest in substantially all of its assets pursuant to the
Loan
Documents, and (d) that such liens
and
security interests created and granted are valid and continuing and secure
all
of the Obligations.
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14. Outstanding
Indebtedness; Waiver of Claims.
Borrower and each other Credit Party hereby acknowledges and agrees that the
aggregate outstanding principal amount of the Revolving Loan as of February
27,
2006 is $24,909,717.74 and is payable pursuant to the Credit Agreement, as
modified hereby, without defense, offset, withholding, counterclaim or deduction
of any kind. Borrower and each other Credit Party hereby waives, releases,
remises and forever discharges Lender and each other Indemnified Person from
any
and all claims, suits, actions, investigations, proceedings or demands, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law of any kind or character, known or unknown,
which
Borrower or any other Credit Party ever had, now has or might hereafter have
against Lender which relates, directly or indirectly, to any acts or omissions
of Lender or any other Indemnified Person on or prior to the Effective
Date.
15. Fees
and Expenses.
Borrower and the other Credit Parties hereby reconfirm their respective
obligations pursuant to Section
11.3
of the
Credit Agreement to pay and reimburse Lender for all reasonable costs and
expenses (including, without limitation, reasonable fees of counsel) incurred
by
Lender in connection with the negotiation, preparation, execution and delivery
of this Amendment and all other documents and instruments delivered in
connection herewith.
16. Amendment
Fee.
To
induce Lender to enter into this Amendment, Borrower hereby agrees to pay to
Lender, an amendment fee in the amount of $75,000 in immediately payable funds,
payable on the Effective Date.
17. Effectiveness.
This
Amendment shall become effective as of February 28, 2006 (the “Effective
Date”)
only
upon satisfaction in full in the judgment of Lender of each of the following
conditions on or prior to February 28, 2006:
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(a)
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Amendment.
Agent shall have received four (4) original copies of this Amendment
duly
executed and delivered by Lender and Borrower and acknowledged and
agreed
to by each other Credit Party.
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(b)
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Representations
and Warranties.
The representations and warranties of or on behalf of Borrower and
the
other Credit Parties in this Amendment shall be true and correct
on and as
of the Effective Date.
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(c)
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Payment
of Fees and Expenses.
Borrower shall have paid to Lender all costs, fees and expenses which
are
owing in connection with this Amendment and the other Loan Documents
and
due to Lender (including, without limitation, reasonable legal fees
and
expenses referenced in Section 15).
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(d)
|
Amendment
Fee.
Lender shall have received the $75,000 amendment fee referred to
in
Section 16 hereof.
|
9
|
(e)
|
SBA
Approval.
Lender shall have received prior written consent of the SBA for this
Amendment as required by Section 19 of the Multi-Party
Agreement.
|
|
(f)
|
Permitted
Borrower Preferred Stock.
Lender shall have received copies of all documents executed in connection
with the issuance of any Permitted Borrower Preferred Stock in accordance
with Section 6.5 of the Credit Agreement on or before the Effective
Date,
which documents shall be in form and substance satisfactory to Lender
and
certified as true, complete and correct by the chief financial officer
of
the Borrower.
|
|
(g)
|
Pledge
Amendment and Stock.
Parent shall have delivered to Lender (i) a pledge amendment to the
Pledge
Agreement executed by Parent pledging any Permitted Borrower Preferred
Stock issued to Parent on or before the Effective Date, (ii) the
certificates evidencing such Permitted Borrower Preferred Stock,
and (iii)
duly executed instruments of transfer or assignment in blank with
respect
to such Permitted Borrower Preferred Stock, all in form and substance
satisfactory to Lender.
|
18. GOVERNING
LAW.
THIS
AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK.
19. Counterparts.
This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
[SIGNATURE
PAGES FOLLOW]
10
IN
WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.
|
BORROWER:
NEWTEK
SMALL BUSINESS FINANCE, INC.
|
||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
| Title: Chief Executive Officer | ||
|
GENERAL
ELECTRIC CAPITAL
CORPORATION,
as
Lender
|
||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxx | |
|
Name: Xxxxxx X. Xxxxxxx |
||
| Title: Its Duly Authorized Signatory | ||
The
undersigned Credit Parties hereby (i) acknowledge this Amendment and
(ii) confirm and agree that their obligations under their respective
Guaranties shall continue without any diminution thereof and shall remain in
full force and effect on and after the effectiveness of this
Amendment.
| SMALL BUSINESS LENDING, INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
| Title: President | ||
| CCC REAL ESTATE HOLDING CO. LLC | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
| Title: President | ||
The
undersigned hereby (i) acknowledges this Amendment and (ii) confirms
and agrees that its obligations under the Pledge Agreement shall continue
without any diminution thereof and shall remain in full force and effect on
and
after the effectiveness of this Amendment.
| NEWTEK BUSINESS SERVICES, INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
| Title: Chief Executive Officer | ||
The
undersigned participants hereby acknowledge, agree and consent to (i) the waiver
by the Lender of Borrower’s failure to comply with the minimum Net Worth
covenant set forth in Annex G of the Credit Agreement as of October 31, 2005,
November 30, 2005, December 31, 2005 and January 31, 2006 as provided in
Section
2
hereof
and (ii) deleting the minimum Fixed Charge Coverage Ratio financial covenant
in
paragraph (b) of Annex G and replacing such financial covenant with a minimum
Senior Charge Coverage Ratio, as provided in Section 9 hereof.
| THE CIT GROUP/BUSINESS CREDIT, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxx | |
|
Name: Xxxxxx Xxxxx |
||
| Title: Vice President | ||
| SIGNATURE BANK | ||
| |
|
|
| By: | /s/ Xxxxx Xxxx | |
|
Name: Xxxxx Xxxx |
||
| Title: Vice President | ||
