Exhibit 10.1
 
ex10-1 [ex10-1.jpg]
 
FIRST AMENDMENT TO CREDIT AGREEMENT
 
This First Amendment to Credit Agreement is entered into as of October 31, 2007,
by and between Highbury Financial Inc., a Delaware corporation (“Borrower”) and
City National Bank, a national banking association (“CNB”).
 
RECITALS
 
A. Borrower and CNB are parties to that certain Credit Agreement, dated as of
November 7, 2006 (the Credit Agreement, as herein amended, hereinafter the
“Credit Agreement”).
 
B. Borrower and CNB desire to supplement and amend the Credit Agreement as
hereinafter set forth.
 
NOW, THEREFORE, the parties agree as follows:
 
1.
Definitions. Capitalized terms used in this Amendment without definition shall
have the meanings set forth in the Credit Agreement.

 
2.
Amendments. The Credit Agreement is amended as follows:

 

 
2.1
Section 1.4 (Aston Funds) is stricken and replaced with the following:

 
“1.4 “Aston Funds” means the portion of the mutual fund business Borrower
acquired from ABN AMRO Asset Management Holdings pursuant to an agreement dated
April 20, 2006.”
 

 
2.2
Section 1.12 (EBITDA) is stricken and replaced with the following:

 
“1.12 “EBITDA” will be determined on a consolidated basis for Borrower and means
the sum of (a) net income of the Borrower determined in accordance with GAAP
earned over the twelve month period ending on the date of determination, plus
(b) amortization of intangible assets, plus (c) interest expense, plus (d)
depreciation, plus (e) other non-cash expenses, and plus (f) taxes, expensed
during the twelve month period ending on the date of determination. For periods
prior to the acquisition of the Aston Funds by Borrower, EBITDA for Borrower
shall include eighteen and one fifth percent (18.2%) of the revenue of the Aston
Funds, less $50,000.00 for each month prior to acquisition. After the closing of
an acquisition, for periods prior to such acquisition, EBITDA for Borrower shall
include the percentage or revenue or profits, as applicable, of the acquisition
target to which Borrower would have been entitled during the periods had the
acquisition been completed prior to those periods.”
 
 
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2.3
Section 1.30 (Termination Date) is stricken and replaced with the following:

 
“1.30 “Termination Date” means October 31, 2008. Notwithstanding the foregoing,
CNB may, at its option, terminate this Agreement pursuant to the Section
entitled “CNB’s Remedies”; the date of any such termination will become the
Termination Date as that term is used in this Agreement.”
 

 
2.4
A new Section 1.32 (Fixed Charges) is added to the Credit Agreement to provide
as follows:

 
“1.32 “Fixed Charges” means the sum (without duplication) of (a) the aggregate
amount of Current Maturity of Long-Term Debt (“Current Maturity of Long-Term
Debt” means that portion of Borrower’s consolidated long-term liabilities,
determined in accordance with GAAP for borrowed money, which will, by the terms
thereof, become due and payable within one (1) year following the date of the
balance sheet upon which such calculations are based.) plus (b) all interest
incurred on borrowed money, plus (c) provisions for Federal and State income
taxes paid or payable, plus (d) all capital expenditures, with (b), (c) and (d)
being determined by reference to the twelve month period ending on the date of
determination. For clarification, Fixed Charges will exclude Total Funded Debt,
as defined herein.”
 

 
2.5
A new Section 1.33 (Liquid Assets) is added to the Credit Agreement to provide
as follows:

 
“1.33 “Liquid Assets” shall mean the sum of cash, cash equivalents and
marketable securities held in the Borrower’s name, excluding (i) any assets upon
which there is any security interest, lien or encumbrance, and (ii) any
securities or accounts which are not readily convertible into cash (such as
restricted stock or hedge funds).”
 

 
2.6
A new Section 1.34 (Marketable Securities) is added to the Credit Agreement to
provide as follows:

 
“1.34 “Marketable Securities” shall mean “margin stock” as defined in Regulation
U of the Federal Reserve Board; mutual funds; and bonds and other debt
securities of United States corporations not falling within the definition of
“margin stock” with a credit quality rating of at least A by Standard & Poors or
A-2 by Moody’s; commercial paper with a credit quality rating of at least A-2 by
Standard & Poors or P-2 by Moody’s; obligations issued by or guaranteed by the
United States government or agencies thereof; and obligations of any state,
territory, municipality or other local governmental subdivision or entity of the
United States, with a credit quality rating of at least A by Standard & Poors or
A-2 by Moody’s.”
 
 
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2.7
A new Section 1.35 (Total Funded Debt) is added to the Credit Agreement to
provide as follows:

 
“1.35 “Total Funded Debt” means, as of the end of each fiscal quarter, the
amount of the principal balances for all Loans under this agreement.”
 

 
2.8
Section 5.10 (Use of Proceeds) is stricken and replaced with the following:

 
“5.10 Use of Proceeds. Borrower will use the proceeds of the Revolving Credit
Loans for working capital, general corporate purposes, acquisitions or
repurchases of Borrower’s outstanding securities.”
 

 
2.9
Section 6.8 (Financial Tests) is stricken and replaced with the following:

 
“6.8 Financial Tests. Borrower will maintain:
 
“6.8.1 Net Worth of not less than $20,000,000 at the end of any fiscal quarter;
 
“6.8.2 A ratio of Debt, less Liquid Assets, to EBITDA of not more than 5.0 to 1
at the end of any fiscal quarter;
 
“6.8.3 A ratio of Total Funded Debt to EBITDA of not more than 2.00 to 1 at the
end of any fiscal quarter; and
 
“6.8.4 A ratio of EBITDA to Fixed Charges of not less than 1.25 to 1 as of the
end of each fiscal quarter.”
 

 
2.10
Section 7.3 (Loans) is stricken and replaced with the following:

 
“7.3 Loans. Make loans or advances to any Person except credit extended to
Affiliates in any amount.”
 

 
2.11
Section 7.9 (Mergers and Acquisitions) is stricken and replaced with the
following:

 
“7.9 Mergers and Acquisitions. Consummate any merger or consolidation, or
acquire all or substantially all of the assets of any Person, without the prior,
written consent of CNB, which consent will not be unreasonably withheld.”
 
3.
Existing Agreement. Except as expressly amended herein, the Credit Agreement
shall remain in full force and effect, and in all other respects is affirmed.

 
4.
Conditions Precedent. This Amendment shall become effective upon the fulfillment
of all of the following conditions to CNB’s satisfaction:

 

 
4.1
CNB shall have received this Amendment duly executed by Borrower.

 
 
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5.
Counterparts. This Amendment may be executed in any number of counterparts, and
all such counterparts taken together shall be deemed to constitute one and the
same instrument.

   

6.
Governing Law. This Amendment and the rights and obligations of the parties
hereto shall be construed in accordance with, and governed by the laws of the
State of California.

 
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year first above written.

     
“Borrower” 
Highbury Financial Inc., a
Delaware corporation
 
   
   
  By:   /s/ Richard Foote  

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Richard Foote, Chief Executive Officer

 

      “CNB”
City National Bank, a
national banking association
 
   
   
  By:   /s/ Aaron Cohen  

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Aaron Cohen, Senior Vice President

 
 
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