Exhibit 10.3

 

SECOND LOAN MODIFICATION AGREEMENT

THIS SECOND LOAN MODIFICATION AGREEMENT (“Agreement”) is made and entered into
effective as of August 2, 2016 (the “Effective Date”), by and between
KIRKPATRICK BANK, an Oklahoma banking (“Lender), and PAYCOM PAYROLL, LLC, a
Delaware limited liability company (“Borrower”), with reference to the
following:

RECITALS:

A.Certain defined terms used in this Agreement are set forth below:

Borrower:

 

Paycom Payroll, LLC, a Delaware limited liability company

Lender:

 

Kirkpatrick Bank, an Oklahoma banking association

Loan Agreement:

 

Loan Agreement, dated May 13, 2015, each by and between Borrower and Lender, as
amended

Note:

 

Promissory Note, dated May 13, 2015, executed by Borrower, as maker, and payable
to the order of Lender, as holder, in the maximum principal amount of
$11,000,000.00

Mortgages:

 

Construction Mortgage (with Power of Sale), Security Agreement and Financing
Statement, dated May 13, 2015, recorded in Book RE12824 at Page 238, and Second
Mortgage (with Power of Sale), Security Agreement and Financing Statement, dated
May 13, 2015. recorded in Book RE12824 at Page 272, each in the real estate
records of Oklahoma County, Oklahoma, each securing the Note and collectively
encumbering the Mortgaged Property

Security Instruments:

 

Mortgages  and the other documents listed in Exhibit “B” attached hereto

Existing Loan Documents:

 

The Loan Agreement, the Note, the Security Instruments and any and all other
instruments and agreements evidencing or securing the Loan or executed in
connection with the Loan

Loan Documents:

 

This Agreement and the Existing Loan Documents, as amended by or pursuant to
this Agreement

 

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Exhibit 10.3

 

Loan:

 

The indebtedness from Lender to Borrower currently evidenced by the Note, as
amended by or pursuant to this Agreement

Mortgaged Property:

 

The real and personal property described in and subject to the liens and
security interests granted in the Security Instruments, such real property being
more particularly described as “Tract 1”, “Tract 2” and “Tract 3” in Exhibit “A”
attached hereto and incorporated herein

All capitalized terms used but not otherwise defined in this Agreement shall
have the respective meanings ascribed to those terms in the Loan Agreement, as
amended hereby.

B.At Borrower’s request, Lender and Borrower mutually desire to amend the
Existing Loan Documents in order to, among other things, (i) reduce the maximum
principal amount of the Note from $11,000,000.00 to $5,000,000.00, and (ii)
modify provisions pertaining to prepayment of the Loan.

C.As of the Effective Date, the aggregate principal amount of $25,261,159.80 has
been advanced under the Note.

AGREEMENT:

In consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Lender and Borrower hereby agree as follows:

1.Recital Paragraphs.  The recital paragraphs set forth above are hereby
incorporated as a part of this Agreement.

2.Conditions Precedent to Lender’s Agreements.  The following are conditions
precedent to Lender’s agreements under this Agreement.  Borrower shall cause
such conditions precedent to be satisfied, on or before the date of this
Agreement:

(a)Receipt by Lender of fully executed originals of this Agreement, the Fourth
Loan Modification Agreement in connection with the modification of loan numbers
1414700 & 1498200, and all loan documents to be executed in connection with the
new loan to be issued by Lender to Borrower in the maximum principal amount of
$28,640,000, each in form and content acceptable to Lender.

(b)Payment by Borrower of all fees, costs and expenses relating to this
modification of the Loan, including, but limited to, the fees, costs and
expenses referenced in paragraph 6 of this Agreement.

(c)No Event of Default shall exist under the Loan Documents.

 

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Exhibit 10.3

 

3.Modification of Existing Loan Documents.

(a)Modification of Existing Loan Documents.  Notwithstanding the provisions of
the Existing Loan Documents, each of the Existing Loan Documents, including the
Note and Loan Agreement, is hereby amended to reduce the indebtedness evidenced
by the Note to FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00).

(b)Modification of Note.  Section 4 of the Note is hereby amended and restated
in its entirety as follows:

4.Prepayment.  Borrower may prepay this Note in full, but not in part, on any
due date so long as: (i) Borrower provides Lender not less than sixty (60) days
advance written notice thereof, and (ii) Borrower pays to Lender prior to or
concurrently with such prepayment, as consideration for the privilege of making
such payment, a prepayment fee equal to the Present Value of ((A-B) x C) where:

A=A rate per annum equal to the fixed rate that Lender determines a swap dealer
would quote to Lender on the Closing Date for an interest rate swap with a
maturity equal to the Maturity Date.

B=A rate per annum equal to the fixed rate that Lender determines a swap dealer
would quote to Lender on the Pre-Payment Date for paying to Lender the fixed
rate side of an interest rate swap with a maturity equal to the Maturity Date.

C =The sum of the products of (i) each Affected Principal Amount for each
Affected Principal Period, times (ii) the number of days in that Affected
Principal Period divided by 360.

"Affected Principal Amount" for an Affected Principal Period means the principal
amount of the Loan scheduled to be outstanding during that Affected Principal
Period determined as of the relevant Prepayment Date by reference to the
Schedule of Principal Amounts before giving effect to any Prepayment Event on
that Prepayment Date, and for any Prepayment, multiplying each such principal
amount times the Prepayment Fraction. For any Failure to Borrow, the Affected
Principal Amount shall be adjusted, as appropriate, to reflect the amount of the
relevant advance not made on the relevant Borrowing Date.  

"Affected Principal Period" means each period from and including a Scheduled Due
Date to but excluding the next succeeding Scheduled Due Date, provided that the
first such period shall begin on and include the Pre-Payment Date.

"Prepayment Fraction" means a fraction equal to the principal amount being
prepaid over the principal amount of the Loan outstanding immediately prior to
that prepayment on the Pre-Payment Date.

"Present Value" is determined as of the Break Date using "B" above as the
discount rate.

"Break Event" means any Prepayment or Acceleration.

 

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Exhibit 10.3

 

“Acceleration” means that the Loan or any note evidencing the Loan is declared
due and payable prior to the Maturity Date.

"Closing Date" means any date on which any advance of the Loan is made.  

"Prepayment Date" means the date for any Prepayment, or otherwise the
Acceleration date.

"Pre-Payment Event" means any Prepayment or Acceleration.

"Prepayment" means that the Loan is prepaid on any date or dates prior to the
Maturity Date.

(c)Modification of Loan Agreement.  Sections 10.1 and 10.8 of the Loan Agreement
are hereby amended and restated in their entirety as follows:

10.1Nonpayment of Note. Default in payment when due of any interest on or
principal of the Note and/or any and all other indebtedness, of whatever kind or
character, now owing or that may hereafter become owing by Borrower to Lender.

10.8Event of Default Under Other Loan Documents.  Any Event of Default occurs
under the Note, the Mortgage, the Assignment, the Subordination Agreements, any
other Loan Documents or any other loan documents executed by Borrower in favor
of Lender pertaining to other indebtedness now owing or that may hereafter
become owing by Borrower to Lender.

4.Borrower’s Representations and Warranties.  Without limitation of any
obligations, representations, warranties or liabilities of Borrower pursuant to
the Loan Documents, Borrower represents and warrants to Lender that:

(a)No Secondary Financing.  No lien or other charge upon the Mortgaged Property,
other than the Mortgages and the mortgages referenced in Exhibit “C”, has been
given or executed by Borrower, or has been contracted or agreed to be so given
or executed.

(b)Title to Properties, Etc.  Borrower has good and marketable fee title to the
Mortgaged Property.

(c)Litigation.  Except as disclosed to Lender on Schedule 4(c) attached hereto,
there are no actions, suits or proceedings (whether or not purportedly on behalf
of Borrower) pending or, to the best knowledge of Borrower, threatened against
of affecting Borrower, at law or in equity or by or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency of
instrumentality, domestic or foreign, which involve any of the transactions
contemplated in this Agreement or the possibility of any judgment or liability
that may result in any material adverse change in the business, operations,
properties or assets, or in the condition, financial or otherwise, of Borrower;
Borrower is not, to the best knowledge of Borrower, in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.

 

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Exhibit 10.3

 

(d)Agreements.  Borrower is not a party to any agreement or instrument,
materially and aversely affecting the operations or condition, financial or
otherwise, of Borrower, and Borrower is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party, which default
would have a material adverse effect upon the business, properties or assets,
operations or condition, financial or otherwise of Borrower.

(e)Governmental Consents.  Borrower is not required to obtain any order,
consent, approval or authorization of, or to make any declaration or filing
with, any governmental authority in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
the issuance and delivery of this Agreement.

(f)No Offsets.  There are no defenses, offsets or counterclaims against the
Loan, and no Event of Default exists under the Loan.

5.Ratification.  Except as expressly modified herein or by documents signed
pursuant to this Agreement, all of the terms and conditions of the Existing Loan
Documents (i) remain unmodified and in full force and effect and (ii) are hereby
ratified and confirmed by Borrower and Lender. Borrower covenants and agrees
that the indebtedness continues to be evidenced by the Note as amended hereby,
that said indebtedness continues to be secured by the Loan Documents and that by
acceptance of the Note pursuant to this Agreement, (i) Lender has not and does
not release or relinquish any rights, remedies and/or lien priorities evidenced
by or granted to Lender in any of the Existing Loan Documents, (ii) the unpaid
balance of the Note, as amended hereby, remains outstanding and has not been
satisfied, and (iii) the first and prior liens of the Mortgages each remain in
full force and effect and are unaltered and unimpaired.  Borrower waives all
defenses, rights of offset, counterclaims and the like, if any, whether legal or
equitable in nature, which any of them may have with respect to their respective
responsibilities, obligations and liabilities under the Loan Documents.  In the
event of any inconsistency between the provisions of this Agreement and those of
the Existing Loan Documents, the provisions of this Agreement shall control.

6.Payment of Costs.  Borrower shall pay or cause to be paid, at the time of
execution of this Agreement, any and all fees and expenses incurred by Lender
and/or its counsel in connection with the preparation and execution of this
Agreement, including without limitation, all legal fees and expenses, title
insurance and endorsement fees, title search expenses, UCC search expenses,
costs of filing and/or recording documents, and any unpaid sums due to Lender.  

7.Additional Documentation.  In addition to the instruments and agreements
specified herein, Borrower shall execute and deliver to Lender such additional
instruments or agreements as Lender may reasonably require for purposes of
consummating or evidencing the transactions contemplated in this Agreement.

8.Default Under this Agreement.  The failure of Borrower to comply with any
provisions of this Agreement shall constitute a default under the Loan
Documents, entitling Lender to exercise any and all remedies to which it may be
entitled thereunder and hereunder, at law and/or in equity (after such notice
and such opportunity to cure such default as may be required by the Loan
Agreement).

 

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Exhibit 10.3

 

9.Headings; Time of Essence.  The headings used in this Agreement are for
convenience only and shall be disregarded in interpreting the substantive
provisions of this Agreement.  Time is of the essence of each term of this
Agreement.

10.Severability.  If any provision of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable, that
portion shall be deemed severed from this Agreement and the remaining parts
shall remain in full force as though the invalid, illegal, or unenforceable
portion had never been a part thereof.

11.Descriptive Headings.  The descriptive headings of the paragraphs of this
Agreement are for convenience only and shall not be used in the construction of
the terms hereof.

12.No Oral Agreements.  THIS AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT UNWRITTEN ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURE PAGE FOLLOWS]

Exhibits & Schedules

Exhibit “A” - Mortgaged Property description

Exhibit “B” - Security Instruments

Exhibit “C” - List of Mortgages

Schedule 4(c) - Pending Litigation

 

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Exhibit 10.3

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement effective
as of the date set forth above.

 

“Borrower”:

 

PAYCOM PAYROLL, LLC,

 

 

a Delaware limited liability company

 

 

 

 

 

 

By

/s/ Chad Richison

 

 

 

Chad Richison, President

 

 

 

 

“Lender”:

 

KIRKPATRICK BANK,

 

 

an Oklahoma state banking association

 

 

 

 

 

 

By:

/s/ David Sutter

 

 

 

David Sutter, Executive Vice President