blve_8k-ex1004.htm


    Exhibit
10.4

     

    


    FIRST AMENDMENT AND WAIVER
AGREEMENT

    


     

    This
FIRST AMENDMENT AND WAIVER AGREEMENT (this “Amendment”) is made as of the Effective Date set forth below by and among Belvedere
SoCal, a bank holding company organized under the laws of California (“Borrower”), and Pacific Coast
Bankers’ Bank (“Lender”)
with respect to the Business Loan Agreement (such Business Loan Agreement, the
“Agreement”) and all
notes, deeds of trust, security agreements, pledge agreements, guaranties, and
other documents (together with the Agreement, collectively referred to herein as
the “Loan Documents”)
among Borrower and Lender and dated as of March 18, 2008 among Borrower and
Lender.  (Borrower and Lender each a “Party” and collectively, the
“Parties.”)

     

    RECITALS

     

    WHEREAS,
based on Borrower’s financial reports for the fourth quarter end of 2008,
Borrower is out of compliance with its (A) Debt Service Coverage Ratio
obligation (the “DSCR
Covenant”) under subparagraph (16) of the “AFFIRMATIVE COVENANTS” section
on page 3 of the Agreement, (B) Bank Capitalization obligation (the “Capitalization Covenant”)
under subparagraph (17) of the “AFFIRMATIVE COVENANTS” section on page 3 of the
Agreement, and (C) Risk Based Capital obligation (the “RBC Covenant”) under
subparagraph (18) of the “AFFIRMATIVE COVENANTS” section on page 3 of the
Agreement.

     

    WHEREAS,
Borrower has requested and Lender is willing to agree to a temporary and limited
waiver of Borrower’s failure to comply with the (A) DSCR Covenant, (B)
Capitalization Covenant, and (C) RBC Covenant, subject to the terms and
conditions set forth below.

     

    WHEREAS,
Borrower and Lender wish to amend the Agreement to append a covenant to the
“AFFIRMATIVE COVENANTS”
section on page 3 of the Agreement.

     

    WHEREAS,
Borrower and Lender wish to amend the Agreement to modify a covenant to the
“AFFIRMATIVE COVENANTS”
section on page 3 of the Agreement.

     

    WHEREAS,
Borrower and Lender wish to amend the Promissory Note to modify the “PAYMENT” section on page 1 of
the Promissory Note.

     

    WHEREAS,
Borrower and Lender wish to amend the Promissory Note to modify the “VARIABLE INTEREST RATE”
section on page 1 of the Promissory Note.

     

    WHEREAS,
Borrower and Lender wish to amend the Promissory Note to modify the “PREPAYMENT” section on page 1
of the Promissory Note.

     

    NOW
THEREFORE, IT IS AGREED THAT:

     

    
      	
              1.  

            	
              Definitions.  Unless
      otherwise indicated, words and terms which are defined in the Agreement
      shall have the same meaning where used herein.  All indebtedness
      owed by Borrower to Lender and evidenced by the Agreement and the Loan
      Documents shall be referred to herein as the “Senior
      Indebtedness.”

            


    

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              2.  

            	
              Amendments to
      Agreement and Promissory Note.  As of the Effective Date,
      the following amendments to the Agreement, the Promissory Note and the
      other Loan Documents shall be
effective:

            


    

    
 

    (a) The
following subsection is added after the last subsection in the “AFFIRMATIVE
COVENANTS” section of the Agreement so as to add a new “AFFIRMATIVE COVENANT” to
the Agreement:

     

    Total Risk Based Capital
Ratio.  Cause the Bank to maintain as of the end of each Fiscal
Quarter a Total Risk Based Capital Ratio, as defined in the Rules and
Regulations of the Federal Financial Institutions Examination Council, for such
Fiscal Quarter of (1) 11.00% or greater by June 30, 2009; and
(2)  12.00% or greater by September 30, 2009 and
thereafter.

    


     

    (b) The
subsection “Risk Based Capital” in the “AFFIRMATIVE COVENANTS” section of the
Agreement is hereby amended and restated to read as follows:

     

    Risk Based
Capital.  Cause the Bank to maintain as of the end of each
Fiscal Quarter, Risk Based Capital for such Fiscal Quarter of not less than (1)
from March 31, 2009, through September 30, 2009, $35,000,000.00; and (2) from
December 31, 2009 and thereafter, $38,000,000.00.

    


     

    (c) The
section “PAYMENT” in the Promissory Note is hereby amended and restated to read
as follows:

     

    PAYMENT.  Borrower will
make payments under this Note on the 18th day of March, June, September, and
December of each year (each, a “Payment Date”), commencing on June 18, 2008, and
continuing through and including March 18, 2016 (the “Maturity Date”), as
follows:  (A) on each of the first four (4) Payment Dates, Borrower
shall pay all accrued but unpaid interest to such Payment Date; and (B) on each
of the next twenty-eight (28) Payment Dates (including the Maturity Date),
Borrower shall pay (subject to any payment changes resulting from changes in the
LIBOR Rate) substantially equal (assuming no change through the Maturity Date of
the LIBOR Rate) installments of principal and interest in an amount sufficient
to fully repay the principal of this Note together with all interest thereon by
the Maturity Date, on which date all unpaid principal of this Note, all accrued
but unpaid interest thereon, and all other costs, expenses, fees and other
charges provided for under this Note shall be immediately due and
payable.  On the fourth (4th)
Payment Date, Lender shall calculate the amount of each installment of principal
and interest that would be sufficient to fully repay the principal of this Note
together with all interest thereon at the LIBOR Rate that becomes effective on
such Payment Date in substantially equal installments by the Maturity Date
(assuming no change through the Maturity Date of the LIBOR Rate) and shall
advise Borrower thereof, whereupon such amount shall be the amount of the
installment of principal and interest due on the next Payment Date and on each
successive Payment Date to, but not including, the Maturity Date; provided,
however, that on each Payment Date commencing with the fifth (5th)
Payment Date and continuing through the Payment Date immediately prior to the
Maturity Date, Lender may recalculate the amount of each installment of
principal and interest that would be sufficient to fully repay the principal of
this Note together with all interest thereon at the LIBOR Rate that becomes
effective on such Payment Date in substantially equal installments by the
Maturity Date (assuming no change through the Maturity Date of the LIBOR Rate
then in effect) and, if so recalculated, Lender shall advise Borrower thereof,
whereupon such amount shall become the amount of the installment of principal
and interest due on the next Payment Date and on each successive Payment Date
to, but not including, the Maturity Date until the amount of the installment of
principal and interest to be paid is next so recalculated, if at all, by
Lender.  Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs; then to any late
charges; then to any accrued but unpaid interest; and then to
principal.  Borrower will pay Lender at Lender’s address shown above
or at such other place as Lender may from time to time designate in
writing.

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (d) The
section “VARIABLE INTEREST RATE” in the Promissory Note is hereby amended and
restated to read as follows, effective retroactively to March 9,
2009:

     

    VARIABLE INTEREST RATE.  Interest shall
accrue on the balance of principal outstanding from time to time under this Note
at an annual rate (the “LIBOR Rate”) that is equal to the Index (defined below)
plus 5.100 percentage points, calculated on the basis of a 360-day year, for
actual days elapsed (subject to the “Interest after Default” section
below).  The LIBOR Rate is subject to change from time to time on each
Calculation Date (defined below) based on changes in an independent index that
is the “Three –month” “London interbank offered rate, or Libor” (rounded upward,
if necessary, to the nearest 1/100 of 1%) as published in the “Borrowing
Benchmarks” section of the Western Edition of The Wall Street Journal (the
“Index”).  The Index is not necessarily the lowest rate charged by
Lender on its loans.  If the Index becomes unavailable during the term
of this loan, Lender may designate a substitute index after notifying
Borrower.  Lender will tell Borrower the current Index rate upon
Borrower’s request.  On the date of this Note the LIBOR Rate shall be
calculated by Lender and shall remain in effect to, but not including, the next
Payment Date.  On each Payment Date, Lender shall recalculate the
LIBOR Rate as of such Payment Date, and the LIBOR Rate as so recalculated shall
become effective on such Payment Date and shall remain in effect to, but not
including, the next Payment Date.  Borrower understands that Lender
may make loans based on other rates as well.  NOTICE:  Under
no circumstances will the interest rate on this Note be more than the maximum
rate allowed by applicable law.  Whenever increases occur in the LIBOR
Rate, Lender, at its option, may do one or more of the following:  (A)
increase Borrower’s payments to ensure the Loan will be paid in full by the
Maturity Date as set forth above, (B) increase Borrower’s payments to cover
accruing interest, (C) increase the number of Borrower’s payments, and (D)
continue Borrower’s payments at the same amount and increase Borrower’s final
payment.

    


     

    (e) The
section “PREPAYMENT” in the Promissory Note is hereby amended and restated to
read as follows:

     

    PREPAYMENT.  Borrower agrees
that all loan fees and other prepaid finance charges are earned fully as of the
date of the Loan and will not be subject to refund upon early payment (whether
voluntary or as a result of default), except as otherwise required by
law.  Borrower may
not prepay all or any portion of the principal of this Note prior to the fourth
(4th) Payment Date.  Borrower
expressly waives any right under California Civil Code section 2954.10 or
otherwise to prepay all or any portion of the principal of this Note except as
is expressly set forth herein.  Except for the foregoing,
Borrower may pay without penalty or premium all or a portion of the amount owed
earlier than it is due.  Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower’s obligation to continue to make
payments as set forth above.  Rather, early payments will reduce the
principal balance due and may result in Borrower’s making fewer
payments.  Borrower agrees not to send Lender payments marked “paid in
full”, “without recourse”, or similar language.  If Borrower sends
such a payment, Lender may accept it without losing any of Lender’s rights under
this Note, and Borrower will remain obligated to pay any further amount owed to
Lender.  All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment
constitutes “payment in full” of the amount owed or that is tendered with other
conditions or limitations or as full satisfaction of a disputed amount must be
mailed or delivered to Lender at Lender’s address shown above or at such other
place as Lender may from time to time designate in writing.

     

     

    (f) The
following subsection is added after the last subsection in the “AFFIRMATIVE
COVENANTS” section of the Agreement so as to add a new “AFFIRMATIVE COVENANT” to
the Agreement immediately after the covenant added pursuant to Section 2(a)
above:

     

    Special Covenants.
Notwithstanding anything to the contrary in the Agreement, the Note or the Loan
Documents, Borrower agrees and covenants to perform, pay and cause the following
to occur on or before the dates indicated:

     

    (i)
Borrower shall cause its wholly owned Delaware trust, Belvedere Socal Statutory
Trust I (“Statutory Trust
I”),  to defer all distributions and payments with respect to
the Trust Preferred Security  that was issued by Statutory Trust I on
January 31, 2008 (the “TRUPS”),subject however to
any clear and unambiguous restriction prohibiting such deferral under applicable
law or contained in the terms of any contract by which Statutory Trust I is
bound in form existing on the Effective Date of the First Amendment and Waiver
Agreement.  The foregoing restriction on distributions shall
automatically terminate, and Borrower may resume otherwise deferred
distributions and payments with respect to the TRUPS at such time as (A) the
principal of the  Senior Indebtedness has been paid down to less than
$5,500,000.00, and (B) Borrower requests confirmation from Lender and Lender
confirms in writing that no Event of Default exists and is continuing under the
Agreement, or any of the Loan Documents;

     

    (ii)
Borrower shall provide evidence that (A) Belvedere Capital Fund II L.P. (the
“Fund”) has made an
additional unsecured loan (the “New Fund Loan”) in an amount
of no less than $6,500,000.00 to the Borrower by no later than March 31, 2009,
and (B) the Fund has provided a fully executed Subordination Agreement (“Subordination Agreement”) on
Lender’s standard form, evidencing the subordination and postponement of such
New Fund Loan and any other loan from Fund to Borrower to the Senior
Indebtedness, and (C) Borrower has invested at least  $5,000,000.00 of
the proceeds from the New Fund Loan into the Borrower’s subsidiary bank as a
capital injection by no later than March 31, 2009.  For the avoidance
of doubt, the Subordination Agreement shall expressly provide that Fund will
postpone its right to payment of and Borrower will defer all principal and
interest payments of such New Fund Loan until the Senior Indebtedness has been
paid in full;

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

     

    (iii)
Borrower shall defer, and the Subordination Agreement shall provide that Fund
has postponed its right to payment of all principal and interest payments for
the following debt issued by Borrower to the Fund until the Senior Indebtedness
is paid in full: (A) “Senior Note” subordinate to Lender’s Note in the amount of
$500,000.00 issued on December 31, 2008, (B) “Senior Note” subordinate to
Lender’s Note in the amount of $2,000,000.00 issued on January 30, 2009, and (C)
“Senior Note” subordinate to Lender’s Note in the amount of $500,000.00 issued
in February 2009;

     

    (iv)
Borrower shall not redeem any shares of common stock or preferred A stock to the
extent such stock has resulted from the exercise of conversion rights contained
in the New Fund Loan referred to in clause (ii) above, or any of the three
“Senior Notes” referred to in clause (iii) above

     

    (v)
Borrower shall not redeem any Series A Preferred Stock of Borrower, and shall
defer all distributions with respect to all Series A Preferred Stock of Borrower
(currently in the amount of $23,827,000.00 issued and outstanding), until the
Senior Indebtedness is paid in full.  Notwithstanding the foregoing,
Borrower shall be permitted to make distributions of additional Series A
Preferred Stock with respect to issued and outstanding Series A Preferred Stock,
upon Lender’s prior written consent which shall not be unreasonably withheld;
and

     

     (vi)
Notwithstanding anything to the contrary in the Agreement and the Loan
Documents, Borrower agrees to pay one of the following  principal
payment reductions of the Senior Indebtedness, as applicable, on or before the
dates specified : (A) if Borrower receives $10,000,000.00 or a greater amount
from the United States Department of the Treasury with respect to Borrower’s
application for participation in the Treasury Capital Purchase Program (the
“CPP”), then within 15
calendar days of receipt of such amount Borrower shall pay a principal reduction
of the Senior Indebtedness equal to $2,500,000.00;  (B) if Borrower
receives any amount less than $10,000,000.00 from the United States Department
of the Treasury with respect to the CPP application, then within 15 calendar
days of receipt of such amount Borrower shall pay a principal reduction of the
Senior Indebtedness equal to $2,000,000.00 and (C) if for any reason whatsoever
no payment is received by Lender pursuant to the forgoing clauses (A) or (B),
then Borrower shall pay a principal reduction of the Senior Indebtedness equal
to $2,000,000.00 by no later than December 31, 2009.

     

     

    (g) All
references to the Business Loan Agreement, whether referred to as such or by any
other term, in any Loan Document shall mean the Agreement as amended by this
Amendment.  All references in any Loan Document to the Promissory
Note, whether referred to as the “Note,” or by another defined term, shall mean
the Promissory Note as amended by this Amendment.

     

     

    
      	
              3.  

            	
              Conditions Precedent
      to Amendment.  As consideration for, and a necessary
      condition precedent to the effectiveness of this Amendment, including
      without limitation the Waiver (as defined in Section 4 below), Borrower
      shall execute, deliver, pay or perform, as the case may be, the following,
      all in form and substance satisfactory to Lender in Lender’s sole
      discretion:

            


    

     

    
      	
              a.  
        

            	
              Corporate Resolution
      to Borrow/ Grant Collateral.  Borrower shall execute and
      deliver to Lender an amended Corporate Resolution to Borrow/ Grant
      Collateral in substantially the form attached hereto as Exhibit
      A;

            


    

     

    
      	
              b.  
        

            	
              Amendment Preparation
      Fee.  Borrower shall pay to Lender a fee in the amount of
      $8,000.00 for administration expenses incurred by Lender in connection
      with the negotiation and preparation of this Amendment together with
      $5,000.00 in legal fees relating to the preparation of this Agreement;
      and

            


    

     

    
      	
              c.  
        

            	
              Execution and Delivery
      of Amendment. Borrower shall deliver to Lender a duly
      executed counterpart of this Amendment.

            


    

     

    
      	
              d.  
        

            	
              Execution and Delivery
      of Subordination Agreement.  Borrower shall deliver to Lender the Subordination Agreement, in Lender’s standard
      form duly executed by Borrower and
  Fund.

            


    

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              4.  

            	
              Waiver; Conditions
      Subsequent.  Subject to Lender’s confirmation of
      satisfaction of each of the covenants set forth in Section 2 (f) above,
      Lender shall waive (the “Waiver”) Borrower’s
      failure to comply with the (A) DSCR Covenant during the period beginning
      October 1, 2008 and ending March 31, 2009, and the (B) Capitalization
      Covenant, and the (C) RBC Covenant during the period beginning October 1,
      2008 and ending December 31, 2008 (collectively referred to herein as the
      “Waiver
      Period”).  This Amendment does not constitute a waiver of
      the (A) DSCR Covenant, the (B) Capitalization Covenant, nor the (C) RBC
      Covenant for any time period other than the Waiver Period, nor does it
      constitute a waiver of any other provision in the
      Agreement.  The Parties agree that (i) Lender has not waived,
      and will not waive, the applicability of default interest at the rate of
      3.00 percentage points in addition to the interest rate otherwise
      applicable to the Senior Indebtedness, and (ii) such default interest rate
      has been in effect beginning March 9, 2009 and will remain in effect until
      (A) Borrower receives  funds from the CPP or Borrower receives
      not less than $5,000,000.00 in funds supplemental to the New Fund Loan as
      set forth in Section 2(f)(ii) above, (B) Borrower pays the principal
      payment reduction as set forth in Section 2(f)(vi) above, and (C) all
      requirements and obligations that are the subject of the Waiver have been
      brought into compliance and remedied, at which time the regular,
      non-default contract interest rate will apply as long as there exists no
      Event of Default under the Agreement, or any of the Loan
      Documents.  For the avoidance of doubt, Lender’s Waiver with
      respect to Borrower’s failure to comply with the (A) DSCR Covenant, the
      (B) Capitalization Covenant, and the (C) RBC Covenant during the Waiver
      Period is subject to an express condition subsequent, namely, Lender’s
      verification of Borrower’s compliance with each of the covenants contained
      in the new covenant added to the Agreement as provided in Section 2 (f)
      above on or before the dates such covenants are required to be
      performed.  Accordingly, the Parties acknowledge and agree that
      the failure of any one of such new covenants contained in Section 2 (f)
      above to be performed to Lender’s satisfaction not later than the date
      required, shall at Lender’s sole and absolute discretion, constitute a
      failure of a condition subsequent to the grant of the Waiver, in which
      case the Waiver shall be abrogated and nullified ab initio, and
      Lender shall thereafter have the right to declare an Event of Default
      based on Borrower’s failure to comply with the (A) DSCR Covenant, the (B)
      Capitalization Covenant, and the (C) RBC Covenant during the Waiver Period
      or at any time thereafter.

            


    

     

    
      	
              5.  

            	
              Future Waiver Rate
      Increase.  Borrower agrees that any future request for
      any covenant waiver shall be subject to an administrative fee in the
      amount of $20,000.00, as well as Lender’s out of pocket fees and costs
      relating thereto.

            


    

     

    
      	
              6.  

            	
              Continued Validity of
      Agreement and Loan Documents.  Except as modified by this
      Amendment, the Agreement and the Loan Documents (including all amendments
      of and modifications to such documents) executed by Borrower or by any
      other person with or in favor of Lender, shall continue in full force and
      effect as originally executed and are ratified and affirmed by the Parties
      hereto.

            


    

     

    
      	
              7.  

            	
              Compliance with Loan
      Documents.  Borrower represents and warrants to Lender as
      follows:  (a) as of the Effective Date of this Amendment,
      Borrower has complied, and is in compliance with, all of the terms,
      covenants and conditions of the Agreement and the other Loan Documents,
      other than Borrower’s failure to comply with the (A) DSCR Covenant, the
      (B) Capitalization Covenant, and the (C) RBC Covenant during the Waiver
      Period;  (b) as of the Effective Date of this Amendment, there
      exists no Event of Default under the Agreement or any of the other Loan
      Documents or an event which would constitute an Event of Default upon the
      lapse of time or giving of notice other than Borrower’s failure to comply
      with the (A) DSCR Covenant, the (B) Capitalization Covenant, and the (C)
      RBC Covenant during the Waiver Period;  (c) the representations
      and warranties of Borrower in the Agreement and the other Loan Documents
      are true and with the same effect as of the Effective Date hereof; and (d)
      Borrower will continue to be in compliance with all of the terms,
      covenants and conditions of the Agreement and the other Loan Documents,
      and all representation and warranties will continue to be true, on the
      Effective Date.

            


    

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              8.  

            	
              Authorization.  Each
      Party represents to the other that the individual executing this Amendment
      on its behalf is the duly appointed signatory of such Party to this
      Amendment and that such individual is authorized to execute this Amendment
      by or on behalf of such Party and to take all action required by the terms
      of this Amendment.

            


    

     

    
      	
              9.  

            	
              When Amendment is
      Effective.  This Amendment shall be effective on the date
      (“Effective Date”)
      when the conditions set forth in Section 3 above have been satisfied as
      determined by Lender.

            


    

     

    
      	
              10.  

            	
              Captions.  Section
      headings and numbers have been set forth herein for convenience
      only.  Unless the contrary is compelled by the context,
      everything contained in each section applies equally to this entire
      document.

            


    

     

    
      	
              11.  

            	
              No
      Novation.  This Amendment is not intended to be, and
      shall not be construed to create, a novation or accord and satisfaction of
      any Loan Document, and, except as specifically amended hereby, the
      Agreement and the Promissory Note and the other Loan Documents shall
      remain unmodified and in full force and
effect.

            


    

     

    
      	
              12.  

            	
              Time:  Time
      is of the essence of each and every provision of this
      Agreement.

            


    

     

    
      	
              13.  

            	
              Severability.  Each
      provision of this Amendment shall be severable from every other provision
      of this Amendment for the purpose of determining the legal enforceability
      of any specific provision.

            


    

     

    
      	
              14.  

            	
              Entire
      Agreement.  This Amendment constitutes the entire
      agreement by and between Borrower and Lender with respect to the subject
      matter hereof and supersedes all prior and contemporaneous negotiations,
      communications, discussions and agreements concerning such subject
      matter.

            


    

     

    
      	
              15.  

            	
              Counterparts.  This
      Amendment may be executed in any number of counterparts, each of which
      shall be an original, but all of which shall together constitute one and
      the same agreement.

            


    

     

    


     

    


     

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              16.  

            	
              Execution
      Date.  The Parties hereto have executed and delivered
      this Amendment as of April 14, 2009

            


    

     

    


    
      
        
          	
                  BELVEDERE
      SOCAL

                   

                   

                  By: /s/ Mary Lynn Lenz
      
                    
      

                  Mary
      Lynn Lenz, President & CEO

                	
                   

                   

                   

                  By /s/ James Westfall
      
                    
      

                  James
      Westfall, CFO

                
	
                  PACIFIC
      COAST BANKERS’ BANK

                   

                   

                  By: /s/ Nino Petroni
      
                    
      

                  Nino
      Petroni, EVP/ CCO

                   

                	 
      


        

      

    

    


     

     

     

     

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