Exhibit 10.1


 


FOURTH AMENDMENT TO LOAN AGREEMENT


 


THIS
FOURTH AMENDMENT TO LOAN AGREEMENT (this “Fourth Amendment” or this “Amendment”)
is entered into as of November 2, 2009 (the “Execution Date”), to
be effective as of October 30, 2009, by and between AMERICAN BUSINESS
LENDING, INC., a Texas corporation (“Borrower”), and WELLS FARGO
FOOTHILL, LLC, a Delaware limited liability company (“Lender”), with
reference to the following facts, which shall be construed as part of this
Fourth Amendment:


 


RECITALS


 


A.            Borrower and Lender have entered
into that certain Loan Agreement dated as of December 15, 2006, as amended
by that certain First Amendment to Loan Agreement dated as of February 27,
2007, that certain Second Amendment to Loan Agreement dated as of July 30,
2007, to be effective as of June 30, 2007, and that certain Third
Amendment to Loan Agreement dated as of February 18, 2009, to be effective
as of February 1, 2009 (as amended or modified from time to time, the “Loan
Agreement”), pursuant to which Lender is providing financial accommodations
to or for the benefit of Borrower upon the terms and conditions contained
therein.  Unless otherwise defined
herein, capitalized terms or matters of construction defined or established in
the Loan Agreement shall be applied herein as defined or established therein.


 


B.            Borrower has requested that Lender
agree to certain amendments to the Loan Agreement, and Lender is willing to do
so to the extent provided in, and subject to the terms and conditions of, this
Fourth Amendment.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the continued performance by Borrower of its
promises and obligations under the Loan Agreement and the other Loan Documents,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender hereby agree as follows:


 


1.             Ratification
and Incorporation of Loan Agreement and Other Loan Documents.  Except as expressly modified under this
Fourth Amendment, (a) Borrower hereby acknowledges, confirms, and ratifies
all of the terms and conditions set forth in, and all of its obligations under,
the Loan Agreement and the other Loan Documents, and (b) all of terms and
conditions set forth in the Loan Agreement and the other Loan Documents are
incorporated herein by this reference as if set forth in full herein.


 


2.             Amendments
to the Loan Agreement.  The Loan
Agreement is hereby amended as follows:


 


2.1            Addition of New Defined Terms.  Section 1.1
of the Loan Agreement is amended by adding thereto in appropriate alphabetical
order the following new defined terms:


 


a.             “Fourth Amendment” shall
mean the Fourth Amendment to Loan Agreement dated as of November 2, 2009,
to be effective as of October 30, 2009, between Borrower and Lender.


 

















 


b.             “Fourth Amendment Closing Date”
shall mean the date on which all conditions precedent set forth in the Fourth
Amendment have been satisfied in a manner acceptable to Lender or waived in
writing by Lender as provided therein, which date shall be confirmed by Lender
to Borrower in writing upon request.


 


c.             “Fourth Amendment Closing Fee”
shall have the meaning ascribed to such term in the Fourth Amendment.


 


2.2            Amendment to Definition of Base
Rate Margin.  Section 1.1
of the Loan Agreement is amended by deleting the existing version of the
defined term “Base Rate Margin” contained therein and replacing it with the
following amended and restated version thereof:


 


“Base Rate Margin” means four and one-quarter
percent (4.25%) per annum.


 


2.3            Amendment to Definition of LIBOR
Rate Margin.  Section 1.1
of the Loan Agreement is amended by deleting the existing version of the
defined term “LIBOR Rate Margin” contained therein and replacing it with the
following amended and restated version thereof:


 


“LIBOR Rate Margin” means four and one-quarter
percent (4.25%) per annum.


 


2.4            Amendment to Definition of
Termination Date.  Section 1.1 of the Loan
Agreement is amended by deleting the existing version of the defined term “Termination
Date” contained therein and replacing it with the following amended and
restated version thereof:


 


“Termination Date” shall mean the earliest
of: (a) January 31, 2012 (unless a later date is agreed to in writing
by Borrower and Lender); (b) the date that Borrower elects to terminate
this Agreement and repays the Obligations in full in accordance with the terms
of Section 2.6; and (c) the
date Lender elects to terminate Borrower’s right to receive Revolving Loans in
accordance with Section 7.2.


 


2.5            Amendment to Interest Rate.  Section 2.3(b) of
the Loan Agreement is amended by deleting the existing version thereof and
replacing it with the following amended and restated version thereof:


 


(b)          Interest
shall accrue on the Revolving Loans at a rate equal to (i) in the case of
a LIBOR Rate Loan, at a per annum rate equal to the sum of (A) the LIBOR
Rate for the applicable Interest Period plus (B) the LIBOR Rate
Margin; (ii) in the case of a Base Rate Loan, at a floating per annum rate
equal to the greater of (A) the Base Rate plus the Base Rate
Margin, or (B) seven and one-half percent (7.50%) per annum; and (iii) otherwise,
at a floating per annum rate equal to the greater of (A) the Base Rate plus
the Base Rate Margin, or (B) seven and one-half percent (7.50%) per annum.


 

















 


2.6            Fourth Amendment Closing Fee.  Section 2.5(a) of
the Loan Agreement is hereby amended by adding the following additional text at
the end of the existing text thereof:


 


In addition, as
consideration for Lender agreeing to enter into the Fourth Amendment, Borrower
agrees to pay to Lender on the Fourth Amendment Closing Date an additional
closing fee (the “Fourth Amendment Closing Fee”) in an amount equal to
$187,500 (i.e., three-quarters of one percent (0.75%) of the Maximum Credit
Line).  Borrower acknowledges that the
Fourth Amendment Closing Fee shall be fully earned by Lender upon the Fourth
Amendment Closing Date and shall not be refundable nor subject to reduction for
any reason.


 


2.7            Amendment to Prepayment Fee.  Section 2.6
of the Loan Agreement is amended by deleting the existing version of the table
contained therein setting forth the calculation of the “Prepayment Fee” and
replacing it with the following amended and restated version thereof:


 


	
  If Prepayment is
  Made

  Between the
  Following 

  Dates,
  Inclusive:

  	
   

  	
   

   

  The Premium
  Shall Be:

  
	
   

  	
   

  	
   

  
	
  Fourth Amendment

  Closing Date to 

  January 31,
  2011

  	
   

  	
  Three percent
  (3.0%) of the 

  Maximum Credit
  Line

  
	
   

  	
   

  	
   

  
	
  February 1,
  2011 to 

  January 30,
  2012

  	
   

  	
  Two percent
  (2.0%) of the 

  Maximum Credit
  Line

  



 


2.8            Amendment to Minimum Tangible Net
Worth Covenant.  Section 5.11(a) of
the Loan Agreement is amended by deleting the existing version thereof and
replacing it with the following amended and restated version thereof:


 


(a)             Minimum
Tangible Net Worth. 
As of the end of each fiscal quarter, maintain, on a
consolidated basis with Borrower’s Subsidiaries, and after taking into account
any dividends paid or accrued, Tangible Net Worth of not less than $5,500,000 plus
100% of the sum of the positive amounts, if any, of Borrower’s net income for
each of the Fiscal Quarters ending on or after March 31, 2009 through the
date of measurement, minus 100% of the sum of the negative amounts, if
any, of Borrower’s net income for each of the Fiscal Quarters ending on or
after March 31, 2009 through the date of measurement.


 


2.9            Amendment to Maximum Delinquent
and Defaulted Notes Percentage Covenant. 
Section 5.11(c) of the Loan
Agreement is amended by deleting the existing version thereof and replacing it
with the following amended and restated version thereof:


 


(c)             Maximum Delinquent and
Defaulted Notes Percentage. 
As of the end of each fiscal month, not cause or allow the ratio
(expressed as a percentage) of (i) the sum of (A) Delinquent
Non-Guaranteed Notes Receivable and (B) Defaulted Non-Guaranteed Notes
Receivable, to (ii) Non-Guaranteed Notes Receivable (each measured by the
respective aggregate outstanding principal


 

















 


amounts of all
Non-Guaranteed Notes Receivable in each category, whether or not eligible for
inclusion in the Borrowing Base), to be more than eight percent (8.0%).


 


2.10          Amendment to Maximum Loan
Charge-Off Percentage Covenant.  Section 5.11(d) of the Loan Agreement is amended
by deleting the existing version thereof and replacing it with the following
amended and restated version thereof:


 


(d)             Maximum
Loan Charge-Off Percentage. 
As of the end of each fiscal quarter, not cause or allow the ratio
(expressed as a percentage) of (i) loan losses for the 12-month period
then ending, to (ii) the average amount of all Non-Guaranteed Notes
Receivable outstanding during such 12-month period (measured by the aggregate
outstanding principal amount of all Non-Guaranteed Notes Receivable, whether or
not eligible for inclusion in the Borrowing Base), to be more than three
percent (3.0%).


 


2.11          Amendment to Covenant Regarding Maintenance
of Bad Debt Reserve.  Section 5.12 of the Loan Agreement is amended by
deleting the existing version thereof and replacing it with the following
amended and restated version thereof:


 


5.12           Maintenance
of Bad Debt Reserves and Discount for Gateway Performing Loans.  Borrower shall (a) maintain on its
books, as of the end of each fiscal quarter, a bad debt reserve consistent with
GAAP and Borrower’s historical performance with respect to any Notes Receivable
originated or acquired by Borrower, except for those Notes Receivable acquired
as part of the Gateway Portfolio Acquisition, and (b) carry on its books,
at all time, the Gateway Performing Loans at Borrower’s acquisition cost,
rather than their face amount, in order to reflect the discount realized by
Borrower; provided, however, that Borrower will, on at least a
quarterly basis, determine and report to Lender on the amount of impaired
Gateway Performing Loans and, if such amount is greater than such discount,
then Borrower will maintain on its books, at all times thereafter, an
additional loan loss reserve equal to the amount of such excess as from time to
time determined.


 


2.12          Amendment to Criteria for Net
Eligible Non-Guaranteed Notes Receivable.  Schedule 1.1(a) of the
Loan Agreement is amended by deleting the existing version of paragraph J thereof and replacing it with the following
amended and restated version thereof:


 


J.             If the
Non-Guaranteed Note Receivable is a Borrower Originated Loan, then such
Non-Guaranteed Note Receivable (i) is not a Borrower Originated Cash Flow
Loan or Partially Secured Loan, and (ii) does not cause the portion of Net
Eligible Non-Guaranteed Notes Receivable that are Borrower Originated Mixed
Collateral Loans to exceed twenty percent (20%) of the sum of (a) total Net
Eligible Non-Guaranteed Notes Receivable that are Borrower Originated Loans, plus
(b) the lesser of (1) total Borrower Originated Cash Flow Loans or
Partially Secured Loans or (2) $1,241,113.24; provided, that in any
case covered by (ii) above, such Non-Guaranteed Note Receivable will be
ineligible only to the extent of such excess;


 
















 


3.                                   Conditions
Precedent. 
Notwithstanding any other provision of this Fourth Amendment, this
Fourth Amendment shall be of no force or effect, and Lender shall not have any
obligations hereunder, until the following conditions have been satisfied:


 


3.1                                   Fourth
Amendment and other Documents in Connection therewith.  Lender shall have received the following,
each in form and substance satisfactory to Lender:


 


a.                                       this Fourth
Amendment, duly executed by Borrower and Lender;


 


b.                                      the
Acknowledgment and Reaffirmation of Guarantor following the signatures of
Borrower and Lender on this Fourth Amendment, executed by FirstCity Financial,
acknowledging the execution of this Fourth Amendment and reaffirming the
obligations of FirstCity Financial with respect to the Amended and Restated
General Continuing Limited Guaranty, dated as of February 18, 2009,
executed by FirstCity Financial in favor of Lender;


 


c.                                       evidence that
FirstCity Financial’s commitment to provide, and the maturity of, the FirstCity
Debt, has been extended to a date no earlier than March 31, 2012;


 


d.                                      written consent
by SBA to this Fourth Amendment and the transactions contemplated hereby.


 


3.2                                   Payment of
First Amendment Closing Fee.  Lender shall have received from Borrower
payment of the Fourth Amendment Closing Fee.


 


3.3                                   No Default or
Event of Default.  No Default
or Event of Default shall have occurred and be continuing.


 


4.                                   Representations
and Warranties re Loan Agreement.  Borrower hereby represents and warrants that
the representations and warranties contained in the Loan Agreement were true
and correct in all material respects when made and, except to the extent that (a) a
particular representation or warranty by its terms expressly applies only to an
earlier date, or (b) Borrower has previously advised Lender in writing as
contemplated under the Loan Agreement, are true and correct in all material
respects as of the date hereof.  Borrower
hereby further represents and warrants that no event has occurred and is continuing,
or would result from the transactions contemplated under this Fourth Amendment,
that constitutes or would constitute a Default or an Event of Default.


 


5.                                   Borrower’s
Waiver of Claims Arising Prior to Execution Date of Amendment.  In consideration of Lender entering into this
Fourth Amendment, Borrower, on behalf of itself, its Subsidiaries and its other
Affiliates, 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 (collectively, the “Claims”),
which Borrower ever had, now has or might hereafter have against Lender or any
other Indemnified Person based on any acts or omissions of Lender or any other
Indemnified Person on or prior to the Execution Date.  Borrower hereby waives and relinquishes for
itself, its Subsidiaries and its other Affiliates all of the rights and
benefits each such Person 


 

















 


has,
or may have, with respect to the Claims released under Section 1542 of the
California Civil Code or any other similar statute.  Section 1542 of the California Civil
Code states as follows:


 


A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.


 


Borrower has been
advised by counsel with respect to the release contained in this Section 5.


 


6.                                   Miscellaneous.


 


6.1                                   Headings.  The various headings of this Fourth Amendment
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Fourth Amendment or any provisions hereof.


 


6.2                                   Counterparts.  This Fourth Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.  Delivery of an executed
counterpart of a signature page to this Fourth Amendment by facsimile or
electronic transmission shall be effective as delivery of a manually executed
counterpart thereof.


 


6.3                                   Interpretation.  No provision of this Fourth Amendment shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party’s
having or being deemed to have structured, drafted or dictated such provision.


 


6.4                                   Complete
Agreement.  This Fourth
Amendment constitutes the complete agreement between the parties with respect
to the subject matter hereof, and supersedes any prior written or oral
agreements, writings, communications or understandings of the parties with respect
thereto.


 


6.5                                   Governing Law.  This Fourth Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of New
York applicable to contracts made and performed in such state, without regard
to the principles thereof regarding conflict of laws.


 


6.6                                   Effect.  Upon the effectiveness of this Fourth
Amendment, each reference in the Loan Agreement to “this Agreement,” “hereunder,”
“hereof” or words of like import shall mean and be a reference to the Loan
Agreement as amended hereby and each reference in the other Loan Documents to
the Loan Agreement, “thereunder,” “thereof,” or words of like import shall mean
and be a reference to the Loan Agreement as amended hereby.


 


6.7                                   Conflict of
Terms.  In the event of any inconsistency
between the provisions of this Fourth Amendment and any provision of the Loan
Agreement, the terms and provisions of this Fourth Amendment shall govern and
control.


 

















 


6.8                                   No Novation or
Waiver.  Except as specifically set
forth in this Fourth Amendment, the execution, delivery and effectiveness of
this Fourth Amendment shall not (a) limit, impair, constitute a waiver by,
or otherwise affect any right, power or remedy of, Lender under the Loan
Agreement or any other Loan Document, (b) constitute a waiver of any
provision in the Loan Agreement or in any of the other Loan Documents or of any
Default or Event of Default that may have occurred and be continuing, or (c) alter,
modify, amend or in any way affect any of the terms, conditions, obligations, covenants
or agreements contained in the Loan Agreement or in any of the other Loan
Documents, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.


 


[THE REMAINDER OF THIS
PAGE IS INTENTIONALLY BLANK]


 

















 


IN WITNESS WHEREOF, the
parties hereto have executed this Fourth Amendment to Loan Agreement as of the
day and year first above written.


 


	
   

  	
  AMERICAN
  BUSINESS LENDING, INC., a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Charles P. Bell, Jr.

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO FOOTHILL, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Pamela A. Wozniak

  
	
   

  	
   

  	
  Vice President

  



 

















 


ACKNOWLEDGMENT
AND REAFFIRMATION OF GUARANTOR


 


FirstCity Financial
Corporation, a Delaware corporation (“FirstCity Financial”), hereby
acknowledges receipt of a copy of the foregoing Fourth Amendment to Loan and
Security Agreement between American Business Lending, Inc., a Texas
corporation (“Borrower”), and Wells Fargo Foothill, LLC, a Delaware
limited liability company (“Lender”), and acknowledges and reaffirms all
of FirstCity Financial’s obligations under the Amended and Restated General
Continuing Limited Guaranty, dated as of February 18, 2009, executed by
FirstCity Financial in favor of Lender.


 


 


	
   

  	
  FIRSTCITY
  FINANCIAL CORPORATION, a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: