Document:

exhibit10-1.htm

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND LOAN DOCUMENTS

 

This First Amendment to Amended and Restated Credit Agreement and Loan Documents is made as of March 1, 2016, by and between by and among the financial institutions from time to time signatory hereto (individually, a “Lender” and collectively, the “Lenders”), California Bank & Trust, a division of ZB, N.A. (formerly known as California Bank & Trust), as Administrative Agent for the Lenders (in such capacity, the “Agent”), and Owens Realty Mortgage, Inc., a Maryland corporation (“Borrower”).

 

RECITALS

 

A.           Borrower, Agent and Lenders entered into that certain Amended and Restated Credit Agreement, dated April 16, 2015 (as amended and modified through but excluding the date hereof, the “Credit Agreement”).

 

B.           The Credit Agreement is evidenced by that certain (i) Amended and Restated Master Revolving Note in the principal amount of up to $20,000,000, made by Borrower and payable to California Bank & Trust and (ii) Master Revolving Note in the principal amount of up to $10,000,000, made by Borrower and payable to First Bank.

 

C.           Borrower executed various documents and agreement in connection with the Credit Agreement, including, but not limited to the following: (i) Amended and Restated Advance Formula Agreement, among Agent, Lenders and Borrower (the “Advance Formula Agreement”), (ii) Addendum to Credit Agreement (Agency Provisions) among Agent, Lenders and Borrower (“the “Addendum to Credit Agreement”), (iii) Security Agreement in favor of Agent and Lenders, (iv) Reference Agreement and (v) various Pledge Agreements and Amended and Restated Pledge Agreements (together with Collateral Assignments of Deeds of Trust and related agreements in connection therewith) in favor of Agent and Lenders (collectively the “Pledges”).  As of the date of this Amendment, the Loan is not secured directly by any real property.

 

D.           Agent, Lenders and Borrower have agreed to amend the Credit Agreement and various other Loan Documents, on the terms and conditions set forth below.

 

AGREEMENT

 

NOW, THEREFORE, for value received, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Definitions.  Unless otherwise indicated, words and terms which are defined in the Credit Agreement have the same meaning where used herein.

 

2. Amendment to Loan Documents.

 

2.1           Each reference to “California Bank & Trust”, whether as Agent or Lender, in the Credit Agreement and all other Loan Documents is changed to “California Bank & Trust, a division of ZB, N.A.” and any reference to Lenders shall include, in addition to California Bank & Trust, a division of ZB, N.A. and First Bank, any other financial institutions from time to time signatory to the Credit Agreement and set forth on Schedule 1 to the Addendum to Credit Agreement.

 

2.2           In Section 1 of the Credit Agreement, the following definitions are hereby amended and restated in its entirety as follows:

 

““Master Revolving Notes” shall mean collectively, the Amended and Restated Master Revolving Note in the principal amount of $35,000,000, by Borrower to the order of California Bank & Trust, a division of ZB, N.A., the Amended and Restated Master Revolving Note in the principal amount of $15,000,000, by Borrower to the order of First Bank, each dated as of March 1, 2016 and any other promissory notes delivered by Borrower to any Lender pursuant to the terms of Section 2(c) of the Addendum (as each may have been amended, modified or supplemented).”

 

  

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“Total Commitment” shall mean Fifty Million Dollars ($50,000,000), or such higher amount not exceeding Seventy Five Million Dollars ($75,000,000), to the extent the Commitments are increased as provided in Section 2(c) of the Addendum.”

 

2.3           Section 4(a) of the Credit Agreement, subparagraphs (v) and (viii) are hereby amended and restated in its entirety as follows:

 

“(v)  As soon as available, and in any event within forty-five (45) days after and as of the end of each fiscal quarter of Borrower, a financial statement and rent roll for each parcel(s) of real Property comprising any Eligible Owned Real Property, reflecting income, expenses, assets and liabilities attributable to such Eligible Owned Real Property and the operations thereof, and the name of each lessee, the net monthly rental for each space in such Eligible Owned Real Property and such other information as Agent may request, certified by an Authorized Officer of Borrower.”

 

“(viii) Promptly after becoming aware of the occurrence or existence of any Default or Event of Default, any change to the Borrowing Base Certificate, or of any other condition, occurrence or event which has had or could reasonably be expected to have a Material Adverse Effect, a written statement of an Authorized Officer of Borrower setting forth the details of such Default or Event of Default, change in Borrowing Base Certificate or such other condition or occurrence, and the action which Borrower has taken or caused to be taken, or proposes to take or cause to be taken, with respect thereto.”

 

2.4           In Section 4 of the Credit Agreement, paragraphs (j) and (k) are hereby amended and restated in its entirety as follows:

 

“(j) Liquid Assets.  At all times until March 31, 2016, be and remain the owner of Unencumbered Liquid Assets having a value (as such value is determined by Agent) of not less than Two Million Dollars ($2,000,000), and thereafter having a value of not less than Three Million Five Hundred Thousand Dollars ($3,500,000).

 

(k) Debt-to Tangible Net Worth Ratio. Maintain, at all times, a Debt-to-Tangible Net Worth Ratio of not more than 0.50 to 1.00 until the period ended March 31, 2016 and not more than 0.60 to 1.00 thereafter.”

 

2.5           A new Subsection (n) is added to Section 4 as follows:

 

“(n)  Opus Loan.  If the Total Commitment is increased to Seventy Million ($70,000,000) or more, Borrower will repay all amounts owing to Opus Bank and terminate all evidence of indebtedness with Opus Bank.”

 

2.6           The Form of Compliance Certificate, Form of Borrowing Base Certificate and Form of Disbursement Request attached to the Credit Agreement are replaced in their entirety with the attached Form of Compliance Certificate, Form of Borrowing Base Certificate and Form of Disbursement Request.

 

2.7            In Recital A to the Addendum to Credit Agreement, the reference to “Thirty Million and No/100 Dollars ($30,000,000)” is changed to “Fifty Million Dollars ($50,000,000) or as increased hereunder”.

 

2.8           In Section 2 of the Addendum to Credit Agreement, the amount of “$5,000,000” available for Swing Line Loans is hereby increased to “$10,000,000”.

 

2.9           A new Subsection (c) is hereby added to Section 2 of the Addendum to Credit Agreement, as follows:

 

(c)           Request for Increase.

 

(i)           Provided there exists no Default or Event of Default, upon notice to the Agent (which shall promptly notify the Lenders), the Borrower may from time to time, request an increase in the Total Commitment by an amount not exceeding $25,000,000; provided that (i) any such request for an increase shall be in a minimum amount of $5,000,000 and (ii) any increase will permanently reduce the amount available under this provision.  At the time of sending such notice, the Borrower (in consultation with the Agent) shall specify the time period within which each Lender or any potential Lenders are requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Lenders and potential Lenders).  Each Lender shall notify the Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Pro Rata Share of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.  The Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested increase and subject to the approval of the Agent and the other Lenders, the Borrower or Agent (with the approval of Borrower) may also invite additional financial institutions to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Agent and its counsel.

 

  

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(ii)           If the Total Commitment is increased in accordance with this Section 2(c), the Agent and the Borrower shall determine the effective date (the “Increase Effective Date”) and the final allocation of such increase.  The Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date.

 

(iii)           As a condition precedent to such increase, the Borrower shall deliver to the Agent a certificate dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by an Authorized Officer of Borrower (A) certifying and attaching the resolutions adopted by Borrower approving or consenting to such increase and borrowing from a particular Lender, and (B) certifying that, before and after giving effect to such increase, (x) the representations and warranties contained in Section 3 and the other Loan Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and (y) no Default nor Event of Default exists.  The Borrower shall prepay any Committed Loans outstanding on the Increase Effective Date (and pay any prepayment fees required pursuant the Master Revolving Notes) to the extent necessary to keep the outstanding Loans ratable with any revised Pro Rata Shares arising from any nonratable increase in the Commitments under this Section 2(c).

 

(iv)           This Section 2(c) shall supersede any provisions in Section 7 or 3(c) to the contrary.

 

2.10           Schedule I to the Addendum to Credit Agreement is replaced in its entirety with the attached Schedule I.

 

2.11           In Section 1.A of the Advance Formula Agreement is hereby amended and restated in its entirety as follows:

 

APPRAISED VALUE.  “Appraised Value” means the “as-is” market value of real property, as determined by Agent from time to time using a reasonable and appropriate method which (i) conforms to then-current regulatory requirements, including FIRREA and USPAP, (ii) is determined by Agent to be reasonable and appropriate under the circumstances, and (iii) takes into account then-current market conditions, including vacancy factors, rental rates and concessions. Loan Notes that were included in the Borrowing Base as Eligible Loan Notes on or before March 5, 2016 that were included despite the non-compliance of an appraisal, will continue to be Eligible Loan Notes so long as a new, compliant appraisal, is received on or before June 4, 2016, though the Appraised Value may be readjusted based on such new appraisal.  Appraisal reviews are required for collateral securing any proposed Eligible Loan Note.

 

2.12           Subsection x of Section 1.B of the Advance Formula Agreement is hereby amended and restated in its entirety as follows:

 

x.           The ratio of (a) the outstanding principal balance of the Loan Note to (b) the then current Appraised Value of the real property that secures the Loan Note is less than or equal to 75%.  Appraisal reviews are required for collateral securing any Loan Note.  Administrative review is required by Agent’s appraisal department for any Loan Note in the principal amount of $5,000,000 or less, and with respect to any Loan Note in the principal amount above $5,000,000, technical review by Agent’s appraisal department is required.  In any event, all Loan Notes must be consented to by Agent and First Bank.

 

  

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2.13           In the Recitals to each Pledge Agreement and Amended and Restated Pledge Agreement executed by Borrower in connection with the Loan, the Master Revolving Notes shall have the meaning ascribed to such term in the Credit Agreement and the amount of the Loan referenced in each such agreement will be the amount of the Total Commitment (as may increase or decrease from time to time).

 

3. Payment of Fees, Costs and Expenses.  Borrower shall pay Bank, on demand, all fees, costs and expenses relating to this Amendment, including without limitation, all fees, costs and expenses (including attorney’s fees and costs, whether out-of-pocket or recoverable pursuant to statute or court rule) incurred by Bank in advising, negotiating, structuring, drafting, reviewing, amending, terminating, enforcing, defending or concerning this Amendment, the Credit Agreement, any of the Loan Documents or any agreement related thereto, whether or not suit is brought.  For and in consideration of Lenders entering into this Amendment, Borrower agrees to pay Agent (a) for the benefit of California Bank & Trust, a division of ZB, N.A., a loan fee of $175,000 and (b) for the benefit of First Bank, a loan fee of $75,000, such loan fees deemed earned, and immediately due, upon execution of this Amendment by Borrower, Lenders and Agent, and is not refundable.

 

4. Conditions to Effectiveness.  The effectiveness of this Amendment is conditioned upon the Bank’s receipt of the following items, in form and content acceptable to the Bank:

 

4.1         A fully executed counterpart of this Amendment.

 

4.2         Evidence that the execution, delivery and performance by the Borrower of this Amendment and any instrument or agreement required under this Amendment have been duly authorized.

 

4.3         Payment by the Borrower of the loan fees set forth in Section 3 above.

 

4.4         Payment by the Borrower of all costs, expenses and attorneys' fees incurred by the Bank in connection with this Amendment.

 

4.5         Fully executed originals of the Master Revolving Notes.

 

5. Governing Law.  This Amendment shall be governed and controlled in all respects by the laws of the State of California, without regard to any conflict of law provisions or principles, including interpretation, enforceability, validity and construction.

 

6. Integration.  This Amendment embodies the entire agreement and understanding among the parties hereto relating to the subject matter hereof and supersedes all prior agreements and understandings relating to the subject matter hereof.  No course of prior dealings among the parties hereto, no usage of trade, and no parol or extrinsic evidence of any nature, shall be used or be relevant to supplement, explain or modify any term used herein.  In the event of any conflict between the terms and provisions of this Amendment and the Loan Documents, the terms and provisions of this Amendment shall control.  This Amendment is a product of negotiation and preparation by and among the parties hereto.  Therefore, Borrower and Bank expressly waive the provisions of Civil Code Section 1654 and acknowledge and agree that this Amendment should not be deemed prepared or drafted by any one party or any other and shall be construed accordingly.

 

7. No Oral Modifications.  The terms of this Amendment cannot be waived, modified or amended except by a writing signed by the parties to this Amendment.  Each party agrees that he, she or it will not rely upon any oral or other non-written waiver, modification or amendment.

 

8. Reliance.  Borrower has not relied upon any statement, representation or promise of Bank or any person or entity acting on Bank’s behalf in executing this Amendment or any related documents or instruments, except as expressly stated in this Amendment or in the related documents or instruments.  Nothing contained in this Amendment is intended to confer any rights, powers or privileges on any person or entity other than the undersigned parties and their heirs, successors and assigns.

 

9. Counterparts.  This Amendment may be executed in counterparts and facsimiles and the counterpart, when properly executed and delivered, will constitute a fully executed complete agreement.

 

10. Liens.  Nothing herein contained or done pursuant hereto shall affect or impair or be construed to affect or impair the lien, charge or encumbrance created by any Pledge Agreement or the priority thereof over other liens, charges or encumbrances, if any, or to release or affect the liability of any party or parties whomsoever who may now or hereafter be liable under or on account of the Loan Documents.

 

  

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11. Successors and Assigns. This Amendment shall apply to, bind and inure to the benefit of the heirs, administrators, executors, legal representatives, successors and assigns of Pledgor and the endorsees, transferees, successors and assigns of Agent and Lenders.

 

 

 

[Signatures on following page(s)]

 

                                                             

  

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IN WITNESS WHEREOF, the parties hereto have executed this document as of the date first above written.

 

Borrower:

 

Owens Realty Mortgage, Inc.,

 

a Maryland corporation

 

By: ________________________________

Name:

Title:

 

AGENT:

CALIFORNIA BANK & TRUST,

a division of ZB, N.A.

as Agent

 

By: _________________________________

        Thomas C. Paton, Jr.

        Senior Vice President and Manager

 

 

LENDERS:

	
CALIFORNIA BANK & TRUST,

	
a division of ZB, N.A.

By:_________________________________

       Thomas C. Paton, Jr.

        Senior Vice President and Manager

	
FIRST BANK

By:_________________________________

Name:

Title:

[Signature Page to First Amendment]

  

  

  

FORM OF COMPLIANCE CERTIFICATE

(Section 4(a)(iii))

To:           California Bank & Trust, a division of ZB, N.A.

456 Montgomery Street, 23rd Floor

San Francisco, CA  94104

Attn.: Thomas C. Paton, Jr.

From:           Owens Realty Mortgage, Inc.

This Compliance Certificate is given pursuant to Section 4(a)(iii) of the Amended and Restated Credit Agreement, dated April 16, 2015 between California Bank & Trust, a division of ZB, N.A. (“Agent”) and Owens Realty Mortgage, Inc. (“Borrower”), as it may have been amended, modified or supplemented (“Credit Agreement”).  All initially capitalized terms used but not defined in this Compliance Certificate shall have the meanings assigned to such terms in the Credit Agreement.

The undersigned hereby certifies that:

1.  I am an Authorized Officer of Borrower, and hold the following position with Borrower: _________________________.   I am authorized to execute and deliver this Certificate to Agent on behalf of Borrower.

 

2.  I have reviewed and am familiar with the terms of the Credit Agreement and the other Loan Documents and have made, or caused to be made under my supervision, a detailed review of the transactions and condition (financial and otherwise) of Borrower during the accounting period covered by the attached financial statements.

 

3.  Attached hereto are the following [check as applicable]:

 

____   Consolidated financial statements of Borrower for and as of its fiscal year ending _________________, containing the balance sheet of Borrower for and as of the close of such fiscal year, statements of income, expenses and retained earnings and a statement of cash flows of Borrower for such fiscal year, and such other comments and financial details as are usually included in similar reports, prepared in accordance with GAAP, all of which are true, complete and correct to the best of my knowledge, and which have been audited by and are accompanied by a report and opinion of an independent certified public accountant.

 

____           Internally prepared consolidated financial statements of Borrower for and as of its fiscal quarter ending ___________________, containing the balance sheet of Borrower as of the end of such quarter, statements of income, expenses and retained earnings and a statement of cash flows for Borrower for such quarter and for the portion of the fiscal year of Borrower through the end of the period then ending, and such other comments and financial details as are usually included in similar reports, prepared in accordance with GAAP, all of which are true, complete and correct to the best of my knowledge.

 

4.  The review described in paragraph 2 above did not disclose, and, to the best of my knowledge, there existed no condition, event or occurrence which constituted a Default or Event of Default during, or at the end of, the accounting period covered by the attached financial statements, and there exists no condition, event or occurrence which constitutes a Default or Event of Default as of the date of this Compliance Certificate, except as set forth in paragraph 5, below.

 

5.  Describe any exceptions to paragraph 4 hereof by listing, in detail and with specific reference to specific sections of the Credit Agreement or applicable Loan Document, the nature of the condition, event or occurrence, the period during which it has existed and the actions that Borrower and/or any other Loan Party has taken, is taking or proposes to take with respect to such condition, event or circumstance.

 

6.  The schedules attached hereto and incorporated herein by this reference set forth the financial data and computations evidencing Borrower’s compliance, or non-compliance, with the covenants set forth in Credit Agreement Section 4(j) (Unencumbered Liquid Assets), Section 4(k) (Debt-to-Tangible Effective Net Worth Ratio), and Section 4(l) (Debt Service Coverage Ratio), all of which data and computations are true and correct.

 

7.  This Compliance Certificate is effective and correct as of _________________________.

 

  

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8.  I represent and warrant that the foregoing is true, complete and correct, and that the information reflected in this Compliance Certificate and the attachments complies with the representations and warranties contained in the Credit Agreement and the other Loan Documents.

 

9.  This Compliance Certificate, together with the financial statements and the computations set forth in the schedules attached hereto are made and delivered to Agent on _________________.

 

OWENS REALTY MORTGAGE, INC.,

a Maryland corporation

By:_____________________________________

Name:

Title:

 

  

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Schedule to Compliance Certificate

As of:________________

 

Financial Covenants

 

I           Liquid Assets (per Credit Agreement  Section 4-j)

 

Unencumbered Liquid Assets                                                                                 ___________

 

Requirement: Not less than $2,000,000 through 3/31/2016 and $3,000,000 thereafter

 

In Compliance?                                                                                                           Yes/No

 

 

II           Debt-To-Tangible Net Worth Ratio (Section 4-k)

 

	
A.  

	
Debt                                                                                                                    ___________

	
B.  

	
Tangible Net Worth                                                                                         ___________

	
C.  

	
Ratio of-A to B                                                                                                  ___________

 

Requirement:  Not to exceed 0.50 to 1.00 through March 31, 2016

and not to exceed 0.60 to 1.00 thereafter

 

In compliance?                                                                                                           Yes/No

 

 

III           Debt Service Coverage Ratio (Section 4-l)

 

	
A.  

	
EBITDA (for the period beginning _____ and ending________)          ___________

	
B.  

	
Debt Service

	
1.  

	
Total Interest Expense (per financial statement)                                 ___________

	
2.  

	
Less interest expense excluded (as defined)                                        ___________

	
3.  

	
Net Interest Expense ( B 1 less B 2)                                                       ___________

	
4.  

	
Current Maturity of Long Term Debt (per financial statement) at    ___________

	
5.  

	
Less excluded items

(a) principal amounts due at maturity intended to be refinanced   __________

(b) outstanding amounts on lines of credit if included in B 4).         __________

	
6.  

	
Net Current Maturity of Long Term Debt (B 4 less B 5 (a&b)          ___________

Ratio of A to B 6                                                                                              ___________

 

Requirement not less than 1.75 to 1

In Compliance?                                                                                                      Yes/No

 

                                                            

  

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FORM OF BORROWING BASE CERTIFICATE

(Section 4(a)(iv))

To:          California Bank & Trust, a division of ZB, N.A.

456 Montgomery Street, 23rd Floor

San Francisco, CA  94104

Attn.: Thomas C. Paton, Jr.

From:           Owens Realty Mortgage, Inc.

This Borrowing Base Certificate is given pursuant to Section 4(a)(iv) of the Amended and Restated Credit Agreement, dated April 16, 2015 among California Bank & Trust, a division of ZB, N.A. (“Agent”), the financial institutions from time to time signatory thereto (“Lenders”) and Owens Realty Mortgage, Inc. (“Borrower”), as it may have been amended, modified or supplemented (“Credit Agreement”), and the Amended and Restated Advance Formula Agreement dated April 16, 2015 among Agent, Lenders and Borrower, as it may have been amended, modified or supplemented (“Advance Formula Agreement”).  All initially capitalized terms used but not defined in this Borrowing Base Certificate shall have the meanings assigned to such terms in the Credit Agreement or the Advance Formula Agreement, as applicable.

The undersigned hereby certifies that:

10.  I am an Authorized Officer of Borrower, and hold the following position with Borrower: _________________________.   I am authorized to execute and deliver this Certificate to Agent on behalf of Borrower.

 

11.  I have reviewed and am familiar with the terms of the Credit Agreement, the Advance Formula Agreement, the other Loan Documents, and have made, or caused to be made under my supervision, a detailed review of the transactions and condition of Borrower, the Eligible Loan Notes, and the Eligible Owned Real Properties.

 

12.  Each of the following is an Eligible Loan Note, with a statement of the current outstanding principal balance and Appraised Value of the real property securing the Eligible Loan Note:

 

	  	
Note

	
Outstanding Principal Balance of Note

	
Appraised Value of Real Property Securing Note

	
Borrowing Availability (Lesser of 75% of Outstanding Principal Balance of Note and 50% of Appraised Value of Real Property Securing Note)

	
a.

	  	  	  	  
	
b.

	  	  	  	  

 

Each of the Eligible Loan Notes satisfies all of the requirements set forth in Section 1(B) of the Advance Formula Agreement.

 

The aggregate amount of borrowing availability based on Eligible Loan Notes is $_________________,

 

13.  Each of the following is an Eligible Owned Real Property, with a statement of its Appraised Value:

 

	  	
Property

	
Appraised Value

	
Borrowing Availability (50% of Appraised Value)

	
a.

	  	  	  
	
b.

	  	  	  

 

Each of the Eligible Owned Real Properties satisfies all of the requirements set forth in Section 1(C) of the Advance Formula Agreement.

 

The aggregate amount of borrowing availability based on Eligible Owned Real Property is $____________.

 

  

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14.  Under the Advance Formula Agreement, the maximum amount that may be borrowed from Lenders (including from Agent with respect to a Swing Line Loan) is $______________, consisting of the lesser of (a) $50,000,000.001 or (b) the sum of (i) the borrowing availability under the Eligible Loan Notes plus (ii) the borrowing availability under the Eligible Owned Real Properties.

 

15.  The current outstanding principal balance owed by Borrower to Lenders (including to Agent with respect to any Swing Line Loan) under the Advance Formula Agreement is $___________________.

 

16.  The remaining borrowing availability under the Advance Formula Agreement is $___________________.

 

17.  This Borrowing Base Certificate is effective and correct as of __________________.

 

18.  I represent and warrant that the foregoing is true, complete and correct, and that the information reflected in this Borrowing Base Certificate complies with the representations and warranties contained in the Credit Agreement, the Advance Formula Agreement, and the other Loan Documents.

 

19.  This Borrowing Base Certificate is made and delivered to Agent on _________________.

 

OWENS REALTY MORTGAGE, INC.,

a Maryland corporation

By:_____________________________________

Name:

Title:

  

1 As may be increased from time to time to $75,000,000 as provided in the Addendum to Credit Agreement.

                                                           

  

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FORM OF DISBURSEMENT REQUEST

(Section 4(m))

To:           California Bank & Trust

456 Montgomery Street, 23rd Floor

San Francisco, CA  94104

Attn.: Thomas C. Paton, Jr.

From:           Owens Realty Mortgage, Inc.

This Disbursement Request is given pursuant to the Amended and Restated Credit Agreement, dated April 16, 2015 among California Bank & Trust, a division of ZB, N.A., fka California Bank & Trust (“Agent”), the financial institutions signatory thereto from time to time (“Lenders”) and Owens Realty Mortgage, Inc. (“Borrower”), as it may have been amended, modified or supplemented (“Credit Agreement”), the Amended and Restated Advance Formula Agreement, dated April 16, 2015 among Agent, Lenders and Borrower, as it may have been amended, modified or supplemented (“Advance Formula Agreement”), the Amended and Restated Master Revolving Note in the principal amount of $35,000,000, by Borrower to the order of California Bank & Trust, a division of ZB, N.A. (as it may have been amended, modified or supplemented, the “CB&T Note”), the Amended and Restated Master Revolving Note in the principal amount of $15,000,000, by Borrower to the order of First Bank, each dated as of the date of the First Amendment to Amended and Restated Credit Agreement (as it may have been amended, modified or supplemented, the “First Bank Note”) and any other promissory notes issued pursuant to the Credit Agreement from time to time as permitted under Section 2(c) of the Addendum to Credit Agreement dated April 16, 2015, as it may have been amended, modified or supplemented (the “Additional Notes”).  The CB&T Note, the First Bank Note and the Additional Notes, if any, are referred to collectively as the “Master Revolving Notes”).  All initially capitalized terms used but not defined in this Disbursement Request shall have the meanings assigned to such terms in the Credit Agreement.

The undersigned hereby certifies that:

	
1.  

	
I am an Authorized Officer of Borrower, and hold the following position with Borrower: _________________________.   I am authorized to execute and deliver this Disbursement Request to Agent on behalf of Borrower.

 

	
2.  

	
On behalf of Borrower, I represent and warrant that the statements made in the Compliance Certificate and Borrowing Base Certificate most recently delivered to Agent are true, complete and correct as of the dates thereof, and that Borrower is entitled under the Loan Documents, as of the date hereof, to receive the disbursement requested by this Disbursement Request.

 

	
3.  

	
On behalf of Borrower, I request that Agent disburse the sum of $_______________ to Borrower pursuant to the Credit Agreement, the Advance Formula Agreement and the Master Revolving Notes in the following manner:

 

□           Swing Line Loan in the amount of $___________________.

 

□           Loan in the amount of $___________________.

 

	
4.  

	
This Disbursement Request is made and delivered to Agent on _________________.

 

OWENS REALTY MORTGAGE, INC.,

a Maryland corporation

By:_____________________________________

                                                                                                                Name:

Title:

                                                                 

  

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Schedule 1

Lenders; Total Commitment – Pro Rata Share

Total Commitment:  $50,000,000.00

	
 

 

Commitment

	
 

 

Lender

	
Pro Rata Share

of

Total Commitment

	
 

 

Address/Tel/Fax/E-Mail

	  	  	  	  
	
$35,000,000.00

	
California Bank & Trust, a division of ZB, N.A.

	
70%

	
California Bank & Trust

456 Montgomery Street, 23rd Floor

San Francisco, CA  94104

Attn:  Thomas C. Paton, Jr.

Senior Vice President

 

Tel:  415-875-1447

Fax:  415-875-1456

E-Mail:  tom.paton@calbt.com

 

	
$15,000,000.00

	
First Bank

	
30%

	
First Bank

1700 North Broadway, Suite 201

Walnut Creek, CA  94596

Attn:  ________________

 

 

Tel: _____________

Fax:  ____________

E-Mail: _______________

 

	  	  	  	  

 

 

  

7exhibit10-2.htm

MASTER REVOLVING NOTE

PRIME RATE

	
amount

 

$15,000,000.00

 

	
note date

 

March 1, 2016

 

	
maturity date

 

March 1, 2018

 

On or before the Maturity Date set forth above, FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of First Bank (herein called “Bank”), at any office of the Bank in the State of California, the principal sum of Fifteen Million Dollars ($15,000,000.00), or so much of said sum as has been advanced and is then outstanding under this Note, together with interest thereon at a per annum rate equal to the Prime Rate plus the Applicable Margin.

This Note is a note under which advances, repayments and re-advances may be made from time to time, subject to the terms and conditions of this Note.

THE BANK SHALL HAVE NO OBLIGATION TO MAKE ANY ADVANCES TO THE UNDERSIGNED PURSUANT TO THIS NOTE (NOTWITHSTANDING ANYTHING EXPRESSED OR IMPLIED IN THIS NOTE OR ELSEWHERE TO THE CONTRARY, INCLUDING, WITHOUT LIMIT, IF THE BANK SUPPLIES THE UNDERSIGNED WITH A BORROWING FORMULA) IN THE EVENT THAT ANY DEFAULT, OR ANY CONDITION OR EVENT WHICH, WITH THE GIVING OF NOTICE OR THE PASSAGE OF TIME, OR BOTH, WOULD CONSTITUTE A DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING OR EXIST.

Accrued and unpaid interest on the unpaid principal balance outstanding hereunder shall be payable monthly, in arrears, on the first Business Day of each month, until maturity (whether as stated herein, by acceleration, or otherwise). Interest accruing hereunder shall be computed on the basis of a year of 360 days, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the applicable interest rate as a result of any change in the Prime Rate on the date of each such change. No interest shall accrue under this Note until the date of the first advance made by the Bank; after that, interest on all advances shall accrue and be computed on the principal balance outstanding from time to time under this Note in accordance with the terms hereof until the same is paid in full.

From and after the occurrence of any Default hereunder, and so long as any such Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of two percent (2.0%) above the otherwise applicable interest rate hereunder, which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

In no event shall the interest payable under this Note at any time exceed the maximum rate permitted by law.

The amount and date of each advance hereunder, its applicable interest rate and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided, however, any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

In the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rate(s) set forth in this Note.

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

The undersigned may prepay all or part of the outstanding balance of any Indebtedness hereunder at any time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid.

If any Change in Law shall (a) subject Bank to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank imposed by the jurisdiction in which Bank’s principal executive office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank, or shall impose on Bank or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction.  A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

  

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In the event that any Change in Law affects or would affect the amount of capital required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder.  A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of them) to the Bank, and any and all modifications, renewals or extensions of it, whether joint or several, contingent or absolute, now existing or later arising, and however evidenced and whether incurred voluntarily or involuntarily, known or unknown, or originally payable to the Bank or to a third party and subsequently acquired by Bank, including, without limitation, any late charges; loan fees or charges; overdraft indebtedness; costs incurred by Bank in establishing, determining, continuing or defending the validity or priority of any security interest, pledge or other lien or in pursuing any of its rights or remedies under any loan document (or otherwise) or in connection with any proceeding involving the Bank as a result of any financial accommodation to the undersigned (or any of them); and reasonable costs and expenses of attorneys and paralegals, whether inside or outside counsel is used, and whether any suit or other action is instituted, and to court costs if suit or action is instituted, and whether any such fees, costs or expenses are incurred at the trial court level or on appeal, in bankruptcy, in administrative proceedings, in probate proceedings or otherwise (collectively “Indebtedness”) are secured by and the Bank is granted a security interest in and lien upon all items deposited in any account of any of the undersigned with the Bank and by all proceeds of these items (cash or otherwise), all account balances of any of the undersigned from time to time with the Bank, by all property of any of the undersigned from time to time in the possession of the Bank and by any other collateral, rights and properties described in each and every deed of trust, mortgage, security agreement, pledge, assignment and other security or collateral agreement which has been, or will at any time(s) later be, executed by any (or all) of the undersigned to or for the benefit of the Bank (collectively “Collateral”). Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place.

If (a) the undersigned (or any of them) or any guarantor under a guaranty of all or part of the Indebtedness (“guarantor”) (i) fail(s) to pay this Note or any of the Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to pay any Indebtedness owing on a demand basis upon demand; or (ii) fail(s) to comply with any of the terms or provisions of any agreement between the undersigned (or any of them) or any guarantor and the Bank, and any such failure continues beyond any applicable grace or cure period, if any, expressly provided with respect thereto; or (iii) become(s) insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization, arrangement or creditor composition proceeding, (if a business entity) cease(s) doing business as a going concern, (if a natural person) die(s) or become(s) incompetent, (if a partnership) dissolve(s) or any general partner of it dies, becomes incompetent or becomes the subject of a bankruptcy proceeding, or (if a corporation or a limited liability company) is the subject of a dissolution, merger or consolidation; or (b) any warranty or representation made by any of the undersigned or any guarantor in connection with this Note or any of the Indebtedness shall be discovered to be untrue or incomplete; or (c) there is any termination, notice of termination, or breach of any guaranty, pledge, collateral assignment or subordination agreement relating to all or any part of the Indebtedness; or (d) there is any failure by any of the undersigned or any guarantor to pay when due any of its indebtedness (other than to the Bank) or in the observance or performance of any term, covenant or condition in any document evidencing, securing or relating to such indebtedness; or (e) the Bank deems itself insecure, believing that the prospect of payment or performance of this Note or any of the Indebtedness is impaired or shall fear deterioration, removal or waste of any of the Collateral; or (f) there is filed or issued a levy or writ of attachment or garnishment or other like judicial process upon the undersigned (or any of them) or any guarantor or any of the Collateral, including, without limit, any accounts of the undersigned (or any of them) or any guarantor with the Bank; then the Bank, upon the occurrence and at any time during the continuance or existence of any of these events (each a “Default”), may, at its option and without prior notice to the undersigned (or any of them), cease advancing money or extending credit to or for the benefit of the undersigned (or any of them) under this Note or any other agreement between the undersigned (or any of them) and Bank, terminate this Note as to any future liability or obligation of Bank, but without affecting Bank’s rights and security interests in any Collateral and the Indebtedness of the undersigned to Bank, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned (or any of them) or given to it under applicable law.  In addition, if this Note is secured by a deed of trust or mortgage covering real property, then the trustor or mortgagor shall not mortgage or pledge the mortgaged premises as security for any other indebtedness or obligations.  This Note, together with all other indebtedness secured by said deed of trust or mortgage, shall become due and payable immediately, without notice, at the option of the Bank, (a) if said trustor or mortgagor shall mortgage or pledge the mortgaged premises for any other indebtedness or obligations or shall convey, assign or transfer the mortgaged premises by deed, installment sale contract or other instrument, or (b) if the title to the mortgaged premises shall become vested in any other person or party in any manner whatsoever, or (c) if there is any disposition (through one or more transactions) of legal or beneficial title to a controlling interest of said trustor or mortgagor.

  

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The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided, however, that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank  any amounts when due, and to the extent that such account balances are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3605 of the California Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness.  The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

The undersigned agree(s) to pay or reimburse to Bank, or any other holder or owner of this Note, on demand, any and all costs and expenses of Bank (including, without limit, court costs, legal expenses and reasonable attorneys’ fees, whether inside or outside counsel is used, whether or not suit is instituted, and, if suit is instituted, whether at the trial court level, appellate level, in a bankruptcy, probate or administrative proceeding or otherwise ) incurred in connection with the preparation, execution, delivery, amendment, administration, and performance of this Note and the related documents, or incurred in collecting or attempting to collect this Note or the Indebtedness, or incurred in any other matter or proceeding relating to this Note or the Indebtedness.

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

For the purposes of this Note, the following terms have the following meanings:

“Applicable Margin” means one-quarter percent (0.25%) per annum.

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in San Francisco, California.

“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including any risk-based capital guidelines.  For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation, administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

  

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“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

“Prime Rate” means the per annum interest rate established by California Bank & Trust as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege.  The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

THE MAXIMUM INTEREST RATE SHALL NOT EXCEED THE HIGHEST APPLICABLE USURY CEILING.

THE UNDERSIGNED AND THE BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

This Note amends, restates, supersedes and replaces that certain Master Revolving Note dated April 16, 2015, in the principal amount of Ten Million Dollars ($10,000,000.00) made by the undersigned payable to Bank (the “Prior Note”); provided, however, (i) the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s indebtedness evidenced by the Prior Note, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note, and (ii) all collateral and guaranties securing or supporting the Prior Note shall continue to secure and support this Note.

This Note is dated and shall be effective as of the date set forth above.

BORROWER:

OWENS REALTY MORTGAGE, INC.,

a Maryland corporation

By: __________________________________________

Name:

Title:

ACKNOWLEDGED AND AGREED:

 

FIRST BANK

 

By: _________________________________

Name:

Title:

Borrower’s Address:  2221 Olympic Boulevard, Walnut Creek, California 94595

	
For Bank Use Only

	
CCAR #

	
LOAN OFFICER INITIALS

 

	
LOAN GROUP NAME

 

	
BASE RATE INDEX

 

	
OBLIGOR NAME

Owens Realty Mortgage, Inc.

	
LOAN OFFICER I.D. NO.

 

	
LOAN GROUP NO.

 

	
OBLIGOR NO.

 

	
NOTE NO.

 

	
AMOUNT

$15,000,000.00

 

 

  

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