Document:

ex10-1.htm

Exhibit 10.1

 

 

LOAN MODIFICATION AGREEMENT

 

THIS LOAN MODIFICATION AGREEMENT (this “Agreement”) is by and among ART’S WAY MANUFACTURING CO., INC., a Delaware corporation (the “Borrower”), Art’s-Way Scientific, Inc., an Iowa corporation (“Scientific”), Art’s-Way Vessels, Inc., an Iowa corporation (“Vessels”), Ohio Metal Working Products/Art’s-Way, Inc., an Ohio corporation (“Ohio Metal”; together, with Scientific and Vessels, collectively, the “Guarantors”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Bank”), and is made as of the date shown opposite the Bank’s signature on the signature page (the “Agreement Date”), but shall be deemed effective with respect to the modifications set forth in Section 3 as of April 27, 2016 (the “Effective Date”), subject to the terms and conditions below.

 

RECITALS:

 

WHEREAS, the Borrower has executed and delivered to the Bank an Installment or Single Payment Note dated May 10, 2012 in the original principal amount of $880,000 (as amended, restated, supplemented or otherwise modified from time to time, the “2012 Term Note”); 

 

WHEREAS, the Borrower has executed and delivered to the Bank a Revolving Credit Note dated May 1, 2013 in the original principal amount of $8,000,000 (as amended, restated, supplemented or otherwise modified from time to time, the “Revolving Note”);

 

WHEREAS, the Borrower has executed and delivered to the Bank Term Notes each dated May 1, 2013 in the original principal amounts of (i) $1,006,500, (ii) 1,143,600 and (iii) 1,833,510.26 (each as amended, restated, supplemented or otherwise modified from time to time, collectively, the “2013 Term Notes”); 

 

WHEREAS, the Borrower has executed and delivered to the Bank a Term Note dated May 29, 2014 in the original principal amount of $1,000,000 (as amended, restated, supplemented or otherwise modified from time to time, the “2014 Term Note”);

 

WHEREAS, the Borrower has executed and delivered to the Bank a Promissory Note dated July 16, 2015 in the original principal amount of $1,500,000 (as amended, restated, supplemented or otherwise modified from time to time, the “Dealer Note”; together with the 2012 Term Note, the Revolving Note, the 2013 Term Notes, and the 2014 Term Note, collectively, the “Notes”);

 

WHEREAS, the Revolving Note is subject to the terms and conditions set forth in the Revolving Credit Agreement dated as of May 1, 2013 between the Borrower and the Bank (as amended, restated, supplemented or otherwise modified from time to time, “Revolving Credit Agreement”);

 

WHEREAS, the 2013 Term Notes are subject to the terms and conditions set forth in the Term Loan Agreement dated as of May 1, 2013 between the Borrower and the Bank (as amended, restated, supplemented or otherwise modified from time to time, “2013 Term Loan Agreement”);

 

WHEREAS, the 2014 Term Note is subject to the terms and conditions set forth in the Term Loan Agreement dated as of May 29, 2014 between the Borrower and the Bank (as amended, restated, supplemented or otherwise modified from time to time, “2014 Term Loan Agreement”; together with the Revolving Credit Agreement and the 2013 Term Loan Agreements, collectively, the “Loan Agreements”);

 

 

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WHEREAS, all indebtedness evidenced by the Notes and the Loan Agreements, and any extensions, renewals, restatements and modifications thereof and all principal, interest, fees and expenses relating thereto; however arising, whether liquidated or unliquidated, whether absolute or contingent, and of whatever nature, including without limitation, costs and expenses of collection and enforcement of the Loan Documents (as defined below), including without limitation attorneys’ fees of both inside and outside counsel, and all other indebtedness, obligations and liabilities of any kind owing by the Borrower or any Guarantor to the Bank or any of its affiliates are referred to in this Agreement as the “Obligations”;

 

WHEREAS, the Obligations are secured by the real and personal property (together with all substitutions and replacements for and products and proceeds of any of the foregoing, the “Collateral”) in which the Bank has been granted a lien pursuant to any of the following documents (together with any additional agreement or document entered into by the Borrower, any Guarantor or other Person for the benefit of the Bank to secure payment of the Obligations or otherwise relating to any Collateral, each as amended, restated or otherwise modified from time to time, collectively, the “Collateral Documents”): 

 

	 	
(i)
	
a Business Security Agreement dated May 1, 2013 by the Borrower in favor of the Bank;

 

	 	
(ii)
	
a Business Security Agreement dated May 1, 2013 by Scientific in favor of the Bank;

 

	 	
(iii)
	
a Business Security Agreement dated May 1, 2013 by Vessels in favor of the Bank;

 

	 	
(iv)
	
a Business Security Agreement dated October 25, 2013 by Ohio Metal in favor of the Bank;

 

	 	
(v)
	
a Pledge Agreement dated May 1, 2013 by Scientific in favor of the Bank;

 

	 	
(vi)
	
a Pledge Agreement dated May 1, 2013 by Vessels in favor of the Bank;

 

	 	
(vii)
	
a Pledge Agreement dated June 4, 2014 by Ohio Metal in favor of the Bank;

 

	 	
(viii)
	
a Mortgage, Security Agreement and Assignment of Rents of Iowa Real Estate dated May 1, 2013 by the Borrower in favor of the Bank and recorded in the Office of the Clayton County Recorder on May 16, 2013 as Document No. 2013R02019;

 

	 	
(ix)
	
a Mortgage, Security Agreement and Assignment of Rents of Iowa Real Estate dated May 1, 2013 by Vessels in favor of the Bank and recorded in the Office of the Dubuque County Recorder on May 16, 2013 as Document No. 007687140008; and

 

	 	
(x)
	
a Mortgage, Security Agreement and Assignment of Rents of Iowa Real Estate dated August 30, 2013 by the Borrower in favor of the Bank and recorded in the Office of the Emmet County Recorder on September 23, 2013 as Document No. 2013-01380;

 

	 	
(xi)
	
an Open-End Mortgage, Security Agreement and Assignment of Rents and Leases (Including Fixture Filing Under Uniform Commercial Code) (Ohio) dated May 29, 2014 by Ohio Metal in favor of the Bank and recorded in the Office of the Stark County Recorder on June 13, 2014 as Document No. 201406130021758.

 

 

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WHEREAS, the Obligations of the Borrower under the Dealer Note are secured by a Collateral Assignment of Dealer’s Notes and Security Agreements dated July 16, 2015 between the Borrower and the Bank (amended, restated or otherwise modified from time to time, the “Collateral Assignment”);

 

WHEREAS, the Obligations of the Borrower are guaranteed pursuant to the following guaranties (each as amended, restated or otherwise modified from time to time, collectively, the “Guaranties”) in favor of the Bank:

 

	 	
(i)
	
a Continuing Guaranty (Unlimited) dated May 1, 2013 by Scientific in favor of the Bank;

 

	 	
(ii)
	
a Continuing Guaranty (Unlimited) dated May 1, 2013 by Vessels in favor of the Bank; and

 

	 	
(iii)
	
a Continuing Guaranty (Unlimited) dated October 25, 2013 by Ohio Metal in favor of the Bank.

 

WHEREAS, the Notes, the Loan Agreements, the Collateral Documents, the Collateral Assignment and the Guaranties, as well as any other loan documents executed by the Borrower or any Guarantor pursuant thereto or in connection therewith, as the same may be amended from time to time, are referred to collectively in this Agreement as the “Loan Documents”; and

 

WHEREAS, the Borrower has requested that the Bank modify the terms of the Loan Documents, and the Bank is willing to grant the Borrower’s request upon the terms and conditions set forth in this Agreement. 

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the above recitals, the agreements set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree:

 

1.     Recitals; Capitalized Terms. The Borrower and each Guarantor acknowledges that the recitals set forth above are true and correct, and are made a part of this Agreement. Capitalized terms used and not defined in this Agreement have the meanings assigned to such terms in the Loan Documents.

 

2.     Confirmation of Indebtedness. The outstanding amounts under the Notes as of April 6, 2016 (as calculated under the Loan Documents prior to the Effective Date of this Agreement) are:

 

	
Note
	
Principal
	
Interest
	
Fees and Late Charges
	
Total

	
2012 Term Note
	
$422,535.15
	
$998.24
	
$0.00
	
$423,533.39

	
2013 Term Note
	
$697,268.68
	
$288.59
	
$0.00
	
$697,557.27

	
2013 Term Note
	
$790,359.86
	
$327.12
	
$0.00
	
$790,686.98

	
2013 Term Note
	
$986,574.78
	
$408.33
	
$0.00
	
$986,983.11

	
Revolving Note
	
$2,888,353.50
	
$1,385.25
	
$0.00
	
$2,889,738.75 

	
2014 Term Note
	
$930,557.55
	
$924.36
	
$0.00
	
$931,481.91

	
Dealer Note
	
$0.00
	
$0.00
	
$0.00
	
$0.00 

	  	  	  	  	  
	
TOTALS
	
$6,715,649.52
	
$4,331.89
	
$   0.00
	
$6,719,981.41

 

 

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3.     Loan Modifications. As of the Effective Date, the Loan Documents are amended and supplemented as follows, so long as the conditions to effectiveness set forth in Section 4 are satisfied or waived as provided in Section 4: 

 

(a)     Changes to the Revolving Note and the Revolving Loan Agreement. The Revolving Note and the Revolving Loan Agreement are hereby amended as follows:

 

(i)     Change in Maturity Date. All references to “Maturity Date” in the Revolving Note and the Revolving Credit Agreement are hereby deemed to be “May 1, 2017”.

 

(ii)     Change in Loan Amount. 

 

(A)     The amount “$8,000,000” in the Revolving Note is hereby deleted in each instance and the amount “$6,000,000” is inserted in substitution therefor.

 

(B)     All references to “Loan Amount” in the Revolving Credit Agreement are hereby deemed to be “$6,000,000”.

 

(iii)     Change in Interest Rate. The paragraph describing the interest rate in the Revolving Note is hereby amended and restated in its entirety to read as follows:

 

“The unpaid principal balance will bear interest at an annual rate equal to 1.0% plus the prime rate announced by the Bank from time to time; provided that the interest rate will not be less than 4.50% per annum at any time. The interest rate hereunder will be adjusted each time that the prime rate changes.”

 

(iv)     Change in Loan Facility Fee. Section 1.6 of the Revolving Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“1.6     Fees. The Borrower agrees to pay to the Bank an unused fee, which shall accrue at the rate of 0.25% per annum on the average daily amount by which (i) the Loan Amount exceeds (ii) the outstanding principal amount of the Note. The unused fee shall accrue from and including April 27, 2016 to the date on which the Obligations are paid in full and all commitments are terminated. Accrued unused fees shall be payable in arrears on the first day of each calendar month and on the Maturity Date, commencing on the first such date to occur after April 27, 2016. All unused fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.”

 

(v)     Change in Warranties and Covenants. Article II of the Revolving Credit Agreement is hereby amended by adding a new Section 2.16 immediately following Section 2.15 thereof to read as follows:

 

“2.16     Appraisals. Upon the Bank’s request from time to time, the Borrower shall permit and enable the Bank to obtain appraisals in form and substance and from appraisers reasonably satisfactory to Bank with respect to any Collateral, including without limitation real estate appraisals with respect to any Collateral constituting real property. The Borrower shall reimburse the Bank for all fees, costs and expenses of any such appraisals.”

 

 

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(vi)     Changes to Addenda to Revolving Credit Agreement and Note. The Addenda to the Revolving Credit Agreement and Note are hereby amended as set forth below. Except as set forth herein, all other requirements of each Addendum to Revolving Credit Agreement and Note shall remain in full force and effect.

 

(A)     Change in Financial Covenants. The Addendum to Revolving Credit Agreement and Note describing the financial covenants and financial reporting is hereby amended by adding or amending, as the case may be, the financial covenants shown below:

 

“Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the four (4) fiscal quarters then ended of at least 1.15 to 1.0, except for the fiscal quarters ended May 31, 2016 and August 31, 2016.”

 

“Year-To-Date Fixed Charge Coverage Ratio as of August 31, 2016 for the fiscal year to date then ended of at least 1.0 to 1.0.”

 

“Year-To-Date EBITDA as of May 31, 2016 for the fiscal year to date then ended of at least $700,000.”

 

“‘EBITDA’ shall mean net income, plus interest expense, plus income tax expense, plus depreciation expense plus amortization expense, subject to adjustments in the Bank’s sole discretion.”

 

(B)     Change in Financial Information and Reporting. The Addendum to Revolving Credit Agreement and Note describing the financial covenants and financial reporting is hereby amended by adding certain reporting requirements to read as follows:

 

“Backlog Report: Not later than 30 days after the end of each calendar month, a detailed backlog report by segment as of the last day of such period in form and substance acceptable to the Bank.”

 

“Compliance Certificate: Concurrently with the delivery of any financial statements delivered pursuant to this Agreement, the Borrower shall deliver a certificate in form and substance acceptable to the Bank in its sole discretion executed by the Borrower’s chief financial officer or other officer or person acceptable to the Bank certifying that (i) the Borrower is in compliance with each of the financial covenants set forth herein, as applicable for the fiscal period then ended, regardless of whether such covenant is tested on such date, and setting forth in reasonable detail the Borrower’s calculation thereof based upon the financial statements delivered in connection therewith; (ii) the representations and warranties set forth in the Agreement are true and correct as of the date of the certificate and (iii) as of the date of the certificate, no default or Event of Default exists under the Agreement or any other Loan Document.”

 

 

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(C)     Change in Borrowing Base. The Addendum to Revolving Credit Agreement and Note describing the Borrowing Base is hereby amended by amending and restating the Section entitled “Borrowing Base Provision and Definitions” in its entirety to read as follows:

 

“Borrowing Base Provision and Definitions. This provision replaces in its entirety the section of the Agreement titled “Borrowing Base” and is hereby made a part of the Agreement. The Borrowing Base will be an amount equal to (A) the sum of (i) seventy-five percent (75%) of the face amount of Eligible Accounts, and (ii) the lesser of fifty percent (50%) of the Borrower’s cost (determined on a lower of cost or market basis or on such other basis as may be designated by the Bank from time to time) of Eligible Inventory, as such cost may be diminished as a result of any event causing loss or depreciation in value of Eligible Inventory, but in no event shall this component exceed $4,000,000.00, less (B) the sum of (i) the then-current outstanding loan balance on the Revolving Credit Note dated May 1, 2013 by the Borrower in favor of the Bank in the principal amount of $6,000,000.00, as amended, (ii) the then-current outstanding loan balance on the Promissory Note dated July 16, 2015 by the Borrower in favor of the Bank in the principal amount of $1,500,000.00, as amended and (iii) undrawn amounts of outstanding letters of credit issued by the Bank or any affiliate thereof. The Borrower will provide the Bank with information regarding the Borrowing Base in such form and at such times as the Bank may request, including without limitation, not later than 30 days after the end of each calendar month, a Borrower Base Certificate signed and certified as accurate by an officer of the Borrower in form and substance acceptable to the Bank in its sole discretion. Capitalized terms used in this provision will have the meanings set forth below. Financial terms used herein which are not specifically defined herein shall have the meanings ascribed to them under generally accepted accounting principles.”

 

(b)     Changes to the 2013 Term Loan Agreements. Each 2013 Term Loan Agreement is hereby amended as follows:

 

(i)     Change in Warranties and Covenants. Article II of each 2013 Term Loan Agreement is hereby amended by adding a new Section 2.15 immediately following Section 2.14 thereof to read as follows:

 

“2.15     Appraisals. Upon the Bank’s request from time to time, the Borrower shall permit and enable the Bank to obtain appraisals in form and substance and from appraisers reasonably satisfactory to Bank with respect to any Collateral, including without limitation real estate appraisals with respect to any Collateral constituting real property. The Borrower shall reimburse the Bank for all fees, costs and expenses of any such appraisals.”

 

(ii)     Changes to Addenda to Term Loan Agreements and Notes. The Addenda to Term Loan Agreement and Note attached to the 2013 Term Loan Agreements are hereby amended as set forth below. Except as set forth herein, all other requirements of each Addendum to Term Loan Agreement and Note shall remain in full force and effect.

 

 

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(A)     Change in Financial Covenants. Each Addendum to Term Loan Agreement and Note is hereby amended by adding or amending, as the case may be, the financial covenants shown below:

 

“Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the four (4) fiscal quarters then ended of at least 1.15 to 1.0, except for the fiscal quarters ended May 31, 2016 and August 31, 2016.”

 

“Year-To-Date Fixed Charge Coverage Ratio as of August 31, 2016 for the fiscal year to date then ended of at least 1.0 to 1.0.”

 

“Year-To-Date EBITDA as of May 31, 2016 for the fiscal year to date then ended of at least $700,000.”

 

“‘EBITDA’ shall mean net income, plus interest expense, plus income tax expense, plus depreciation expense plus amortization expense, subject to adjustments in the Bank’s sole discretion.”

 

(B)     Change in Financial Information and Reporting. Each Addendum to Term Loan Agreement and Note is hereby amended by certain reporting requirements to read as follows:

 

“Backlog Report: Not later than 30 days after the end of each calendar month, a detailed backlog report by segment as of the last day of such period in form and substance acceptable to the Bank.”

 

“Compliance Certificate: Concurrently with the delivery of any financial statements delivered pursuant to this Agreement, the Borrower shall deliver a certificate in form and substance acceptable to the Bank in its sole discretion executed by the Borrower’s chief financial officer or other officer or person acceptable to the Bank certifying that (i) the Borrower is in compliance with each of the financial covenants set forth herein, as applicable for the fiscal period then ended, regardless of whether such covenant is tested on such date, and setting forth in reasonable detail the Borrower’s calculation thereof based upon the financial statements delivered in connection therewith; (ii) the representations and warranties set forth in the Agreement are true and correct as of the date of the certificate and (iii) as of the date of the certificate, no default or Event of Default exists under the Agreement or any other Loan Document.”

  

(c)     Changes to the 2014 Term Loan Agreement. The 2014 Term Loan Agreement is hereby amended as follows:

 

(i)     Change in Financial Information and Reporting. Section 2.13 of the 2014 Term Loan Agreement is hereby amended by adding certain reporting requirements to read as follows:

 

“Backlog Report: Not later than 30 days after the end of each calendar month, a detailed backlog report by segment as of the last day of such period in form and substance acceptable to the Bank.”

 

 

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“Compliance Certificate: Concurrently with the delivery of any financial statements delivered pursuant to this Agreement, the Borrower shall deliver a certificate in form and substance acceptable to the Bank in its sole discretion executed by the Borrower’s chief financial officer or other officer or person acceptable to the Bank certifying that (i) the Borrower is in compliance with each of the financial covenants set forth herein, as applicable for the fiscal period then ended, regardless of whether such covenant is tested on such date, and setting forth in reasonable detail the Borrower’s calculation thereof based upon the financial statements delivered in connection therewith; (ii) the representations and warranties set forth in the Agreement are true and correct as of the date of the certificate and (iii) as of the date of the certificate, no default or Event of Default exists under the Agreement or any other Loan Document.”

 

(ii)     Changes to Financial Covenants. Section 2.14 of the 2014 Term Loan Agreement is hereby amended by adding or amending, as the case may be, the financial covenants shown below.

 

“Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the four (4) fiscal quarters then ended of at least 1.15 to 1.0, except for the fiscal quarters ended May 31, 2016 and August 31, 2016.”

 

“Year-To-Date Fixed Charge Coverage Ratio as of August 31, 2016 for the fiscal year to date then ended of at least 1.0 to 1.0.”

 

“Year-To-Date EBITDA as of May 31, 2016 for the fiscal year to date then ended of at least $700,000.”

 

(iii)     Changes to Financial Definitions. Section 2.15 of the 2014 Term Loan Agreement is hereby amended by adding the defined term “EBITDA” to read as follows.

 

“‘EBITDA’ shall mean net income, plus interest expense, plus income tax expense, plus depreciation expense plus amortization expense, subject to adjustments in the Bank’s sole discretion.”

 

(d)     Changes to the Dealer Note.

 

(i)     Change in Maturity Date. All references to “Maturity Date” in the Dealer Note are hereby deemed to be “May 1, 2017”

 

(ii)     Change in Loan Amount. 

 

(A)     The amount “$1,500,000” in the Dealer Note is hereby deleted in each instance and the amount “$200,000” is inserted in substitution therefor.

 

(B)     The reference “One Million Five Hundred Thousand Dollars and 00/100” in the Dealer Note is hereby deleted and the reference “Two Hundred Thousand Dollars and 00/100” is inserted in substitution therefor.

 

(iii)     Change in Interest Rate and Fees. Section 2 of the Dealer Note is hereby amended and restated in its entirety to read as follows:

 

 

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“2.     Interest and Fees. 

 

(i)     Interest. This Note shall accrue interest at a variable rate per annum equal to 1.00% plus the prime rate announce announced by Lender and in effect from time to time (the “Interest Rate”), and shall commence on the Commencement Date. Notwithstanding, the Interest Rate under this Note shall not be less than four and five-tenths of a percent (4.50%) per annum. Interest on this Note shall be calculated on the basis of a 360-day year, counting each day as 1/30th of a month, and each month as 1/12th of a year.

 

(ii)     Fees. Borrower agrees to pay to Lender an unused fee, which shall accrue at the rate of 0.25% per annum on the average daily amount by which (i) the principal amount of the Note exceeds (ii) the entire Advance Amount. The unused fee shall accrue from and including April 27, 2016 to the date on which the Obligations are paid in full and all commitments are terminated. Accrued unused fees shall be payable in arrears on the first day of each calendar month and on the Maturity Date, commencing on the first such date to occur after April 27, 2016. All unused fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.”

 

(iv)     Change in Draw Feature; Draft Conditions. Section 3(e) of the Dealer Note is hereby amended and restated in its entirety to read as follows:

 

“(e) a copy of the Security Agreement that secures the applicable Dealer’s Note (each, a “Dealer’s Security Agreement”), together with a copies of the written notices to be delivered to any other creditors of such Dealer with a conflicting security interest providing that Borrower has a purchase money security interest in such collateral and any other documentation required to perfect Borrower’s security interest in such collateral in accordance with the Uniform Commercial Code; and”

 

(v)     Change in Defaults. Section 5(e) of the Dealer Note is hereby amended and restated in its entirety to read as follows:

 

“(e) Borrower fails to provide Lender, within five (5) Business Days after an Advance Disbursement Date, with adequate documentation related to the perfection and first priority of any and every security interest or lien created in favor of Borrower pursuant to a Dealer Security Agreement with respect to the equipment identified in the Borrowing Notice, including without limitation evidence of delivery of any purchase money security interest notices necessary to perfect Borrower’s security interest in such equipment in accordance with the Uniform Commercial Code.”

 

(e)     Miscellaneous. All references in the Loan Documents to a Loan Document means such Loan Document as modified and supplemented by this Agreement.

 

4.     Conditions to Effectiveness of Agreement. The Borrower shall deliver (or cause to be delivered) to the Bank each of the following, each in form and substance satisfactory to the Bank:

 

(a)     this Agreement, duly executed by the Borrower and the Guarantors;

 

 

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(b)     a certificate of the secretary or other appropriate officer of the Borrower, certifying (i) that the execution and delivery of this Agreement and the performance by the Borrower of this Agreement and the Loan Documents as amended hereby have been duly approved by all necessary action of the board of directors of the Borrower, and attaching true, correct and complete copies of the applicable resolutions granting such approval; (ii) that attached to such certificate are true and correct copies of the articles of incorporation and bylaws of the Borrower, together with such copies; and (iii) the names of the officers of the Borrower that are authorized to sign the Loan Documents and other documents contemplated hereunder, together with the true signatures of such officers; the Bank may conclusively rely on such certificate until the Bank receives a further certificate of the secretary or other appropriate office of the Borrower canceling or amending the prior certificate and submitting the signatures of the officers named in such further certificate;

 

(c)     a certificate of the secretary or other appropriate officer of each Guarantor certifying (i) that the execution and delivery of the to this Agreement, and the performance by such Guarantor of this Agreement and the Guaranty to which such Guarantor is a party have been duly approved by all necessary action of the board of directors of such Guarantor, and attaching true, correct and complete copies of the applicable resolutions granting such approval; (ii) that attached to such certificate are true and correct copies of the articles of incorporation and bylaws of such Guarantor, together with such copies; and (iii) the names of the officers of such Guarantor that are authorized to sign the Loan Documents and other documents contemplated hereunder, together with the true signatures of such officers; the Bank may conclusively rely on such certificate until the Bank receives a further certificate of the secretary or other appropriate office of such Guarantor canceling or amending the prior certificate and submitting the signatures of the officers named in such further certificate;

 

(d)     evidence of all insurance required by the terms of the Loan Documents, together with certificates and loss payable endorsements showing the Bank as additional insured and lender loss payee thereunder;

 

(e)     all fees and costs of the Bank, including attorney’s fees, incurred in connection with the drafting and preparation of this Agreement and any related documents; and

 

(f)     such additional information or documentation as the Bank may require.

 

The later of (x) the date on which the last of the conditions and requirements in this Section 4 has been satisfied, or waived in writing by the Bank; and (y) the Agreement Date is called the “Closing Date.” The provisions of this Section 4 are solely for the Bank’s benefit and protection.

 

5.     Further Assurances. Following the receipt of any real estate appraisal with respect to any Collateral constituting real property, promptly upon request by the Bank, the Borrower and the Guarantors shall take such additional actions and execute such documents as the Bank may reasonably require from time to time in order (i) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents, including without limitation any mortgage, and (ii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Bank the rights granted or now or hereafter intended to be granted to Bank under any Collateral Document or any other Loan Document, including without limitation any mortgage and the amount secured thereunder. 

 

6.     Acknowledgments. The Borrower acknowledges and agrees that as of the Closing Date: (a) the Obligations exist and are owing without offset, defense or counterclaim assertable by the Borrower or any Guarantor against the Bank; and (b) the Collateral Documents and the Collateral Assignment continue to secure the Obligations, as applicable.

 

 

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7.     Ratification of Loan Documents. The Borrower and each Guarantor represents that on and as of the Closing Date and after giving effect to this Agreement all of the representations and warranties contained in the Loan Documents to which it is a party are true, correct and complete in all respects as of the Closing Date as though made on and as of such date, except for changes expressly permitted by the terms of the Loan Documents. The parties further acknowledge that the Loan Documents, as amended and supplemented by this Agreement, remain in full force and effect. Without limiting the generality of the foregoing, the Borrower represents and warrants that the Collateral Documents and the Collateral Assignment continue to secure the obligations of the Borrower under the Notes, as applicable. 

 

8.     Confirmation of Guarantors. Each Guarantor consents to the terms of this Agreement and acknowledges that all indebtedness of the Borrower arising under the Loan Agreements and the Notes, each as amended hereby, constitutes Obligations (as defined in each Guaranty) under the Guaranty of such Guarantor. The confirmation set forth in this Section 8 shall not be deemed to limit the terms of any Guaranty in any manner. Each Guarantor acknowledges that this Section 8 merely confirms the terms of the Guaranty to which it is a party; that no such confirmation is required in connection with this Agreement or any future amendment to or restatement of any Loan Agreement, any Note or any document executed in connection with the Loan Agreements or this Agreement.

 

9.     General Release and Waivers. 

 

(a)     The Borrower and each Guarantor, for and on behalf of itself and its legal representatives, successors and assigns, does waive, release, relinquish and forever discharge the Bank, its parents, subsidiaries, and affiliates, its and their respective past, present and future directors, officers, managers, agents, employees, insurers, attorneys, representatives and all of their respective heirs, successors and assigns (collectively, the “Released Parties”), of and from any and all manner of action or causes of action, suits, claims, demands, judgments, damages, levies and executions of whatsoever kind, nature or description arising on or before the Closing Date, including, without limitation, any claims, losses, costs or damages, including compensatory and punitive damages, in each case whether known or unknown, asserted or unasserted, liquidated or unliquidated, fixed or contingent, direct or indirect, which the Borrower or such Guarantor, or its legal representatives, successors or assigns, ever had or now has or may claim to have against any of the Released Parties, with respect to any matter whatsoever, including, without limitation, the Loan Documents, the administration of the Loan Documents, the negotiations relating to this Agreement and the other Loan Documents executed in connection with this Agreement and any other instruments and agreements executed by the Borrower or such Guarantor in connection with the Loan Documents or this Agreement, arising on or before the Closing Date (collectively, “Claims”). The Borrower and each Guarantor acknowledges that it is aware that it may discover facts different from or in addition to those it now knows or believes to be true with respect to the Claims, and agrees that the release contained in this Agreement is and will remain in effect in all respects as a complete and general release as to all matters released in this Agreement, notwithstanding any such different or additional facts. The Borrower and each Guarantor agrees not to sue any Released Party or in any way assist any other person or entity in suing a Released Party with respect to any claim released in this Section.

 

(b)     The Borrower and each Guarantor irrevocably waives, to the extent permissible under law, any and all rights of redemption, the right to notice of any proposed sale of any of the Collateral constituting personal property (the “Personal Property Collateral”), or of any other disposition of any of the Personal Property Collateral, and any other rights with respect to the Personal Property Collateral under the Uniform Commercial Code or other laws of any state.

 

 

11

 

 

10.     No Duress or Reliance. The Borrower and each Guarantor acknowledges and agrees that the Borrower or such Guarantor has received the advice of independent counsel, appraisers and accountants selected by the Borrower or such Guarantor, or the opportunity to obtain such advice, before entering into this Agreement and the other Loan Documents to which it is party referred to in this Agreement, and has not relied upon the Bank or any of its officers, directors, employees, agents or attorneys concerning any aspect of the transactions contemplated by this Agreement and the other Loan Documents to which it is a party referred to in this Agreement. The Borrower or such Guarantor executed and delivered this Agreement of the Borrower’s or such Guarantor’s own free will and will execute and deliver the other instruments required by this Agreement of the Borrower’s or such Guarantor’s own free will. The Borrower and such Guarantor further acknowledges that the Bank has not taken advantage of the Borrower or such Guarantor by threats, overreaching, unconscionable conduct or other activities and that the Borrower or such Guarantor is proceeding in all transactions contemplated in this Agreement as a volunteer and in what such Borrower or Guarantor perceives to be the Borrower’s or such Guarantor’s own best interest. 

 

11.     Notices. Any notice or other communication to any party in connection with this Agreement or any Loan Document shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to such party at the address specified below, or at such other or additional address as such party shall have specified to the other party in writing. All periods of notice (if any) shall be measured from the date of delivery of the notice if manually delivered, from the date of sending if sent by facsimile transmission, from the first business day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed. Each notice or other communication should be addressed as follows: 

 

	
 
	
If to the Bank: 
	
U.S. Bank National Association

	
 
	
 
	
St. Louis Plaza

7th & Washington

St. Louis, MO 63101 

Attn: Roger Gross

Fax: (314) 418-2135

	
 
	
 
	
 

	 	If to the Borrower:  	Art’s-Way Manufacturing Company, Inc.
	 	 	
5556 Highway 9 West

Armstrong, Iowa 50514

Attn: Amber Murra, Chief Financial Officer

Fax: (712) 864-3154

	 	 	 
	 	If to the Guarantors:  	Art’s-Way Scientific, Inc.
	 	 	
5556 Highway 9 West

Armstrong, Iowa 50514

Attn: Amber Murra, Chief Financial Officer

Fax: (712) 864-3154

	 	 	 
	 	 	and
	 	 	 
	 	 	
Art’s-Way Vessels, Inc.

5556 Highway 9 West

Armstrong, Iowa 50514

Attn: Amber Murra, Chief Financial Officer

Fax: (712) 864-3154

 

 

12

 

 

	 	 	and
	 	 	 
	 	 	
Ohio Metal Working Products/Art’s-Way, Inc.

5556 Highway 9 West

Armstrong, Iowa 50514

Attn: Amber Murra, Chief Financial Officer

Fax: (712) 864-3154

    

The parties agree that the notice addresses set forth in this Agreement supersede and replace all prior notice addresses. 

 

12.     Representations and Warranties. The Borrower and each Guarantor warrants and represents that (a) on and as of the Closing Date and after giving effect to this Agreement, there will exist no default under the Loan Documents, as amended by this Agreement, or any other instruments executed by the Borrower or such Guarantor in connection with this Agreement or the Loan Documents, or circumstances that with the giving of notice, the passage of time or both will constitute an Event of Default under any Loan Document on such date; (b) the Borrower or such Guarantor has the power and legal right and authority to enter into, deliver and perform this Agreement, and any other documents or agreements executed by the Borrower or such Guarantor in connection with this Agreement, and that neither this Agreement, nor the agreements contained in this Agreement or any documents or agreements executed by the Borrower or such Guarantor in connection with this Agreement contravene any provision of or constitute a default under any agreement, instrument or indenture to which the Borrower or such Guarantor is a party or signatory or any provision of the Borrower’s or such Guarantor ’s constituent documents, if applicable, or any other agreement or requirement of law; (c) this Agreement and all other documents or agreements executed by the Borrower or such Guarantor in connection with this Agreement have been duly executed and delivered by the Borrower or such Guarantor and constitute the legal, valid and binding obligation of the Borrower or such Guarantor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity; and (d) no consent, approval or authorization of or registration or declaration with any party, including but not limited to any governmental authority, is required (except for those which the Borrower or such Guarantor has obtained or provided) in connection with the execution and delivery by the Borrower or such Guarantor of this Agreement, or any other documents or agreements executed by the Borrower or such Guarantor in connection with this Agreement, or the performance of the obligations of the Borrower or such Guarantor described in this Agreement. 

 

13.     Further Assurances. The Borrower shall promptly correct any defect or error that may be discovered in any Loan Document or in the execution, acknowledgment or recordation of any Loan Document. Promptly upon request by the Bank, the Borrower also shall do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Bank may reasonably require from time to time in order: (a) to carry out more effectively the purposes of the Loan Documents; (b) to perfect and maintain the validity, effectiveness and priority of any security interests intended to be created by the Loan Documents; and (c) to better assure, convey, grant, assign, transfer, preserve, protect and confirm unto the Bank the rights granted now or hereafter intended to be granted to the Bank under any Loan Document or under any other instrument executed in connection with any Loan Document or that the Borrower may be or become bound to convey, mortgage or assign to the Bank in order to carry out the intention or facilitate the performance of the provisions of any Loan Document. The Borrower shall furnish to the Bank evidence satisfactory to the Bank of every such recording, filing or registration.

 

 

13

 

 

14.     Copies; Entire Agreement; Modification. The Borrower acknowledges the receipt of a copy of the Notes and all other Loan Documents. The Notes and all of the Loan Documents are each a “transferable record” as defined in applicable law relating to electronic transactions. Therefore, the Bank may, on behalf of the Borrower, create a microfilm or optical disk or other electronic image of the Notes and any or all of the Loan Documents that is an authoritative copy as defined in such law. The Bank may store the authoritative copy of such Notes and any or all of the Loan Documents in its electronic form and then destroy the paper original as part of the Bank’s normal business practices. The Bank, on its own behalf, may control and transfer such authoritative copy as permitted by such law. 

 

15.     Additional Provisions. TIME IS OF THE ESSENCE WITH RESPECT TO ALL PROVISIONS OF THIS AGREEMENT. No amendment, modification or waiver of the provisions of this Agreement or any Loan Document is effective unless the same is in writing and signed by the party against whom it is to be enforced, and then such amendment, modification or waiver shall be effective only in the specific instance and for the specific purpose for which given. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF IOWA, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. The Loan Documents as modified by this Agreement, and this Agreement, shall represent the entire agreement among the Borrower, the Guarantors and the Bank with respect to the modification of the Loan Documents, shall supersede any prior oral negotiations or agreements, and shall be binding upon the parties to this Agreement and their respective legal representatives, successors and assigns. In the event of any conflict between the provisions of this Agreement and the provisions of any Loan Document, the provisions of this Agreement shall govern. If any part of this Agreement is held to be illegal, invalid or unenforceable, (a) the remainder of this Agreement shall continue in full force and effect, notwithstanding such illegality, invalidity or unenforceability and (b) the judge or arbiter holding that part illegal, invalid or unenforceable shall attempt to reform that part so as to give effect to the original intent of the parties. Section headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. This Agreement may be executed in different counterparts with the same effect as if the signatures were on the same instrument, and will be effective upon delivery of all such counterparts to the Bank. Facsimiles or other photocopies or images of executed signature pages to this Agreement shall be considered originals.

 

16.     Waiver of Jury Trial. THE BORROWER, EACH GUARANTOR AND THE BANK IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY LOAN DOCUMENT.

 

17.     No Commitment to Extend, Modify or Forbear. EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, THE BANK IS NOT COMMITTED, AND IS NOT COMMITTING AT THIS TIME, TO EXTEND, MODIFY OR OTHERWISE RESTRUCTURE ANY LOAN, OR FORBEAR FROM EXERCISING ANY OF ITS RIGHTS OR REMEDIES UNDER THE LOAN DOCUMENTS, AS AMENDED BY THIS AGREEMENT. NO PRIOR COURSE OF DEALING, NO USAGE OF TRADE, AND NO ORAL STATEMENTS OR COMMENTS BY THE BANK OR ITS OFFICERS, EMPLOYEES, ATTORNEYS OR OTHER AGENTS WILL BE DEEMED TO BE A COMMITMENT BY THE BANK TO EXTEND, MODIFY, OR OTHERWISE RESTRUCTURE ANY LOAN OR FORBEAR FROM EXERCISING ANY OF ITS RIGHTS OR REMEDIES, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, OR UNLESS THE SAME SHALL BE REDUCED IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE BANK.

 

 

14

 

 

18.     Borrower’s Understanding. THE BORROWER ACKNOWLEDGES THAT: (A) THIS AGREEMENT CONTAINS A COMPLETE RELEASE OF CLAIMS AND WAIVERS OF CERTAIN RIGHTS; (B) THE BORROWER HAS READ AND UNDERSTOOD THIS AGREEMENT IN ITS ENTIRETY PRIOR TO SIGNING AND FULLY AGREES TO EACH, ALL AND EVERY PROVISION OF THIS AGREEMENT; AND (C) THE BORROWER HAS RECEIVED A COPY OF THIS AGREEMENT.

 

19.     IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN THE BORROWER AND THE BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN THE BORROWER AND THE BANK, WHICH OCCURS AFTER RECEIPT BY THE BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BE RELIED UPON.

 

[The next page is the signature page.]

 

 

15

 

 

IN WITNESS WHEREOF, the parties to this Loan Modification Agreement have caused it to be duly executed as of the date set forth below.

 

	
Date: April 27, 2016
	
ART’S-WAY MANUFACTURING COMPANY, INC.,

	 	a Delaware corporation
	 	 
	 	 
	 	
By: /s/ Carrie L. Majeski________________

Name: Carrie Majeski__________________

Title: Chief Executive Officer____ ________

	 	 
	 	 
	 	 
	Date: April 27, 2016   	ART’S-WAY SCIENTIFIC, INC.,
	 	an Iowa corporation
	 	 
	 	 
	 	
By: /s/ Carrie L. Majeski________________

Name: Carrie Majeski__________________

Title: Chief Executive Officer_____ _______

	 	 
	 	 
	 	 
	Date: April 27, 2016   	ART’S-WAY VESSELS, INC.,
	 	an Iowa corporation
	 	 
	 	 
	 	
By: /s/ Carrie L. Majeski________________

Name: Carrie Majeski__________________

Title: Chief Executive Officer________ ____

	 	 
	 	 
	 	 
	Date: April 27, 2016	Ohio Metal Working Products/Art’s-Way, Inc., 
	 	an Ohio corporation 
	 	 
	 	 
	 	
By: /s/ Carrie L. Majeski________________

Name: Carrie Majeski__________________

Title: Chief Executive Officer_________ ___

	 	 
	 	 
	 	 
	Date: April 27, 2016	U.S. BANK NATIONAL ASSOCIATION,
	 	a national banking association
	 	 
	 	 
	 	
By: /s/ Roger Gross____________________

Name: Roger Gross____________________

Title: Vice President________________ ___ex10-12.htm

Exhibit 10.12

 

AMENDMENT NUMBER ONE TO SECOND 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDMENT NUMBER ONE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of April 27, 2016 is entered into by and between JMP HOLDING LLC, formerly known as JMP Group LLC, a Delaware limited liability company (“Borrower”), the lenders from time to time party to the below-defined Credit Agreement (together with their respective successors and assigns, each a “Lender” and collectively, the “Lenders”) and CITY NATIONAL BANK, a national banking association (“CNB”), as the administrative agent for the Lenders, (in such capacity, together with its successors and assigns in such capacity, the “Agent”) and in light of the following:

 

W I T N E S S E T H

 

WHEREAS, Borrower, Agent and the Lenders are party to that certain Second Amended and Restated Credit Agreement, dated as of April 30, 2014 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”); 

 

 

WHEREAS, the Borrower has requested that Agent and the Lenders make certain amendments to the Credit Agreement; and

 

WHEREAS, upon the terms and conditions set forth herein, Agent and the Lenders are willing to make such amendments to the Credit Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.          DEFINITIONS Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement, as amended hereby.

 

2.          AMENDMENTS TO CREDIT AGREEMENT. 

 

a.     Section 1.1 of the Credit Agreement is hereby amended by inserting or amending and restating, as applicable, the following definitions in their entirety:      

 

“Final Payment Date” means April 30, 2020.

 

“Final Revolving Commitment Termination Date” means the earlier to occur of (a) April 30, 2017; or (b) such earlier date on which the Revolving Loans shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents. 

 

“Sublimit” means, at any time, the result of (a) the lesser of (i) $48,500,000 and (ii) the sum of (A) the Maximum Revolver Amount plus (B) the Commitment Amount (as such term is defined in the Note Agreement), minus (b) the principal amount of all loans under the Broker/Dealer Facility then outstanding.

 

 

1

 

 

b.     Section 2.1(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“(b)     The foregoing to the contrary notwithstanding, in no event shall any Lender be obligated to make Loans hereunder if, after giving effect to the requested Revolving Loan, the Revolving Credit Facility Usage would exceed lesser of (i) the Maximum Revolver Amount or (ii) the Sublimit.”

 

c.     Section 2.3(e) of the Credit Agreement is hereby amended by deleting the words “July 1, 2016” appearing therein and replacing them with the words “July 1, 2017”. 

 

d.     Section 2.18(a)(ii) of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“(ii)     the Revolving Credit Facility Usage would exceed the lesser of (x) Maximum Revolver Amount and (y) the Sublimit.”

 

3.          REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants to Agent and the Lenders as follows:

 

a.     Borrower has the requisite power and authority to execute and deliver this Amendment and the authority to perform its obligations hereunder and under the Loan Documents to which it is a party. The execution, delivery, and performance of this Amendment and the performance by Borrower of each Loan Document to which it is a party (i) have been duly approved by all necessary action and no other proceedings are necessary to consummate such transactions; and (ii) are not in contravention of (A) any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court or governmental authority binding on it, (B) the terms of its Governing Documents, or (C) any provision of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected;

 

b.     This Amendment has been duly executed and delivered by Borrower. This Amendment will, upon its effectiveness in accordance with the terms hereof, and each Loan Document to which Borrower is a party is the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, and is in full force and effect except as such validity and enforceability is limited by the laws of insolvency and bankruptcy, laws affecting creditors’ rights and principles of equity applicable hereto;

 

c.     No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein has been issued and remains in force by any Governmental Authority against Borrower; 

 

d.     Borrower does not have any actual or potential claim or cause of action against Agent or any Lender for any actions or events occurring on or before the date hereof, and Borrower hereby waives and releases any right to assert same;

 

 

2

 

 

e.     No Default or Event of Default has occurred and is continuing on the date hereof or as of the date of the effectiveness of this Amendment after giving effect to this Amendment; and

 

f.     The representations and warranties in the Credit Agreement and the other Loan Documents are true and correct in all material respects (except to the extent qualified by materiality, then such representations and warranties are true and correct in all respects) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date).

 

4.         CONDITIONS PRECEDENT. The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Amendment and each and every provision hereof:

 

a.     Agent shall have received this Amendment, duly executed by Borrower, and the same shall be in full force and effect;

 

b.     Agent shall have received a reaffirmation and consent substantially in the form attached hereto as Exhibit A, duly executed and delivered by each Subsidiary of Borrower that is listed on the signature pages thereof;

 

c.     Agent shall have received, in immediately available funds, the Amendment Fee referred to in Section 6(a) hereof;

 

d.     The representations and warranties in the Credit Agreement and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

 

e.     No Default or Event of Default shall have occurred and be continuing as of the date of the effectiveness of this Amendment after giving effect to this Amendment; 

 

f.     No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any Governmental Authority against Borrower; and

 

g.     All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered, executed, or recorded and shall be in form and substance reasonably satisfactory to Agent.

 

5.         Agreements.   This Amendment has been entered into without force or duress, of the free will of Borrower, and the decision of Borrower to enter into this Amendment is a fully informed decision and Borrower is aware of all legal and other ramifications of each decision. It has read and understands this Amendment, has consulted with and been represented by independent legal counsel of its own choosing in negotiations for and the preparation of this Amendment, has read this Amendment in full and final form, and has been advised by its counsel of its rights and obligations hereunder and thereunder. 

 

 

3

 

 

6.         Payment of Costs and Fees. 

 

a.     On or before the date hereof, Borrower shall pay to Agent an amendment fee in the amount of $37,500 (“Amendment Fee”) in immediately available funds, which Amendment Fee shall be for Agent’s sole and separate account and not the account of any Lender. Such Amendment Fee shall be fully earned and non-refundable on the date hereof.

 

b.     Borrower shall reimburse Agent and the Lenders on demand for all of their actual out-of-pocket costs, expenses, fees and charges in connection with the preparation, negotiation, execution and delivery of this Amendment and any documents and instruments relating hereto (which costs may include the reasonable fees and expenses of any attorneys retained by Agent or such Lender).

 

7.       CONSTRUCTION. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

 

8.       ENTIRE AMENDMENT; EFFECT OF AMENDMENT. This Amendment, and terms and provisions hereof, the Credit Agreement and the other Loan Documents constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written. Except for the amendments to the Credit Agreement expressly set forth in Section 2, hereof, the Credit Agreement and other Loan Documents shall remain unchanged and in full force and effect. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of or as an amendment of any right, power, or remedy of Agent or the Lenders as in effect prior to the date hereof. The amendments set forth herein are limited to the specifics hereof, shall not apply with respect to any facts or occurrences (or any Subsidiary other than the New Subsidiaries) other than those on which the same are based, shall not excuse future non-compliance with the Credit Agreement, and shall not operate as a consent to any further or other matter, under the Loan Documents. To the extent any terms or provisions of this Amendment conflict with those of the Credit Agreement or other Loan Documents, the terms and provisions of this Amendment shall control. This Amendment is a Loan Document.

 

9.         COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be executed in any number of counterparts, all of which when taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. Delivery of an executed counterpart of this Amendment by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

 

 

4

 

 

10.        Effect on Loan Documents.

 

a.     The Credit Agreement, as amended hereby, and each of the other Loan Documents shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects. Except for the amendments to the Credit Agreement expressly set forth herein, the Credit Agreement and other Loan Documents shall remain unchanged and in full force and effect. The execution, delivery and performance of this Amendment shall not operate, except as expressly set forth herein, as a modification or waiver of any right, power, or remedy of Agent or the Lenders under the Credit Agreement or any other Loan Document. The amendments set forth herein are limited to the specifics hereof, and, except as expressly set forth herein, shall neither excuse any future non-compliance with the Credit Agreement, nor operate as a waiver of any Unmatured Event of Default or Event of Default. 

 

b.     Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.

 

c.     To the extent any terms or provisions of this Amendment conflict with those of the Credit Agreement or other Loan Documents, the terms and provisions of this Amendment shall control. To the extent that any terms and conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.

 

d.     This Amendment is a Loan Document. 

 

e.     Unless the context of this Amendment clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”. 

 

11.     Reaffirmation of Obligations. The Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Credit Agreement and the other Loan Documents to which it is a party effective as of the date hereof and as amended hereby. The Borrower hereby further ratifies and reaffirms the validity and enforceability of all of the liens and security interests in the Collateral heretofore granted, pursuant to and in connection with any Loan Document to Agent as collateral security for the obligations under the Loan Documents in accordance with their respective terms, and acknowledges that all of such liens and security interests, and all Collateral heretofore pledged as security for such obligations, continues to be and remain collateral for such obligations from and after the date hereof, in each case except as otherwise expressly provided in the Loan Documents. 

 

 

5

 

 

12.     Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

 

6

 

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the date first written above.

 

	
BORROWER:
	
JMP HOLDING LLC, formerly known as 

JMP Group LLC, a Delaware limited liability 

company, as Borrower

 

 

By:       /s/ Raymond S. Jackson________

             Raymond S. Jackson
             Chief Financial Officer

 

 

[Signature Page To Amendment Number one To 

second amended and restated Credit Agreement]

 

 

 

 

	
AGENT AND LENDERS:
	
CITY NATIONAL BANK, 
a national banking corporation , as Agent and 

as a Lender

 

 

By:      /s/ Eric Lo                                                       

            Eric Lo
            Vice President

 

 

[Signature Page To Amendment Number one To 

second amended and restated Credit Agreement]

 

 

 

 

EXHIBIT A

 

REAFFIRMATION AND CONSENT

 

All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in (a) that certain Credit Agreement entered into between JMP HOLDING LLC, formerly known as JMP Group LLC, a Delaware limited liability company (“Borrower”), the lenders from time to time party thereto (together with their respective successors and assigns, each a “Lender” and collectively, the “Lenders”) and CITY NATIONAL BANK, a national banking association (“CNB”), as the administrative agent for the Lenders, (in such capacity, together with its successors and assigns in such capacity, the “Agent”), dated as of August 3, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), and (b) that certain Amendment Number One to Second Amended and Restated Credit Agreement, dated as of April 27, 2016 (the “Amendment”) by and among Borrower, the Lenders and Agent. The undersigned hereby (a) represents and warrants to Agent and the Lenders that the execution, delivery, and performance of this Reaffirmation and Consent are within its powers, have been duly authorized by all necessary action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the transactions contemplated by the Amendment and by each amendment to any Loan Document executed on or before the date hereof; (c) acknowledges and reaffirms its obligations owing to the Agent or any Lender under any Loan Documents to which it is a party; and (d) agrees that each of the Loan Documents to which it is a party is and shall remain in full force and effect. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, each understands that neither Agent nor any Lender has any obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

 

[Signature page to follow.]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have each caused this Reaffirmation and Consent to be executed as of the date of the Amendment.

 

	
 
	
HARVEST CAPITAL STRATEGIES LLC,

a Delaware limited liability company

	 	 
	
 
	
 

	
 
	
By:      /s/ Raymond S. Jackson__________    

            Raymond S. Jackson     
            Chief Financial Officer

 

 

[Signature Page To Amendment Number one To 

second amended and restated Credit Agreement]

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