Document:

Exhibit 10.1

 

 

CONSENT AND WAIVER

 

THIS CONSENT AND WAIVER,
dated effective as of March 28, 2018 (this “Consent”), is among STELLUS CAPITAL INVESTMENT CORPORATION,
a Maryland corporation (the “Borrower”), ZB, N.A. dba Amegy Bank, as Administrative Agent (in such capacity,
the “Administrative Agent”), and the Lenders party hereto. Capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in Article I.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower,
the Lenders party thereto, and the Administrative Agent are parties to the Senior Secured Revolving Credit Agreement dated as of
October 10, 2017 (as amended, supplemented, amended and restated or otherwise modified from time to time through the date hereof,
the “Credit Agreement”);

 

WHEREAS, Borrower has
requested that Administrative Agent and Lenders consent to the Proposed Over-advance (defined in Section 2.1 of this
Consent), and Administrative Agent and Lenders have agreed to provide such consent, subject to the terms and conditions of this
Consent;

 

WHEREAS, Borrower anticipates
that an Event of Default may occur if the (a) the Proposed Over-advance occurs prior to March 31, 2018, and (b) as a result thereof,
Borrower fails to comply with Section 6.07(c) (Liquidity Test) of the Credit Agreement for the fiscal quarter ending
March 31, 2018 (the “Anticipated Event of Default”);

 

WHEREAS, Borrower has
requested that Administrative Agent and Lenders waive the Anticipated Event of Default, and Administrative Agent and Lenders have
agreed to provide such waiver, subject to the terms and conditions of this Consent.

 

NOW, THEREFORE, the
parties hereto hereby covenant and agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1Certain
Definitions. The following terms when used in this Consent shall have the following meanings (such meanings to be equally applicable
to the singular and plural forms thereof):

 

“Consent”
is defined in the preamble.

 

“Borrower”
is defined in the preamble.

 

“Credit Agreement”
is defined in the first recital.

 

“Consent Effective
Date” is defined in Article III.

 

    
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SECTION 1.2Other
Definitions. Capitalized terms for which meanings are provided in the Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Consent with such meanings.

 

ARTICLE II

CONSENT AND WAIVER

 

SECTION 2.1Proposed
Over-advance. The following transactions shall collectively be referred to as the “Proposed Over-advance”:

 

(a)       Borrower
has requested that Administrative Agent and Lenders advance up to $25,000,000 (the “Over-advance Amount”)
in Dollar Loans under the Credit Agreement, the principal amount of which exceeds the Borrowing Base in effect as of the Consent
Effective Date.

 

(b)       Borrower
has proposed that the Over-advance Amount be advanced by Lenders in two tranches, with (a) $10,000,000 (the “Initial
Over-advance”) of the Over-advance Amount to be advanced simultaneously upon the closing of this Consent, and (b)
$15,000,000 (the “Second Over-advance”) of the Over-advance Amount to be advanced upon final approval
of the SBA Debentures (as defined in clause (c) below) by the U.S. Small Business Administration (the “SBA”),
which shall in no event be later than April 30, 2018.

 

(c)       Borrower
will contribute (i) some or all of the proceeds of the Over-Advance Amount to its wholly-owned subsidiary, Stellus Capital SBIC
LP, a Delaware limited partnership (“Stellus Capital SBIC”), to temporarily fund new loans for Stellus
Capital SBIC until such date that certain debentures in the amount of $60,000,000 (the “SBA Debentures”)
are issued and funded to Stellus Capital SBIC by the SBA and (ii) use any remaining proceeds of the Over-advance Amount to fund
new loans made by the Borrower.

 

SECTION 2.2 Consent
and Waiver – Proposed Over-advance. Subject to the conditions set out in this Consent, as of the Consent Effective Date,
each of the Administrative Agent and the Lenders hereby (a) consents to the Proposed Over-advance for the period beginning on the
Consent Effective Date and ending May 14, 2018 (the “Consent Period”), (b) during such Consent Period,
and subject to clause (ii) below, waives any requirement for mandatory prepayment of the Over-Advance Amount pursuant to
Section 2.10(c) (Mandatory Prepayments due to Borrowing Base Deficiency) of the Credit Agreement, (c) waives any
Events of Default that may arise under the Agreement and the other Loan Documents solely as a result of the Proposed Over-advance,
and (d) agrees not to exercise any of the rights or remedies available to Administrative Agent or Lenders under the Loan Documents
solely as a result of the Proposed Over-advance; provided that,

 

(i)       with
respect to the Second Over-advance, prior to making such advance, Administrative Agent has received evidence in writing of final
approval by the SBA with respect to the SBA Debentures; and

 

    
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(ii)       Borrower
repays to Lenders in full all outstanding principal with respect to the Over-advance Amount, together with all accrued and unpaid
interest thereon, upon the earlier to occur of (A) the second Business Day after the date that Stellus Capital SBIC receives the
proceeds of the SBA Debentures, and (B) the last day of the Consent Period.

 

Borrower,
Administrative Agent and Lender hereby agree that the outstanding principal amount of the Over-advance Amount shall accrue interest
at a rate per annum equal to the Adjusted LIBO Rate for an Interest Period of one month plus 3.50%.

 

SECTION 2.3 Consent
and Waiver – Anticipated Event of Default. Subject to the conditions set out in this Consent, as of the Consent Effective
Date, each of the Administrative Agent and the Lenders hereby (a) waives the Anticipated Event of Default, and (b) agrees not to
exercise any of the rights or remedies available to Administrative Agent or Lenders under the Loan Documents solely as a result
the Anticipated Event of Default.

 

SECTION 2.4 Limited
Consent and Waiver. The Borrower acknowledges and agrees that (a) the consents and waivers set forth in this Article II
shall be strictly limited to its terms with respect to the express provisions temporarily waived hereunder and (b) no waiver or
approval by the Administrative Agent or Lenders shall (i) be applicable to subsequent transactions or (ii) require any other waiver
(whether similar or dissimilar to the waiver granted under this Article II).

 

ARTICLE III

CONDITIONS TO EFFECTIVENESS; FEES.

 

SECTION 3.1Effective
Date. This Consent shall become effective on the date (the “Consent Effective Date”) when the Administrative
Agent shall have received counterparts of this Consent duly executed and delivered on behalf of the Borrower.

 

SECTION 3.2Fees.

 

(a)       On
the Consent Effective Date, Borrower shall pay to Administrative Agent, for the account of each of the Lenders, in each case payable
to such Lenders based on their ratable share of the Initial Over-Advance, an over-advance fee equal to $40,000.

 

(b)       On
the date that the Second Over-advance is made, Borrower shall pay to Administrative Agent, for the account of each of the Lenders,
in each case payable to such Lenders based on their ratable share of the Second Over-Advance, an over-advance fee equal to $60,000.

 

ARTICLE IV

MISCELLANEOUS

 

SECTION 4.1Representations.
The Borrower hereby represents and warrants that (i) this Consent constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms, (ii) upon the effectiveness of this Consent, no Event of Default shall exist, and (iii)
its representations and warranties as set forth in the Loan Documents, as applicable, are true and correct in all material respects
(except those representations and warranties qualified by materiality or by reference to a material adverse effect, which are true
and correct in all respects) on and as of the date hereof as though made on and as of the date hereof (unless such representations
and warranties specifically refer to a previous day, in which case, they shall be complete and correct in all material respects
(or, with respect to such representations or warranties qualified by materiality or by reference to a material adverse effect,
complete and correct in all respects) on and as of such previous day).

 

    
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SECTION 4.2Cross-References.
References in this Consent to any Article or Section are, unless otherwise specified, to such Article or Section of this Consent.

 

SECTION 4.3Loan
Document Pursuant to Credit Agreement. This Consent is a Loan Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered and applied in accordance with all of the terms and provisions
of the Credit Agreement, as amended hereby, including Article IX thereof.

 

SECTION 4.4Successors and Assigns. The
provisions of this Consent shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns.

 

SECTION 4.5Counterparts.
This Consent may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute
an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a
signature page of this Consent by telecopy electronically (e.g. pdf) shall be effective as delivery of a manually executed counterpart
of this Consent.

 

SECTION 4.6Governing
Law. This Consent shall be governed by and construed in accordance with the laws of the State of New York.

 

SECTION 4.7Full
Force and Effect; Limited Consent. Except as expressly amended hereby, all of the representations, warranties, terms, covenants,
conditions and other provisions of the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue
to be, and shall remain, in full force and effect in accordance with their respective terms. The consent, waiver, and release set
forth herein shall be limited precisely as provided for herein to the provisions expressly amended and shall not be deemed to be
an amendment to, consent to or modification of any other terms or provisions of the Credit Agreement or any other Loan Document
or of any transaction or further or future action on the part of the Borrower which would require the consent of the Lenders under
the Credit Agreement or any of the Loan Documents. Upon and after the execution of this Consent by each of the parties hereto,
each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words
of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”,
“thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as may be modified hereby.

 

[Signatures appear
on following pages.]

 

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

 

	 	BORROWER:
	 	 
	 	STELLUS CAPITAL INVESTMENT CORPORATION
	 	 
	 	 
	 	By:	/s/ W. Todd Huskinson
	 	 	W. Todd Huskinson
	 	 	Chief Financial Officer, Chief Compliance Officer, Treasurer, and Secretary

    
Signature Page to Consent and Waiver

     

    

 

 

	 	ADMINISTRATIVE AGENT:
	 	 
	 	ZB, N.A. dba Amegy Bank,
	 	as Administrative Agent
	 	 	 
	 	By:	/s/ Natalie Garza
	 	 	Natalie Garza
	 	 	Senior Vice President

 

    
Signature Page to Consent and Waiver

     

    

 

 

	 	LENDERS:
	 	 
	 	ZB, N.A. dba Amegy Bank,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Natalie Garza
	 	 	Natalie Garza
	 	 	Senior Vice President

    
Signature Page to Consent and Waiver

     

    

 

	 	CADENCE BANK, N.A.,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Andrew Arizpe
	 	 	Andrew Arizpe
	 	 	Vice President

    
Signature Page to Consent and Waiver

     

    

 

		FROST BANK,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Jake Fitzpatrick
	 	 	Jake Fitzpatrick
	 	 	Assistant Vice President

    
Signature Page to Consent and Waiver

     

    

 

	 	STIFEL BANK AND TRUST,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Joseph L. Sooter, Jr.
	 	 	Joseph L. Sooter, Jr.
	 	 	Senior Vice President

 

    
Signature Page to Consent and Waiver

     

    

 

 

	 	TEXAS CAPITAL BANK,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Eva Pawelek
	 	 	Eva Pawelek
	 	 	Senior Vice President

    
Signature Page to Consent and Waiver

     

    

 

	 	COMMUNITYBANK OF TEXAS, N.A.,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Stephen L. Jukes
	 	 	Stephen L. Jukes
	 	 	Executive Vice President

    
Signature Page to Consent and Waiver

     

    

 

 

	 	WOODFOREST NATIONAL BANK,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ Sushim R. Shah
	 	 	Sushim R. Shah
	 	 	Senior Vice President

 

    
Signature Page to Consent and Waiver

     

    

 

	 	WHITNEY BANK,
	 	as a Lender
	 	 
	 	 
	 	By:	/s/ D. Scott Wiginton
	 	 	D. Scott Wiginton
	 	 	Senior Vice President
	 	 	 

 

 

 

    
Signature Page to Consent and WaiverExhibit

Exhibit 10.10

March 1, 2018
_________________ 
_________________
Re:    Special Retention Bonus Plan 
Dear _________________,
In recognition of your contributions and to reward you for your continued service to Brookdale, the Compensation Committee of the Company’s Board of Directors has determined that, in addition to the standard annual cash incentive plan applicable to your position, you are eligible to participate in a special retention bonus plan (the “Retention Plan”), subject to the terms and conditions described herein.
Under the Retention Plan, in exchange for your continued service to and employment with Brookdale, Brookdale will pay you a one-time, lump-sum retention bonus in the total gross amount of $__________(1) (the “Retention Bonus”).  The Retention Bonus will become payable only upon your remaining actively and continuously employed by Brookdale through December 13, 2018 (such date, the “Bonus Accrual Date”).
The additional terms and conditions attached hereto, which are incorporated herein by reference, shall also apply to the Retention Plan.  
Thank you for all of your efforts.
/s/ Cindy Baier
Cindy Baier
President and Chief Executive Officer

_________________
		
	(1)
	The amount awarded to the Company’s named executive officers was $350,000 for Cedric T. Coco and $450,000 for Mary Sue Patchett.

Additional Terms, Conditions and Definitions
1.    Payment.  Payment of the Retention Bonus will be made as soon as administratively possible, but in no event later than thirty (30) days after the Bonus Accrual Date.
2.    Termination of Employment.  You forfeit your eligibility for any portion of the Retention Bonus if you are not actively and continuously employed through the Bonus Accrual Date.  Notwithstanding the foregoing, if your employment is terminated due to death or permanent or total disability, you (or your estate) will receive a prorated amount as of the date of termination, subject to other terms and conditions of the Retention Plan.
3.    Taxes.  Payment of the Retention Bonus will be subject to all applicable tax withholdings.
4.    Not a Contract for Employment.  The Retention Plan shall not be deemed to constitute a contract between Brookdale and any participant.  The provisions of the Retention Plan shall not be deemed to abridge or limit any managerial right of Brookdale to change any participant’s at-will employment status, to give any participant the right to be retained in employment for any specific period of time, or to interfere with the right of Brookdale to discharge any participant at any time regardless of the effect which such discharge may have upon him or her as a participant.  By his or her act of participation in the Retention Plan, each participant on behalf of himself or herself and his or her heirs, assigns and beneficiaries shall be deemed conclusively to have agreed to and accepted the terms and conditions of the Retention Plan.
5.    Plan Interpretation.  The Compensation Committee of the Company’s Board of Directors retains the right to interpret the provisions hereof.  Any decision made by the Compensation Committee shall be final and binding on each participant. 
6.    Effect on Other Plans and Policies.  The Retention Plan represents a special one-time bonus and will be deemed not to be part of any participant’s actual or target annual base salary, bonus or total compensation for purposes of any other plan, policy or agreement applicable to any participant.  

7.    Section 409A.  It is intended that (i) each payment or installment of payments provided under the Retention Plan is a separate “payment” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and (ii) that the payments satisfy, to the greatest extent possible, the exemptions from the application of Section 409A, including those provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(9)(iii) and 1.409A-1(b)(9)(v).  Notwithstanding anything to the contrary herein, if (i) on the date of your “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)), you are deemed to be a “specified employee” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of Brookdale, as determined in accordance with the company’s “specified employee” determination procedures, and (ii) any payments to be provided to the you pursuant to the Retention Plan which constitute “deferred compensation” for purposes of Section 409A are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A if provided at the time otherwise required under the Retention Plan, then such payments shall be delayed until the date that is six (6) months after the date of your “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) or, if sooner, the date of your death.  Any payments delayed pursuant to this Section 7 shall be made in a lump sum on the first day of the seventh month following your “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) or, if sooner, the date of your death.  The Retention Policy shall be interpreted in accordance with, and Brookdale and the participant will use their best efforts to achieve timely compliance with, Section 409A and the Treasury Regulations and other interpretive guidance  promulgated thereunder, including without limitation any such regulations or other guidance that may be issued after the date of the Retention Policy, to the extent applicable.  

By his or her act of participation in the Retention Plan, each participant on behalf of himself or herself and his or her heirs, assigns and beneficiaries shall be deemed conclusively to have agreed and acknowledged that (i) Brookdale does not make any representations with respect to the application of Section 409A to any tax, economic or legal consequences of any payments payable to you under the Retention Plan; (ii) you have obtained independent tax advice regarding the application of Section 409A to the payments due to you hereunder, (iii) you retain full responsibility for the potential application of Section 409A to the tax and legal consequences of payments payable to you hereunder and (iv) Brookdale shall not indemnify or otherwise compensate you for any violation of Section 409A that may occur in connection with the Retention Plan.

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