EXHIBIT 10
MODIFICATION TO CREDIT
AGREEMENT
This Modification to Credit Agreement
("Modification") is made as of October 13, 2009, by and among
OWENS MORTGAGE INVESTMENT FUND, a California limited
partnership (“Borrower”) and CALIFORNIA BANK &
TRUST, FIRST BANK and CITY NATIONAL BANK (which are
collectively known as “Lenders”).
RECITALS
A. Pursuant
to the terms of a Credit Agreement ("Credit Agreement") between
Lenders and Borrower dated as of August 31, 2001, Lenders agreed to
make Revolving Loans to Borrower up to the credit limit of the
principal sum of $20,000,000. California Bank &
Trust is the agent of Lenders under the Credit Agreement
(“Agent”). The Credit Agreement was amended
by a Modification to Credit Agreement, dated February 28, 2002,
executed by the parties that, among other things, added Swing Loans
to the facility. The Revolving Loans and Swing Loans are
collectively referred to as “Loans.” By a
Modification to Credit Agreement, dated August 16, 2002, executed
by the parties, the “Amount of Aggregate Commitment”
for each Lender was increased. By a Modification to
Credit Agreement dated July 31, 2003, executed by the parties, the
“Commitment Termination Date” was extended to July 31,
2005. By a further Modification to Credit Agreement
dated July 31, 2005, the “Commitment Termination Date”
was extended to September 30, 2005. By another
Modification to Credit Agreement, dated September 30, 2005, the
“Commitment Termination Date” was extended to July 31,
2007. By another Modification to Credit Agreement, dated
February 9, 2006, the Amount of Aggregate Commitment for each
Lender through July 31, 2006 was amended and Second Replacement
Revolving Promissory Notes were executed. By a
Modification to Credit Agreement, dated August 15, 2006, compliance
with section 11.25 of the Credit Agreement as of September 30, 2006
was waived. By a further Modification to Credit Agreement, dated
February 23, 2007, the “Amount of Aggregate Commitment”
for Loans was temporarily increased through July 31, 2007,
provision for an Unused Commitment Fee was added, and Third
Replacement Promissory Notes were executed. By another Modification
to Credit Agreement, dated July 20, 2007, the Commitment
Termination Date was further extended to July 31,
2009. The Credit Agreement was again amended by a
Modification to Credit Agreement, dated March 31, 2008, by which
the Amount of Aggregate Commitment was changed, the Unused
Commitment Fee was reaffirmed, and the Minimum Tangible Net Worth
covenant was adjusted, among other things. The Credit
Agreement was last amended by a Modification to Credit Agreement,
dated March 27, 2009 by which section 5.1 of the Credit Agreement
was modified to establish an interest rate floor
B. In
response to Borrower's request and in reliance upon Borrower's
representations made to Lenders in support thereof, Lenders have
agreed to further modify the terms of the Credit Agreement, as set
forth in this Modification. Capitalized terms shall have
the meanings assigned to them in the Credit Agreement, as
previously modified, except as set forth in this
Modification.
AGREEMENT
NOW, THEREFORE, Borrower and Lenders agree as
follows:
1.
Adoption of Recitals . Borrower hereby represents
and warrants that each of the recitals set forth above is true,
accurate and complete.
2.
Conditions Precedent . This Modification shall
become effective only upon Borrower's delivery or satisfaction of
the following conditions in form and substance acceptable to
Agent:
(a) There
shall be no Event of Default under the Credit Agreement, except as
waived hereby;
(b) Borrower
shall execute this Modification;
(c) Guarantor
shall execute the Acknowledgment and Consent appended to the
Modification;
(d) Borrower
shall pay to Agent all of Agent’s attorneys' fees incurred in
the preparation of this Modification and all out-of-pocket fees
incurred by Agent in connection with this Modification, including
recordation fees and title insurance premiums; and
(e) Borrower
shall provide any other items or documents required by Agent in
connection with the consummation of this transaction.
3.
Conditions Subsequent
. By
October 30, 2009, Borrower shall perform the following conditions
subsequent;
(a) Borrower
shall deliver Deeds of Trust in form satisfactory to Agent on
parcels of real property owned by Borrower, which Deeds of Trust
shall be recorded in the office of the county recorder for the
county in which the real property is located. Borrower
shall also execute and deliver to Agent Assignments of Promissory
Notes and related Assignments of Deeds of Trust (collectively
“Assignments”) in form acceptable to Agent for current
performing note receivables in favor of Borrower. The
Assignments shall be accompanied by the original promissory note
for the related note receivable. The value of the Borrower’s
real estate encumbered by the Deeds of Trust and the value of the
notes receivable for which Assignments are provided shall be in a
total amount of not less than two hundred percent (200%) of the
Liabilities as determined by Agent in its absolute
discretion. The real property for which Deeds of Trust
are to be provided and the notes receivable related to the
Assignments shall be selected by Agent in its absolute
discretion.
(b) Borrower
shall provide Agent with title insurance for the Deeds of Trust
delivered to Agent under subsection (a) above in form, substance
and amount acceptable to Agent.
4. Representations
and Warranties . Borrower hereby represents and
warrants that no event of default, breach or failure of condition
has occurred or exists, or would exist with notice or lapse of
time, or both, under any of the Credit Documents, and all
representations and warranties of Borrower in this Modification and
the other Credit Documents are true and correct as of the date of
this Modification and shall survive the execution of this
Modification.
5.
Modification of Loan Documents . The Credit
Documents are hereby supplemented, amended and modified to
incorporate the following, which shall supersede and prevail over
any existing and conflicting provisions thereof:
(a) The
Lenders shall not be required to make further Loans under
the Credit Agreement;
(b) The
definition of “Commitment Termination Date” in Section
1.1 of the Credit Agreement is amended by deleting the date
“July 31, 2009” and inserting “March 31,
2010” in its place.
(c) Although
no further advances are required, the “Amount of Aggregate
Commitment” for Loans as provided on the execution pages of
the Credit Agreement for each Lender shall be modified as
follows:
$21,516,000.00
in the case of California Bank & Trust;
$10,758,000.00
in the case of First Bank; and
$7,172,000.00
in the case of City National Bank.
(d) Section
4.1 of the Credit Agreement, entitled “Revolving
Loans,” is deleted and replaced with the
following:
Notes . The Loans shall be (i) evidenced by
the Revolving Notes executed by Borrower, (ii) be made
payable to the order of each Lender and (iii) mature on the
Commitment Termination Date when all principal shall be due,
subject to acceleration upon an Event of Default. All
Loans and all payments of principal thereof shall be evidenced by
each Lender in its records or, at such Lender’s option, on
the schedule attached to its Notes, which records or schedules
shall be presumptive evidence of the subject matter
thereof. In the event that Borrower liquidates any real
estate or other investment asset, the proceeds thereof, less such
seller costs as Agent shall deem reasonable in the exercise of its
absolute discretion, shall be paid to Lenders for application to
principal on the Loans. All payments of principal
received by Borrower on its note receivables, other than the
currently due installment (other than at maturity), shall be
remitted to Lenders for application to the outstanding principal
balances on the Loans. All Loans and all payments of
principal thereof shall be evidenced by each Lender in its records
or, at s
