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EXHIBIT 10.35
ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT
THIS ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT (this "AGREEMENT")
is
entered into as of February 27, 2004, by
and among PMC CAPITAL, INC., a Florida
corporation ("PMC"), PMC COMMERCIAL TRUST,
a Texas real estate investment trust
(the "COMPANY"), SECURITY LIFE OF DENVER
INSURANCE COMPANY ("SLD") and ING USA
ANNUITY AND LIFE INSURANCE COMPANY ("ING
USA") (collectively, the
"NOTEHOLDERS").
RECITALS:
A. PMC and SLD (in such capacity, the "1995 FLOATING RATE
PURCHASER")
entered into that certain Note Agreement
dated as of April 19, 1995, as amended
prior to the date hereof (as so amended,
the "1995 FLOATING RATE NOTE
AGREEMENT"), pursuant to which PMC issued
and sold to the 1995 Floating Rate
Purchaser $5,000,000 in aggregate principal
amount of its Floating Rate Senior
Promissory Notes due April 19, 2004 (the
"1995 FLOATING RATE NOTES"). The 1995
Floating Rate Purchaser is the holder,
directly or through its nominees, of 100%
of the outstanding principal amount of the
1995 Floating Rate Notes.
B. PMC and ING USA (or its predecessor) (in such capacity, the
"7.44%
PURCHASER") entered into those certain Note
Agreements each dated as of July 19,
1999, as amended prior to the date hereof
(as so amended, the "7.44% NOTE
AGREEMENTS"), pursuant to which PMC issued
and sold to the 7.44% Purchaser
$10,000,000 in aggregate principal amount
of its 7.44% Senior Promissory Notes
due July 19, 2005 (the "7.44% NOTES"). The
7.44% Purchaser is the holder,
directly or through their respective
nominees, of 100% of the outstanding
principal amount of the 7.44% Notes.
C. PMC and SLD (in such capacity, the "2000 FLOATING RATE
PURCHASER")
entered into that certain Note Agreement
dated as of July 19, 2000, as amended
prior to the date hereof (as so amended,
the "2000 FLOATING RATE NOTE
AGREEMENT"), pursuant to which the PMC
issued and sold to the 2000 Floating Rate
Purchaser $10,000,000 in aggregate
principal amount of its Floating Rate Senior
Promissory Notes due July 19, 2004 (the
"2000 FLOATING RATE NOTES"). The 2000
Floating Rate Purchaser is the holder,
directly or through its nominees, of 100%
of the outstanding principal amount of the
2000 Floating Rate Notes.
D. PMC and SLD (in such capacity, the "2001 FLOATING RATE
PURCHASER")
entered into that certain Note Agreement
dated as of July 19, 2001, as amended
prior to the date hereof (as so amended,
the "2001 FLOATING RATE NOTE
AGREEMENT"; together with the 1995 Floating
Rate Note Agreement, the 7.44% Note
Agreements and the 2000 Floating Rate Note
Agreement, collectively, the "NOTE
AGREEMENTS" and, each, a "NOTE AGREEMENT"),
pursuant to which the PMC issued and
sold to the 2001 Floating Rate Purchaser
$10,000,000 in aggregate principal
amount of its Floating Rate Senior
Promissory Notes due July 19, 2006 (the "2001
FLOATING RATE NOTES"; together with the
1995 Floating Rate Notes, the 7.44%
Notes and the 2000 Floating Rate Notes,
together with any promissory notes now
or hereafter issued in replacement or
substitution thereof in accordance with
the Note Agreements, collectively, the
"NOTES" and, each, a "NOTE" ). The 2001
Floating Rate Purchaser is the holder,
directly or through its nominees, of 100%
of the outstanding principal amount of the
2001 Floating Rate Notes.
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E. PMC and the Company have authorized the merger of PMC with and
into
the Company, with the Company being the
surviving entity after giving effect to
such merger (the "MERGER"). Pursuant to the
plan of merger adopted by both PMC
and the Company, and in accordance with
applicable law, upon the effective date
of the Merger (i) PMC will cease to exist
as a separate legal entity, (ii) all
of the rights, titles and interests of PMC
in and to its licenses, assets,
properties and franchises will be deemed
transferred and assigned to the Company
and the Company will be deemed to have
acquired all such rights, titles and
interests in and to such licenses, assets,
properties and franchises
automatically without any further action,
and (iii) PMC will be deemed to have
assigned and delegated to the Company, and
the Company will be deemed to have
assumed, all of the outstanding obligations
of PMC, whether arising under
contract or under law.
F. The parties hereto desire to enter into this agreement to,
among
other things (i) provide for the express
assumption by the Company of all of
PMC's obligations under each of the Note
Agreements and the related Notes and
(ii) amend and/or waive certain provisions
of the Note Agreements and the Notes,
only as expressly set forth herein.
G. Capitalized terms used herein shall have the respective
meanings
ascribed thereto in the Note Agreements
unless herein defined or the context
shall otherwise require.
NOW, THEREFORE, in order to induce the Purchasers to grant
their
consent to the Merger, in consideration of
the mutual premises herein contained,
and for other good and valuable
consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. ASSUMPTION AGREEMENT. The
Company has authorized its assumption of,
and (subject to the satisfaction in full of
the conditions precedent set forth
in Section 5.1 hereof) hereby irrevocably
assumes and agrees to be fully liable
for, all of the obligations and
undertakings of PMC, whether now existing or
hereafter arising, provided for in the Note
Agreements and the Notes, including,
without limitation, all the covenants in
the Note Agreements and the Notes and
the obligation to duly and punctually pay
the principal and interest,
Yield-Maintenance Premium, if any, on the
Notes in accordance with the terms of
the Note Agreements and the Notes.
SECTION 2. CONSENT AND WAIVERS. Subject to
the satisfaction in full of the
conditions precedent set forth in Section
5.1 hereof, the Noteholders hereby
grant the following consent and
waivers:
2.1. The Noteholders hereby (a) consent to the Merger and (b) waive
the
provisions of paragraph 5E that would
otherwise require PMC to maintain its
corporate existence and waive the
provisions of paragraph 6C(4) that would
otherwise prohibit the Merger, in each case
to the extent and only to the extent
to permit the Merger to be consummated,
provided that (in the case of clause (a)
and (b) above of this Section 2.1) each of
the following conditions are met: (i)
after giving effect to the Merger, the
Company is the surviving entity, and the
Company has expressly assumed all of the
obligations of PMC and agreed to be
bound by all of the covenants applicable to
PMC under the Note Agreements and
the Notes; (ii) the merger is consummated
no later than March 31, 2004; and
(iii) the Merger is consummated in
accordance with the terms of the plan of
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merger that has been furnished by PMC to
the Noteholders, a copy of which is
attached hereto as Exhibit A.
2.2. The Noteholders hereby waive any
violation of the financial covenant in
paragraph 6A(i) of the Note Agreements
providing that the Company will not
permit Net Loans Receivable at any time to
be less than 150% of Senior Funded
Debt of the Company and its Subsidiaries
provided that (i) such waiver relates
solely to the fiscal month ended December
31, 2003, and (ii) on the date that
each of the conditions precedent in Section
5 have been satisfied (the
"EFFECTIVE DATE") and after giving effect
to the Merger, the Company will be in
pro forma compliance with the financial
covenant in paragraph 6A(i) of the Note
Agreements.
SECTION 3. AMENDMENTS. Subject to the
satisfaction in full of the conditions
precedent set forth in Section 5.1 hereof,
the parties hereto hereby agree that
the Note Agreements, the Schedules to the
Note Agreements and the Notes are
hereby amended as follows:
3.1. Each reference to the "Company" or to "PMC Capital, Inc."
appearing in the Note Agreements and the
Notes shall be deemed to refer to "PMC
Commercial Trust, a Texas real estate
investment trust".
3.2. Schedule I (Outstanding Debt and Liens) to each of the
Note
Agreements is hereby deleted in its
entirety and a new Schedule I is substituted
in lieu thereof as set forth on Schedule I
attached to this Agreement.
3.3. Schedule II (Subsidiaries) to each of the Note Agreements
is
hereby deleted in its entirety and a new
Schedule II is substituted in lieu
thereof as set forth on Schedule II
attached to this Agreement.
3.4. Schedule III (Agreements Restricting Debt) to each of the
Note
Agreements is hereby deleted in its
entirety and a new Schedule III is
substituted in lieu thereof as set forth on
Schedule III attached to this
Agreement.
3.5. Schedule IV (Agreements with Shareholders) to each of the
Note
Agreements is hereby deleted in its
entirety and a new Schedule IV is
substituted in lieu thereof as set forth on
Schedule IV attached to this
Agreement.
3.6. Paragraph 5H of each of the Note Agreements is hereby deleted
and
a new paragraph 5H is substituted in lieu
thereof to read in its entirety as
follows:
"5H. BUSINESS OF THE COMPANY. The Company covenants that
neither it nor any Subsidiary will engage in any business if,
as a result, the general nature of the business which would
then be engaged in by the Company and its Subsidiaries taken
as a whole would be materially changed from the general nature
of the business engaged in by the Company and its Subsidiaries
on the date of this Agreement; provided, however that the
Company may engage in the business of a real estate investment
trust as conducted by the Company on the Amendment Effective
Date, including the origination of loans to small businesses
collateralized by first liens on the real estate of the
related business, the origination of loans for commercial real
estate collateralized by first liens on real
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estate and the ownership of commercial properties
predominantly in the hospitality industry."
3.7. Paragraph 6A of each of the Note Agreements is hereby amended
by
adding the following sentence immediately
after the end of the first paragraph
thereof to read in its entirety as
follows:
"In addition to the foregoing covenants, the Company hereby
covenants and agrees that it will not permit (a) the Company's
consolidated Net Worth at any time to be less than the sum of
(i)
$145,000,000, plus (ii) 100% of the net proceeds from any
Equity
Issuances (defined below) by the Company after the Amendment
Effective
Date; (b) the Maximum Non-performing Loan Ratio (defined below) at
any
time to exceed 10%; and (c) the Maximum Charge-off Ratio
(defined
below) at any time to exceed 2%, to be determined for
compliance
reporting purposes as of the last day of each fiscal quarter.
As used herein, "EQUITY ISSUANCES" shall mean the issuance by
the Company of any shares of any class of beneficial interests,
stock,
warrants, options or other equity interests, whether pursuant to
a
public offering or otherwise, but does not include (a) any present
and
future shares of beneficial interests, stock, options or
warrants
issued to employees or trust managers of the Company or (b) any
present
and future shares of beneficial interests, stock, options or
warrants
issued in respect of any dividend reinvestment plan established
and
maintained by the Company. As used herein, "MAXIMUM NON-PERFORMING
LOAN
RATIO" shall mean, as of any date of determination, the ratio
expressed
as a percentage equal to (a) the aggregate amount of all
non-performing
commercial mortgage loans (including delinquent loans) of the
Company
and its consolidated Subsidiaries as of such date, divided by (b)
the
Company's consolidated Net Worth as of such date. As used herein,
the
term "MAXIMUM CHARGE-OFF RATIO" shall mean, as of any date of
determination, a fraction expressed as a percentage, the numerator
of
which is the sum of the total amounts charged off by the Company
and
its consolidated Subsidiaries (less any such amounts
subsequently
recovered) for the four fiscal quarters then ended, and the
denominator
of which is the aggregate average principal balance of
commercial
mortgage loans of the Company and its consolidated Subsidiaries for
the
four fiscal quarters of the Company then ended.
3.8. Paragraph 6B(b) of each of t
