SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Incorporation of Recitals. Each of the above Recitals is incorporated herein as true and correct in all material respects and is relied upon by Agent and the Lenders in agreeing to the terms of this Amendment.

 

2. Defined Terms. Any and all initially-capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment), without definition shall have the respective meanings specified in the Forbearance Agreement and/or Credit Agreement, as applicable.

 

3. Acknowledgments. Borrower and Guarantors each restates and reaffirms the acknowledgments each made in Section 3 of the Forbearance Agreement as of the Amendment Effective Date as such term is defined in Section 10 hereof. Except as expressly set forth herein, all terms, conditions, covenants, representations and warranties contained in the Credit Agreement, the other Loan Documents and all rights of Agent and the Lenders and all obligations of Borrower and the Guarantors thereunder, remain in full force and effect.

 

4. Forbearance; Temporary Waiver.

 

(a) Waiver of Forbearance Termination Events. The Lenders and MUFG LTD hereby waive the Forbearance Termination Events occurring under the Forbearance Agreement as a result of the New Events of Defaults and any Event of Default under Section 9.1.18 of the Credit Agreement that may arise from the Swap Default.

 

(b) Specified Defaults. The Specified Defaults under the Forbearance Agreement shall hereby include the New Events of Default and any Event of Default under Section 9.1.18 of the Credit Agreement that may arise from the Swap Default and the term “Specified Defaults” in the Forbearance Agreement and Exhibit A thereto are hereby each modified to include the New Events of Default and the Event of Default under Section 9.1.18 of the Credit Agreement with respect to the Swap Default.

 

(c) Forbearance Period. Section 4(a)(i) of the Forbearance Agreement is hereby amended to read as follows:

 

 

(d) Temporary Waiver. The provisions of the Credit Agreement and the other Loan Documents to the contrary notwithstanding, subject to the terms and conditions of the Forbearance Agreement (as amended hereby) and as long as a Forbearance Termination Event has not then occurred, Agent and the Lenders hereby agree to temporarily waive compliance with the following requirements of the Credit Agreement for the reborrowing of LIBOR Loans: (i) the requirement of Section 2.1.1 of the Credit Agreement that Loans shall be made as Base Rate Loans if a Default or Event of Default has occurred and is continuing, and (ii) the requirements of Section 2.1.4(b) of the Credit Agreement that (1) no Default or Event of Default shall then exist and be continuing on the date of such reborrowing and (2) that Borrower provide two (2) Business Days’ notice prior to the date of such reborrowing (such requirements in the forgoing clauses (i) and (ii) are referred to collectively herein as the “Reborrowing Requirements”). For clarity, the purpose of this temporary waiver of the Reborrowing Requirements is solely to permit the reborrowing (i.e., rollover) of outstanding LIBOR Loans and not for the extension for any new Loans (and Borrower acknowledges its covenant under the Forbearance Agreement to not request borrowing of new Loans). Each Obligor hereby acknowledges and agrees each of the Specified Default (as such term is amended hereby) exists as of the date hereof and will continue to exist after the Amendment Effective Date.

 

(e) Limited Effect of Waiver. The waiver set forth in Section 4(d) above shall be limited precisely as written and shall not be deemed (a) to be a waiver of any other term or condition of the Credit Agreement or the other Loan Documents, (b) to be a waiver of any Default or Event of Default (including, without limitation, the Specified Defaults, as such term is amended hereby), (c) to prejudice any right or remedy which Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents, nor shall the entering into this Amendment or the Forbearance Agreement (as amended hereby) preclude agent or the Lenders from refusing to enter into any further waivers or amendments with respect to the Credit Agreement or any other Loan Document, (d) to be a consent to any future waiver under the Credit Agreement or the other Loan Documents, or (e) to constitute a course of dealing or other basis for altering any Obligations or any other contract or instrument.

 

(f) Extension of Cure Deadline. Borrower acknowledges that there exists a Borrowing Base Deficiency that constitutes a Default (“Borrowing Base Default”) and will constitute an Event of Default if not cured by January 13, 2020 (the “Deficiency Cure Deadline”). It is hereby confirmed that the Borrowing Base Default is a Specified Default under the Forbearance Agreement as amended hereby. Notwithstanding the provisions of the Credit Agreement or any other Loan Documents, the Deficiency Cure Deadline is hereby extended to February 12, 2020. For the avoidance of doubt, the failure to cure the Borrowing Deficiency Default by the Deficiency Deadline as extended hereby shall constitute an immediate Event of Default under the Credit Agreement.

 

(g) Interest Rate Increase. From and after the Amendment Effective Date, all LIBOR Loans under the Credit Agreement shall bear interest at the Applicable LIBOR Rate in effect after giving effect to the amendments to the Credit Agreement described below (which interest rate shall remain in effect notwithstanding any occurrence of a Forbearance Termination Date).

 

5. Amendments to Forbearance Agreement.

 

(a) Section 5 of the Forbearance Agreement titled “Covenants” is hereby amended by adding the following paragraphs immediately below paragraph (c) thereof:

 

 

 

 

 

 

6. Amendments to Credit Agreement. The Credit Agreement shall be amended as follows:

 

(a) The following definition is hereby added to Section 1.1 in alphabetical order:

 

 

 

 

(b) The following terms and their respective definitions set forth in Section 1.1 of the Credit Agreement shall be deleted and replaced with the following:

 

 

 

(c) The term “Pricing Leverage” and its definition set forth in Section 1.1 of the Credit Agreement shall be deleted and the reference to such term in second paragraph of the form Compliance Certificate attached as Exhibit C to the Credit Agreement, along with first numbered paragraph of the form Compliance Certificate, is hereby deleted.

 

(d) Sections 2.1.4(a)(i) and (b) are hereby amended to delete “and in an integral multiple of $100,000.00” where they appear in such Sections. The form of Borrowing Notice attached as Exhibit B to the Credit Agreement is amended to delete such sentence from its footnote number 1.

 

(e) Section 2.2.1(a) of the Credit Agreement is amended by adding the following at the end thereof:

 

 

(f) Section 2.2.1(b) of the Credit Agreement is amended by adding the following at the end thereof:

 

 

(g) Section 2.2.1(c) of the Credit Agreement shall be deleted and replaced with the following:

 

 

(h) Section 2.6.3 of the Credit Agreement is amended by deleting and replacing second sentence thereof with the following:

 

 

(i) Section 3.3.3 of the Credit Agreement is amended as follows:

 

 

(j) Section 6.6 of the Credit Agreement is hereby amended and replaced with the following:

 

 

(k) Section 6.25 of the Credit Agreement is amended by deleting and replacing subsection (b) thereof with the following:

 

 

(l) Section 12.8.2 of the Credit Agreement is amended by deleting the following sentence from clause (i) thereof:

 

 

7. Consent to Sale.

 

(a) The Lenders consent to sale of the 454 Collateral and the release of the security interests and liens granted under the Collateral Documents solely with respect to 454 Collateral. The Lenders hereby authorize Agent to enter into and deliver appropriate lien releases, filings and related instruments necessary to effectuate the terms of this Agreement and the discharge of the liens granted to Agent under the Collateral Documents with respect to the 454 Collateral, including the Credit Agreement and the Mortgage.

 

(b) Borrower shall cause the proceeds of the sale of the 454 Collateral in the amount of $975,000 (the “454 Sale Proceeds”) to be deposited into the Restricted Account. Borrower hereby acknowledges and agrees that the 454 Sale Proceeds and any and all funds in the Restricted Account shall be subject to Agent’s security interest, shall constitute Collateral for the Obligations and shall be subject to the terms hereof and the terms of the Credit Agreement (including Section 2.11 thereof (Application of Payments)) and of the Forbearance Agreement.

 

(c) Effective upon Agent’s receipt of a wire transfer confirmation number evidencing the transfer of the 454 Sale Proceeds as described in Section 7(b) above and Agent’s confirmation of receipt of such funds, and provided no Forbearance Termination Event then exists, Agent agrees to release and discharge its security interests and liens in the 454 Collateral and authorizes and consents to any filings necessary to evidence the releases pursuant to this Section 7 or the discharge of any liens thereof.

 

8. Disbursements. Provided no Forbearance Termination Event then exists, the Lenders hereby approve Borrower’s Cash Flow Budget prepared on December 9, 2019 for the limited purpose of making disbursements from available funds in the Restricted Account to fund Borrower’s Liquidity Needs identified in such Cash Flow Budget through the week ending December 13th and authorize Agent to make such disbursements. Notwithstanding the foregoing approval of such Cash Flow Budget, to the extent future disbursements from the Restricted Account are requested after December 13, 2019, Borrower must obtain the approval of the Lenders of a new Cash Flow Budget as set forth in Section 5(g) of the Forbearance Agreement (as amended hereby) that references the applicable provisions of the Second Amendment.

 

9. Representations and Warranties. Each of Borrower and Guarantors represents and warrants that (a) after giving effect to this Amendment, except for the representations and warranties which are made only as of a prior date, the representations and warranties set forth in the Credit Agreement and in the other Loan Documents are true and correct in all respects as of the Amendment Effective Date, as if made on and as of such date; (b) after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing (other than the Specified Defaults, as such term is amended hereby); (c) the execution, delivery and performance of this Amendment are within the corporate power and authority of such Person and have been duly authorized by appropriate corporate action and proceedings; (d) this Amendment constitutes a legal, valid, and binding obligation of such Person enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Amendment; and (f) the Liens under the Loan Documents are valid and subsisting and secure Borrower’s and such Person’s obligations under the Loan Documents.

 

10. Conditions Precedent. This Amendment shall become effective on the date (the “Amendment Effective Date”) each of the following conditions shall have been satisfied or waived by Agent in its sole discretion:

 

(a) This Amendment. Agent shall have received this Amendment, duly executed by Borrower, Guarantors and the Lenders.

 

(b) No Default. Upon giving effect to this Amendment, there shall be no Default or Event of Default (other than the Specified Defaults as such term is amended hereby).

 

(c) Representations and Warranties. The representations and warranties in this Amendment shall be true and correct in all material respects.

 

(d) Prior Amendment Fee. Agent shall have received the fee due pursuant to the First Amendment in the amount of $225,000 in accordance with Section 7 thereof.

 

11. Forbearance Extension Fee. In consideration for the agreement of Lenders to enter into this Amendment, Borrower shall pay to Agent for the account of the Lenders a forbearance amendment fee in the amount of 100 basis points of the outstanding principal amount of the Loans (the “Amendment Fee”), which Amendment Fee shall be deemed fully earned and non-refundable for any reason whatsoever and shall be due and payable on December 16, 2019 after giving effect to the rollover of the LIBOR Loan due on such Payment Date. In lieu of cash payment, the Amendment Fee may be paid in kind by capitalizing the amount thereof and adding it to the principal amount of the Loans, whereby the principal amount of each outstanding LIBOR Loan shall thereafter increase by 100 basis points and such increase shall become part of the principal amount of such LIBOR Loan and bear interest in accordance with the Credit Agreement for all purposes.

 

12. General Release. Each of Borrower and Guarantors, on behalf of itself and on behalf of its Subsidiaries, successors, assigns, legal representatives and financial advisors (collectively, the “Releasing Parties”), hereby releases, acquits and forever discharges Agent, the Lenders and each of their respective past and present directors, officers, employees, agents, attorneys, affiliates, predecessors, successors, administrators and assigns (the “Released Parties”) of and from any and all claims, actions, causes of action, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever heretofore or hereafter arising from any events or occurrences, or anything done, omitted to be done, or allowed to be done by any of the Released Parties, on or before the date of execution of this Amendment, WHETHER KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, including, without limitation, any of the same arising from or related to anything done, omitted to be done, or allowed to be done by any of the Released Parties and in any way connected with this Amendment, the Forbearance Agreement, or any of the Loan Documents, any other credit facilities provided or not provided, any advances made or not made, or any past or present deposit or other accounts of any Releasing Party with any Released Party and the handling of the same by any Released Party, including, without limitation, the manner and timing in which items were deposited or credited thereto or funds transferred therefrom or made available to any of the Releasing Parties, the honoring or returning of any checks drawn on any account, and any other dealings between the Releasing Parties and the Released Parties (the “Released Matters”). Releasing Parties each further agree never to commence, aid or participate in (except to the extent required by order or legal process issued by a court or governmental agency of competent jurisdiction) any legal action or other proceeding based in whole or in part upon the Released Matters. In furtherance of this general release, Releasing Parties each acknowledge and waive the benefits of California Civil Code Section 1542 (and all similar ordinances and statutory, regulatory, or judicially created laws or rules of any other jurisdiction), which provides:

 

 

 

13. Miscellaneous.

 

(a) Breach as Event of Default; Agreement as Loan Document. It shall be an immediate Event of Default under the Credit Agreement if Obligor breaches any covenant contained herein or in the Forbearance Agreement (as amended hereby) or if any representation or warranty contained herein or in the Forbearance Agreement (as amended hereby) proves to be inaccurate or untrue in any material respect. Each of the Loan Documents shall be deemed modified so far as to be consistent with this Amendment. Except as specifically modified and amended herein, all of the terms, covenants, conditions and agreements contained in the Credit Agreement and the other Loan Documents shall remain in full force and effect. In the event of any inconsistency between this Amendment and any Loan Document, the provisions of this Amendment shall control. This Amendment and the Forbearance Agreement (as amended hereby) shall each constitute a Loan Document under the Credit Agreement. Any provision of any Loan Document which applies to Loan Documents generally shall apply to this Amendment and the Forbearance Agreement (as amended hereby).

 

(b) Review And Construction Of Documents. Each party hereto hereby acknowledges, and represents and warrants to the other parties hereto, that:

 

(i) it has had the opportunity to consult with legal counsel of its own choice and has been afforded an opportunity to review this Amendment and the Forbearance Agreement (as amended by this Amendment) with legal counsel;

 

(ii) it has carefully reviewed this Amendment and the Forbearance Agreement (as amended by this Amendment) and fully understands all terms and provisions of this Amendment and the Forbearance Agreement (as amended by this Amendment);

 

(iii) it has freely, voluntarily, knowingly, and intelligently entered into this Amendment and the Forbearance Agreement (as amended by this Amendment) of its own free will and volition;

 

(iv) none of the Lenders or Agent have a fiduciary relationship with any Obligor and the Obligor does not have a fiduciary relationship with Agent or the Lenders, and the relationship between the Lenders or Agent, on the one hand, and Obligor, on the other hand, is solely that of creditor and debtor; and

 

(v) no joint venture exists among Obligor and the Lenders or Agent.

 

(c) Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment, and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.

 

(d) APPLICABLE LAW. THIS AMENDMENT, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(e) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AMENDMENT, THE FORBEARANCE AGREEMENT (AS AMENDED BY THIS AMENDMENT) OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

(f) Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Agent, Lenders and Obligor and their respective successors and assigns; provided, however, that Obligor may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Agent and Lenders. The execution and delivery of this Amendment by any Lender prior to the Amendment Effective Date shall be binding upon its successors and assigns and shall be effective as to any Loans or Revolving Commitment assigned to such Lender after such execution and delivery.

 

(g) Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. An executed signature page of this Amendment may be delivered by facsimile transmission or electronic PDF of the relevant signature page hereof.

 

(h) Headings. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

 

(i) Expenses of Agent and Lenders. Borrower shall promptly pay all fees, costs, charges, expenses, and disbursements of Agent incurred in connection with the preparation, execution, and delivery of this Amendment, and the other documents contemplated by this Amendment, including all legal fees and expenses.

 

(j) Further Assurances. Obligor agrees to execute, acknowledge, deliver, file and record such further certificates, instruments and documents, and to do all other acts and things, as may be reasonably requested by Agent and necessary or reasonably advisable to carry out the intents and purposes of this Amendment.

 

(k) Amendments. The provisions of the Forbearance Agreement (as amended by this Amendment) may be further amended or waived by an instrument in writing signed by Borrower, the Lenders and Agent, provided that an amendment limited to extending the Forbearance Period shall be effective pursuant to a writing signed by Agent, at the direction of the Requisite Lenders, and Borrower.

 

(l) Integration; No Oral Agreements. This Amendment, the Forbearance Agreement (as amended), the Credit Agreement, the other Loan Documents and the other written agreements, instruments, and documents entered into in connection therewith set forth in full the terms of agreement between the parties hereto and thereto with respect to the subject matter thereof and are intended as the full, complete, and exclusive contracts governing the relationship between such parties with respect to the subject matter thereof, superseding all other discussions, promises, representations, warranties, agreements, and understandings between the parties with respect thereto. There are no oral agreements among the parties hereto.

 

(m) THIS AMENDMENT AND THE FORBEARANCE AGREEMENT (AS AMENDED) EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO REGARDING THE CREDIT PARTIES’ FORBEARANCE WITH RESPECT TO THEIR RIGHTS AND REMEDIES WHICH MAY ARISE AS A RESULT OF THE SPECIFIED EVENTS OF DEFAULT AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSION OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.