SECOND MODIFICATION AGREEMENT

 Exhibit 10.1

 

BY THIS SECOND MODIFICATION AGREEMENT (the "Agreement"), made and entered into as of the 26th day of October, 2007, by WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, whose address is Commercial Banking, MAC S4101-251, 100 West Washington, Phoenix, Arizona 85003 (hereinafter called "Lender"), and UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware corporation, dba UNIVERSAL TECHNICAL INSTITUTE OF DELAWARE ("Borrower"), whose address is 20410 North 19th Avenue, Suite 200, Phoenix, Arizona 85027, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby confirm and agree as follows:

 

SECTION 1. RECITALS; ACKNOWLEDGEMENTS.

 

1.1 Borrower and Lender entered into a Credit Agreement dated October 26, 2004, as amended by that certain Modification Agreement dated July 5, 2006 (as amended, the "Credit Agreement"), which provided for, among other things, a line of credit ("Line of Credit") in the maximum aggregate amount of $30,000,000.00 (collectively, the "Loans"), all upon the terms and conditions contained therein. All undefined capitalized terms used herein shall have the meaning given them in the Credit Agreement. The Credit Agreement, the Line of Credit Note and all other agreements, documents and instruments relating to the Loans are referred to as the Credit Documents.

 

1.2 Borrower and Lender desire to modify the Credit Documents as set forth herein.

 

 

2.1 Section 4.9 of the Credit Agreement is hereby amended to read as follows:

 

SECTION 4.9 FINANCIAL CONDITION. Maintain Borrower's financial condition at the end of each fiscal year with respect to Sections 4.9(a) and 4.9(b) and at the end of each fiscal quarter for Sections 4.9 (c), (d) and (e) as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein), with compliance determined commencing with Borrower's financial statements for the period ending December, 2007:

 

(a) Net income after taxes determined for any fiscal year of not less than $7,500,000.00 for such year.

 

(b) Net income after taxes determined for any two (2) consecutive fiscal quarters of not less than $0.00 for such consecutive quarters.

 

(c) Total Liabilities divided by Tangible Net Worth determined for any fiscal quarter of not greater than the DNW Ratio, with "Total Liabilities" defined as the aggregate of current liabilities and non-current liabilities excluding EITF 97-10 Liabilities up to $30,000,000.00 less subordinated debt, with "Tangible Net Worth" defined as total assets less Total Liabilities and less any intangible assets, and with "DNW Ratio" defined as 3.00 to 1.00.

 

 

(d) Current Ratio determined for any fiscal quarter of less than the CR Requirement. "Current Ratio" is defined as total current assets divided by total current liabilities which shall include without limitation any outstanding balance on the Line of Credit, outstanding surety bonds and any outstanding Letters of Credit under the Line of Credit Commitment), with "CR Requirement" defined as 0.50 to 1.00.

 

(e) Tangible Net Worth (as defined in Paragraph (c) above) determined as of any fiscal quarter of not less than $35,000,000.00.

 

2.2 The following definitions in Exhibit "A" to the Credit Agreement are hereby amended to read as follows:

 

"Line of Credit Maturity Date" means October 26, 2009.

 

"Tangible Net Worth": See Section 4.9(c).

 

 

3.1 All references to the Credit Agreement in the Credit Documents are hereby amended to refer to the Credit Agreement as hereby amended.

 

3.2 Borrower acknowledges that the indebtedness evidenced by the Line of Credit Note is just and owing, that the balance thereof is correctly shown in the records of Lender as of the date hereof, and Borrower agrees to pay the indebtedness evidenced by the Line of Credit Note according to the terms thereof, as herein modified.

 

3.3 Borrower hereby reaffirms to Lender each of the representations, warranties, covenants and agreements of Borrower set forth in the Line of Credit Note and the Credit Agreement, with the same force and effect as if each were separately stated herein and made as of the date hereof.

 

3.4 Borrower hereby ratifies, reaffirms, acknowledges, and agrees that the Line of Credit Note and the Credit Agreement, represent valid, enforceable and collectible obligations of Borrower, and that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to any of these documents or instruments. In addition, Borrower hereby expressly waives, releases and absolutely and forever discharges Lender and its present and former shareholders, directors, officers, employees and agents, and their separate and respective heirs, personal representatives, successors and assigns, from any and all liabilities, claims, demands, damages, action and causes of action, of which Borrower has, or may reasonably be expected to have knowledge, that Borrower may now have, or has had prior to the date hereof, or that may hereafter arise with respect to acts, omissions or events occurring prior to the date hereof and, without limiting the generality of the foregoing, from any and all liabilities, claims, demands, damages, actions and causes of action, known or unknown, contingent or matured, arising out of, or in any way connected with, the Loans. Borrower further acknowledges and represents that no event has occurred and no condition exists that, after notice or lapse of time, or both, would constitute a default under this Agreement, the Line of Credit Note or the Credit Agreement.

 

 

3.5 All terms, conditions and provisions of the Line of Credit Note and the Credit Agreement are continued in full force and effect and shall remain unaffected and unchanged except as specifically amended hereby. The Line of Credit Note and the Credit Agreement, as amended hereby, are hereby ratified and reaffirmed by Borrower, and Borrower specifically acknowledges the validity and enforceability thereof.

 

SECTION 4. GENERAL.

 

4.1 This Agreement in no way acts as a release or relinquishment of those rights securing payment of the Loans. Such rights are hereby ratified, confirmed, renewed and extended by Borrower in all respects.

 

4.2 The modifications contained herein shall not be binding upon Lender until Lender shall have received all of the following:

 

(a) An original of this Agreement, fully executed by the Borrower.

 

(b) An original Consent and Agreement of Guarantors executed by each Guarantor.

 

(c) Such resolutions or authorizations and such other documents as Lender may require relating to the existence and good standing of the Borrower and the authority of any person executing this Agreement or other documents on behalf of the Borrower.

 

4.3 Borrower shall execute and deliver such additional documents and do such other acts as Lender may reasonably require to fully implement the intent of this Agreement.

 

4.4 Borrower shall pay all costs and expenses, including, but not limited to, reasonable attorneys' fees incurred by Lender in connection herewith, whether or not all of the conditions described in Paragraph 4.2 above are satisfied. Lender, at its option, but without any obligation to do so, may advance funds to pay any such costs and expenses that are the obligation of the Borrower, and all such funds advanced shall bear interest at the highest rate provided in the Line of Credit Note and shall be due and payable upon demand.

 

4.5 Notwithstanding anything to the contrary contained herein or in any other instrument executed by Borrower or Lender, or in any other action or conduct undertaken by Borrower or Lender on or before the date hereof, the agreements, covenants and provisions contained herein shall constitute the only evidence of Lender's consent to modify the terms and provisions of the Credit Agreement. Accordingly, no express or implied consent to any further modifications involving any of the matters set forth in this Agreement or otherwise shall be inferred or implied by Lender's execution of this Agreement. Further, Lender's execution of this Agreement shall not constitute a waiver (either express or implied) of the requirement that any further modification of the Loans or of the Line of Credit Note or the Credit Agreement, shall require the express written approval of Lender; no such approval (either express or implied) has been given as of the date hereof.

 

 

4.6 Time is hereby declared to be of the essence hereof of the Loans, of the Line of Credit Note and of the Credit Agreement, and Lender requires, and Borrower agrees to, strict performance of each and every covenant, condition, provision and agreement hereof, of the Line of Credit Note and the Credit Agreement.

 

4.7 This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their heirs, personal representatives, successors and assigns.

 

4.8 This Agreement is made for the sole protection and benefit of the parties hereto, and no other person or entity shall have any right of action hereon.

 

4.9 This Agreement shall be governed by and construed according to the laws of the State of Arizona.

 

IN WITNESS WHEREOF, these presents are executed as of the date indicated above.

 

	UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware corporation, dba UNIVERSAL TECHNICAL INSTITUTE OF DELAWARE
	By:	/s/ Jennifer L. Haslip
	Name:	Jennifer L. Haslip
	Title:	Chief Financial Officer

BORROWER

 

	WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
	By:	/s/ Keri M. Tignini
	Name:	Keri M. Tignini
	Title:	Vice President

LENDER

 

 

 

Each of the undersigned Guarantors executed a Continuing Guaranty (each, a "Guaranty") as described in the Credit Agreement dated as of October 26, 2004 (as amended from time to time, the "Credit Agreement") between WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, and UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware corporation, dba UNIVERSAL TECHNICAL INSTITUTE OF DELAWARE Each of the undersigned Guarantors hereby consents and agrees to the modifications and all other matters contained in the foregoing Modification Agreement of even date herewith.

 

	UTI HOLDINGS, INC., an Arizona corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO
	UNIVERSAL TECHNICAL INSTITUTE OF ARIZONA, INC., a Delaware corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO
	U.T.I. OF ILLINOIS, INC., an Illinois corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO

	UNIVERSAL TECHNICAL INSTITUTE OF CALIFORNIA, INC., a California corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO

 

 

	UNIVERSAL TECHNICAL INSTITUTE OF NORTH CAROLINA, INC., a Delaware corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO
	UNIVERSAL TECHNICAL INSTITUTE OF TEXAS, INC., a Texas corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO
	UNIVERSAL TECHNICAL INSTITUTE OF PENNSYLVANIA, INC., a Delaware corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO

	UNIVERSAL TECHNICAL INSTITUTE OF MASSACHUSETTS, INC., a Delaware corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO

 

 

	CLINTON EDUCATION GROUP, INC., a Delaware corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO
	CUSTOM TRAINING GROUP, INC., a California corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO
	UNIVERSAL TECHNICAL INSTITUTE OF NORTHERN CALIFORNIA, INC., a California corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO

	UNIVERSAL TECHNICAL INSTITUTE OF PHOENIX, INC., a Delaware corporation
	By	/s/ Jennifer L. Haslip
	Name	Jennifer L. Haslip
	Its	CFO

GUARANTOR

Dated as of October 26, 2007

 

 

Wells Fargo Bank, National Association

MAC S4101-251

100 West Washington

Phoenix, Arizona 85004

Date:                           ¹ 

Dear Ladies and Gentlemen:

 

This Compliance Certificate refers to the Credit Agreement dated as of October 26, 2004 (as it may hereafter be amended, modified, extended or restated from time to time, the "Credit Agreement"), between Universal Technical Institute, Inc., a Delaware corporation ("Borrower"), and Wells Fargo Bank, National Association ("Bank"). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

Pursuant to Section 4.3(c) of the Credit Agreement, the undersigned, the chief financial officer of Borrower, hereby certifies that:

 

Enclosed are the required financial statements for the [fiscal quarter] [fiscal year] ending for the Borrower as required under Section 4.3 of the Credit Agreement, which fairly and accurately present in all material respects the financial condition and results of the operation of the Borrower.

 

To the best of the undersigned's knowledge, no "Event of Default" and/or other event that with the passing of time or the giving of notice or both would become an Event of Default has occurred [or if so, specifying the nature and extent thereof and any corrective actions taken or to be taken].

 

As of the last day of the Reporting Period, the computations below were true and correct:

 

 

 

I.	Section 4.9(a) - Net Income After Taxes (measured annually)
	Net Income After Taxes		$
	Net Income After Taxes Minimum Requirement		$	7,500,000
II.	Section 4.9(b) - Net Income After Taxes (measured annually for each quarter)
	Net Income After Taxes (quarter 1)		$
	Net Income After Taxes Minimum Requirement		$	0.00
	Net Income After Taxes (quarter 2)		$
	Net Income After Taxes Minimum Requirement		$	0.00
	Net Income After Taxes (quarter 3)		$
	Net Income After Taxes Minimum Requirement		$	0.00
	Net Income After Taxes (quarter 4)		$
	Net Income After Taxes Minimum Requirement		$	0.00
II.	Section 4.9(c) - Total Liabilities to Tangible Net Worth
	Liabilities:
	Current Liabilities		$
	Plus: Noncurrent Liabilities		$
	Less: EITF 97-10 Liabilities up to $30,000,000		($		)
	Less: Subordinated Debt		($		)
	Equals: Total Liabilities		$	A
	Tangible Net Worth:
	Total Assets		$
	Less: Total Liabilities		($		)
	Less: Intangible Assets		($		)
	Equals: Tangible Net Worth		$	B
	DNW Ratio (A divided by B) Equals			:1.00
	DNW Ratio Maximum Requirement			3.00:1.00

 

 

III.	Section 4.9(d) - Current Ratio
	Numerator:	Current Assets	$	A
		divided by
	Denominator:	Current Liabilities (including Line of Credit balance outstanding surety bonds and outstanding Letters of Credit under The Line of Credit Commitment)	$	B
	Current Ratio	equals		A/B
	Current Ratio Minimum Requirement.			50:1.00
IV.	Section 4.9(e) - Tangible Net Worth
	Amount		$
	Minimum Requirement		$	35,000,000.00

	UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware corporation
	By:
	Name:
	Title: