SEVENTH MODIFICATION AGREEMENT AND COVENANT WAIVER
Exhibit 10.1
SEVENTH
MODIFICATION AGREEMENT AND COVENANT
WAIVER
This
Seventh Modification Agreement and Covenant
Waiver (this “Agreement”) is
made
as of November 12,
2008 but effective November 28,
2008 (the “Effective
Date”), by and between VINEYARD NATIONAL BANCORP, a California
corporation (“Borrower”) and
FIRST
TENNESSEE BANK NATIONAL ASSOCIATION (“Lender”). Unless
otherwise set forth herein, all capitalized terms used herein shall have
the
meaning given such terms in the Loan Documents (defined below).
WHEREAS, in connection with a loan from Lender to Borrower in the original
principal amount of $70,000,000.00, with a current outstanding principal
loan
balance of $48,300,000.00 (the “Loan”), the
Borrower
executed and delivered to Lender that certain Amended and Restated Promissory
Note (“Note”)
dated March 29, 2007, that certain Loan Agreement (“Loan Agreement”),
that certain Pledge Agreement together with Addendum to Pledge
Agreement (collectively the “Pledge”), each
dated
as of March 17, 2006, that certain Modification Agreement effective as
of May
11, 2006 (“First
Modification”), that certain Second Modification Agreement and Covenant
Waiver effective as of March 29, 2007 (“Second
Modification”), that certain Third Modification Agreement and Covenant
Waiver effective as of March 15, 2008 (“Third Modification”),
that certain Fourth Modification Agreement and Covenant Waiver effective
as of
June 30, 2008 (“Fourth
Modification”), that certain Fifth Modification Agreement and Covenant
Waiver dated and effective as of August 29, 2008 (“Fifth
Modification”), that certain
Amendment to Fifth Modification Agreement and Covenant Waiver effective
as of
September 23, 2008 (“Amendment to
Fifth
Modification”)
and that certain Sixth Modification Agreement and
Covenant Waiver effective as of October 28, 2008 (“Sixth
Modification”)
(this Agreement, the Note, the Loan Agreement, the Pledge, the First
Modification, the Second Modification, the Third Modification, the Fourth
Modification, the Fifth Modification, Amendment to Fifth Modification,
the Sixth
Modification and any other documents executed by Borrower in connection
with the
Loan (but expressly excluding the Letter Agreement, defined below) are
collectively herein referred to as the “Loan
Documents”);
WHEREAS, Borrower desires to extend the maturity date of the Loan through
March
31, 2009;
WHEREAS, Borrower has requested that Lender extend the Waivers (as defined
in
the Fifth Modification and Amendment to Fifth Modification) through and
including March 31, 2009 (“Existing
Waivers”);
WHEREAS, Borrower has requested that Lender grant
an additional waiver of the Loan Agreement as more particularly set forth
on
Exhibit A attached hereto and incorporated herein by reference (the “Additional
Waiver”;
the Existing Waivers and Additional Waiver are
collectively referred to as the “Waivers”);
WHEREAS,
in connection with this
Agreement, Borrower, Lender and Vineyard Bancshares, Inc. (the “Buyer”) are
entering
into a certain letter agreement, dated the date hereof (the “Letter Agreement”),
pursuant to which Lender has agreed, subject to the terms and conditions
set
forth therein, to accept certain payments from Buyer in full satisfaction
of the
obligations owing under the Loan Documents;
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WHEREAS,
subject
to the terms and conditions
contained herein, Lender is willing to (i) extend the Maturity Date of
the Loan
and (ii) grant and extend the
Waivers.
NOW, THEREFORE, FOR MUTUAL CONSIDERATIONS, the receipt and sufficiency
of which
is hereby acknowledged, the undersigned Borrower and Lender do hereby modify
the
Loan Documents as follows:
1) Capitalized
Terms. Any capitalized term used but not defined herein shall
have the meaning ascribed to it in the Loan Documents. All references
to the “Loan Documents” in the Loan Agreement and any of the other Loan
Documents shall include, without limitation, this Agreement and all other
such
Loan Documents, as modified by this Agreement.
2) Extension
of Maturity Date;
Waiver. Subject to Borrower’s compliance with all representations,
warranties, covenants and agreements contained in this Agreement and all
the
other Loan Documents as modified hereby:
(a) Maturity
Date. The “Maturity Date” set forth in the Loan Agreement and
elsewhere in the Loan Documents is hereby modified to mean March 31,
2009 (the “New
Maturity Date”).
(b) Waivers. Lender
hereby extends the Waivers for a period through and including the New Maturity
Date.
3) Modification
of the
Note. The Note and, where applicable, the other Loan Documents
are hereby modified as follows:
a. Interest
Rate. From and after November 28, 2008 through and including
the New
Maturity Date, interest shall accrue on the outstanding principal balance
of the
Note at a fixed annual rate equal to the LIBOR Rate, as hereinafter defined,
plus three hundred fifty (350) basis points (LIBOR Rate + 3.50%). As used
herein, the term “LIBOR Rate” refers to the sixty (60) day London Interbank
Offered Rate, as determined by Lender in its sole (but reasonable)
discretion. The LIBOR Rate shall be determined by Lender as of November 28, 2008 (or, if such date is not
a
business day, then on the next preceding business day). Interest
shall be calculated on the basis of a 360 day year and the actual number
of
calendar days elapsed. Notwithstanding anything else in this
instrument to the contrary, in no event shall the maximum rate of interest
payable in respect to the indebtedness evidenced hereby exceed the maximum
rate
of interest allowed to be charged by applicable law.
b. Payment
Schedule. Said principal and accrued interest thereon shall be
due and payable as hereinafter set forth:
On
the New Maturity Date the entire outstanding principal balance of the Loan,
any
accrued and unpaid interest thereon, and all incurred fees shall be due
and
payable without demand.
c. No
New
Advances. Borrower may not reborrow any sums repaid under the
Loan, and Lender has no obligation to advance any new loan proceeds under
the
Loan.
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4) Conditions
of Extension of
Maturity Date; Waiver. Lender’s agreement to extend the
Maturity Date and Waivers is conditioned upon and subject to the timely
satisfaction by Borrower of each of the following conditions (collectively
the
“Conditions of
Modification”):
a. Correctness
and
Warranties. Except as expressly modified or waived herein, all
representations and warranties made by Borrower to Lender under this Agreement
and the other Loan Documents (including without limitation all of Borrower’s
representations and warranties set forth in Sections 3.5 and 3.9 of the
Loan
Agreement) are and shall remain true and correct through and including
the New
Maturity Date and payment in full of the Loan.
b. No
Defaults
Hereunder. Borrower shall not breach any promise or covenant
contained in this Agreement and shall not be in default under any provision
of
this Agreement or the other Loan Documents (except with respect to the
Waivers,
as waived hereby).
5) Termination
Events. Each of the following shall constitute a Termination
Event and an Event of Default under this Agreement and all other Loan Documents
without any further cure or grace period, notwithstanding anything to the
contrary in the Loan Documents (each, a “Termination
Event”):
a. Conditions
of Modification;
Compliance. If Borrower shall fail to comply in a timely
manner with any of the Conditions of Modification set forth above.
b. Bankruptcy. If
Borrower shall become a debtor in bankruptcy by means of either a voluntary
or
involuntary petition.
c. Receivership;
Insolvency. If any kind of receivership or insolvency
proceeding is commenced by or against Borrower.
6) New
Maturity Date;
Acceleration of Loan. Borrower agrees that the Loan
automatically, and without notice, shall be immediately all due and payable
in
full upon the earlier of:
a.
New Maturity Date; or
b.
The occurrence of any Termination Event, as defined above.
The entire amount of the Loan, including all accrued and unpaid interest,
shall
be immediately due and payable upon the earlier to occur of the New Maturity
Date or the occurrence of any Termination Event, and Lender shall be entitled
immediately to exercise all of its rights and remedies under the Loan Documents,
all without further notice to Borrower; provided, however, that in no event
shall the occurrence of a Termination Event under Section 5.b. or 5.c.
above
affect the rights and obligations of Borrower and Lender under the Letter
Agreement.
7) Representations,
Warranties
and Covenants. As an inducement to Lender to enter into this
Agreement, Borrower makes the following representations, warranties and
covenants:
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a. Enforceability. The
Loan, this Agreement, and all the other Loan Documents are fully enforceable,
and the Loan is not subject to any defense or counterclaim or any claim
of
setoff or recoupment by Borrower.
b. Representation
by
Counsel. Borrower has been represented by, or advised to
consult with, counsel in connection with the negotiation and execution
of this
Agreement; this Agreement represents an arms-length transaction; and Borrower
has acted in good faith in the making of this Agreement.
c. Consents. The
execution and performance of this Agreement by Borrower does not and will
not
violate any agreement to which Borrower is a party, and the execution and
performance of this Agreement by Borrower does not require the consent
of any
third party, or if the consent of a third party is required, such consent
has
been previously obtained by Borrower.
d. Sale
of
Assets. Through and including the New Maturity Date, Borrower
will not dispose of any of its property outside the ordinary course of
business
or as otherwise provided for in this Agreement or the Letter
Agreement.
e. New
Debt. Through and including the New Maturity Date, Borrower
will not incur any additional debt except for unsecured trade debt incurred
in
the ordinary course of business without the prior written consent of Lender
in
its sole and absolute discretion.
f. Impairment. Borrower
will take no action which would impair its ability to perform its obligations
hereunder or to satisfy any of the Conditions of Modification.
g. Extension
Fee. Promptly after with Borrower’s execution hereof, Borrower
shall pay Lender’s attorneys fees in connection herewith.
8) Further
Assurances. At any time and from time to time after the date
of this Agreement, at the request of Lender, Borrower shall, without further
consideration, and at Borrower’s sole expense, execute and deliver such
documents and instruments, and take such actions, as Lender may deem necessary
(a) to perfect any of Lender’s security interests or liens granted in any of the
Loan Documents, and/or (b) to carry out the purposes and intentions of
this
Agreement and the Loan Documents.
9) Effectiveness
of the
Loan. This Agreement shall not constitute a novation of any of
the other Loan Documents, and all the Loan Documents shall survive the
execution
of this Agreement and remain in full force and effect subject only to the
Waivers as set forth herein and to any express modifications thereto as
herein
provided. The lien and security interest on the Collateral granted
pursuant to the Pledge is hereby extended, and the lien and security interest
on
the Collateral shall continue to secure the remaining amounts outstanding
in
respect of all indebtedness that may be due and owing pursuant to the terms
of
the Loan Documents, including without limitation principal and interest
on all
amounts loaned pursuant to the Note. There are no oral
representations or assurances from Lender to Borrower which survive the
execution of this Agreement.
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10) Release
and
Waiver. Borrower hereby acknowledges and stipulates that it
has no claims or causes of action of any kind whatsoever against
Lender. Borrower represents that it is entering into this Agreement
freely, and with the advice of counsel as to its legal
alternatives. Borrower hereby releases Lender from any and all
claims, causes of action, demands and liabilities of any kind whatsoever
whether
direct or indirect, fixed or contingent, liquidated or unliquidated, disputed
or
undisputed, known or unknown, which Borrower has or may acquire in the
future
relating in any way to any event, circumstance, action or failure to act
to the
date of this Agreement. The release by Borrower herein, together with
the other terms and provisions of this Agreement, is executed by Borrower
advisedly and without coercion or duress from Lender, Borrower having determined
that the execution of this Agreement, and all its terms and provisions
are in
Borrower’s economic best interest.
11) No
Obligation to Extend; No
Waiver. Borrower acknowledges and agrees that Lender is not
obligated and does not agree to any additional extensions of the New Maturity
Date or any further Waivers except as expressly set forth
herein. Except as expressly provided herein as to the New Maturity
Date and the Waivers, (i) this Agreement shall not constitute a waiver
by Lender
of any defaults under the Loan Documents, (ii) Lender reserves all of its
rights
and remedies under the other Loan Documents, and (iii) all of the Loan
Documents
are in all respects confirmed, ratified and approved and are in full force
and
affect as of the date hereof. No action or course of dealing on the
part of Lender, its officers, employees, consultants, or agents, nor any
failure
or delay by Lender with respect to exercising any right, power or privilege
of
Lender under the Loan Documents or this Agreement, shall operate as a waiver
thereof, except to the extent expressly provided herein.
12) Costs
and
Expenses. Borrower agrees to pay on demand all out-of-pocket
costs and expenses of Lender, including the fees and out-of-pocket expenses
of
counsel for Lender, in connection with the administration, enforcement,
or
protection of Lender’s rights under this Agreement and/or the Note and other
Loan Documents.
13) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.
14) Amendments. This
Agreement cannot be amended, rescinded, supplemented or modified except
in
writings signed by the parties hereto.
15) Entire
Agreement. Subject to Section 9 above, this Agreement,
together with the Letter Agreement, contains the entire agreement of the
parties
and supersedes any other discussions or agreements relating to the subject
of
this Agreement.
16) Time
of the
Essence.
TIME IS OF THE ESSENCE OF THIS AGREEMENT.
17) Counterpart
Signature
Pages. This Agreement may be executed in one or more
counterparts and may be delivered by facsimile or electronic mail, each
of which
shall be deemed an original and all of which together shall constitute
one and
the same instrument.
[Signatures
on Following Page]
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COUNTERPART
SIGNATURE PAGE TO
SEVENTH
MODIFICATION AGREEMENT AND COVENANT
WAIVER
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
first
above written.
BORROWER:
a
California corporation
By: /s/
▇▇▇▇
▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇.
Terry__
Title: President and Chief Executive Officer
STATE
OF CALIFORNIA
COUNTY
OF RIVERSIDE
Before me, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Notary Public of the state and county
aforesaid, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and
who,
upon oath, acknowledged himself to be President and Chief Executive Officer
(or
other officer authorized to execute the instrument) of VINEYARD NATIONAL BANCORP, a
California corporation, the within named bargainor, and that he as such
President and Chief Executive Officer, executed the foregoing instrument
for the
purpose therein contained, by signing the name of the corporation by himself
as
President and Chief Executive Officer.
WITNESS MY HAND, at office, this 12th day of November, 2008.
_/s/ ▇▇▇▇▇▇▇▇▇
▇.
Reyes_____________________________
Notary Public
My
Commission Expires:
__January
24,
2010____________________________
COUNTERPART
SIGNATURE PAGE TO
SEVENTH
MODIFICATION AGREEMENT AND COVENANT
WAIVER
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date
first above written.
LENDER:
FIRST TENNESSEE BANK
NATIONALASSOCIATION, a national
banking association
By: /s/
▇▇▇▇▇ ▇. Work_
Name: ▇▇▇▇▇ ▇.
Work
Title: Executive Vice
President
STATE
OF TENNESSEE
COUNTY
OF SHELBY
Before me, ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Notary Public of the state and county aforesaid,
personally appeared ▇▇▇▇▇ ▇. Work, with whom I am personally acquainted
(or
proved to me on the basis of satisfactory evidence), and who, upon oath,
acknowledged himself to be Executive Vice President (or other officer authorized
to execute the instrument) of First Tennessee Bank National Association,
a
national banking association, the within named bargainor, and that he as
such
Executive Vice President, executed the foregoing instrument for the purpose
therein contained, by signing the name of the national banking association
by
himself as Executive Vice President.
WITNESS MY HAND, at office, this 13th day of November, 2008.
__/s/ ▇.
▇▇▇▇▇▇
Robinson____________________________
Notary Public
My
Commission Expires:
__April
28,
2009________________________
EXHIBIT
A
ADDITIONAL
WAIVER
Borrower
has disclosed to and has requested from Lender the Additional Waiver regarding
Borrower’s
potential
noncompliance
with Sections 5.5 and5.7
of the Loan Agreement as a result
of Borrower entering into that certain Stock Purchase Agreement dated November
12, 2008
in which Borrower proposes to sell
its shares of common stock of Vineyard Bank, National Association to Vineyard
Bancshares, Inc.