FIRST AMENDMENT TO
LOAN AGREEMENT
This FIRST AMENDMENT TO LOAN AGREEMENT (this "First Amendment") is entered
into effective as of the 1st day of July 2001, between U.S. Global Investors,
Inc. (the "Borrower"), and BANK ONE, NA, with its main office in Chicago,
Illinois (the "Bank").
RECITALS
A. Effective on February 1, 2001, Borrower and Bank executed a loan
agreement (the "Loan Agreement") whereby Bank agreed to make available to
Borrower a $1,109,827.14 Real Estate Loan, and a Revolving Credit Loan not to
exceed the Commitment Amount, pursuant to the terms of the Loan Agreement.
B. Borrower and Bank desire to modify and amend certain provisions of the
Loan Agreement, to waive certain breaches by Borrower of covenants therein and
modify the Revolving Credit Loan, and Bank is willing to do so on the terms and
conditions stated in this First Amendment.
C. Each capitalized term used in this First Amendment shall have the
meaning given to it in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other valuable consideration, Borrower and Bank agree as follows:
AGREEMENT
1. Article 3 is hereby amended to add Section 3.03 as follows:
"3.03 Assignment of Account. Borrower shall execute and deliver to Bank an
Assignment of Account of even date herewith granting to Bank a first and
prior lien on all cash assets and property in the deposit account
established or to be established by Borrower with Bank to secure advances
under the Revolving Credit Loan, together with all replacements, additions,
substitutions and accessions to all of the foregoing, all records relating
in any way to the foregoing (the "Deposit Account").
2. Section 5.01 is hereby amended to add subsection (j) as follows:
(j) The duly executed Assignment of Account assigning the Borrower's right,
title and interest in the Deposit Account described in Section 3.03.
3. Section 6.01(c) is hereby amended to add the following at the beginning of
the subsection:
"In the event any amount is outstanding under the Revolving Credit Loan,
then..."
4. Section 6.02 is hereby amended to delete subsection (b) "Tangible Net
Worth" in its entirety and replace such subsection with a new subsection
(b) as follows:
"6.02(b) Current Ratios. Borrower will maintain at all times a ratio of
current assets to current liabilities of not less than 2.00:1l00, tested
quarterly."
5. Waivers of Compliance.
(a) Bank and Borrower acknowledge that Borrower breached the Debt Service
Coverage covenant set forth in Section 6.02(a) of the Loan Agreement
by failing to be in compliance therewith as of the end of the fiscal
quarter ending March 31, 2001 and June 30, 2001. Bank hereby waives
such breach for the period ending March 31, 2001 and June 30, 2001.
(b) The waivers contained herein do not constitute waivers by the Bank of
any breaches other than the breaches specifically described herein,
nor are the waivers provided herein to be construed as a waiver of any
future breaches of the Loan Agreement.
6. Appendix A item 5 "Borrowing Base" is deleted and replaced with the
following:
"5. "Borrowing Base" shall mean an amount equal to the currently
available funds in the Deposit Account."
7. Exhibit A and Exhibit B to the Loan Agreement are hereby replaced with
Exhibit A and Exhibit B attached to this First amendment.
8. Conditions Precedent. Paragraphs 1 through 7 above are not effective until
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Bank receives (i) a counterpart of this First Amendment executed by
Borrower, (ii) the fully executed Assignment of Account described in
Section 3.03, (iii) payment of any and all costs and expenses (including
without limitation, attorneys' fees and expenses) that Bank may reasonably
incur in connection with the preparation and negotiation of this First
Amendment and all related documents, and (iv) any other document reasonably
required by Bank.
9. Ratifications. Borrower (a) ratifies and confirms all provisions of the
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Loan Documents as amended by this First Amendment, (b) ratifies and
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confirms that all assurances and Liens granted, conveyed, or assigned to
Bank under the Loan Documents are not released, reduced or otherwise
adversely affected by this First Amendment and continue to assure, and
secure full payment and performance of the present and future Obligations,
and (c) agrees to perform such acts and duly authorize, execute,
acknowledge, deliver, file and record such additional documents, and
certificates and authorizations as Bank may reasonably request in order to
create, perfect, preserve, and protect those assurances and Liens.
10. Representations. Borrower represents and warrants to Bank that as of the
date of this First Amendment (a) all representations and warranties in the
Loan Documents are true and correct in all material respects except to the
extend that (i) any of them speak to a different specific date or to
covenants and conditions as are amended by this First Amendment or (ii) the
facts on which any of them were based have been changed by transactions
contemplated or permitted by the Loan Agreement, and (b) no undisclosed
Event of Default has occurred or is continuing
11. Authority; Binding Effect. Each signatory to this First Amendment
represents and warrants to Bank that (i) it or he has taken all corporate,
partnership or other action required to authorize execution of this First
Amendment and compliance with its terms, (ii) this First Amendment does not
and will not violate or conflict with any law, statute, regulation, order,
agreement, document, or instrument binding on it or him, or its or his
property, and (ii) on Bank's request, it or he shall provide reasonably
satisfactory evidence thereof to Bank.
12. Agreements Valid, As Amended. Except as modified by this First Amendment,
the Loan Agreement and Loan Documents remain in full force and effect as
originally written.
13. Miscellaneous.
(a) Governing Law. This First Amendment is being executed and delivered,
and is intended to be performed, in the State of Texas, whose
substantive laws govern the validity, construction, enforcement and
interpretation of this First Amendment.
(b) Headings. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this First Amendment.
(c) Multiple Counterparts. This First Amendment may be executed in any
number of counterparts, all of which taken together shall constitute
one and the same agreement, and any of the parties hereto may execute
this First Amendment by signing such counterpart.
(d) Texas Business and Commerce Code Section 26.02 Notice. THIS FIRST
AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
CONCERNING THE MATTERS CONTAINED HEREIN (BUT DOES NOT AFFECT THE LOAN
DOCUMENTS EXCEPT AS SPECIFIED HEREIN) AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
"Borrower"
U.S. GLOBAL INVESTORS, INC.
By: ____________________________
Name: Frank E. Holmes
Title: Chairman and Chief Executive Officer
Date: _____________________________
"Bank"
BANK ONE, NA, with its
Main office in Chicago, Illinois
By: __________________________
Name: Clay D. Jett
Title: Vice President
Date: ___________________________
EXHIBIT A
BORROWING BASE COMPLIANCE (DRAW) CERTIFICATE
1. Balance of immediately available funds $ Deposit Account
2. Amount of Revolving Credit Note $
3. Lesser of line 1 or line 2 $
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4. Present Revolving Credit Note balance $ (principal outstanding)
5. Principal Balance available for borrowing $ (line 3 minus line 4) (If
line 5 is a negative number, then a "pay down" in accordance with the
Agreement is required)
Pursuant to that certain Business Loan Agreement dated February 1, 2001, as
amended by that First Amendment to Loan Agreement dated to be effective July 1,
2001, (the "Loan Agreement") as entered into by and between U.S. Global
Investors, Inc. ("Borrower") and Bank One, NA ("Bank One"), Borrower submits the
foregoing information for the purpose of inducing Bank One to advance money to
Borrower from the balance of funds available (if any) under Borrower's Revolving
Credit Note dated February 1, 2001, in the original principal amount of
$1,000,000.00. Borrower hereby certifies and affirms that the information
contained in this Borrowing Base Compliance (Draw) Certificate is true, complete
and correct according to the financial records of the Borrower and is properly
available as collateral for advances pursuant to the Agreement and the
representations and warranties set forth therein, As of the Date of this
Certificate Borrower is in full compliance with all terms, conditions, covenants
and provisions of the Loan Agreement. Borrower is not aware of an Event of
Default under the Loan Agreement or any facts or circumstances which might give
rise to any Event of Default. The terms used in this Certificate have the same
meaning as assigned to them in the Loan Agreement. Borrower further certifies
that all withholding taxes and FICA Taxes have been paid in full as of the date
of this Certificate.
Borrower:
U.S. Global Investors, Inc.
By:
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Its:
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(date)
EXHIBIT B
BORROWING BASE (COVENANT) COMPLIANCE CERTIFICATE
(For the month/quarter/year ending )
Pursuant to the Loan Agreement dated February 1, 2001, as amended by that
First Amendment to Loan Agreement dated to be effective July 1, 2001, (the "Loan
Agreement") between U.S. Global Investors, Inc. ("Borrower")_ and Bank One, NA
("Bank One"), the undersigned hereby certifies as follows. Unless otherwise
defined herein, the terms used in this Certificate have the meaning(s) assigned
to it/them I the Loan Agreement.
1. I am the duly appointed President or Chief Financial Officer or Chief
Accounting Officer of Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision a detailed review of the
transactions and condition of the Borrower during the accounting
period covered by the financial statements being furnished
concurrently with this Certificate;
3. The Borrower is in full compliance with all terms, conditions,
covenants and provisions of the Loan Agreement, except as follows:
4. The Borrower reports its compliance with the financial covenants
contained in the Loan Agreement as follows:
Section Covenant Required/Permitted Actual
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Current Ratio 2.00 : 1.00
Ratio of Debt to TNW .75 : 1.00
Debt Service Coverage Ratio 1.5 : 1.00
5. Each of the representations contained in the Loan Agreement are
correct as of this date.
6. The financial statements of Borrower as of , 20 , and for the fiscal
year then ended, and the financial statements as of , 20 , and for the
partial fiscal year then ended, present fairly the financial condition
of Borrower and the results of its operations as of the dates of such
statements and for the fiscal periods then ended, and since the date
of the latest of such statements there has been no material adverse
change in its financial position or its operations.
7. No Event of Default has occurred and Borrower is not aware of any
facts which might result in an Event of Default.
Borrower:
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Date
U.S. Global Investors, Inc.
By:
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Its:
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