SECOND MODIFICATION OF LOAN AGREEMENT BY AND BETWEEN CHURCH LOANS & INVESTMENTS TRUST AND AMARILLO NATIONAL BANK DATED DECEMBER 31, 2002 This Second Modification of Loan Agreement is entered effective as of April 14, 2003 by and between CHURCH LOANS &...
SECOND MODIFICATION OF LOAN AGREEMENT
BY AND BETWEEN CHURCH LOANS & INVESTMENTS TRUST
AND AMARILLO NATIONAL BANK
DATED DECEMBER 31, 2002
This Second Modification of Loan Agreement is entered effective as of April 14, 2003 by and between CHURCH LOANS & INVESTMENTS TRUST ("the Trust") and AMARILLO NATIONAL BANK ("the Bank") hereby modifying, amending and supplementing certain terms and conditions of that certain Loan Agreement entered into by and between the Trust and the Bank dated December 31, 2002 and previously modified by that certain Modification to Loan Agreement dated January 27, 2003 (such Loan Agreement as previously modified is herein referred to as "the Loan Agreement").R E C I T A L S:
1. Pursuant to the Loan Agreement as originally written, the Bank extended a line of credit to the Trust in an amount not to exceed $20,000,000. 2. Such line of credit is represented by a Promissory Note dated December 31, 2002 executed by the Trust payable to the order of the Bank in the principal amount of $20,000,000, ("the $20,000,000 Note"), and is secured by a pledge of Qualified Collateral, as defined in the Loan Agreement, pursuant to the Loan Agreement and that certain Security Agreement dated December 31, 2002 ("the $20,000,000 Security Agreement"). 3. The Trust and the Bank thereafter entered into a Modification to Loan Agreement dated January 27, 2003 ("the First Modification") pursuant to which the amount of the line of credit was increased by an additional $4,000,000 thereby making the total indebtedness subject to the Loan Agreement and owing by the Trust to the Bank equal to a sum not exceeding $24,000,000. 4. The increase in the line of credit is represented by a Promissory Note dated January 27, 2003 executed by the Trust payable to the order of the Bank in the principal amount of $4,000,000, ("the $4,000,000 Note"), and is secured by a pledge of Qualified Collateral, as defined in the Loan Agreement, pursuant to the Loan Agreement and that certain Security Agreement dated January 27, 2003 ("the $4,000,000 Security Agreement"). 5. The Trust and the Bank have agreed, subject to the terms and conditions of this Second Modification Agreement, to increase the amount of the line of credit by an additional $11,000,000 thereby making the total indebtedness subject to the Loan Agreement and owing by the Trust to the Bank equal to a sum not to exceed $35,000,000.
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A G R E E M E N T:
NOW, THEREFORE, the Bank and the Trust do hereby agree to amend, modify and supplement the Loan Agreement in
the following regards:
1. The Loan Agreement is hereby modified, in its entirety, to refer, as of the date hereof, to an
extension of credit by the Bank to the Trust in an amount not to exceed $35,000,000.
2. The additional extension of credit by the Bank to the Trust in an amount not to exceed $11,000,000
shall be evidenced by a separate Promissory Note in the amount of $15,000,000 ("the $15,000,000
Note") to be executed by the Trust and payable to the order of the Bank which said sum represents
the renewal, extension and replacement of the "the $4,000,000 Note" and the additional committed
amount of $11,000,000. The $15,000,000 Note shall be in the form similar to that set forth on
Exhibit "C" attached hereto and made a part hereof for all purposes, with blanks appropriately
completed, being payable as set forth therein and bearing interest at a rate equal to .75% per annum
less than the X.X. Xxxxxx Xxxxx & Co., Inc.'s prime lending rate adjusted daily. Upon the
execution of the $15,000,000 Note, the $20,000,000 Note together with the $15,000,000 Note shall
represent the maximum principal commitment of the Bank.
3. The term "Note" or "Notes" as used in the Loan Agreement shall, as of the date hereof, refer to both
the $20,000,000 Note and the $15,000,000 Note. For all purposes of the Loan Agreement as modified
hereby, all terms, covenants and provisions applicable to the extension of credit by the Bank to the
Trust shall be construed as if the $20,000,000 Note and the $15,000,000 Note were one indebtedness
in an amount not to exceed $35,000,000.
4. Section 1.4(b) of the Loan Agreement is hereby modified to provide as follows:
(b) At maturity of any Note then evidencing the debt created hereunder, if the commitment of
the Bank is extended as provided in paragraph 1.1(b), the Trust shall execute and deliver
to the Bank the following:
(1) a subsequent Note in the amount of $20,000,000 in terms identical to
Exhibit "A" attached hereto and made a part hereof for all purposes,
except that each such subsequent $20,000,000 note shall bear the date
of issue and recite appropriate dates and renewal data, if any; and
(2) a subsequent Note in the amount of $15,000,000 in terms identical to
Exhibit "A" attached hereto and made a part hereof for all purposes,
except that each such
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subsequent $15,000,000 note shall bear the date of issue, recite
appropriate dates and renewal data, if any and shall bear interest at a
rate .75% per annum less than X. X. Xxxxxx Chase & Co.'s prime
lending rate adjusted daily.
Each such subsequent renewal Note shall evidence loans made and
outstanding hereunder prior to the maturity date of such renewal
Note(s), which date shall be a date one year from the date of such note
unless a different date is determined by mutual agreement of the Trust
and the Bank. There shall be endorsed upon each such subsequent Note,
to evidence the first Advance thereunder, the principal balance
outstanding hereunder at the time of issue. Upon acceptance of same by
the Bank, each such renewal Note shall be subject to all terms hereof
and shall be deemed the "Note" hereunder.
5. Section 1.4(c) of the Loan Agreement is hereby modified to provide as follows:
(c) If the term of this Agreement is not extended by the parties at maturity of the notes
described in paragraphs in 1.4(a) or (b), then evidencing the debt created hereunder, the
Trust shall execute and deliver to Bank two promissory notes, one in the amount of up to
$20,000,000 and a second in the amount of the indebtedness owing by the Trust to the Bank
in excess of $20,000,000, both notes being in the form similar to Exhibit "B" attached
hereto and made a part hereof for all purposes, to evidence loans made and outstanding
hereunder, which said notes shall recite the appropriate dates and shall be amortized over
a period of time and in such a way that the principal and interest shall be paid in equal
quarterly installments of principal and interest as are required to retire the
indebtedness over a term, not to exceed five (5) years, which shall be equal to the
weighted average remaining term of all real estate lien notes of the Trust which are
pledged as collateral on this loan and held by the Bank at the time of the execution of
such Exhibit "B" type notes. Interest on the note in the principal sum not to exceed
$20,000,000 shall bear interest at a rate equal to 1% per annum less than X.X. Xxxxxx
Chase & Co.'s prime lending rate adjusted daily and interest on the note in the
principal sum in excess of $20,000,000 shall bear interest at a rate equal to .75% less
than X.X. Xxxxxx Xxxxx & Co.'s prime lending rate adjusted daily. There shall be
endorsed upon such note(s), to evidence the first advance thereunder, the principal
balance outstanding thereunder at the time of issue, and upon acceptance of same by Bank
shall be subject to all terms hereof and shall be deemed the note hereunder.
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6. All advances made pursuant to the $15,000,000 Note shall be considered "subsequent advances" or
"subsequent closings" under the Loan Agreement and shall be made pursuant to the terms and
conditions applicable to such "subsequent advances" or "subsequent closings", with the
exception that prior to the initial advance of funds representing an advance of the $15,000,000
Note, the Bank shall have received from the Trust's legal counsel in connection with this
transaction, addressed to the Bank, a favorable opinion in form, scope and substance
satisfactory to the Bank:
(a) to the effect that the Trust is a duly organized and existing real estate investment
trust in good standing under the laws of the State of Texas and has the power and
authority to own its property and to carry on its business as set forth in paragraph
2.3 of the Loan Agreement;
(b) to the effect that this Modification Agreement has been duly authorized, executed and
delivered by the Trust and constitutes a legal valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms;
(c) to the effect that the $15,000,000 Note delivered by the Trust to the Bank has been
duly authorized, executed and delivered by the Trust and constitutes the legal, valid
and binding obligation of the Trust, enforceable against the Trust in accordance with
its terms;
(d) to the effect that the $15,000,000 Note is secured by valid, binding and enforceable
first liens in favor of the Bank, subject to no rights, equities or encumbrances
outstanding in favor of any party other than Bank which are or could become prior to
or on parity with Bank's liens, on all Collateral (including where such Collateral
constitutes notes receivable, the real estate or other collateral securing such notes
receivable) that has been pledged as security therefor pursuant to Section 5 of the
Loan Agreement;
(e) to the effect that no action of, or filing with, any governmental or public body or
authority is required to authorize, or is otherwise required in connection with, the
execution, delivery and performance by the Trust of this Modification Agreement or the
$15,000,000 Note;
(f) to the effect that it is not necessary in connection with the delivery of the
$15,000,000 Note under the circumstances contemplated by this Agreement to register
such Note under the Securities Act of 1933, as amended and then in effect, or to
qualify an indenture in respect thereof under the Trust Indenture Act of 1939, as
amended and then in effect, and that if Bank should in the future deem it expedient to
sell the Note (or any Note delivered in exchange therefor as in such Note or in the
Loan Agreement permitted), which the Bank does not now
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contemplate or foresee, such sale would not of itself require registration of such Note
under said Securities Act of 1933 or qualification of an indenture in respect of such
Note under said Trust Indenture Act, provided that at the time of such sale, such Bank
neither controls, nor is controlled by, nor is under common control with, the Trust,
either directly or indirectly, or, if any such control then exists, that such sale is
not made through an underwriter as defined in said Securities Act of 1933;
(g) as to such other matters incident to the transactions contemplated by this
Modification Agreement as the Bank may reasonably desire;
(h) to the effect that neither the execution and delivery of this Second Modification
Agreement, the consummation of the transactions herein contemplated, the fulfillment
of the terms hereof, nor compliance with the provisions hereof and of the $15,000,000
Note or the entire indebtedness in an amount not to exceed $35,000,000 will result in
a breach of any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Trust pursuant to
the terms of the Declaration of Trust dated February 22, 1963, as amended, or the
bylaws of the Trust, or any agreement or instrument of which such counsel (having made
inquiry with respect thereto) has knowledge, to which the Trust is a party;
(i) to the effect that with respect to such persons as shall have been identified in
writing to the Bank as being duly authorized agents or officers of the Trust, all
actions required to be taken by the Trust to clothe such persons with such authority
have been taken, and the actions of such persons as contemplated herein will be and
constitute and legal, valid and binding acts of the Trust; and
(j) to the effect that all conditions for lending have been met.
7. The second paragraph of Section 1.5 of the Loan Agreement is hereby modified to read as follows:
The Bank may elect not to extend the term of this Agreement by giving written notice to
the Trust at least five (5) months prior to the maturity date of a Note provided in paragraph
1.4(a) or (b) then in existence evidencing the debt created hereunder. Upon Bank giving such
notice as required hereby, the Trust may elect to enter into the note and resulting payoff
provisions as described in paragraph 1.4(c) hereof and the loan shall be extinguished according
to the provisions of paragraph 1.4(c).
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8. Section 1.6 of the Loan Agreement is hereby modified, effective as of April 1, 2003, to provide as
follows:
1.6 Commitment Fees. In consideration of Bank's agreement and commitment to make the
loans contemplated hereby, if the average quarterly advanced portion of the loan is less than
$16,000,000, then the Trust agrees to pay to Bank for such calendar quarter a commitment fee
equal to one-eighth (1/8) of one percent (1%) per annum of the average quarterly unadvanced
portion of Bank's commitment. If the average quarterly advanced portion of the loan is in
excess of $16,000,000, then there shall be no non-use commitment fee for such quarter.
The term "average quarterly advanced portion" of the loan or commitment shall mean the
daily average balance of the amount of the loan balance computed for a calendar quarter. The
term "average quarterly unadvanced portion" of the loan or commitment shall mean the difference
between the average quarterly advanced portion of the loan and $35,000,000.
Such fee shall be computed in arrears for the quarters ending March 31, June 30,
September 30, and December 31 of each year of the Bank's commitment on the basis of the average
quarterly unadvanced portion of the commitment and shall be payable quarterly on January 1,
April 1, July 1 and October 1 of each year during the term of Bank's commitment.
9. Section 6.11 of the Loan Agreement is hereby modified to provide as follows:
6.11 Net Worth and Indebtedness. The net worth of the Trust shall not at any time be
less than $18,000,000; and the total indebtedness of the Trust shall not at any time exceed a
sum equal to 2.5 times the total net worth of the Trust. The terms "net worth" and "total
indebtedness" shall be as set forth in the financial statements of the Trust and as prepared in
the ordinary course of business consistent with generally accepted accounting principles.
10. It is agreed that upon execution of this Modification Agreement and prior to any advances pursuant
hereto of monies under the $15,000,000 Note, the Trust will execute and deliver to the Bank an
additional Security Agreement dated even date herewith expressly securing the $15,000,000 Note ("the
$15,000,000 Security Agreement"). It is understood and agreed that any and all collateral pledged as
security for the line of credit owing to the Bank by the Trust pursuant to the Loan Agreement or
this Modification Agreement (both the $20,000,000 Security Agreement and the $15,000,000 Security
Agreement) shall be security for the entire indebtedness not to exceed $35,000,000 irrespective of
the $20,000,000 Note or the $15,000,000 Note.
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11. Section 7.4 is deleted in its entirety and replaced with the following:
7.4 Pledge Value. The term "Pledge Value" when used with respect to Collateral (including
Qualified Collateral), shall mean, as of the date of determination, in the case of Notes secured by
Mortgages and Deeds of Trust, the lesser of (i) the outstanding principal amount of the Collateral
Note obligation secured thereby (but, unless otherwise approved in writing by the Bank, only to the
extent that the then present principal amount is not in excess of $3,000,000), discounted to a value
such that, based upon the interest rate payable thereunder, the effective annual yield upon such
Note will be not less than a rate 2% per annum in excess of that rate of interest announced or
published on the first day of each calendar quarter as X. X. Xxxxxx Xxxxx &Co.'s Prime rate,
whether or not said rate is the lowest rate of interest charged by Bank to its borrowers, and (ii)
the outstanding principal amount of the Collateral Note. Pledge Value of Notes shall be determined
quarterly as of the first day of each calendar quarter. The purpose of the above stated $3,000,000
limitation is to avoid undue concentration of the Collateral into only a few loans and to promote
diversification of the Collateral. Consistent with this purpose, consent will not be unreasonably
withheld for loans in excess of $3,000,000 where, in the judgment of Bank, exercised in good faith,
there is no such undue concentration and lack of diversification.
12. The obligation of the Bank to fund amounts hereunder is subject to Bank having outstanding and valid
participations with eligible persons in a minimum amount of $15,000,000. Lender, its successors and
assigns, may assign to one or more persons or entities all or any portion of its rights and
obligations hereunder and under any of the loan papers and may sell participations therein, in each
case, without the consent of the Trust. From and after any such assignment or sale, the assignee or
participant in connection therewith shall have all of the right and obligations of Bank (or the
applicable assignor), to the extent of such assignment or participation, as applicable.
13. Except as modified, amended or supplemented herein, the Loan Agreement, and all its terms and
conditions, are hereby expressly ratified and confirmed and shall continue in effect.
14. Notwithstanding anything to the contrary contained herein, it is understood and agreed that the
owners of Certificates of Beneficial Interest of the Trust, irrespective of whether said
Certificates of Beneficial Interest are owned by any person in such person's individual capacity or
in any representative capacity, shall not be personally liable under or by virtue of this Second
Modification Agreement or under any Note executed pursuant hereto, or on any Note endorsed by the
Trust and delivered to the Bank as security for payment of the loans advanced pursuant to the Loan
Agreement or this
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Second Modification Agreement. The foregoing provisions shall be deemed a limitation on personal
liability only to the extent that such liability, if any, arises by virtue of the ownership of said
Certificates of Beneficial Interest. Nothing contained in this paragraph shall be deemed to limit,
release or modify the liability, if any, of any such owner of Certificates of Beneficial Interest
arising in any manner other than because of such ownership, including by way of example, but not
limitation, the liability, if any, of any person having executed a Guaranty or of any member of the
Board of Trust Managers or any officer thereof for willful misconduct or gross negligence in
connection with any representation, warranty, or certificate made by such person in performance of
this Second Modification Agreement. This paragraph shall not be deemed to create or imply the
existence of personal liability on the part of any person by virtue of any office or otherwise, but
rather shall be deemed solely a statement of the limitation of personal liability, if any, arising
by virtue of the ownership to said Certificates of Beneficial Interest.
THIS WRITTEN MODIFICATION AGREEMENT TOGETHER WITH THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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DATED this 14th day of April, 2003.
TRUST: CHURCH LOANS &INVESTMENTS TRUST
By: /s/ Xxxx X. XxXxxxxxx
Xxxx X. XxXxxxxxx, Chairman
BANK: AMARILLO NATIONAL BANK
By: /s/ Xxxxx Xxxx
Xxxxx Xxxx, Senior Vice President
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