CLASS A-1 NOTE
LOAN AND STANDBY TRUST AGREEMENT
THIS LOAN AND STANDBY TRUST AGREEMENT is dated as of ___________,
1997 between Ministry Partners Investment Corporation, a California
corporation (the "Company"), the Holders of the Company's Class A-1 Notes,
as defined below, and such Trustee or Trustees as may be appointed by the
Holders pursuant to the terms hereof.
WHEREAS, the Company has undertaken to offer and issue, through an
offering registered under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to that certain Registration Statement on Form SB-2 and
the Prospectus which is a part thereof (the "Prospectus"), as supplemented,
up to $25,000,000 of its Class A-1 Notes.
NOW, THEREFORE, in consideration of the agreements contained herein
and for other good and valuable consideration, the adequacy of which is
hereby acknowledged, the Company, the Holders and the Trustee mutually
agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1. Definitions
For the purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the capitalized terms
used herein and not otherwise defined in this section have the meaning
assigned to them in the Prospectus and include the plural as well as the
singular. All accounting terms not otherwise defined herein have the
meanings assigned to them in the Prospectus and all computations herein
provided for shall be made in accordance with generally accepted accounting
principles. In determining generally accepted accounting principles, the
Company may conform to any other rule or regulation of any regulatory
authority having jurisdiction over the Company.
"Adjusted Net Worth" means the sum of (i) the consolidated equity of
the common stockholders of the Company and any consolidated subsidiary,
plus (ii) the respective amounts reported on such entity's most recent
balance sheet with respect to any series of preferred stock, plus (iii) the
amount of the ECCU credit line, whether or not then funded, and any loan
ECCU or any other lender is contractually obligated to loan to the Company,
but only to the extent such loan amount is expressly subordinated in right
to payment on a current basis to the Class A-1 Notes. For purposes of
computing Adjusted Net Worth, except with respect to the ECCU credit line
and any other loans included in Adjusted Net Worth as provided in the
foregoing, all transactions between the Company and any Affiliates,
including ECCU, shall be treated as if the transactions had been entered
into with an unaffiliated third-party to the extent that GAAP would require
any different treatment.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this
definition, "control," "controlling" and "controlled," when used with
respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented, modified or amended by one or more
supplemental agreements hereto entered into pursuant to the applicable
provisions hereof. The Agreement is not qualified under or subject to the
Trust Indenture Act of 1939, as amended.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the State of California are not required
to be open.
"Cash Flow" means with respect to any period, Consolidated Net income
of the Company and any subsidiary for such period plus (a) an amount equal
to any extraordinary loss plus any net loss realized in connection with the
sale or other disposition of any assets (to the extent such net losses were
deducted in computing Net Income for such period), plus (b) provision for
taxes based on income or profits to the extent such provisions for taxes
was deducted in computing Net Income for such period, plus (c) Fixed
Charges for such period, plus (d) depreciation and amortization (including
amortization of goodwill and other intangibles) for such period to the
extent such depreciation and amortization were deducted in computing Net
Income for such period, in each case, on a consolidated basis and
determined in accordance with GAAP, plus (e) interest expense paid or
accrued for such period with respect to the subordinated ECCU Credit line
and any other Indebtedness which is subordinated to the Notes, plus (f) the
unused amount of the ECCU Credit Line (and any other financing subordinated
to the Notes) available to the Company on the date the determination of
Cash Flow is made.
"Class A Notes" means the Series 1, Series 5, Series 10, Series 25,
Series 50, Series 100 and Series C Notes provided, however, that the
aggregate of all series of Class A Notes shall not exceed $5,000,000.
"Class A-1 Notes" means the Series 1, Series 5, Series 10, Series
25, Series 50, Series 100 and Series C Notes provided, however, that the
aggregate of all series of Class A-1 Notes shall not exceed $25,000,000.
"Default" means any event that with the passage of time or the giving
of notice or both is or could be an Event of Default.
"ECCU Credit Line" means that certain loan agreement and note in the
amount of $2,100,000 dated February 26, 1997, as amended, as subordinated
by that certain Subordination Agreement dated June 1, 1994, as amended.
"Events of Default" means those Events of Default defined under
"Events of Default" herein, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body.
"Fixed Charges" means, with respect to any period, consolidated
interest expense for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount, noncash interest payments and the
interest component of capital leases, but excluding amortization of
deferred financing fees) plus, without duplication, all interest
capitalized for such period on a consolidated basis and in accordance with
GAAP. Fixed Charges shall not include any interest expense for such period
paid or accrued with respect to any loan to the extent it is expressly
subordinated to in right of payment amounts due and payable to the Class A-1
Notes.
"Fixed Charge Coverage Ratio" means, with respect to any period, the
ratio of the Cash Flow of the Company for such period to the Fixed Charges
of the Company for such period. In the event the Company incurs, assumes,
guarantees, repays, redeems or otherwise retires any Indebtedness (other
than the Company's credit line with ECCU) subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated
but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption,
guarantee, repayment, redemption or retirement of Indebtedness, including,
if applicable, the application of the proceeds therefrom, as if the same
had occurred at the beginning of the applicable period. In making such
calculations on a pro forma basis, interest attributable to Indebtedness
bearing a floating interest rate shall be computed as if the rate in effect
on the date of computation had been the applicable rate for the entire
period.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Holder" means the Person or Persons in whose name a Class A-1 Note
is registered on the books and records of the Company as a holder of Class
A-1 Notes.
"Indebtedness" means any indebtedness, whether or not contingent, (i)
in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or credit (or reimbursement agreements in respect
thereof), (ii) representing the balance deferred and unpaid of the purchase
price of any property, (iii) representing capital lease obligations; and
(iv) representing any hedging obligations, except, in each case, any such
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing Indebtedness (other than hedging obligations)
would appear as a liability upon a balance sheet prepared in accordance
with GAAP, and also includes, to the extent not otherwise included, the
guarantee of obligations of other persons that would be included within
this definition.
"Majority in Interest" or "Majority of Principal Amount" shall mean a
majority of the outstanding unpaid principal amount of all Outstanding
Class A-1 Notes plus all unpaid interest due thereon (as reflected on the
books and records of the Company as voted by the Holders thereof).
"Maturity Date" means the date on which the unpaid balance of
principal and accrued interest is due and payable on the respective Class
A-1 Note. The Maturity Date of a Class A-1 Note may be six (6), twelve
(12), twenty-four (24), thirty (30) or sixty (60) months, other than the
Series C Notes shall have a Maturity Date of seventy-two (72) months from
the date of issuance.
"Net Income" means, with respect to the Company for any period, the
aggregate of the net income of the Company for such period, on a
consolidated basis, determined in accordance with GAAP; provided that the
Net Income of any entity that is not a subsidiary of the Company or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
entity or a wholly-owned subsidiary of the Company.
"Net Tangible Assets" means, with respect to the Company, the total
amount of assets of the Company and any subsidiary (less applicable
reserves) on a consolidated basis, as determined in accordance with GAAP,
less intangible assets. For purposes of computing Net Tangible Assets, all
transactions between the Company and any Affiliates, including ECCU, shall
be treated as if the transactions had been entered into with an
unaffiliated third-party to the extent GAAP would require any different
treatment.
"Other Indebtedness" means any Indebtedness of the Company
outstanding other than any amounts owing with respect to the Class A-1
Notes and any extension, refinancing, refunding, renewal, substitution or
replacement of any such Indebtedness, but only to the extent that any such
extension, refinancing, refunding, renewal, substitution or replacement
does not exceed the principal amount of the Indebtedness being extended,
refinanced, refunded, renewed, substituted or replaced (plus the amount of
the reasonable fees and expenses in connection therewith) and that no
additional security is granted in connection with any such extension,
refinancing, refunding, renewal, substitution or replacement.
"Outstanding Class A-1 Notes" when used with respect to Class A-1
Notes means, as of the date of determination, all Class A-1 Notes
theretofore issued and delivered by the Company and not paid, prepaid or
redeemed in full pursuant to their terms.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock partnership, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Rate Schedule" means the schedule of interest rates payable on the
Class A-1 Notes as issued from time to time by the Company as a supplement
to the Prospectus.
"Series 1 Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes which must be issued within
the initial principal amount of at least $1,000, bearing interest at the
rate designated for Series 1 Notes by the Company on the Rate Schedule
effective on the issuance date of said Note and having the Maturity Date
elected by the Holder.
"Series 5 Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes which must be issued within
the initial principal amount of at least $5,000, bearing interest at the
rate designated for Series 5 Notes by the Company on the Rate Schedule
effective on the issuance date of said Note and having the Maturity Date
elected by the Holder.
"Series 10 Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes which must be issued within
the initial principal amount of at least $10,000, bearing interest at the
rate designated for Series 10 Notes by the Company on the Rate Schedule
effective on the issuance date of said Note and having the Maturity Date
elected by the Holder.
"Series 25 Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes which must be issued within
the initial principal amount of at least $25,000, bearing interest at the
rate designated for Series 25 Notes by the Company on the Rate Schedule
effective on the issuance date of said Note and having the Maturity Date
elected by the Holder.
"Series 50 Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes which must be issued within
the initial principal amount of at least $50,000, bearing interest at the
rate designated for Series 50 Notes by the Company on the Rate Schedule
effective on the issuance date of said Note and having the Maturity Date
elected by the Holder.
"Series 100 Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes which must be issued within
the initial principal amount of at least $100,000, bearing interest at the
rate designated for Series 100 Notes by the Company on the Rate Schedule
effective on the issuance date of said Note and having the Maturity Date
elected by the Holder.
"Series C Note" means one of the series of up to $25,000,000 of
principal amount (less the aggregate principal amount of all other series
of Class A-1 Notes issued) of Class A-1 Notes issued in the initial
principal amount of $10,000 or $25,000 bearing interest at the variable
rate designated by the Company for the Series C Notes on the Rate Schedule
effective on the date of issuance of the Note and having a Maturity Date of
seventy-two (72) months from the date of issuance.
"Tangible Adjusted Net Worth" means the Adjusted Net Worth of the
Company less the Company's intangible assets, if any.
"Trustee" means the Person or Persons elected as the "Trustee"
pursuant to the terms of this Agreement or a successor thereto once the
latter shall have become such pursuant to the applicable provisions of this
Agreement.
Section B. Acts of Holders
1. Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more substantially
concurrent instruments of substantially similar tenor signed by such
Holders in person or by an agent or attorney duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is herein expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments.
2. The ownership of the Class A-1 Notes shall be conclusively
proven by the books and records of the Company.
3. Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Class A-1 Note shall bind every
future Holder of the same Class A-1 Note and the Holder of every Class A-1
Note issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Class A-1 Note.
Section C. Notices to Trustee and the Company
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with:
1. The Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if given in writing by personal
service or mailed by certified mail, return receipt requested, addressed to
the Trustee at the address provided to the Holder by the Trustee in
writing, or
2. The Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder if given in writing by personal
service or mailed by certified mail, return receipt requested, addressed to
the Company at 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx X. Xxxxx, President, or at any other address previously
furnished in writing to the Trustee by the Company.
Section D. Notices to Holders
Where this Agreement provides for publication of notice to Holders of
any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder of such Class A-1 Notes, at the address of such Holder as it
appears in the books and records of the Company, not later than the latest
date, and not earlier than the earliest date, prescribed for the first
publication of such notice.
Section E. Effect of Headings and Table of Contents
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
Section F. Successors and Assigns
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section G. Severability
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section H. Benefits of Agreement
Nothing in this Agreement or in the Class A-1 Notes, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy
or claim under this Agreement.
Section I. Governing Law
This Agreement and all rights and obligations of the undersigned
hereof shall be governed, construed and interpreted in accordance with the
laws of the State of California without regard to conflict of law
principles.
Section J. Persons Deemed Owners
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Note is registered as the owner of
such Class A-1 Note for the purpose of receiving payment of principal of or
interest on said Class A-1 Note and for all other purposes whatsoever,
whether or not such Class A-1 Note is overdue.
ARTICLE II
CONTINUING COVENANTS OF THE COMPANY
Section A. Continuing Covenants of the Company
1. Limitation on Restricted Payment. While any Class A-1 Note is
outstanding, the Company shall not, and will not permit any subsidiary to,
directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the stock of the Company or any subsidiary
(other than dividends or distributions payable (x) in capital stock of the
Company or such subsidiary or (y) to the Company or any wholly-owned
subsidiary); (ii) purchase, redeem or otherwise acquire or retire for value
any capital stock of the Company or any wholly-owned subsidiary; (iii)
voluntarily purchase, redeem or otherwise acquire or retire for value,
prior to the scheduled maturity of any mandatory sinking fund payments
thereon or the stated maturity thereof, any Indebtedness of the Company
that is subordinated in right of payment to the Class A-1 Notes (all such
payments and other actions set forth in clauses (i) through (iii) above
being collectively referred to as "Restricted Payments") unless, at the
time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company or any subsidiary, does
not exceed the sum of:
(i) 50% of the Net Income of the Company for the period
(taken as one accounting period) from fiscal year ended December 31, 1996
to the end of the Company's most recently ended full fiscal quarter for
which financial statements are available at the time of such Restricted
Payment (or, if such Net Income for such period is a deficit, 100% of such
deficit), plus
(ii) 100% of the aggregate net cash proceeds received by
the Company from the issue or sale of capital stock of the Company (other
than capital stock sold to a subsidiary of the Company), debt securities or
capital stock convertible into capital stock of the Company upon such
conversion, or any funds advanced or loaned to the Company by ECCU under
its subordinated line of credit, plus
(iii) 100% of the cash, if any, contributed to the capital
of the Company, as additional paid in capital by any stockholder of the
Company.
(c) The foregoing notwithstanding, the provisions of
subsection (b)(i), (ii) and (iii) above shall not prohibit the following
Restricted Payments:
(i) the payment of any dividend within sixty (60) days
after the date of declaration thereof, if at said date of declaration such
payment would have complied with the foregoing provisions; or
(ii) (x) the redemption, repurchase, retirement or other
acquisition of any capital stock of the Company, (y) the purchase,
redemption or other acquisition or retirement for value prior to the
scheduled maturity of any mandatory sinking fund payments or stated
maturity of Indebtedness of the Company subordinated in right of payment to
the Holders of the Class A-1 Notes, or (z) the making of any investment in
the Company or any subsidiary of the Company in each case of (x), (y) and
(z) in exchange for, or out of the proceeds of the substantially concurrent
sale (other than to the Company) of, capital stock of the Company.
2. Limitation or Outstanding Class A-1 Notes. The Company shall
not issue any Class A-1 Note if, after giving effect to such issuance, the
Class A-1 Notes then outstanding would have an aggregate unpaid balance
exceeding $10,000,000.
3. Limitation on Incurrence of Indebtedness. While any Class A-1
Note is outstanding, the Company shall not, and will not permit any
subsidiary to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become, directly or indirectly, liable with respect
to (collectively, "incur") any Indebtedness; unless the Fixed Charge
Coverage Ratio of the Company, determined on a consolidated basis, for the
Company's most recently ended four full fiscal quarters for which financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred, would have been at least 1.20 to 1.0,
determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom to a repayment of any Indebtedness), as if the
additional Indebtedness had been incurred at the beginning of such
four-quarter period. Provided, however, that notwithstanding the foregoing,
the Company may incur Indebtedness that: (i) is evidenced by the Class A-1
Notes; (ii) was existing at December 31, 1996 as it may be extended or
modified; (iii) is incurred in the ordinary course of business for the
funding of mortgage loans which includes warehouse lines of credit and
gestation or repurchase facilities; (iv) is in respect of performance,
completion, guarantee, surety and similar bonds, banker's acceptances or
letters of credit provided by the Company in the ordinary course of
business; and/or (v) when incurred, does not result in other Indebtedness
in excess of $750,000 outstanding at any time.
4. Merger, Consolidation or Sale of Assets. While any Class A-1
Note is outstanding, the Company shall not consolidate or merge with or
into any other person or entity (whether or not the Company is the
surviving corporation) or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets
(excepting loans held for sale in the normal course of the Company's
mortgage banking operations) in one or more related transactions to,
another corporation, person or entity, unless (i) the Company is the
surviving corporation of such consolidation or merger; and (ii) immediately
after such transaction no Default or Event of Default exists.
5. Maintenance of Tangible Adjusted Net Worth. In the event that,
while any Class A-1 Note is outstanding, within 55 days after the end of
any fiscal quarter (100 days after the end of any fiscal year) as of the
end of which the Company's Tangible Adjusted Net Worth is less than
$2,000,000 (the "Minimum Tangible Adjusted Net Worth"), the Company shall
notify the Holders of such event and shall within sixty (60) days
thereafter restore its Tangible Adjusted Net Worth to an amount greater
than the Minimum Tangible Adjusted Net Worth.
6. Books and Records. The Company shall keep proper books of
record and account, in which full and correct entries shall be made of all
dealings or transactions of or in relation to the Class A-1 Notes and the
business and affairs of the Company in accordance with generally accepted
accounting principles. The Company shall furnish to the Trustee any and
all information related to the Class A-1 Notes as the Trustee may
reasonably request and which is in the Company's possession.
ARTICLE III
REMEDIES
Section A. Events of Default
Each of the following constitutes an Event of Default under the Class
A-1 Notes: (i) default for thirty (30) days in the payment when due of
interest or penalty on any Class A-1 Note; (ii) default for thirty (30)
days in the payment when due of principal of any Class A-1 Note; (iii) if
not cured in a timely manner, failure by the Company to observe or perform
any of the covenants or agreements in the Class A-1 Notes or set forth
under Article II hereof required to be performed by it; or (iv) if not
cured in a timely manner, default under the instruments governing any Other
Indebtedness or any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Other
Indebtedness for money borrowed by the Company, whether such Other
Indebtedness or guarantee now exists or is hereafter created, which default
(a) is caused by a failure to pay when due principal or interest on such
Other Indebtedness within the grace period provided in such Other
Indebtedness and which continues beyond any applicable grace period (a
"Payment default") or (b) results in the acceleration of such Other
Indebtedness prior to its express maturity, provided in each case the
principal amount of any such Other Indebtedness, together with the
principal amount of any other such Other Indebtedness under which there has
been a Payment default or the maturity of which has been so accelerated,
aggregates $250,000 or more.
In order to cure payment Default, the Company must mail to the
Holder, direct deposit or credit if that option is selected, the amount of
the nonpayment plus a late payment penalty equal to simple interest on the
amount unpaid at the rate of 10% per annum, measured from the date the
payment should have been mailed, deposited or credited pursuant to the
terms of the Class A-1 Notes until the date it actually is mailed,
deposited or credited.
Section B. Appointment of Trustee and Commencement of Operation of the
Trust
If an Event of Default occurs and is continuing, then and in every
such case the Holders of not less than a Majority in Principal Amount of
the Outstanding Class A-1 Notes by written and signed ballot or other
written and signed consent may, within thirty (30) days of such Event of
Default, appoint a Trustee. Upon delivery of the properly executed written
instrument evidencing the appointment of the Trustee and the latter's
acceptance of such appointment by due execution of this specific and exact
form of Agreement, the operation of this Trust shall commence and the power
and rights of the Trustee hereunder shall begin.
Section C. Covenant to Pay Trustee Amounts Due on Class A-1 Notes and
Right of Trustee and Holders of Judgment
The Company covenants that, if an Event of Default has occurred and
is continuing, the Company will, upon written request of the Trustee, cure
such default and pay forthwith for the benefit of the Holders the whole
amount then due, any penalties which may be due and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and all
other amounts due to the Trustee hereunder. If the Company fails to cure
such defaults and pay such amounts forthwith upon such demand, the Trustee,
in its own name and as Trustee of an express trust, shall be entitled to
xxx for and recover judgment against the Company and any other obligor on
the Class A-1 Notes for the amount so due and unpaid pursuant to the terms
of the Class A-1 Notes.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of not less than a Majority in Principal Amount of the then
Outstanding Class A-1 Notes may declare all the Class A-1 Notes to be due
and payable immediately and take any action allowed by law to collect such
amounts. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company, all Outstanding Class A-1 Notes will become due and payable
without further action or notice.
The Trustee may withhold from the Holders notice of any Default or
Event of Default if it believes that withholding notice is in their
interest, except a Default or Event of Default relating to the payment of
principal, interest or penalties.
Section D. Application of Money Collected
Any money collected by the Trustee pursuant to this Article, together
with any other sums then held by the Trustee hereunder, shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case
of the distribution of such money on account of principal or interest upon
presentation of the Class A-1 Notes, and the notation thereof of the
payment if only partially paid and upon surrender thereof if fully paid:
(i) First: To the payment of all unpaid amounts due to the
Trustee hereunder;
(ii) Second: To the payment of the whole amount then due and
unpaid on the Outstanding Class A-1 Notes, for principal and interest
and any penalties which may be due under the terms of the Class A-1
Notes, in respect of which or for the benefit of which such money has
been collected; and in case such proceeds shall be insufficient to
pay in full the whole amount so due and unpaid on such Class A-1
Notes, then to the payment of such principal and interest and without
any preference or priority, ratably according to the aggregate amount
so due; and
(iii) Third: To the payment of the remainder, if any, to the
Company or to whosoever may be lawfully entitled to receive the same
or as a court of competent jurisdiction may direct.
Section E. Trustee May File Proofs of Claim
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Class A-1 Notes or the property of the Company or of such other obligor or
their creditors, the Trustee (irrespective of whether the principal of the
Class A-1 Notes shall then be due and payable, as therein expressed or by
declaration or otherwise, and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) To file and prove a claim for the whole amount of
principal, interest and penalty owing and unpaid in respect of the
Outstanding Class A-1 Notes and to file such other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including to the extent permitted by law any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(ii) To collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, Trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under this
Agreement.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan
or reorganization, arrangement, adjustment or composition affecting the
Class A-1 Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder.
Section F. Trustee May Enforce Claims Without Possession of Class A-1
Notes
All rights of action and claims under this Agreement, or documents
related thereto, may be prosecuted and enforced by the Trustee without the
possession of any of the Class A-1 Notes or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as Trustee of an express trust.
Any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due to the Trustee
hereunder, be for the ratable benefit of the Holders of the Class A-1 Notes
(based on the aggregate amount of unpaid principal and interest due each
such Holder on such date) in respect of which such judgment has been
recovered.
Section G. Limitation on Suits
DURING THE PERIOD OF THE OPERATION OF THIS AGREEMENT, NO HOLDER SHALL
HAVE ANY RIGHT TO INSTITUTE OR CONTINUE ANY PROCEEDING or judicial action
pursuant to Articles II and III above or otherwise, under or with respect
to this Agreement or the Class A-1 Notes, or for the appointment of a
receiver or trustee or for any other remedy hereunder, unless all of the
following have occurred:
(i) Such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) The Holders of not less than a Majority in Principal
Amount of the Outstanding Class A-1 Notes shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(iii) Such Holder has offered to the Trustee indemnity
reasonably acceptable to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request and
provided security therefor reasonably acceptable to the Trustee;
(iv) The Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(v) No written direction inconsistent with such written
request has been given to the Trustee during such 60-day period by
the Holders of a Majority in Principal Amount of the Outstanding
Class A-1 Notes;
it being understood and intended that no one or more Holders of Class A-1
Notes shall have any right in any manner whatever by virtue of, or pursuant
to any provision of this Agreement to affect, disturb or prejudice the
rights created under this Agreement or the rights of any other Holders of
Class A-1 Notes, or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Agreement, except
in the manner herein provided and for the equal and ratable benefit of all
Outstanding Class A-1 Note Holders. No Holder shall have the right and
each Holder hereby waives the right to xxx individually except in
accordance with the provisions of this Agreement.
Section H. Rights to Settle or Compromise
A Trustee may not make any settlement or compromise concerning the
rights of Holders, including in regard to payments of principal or
interest, unless it is approved in a separate vote by a Majority in
Interest of the Holders. Any settlement or compromise so approved would
be binding upon all the Holders.
Section I. Rights and Remedies Cumulative
Except insofar as same shall contradict the express terms of this
Agreement, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law
and the terms of this Agreement, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise.
Section X. Xxxxx or Omission not Waiver
No delay or omission of the Trustee or of any Holder of any Class A-1
Note to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given
by this Agreement or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.
Section K. Waiver of Past Defaults
Before any judgment or decree for payment of money due has been
obtained by the Trustee as provided in this Article, the Holders of not
less than a Majority in Principal Amount of the Outstanding Class A-1 Notes
may, by Act of such Holders delivered to the Trustee and the Company, on
behalf of the Holders of all the Notes waive any past default hereunder and
its consequences and settle or compromise any claim related to the payment
of principal and interest on the Outstanding Class A-1 Notes, provided the
terms of such settlement or compromise have been made known to all Holders
of Outstanding Class A-1 Notes and the approval of the Majority in Interest
has been made in a signed written document. If and only if required by
law, the Trustee may provide a procedure for any Holder so desiring to
remove itself from the group settlement and to allow the Holder opting out
of the group settlement to proceed to enforce its rights individually and
as it sees fit.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section L. Notice of Defaults
As soon as practicable after the occurrence of any Event of Default
hereunder, the Company shall transmit notice thereof by mail to all Holders
of Class A-1 Notes, as their names and addresses appear on the books and
records of the Company.
ARTICLE IV
THE TRUSTEE
Section A. Certain Duties and Responsibilities
1. The Trustee shall, in the exercise of the rights and powers
vested in it by this Agreement, use the same degree of care and skill in
its exercise as a reasonable person would exercise or use.
2. No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own grossly negligent action, its own
grossly negligent failure to act, or its own willful misconduct, except
that:
a. The Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a Majority in Principal Amount of the
Outstanding Class A-1 Notes relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
b. No provision of this Agreement shall require the Trustee
to advance, expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers;
c. The Trustee shall be presumed to have acted without
negligence if it acted, or omitted to act, in good faith and in reliance
upon an opinion of counsel obtained by it.
Section B. Certain Rights of Trustee
Except as otherwise provided below:
1. The Trustee may consult with counsel, accountants and other
experts and the advice or opinion of such counsel, accountants and other
experts shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by the Trustee hereunder in good
faith and in reliance thereon and the Trustee shall have the right at any
time to seek instructions from a court of competent jurisdiction;
2. The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction
of any of the Holders pursuant to this Agreement, unless such Holders shall
have offered to the Trustee security or indemnity reasonably acceptable to
the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
3. The Trustee may execute any of the powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys
and the Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed by it hereunder with the
care required below; and
4. Anything to the contrary contained herein notwithstanding, the
Trustee shall have no duty to take any action whatsoever if it believes in
good faith that the taking of such action may expose the Trustee to
personal liability.
Section C. May Hold Class A-1 Notes
The Trustee in its individual or any other capacity may become the
owner or pledgee of Class A-1 Notes and may otherwise deal with the Company
with the same rights it would have if it were not Trustee.
Section D. Compensation, Reimbursement and Security Therefor
The Company agrees:
1. To pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder;
2. To reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Agreement, including reasonable fees
and expenses of counsel for the Trustee, except as such expense,
disbursement or advance may be attributable to the Trustee's gross
negligence or bad faith;
3. To indemnify the Trustee for, and to hold it harmless against
any loss, liability or expense incurred without gross negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Section E. Trustee Eligibility
The Trustee may not be an Affiliate of the Company.
Section F. Termination of Trust and Removal of Trustee, Appointment of
Successor
1. Upon the moment all Defaults or Events of Defaults are cured or
deemed cured pursuant to this Agreement, the appointment of the Trustee and
the operation of the Trust will terminate and the powers and the rights of
the Trustee hereunder shall cease forthwith.
2. No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee as provided herein.
3. The Trustee may resign as Trustee hereunder at any time by
giving written notice thereof to the Company and the Holders. Upon
delivery of an instrument of acceptance by a successor Trustee duly
appointed by a Majority in Interest of the Holders the resignation will
become effective.
4. The Trustee may be removed as Trustee hereunder at any time by
Act of the Holders of a Majority in Principal Amount of the Class A-1
Notes, delivered to the Trustee and to the Company.
5. If at any time:
a. The Trustee shall cease to be eligible as Trustee and
shall fail to resign after written request therefor by the Company or by
any Holder, or
b. The Trustee shall be adjudged incompetent, bankrupt or
insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then in any such case, any Holder may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Section G. Acceptance of Appointment by Successor
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers and duties of the retiring Trustee under this
Agreement.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
ARTICLE V
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND THE COMPANY
Section A. The Company to Furnish Trustee Lists of Holders
The Company will furnish or cause to be furnished to the Trustee not
more than five (5) days after its appointment and acceptance as Trustee,
and at such other times as the Trustee may reasonably request in writing,
within ten (10) business days after receipt by the Company of any such
request, a list in such form as the Trustee may reasonably request
containing all the information in the possession or control of the Company,
or any of its paying agents, as to the names and addresses of the Holders
of Class A-1 Notes, obtained since the date as of which the next previous
list, if any, was furnished, and the status of the amount of principal and
interest paid or outstanding in respect of each Class A-1 Notes.
ARTICLE VI
SUPPLEMENTAL AGREEMENTS
Section A. Supplement Agreement Without Consent of Holders
Without the consent of the Holder of any Class A-1 Note, the Company,
when authorized by a board resolution, and the Trustee may from time to
time enter into one or more agreements supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
1. To add to the conditions, limitations and restrictions on the
authorized amount or purposes of issue, authentication and delivery of
Class A-1 Notes, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed; provided that any such
modification does not adversely affect the rights and interests of the
Holders.
2. To evidence the succession of another corporation or entity to
the Company and the assumption by any such successor of the covenants of
the Company contained herein; or
3. To add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
4. To cure any ambiguity, to amend any provision herein which may
be inconsistent with any other provision herein or to make any other
provisions, with respect to matters or questions arising under this
Agreement, which shall not be inconsistent with the provisions of this
Agreement, provided such action shall not adversely affect the rights and
interests of the Holders.
Section B. Supplemental Agreements with Consent of Holders
With the consent of the Holders of not less than a Majority in
Principal Amount affected by such agreement or supplemental agreement, by
Act of such Holders delivered to the Company and the Trustee, the Company
and the Trustee may enter into an agreement or agreements supplemental
hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of the Class A-1 Notes
under this Agreement. Such agreement or supplemental agreement may, with
the consent of a Majority in Interest of the Holders of each Outstanding
Class A-1 Notes affected thereby, effect a compromise or settlement
affecting the term, interest rate and other terms of all the Class A-1
Notes; provided that any such compromise or settlement must be ratable and
proportionate in effect on all Outstanding Class A-1 Note Holders based on
the aggregate amount of principal and interest and penalty payments due
them under the terms of their respective Class A-1 Notes as of the date of
settlement.
The Trustee may in its discretion determine whether or not any Class
A-1 Notes would be affected by any supplemental agreement and any such
determination shall be conclusive upon the Holders of all Class A-1 Notes,
whether theretofore or thereafter authenticated and delivered hereunder.
The Trustee shall not be liable for any such determination made in good
faith.
It shall not be necessary for any Act of Holders under this section
to approve the particular form of any proposed supplemental agreement, but
it shall be sufficient if such Act shall approve the substance thereof.
Section C. Effect of Supplemental Agreements
Upon the execution of any supplemental agreements under this Article,
this Agreement shall be modified in accordance therewith and such
supplemental agreement shall form a part of this Agreement for all
purposes; and every Holder of Class A-1 Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
ARTICLE VII
DEFEASANCE
Section A. Payment of Indebtedness, Satisfaction and Discharge of
Agreement.
Whenever the Company has paid or caused to be paid all amounts then
currently due and payable pursuant to the terms of the Class A-1 Notes then
this Agreement and the rights and interests created hereby shall cease and
become null and void (except as to any surviving rights of transfer or
exchange of Class A-1 Notes herein or therein provided for and except as
otherwise stated in the next paragraph) and the Trustee then acting as such
hereunder shall, at the expense of the Company, execute and deliver such
instruments of satisfaction and discharge as may be necessary.
Notwithstanding anything to the contrary herein contained, the
obligations of the Company to pay or reimburse the Trustee as provided
herein shall survive the termination, satisfaction and discharge of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section A. Counterparts
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.
The Holders have consented hereto and are bound hereto by executing an
agreement to be bound hereby contained in the subscription document related
to the offering of the Class A-1 Notes.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MINISTRY PARTNERS INVESTMENT
CORPORATION, a California corporation
By: __________________________
TRUSTEE
By: ___________________________
___________________________
Print Name
Date: _________________________
