EXHIBIT 10(m)
SECOND AMENDMENT TO LOAN AGREEMENT
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THIS SECOND AMENDMENT ("Second Amendment") dated as of the 15th day of
July, 1997, to the Loan Agreement (the "Loan Agreement"), made and entered into
as of July 12, 1995, by and among SUMMIT BANCSHARES, INC., a Texas corporation,
(hereinafter called "Borrower') and THE FROST NATIONAL BANK, a national banking
association (hereinafter called "Lender"). All capitalized terms not otherwise
defined herein shall have the meaning ascribed to each of them in the Loan
Agreement.
W I T N E S S E T H:
WHEREAS, Borrower executed the Loan Agreement to govern those two certain
promissory notes from Lender, specifically, a $8,000,000.00 Acquisition Note and
a $1,000,000.00 Liquidity Note (collectively, the "Notes").
WHEREAS, Borrower executed the First Amendment to Loan Agreement on July 15,
1996 which renewed and extended the maturity date of the Notes; and
WHEREAS, the Borrower desires to again renew and extend the unpaid principal
balance of the Notes; and
WHEREAS, the Lender agrees to renew and extend the Notes all as hereinafter
provided.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender do hereby agree as follows:
ARTICLE I
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AMENDMENT TO LOAN AGREEMENT
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1.1 Amendment to Notes. As of the effective date hereof, the Borrower has
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zero outstanding under the Acquisition Note and the Liquidity Note. The
Borrower desires to renew these credit facilities by the execution of another
Acquisition Note and Liquidity Note extending the original payment terms and the
maturity date by one year. Accordingly, Sections 2.02(a) and (b) of the Loan
Agreement shall be, and are hereby, amended to read in their entirety as
follows:
(a) Acquisition Note. From Closing Date and continuing at all times
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through July 15, 1998 (the "Revolving Credit Period") the Loan evidenced
by the Acquisition Note shall be a revolving credit facility which will
allow the Borrower to request such amounts as Borrower may elect from time
to time (each such amount being herein called an "Advance") so long as the
aggregate amount of Advances outstanding at any time under the Acquisition
Note does not exceed Eight Million and No/100 Dollars ($8,000,000.00)
provided however, the minimum Advance must be at least $500,000.00. The
Borrower shall have the right to borrow, repay, and borrow again under the
credit facility. The outstanding principal balance of the Acquisition Note
on July 15, 1998 shall convert to a term facility (the "Term Period")
SECOND AMENDMENT TO LOAN AGREEMENT -- PAGE 1
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and shall be payable in 20 equal quarterly installments of principal plus
all accrued and unpaid interest, with all unpaid principal plus all accrued
and unpaid interest being due and payable on July 15, 2003. Principal and
interest of the Acquisition Note shall be due and payable as provided in
the Acquisition Note.
(b) Liquidity Note. The Liquidity Note shall be due and payable as
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follows: during the Revolving Credit Period the Loan evidenced by the
Liquidity Note shall be a revolving credit facility which will allow the
Borrower to request such amounts as Borrower may elect from time to time
(each such amount being herein called an "Advance") so long as the
aggregate amount of Advances outstanding at any time under the Liquidity
Note does not exceed One Million and No/100 Dollars ($1,000,000.00)
provided however, the minimum Advance must be at least $50,000.00. The
Borrower shall have the right to borrow, repay, and borrow again under the
credit facility. The outstanding principal balance of the Liquidity Note
on July 15, 1998 shall convert to a term facility (the "Term Period") and
shall be payable in 20 equal quarterly installments of principal plus all
accrued and unpaid interest, with all unpaid principal plus all accrued and
unpaid interest being due and payable on July 15, 2003. Principal and
interest of the Liquidity Note shall be due and payable as provided in the
Liquidity Note.
1.2 Amendment to Negative Covenants. The Borrower and Lender agree to
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amend, and do hereby amend, Sections 5.04, 5.06 and 5.10 of the Negative
Covenants in the Loan Agreement such that after the amendment such Sections
shall read in their entirety as follows:
"5.04 Tangible Net Worth. The Borrower shall not permit its
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consolidated Tangible Net Worth to at any time be less than Thirty
Million and No/100 Dollars ($30,000,000.00) plus the Tangible Net Worth of
any subsidiaries acquired after Closing Date. The Borrower shall not
permit the Bank's Tangible Net Worth at any time to be less than Twelve
Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00)."
"5.06 Dividends. Borrower shall not declare or pay any dividends,
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make any payment on account of any class of the capital stock of Borrower
now or hereafter outstanding, or make any distribution of cash or property
to holders of any shares of such stock which exceed $2,000,000.00 in the
aggregate during any fiscal year, provided however, without Lender's prior
written consent, Borrower will not declare any dividend so long as Borrower
is in default in payment of the Obligations. Payment by Borrower for
shares purchased under a stock repurchase plan by which Borrower purchases
its own shares on the open market will not be considered a distribution to
shareholders."
"5.10 Limitation on Debt. Borrower shall not, nor allow any
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Subsidiary to, create, incur, assume, become liable in any manner in
respect of, or suffer to exist, any debt for borrowed money except:
(a) debt, excluding debt created under this Agreement, not in excess of
$1,000,000.00 at any one time outstanding;
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(b) debt created under this Agreement;
(c) debt secured by a purchase money security interest; and
(d) $6,000,000.00 of federal funds purchased excluding intercompany
transactions (meaning transaction between or among Borrower and its
Subsidiaries, or any of them)."
ARTICLE 11
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CONDITIONS OF EFFECTIVENESS
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2.1 Effective Date. This Second Amendment shall become effective as of
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July 15, 1997, when, and only when, Lender shall have received counterparts of
this Second Amendment executed and delivered by Borrower and when each of the
following conditions shall have been met, all in form, substance, and date
satisfactory to Lender:
(a) Renewal Notes. Borrower shall have executed and delivered to
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Lender a new Acquisition Note and Liquidity Note, payable to the order of
Lender as set forth therein, duly executed on behalf of the Borrower, dated
effective July 15, 1997 in the principal amounts of $8,000,000.00 and
$1,000,000.00, respectively.
(b) Additional Loan Documents. Borrower shall have executed and
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delivered to Lender such other documents as shall have been requested by
Lender to renew, and extend, the Loan Documents to secure payment of the
Obligations of Borrower, all in form satisfactory to Lender and its
counsel.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
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3.1 Representations and Warranties. ln order to induce Lender to enter
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into this Second Amendment, Borrower represents and warrants the following:
(a) Borrower has the corporate power to execute and deliver this
Second Amendment, the Notes, and other Loan Documents and to perform all of
its obligations in connection herewith and therewith.
(b) The execution and delivery by Borrower of this Second Amendment,
the Notes, and other Loan Documents and the performance of its obligations
in connection herewith and therewith: (i) have been duly authorized or will
be duly ratified and affirmed by all requisite corporate action; (ii) will
not violate any provision of law, any order of any court or agency of
government or the Articles of Incorporation or Bylaws of such entity; (iii)
will not be in conflict with, result in a breach of or constitute (alone or
with due notice or lapse of time or both) a default under any indenture,
agreement or other instrument; and (iv) will not require any registration
with, consent or approval of or other action by any federal, state,
provincial or other governmental authority or regulatory body.
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(c) There is no action, suit or proceeding at law or in equity or by
or before any governmental instrumentality or other agency or regulatory
authority now pending or, to the knowledge of Borrower, threatened against
or affecting Borrower or any properties or rights of Borrower or involving
this Second Amendment or the transactions contemplated hereby which, if
adversely determined, would materially impair the right of Borrower, to
carry on business substantially as now conducted or materially and
adversely affect the financial condition of Borrower or materially and
adversely affect the ability of Borrower to consummate the transactions
contemplated by this Second Amendment.
(d) The representations and warranties of Borrower contained in the
Loan Agreement, this Second Amendment, the Notes, and any other Loan
Document securing Borrowers Obligations and indebtedness to Lender are
correct and accurate on and as of the date hereof as though made on and as
of the date hereof, except to the extent that the facts upon which such
representations are based have been changed by the transactions herein
contemplated.
ARTICLE IV
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RATIFICATION OF OBLIGATIONS AND LIENS
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4.1 Ratification of Obligation. The Borrower does here acknowledge,
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ratify and confirm that it is obligated and indebted to Lender as evidenced by
the Loan Agreement (as amended by this Second Amendment), the Notes and all
other Loan Documents.
4.2 Valid Liens. Borrower hereby acknowledges and agrees that the liens
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and security interests of the Loan Documents are valid and subsisting liens and
security interests and are superior to all liens and security interests other
than those exceptions approved by Lender in writing. Nothing herein contained
shall affect or impair the validity or priority of the liens and security
interests under the Loan Documents.
4.3 Ratification of Agreements. The Loan Agreement, this Second
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Amendment, the Notes, and each other Loan Document, as hereby amended, is
acknowledged, ratified and confirmed in all respects as being valid, existing,
and of full force and effect. Any reference to the Loan Agreement in any Loan
Document shall be deemed to be a reference to the Loan Agreement as amended by
this Second Amendment. The execution, delivery and effectiveness of this Second
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of Lender under the Loan Agreement, nor constitute a
waiver of any provision of the Loan Agreement. The Borrower acknowledges,
ratifies and confirms that the collateral securing the Loan secures all of the
indebtedness of the Borrower, including without limitation, the Notes.
ARTICLE V
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MISCELLANEOUS
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5.1 Survival of Agreements. All representations, warranties, covenants
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and agreements of Borrower, herein or in any other Loan Document shall survive
the execution and delivery of this Second Amendment, and the other Loan
Documents and the performance hereof and thereof,
SECOND AMENDMENT TO LOAN AGREEMENT -- PAGE 4
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including without limitation the making or granting of the Loan and the delivery
of the Notes and all other Loan Documents, and shall further survive until all
of Borrower's Obligations to Lender are paid in full. All statements and
agreements contained in any certificate or instrument delivered by Borrower
hereunder or under the Loan Documents to Lender shall be deemed to constitute
the respective representations and warranties by Borrower and/or respective
agreements and covenants of Borrower under this Second Amendment and under the
Loan Agreement.
5.2 Loan Document. This Second Amendment, the Notes, and each other Loan
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Documents executed in connection herewith are each a Loan Document and all
provisions in the Loan Agreement, as amended, pertaining to Loan Documents apply
hereto and thereto.
5.3 Governing Law. This Second Amendment shall be governed by and
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construed in all respects in accordance with the laws of the State of Texas and
any applicable laws of the United States of America, including construction,
validity and performance.
5.4 Counterparts. This Second Amendment may be separately executed in any
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number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to constitute one and the same
Second Amendment.
5.5 Release of Claims. Borrower by its execution of this Second
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Amendment, hereby declares that it has no set-offs, counterclaims, defenses or
other causes of action against Lender arising out of the Loan, the renewal,
modification and extension of the Loan, any documents mentioned herein or
otherwise; and, to the extent any such setoffs, counterclaims, defenses or other
causes of action which may exist, whether known or unknown, such items are
hereby expressly waived and released by Borrower.
5.6 Attorneys' Fees. Borrower hereby agrees to pay to Lender, upon
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demand, the reasonable attorneys' fees and expenses of Lender's counsel, filing
and recording fees and other reasonable expenses incurred by Lender in
connection with this Second Amendment. Borrower also agrees to provide to
Lender such other documents and instruments as Lender may reasonably request in
connection with the renewal, extension and modification of the Loans mentioned
herein.
5.7 ENTIRE AGREEMENT. THIS SECOND AMENDMENT, TOGETHER WITH ANY LOAN
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DOCUMENTS EXECUTED IN CONNECTION HEREWITH, CONTAINS THE ENTIRE AGREEMENT BETWEEN
THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND ALL
PRIOR AGREEMENTS RELATIVE THERETO WHICH ARE NOT CONTAINED HEREIN OR THEREIN ARE
TERMINATED. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS
SECOND AMENDMENT, AND THE LOAN DOCUMENTS MAY BE AMENDED, REVISED, WAIVED,
DISCHARGED, RELEASED OR TERMINATED ONLY BY A WRITTEN INSTRUMENT OR INSTRUMENTS,
EXECUTED BY THE PARTY AGAINST WHICH ENFORCEMENT OF THE AMENDMENT, REVISION,
WAIVER, DISCHARGE, RELEASE OR TERMINATION IS ASSERTED. ANY ALLEGED AMENDMENT,
REVISION, WAIVER, DISCHARGE, RELEASE OR TERMINATION WHICH IS NOT SO DOCUMENTED
SHALL NOT BE EFFECTIVE AS TO ANY PARTY.
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IN WITNESS WHEREOF, this Second Amendment is executed effective as of the
date first written above.
BORROWER: SUMMIT BANCSHARES, INC.
By: /s/ Philip E. Norwood
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Its: President
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By: /s/ Bob G. Scott
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Its: Senior Vice President
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LENDER: THE FROST NATIONAL BANK
By: /s/ Jerry L. Crutsinger
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Its: Vice President
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