Church Loans & Investment Trust
(A Real Estate Investment Trust)
January 27, 1999
The Biltmore Group of Louisiana, LLC
FBO: Natchitoches, LA
507 Trenton St
W. Monroe, LA 71291
Re: $1,450,000 Interim Loan
Gentlemen:
This will constitute the commitment of Church Loans & Investments Trust
("Church Loans") to loan to The Biltmore Group of Louisiana, LLC FBO:
Natchitoches, LA ("the Borrower") the sum of $1,450,000, or any amount
less than that amount as the Borrower may need, less any legal fees, title
insurance, appraisal costs, mortgage registration tax and all other closing
costs and expense that may be incurred by Church Loans in connection with
the funding and collection of the loan.
The loan is to be made pending the offering of bonds by the Borrower
through MMR Investment Bankers ("MMR") as provided hereinafter.
The loan will be for a term of one year and will bear interest at a variable
rate which would be equal to 1.5% per annum in excess of the "Prime Rate"
of interest published by the Wall Street Journal under the heading "Money
Rates". Interest upon the unpaid principal shall be paid monthly upon
the first day of each month during the term of the loan. Both principal
and interest upon the unpaid principal of the loan will be due at maturity.
The loan will be repaid from the first bond proceeds subject only to
(1)the payment of various broker/dealer fees and (2)an initial sinking
fund reserve of $90,000.
Funds advanced upon this loan would be used to construct an assisted
care facility on 4 acres located on Louisiana Highway 1 Bypass, Natchitoches,
LA.
5305 I-40 West PO Box 8203 Amarillo TX 79114-8203
(806)358-3666 (800)692-1111 Fax (806)358-1430
The Biltmore Group of Louisiana, LLC
FBO: Natchitoches, LA
January 27, 1999
Page 2
This commitment shall be subject to the following conditions:
1. That the Borrower pay to Church Loans upon the acceptance of the
commitment a commitment fee equal to 2.5% (two and one-half percent)
of the principal amount of the funds to be advanced to the Borrower
under the terms of this commitment. One-half of the total
commitment for (ie. $18,125.00) shall be remitted with this signed
commitment letter. Although such commitment fee is due and payable
upon the Borrower's acceptance and execution of this commitment
letter, as a convenience to the Borrower, Church Loans will allow
the balance of the commitment letter fee to be paid at closing from
the proceeds of the loan. However, in the event that you decide not
to proceed to close this loan for any reason, the balance of the
commitment fee is due and owing by you to Church Loans and the amount
already paid in non-refundable. Such fee is not interest, but is
paid and payable to Church Loans to induce Church Loans to enter
into this loan commitment and to compensate Church Loans for making
available the funds necessary to fund the entire amount of the
committed loan whether or not such amount is advanced.
2. That the Borrower pay in advance the sum of $250.00 which is the
title insurance cancellation fee in the event the Borrower decides
not to accept the commitment after title work has begun. Upon
closing this fee will be used to offset other closing expenses.
This sum should be remitted with this signed commitment letter.
The closing of your loan will normally be enhanced if our law firm
orders the title insurance from title companies that have had
experience in dealing with our closings. If possible, we would
recommend that you allow our legal counsel to place the order for
the title insurance. Our legal counsel will order the title
insurance as soon as they have a correct legal description for the
property.
3. That upon acceptance of this commitment the Borrower shall deposit
with Church Loans the additional sum of $2,500.00 which are the
legal fees to be incurred by Church Loans in connection with the
loan. This amount should be remitted with this signed commitment
letter.
4. That the loan shall be secured by a first mortgage lien upon all
the Borrower's existing buildings and facilities.
The Biltmore Group of Louisiana, LLC
FBO: Natchitoches, LA
January 27, 1999
Page 3
5. That a mortgage title insurance policy in the face amount of not
less than the total amount of the loan be issued by a title
insurance company designated by Church Loans, insuring the fact
that Church Loans is the owner and holder of a good and valid
first lien mortgage upon the real estate securing the loan as
described in paragraph 2 above.
6. That the total loan will not exceed 66 2/3% of the total appraised
value of the real estate given to secure the loan. Such appraisal
must be certified to comply with the standards of Church Loans and
be submitted for approval prior to advancement of any funds. Such
appraisal shall be rendered by an appraiser who, among other things,
shall have. (a) appraised the real estate at not more than the fair
market value thereof; (b) appraised the value of the improvements
on the real estate at not more than the depreciated cost thereof;
and (c) considered in making such appraisal the likelihood of
deterioration of the neighborhood in which the real estate and
improvements are located. The qualifications of the appraiser and
references, preferably banks and insurance companies, should be
submitted with the appraisal.
7. That the Borrower enter into a bond offering agreement with MMR
under the terms of which MMR shall assist the Borrower in the
offering upon a best efforts basis bonds of the Borrower in an
amount of not less than $1,800,000 of which the first proceeds
after the payment of the expenses of the offering and an initial
sinking fund reserve of $90,000 shall be used to retire this loan.
The effective date of this bond offering shall be not more than 90
days after the date of the note securing this loan. Effective date
is the date the bonds are first offered for sale.
8. That the promissory note evidencing the loan be guaranteed by the
Forsythe Group, Inc. so that $500,000 of the total amount of the
loan is guaranteed upon guaranty forms furnished by Church Loans.
9. That the loan be closed on or before sixty days from the date
hereof.
10. That during the term of the loan the Borrower shall agree to
periodically supply Church Loans with financial statements and
reports, as requested by Church Loans.
The Biltmore Group of Louisiana, LLC
FBO: Natchitoches, LA
January 27, 1999
Page 4
11. That Church Loans must review and approve all legal documents
prior to closing.
12. That a representative of Church Loans conduct an on-site
inspection of the property to be given by the Borrower to
secure the loan. The expense of this inspection shall be
borne by the Borrower.
13. That the Borrower enter into a loan agreement incorporating the
terms and conditions of this commitment as well as other normal
terms of the Church Loans loan agreement.
14. That should the proceeds from the sale of the bonds through MMR
and other participating broker/dealers, after the payment of the
expenses associated with the bond offering and the establishment
of the first six months sinking fund reserve, be insufficient to
pay the unpaid principal and interest upon the loan committed
herein at its maturity, at the option of the Borrower the term
of said loan shall be renewed and extended by Church Loans as
follows:
(a) The term of the loan shall he initially renewed and extended
for an additional period of one (1) year upon the following
terms and conditions:
(1) The Borrower shall be current upon all of its outstanding
debt obligations, to include, but not necessarily
restricted to all sinking fund payments payable to the
trustee in connection with the bonds to be offered
through MMR, and all interest payments upon the loan to
be made by Church Loans to the Borrower under the terms
of this commitment.
(2) The amount of the loan to be renewed and extended shall
be the lesser of (i) the unpaid principal upon the loan
committed herein at maturity, or (ii) the unpaid
principal amount of all unsold bonds offered through
MMR described above.
(3) The interest rate upon the loan shall be at a variable
rate equal to 1.5% per annum in excess of the "Prime
Rate" of interest published by
The Biltmore Group of Louisiana, LLC
PBO: Natchitoches, LA
January 27, 1999
Page 5
the Wall Street Journal under the heading "Money Rates".
(4) The interest upon the unpaid principal balance of the
loan shall be payable monthly.
(5) The principal upon the loan shall be paid on or before
one year from date.
(6) The Borrower shall pay Church Loans a loan extension fee
equal to 2.5% (two and one-half percent) of the principal
amount of the loan.
(b) If on the maturity of the loan described in paragraph 11 (a)
above, less than all of the bonds to be offered by the
Borrower through MMR have been sold, at the option of the
Borrower, the principal amount of all unsold bonds shall be
renewed and extended by Church Loans into a permanent loan
upon the following terms and conditions;
(1) The Borrower shall be current upon all of its outstanding
debt obligations, to include, but not necessarily
restricted to all Sinking fund payments payable to the
trustee in connection with the bonds to be offered
through MMR, and all interest payments upon the loan to
be made by Church Loans to the Borrower under the terms
of this commitment.
(2) The permanent loan shall bear interest at the same rate
as described in paragraph 11 (a) above.
(3) The amount of the permanent loan shall be payable in
equal, or as equal as possible due to the variable rate
of interest on the loan, monthly installments of
principal and interest over a period of thirteen years,
however, the loan shall be due and payable in full, with
interest, at the date of the final maturity of the bonds.
Borrower shall have the right of the Borrower to prepay
the loan at any time without penalty.
The Biltmore Group of Louisiana, LLC
FBO: Natchitoches, LA
January 27, 1999
Page 6
(4) The Borrower shall pay to Church Loans an additional loan
renewal fee equal to 5% (5 points) of the principal
amount of the permanent loan.
(5) The loan shall continue to be secured on an equal basis
with the outstanding bonds to be issued by the Borrower
through MMR upon all property to be given by the
Borrower to secure the loan committed herein.
(c) Until such time as the loans committed herein are paid in
full, the Borrower shall not further encumber the property
securing the payment of said loans, either by placing
additional mortgages or deeds of trust upon said property,
or by increasing the indebtedness of the Borrower under any
Trust Indenture, mortgage or deed of trust or other security
documents associated with the sale of bonds secured by said
property. Should the Borrower additionally encumber the
property securing the loans committed hereby prior to their
payment in full, Church Loans shall have the right to declare
the unpaid principal and interest upon said loans immediately
due and payable upon thirty days notice to the Borrower.
(d) The term "bonds" as used herein shall mean and refer to the
series of bonds dedicated to the Natchitoches, Louisiana
project.
The acceptance of this commitment must be indicated by the Borrower's
signing and returning the original of this commitment letter within ten
(10) days from the date hereof. The acceptance of this commitment will
be the Borrower's authorization for Church Loans to withhold from the
proceeds of any loan any legal fees, premiums for the purchase of title
insurance, appraisal costs and other closing costs which are to be paid
which are associated with the loan. This commitment is conditioned upon
the loan being closed on or before March 27, 1999. Any extension of this
commitment will be subject to terms which may be mutually agreed upon
at the time of extension.
The Biltmore Group of Louisiana, LLC
FBO: Natchitoches, LA
January 27, 1999
Page 7
We look forward to working with you in connection with this transaction.
Sincerely yours,
/S/KELLY ARCHER
Kelly Archer
Manager of Operations
KA/ja
The above commitment has been agreed to and accepted by the undersigned
Managing Member of The Biltmore Group of Louisiana, LLC.
Date:
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