EXHIBIT 99.1
LOAN AND SUBORDINATED
DEBENTURE PURCHASE AGREEMENT
between
LASALLE BANK NATIONAL ASSOCIATION
and
▇▇▇▇▇▇ CAPITAL GROUP, INC.
Dated as of November 27, 2002
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS...........................................................1
1.1. Defined Terms................................................1
1.2. Certain UCC and Accounting Terms: Interpretations............8
1.3. Exhibits and Schedules Incorporated..........................8
2. CREDIT FACILITIES.....................................................7
2.1. The Loans....................................................8
2.2. The Notes and the Subordinated Debenture.....................9
2.3. Maturity Dates...............................................9
2.4. Collateral...................................................9
2.5. The Closing..................................................9
2.6. Interest Rates..............................................10
2.7. Payments....................................................10
2.8. Capital Adequacy............................................10
3. DISBURSEMENTS........................................................10
3.1. Initial and Subsequent Disbursements........................10
3.2. Conditions Precedent to Initial Disbursement................10
3.3. Conditions to All Disbursements; Renewals and
Conversions.................................................11
4. GENERAL REPRESENTATIONS AND WARRANTIES...............................12
4.1. Organization and Authority..................................12
4.2. No Impediment to Transactions...............................13
4.3. Purposes of Loans...........................................14
4.4. Financial Condition.........................................14
4.5. Title to Properties.........................................15
4.6. No Material Adverse Change..................................16
4.7. Compliance with Law.........................................16
4.8. Borrower Status.............................................18
4.9. No Misstatement.............................................18
4.10. Representations and Warranties Generally....................18
5. GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.........................18
5.1. Compliance with Loan Documents..............................19
5.2. Material Transactions.......................................19
5.3. Pledged Shares..............................................20
5.4. Business Operations.........................................20
5.5. Compliance with Laws........................................21
5.6. Lender Expenses.............................................22
5.7. Subordinated Debt...........................................23
5.8. Inspection Rights...........................................23
6. REPORTING............................................................23
6.1. Annual......................................................23
6.2. Quarterly...................................................23
6.3. Securities Filings..........................................23
6.4. Compliance Certificate......................................23
6.5. Copies of Other Reports and Correspondence..................24
6.6. Proceedings.................................................24
6.7. Event of Default; Material Adverse Change...................24
6.8. Issuance of Borrower Capital Stock..........................24
6.9. Other Information Requested by Lender.......................24
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7. FINANCIAL COVENANTS..................................................24
7.1. Capitalization..............................................24
7.2. Tier 1 Capital..............................................24
7.3. Minimum Return on Average Assets............................25
7.4. Non-Performing Asset Ratio..................................25
7.5. Loss Reserves...............................................25
7.6. Debt to Equity..............................................25
8. BORROWER'S DEFAULT...................................................25
8.1. Borrower's Defaults and Lender's Remedies...................25
8.2. Protective Advances.........................................28
8.3. Other Remedies..............................................29
8.4. No Lender Liability.........................................29
8.5. Lender's Fees and Expenses..................................29
8.6. Limitation on Remedies with Respect to Subordinated Debt....29
9. MISCELLANEOUS........................................................29
9.1. Release; Indemnification....................................29
9.2. Assignment and Participation................................30
9.3. Prohibition on Assignment...................................30
9.4. Time of the Essence.........................................30
9.5. No Waiver...................................................30
9.6. Severability................................................31
9.7. Usury; Revival of Liabilities...............................31
9.8. Notices.....................................................31
9.9. Successors and Assigns......................................32
9.10. No Joint Venture............................................32
9.11. Brokerage Commissions.......................................32
9.12. Publicity...................................................32
9.13. Documentation...............................................32
9.14. Additional Assurances.......................................32
9.15. Entire Agreement............................................33
9.16. Choice of Law...............................................33
9.17. Forum; Agent; Venue.........................................33
9.18. No Third Party Beneficiary..................................33
9.19. Legal Tender of United States...............................33
9.20. Definitions; Captions; Counterparts.........................33
9.21. Knowledge; Discretion.......................................33
9.22. WAIVER OF RIGHT TO JURY TRIAL...............................34
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EXHIBITS:
A Form of Term Note
B Form of Revolving Note
C Form of Subordinated Debenture
D Form of Pledge Agreement
E Form of Collateral Safekeeping Agreement
F Form of Rate Election Notice
G Form of Opinion of Borrower's Counsel
H Form of Quarterly Compliance Certificate
DISCLOSURE SCHEDULES:
4.1.2 Subsidiaries; Capital Stock of Borrower
4.1.3 Capital Stock of the Subsidiaries
4.1.4 Corporate Names
4.4.2 Loans
4.5.1 Financing Statements
4.6 Material Adverse Changes
4.7.2 Regulatory Enforcement Actions
4.7.3 Pending Litigation
4.7.5 ERISA
5.2.3 Indebtedness
5.2.4 Permitted Asset Sales
5.4.5 Insurance
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LOAN AND SUBORDINATED DEBENTURE PURCHASE AGREEMENT
THIS LOAN AND SUBORDINATED DEBENTURE PURCHASE AGREEMENT (this
"AGREEMENT") is dated as of November 27, 2002 and is made by and between ▇▇▇▇▇▇
CAPITAL GROUP, INC., a Delaware corporation ("BORROWER"), and LASALLE BANK
NATIONAL ASSOCIATION, a national banking association ("LENDER").
R E C I T A L S :
A. Borrower is a bank holding company that owns 100% of the issued and
outstanding capital stock of ▇▇▇▇ ▇▇▇▇▇▇ Bank ("SUBSIDIARY BANK"), an Illinois
banking corporation with its main banking premises located in Wheeling,
Illinois. The issued and outstanding capital stock of Subsidiary Bank may be
referred to as the "SUBSIDIARY BANK SHARES."
B. Borrower has requested that Lender provide it with three credit
facilities in the aggregate principal amount of $22,000,000 consisting of (a) a
term Loan (the "TERM LOAN") in the principal amount of $500,000 (the "TERM LOAN
AMOUNT"), (b) a revolving line-of-credit (the "REVOLVING LOAN") in the principal
amount of $11,500,000 (the "REVOLVING LOAN AMOUNT") and (c) subordinated debt
(the "SUBORDINATED DEBT") in the principal amount of $10,000,000 (the
"SUBORDINATED DEBT AMOUNT"). The Term Loan and the Revolving Loan may be
referred to collectively as the "SENIOR LOANS" and the Senior Loans and the
Subordinated Debt may be referred to collectively as the "LOANS."
C. The proceeds from the Loans shall be used by Borrower to retire
certain existing indebtedness of Borrower to Lender and for general corporate
purposes.
D. The Subordinated Debt is intended to qualify as Tier 2 capital under
applicable rules and regulations promulgated by the Board of Governors of the
Federal Reserve System (the "FRB").
E. Lender is willing to lend to Borrower up to an aggregate principal
amount of $22,000,000 under the Loans in accordance with the terms, subject to
the conditions and in reliance on the recitals, representations, warranties,
covenants and agreements set forth herein and in the other Loan Documents (as
defined below).
THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained, the parties hereto hereby agree as follows:
A G R E E M E N T:
1. DEFINITIONS.
1.1. DEFINED TERMS. The following capitalized terms generally used in
this Agreement and in the other Loan Documents shall have the meanings defined
or referenced below. Certain other capitalized terms used only in specific
sections of this Agreement may be defined in such sections.
"AFFILIATE(S)" shall mean, with respect to any Person, such Person's
immediate family members, partners, members or parent and subsidiary
corporations, and any other Person directly or indirectly controlling,
controlled by, or under common control with, said Person, and their respective
Affiliates, members, shareholders, directors, officers, employees, agents and
representatives.
"AGREED UPON TERMS AND PROCEDURES" shall mean the Agreed Upon Terms and
Procedures relating to interest rates, interest and payments executed by
Borrower on the date hereof as such may be amended, restated, supplemented or
modified from time to time.
"ASSIGNEE LENDER" shall have the meaning ascribed to such term in
Section 9.2.
"AVERAGE TOTAL ASSETS" shall have the meaning ascribed to such term in
Section 7.3.
"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of 1978, as
amended or recodified.
"BASE RATE" shall mean that rate of interest (expressed as a percent
per annum) equal to Lender's "base" or "prime" rate (which is not necessarily
the lowest or most favorable rate of interest charged by Lender on commercial
loans at any time) in effect from time to time, which means a base rate of
interest established by Lender from time to time that serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto. Any change in the rate of interest hereunder due to a change
in the base or prime rate shall become effective on the date each change in the
base or prime rate is announced by Lender.
"BASE RATE TRANCHE" shall mean a Borrowing Tranche as to which the Base
Rate is applicable.
"BORROWER" shall have that meaning ascribed to such term above.
"BORROWER 2001 AUDITED FINANCIAL STATEMENTS" shall have the meaning
ascribed to such term in Section 4.4.
"BORROWER 2001 AUDITED FINANCIAL STATEMENTS DATE" shall have the
meaning ascribed to such term in Section 4.4.
"BORROWER FINANCIAL STATEMENTS" has the meaning ascribed to such term
in Section 4.4.
"BORROWER'S ACCOUNTANT" means KPMG LLP, or such other nationally
recognized firm of certified public accountants selected by Borrower as shall
from time to time audit Borrower.
"BORROWER'S LIABILITIES" means Borrower's obligations under this
Agreement, the Term Note, the Revolving Note and any other Loan Documents (other
than the principal, interest and other amounts payable under the Subordinated
Debenture).
"BORROWING DATE" means the date any Borrowing Tranche is disbursed,
renewed or converted (from a LIBO Tranche to a Base Rate Tranche or from a Base
Rate Tranche to a LIBO Tranche).
"BORROWING TRANCHE" shall mean a disbursement of proceeds under any
Loan pursuant to this Agreement and the Agreed Upon Terms and Procedures.
"BUSINESS DAY" shall mean (a) for all purposes other than as covered by
clause (b) hereof, a day of the week (but not a Saturday, Sunday or a legal
holiday under the laws of the State of Illinois or any other day on which
banking institutions located in Illinois are authorized or required by law or
other governmental action to close) on which the Chicago, Illinois offices of
Lender are open to the public for carrying on substantially all of Lender's
business functions and (b) with respect to determinations in connection with,
and payments of principal and interest on any LIBO Rate Tranche, any day which
is a Business Day described in clause (a) and which is also a day for trading by
and between banks in U.S. dollar-denominated deposits in the London Interbank
Eurodollar Market. Unless specifically referenced in this Agreement as a
Business Day, all references to "days" shall be to calendar days.
"CAPITAL EXPENDITURES" shall mean expenditures made or costs incurred
that are required to be capitalized for financial reporting purposes in
accordance with GAAP, but excluding expenditures made in connection with the
replacement or restoration of assets to the extent reimbursed or financed from
insurance proceeds paid on account of the loss of or damage to the assets being
replaced or restored.
"CLOSING" has that meaning ascribed to such term in Section 2.5.
"CLOSING DATE" means November 27, 2002.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended or
recodified.
"COLLATERAL" shall mean all the property (including all tangible and
intangible property) in which the Collateral Documents grant (or purport to
grant) Lender a security interest.
"COLLATERAL DOCUMENTS" shall mean the Pledge Agreement, the Collateral
Safekeeping Agreement and such other certificates, documents, and instruments
entered into or delivered in connection with or relating to the Collateral.
"CONDITION OR RELEASE" shall mean any presence, use, storage,
transportation, discharge, disposal, release or threatened release of any
Hazardous Materials.
"DEFAULT RATE" shall have the meaning ascribed to such term in the
Agreed Upon Terms and Procedures.
"DISCLOSURE SCHEDULE" means, in aggregate, the disclosures contemplated
herein as included in the Disclosure Schedule, which has been delivered in
connection with the execution of the Agreement.
"EMPLOYEE BENEFIT PLAN" means an "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
"EQUITY INTEREST" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person which is not a corporation
and any and all warrants, options or other rights to purchase any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended or recodified.
"ERISA AFFILIATE" means any person (as defined in Section 3(9) of
ERISA) which together with Borrower would be a member of the same "controlled
group" within the meaning of Sections 414(b), (m), (c) and (o) of the Code.
"EVENT OF DEFAULT" shall have the meaning ascribed to such term in
Section 8.1.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended or
recodified.
"FDIC" means the Federal Deposit Insurance Corporation.
"FDI ACT" means the Federal Deposit Insurance Act, as amended or
recodified.
"FRB" has the meaning ascribed to such term in the recitals hereto.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
"GOVERNMENTAL AGENCY(IES)" means, individually or collectively, any
federal, state, county or local governmental department, commission, board,
regulatory authority or agency including, without limitation, the FRB, the ICB
and the FDIC.
"HAZARDOUS MATERIALS" means oil, flammable explosives, asbestos, urea
formaldehyde insulation, polychlorinated biphenyls, radioactive materials,
hazardous wastes, toxic or contaminated substances or similar materials,
including, without limitation, any substances which are "hazardous substances,"
"hazardous wastes," "hazardous materials" or "toxic substances" under the
Hazardous Materials Laws and/or other applicable environmental laws, ordinances
or regulations.
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"HAZARDOUS MATERIALS CLAIMS" shall have the meaning ascribed to such
term in Section 4.7.6.
"HAZARDOUS MATERIALS LAWS" mean any laws, regulations, permits,
licenses or requirements pertaining to the protection, preservation,
conservation or regulation of the environment which relates to real property,
including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section
7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environment Response,
Compensation and Liability Act of 1980, as amended (including the Superfund
Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the
Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C.
Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; and all comparable state and local laws, laws of other jurisdictions or
orders and regulations.
"IBA" means the Illinois Banking Act, as amended or recodified.
"ICB" means the office of the Illinois Commissioner of Banks and Real
Estate.
"INDEBTEDNESS" means and includes: (a) all items arising from the
borrowing of money that, according to GAAP now in effect, would be included in
determining total liabilities as shown on the consolidated balance sheet of
Borrower or any Subsidiary; (b) all obligations secured by any lien in property
owned by Borrower whether or not such obligations shall have been assumed; (c)
all guarantees and similar contingent liabilities with respect to obligations of
others; and (d) all other obligations (including, without limitation, letters of
credit) evidencing obligations to others; provided, however, Indebtedness shall
not include trade payables incurred in the ordinary course of business and, in
the case of Subsidiary Bank, Indebtedness shall not include deposits or other
`indebtedness incurred in the ordinary course of business and in accordance with
customary banking practices and applicable laws and regulations.
"INDENTURE" means that certain indenture dated as of October 21, 2002,
between Borrower and LaSalle Bank National Association, as trustee.
"INSTRUCTIONS" means disbursement instructions given by Borrower to
Lender specifying the manner in which proceeds of the Loans should be disbursed
at Closing.
"INTEREST RATE FLOOR AMOUNT" shall mean an interest rate amount equal
to 3.50% per annum and, notwithstanding any other provision in this Agreement or
any other Loan Document, shall represent the lowest level at which interest may
accrue under any Senior Loan.
"INTEREST RATE PROTECTION AGREEMENT" shall mean an interest rate swap,
cap, collar or other hedging or derivative agreement, to which Lender or any
Affiliate of Lender is the counterparty, intended to mitigate interest rate
risk, along with any other related agreement or instrument executed in
connection therewith.
"INTERIM FINANCIAL STATEMENTS DATE" shall have the meaning ascribed to
such term in Section 4.4.
"INITIAL DISBURSEMENT" shall have the meaning ascribed to such term in
Section 3.1.
"JUNIOR SUBORDINATED DEBENTURES" means the 9 3/4% junior subordinated
debentures due 2032 issued by Borrower pursuant to the Indenture.
"LEASES" shall mean all leases, licenses or other documents providing
for the use or occupancy of any portion of any Property, including all
amendments, extensions, renewals, supplements,
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modifications, sublets and assignments thereof and all separate letters or
separate agreements relating thereto.
"LENDER" shall have that meaning ascribed to such term above.
"LIBO RATE" shall mean that rate of interest equal to (a) the quotient
of (i) the rate of interest, rounded upward, if necessary, to the nearest whole
multiple of .0625% (1/16 of 1%), quoted by Lender as the London Inter-Bank
Offered Rate for deposits in U.S. Dollars on the date, at approximately 11:00
a.m. London time, that is two Business Days prior to any applicable Borrowing
Date for purposes of calculating effective rates of interest for Loans or
obligations making reference thereto for an amount approximately equal to a LIBO
Rate Tranche and for a period of time approximately equal to a LIBOR Period,
divided by (ii) 100% minus the Reserve Percentage.
"LIBO RATE TRANCHE" shall mean a Borrowing Tranche as to which the LIBO
Rate is applicable.
"LIBOR PERIOD" shall mean a period of 90 days, plus or minus one or two
days, with respect to a LIBO Rate Tranche; provided that no LIBOR Period shall
extend beyond any Maturity Date.
"LOANS" has that meaning ascribed to such term in the recitals hereto.
"LOAN DOCUMENTS" means those documents and instruments (including,
without limitation, all agreements, instruments and documents, including,
without limitation, guaranties, mortgages, deeds of trust, pledges, powers of
attorney, consents, assignments, contracts, notices and all other written matter
heretofore, now and/or from time to time hereafter executed by and/or on behalf
of Borrower in connection with this Agreement and the Loans) entered into or
delivered in connection with or relating to the Loans, including the documents
listed on the schedule of closing documents prepared in connection with the
Closing. Loan Documents shall also include any Interest Rate Protection
Agreement between Borrower and Lender.
"LOAN FEE" means both a one-time acceptance fee equal to $75,000 and a
one-time facility fee equal to 1.25% of the Subordinated Debt Amount.
"MATURITY DATE" means any of the Term Loan Maturity Date, the Revolving
Loan Maturity Date and/or the Subordinated Debt Maturity Date as the context may
indicate.
"NONPERFORMING ASSETS" shall have the meaning ascribed to such term in
Section 7.4.
"NONPERFORMING LOANS" shall have the meaning ascribed to such term in
Section 7.5.
"NOTES" means the Term Note, the Revolving Note and the Subordinated
Debenture each as amended, restated, supplemented or modified from time to time,
and each note or debenture, as the case may be, delivered in substitution or
exchange for any of such Notes and, where applicable, shall include the singular
number as well as the plural.
"PERMITTED DISTRIBUTIONS" means either or both of (a) during any
calendar year, beginning with 2003, either or both of (i) cash dividends of
Borrower that do not exceed, in the aggregate, 25% of the net after tax income
(determined in accordance with GAAP) of Borrower, if any, for such calendar
year, and (ii) cash dividends by a Subsidiary (other than the Trust) that do not
exceed, in the aggregate, 60% of the net after tax income (determined in
accordance with GAAP) of such Subsidiary, if any, for such calendar year, and
(b) cash distributions by the Trust (with respect to its outstanding securities
as of the date of this Agreement).
"PERSON" means an individual, a corporation (whether or not for
profit), a partnership, a limited liability company, a joint venture, an
association, a trust, an unincorporated organization, a government or any
department or agency thereof (including a Governmental Agency) or any other
entity or organization.
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"PLEDGE AGREEMENT" means a Pledge Agreement dated as of the Closing
Date between Borrower and Lender (as amended, restated, supplemented or modified
from time to time, the "PLEDGE AGREEMENT") in the form attached as Exhibit D
hereto, pursuant to which the Subsidiary Bank Shares are pledged to Lender.
"POTENTIAL EVENT OF DEFAULT" shall mean an event or circumstance that
with the passage of time, the giving of notice or both, could become an Event of
Default.
"PROPERTY" means any real property owned or leased by Borrower or any
Subsidiary.
"RATE ELECTION NOTICE" shall mean a properly completed notice in the
form attached as Exhibit F hereto or a verbal notice conveyed to Lender in
accordance with its disbursement procedures from time to time.
"RESERVE FOR LOAN AND LEASE LOSSES" shall have the meaning ascribed to
such term in Section 7.4.
"RESERVE PERCENTAGE" shall mean the percentage announced within Lender
as the reserve percentage under Regulation D of the FRB for Loans and
obligations making reference to a LIBO Rate for a LIBOR Period. The Reserve
Percentage shall be based on Regulation D or other regulations from time to time
in effect concerning reserves for Eurocurrency Liabilities as defined in
Regulation D from related institutions as though Lender were in a net borrowing
position, as promulgated by the FRB, or its successor.
"REVOLVING LOAN" has that meaning ascribed to such term in the recitals
hereto.
"REVOLVING LOAN AMOUNT" has that meaning ascribed to such term in the
recitals hereto.
"REVOLVING LOAN MATURITY DATE" means November 27, 2003.
"REVOLVING NOTE" means a promissory note in the form attached as
Exhibit B hereto in the principal amount of the Revolving Loan Amount, as
amended, restated, supplemented or modified from time to time and each note
delivered in substitution or exchange for such note.
"RICO RELATED LAW" shall mean the Racketeer Influenced and Corrupt
Organizations Act of 1970 or any other federal, state or local law for which
forfeiture of assets is a potential penalty.
"SEC" shall mean the Securities and Exchange Commission of the United
States of America.
"SUBORDINATED DEBT" has that meaning ascribed to such term in the
recitals hereto.
"SUBORDINATED DEBT AMOUNT" has that meaning ascribed to such term in
the recitals hereto.
"SUBORDINATED DEBT MATURITY DATE" means November 27, 2009.
"SUBORDINATED DEBENTURE" means a subordinated debenture note in the
form attached as Exhibit C hereto in the principal amount of the Subordinated
Debt Amount, as amended, restated, supplemented or modified from time to time
and each debenture delivered in substitution or exchange for such subordinated
debenture.
"SUBSIDIARY" means Subsidiary Bank and any other corporation or other
entity of which any Equity Interest is directly or indirectly owned by Borrower.
"SUBSIDIARY BANK" has that meaning ascribed to such term in the
recitals hereto.
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"SUBSIDIARY BANK SHARES" has that meaning ascribed to such term in the
recitals hereto.
"▇▇▇▇▇▇ FAMILY" shall have the meaning ascribed to such term in Section
8.1.1.21.
"TERM LOAN" has that meaning ascribed to such term in the recitals
hereto.
"TERM LOAN AMOUNT" has that meaning ascribed to such term in the
recitals hereto.
"TERM LOAN MATURITY DATE" means November 27, 2009.
"TERM NOTE" means a promissory note in the form attached as Exhibit A
hereto in the principal amount of the Term Loan Amount, as amended, restated,
supplemented or modified from time to time and each note delivered in
substitution or exchange for such note.
"TIER 1 CAPITAL" shall have the meaning ascribed to such term in
Section 7.2.
"TIER 2 CAPITAL" shall have the definition provided in, and shall be
determined in accordance with, the rules and regulations of the FRB.
"TRANSFER" shall mean any conveyance, transfer, sale, assignment,
pledge, hypothecation, mortgage, encumbrance or other disposition of all or any
portion of the Property or of any interest in Borrower, as applicable, or the
entering into of any agreement to do any of the foregoing, whether the same
occurs directly, indirectly, by operation of law or otherwise.
"TRUST" means that certain Delaware statutory trust known as "TAYC
Capital Trust I," which is maintained by Borrower in accordance with that
certain Amended and Restated Trust Agreement dated as of October 21, 2002.
"UCC" shall mean the Uniform Commercial Code as enacted in the State of
Illinois, as amended or recodified.
1.2. CERTAIN UCC AND ACCOUNTING TERMS: INTERPRETATIONS. Except as
otherwise defined in this Agreement or the other Loan Documents, all words,
terms and/or phrases used herein and therein shall be defined by the applicable
definition therefore (if any) in the UCC. Notwithstanding the foregoing, any
accounting terms used in this Agreement which are not specifically defined
herein shall have the meaning customarily given to them in accordance with GAAP.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement. The foregoing definitions are
equally applicable to both the singular and plural forms of the terms defined.
The words "hereof", "herein" and "hereunder" and words of like import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The word "including" when used in this
Agreement without the phrase "without limitation," shall mean "including,
without limitation". All references to time of day herein are references to
Chicago, Illinois time unless otherwise specifically provided. Any reference
contained herein to attorneys' fees and expenses shall be deemed to be
reasonable fees and expenses of Lender's outside counsel and of any other
third-party experts or consultants engaged by Lender's outside counsel on
Lender's behalf. All references to any Loan Document shall be deemed to be to
such document as amended, modified or restated from time to time.
1.3. EXHIBITS AND SCHEDULES INCORPORATED. All exhibits and schedules
attached hereto or referenced herein, are hereby incorporated into this
Agreement.
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2. CREDIT FACILITIES.
2.1. THE LOANS. Lender agrees to extend to Borrower the following
credit facilities in the aggregate principal amount of the sum of Term Loan
Amount, the Revolving Loan Amount plus the Subordinated Debt Amount:
2.1.1. THE TERM LOAN. Lender agrees to extend the Term Loan to
Borrower in accordance with the terms of, and subject to the conditions set
forth in, this Agreement, the Term Note and the other Loan Documents. An initial
Borrowing Tranche in an amount equal to the entire principal amount of the Term
Loan shall be borrowed on the Closing Date and, thereafter, such Borrowing
Tranche may be converted or renewed from time to time in accordance with the
terms and subject to the conditions set forth in this Agreement. Subject to
Section 2.6, the Interest Rate Floor Amount and any other conditions and
limitations set forth in this Agreement, any Borrowing Tranche under the Term
Loan shall be treated as, at Borrower's election subject to and in accordance
with the terms in this Agreement: (a) a LIBO Rate Tranche and shall bear
interest per annum at a rate equal to 1.15% (115 basis points) plus the LIBO
Rate; or (b) a Base Rate Tranche and shall bear interest at a rate equal to the
Base Rate. The unpaid principal balance plus all accrued but unpaid interest on
the Term Loan shall be due and payable on the Term Loan Maturity Date, or such
earlier date on which such amount shall become due and payable on account of
acceleration by Lender in accordance with the terms of the Term Note and this
Agreement.
2.1.2. THE REVOLVING LOAN. Lender agrees to extend the Revolving
Loan to Borrower in accordance with the terms of, and subject to the conditions
set forth in, this Agreement, the Revolving Note and the other Loan Documents.
An initial Borrowing Tranche under the Revolving Loan shall be borrowed on the
Closing Date and, thereafter, any such Borrowing Tranche may be converted or
renewed from time to time in accordance with the terms and subject to the
conditions set forth in this Agreement. Subject to Section 2.6, the Interest
Rate Floor Amount and any other conditions and limitations set forth in this
Agreement, any Borrowing Tranche under the Revolving Loan shall be treated as,
at Borrower's election subject to and in accordance with the terms set forth in
this Agreement: (a) a LIBO Rate Tranche and shall bear interest per annum at a
rate equal to 1.15% (115 basis points) plus the LIBO Rate; or (b) a Base Rate
Tranche and shall bear interest at a rate equal to the Base Rate. The unpaid
principal balance plus all accrued but unpaid interest on the Revolving Loan
shall be due and payable on the Revolving Loan Maturity Date, or such earlier
date on which such amount shall become due and payable on account of
acceleration by Lender in accordance with the terms of the Revolving Note and
this Agreement.
2.1.3. THE SUBORDINATED DEBT. Lender agrees to extend the
Subordinated Debt to Borrower in accordance with the terms of, and subject to
the conditions set forth in, this Agreement, the Subordinated Debenture and the
other Loan Documents. An initial Borrowing Tranche in an amount equal to the
entire principal amount of the Subordinated Debt shall be borrowed on the
Closing Date and, thereafter, any such Borrowing Tranche may be converted or
renewed from time to time in accordance with the terms and subject to the
conditions set forth in this Agreement. Subject to Section 2.6 and any other
conditions and limitations set forth in this Agreement, any Borrowing Tranche
under the Subordinated Debt shall be treated as, at Borrower's election subject
to and in accordance with the terms set forth in this Agreement: (a) a LIBO Rate
Tranche and shall bear interest per annum at a rate equal to 2.75% (275 basis
points) plus the LIBO Rate; or (b) a Base Rate Tranche and shall bear interest
at a rate equal to 2.50% (250 basis points) plus the Base Rate. The unpaid
principal balance plus all accrued but unpaid interest on the Subordinated Debt
shall be due and payable on the Subordinated Debt Maturity Date, or such earlier
date on which such amount shall become due and payable on account of
acceleration by Lender in accordance with the terms of the Subordinated
Debenture or this Agreement.
2.2. THE NOTES AND THE SUBORDINATED DEBENTURE. The Loans shall be
evidenced by the Term Note, the Revolving Note and the Subordinated Debenture.
2.3. MATURITY DATES. On the Term Loan Maturity Date, all sums due and
owing under this Agreement and the other Loan Documents with respect to the Term
Loan shall be repaid in full. On the Revolving Loan Maturity Date, all sums due
and owing under this Agreement and the other Loan Documents with respect to the
Revolving Loan shall be repaid in full. On the Subordinated Debenture Maturity
Date, all sums due and owing under this Agreement and the other Loan Documents
with respect to the Subordinated Debenture shall be repaid in full. Borrower
acknowledges and agrees that Lender
8
has not made any commitments, either express or implied, to extend the terms of
the Loans past their Maturity Dates, unless Borrower and Lender hereafter
specifically otherwise agree in writing.
2.4. COLLATERAL. Borrower's Liabilities shall be secured by the
collateral pledged pursuant to the Pledge Agreement. Notwithstanding anything to
the contrary in any Loan Document, the obligations of Borrower to Lender under
the Subordinated Debenture shall be unsecured.
2.5. THE CLOSING. The initial funding of the Loans (the "CLOSING") will
occur at the offices of Barack ▇▇▇▇▇▇▇▇▇▇, counsel to Lender, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 9:30 a.m. on the Closing Date, or at
such other place or time or on such other date as the parties hereto may agree,
by disbursing the proceeds of the Loan in accordance with any Instructions
received at least one Business Day prior to Closing.
2.6. INTEREST RATES. Borrower agrees that matters concerning the
election, payment, application, accrual and computation of interest and interest
rates shall be in accordance with the Agreed Upon Terms and Procedures agreed
to, as executed, by Borrower.
2.7. PAYMENTS. Borrower agrees that matters concerning prepayments,
payments and application of payments shall be in accordance with the Agreed Upon
Terms and Procedures agreed to, as executed by, Borrower.
2.8. CAPITAL ADEQUACY. If Lender shall reasonably determine that the
application or adoption of any law, rule, regulation, directive, interpretation,
treaty or guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force of law
(including, without limitation, application of changes to Regulation H and
Regulation Y of the FRB issued by the FRB on January 19, 1989 and regulations of
the Comptroller of the Currency, Department of Treasury, 12 CFR Part 3, Appendix
A, issued by the Comptroller of the Currency on January 27, 1989) increases the
capital required or expected to be maintained by Lender or any person or entity
controlling Lender, and such increase is based upon the existence of Lender's
obligations hereunder and under other commitments of this type, then, within 10
days after demand from Lender, Borrower shall pay to Lender, from time to time,
such amount or amounts as will compensate Lender or such controlling person or
entity, as the case may be, for such increased capital requirement. The
determination of any amount to be paid by Borrower under this Section 2.8 shall
take into consideration the policies of Lender or of any Person controlling
Lender with respect to capital adequacy and shall be based upon any reasonable
averaging, attribution and allocation methods. A certificate of Lender setting
forth the amount or amounts as shall be necessary to compensate Lender as
specified in this Section 2.8 shall be delivered to Borrower and shall be
conclusive in the absence of manifest error.
3. DISBURSEMENTS.
3.1. INITIAL AND SUBSEQUENT DISBURSEMENTS. At such time as all of the
terms and conditions set forth in Section 3.2 have been satisfied by Borrower
and Borrower has executed and delivered to Lender each of the Loan Documents and
any other related documents in form and substance satisfactory to Lender, in its
sole and absolute discretion, Lender shall disburse to Borrower an amount equal
to $10,500,000 (the "INITIAL DISBURSEMENT"), representing a disbursement of
$500,000 under the Term Loan, $0 under the Revolving Loan and $10,000,000 under
the Subordinated Debenture. In the event Borrower fails to satisfy such
disbursement conditions, Borrower nevertheless shall pay all costs and expenses
incurred by Lender in connection with the transactions contemplated herein
promptly upon receipt of an invoice therefor from Lender.
3.2. CONDITIONS PRECEDENT TO INITIAL DISBURSEMENT. In conjunction with
and as additional (but independent) supporting evidence for certain of the
covenants, representations and warranties made by Borrower herein, prior to and
as a condition of the Initial Disbursement, Borrower shall deliver or cause to
be delivered to Lender each of the following, each of which shall be in form and
substance satisfactory to Lender, in its sole and absolute discretion:
9
3.2.1. SEARCHES. Such UCC, tax lien and judgment searches
regarding Borrower pertaining to the jurisdictions (a) in which Borrower is
organized and headquartered, and (b) in which the Collateral is located as
determined pursuant to Article 9 of the UCC.
3.2.2. OPINIONS. An opinion of counsel of Borrower in
substantially the form attached as Exhibit H hereto and otherwise satisfactory
to Lender, dated on or about the date of the Initial Disbursement.
3.2.3. LOAN DOCUMENTS. The Loan Documents, including, without
limitation, the Notes and the Collateral Documents.
3.2.4. PLEDGED SECURITIES. The actual certificates representing
all of the securities constituting the Pledged Stock (as defined in the Pledge
Agreement) together with irrevocable stock powers for each such certificate
endorsed by Borrower in blank.
3.2.5. AUTHORITY DOCUMENTS. Copies certified by the appropriate
secretary of state or Governmental Agency of (a) the certificate of
incorporation of Borrower, and (b) the charter of Subsidiary Bank. Good standing
certificates for (i) Borrower issued by the Secretary of State of the State in
which it is organized, (ii) Subsidiary Bank issued by the ICB. Copies certified
by the Secretary or an Assistant Secretary of Borrower of the Bylaws of Borrower
and Subsidiary Bank. Copies certified by the Secretary or an Assistant Secretary
of Borrower of resolutions of the board of directors of Borrower authorizing the
execution, delivery and performance (including the authority to pledge the
Pledged Stock) of this Agreement, the Notes and the other Loan Documents. An
incumbency certificate of the Secretary or an Assistant Secretary of Borrower
certifying the names of the officer or officers of Borrower authorized to sign
this Agreement, the Notes and the other documents provided for in this
Agreement, together with a sample of the true signature of each such officer
(Lender may conclusively rely on such certificate until formally advised by a
like certificate of any changes therein).
3.2.6. REGULATORY CONSENTS. Copies certified by the Secretary or
an Assistant Secretary of Borrower of all documents evidencing all necessary
consents, approvals and determinations of any Governmental Agency with respect
to the transactions contemplated in the Loan Documents and any other
transactions between Lender and Borrower or Subsidiary Bank.
3.2.7. INSTRUCTIONS. The Instructions.
3.2.8. LOAN FEE AND CERTAIN COSTS OF LENDER. Payment of the Loan
Fee and certain costs and expenses incurred by Lender to date in connection with
the transactions contemplated herein, such as Lender's attorneys' fees and
expenses and other fees and expenses paid or payable to any other parties.
3.2.9. OTHER REQUIREMENTS. Such other additional information
regarding Borrower, Subsidiary Bank and their respective assets, liabilities
(including any liabilities arising from, or relating to, legal proceedings) and
contracts as Lender may require in its sole discretion.
3.2.10. OTHER DOCUMENTS. Such other certificates, affidavits,
schedules, resolutions, opinions, notes and/or other documents which are
provided for hereunder or as Lender may reasonably request.
3.3. CONDITIONS TO ALL DISBURSEMENTS; RENEWALS AND CONVERSIONS.
Notwithstanding anything to the contrary contained herein, the continued
performance, observance and compliance by Borrower of and with all of the
covenants, conditions and agreements of Borrower contained herein (whether or
not non-performance constitutes an Event of Default) and in the other Loan
Documents shall be further conditions precedent to any disbursements of the
proceeds under any Loan. In addition, Lender shall not be required to disburse
proceeds under any Loan or to renew or convert any Borrowing Tranche at any time
that any of the following are true:
10
3.3.1. DEFAULT. There exists an Event of Default or Potential
Event of Default.
3.3.2. LEGISLATION OR PROCEEDINGS. Any legislation has been passed
or any suit or other proceeding has been instituted the effect of which is to
prohibit, enjoin (or to declare unlawful or improper) or otherwise adversely
affect, in Lender's sole and absolute judgment, Borrower's performance of its
obligations hereunder, or any litigation or governmental proceeding has been
instituted or threatened against Borrower or Subsidiary Bank or any of their
officers or shareholders which, in the sole discretion of Lender, may adversely
affect the financial condition or operations of Borrower or Subsidiary Bank.
3.3.3. COLLATERAL. Lender has reasonable cause to believe that any
Collateral might be subject to forfeiture under any RICO Related Law or any of
the Collateral is subject to any pledge, lien, security interest, charge or
encumbrance other than in favor of Lender.
3.3.4. MATERIAL ADVERSE CHANGE. There has occurred, in Lender's
sole and complete discretion, a material adverse change in the financial
condition or affairs of Borrower or Subsidiary Bank since the date of the
Borrower Financial Statements.
3.3.5. REPRESENTATIONS AND WARRANTIES. Any representation or
warranty of Borrower contained herein or any information set forth in the
recitals hereto, shall not be true on and as of the date of any Borrowing
Tranche, with the same effect as though such representations and warranties had
been made, or such information had been presented, on and as of such date.
3.3.6. APPROVALS. All necessary or appropriate actions and
proceedings have not been taken in connection with, or relating to, the
transactions contemplated hereby and all documents incident thereto have not
been completed and tendered for delivery, in substance and form satisfactory to
Lender, including, without limitation, if appropriate in the opinion of Lender,
Lender's failure to have received evidence of all necessary approvals from
Governmental Agencies.
3.3.7. OTHER DOCUMENTS. Lender has not received in substance and
form reasonably satisfactory to Lender, all certificates, affidavits, schedules,
resolutions, opinions, notes, and/or other documents which are provided for
hereunder.
Lender's refusal to disburse any proceeds of the Loans on account of the
provisions of this Section 3.3 shall not alter or diminish any of Borrower's
other obligations hereunder or otherwise prevent any breach or default of
Borrower hereunder from becoming an Event of Default. Each Rate Election Notice
submitted by Borrower hereunder shall constitute an affirmation that Borrower
has performed, observed and complied with its covenants, conditions and
agreements contained herein in all material respects and that all
representations and warranties made by Borrower hereunder continue to be true
and correct as of the date of such Rate Election Notice.
4. GENERAL REPRESENTATIONS AND WARRANTIES. Borrower hereby covenants,
represents and warrants to Lender as follows:
4.1. ORGANIZATION AND AUTHORITY.
4.1.1. LEGALLY. Borrower (a) is a corporation duly organized
validly existing and in good standing under the laws of the State of Delaware;
(b) is duly qualified as a foreign corporation and in good standing in all
states in which it is doing business except where the failure to so qualify
would not have a material adverse effect on the financial condition, business,
operations or prospects of Borrower; and (c) has all requisite power and
authority, corporate or otherwise, to own, operate and lease its properties and
to carry on its business as now being conducted. Each of Subsidiary Bank and the
other Subsidiaries is duly organized, validly existing and chartered under the
laws of the state of its organization, and has all requisite power and
authority, corporate or otherwise, to own, operate and lease its properties and
to carry on its business as now being conducted. The deposit accounts of
Subsidiary Bank are insured by the FDIC. Borrower and Subsidiary Bank have made
payment of all franchise and similar taxes in the
11
States of Delaware and Illinois, and in all of the other respective
jurisdictions in which they are incorporated, chartered or qualified, except for
any such taxes (i) where the failure to pay such taxes will not have a material
adverse effect on the financial condition, business or operations of Borrower or
Subsidiary Bank, (ii) the validity of which is being contested in good faith and
(iii) for which proper reserves have been set aside on the books of Borrower or
Subsidiary Bank, as the case may be.
4.1.2. CAPITAL STOCK OF BORROWER. Section 4.1.2 of the Disclosure
Schedule correctly sets forth (a) the state or states in which Borrower conducts
its businesses, (b) a list of all subsidiaries of Borrower, all of which are
directly or indirectly wholly owned by Borrower, and (c) a list of each class of
stock of Borrower, the number of authorized and issued and outstanding shares of
each class of stock of Borrower, and the number of shares of each class of stock
of Borrower beneficially owned (within the meaning of Section 13d-3 promulgated
under the Exchange Act) by members of the ▇▇▇▇▇▇ Family, and, except as
otherwise stated in Section 4.1.2 of the Disclosure Schedule, there is no plan,
agreement or understanding providing for, or contemplating, the issuance of any
additional shares of capital stock of Borrower. All of the outstanding capital
stock of Borrower has been duly authorized, legally and validly issued, fully
paid and nonassessable. Except as otherwise stated in Section 4.1.2 of the
Disclosure Schedule, there are, as of the date hereof, no outstanding options,
rights, warrants or other agreements or instruments obligating Borrower to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Borrower or obligating Borrower to grant, extend
or enter into any such agreement or commitment.
4.1.3. CAPITAL STOCK OF THE SUBSIDIARY BANK. Section 4.1.3 of the
Disclosure Schedule correctly sets forth (a) the state or states in which
Subsidiary Bank conducts businesses, and (b) a list of each class of stock of
Subsidiary Bank as well as the owners of record and beneficial owners thereof,
including the number of shares held by each, and, except as otherwise stated in
Section 4.1.3 of the Disclosure Schedule, there is no plan, agreement or
understanding providing for, or contemplating, the issuance of any additional
shares of capital stock of Subsidiary Bank. All of the Subsidiary Bank Shares
have been duly authorized, legally and validly issued, fully paid and
nonassessable, and the Subsidiary Bank Shares are owned by Borrower free and
clear of all pledges, liens, security interests, charges or encumbrances, except
as may exist for the benefit of Lender and, following the Closing Date, Borrower
will own the Subsidiary Bank Shares free and clear of all pledges, liens,
security interests, charges or encumbrances, except for any security interest
granted herewith by Borrower to Lender. None of the Subsidiary Bank Shares have
been issued in violation of any shareholder's preemptive rights. Except as
otherwise stated in Section 4.1.3 of the Disclosure Schedule, there are, as of
the date of this Agreement, no outstanding options, rights, warrants or other
agreements or instruments obligating Borrower to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
Subsidiary Bank or obligating Borrower or Subsidiary Bank to grant, extend or
enter into any such agreement or commitment.
4.1.4. CORPORATE NAMES. Borrower has no assumed corporate names
and is not doing business under any name other than as set forth in Section
4.1.4 of the Disclosure Schedule.
4.2. NO IMPEDIMENT TO TRANSACTIONS.
4.2.1. TRANSACTION IS LEGAL AND AUTHORIZED. The borrowing of the
principal amount of the Loans, the execution of this Agreement and the other
Loan Documents and compliance by Borrower with all of the provisions of this
Agreement and of the other Loan Documents are within the corporate and other
powers of Borrower and Subsidiary Bank. This Agreement and the other Loan
Documents have been duly authorized, executed and delivered, and are the legal,
valid and binding obligations of Borrower or other signatory thereof (other than
Lender), as appropriate, enforceable in accordance with their terms.
4.2.2. NO DEFAULTS OR RESTRICTIONS. Neither the execution and
delivery of the Loan Documents nor compliance with their terms and conditions
will conflict with or result in a material breach of, or constitute a material
default under, any of the terms, obligations, covenants, conditions or
provisions of any corporate restriction or of any indenture, mortgage, deed of
trust, pledge, bank loan or credit agreement, corporate charter, bylaw or any
other agreement or instrument to which Borrower or
12
any Subsidiary is now a party or by which any of them or any of their properties
may be bound or affected, or any judgment, order, writ, injunction, decree or
demand of any court, arbitrator, grand jury, or Governmental Agency, or result
in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any property or asset of Borrower or any Subsidiary under the
terms or provisions of any of the foregoing. None of Borrower or any Subsidiary
is in material default in the performance, observance or fulfillment of any of
the terms, obligations, covenants, conditions or provisions contained in any
indenture or other agreement creating, evidencing or securing indebtedness of
any kind or pursuant to which any such indebtedness is issued, or other
agreement or instrument to which Borrower or any Subsidiary is a party or by
which Borrower or any Subsidiary or their properties may be bound or affected.
4.2.3. GOVERNMENTAL CONSENT. Except for those furnished pursuant
to Section 3.2.6, if any, no governmental orders, permissions, consents,
approvals or authorizations are required to be obtained by Borrower and no
registrations or declarations are required to be filed by Borrower in connection
with, or contemplation of, the execution and delivery of, and performance under,
this Agreement and the other Loan Documents.
4.3. PURPOSES OF LOANS.
4.3.1. USE OF PROCEEDS. Borrower shall use the proceeds of the
Loans to retire certain existing indebtedness to Lender, with any remaining
proceeds to be used for general corporate purposes including to support the
growth of Subsidiary Bank. The Loans are exempt transactions under the
Truth-in-Lending Act, as amended or recodified. Borrower does not own any
"margin security" as such term is defined in Regulation G of the FRB. Borrower
will not use any part of the proceeds of the Loan (a) directly or indirectly to
purchase or carry any margin security or reduce or retire any indebtedness
originally incurred to purchase any such margin security within the meaning of
Regulation U of the FRB, or (b) so as to involve Borrower or Lender in a
violation of Regulation U of the FRB. Borrower agrees to execute, or cause to be
executed, all instruments necessary to comply with all of the requirements of
Regulation U of the FRB.
4.3.2. USURY. The Loans constitute a transaction within the
meaning of 815 ILCS 205/4(1)(a), and neither the amounts to be received by
Lender as interest under any Note nor the Loan Fee is usurious or illegal under
applicable law.
4.4. FINANCIAL CONDITION.
4.4.1. BORROWER FINANCIAL STATEMENTS. Borrower has delivered to
Lender copies of the consolidated and consolidating financial statements of
Borrower as of and for the year ending December 31, 2001 (the "BORROWER 2001
AUDITED FINANCIAL STATEMENTS DATE"), audited by Borrower's Accountant (the
"BORROWER 2001 AUDITED FINANCIAL STATEMENTS"). The Borrower 2001 Audited
Financial Statements are true and correct, are prepared in accordance with the
respective books of account and records of Borrower and its Subsidiaries and
have been prepared in accordance with GAAP applied on a basis consistent with
prior periods, and fairly and accurately present in all material respects the
financial condition of Borrower and its Subsidiaries and their assets and
liabilities and the results of their operations as of such date. Except as set
forth in Section 4.6 of the Disclosure Schedule, since the Borrower 2001 Audited
Financial Statements Date, there has been no material and adverse change in the
financial condition, business, properties or operations of Borrower or
Subsidiary Bank. In addition, Borrower has delivered to Lender copies of call
reports filed by Subsidiary Bank for the period ending September 30, 2002 (the
"INTERIM FINANCIAL STATEMENTS DATE") and copies of regulatory filings (including
Form FRY-9C filings) (such call reports and regulatory filings, "INTERIM
FINANCIAL STATEMENTS" and together with the Borrower 2001 Audited Financial
Statements, the "BORROWER FINANCIAL STATEMENTS"). The Borrower Interim Financial
Statements are true and correct, are prepared in accordance with the respective
books of account and records of Borrower and its Subsidiaries and have been
prepared in accordance with applicable banking regulations, rules and guidelines
on a basis consistent with prior periods, and fairly and accurately present in
all material respects the financial condition of Borrower and Subsidiary Bank
and their respective assets and liabilities and the results of their respective
operations as
13
of such date. The Borrower 2001 Audited Financial Statements and the Interim
Financial Statements contain and reflect provisions for taxes, reserves and
other liabilities of Borrower in accordance with GAAP and applicable banking
regulations, rules and guidelines, respectively. Neither Borrower nor Subsidiary
Bank has any material debt, liability or obligation of any nature (whether
accrued, contingent, absolute or otherwise) which is not provided for or
disclosed in the Borrower Financial Statements.
4.4.2. LOANS. To Borrower's knowledge, except as otherwise stated
in Section 4.4.2 of the Disclosure Schedule, each loan having an outstanding
balance of more than $500,000 and reflected as an asset of Subsidiary Bank in
the Borrower Financial Statements is the legal, valid and binding obligation of
the obligor named therein, enforceable in accordance with its terms. To
Borrower's knowledge, except as otherwise stated in Section 4.4.2 of the
Disclosure Schedule, no obligor named therein is seeking to avoid the
enforceability of the terms of any loan under any such laws or equitable
principles, and, no such loan having an unpaid balance (principal and accrued
interest) in excess of $500,000 is subject to any defense, offset or
counterclaim.
4.4.3. RESERVE FOR POSSIBLE LOAN AND LEASE LOSSES. To the best of
Borrower's knowledge, the reserves for possible loan and lease losses shown in
the Borrower Financial Statements are adequate in all respects to provide for
losses, net of recoveries relating to loans previously charged off, on loans and
leases outstanding and contain an additional amount of unallocated reserves for
unanticipated future losses at levels considered adequate based upon generally
accepted safe and sound banking practices, as of the date of such statements or
reports.
4.4.4. SOLVENCY. After giving effect to the consummation of the
transactions contemplated by this Agreement, Borrower and Subsidiary Bank have
capital sufficient to carry on their respective business and transactions and
all businesses and transactions in which they are about to engage and each is
solvent and able to pay its debts as they mature. No transfer of property is
being made and no indebtedness is being incurred in connection with the
transactions contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of Borrower or Subsidiary Bank.
4.4.5. SUBORDINATION. The Junior Subordinated Debentures are
expressly subordinate and junior in all respects (including, without limitation,
with respect to the right of payment) to the Loans to the extent provided in
Article XVI of the Indenture. The Loans constitute "Senior Indebtedness" as
defined in the Indenture.
4.5. TITLE TO PROPERTIES.
4.5.1. OWNED PROPERTY. Except for real property and other assets
acquired and/or being acquired from debtors in full or partial satisfaction of
obligations owed to Subsidiary Bank and property or other assets leased by
Borrower or Subsidiary Bank, Borrower and Subsidiary Bank have, respectively,
good and marketable fee title to all the Properties, and good and marketable
title to all other property and assets reflected in the Borrower Financial
Statements, excluding property and assets sold or otherwise disposed of for
their fair market value subsequent to the date of such Borrower Financial
Statements. Except for Properties and other assets acquired and/or being
acquired from debtors in full or partial satisfaction of obligations owed to
Subsidiary Bank and property or other assets leased by Borrower or any
subsidiary, all property and assets of any kind (real or personal, tangible or
intangible) of Borrower and Subsidiary Bank are free from any liens,
encumbrances or defects in title, except for any liens granted herewith or
previously by Borrower to Lender. Except as identified in Section 4.5.1 of the
Disclosure Schedule, no financing statement under the UCC that names Borrower or
Subsidiary Bank has been filed and neither Borrower nor any Subsidiary Bank has
signed any financing statement or any Pledge Agreement authorizing any secured
party thereunder to file any such financing statement.
4.5.2. LEASED PROPERTY. For assets or property leased by Borrower
or Subsidiary Bank, Borrower and Subsidiary Bank enjoy peaceful and undisturbed
possession under all of the leases under which they are operating, all of which
permit the customary operations of Borrower and Subsidiary Bank,
14
as applicable. None of such leases is in material default and no event has
occurred which with the passage of time or the giving of notice, or both, would
constitute a material default under any thereof.
4.6. NO MATERIAL ADVERSE CHANGE. Since the Borrower 2001 Audited
Financial Statements Date, neither the business, operations, properties nor
assets of Borrower or Subsidiary Bank have been materially and adversely
affected in any way, as the result of any act or event, including, without
limitation, fire, explosion, accident, act of God, strike, lockout, flood,
drought, storm, earthquake, combination of workmen or other labor disturbance,
riot, activity of armed forces or of the public enemy, embargo, or
nationalization, condemnation, requisition or taking of property, or
cancellation or modification of contracts, by any domestic or foreign government
or any instrumentality or agency thereof. Except as set forth in Section 4.6 of
the Disclosure Schedule, since the Borrower 2001 Audited Financial Statements
Date, there have been no material changes in the assets, liabilities, or
condition, financial or otherwise, of either Borrower or Subsidiary Bank other
than changes arising from transactions in the ordinary course of business, and
none of such changes has been materially adverse, whether in the ordinary course
of business or otherwise.
4.7. COMPLIANCE WITH LAW. Except as set forth on Section 4.7.2 of the
Disclosure Schedule, Borrower and Subsidiary Bank have complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government, or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective properties, except where any such failure to comply would not
materially and adversely affect the financial condition, business or operations
of Borrower or Subsidiary Bank.
4.7.1. TAXES. Borrower and each Subsidiary have filed all United
States income tax returns and all state and municipal tax returns which are
required to be filed, and have paid, or made adequate provision for the payment
of, all material taxes which have become due pursuant to said returns or
pursuant to any assessment received by Borrower or any Subsidiary, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. Borrower is unaware of any audit, assessment or
other proposed action or inquiry of the Internal Revenue Service with respect to
the United States income tax liability of Borrower or any Subsidiary. To the
best of Borrower's knowledge, Borrower and each Subsidiary have withheld amounts
from their employees, shareholders or holders of public deposit accounts in full
and complete compliance with the tax withholding provisions of applicable
federal, state and local laws and each has filed all federal, state and local
returns and reports for all years for which any such return or report would be
due with respect to employee income tax withholding, social security,
unemployment taxes, income and other taxes and all payments or deposits with
respect to such taxes have been made within the time period required by law.
4.7.2. REGULATORY ENFORCEMENT ACTIONS. Except as set forth on
Section 4.7.2 of the Disclosure Schedule, none of Borrower, Subsidiary Bank or
any of their respective officers or directors is now operating under any
restrictions, agreements, memoranda, or commitments (other than restrictions of
general application) imposed by any Governmental Agency, nor are any such
restrictions threatened or agreements, memoranda or commitments being sought by
any Governmental Agency.
4.7.3. PENDING LITIGATION. Except as otherwise disclosed in
Section 4.7.3 of the Disclosure Schedule, there are no actions, suits,
proceedings or written agreements pending, or, to the best knowledge of
Borrower, threatened or proposed, against Borrower or Subsidiary Bank at law or
in equity or before or by any federal, state, municipal, or other governmental
department, commission, board, or other administrative agency, domestic or
foreign, that, either separately or in the aggregate, will materially and
adversely affect the financial condition, business, or operations of any of
Borrower or Subsidiary Bank; and neither Borrower nor Subsidiary Bank is in
default with respect to any order, writ, injunction, or decree of, or any
written agreement with, any court, commission, board or agency, domestic or
foreign, that, either separately or in the aggregate, will materially and
adversely affect the financial condition, business, or operations of any of
Borrower or Subsidiary Bank.
4.7.4. RICO. There are no suits, actions or proceedings pending or
threatened against Borrower or any Subsidiary, or any of the principals thereof,
under a RICO Related Law.
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4.7.5. ERISA. All Employee Benefit Plans (as defined in Section
3(3) of ERISA) established or maintained by Borrower or any ERISA Affiliate or
to which Borrower or any ERISA Affiliate contributes are in material compliance
with applicable requirements of ERISA, and are in material compliance with
applicable requirements (including qualification and non-discrimination
requirements) of the Code for obtaining the tax benefits the Code thereupon
permits with respect to such plans. Each Employee Benefit Plan which is a group
health plan (within the meaning of Section 5000(b)(1) of the Code) complies with
and has been maintained and operated in material compliance with each of the
requirements of Section 4980B of the Code. Neither Borrower nor any ERISA
Affiliate has failed to make any contributions or to pay any amounts with
respect to any Employee Benefit Plan or ERISA or any other applicable law. No
"reportable event" or "prohibited transaction," as defined in ERISA, has
occurred and is continuing as to any Employee Benefit Plan and no excise taxes
have been incurred or security is required with respect to any Employee Benefit
Plan. Except as set forth in Section 4.7.5 of the Disclosure Schedule, no
Employee Benefit Plan has, or as of the Closing Date will have, any amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA) for
which Borrower or any ERISA Affiliate could be liable to any Person under Title
IV of ERISA if any such plan were terminated. All Employee Benefit Plans are
funded in accordance with Section 412 of the Code (if applicable). There would
be no obligations under Title IV of ERISA relating to any Employee Benefit Plan
that is a multiemployer plan if any such plan were terminated or if Borrower or
any ERISA Affiliate withdrew from any such plan. Except as required by section
4980B of the Code or applicable state insurance laws, neither Borrower nor any
ERISA Affiliate has promised any employee medical coverage after termination of
employment, or promised medical coverage to any former employee or other
individual not employed by Borrower or any ERISA Affiliate, and neither Borrower
nor any ERISA Affiliate maintains or contributes to any plan or arrangement
providing medical benefits to employees after their termination of employment or
any other individual not employed by Borrower or any ERISA Affiliate.
4.7.6. ENVIRONMENTAL. No Property is or, to the best of Borrower's
knowledge, has been a site for the use, generation, manufacture, storage,
treatment, release, threatened release, discharge, disposal, transportation or
presence of any Hazardous Materials and neither Borrower nor any Subsidiary has
engaged in such activities. Each Property, and Borrower and each Subsidiary, are
in compliance with all Hazardous Materials Laws. There are no claims or actions
("HAZARDOUS MATERIALS CLAIMS") pending or, to the best of Borrower's knowledge,
threatened, nor have there been any such claims or actions in the past, against
Borrower or any Subsidiary or any Property by any Governmental Agency or by any
other Person relating to any Hazardous Materials or pursuant to any Hazardous
Materials Law.
4.8. BORROWER STATUS.
4.8.1. RESTRICTIONS ON BORROWER. Neither Borrower nor Subsidiary
Bank is a party, nor is bound by, any contract or agreement or instrument, or
subject to any charter or other corporate restriction materially and adversely
affecting its financial condition, business or operations.
4.8.2. NON-FOREIGN STATUS. Borrower is not a nonresident alien for
purposes of U.S. income taxation and is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as said terms are defined in the
Internal Revenue Code and Income Tax Regulations).
4.8.3. INVESTMENT COMPANY ACT. Borrower is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
4.8.4. NO BURDENSOME AGREEMENTS. Neither Borrower nor Subsidiary
Bank is a party to any agreement, instrument or undertaking or subject to any
other restriction, (a) which presently has a material adverse affect upon the
property, financial condition or business operations of Borrower or Subsidiary
Bank, or (b) under or pursuant to which Borrower or Subsidiary Bank is or will
be required to place (or under which any other Person may place) a lien upon any
of its properties securing indebtedness either upon demand or upon the happening
of a condition, with or without such demand.
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4.9. NO MISSTATEMENT. No information, exhibit, report, schedule or
document furnished by the Borrower to Lender in connection with the negotiation
or execution of this Agreement or the making of any Loan contains any untrue
statement of a material fact, or omits to state a material fact or any fact
necessary to make the statements contained therein not misleading in light of
the circumstances when made or furnished to Lender.
4.10. REPRESENTATIONS AND WARRANTIES GENERALLY. The representations and
warranties set forth in this Agreement or in any other Loan Document will be
true and correct on the date of this Agreement and as otherwise provided herein
with the same force and effect as if made on each such date. All
representations, warranties, covenants and agreements made in this Agreement or
in any certificate or other document delivered to Lender by or on behalf of
Borrower pursuant to or in connection with this Agreement shall be deemed to
have been relied upon by Lender notwithstanding Lender's review of any documents
or materials delivered by Borrower to Lender pursuant to the terms hereof and
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf (and Borrower hereby acknowledges such reliance by Lender in making
the Loans and all disbursements thereunder) and, furthermore, shall survive the
making of any or all of the disbursements of proceeds under the Loans and
continue in full force and effect as long as there remains unperformed any
obligations to Lender hereunder or under any of the other Loan Documents.
5. GENERAL COVENANTS, CONDITIONS AND AGREEMENTS. Borrower hereby further
covenants and agrees with Lender as follows:
5.1. COMPLIANCE WITH LOAN DOCUMENTS. Borrower shall comply with,
observe and timely perform each and every one of the covenants, agreements and
obligations under each and every one of the Loan Documents and any other Loan
Document to which it is a party.
5.2. MATERIAL TRANSACTIONS.
5.2.1. STRUCTURAL CHANGES. Borrower shall not itself, nor shall it
cause, permit or allow any Subsidiary to purchase the assets of, merge with or
into or consolidate with or into, any other Person without the prior written
consent of Lender, which consent shall not be unreasonably withheld.
5.2.2. DISTRIBUTIONS. From the date hereof through and including
January 10, 2003, Borrower shall not declare or pay any cash dividend or make
(or otherwise become obligated to make) any other distribution in respect of its
capital stock or other outstanding securities in an aggregate amount that
exceeds $1,500,000. Except as permitted in the immediately preceding sentence
and for Permitted Distributions, Borrower shall not itself, nor shall it cause,
permit or allow any Subsidiary to declare or pay any cash dividend or make (or
otherwise become obligated to make) any other distribution in respect of its
capital stock or other outstanding securities. Notwithstanding anything in this
Section 5.2.2 to the contrary, Borrower may not, and shall cause its
Subsidiaries to not, declare or pay any dividend or make (or otherwise become
obligated to make) any other distribution in respect of its capital stock if an
Event of Default has occurred and is continuing or if the declaration or payment
of the dividend or the making of any other distribution would result in the
occurrence of a Potential Event of Default or an Event of Default.
5.2.3. INCURRING DEBT. Borrower shall not itself, nor shall it
cause, permit or allow any Subsidiary to (a) create, assume, incur, have
outstanding, or in any manner become liable in respect of any Indebtedness,
other than as reflected in Section 5.2.3 of the Disclosure Schedule or, with
respect to the Subsidiary Bank, in the ordinary course of business and in
accordance with applicable laws and regulations and safe and sound banking
practices, or (b) create, assume, incur, suffer or permit to exist any mortgage,
pledge, deed of trust, encumbrance (including the lien or retained security
title of a conditional vendor), security interest, assignment, lien or charge of
any kind or character upon or with respect to any of their real or personal
property, including, without limitation, any capital stock owned by Borrower or
Subsidiary Bank whether owned at the date hereof or hereafter acquired, or
assign or otherwise convey any right to receive income.
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5.2.4. ASSET SALES. Other than as set forth in Section 5.2.4 of
the Disclosure Schedule, Borrower shall not itself, nor shall it cause, permit
or allow any Subsidiary to dispose of by sale, assignment, lease or otherwise,
property or assets now owned or hereafter acquired if such property or assets
plus all other properties and assets sold, leased, transferred or otherwise
disposed of during the 12-month period ending on the date of such sale, lease or
other disposition shall have an aggregate value of more than 5% of the
consolidated assets of Borrower as reflected in the most recent balance sheet
delivered to Lender pursuant to Section 6.1, except that Subsidiary Bank may
dispose of its property or assets to Borrower or sell residential mortgage loans
in the ordinary course of its banking business and consistent with safe and
sound banking practices.
5.2.5. MAKING LOANS. Borrower shall not itself, nor shall it
cause, permit or allow any Subsidiary to make any loans or advances, whether
secured or unsecured, to any Person, other than (a) loans or advances to
employees (made in accordance with applicable laws, at arms-length and pursuant
to terms that are no more favorable than may be obtained from unrelated
third-party institutional lenders) up to the aggregate sum of $500,000 at any
time outstanding, (b) loans or advances made by Subsidiary Bank in the ordinary
course of business and in accordance with applicable laws and regulations and
safe and sound banking practices, and (c) the loan made by the Trust to Borrower
(in the aggregate principal amount of $46,400,000) evidenced by the Junior
Subordinated Debentures.
5.3. PLEDGED SHARES.
5.3.1. ENCUMBRANCE. Borrower shall not itself, nor shall it cause,
permit or allow any Subsidiary to directly or indirectly create, assume, incur,
suffer or permit to exist any pledge, encumbrance, security interest,
assignment, lien or charge of any kind or character on the Subsidiary Bank
Shares or any other stock owned by Borrower or Subsidiary Bank, except for any
security interest granted herewith or previously by Borrower to Lender. Borrower
shall not itself, nor shall it cause, permit or allow any Subsidiary to sell,
transfer, issue, reissue, exchange or grant any option with respect to any
Subsidiary Bank Shares.
5.3.2. DILUTION. Borrower shall not itself, nor shall it cause,
permit or allow any Subsidiary to cause or allow the percentage of Subsidiary
Bank Shares owned directly or indirectly by Borrower to diminish as a percentage
of the outstanding capital stock of Subsidiary Bank.
5.3.3. STRUCTURAL CHANGES. Borrower shall not itself, nor shall it
cause, permit or allow any Subsidiary to, redeem any of Borrower's or any such
Subsidiary's capital stock or other outstanding securities, declare a stock
dividend or otherwise change the capital structure of Borrower or any
Subsidiary.
5.4. BUSINESS OPERATIONS.
5.4.1. COMPLIANCE WITH LOAN DOCUMENTS. Borrower shall not itself,
nor shall it cause, permit or allow any Subsidiary to breach or fail to perform
or observe any of the terms and conditions of the Notes, the Pledge Agreement or
any other Loan Document.
5.4.2. BANKING PRACTICES. Borrower shall not itself, nor shall it
cause, permit or allow any Subsidiary to engage in any unsafe or unsound banking
practices as determined by a Governmental Agency.
5.4.3. CAPITAL EXPENDITURES. Borrower shall not itself, nor shall
it cause, permit or allow any Subsidiary to make or incur aggregate combined
capital expenditures during any fiscal year in an amount greater than
$10,000,000.
5.4.4. AFFILIATE TRANSACTIONS. Borrower shall not itself, nor
shall it cause, permit or allow any Subsidiary to enter into any transaction
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate except in the ordinary course of
business and
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pursuant to the reasonable requirements of Borrower's or such Affiliate's
business and upon terms consistent with applicable laws and regulations and
reasonably found by the appropriate board(s) of directors to be fair and
reasonable and no less favorable to Borrower or such Affiliate than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate.
5.4.5. INSURANCE. At its sole cost and expense, Borrower will
maintain, and will cause each Subsidiary to maintain, bonds and insurance to
such extent, covering such risks as is usual and customary for owners of similar
businesses and properties in the same general area in which Borrower or
Subsidiary Bank operates, including, without limitation, insurance for fire and
other risks insured against by extended coverage, public liability insurance,
workers' compensation insurance and such additional bonds and insurance as may
reasonably be requested by Lender. All such bonds and policies of insurance
shall be in a form and with issuers/insurers recognized as adequate by prudent
business persons, and all such policies shall be in amounts no less than the
amounts of such policies set forth on Section 5.4.5 of the Disclosure Schedule
or as otherwise may be reasonably satisfactory to Bank.
5.5. COMPLIANCE WITH LAWS.
5.5.1. GENERALLY. Borrower shall comply and cause each Subsidiary to
comply in all material respects with all applicable statutes, rules,
regulations, orders and restrictions in respect of the conduct of their
respective businesses and the ownership of their respective properties.
5.5.2. REGULATED ACTIVITIES. Borrower shall not itself, nor shall it
cause, permit or allow any Subsidiary to (a) engage in any business or activity
not permitted by all applicable laws and regulations, including without
limitation, the Bank Holding Company Act of 1956, as amended, the IBA, the FDI
Act and any regulations promulgated thereunder, or (b) make any loan or advance
secured by the capital stock of another bank or depository institution, or
acquire the capital stock, assets or obligations of or any interest in another
bank or depository institution, in each case other than in the ordinary course
of business and in accordance with applicable laws and regulations and safe and
sound banking practices.
5.5.3. TAXES. Borrower shall promptly pay and discharge all taxes,
assessments and other governmental charges imposed upon Borrower or any
Subsidiary or upon the income, profits, or property of Borrower or any
Subsidiary and all claims for labor, material or supplies which, if unpaid,
might by law become a lien or charge upon the property of Borrower or any
Subsidiary. Neither Borrower nor any Subsidiary shall be required to pay any
such tax, assessment, charge or claim, so long as the validity thereof shall be
contested in good faith by appropriate proceedings, and reserves therefor shall
be maintained on the books of Borrower and such Subsidiary as are deemed
adequate by Lender.
5.5.4. ERISA. As soon as possible, and in any event within 10 Business
Days, after: (a) Borrower or any ERISA Affiliate knows that with respect to any
Employee Benefit Plan, a "prohibited transaction," a "reportable event," or any
other event or condition which could subject Borrower or any ERISA Affiliate to
liability under ERISA or the Code; or (b) the institution of steps by Borrower
or any ERISA Affiliate to withdraw from, or the institution of any steps by any
party to terminate, any Employee Benefit Plan; has or may have occurred,
Borrower shall deliver to Lender a certificate of a responsible officer setting
forth the details of such matter, the action that Borrower proposes to take with
respect thereto, and, when known, any action taken or threatened by the Internal
Revenue Service, the U.S. Department of Labor, or the Pension Benefit Guarantee
Corporation. For purposes of this covenant, Borrower shall be deemed to have
knowledge of all facts known by the fiduciaries of any plan of Borrower or any
ERISA Affiliate.
5.5.5. ENVIRONMENTAL MATTERS. Borrower shall: (a) exercise, and cause
Subsidiary Bank to exercise, due diligence in order to comply with all Hazardous
Materials Laws; (b) promptly advise Lender in writing and in reasonable detail
of (i) any Condition or Release required to be reported to any Governmental
Agency under any applicable Hazardous Materials Laws, (ii) any and all written
communications with respect to Hazardous Materials Claims or any Condition or
Release required to be reported to any Governmental Agency, (iii) any remedial
action taken by Borrower or any other Person in response to (A) any Hazardous
Material on, under or about any Property, the existence of which is
19
reasonably likely to give rise to an Environmental Claim, or (B) any
Environmental Claim that could reasonably be expected to have a material adverse
effect on Borrower or any Subsidiary, (iv) Borrower's discovery of any
occurrence or condition on any real property adjoining or in the vicinity of any
Property that could cause such Property or any part thereof to be subject to any
materially adverse restrictions on the ownership, occupancy, transferability or
use thereof under any Hazardous Materials Law, and (v) any request for
information from any Governmental Agency indicating that such agency has
initiated an investigation as to whether Borrower or any Subsidiary may be
potentially responsible for a Condition or Release or threatened Condition or
Release of Hazardous Materials; (c) at its own expense, provide copies of such
documents or information as Bank may reasonably request in relation to any
matters disclosed pursuant to this Section 5.5.5; (d) promptly take any and all
necessary remedial action in connection with any Condition or Release or
threatened Condition or Release on, under or about any Property in order to
comply with all applicable Hazardous Materials Laws. In the event Borrower or
any Subsidiary undertakes any remedial action with respect to such Hazardous
Material on, under or about any Property, Borrower or such Subsidiary shall
conduct and complete such remedial action in compliance with all applicable
Hazardous Materials Laws and in accordance with the policies, orders and
directives of all Governmental Agencies. Borrower shall permit Lender, from time
to time and in its sole and absolute discretion, to retain, at Borrower's
expense, an independent professional consultant to review any report relating to
Hazardous Materials prepared by or for Borrower or any Subsidiary, and at
reasonable times and subject to reasonable conditions to conduct its own
investigation of any Property, and Borrower agrees to use commercially
reasonable efforts to obtain permission for Lender's professional consultant to
conduct its own investigation of any Property and shall cause each Subsidiary to
do the same. Borrower hereby grants to Lender, its agents, employees,
consultants, and contractors the right to enter into or on to, at reasonable
times, any Property to perform such tests on such Property as are reasonably
necessary to conduct such investigation. Borrower shall promptly notify Lender
of (1) any acquisition of stock, assets, or property by Borrower or Subsidiary
Bank that reasonably could be expected to expose Borrower or Subsidiary Bank to,
or result in, a Hazardous Materials Claim that could have a material adverse
effect or that could be expected to have a material adverse effect on any
governmental authorization, license, permit or approval then held by Borrower or
Subsidiary Bank, and (2) any proposed action outside the normal course of
business to be taken by Borrower or Subsidiary Bank to commence industrial or
other operations that could subject Borrower or Subsidiary Bank to additional
laws, rules or regulations, including, without limitation, laws, rules and
regulations requiring additional environmental permits or licenses.
5.5.6. ENVIRONMENTAL INDEMNITY. Borrower hereby agrees to defend,
indemnify and hold harmless Lender, its directors, officers, employees, agents,
successors and assigns (including, without limitation, any participants in the
Loan) from and against any and all losses, damages, liabilities, claims,
actions, judgments, court costs and legal or other expenses (including, without
limitation, attorney's fees and expenses) which Lender may incur as a direct or
indirect consequence of (a) any Hazardous Materials Claim or any other violation
of a Hazardous Materials Law, or (b) the use, generation, manufacture, storage,
disposal, threatened disposal, transportation or presence of Hazardous Materials
in, on, under or about the Property or otherwise by the Borrower or any
Subsidiary. Borrower's duty and obligations to defend, indemnify and hold
harmless Lender shall survive the cancellation of the Notes, the Subordinated
Debenture and any other Loan Documents.
5.5.7. CORPORATE EXISTENCE. Borrower shall do or cause to be done all
things necessary to maintain, preserve and renew its corporate existence and
that of Subsidiary Bank and its and their rights and franchises, and comply with
all related laws applicable to Borrower or Subsidiary Bank.
5.6. LENDER EXPENSES. Whether or not any Loan is made, Borrower will (a)
pay all reasonable costs and expenses of the Lender incident to the transactions
contemplated by this Agreement including, without limitation, all costs and
expenses incurred in connection with the preparation, negotiation and execution
of the Loan Documents, or in connection with any modification, amendment,
alteration, or the enforcement of this Agreement, the Notes, the Subordinated
Debenture or the other Loan Documents, including, without limitation, the
Lender's out-of-pocket expenses and the charges and disbursements to counsel
retained by the Lender, and (b) pay and save the Lender and all other holders of
the Notes and Subordinated Debenture harmless against any and all liability with
respect to amounts payable as a result
20
of (i) any taxes which may be determined to be payable in connection with the
execution and delivery of this Agreement, the Notes, the Subordinated Debenture
or the other Loan Documents or any modification, amendment or alteration of the
terms or provisions of this Agreement, the Notes, the Subordinated Debenture or
the other Loan Documents, (ii) any interest or penalties resulting from
nonpayment or delay in payment of such expenses, charges, disbursements,
liabilities or taxes, and (iii) any income taxes in respect of any reimbursement
by Borrower for any of such violations, taxes, interests or penalties paid by
the Lender. The obligations of the Borrower under this Section 5.6 shall survive
the repayment in full of the Notes and the Subordinated Debenture. Any of the
foregoing amounts incurred by the Lender and not paid by the Borrower upon
demand shall bear interest from the date incurred at the rate of interest in
effect or announced by Lender from time to time as its Base Rate plus 6% per
annum and shall be deemed part of the Borrower's Liabilities hereunder.
5.7. SUBORDINATED DEBT. If the Subordinated Debt ceases to be deemed to be
Tier 2 Capital other than due to the limitation imposed by the second sentence
of 12 C.F.R. ss.250.166(e), which limits the capital treatment of subordinated
debt during the five years immediately preceding the maturity date of the
subordinated debt, Borrower shall: (a) immediately notify Lender; and (b)
immediately upon request of Lender execute and deliver all such agreements
(including, without limitation, pledge agreements and replacement notes) as
Lender may reasonably request in order to restructure the obligations evidenced
by the Subordinated Debt as a senior secured obligation of Borrower.
5.8. INSPECTION RIGHTS. Borrower shall permit and cause Subsidiary Bank to
permit Lender, at Borrower's expense, through Lender's employees, attorneys,
accountants or other agents, to inspect any of the properties, corporate books
and financial books and records of Borrower and Subsidiary Bank at such times as
Lender reasonably may request; provided, however, if no Potential Event of
Default or Event of Default shall have occurred, such inspections shall be
conducted at Lender's expense and limited to not more than two times in any
calendar year.
6. REPORTING. Borrower shall furnish and deliver to Lender:
6.1. ANNUAL. As soon as available, but in any event not more than 90 days
after the close of each fiscal year of Borrower, or within such further time as
Lender may permit, consolidated and consolidating audited financial statements
for Borrower and Subsidiary Bank, including a balance sheet and related profit
and loss statement, prepared in accordance with GAAP consistently applied
throughout the periods reflected therein by Borrower's Accountant or other
independent certified public accountants acceptable to Lender, who shall give
their unqualified opinion with respect thereto.
6.2. QUARTERLY. As soon as available, but in any event not more than 45
days after the close of each quarterly period of each fiscal year of Borrower,
or within such further time as Lender may permit, (a) the call reports filed by
Subsidiary Bank with state or federal bank regulatory agencies, and (b) Forms
FRY-9C filed by Borrower with federal bank regulatory agencies.
6.3. SECURITIES FILINGS. As soon as practicable, but in any event not more
than 3 Business Days after any such filings shall be made with the SEC or any
exchange or market on which the capital stock of Borrower may be traded, all
reports or other filings made by the Borrower on Forms 10-K and 10-Q and current
reports on Form 8-K.
6.4. COMPLIANCE CERTIFICATE. Borrower shall furnish Lender, at the same
time as the quarterly financial reports referred to in Section 6.2, a quarterly
compliance certificate in the form attached as Exhibit H hereto, which
certificate shall state that (a) Borrower is in compliance in all material
respects with all covenants contained in this Agreement, (b) that no Potential
Event of Default or Event of Default has occurred or is continuing, or, if there
is any such event, describing such event, the steps, if any, that are being
taken to cure it, and the time within which such cure will occur and (c) all
representations and warranties made by Borrower herein continue to be true as of
the date of such certificate. Such quarterly compliance certificate shall be
signed by the Chief Executive Officer, President or Chief Financial Officer of
Borrower and shall also contain, in a form and with such specificity as is
reasonably satisfactory to
21
Lender, such additional information as Lender shall have reasonably requested by
Borrower prior to the submission thereof.
6.5. COPIES OF OTHER REPORTS AND CORRESPONDENCE. To the extent permitted by
law, promptly after same are available, copies of each annual report, proxy or
financial statement or other report or communication sent by Borrower or
Subsidiary Bank to the stockholders of Borrower, and copies of all annual,
regular, periodic and special reports and registration statements which Borrower
or Subsidiary Bank may file or be required to file with any federal or state
banking regulatory agency or any other Governmental Agency or with any
securities exchange, and each call report and Uniform Bank (and Bank Holding
Company) Performance Report with respect to Borrower. Promptly upon receipt
thereof, one copy of each written audit report submitted to Borrower by
Borrower's Accountant.
6.6. PROCEEDINGS. Unless expressly prohibited by law, immediately after
receiving knowledge thereof, notice in writing of all charges, assessments,
actions, suits and proceedings (as well as notice of the outcome of any such
charges, assessments, actions, suits and proceedings) that are initiated by, or
brought before, any court or Governmental Agency, in connection with Borrower or
Subsidiary Bank, other than ordinary course of business litigation not involving
the FRB, the FDIC or the ICB, which, if adversely decided, would not have a
material adverse effect on the financial condition or operations of Borrower or
Subsidiary Bank.
6.7. EVENT OF DEFAULT; MATERIAL ADVERSE CHANGE. Promptly after the
occurrence thereof, notice of any other matter which has resulted in, or could
reasonably be expected to result in, a Potential Event of Default, an Event of
Default or a materially adverse change in the financial condition, business or
operations of Borrower or Subsidiary Bank.
6.8. ISSUANCE OF BORROWER CAPITAL STOCK. An amended Section 4.1.2 of the
Disclosure Schedule in the event that Borrower issues any capital stock as
provided in Section 4.1.2.
6.9. OTHER INFORMATION REQUESTED BY LENDER. Unless expressly prohibited by
law, such other information concerning the business, operations, financial
condition and regulatory status of Borrower or Subsidiary Bank as Lender may
from time to time reasonably request, so long as such information is not
confidential and related to a customer of Borrower or Subsidiary Bank.
7. FINANCIAL COVENANTS.
7.1. CAPITALIZATION. Borrower (on a consolidated basis) shall maintain and
cause Subsidiary Bank to maintain such capital as may be necessary to cause (a)
Borrower to be classified as "adequately capitalized" and (b) Subsidiary Bank to
be classified as "well capitalized," each in accordance with the rules and
regulations of its primary federal regulator, as in effect from time to time and
consistent with the financial information and reports contemplated in Section 6
hereof.
7.2. TIER 1 CAPITAL. Borrower shall cause the amount of the Tier 1 Capital
of Subsidiary Bank to be not less than $150,000,000 at all times. For the
purposes of this Agreement, "TIER 1 CAPITAL" shall have the definition provided
in, and shall be determined in accordance with, the rules and regulations of the
primary federal regulator of Subsidiary Bank, as in effect from time to time,
and shall be consistent with the financial information and reports contemplated
in Section 6 hereof.
7.3. MINIMUM RETURN ON AVERAGE ASSETS. Borrower shall cause Subsidiary Bank
to maintain on an annualized basis, an annual return on Average Total Assets of
greater than 0.70%. This covenant shall be calculated beginning with the quarter
ended December 31, 2002. For purposes of this Agreement, "AVERAGE TOTAL ASSETS"
shall have the definition provided in, and shall be determined in accordance
with, the rules and regulations of the primary federal regulator of Subsidiary
Bank, as in effect from time to time, and shall be consistent with the financial
information and reports contemplated in Section 6 hereof.
22
7.4. NON-PERFORMING ASSET RATIO. Borrower shall cause Subsidiary Bank to
maintain its ratio of (a) Nonperforming Assets to (b) the sum of Tier 1 Capital
plus the Reserve for Loan and Lease Losses to be less than 25% at all times,
measured quarterly and derived from the applicable call reports of Subsidiary
Bank filed with its primary federal regulator, which shall be consistent with
the financial information and reports contemplated in Section 6 hereof. For
purposes of this Agreement, "NONPERFORMING ASSETS" shall mean the sum of all
other real estate owned and repossessed assets, non-accrual loans, restructured
loans and loans on which any payment is 90 or more days past due but which
continue to accrue interest and "RESERVE FOR LOAN AND LEASE LOSSES" shall mean
the amount set forth in the call reports of Subsidiary Bank, which shall be
consistent with the financial information and reports contemplated in Section 6
hereof.
7.5. LOSS RESERVES. Borrower shall cause Subsidiary Bank to maintain its
Reserve for Loan and Lease Losses at an amount that exceeds an amount equal to
100% of its Nonperforming Loans at all times, measured quarterly and derived
from the call reports of Subsidiary Bank filed with its primary federal
regulator, which shall be consistent with the financial information and reports
contemplated in Section 6 hereof. For purposes of this Section 7.5
"NONPERFORMING LOANS" shall mean the sum of all non-accrual loans, restructured
loans and loans on which any payment is 90 or more days past due but which
continue to accrue interest and shall be consistent with the call reports of
Subsidiary Bank and the financial information and reports contemplated in
Section 6 hereof.
7.6. DEBT TO EQUITY. Borrower (on a non-consolidated, parent-company-only
basis) shall maintain its ratio of (a) Indebtedness (on a non-consolidated,
parent-company-only basis) minus the portion of trust preferred securities
(which are reflected on Borrower's balance sheet as "Guaranteed preferred
beneficial interest in the 9 3/4% junior subordinated debentures due 2032 of
▇▇▇▇▇▇ Capital Group, Inc.") that qualify and are included in Borrower's Tier 1
Capital to (b) stockholder's equity (on a non-consolidated, parent-company-only
basis, as determined in accordance with GAAP) at no more than 30% at all times,
measured quarterly and derived from the financial statements filed by Borrower
with its primary federal regulator, which are consistent with the financial
information and reports contemplated in Section 6 hereof.
8. BORROWER'S DEFAULT.
8.1. BORROWER'S DEFAULTS AND LENDER'S REMEDIES.
8.1.1. EVENTS OF DEFAULT. Each of the following shall constitute an
"Event of Default" under this Agreement:
8.1.1.1. Borrower fails to pay, when due, any principal of or
installment of interest on any Note; or
8.1.1.2. Borrower fails to pay, when due, the Loan Fee or any
other amount payable under this Agreement (other than principal or interest),
and such failure continues for a period of five Business Days after notice
thereof from Lender to Borrower; or
8.1.1.3. Borrower fails to keep or perform any of its agreements,
undertakings, obligations, covenants or conditions under this Agreement not
expressly referred to in another clause of this Section and such failure
continues for a period of ten days after notice thereof from Lender to Borrower;
or
8.1.1.4. Any "Event of Default" or "Default" as defined under, or
a default or breach in any respect by Borrower of any representation, warranty,
covenant or agreement under, any of the Loan Documents (including, without
limitation, any Collateral Document) occurs; or
8.1.1.5. Any representation, warranty or certification made in
this Agreement by Borrower or otherwise made in writing in connection with or as
contemplated by this Agreement or any of
23
the other Loan Documents by Borrower shall be or become materially incorrect or
false, or any representation to Lender by Borrower as to the financial condition
or credit standing of Borrower is or proves to be false or misleading; or
8.1.1.6. The dissolution of Borrower, or the failure of (a)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to be the chief executive officer of Borrower and the chairman
of the board of Subsidiary Bank or (b) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to be the president of
Borrower and the president and chief executive officer of Subsidiary Bank; or
8.1.1.7. The execution by Borrower of any secondary or additional
financing agreements or arrangements of any kind whatsoever secured, in whole or
in part, by all or any part of or interest in any Collateral; or
8.1.1.8. There occurs, in the reasonable opinion of Lender, a
material adverse change in the financial condition of Borrower; or
8.1.1.9. Any order or decree is entered by any court of competent
jurisdiction directly or indirectly enjoining or prohibiting Lender or Borrower
from performing any of their obligations under this Agreement or any of the Loan
Documents, and such order or decree is not vacated, and the proceedings out of
which such order or decree arose are not dismissed, within 60 days after the
granting of such decree or order; or
8.1.1.10. The filing of formal charges by any governmental or
quasi-governmental entity, including, without limitation, the issuance of an
indictment, under a RICO Related Law against Borrower or any Affiliate of
Borrower; or
8.1.1.11. Final judgment or judgments for the payment of money is
or are outstanding against any Borrower or against any of their property or
assets in any single case in excess of $500,000 and in an aggregate amount in
excess of $2,500,000, and any one of such judgments has remained unpaid,
unvacated, unbonded or unstayed by appeal or otherwise for a period of 30 days
from the date of its entry; or
8.1.1.12. The FRB, the FDIC, the ICB or other Governmental Agency
notification charged with the regulation of bank holding companies or depository
institutions: (a) issues to Borrower or Subsidiary Bank, or initiates any
action, suit or proceeding to obtain against, impose on or require from Borrower
or Subsidiary Bank, a cease and desist order or similar regulatory order, the
assessment of civil monetary penalties, articles of agreement, a memorandum of
understanding, a capital directive, a capital restoration plan, restrictions
that prevent or as a practical matter impair the payment of dividends by
Subsidiary Bank or the payments of any debt by Borrower, restrictions that make
the payment of the dividends by Subsidiary Bank or the payment of debt by
Borrower subject to prior regulatory approval, a notice or finding under Section
8(a) of the FDI Act, or any similar enforcement action, measure or proceeding;
or (b) proposes or issues to any executive officer or director of Borrower or
Subsidiary Bank, or initiates any action, suit or proceeding to obtain against,
impose on or require from any such officer or director, a cease and desist order
or similar regulatory order, a removal order or suspension order, or the
assessment of civil monetary penalties; or
8.1.1.13. Subsidiary Bank is notified that it is considered an
institution in "troubled condition" within the meaning of 12 U.S.C. Section
1831i and the regulations promulgated thereunder, or if a conservator or
receiver is appointed for Subsidiary Bank; or
8.1.1.14. Borrower or Subsidiary Bank becomes insolvent or is
unable to pay its debts as they mature; or makes an assignment for the benefit
of creditors or admits in writing its inability to pay its debts as they mature;
or suspends transaction of its usual business; or if a trustee of any
substantial part of the assets of Borrower or Subsidiary Bank is applied for or
appointed, and if appointed in a proceeding brought against Borrower, Borrower
by any action or failure to act indicates its approval of, consent to, or
acquiescence in such appointment, or within 30 days after such appointment, such
24
appointment is not vacated or stayed on appeal or otherwise, or shall not
otherwise have ceased to continue in effect; or
8.1.1.15. Any proceedings involving Borrower or Subsidiary Bank
are commenced by or against Borrower or Subsidiary Bank under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law or statute of the federal government or any state government
and, with respect to Borrower only, if such proceedings are instituted against
Borrower, Borrower by any action or failure to act indicates its approval of,
consent to or acquiescence therein, or an order shall be entered approving the
petition in such proceedings and within 30 days after the entry thereof such
order is not vacated or stayed on appeal or otherwise, or shall not otherwise
have ceased to continue in effect; or
8.1.1.16. Borrower applies for, consents to or acquiesces in the
appointment of a trustee, receiver, conservator or liquidator for itself under
Chapter 7 or Chapter 11 of the Bankruptcy Code (the "CODE Provisions"), or in
the absence of such application, consent or acquiescence, a trustee,
conservator, receiver or liquidator is appointed for Borrower under the Code
Provisions, and is not discharged within 30 days, or any bankruptcy,
reorganization, debt arrangement or other proceeding or any dissolution,
liquidation, or conservatorship proceeding is instituted by or against Borrower
under the Code Provisions, and if instituted against Borrower, is consented or
acquiesced in by it or remains for 30 days undismissed, or if Borrower is
enjoined, restrained or in any way prevented from conducting all or any material
part of its business under the Code Provisions; or
8.1.1.17. Subsidiary Bank applies for, consents to or acquiesces
in the appointment of a receiver for itself, or in the absence of such
application, consent or acquiescence, a receiver is appointed for Subsidiary
Bank, and is not discharged within 30 days; or
8.1.1.18. Fifteen days after notice thereof, Borrower or
Subsidiary Bank continues to be in default in any payment of principal or
interest for any other obligation or in the performance of any other term,
condition or covenant contained in any agreement (including, without limitation,
an agreement in connection with the acquisition of capital equipment on a title
retention or net lease basis), involving a sum in excess of $250,000 for any
single default and $500,000 for all of such ongoing defaults under any and all
agreements, under which any such obligation is created the effect of which
default is to cause the holder of such obligation to cause such obligation to
become due prior to its stated maturity; or
8.1.1.19. The Pledged Stock (as defined in the Pledge Agreement)
is attached, seized, subjected to a writ of distress warrant, or is levied upon
or becomes subject to any lien, claim, security interest or other encumbrance of
any kind, or comes within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors; or
8.1.1.20. Subsidiary Bank applies for, consents to or acquiesces
in the appointment of a receiver for itself, or in the absence of such
application, consent or acquiescence, a receiver is appointed for Subsidiary
Bank;
8.1.1.21. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "▇▇▇▇▇▇ Family") fail, in the
aggregate, to beneficially own (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) more than 50% of the capital stock of Borrower and more
than 50% of the voting stock of Borrower, in each case as may be outstanding
from time to time, or any Person beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) more shares of capital stock of
Borrower or more shares of voting stock of Borrower, in each case as may be
outstanding from time to time, than the ▇▇▇▇▇▇ Family; or
8.1.1.22. The Junior Subordinated Debentures are no longer junior
and subordinate in all respects to the Loans.
25
8.1.2. LENDER'S REMEDIES. Subject to Section 8.6, upon the occurrence
of any Event of Default, Lender shall have the right, if such Event of Default
shall then be continuing, in addition to all the remedies conferred upon Lender
by law or equity or the terms of any Loan Document, to do any or all of the
following, concurrently or successively, without notice to Borrower:
8.1.2.1. Declare the Notes to be, and it shall thereupon become,
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived, anything contained herein or
in any Note to the contrary notwithstanding; or
8.1.2.2. Terminate Lender's obligations under this Agreement to
extend credit of any kind or to make any disbursement, whereupon the commitment
and obligation of Lender to extend credit or to make disbursements hereunder
shall terminate; or
8.1.2.3. Exercise all of its rights and remedies at law, in
equity and/or pursuant to any or all Collateral Documents, including foreclosing
on the Collateral.
Borrower shall pay to Lender, upon demand, all expenses (including, without
limitation, attorneys' fees and expenses) of obtaining such judgment or decree
or of otherwise seeking to enforce its rights under this Agreement or any of the
other Loan Documents or other related documents; and all such expenses, as
determined by Lender in its sole and absolute discretion, shall, until paid, be
secured by the Loan Documents and shall bear interest at the Default Rate
described in the Note.
8.2. PROTECTIVE ADVANCES. If an Event of Default occurs, Lender may (but
shall in no event be required to) cure any such Event of Default and any amounts
expended by Lender in so doing, as determined by Lender in its sole and absolute
discretion, shall (a) be deemed advanced by Lender under an obligation to do so
regardless of the identity of the person or persons to whom such funds are
furnished, (b) constitute additional advances hereunder, the payment of which is
additional indebtedness evidenced by the Note, and (c) become due and owing, at
Lender's demand, with interest accruing from the date of disbursement thereof
until fully paid at the Default Rate.
8.3. OTHER REMEDIES. If any Event of Default shall occur and be continuing,
Lender may, in addition to any other rights and remedies hereunder, exercise any
and all remedies provided in any of the other Loan Documents and other related
documents.
8.4. NO LENDER LIABILITY. To the extent permitted by law, Lender shall have
no liability for any loss, damage, injury, cost or expense resulting from any
action or omission by it, or any of its representatives, which was taken,
omitted or made in good faith.
8.5. LENDER'S FEES AND EXPENSES. In case of any Event of Default hereunder,
Borrower shall pay Lender's fees and expenses including, without limitation,
attorneys' fees and expenses, in connection with the enforcement of this
Agreement or any of the other Loan Documents or other related documents.
8.6. LIMITATION ON REMEDIES WITH RESPECT TO SUBORDINATED DEBT. If an Event
of Default under Sections 8.1.1.16 or 8.1.1.17 shall occur, Lender may declare
the Subordinated Debenture and any other amounts due Lender hereunder
immediately due and payable, whereupon the Subordinated Debenture and such other
amounts payable hereunder shall immediately become due and payable, without
presentment, demand, protest or notice of any kind. If Borrower receives a
written notification from the FRB that the Subordinated Debenture no longer
constitutes Tier 2 Capital of Borrower (the "Federal Reserve Notice"), other
than due to the limitation imposed by the second sentence of 12 C.F.R.
ss.250.166(e), which limits the capital treatment of subordinated debt during
the five years immediately preceding the maturity date of the subordinated debt,
and if thereafter any Event of Default shall occur under Section 8.1, Lender may
declare the Subordinated Debenture and any other amounts due Lender hereunder
immediately due and payable, whereupon the Subordinated Debenture and such other
amounts payable hereunder shall immediately become due and payable, without
presentment, demand, protest or notice of any kind. Upon the occurrence of an
Event of Default, it is specifically understood and
26
agreed that, notwithstanding the curing of such Event of Default, Borrower shall
not be released from any of its covenants hereunder unless and until the
Subordinated Debenture is paid in full. Upon the occurrence of an Event of
Default without notice by Lender to or demand by Lender of Borrower, Lender
shall have no further obligation to and may then forthwith cease advancing
monies or extending credit to or for the benefit of Borrower under this
Agreement and the other Loan Documents. The parties agree that until the earlier
of the Subordinated Debt Maturity Date or the delivery of a Federal Reserve
Notice, Lender may only enforce Borrower's obligations under the Subordinated
Debt (a) if Borrower fails to pay interest when due on the Subordinated
Debenture, in which case Lender may pursue Borrower for such interest, (b) if
Borrower fails to comply with any of the covenants set forth in Section 5 (other
than Sections 5.2.3(a) and 5.2.4), in which case Lender may pursue Borrower to
ensure that Borrower complies with such covenants, or (c) if an Event of Default
occurs under Sections 8.1.1.16 or 8.1.1.17, in which case the first sentence of
this Section 8.6 shall govern.
9. MISCELLANEOUS.
9.1. RELEASE; INDEMNIFICATION. Borrower hereby releases Lender from any and
all causes of action, claims or rights which the Borrower may now or hereafter
have for, or which may arise from, any loss or damage caused by or resulting
from (a) any failure of Lender to protect, enforce or collect in whole or in
part any of the Collateral and (b) any other act or omission to act on the part
of Lender, its officers, agents or employees, except in each instance for
willful misconduct and gross negligence. Borrower shall indemnify, defend and
hold Lender and its Affiliates harmless from and against any and all losses,
liabilities, obligations, penalties, claims, fines, demands, litigation,
defenses, costs, judgments, suits, proceedings, actual damages, disbursements or
expenses of any kind or nature whatsoever (including, without limitation,
attorneys' fees and expenses) which may at any time be either directly or
indirectly imposed upon, incurred by or asserted or awarded against Lender or
any of Lender's Affiliates in connection with, arising from or relating to
Lender's entering into or carrying out the terms of this Agreement or being the
holder of any Note, other than any loss, liability, damage, suit, claim,
expense, fees or costs arising solely by reason of Lender's or any of Lender's
Affiliates' willful misconduct or gross negligence.
9.2. ASSIGNMENT AND PARTICIPATION. Lender may pledge or otherwise
hypothecate all or any portion of this Agreement or grant participations herein
(provided Lender acts as agent for any participants, except as provided below,
and, provided, further, Lender retains at least $5,500,000 of the Loans at all
times), or in any of its rights and security hereunder, including, without
limitation, the Note. Lender may, with the written consent of Borrower, which
consent shall not be unreasonably withheld, conditioned or delayed, also assign
all or any part of any Loan and Lender's obligations in connection therewith to
one or more commercial banks or other financial institutions or investors (each
an "ASSIGNEE LENDER"). Upon delivery to Borrower of an executed copy of the
Assignee Lender's assignment and acceptance (a) each such Assignee Lender shall
be deemed to be a party hereto and, to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender, such
Assignee Lender shall have the rights and obligations of Lender hereunder and
under the other Loan Documents and other related documents (b) Lender, to the
extent that rights and obligations hereunder have been assigned and delegated by
it, shall be released from its obligations hereunder and under the other Loan
Documents (including, without limitation, the obligation to fund the Assignee
Lender's share of the Loans) and other related documents. Within five Business
Days after receipt of a copy of the executed assignment and acceptance document,
Borrower shall execute and deliver to Lender a new Note or Notes, as applicable
(for delivery to the relevant Assignee Lender), evidencing such Assignee
Lender's assigned portion of the Loans and a replacement Note or Notes, as
applicable, in the principal amount of the Loans retained by Lender (such Note
to be in exchange for, but not in payment of, the Note then held by Lender).
Such Note shall be dated the date of the predecessor Note. Lender shall ▇▇▇▇ the
predecessor Note "exchanged" and deliver it to Borrower. Accrued interest on
that part of the predecessor Note evidenced by the new Note, and accrued fees,
shall be paid as provided in the assignment agreement between Lender and to the
Assignee Lender. Accrued interest on that part of the predecessor Note evidenced
by the replacement Note shall be paid to Lender. Accrued interest and accrued
fees shall be so apportioned between the Note and paid at the same time or times
provided in the predecessor Note and in this Agreement. Borrower authorizes
Lender to disclose to any prospective
27
Assignee Lender any financial or other information pertaining to Borrower or the
Loans. In addition, Borrower agrees that, if so requested by Lender, Borrower
will cause all insurance policies, binders and commitments (including, without
limitation, casualty insurance and title insurance) required by the Loan
Documents or other related documents to be delivered to Lender to name the
Assignee Lender as an additional insured or obligee, as Lender may request.
Anything in this Agreement to the contrary notwithstanding, and without the need
to comply with any of the formal or procedural requirements of this Agreement,
including this Section 9.2, Lender may at any time and from time to time pledge
and assign all or any portion of its rights under all or any of the Loan
Documents and other related documents to a Federal Reserve Bank; provided that
no such pledge or assignment shall release Lender from its obligations
thereunder.
9.3. PROHIBITION ON ASSIGNMENT. Borrower shall not assign or attempt to
assign its rights under this Agreement, either voluntarily or by operation of
law.
9.4. TIME OF THE ESSENCE. Time is of the essence of this Agreement.
9.5. NO WAIVER. No waiver of any term, provision, condition, covenant or
agreement herein contained shall be effective unless set forth in a writing
signed by Lender, and any such waiver shall be effective only to the extent set
forth in such writing. No failure to exercise or delay in exercising, by Lender
or any holder of the Note, of any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege preclude any other or further exercise thereof, or the
exercise of any other right or remedy provided by law. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any right or
remedy provided by law or equity. No notice or demand on Borrower in any case
shall, in itself, entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand. No
consent or waiver, expressed or implied, by Lender to or of any breach or
default by Borrower in the performance of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance of the same or any other obligations of Borrower
hereunder. Failure on the part of Lender to complain of any acts or failure to
act or to declare an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by Lender of its rights hereunder or
impair any rights, powers or remedies on account of any breach or default by
Borrower.
9.6. SEVERABILITY. Any provision of this Agreement which is unenforceable
or invalid or contrary to law, or the inclusion of which would adversely affect
the validity, legality or enforcement of this Agreement, shall be of no effect
and, in such case, all the remaining terms and provisions of this Agreement
shall subsist and be fully effective according to the tenor of this Agreement
the same as though any such invalid portion had never been included herein.
Notwithstanding any of the foregoing to the contrary, if any provisions of this
Agreement or the application thereof are held invalid or unenforceable only as
to particular persons or situations, the remainder of this Agreement, and the
application of such provision to persons or situations other than those to which
it shall have been held invalid or unenforceable, shall not be affected thereby,
but shall continue valid and enforceable to the fullest extent permitted by law.
9.7. USURY; REVIVAL OF LIABILITIES. All agreements between Borrower and
Lender (including, without limitation, this Agreement and any other Loan
Documents) are expressly limited so that in no event whatsoever shall the amount
paid or agreed to be paid to Lender exceed the highest lawful rate of interest
permissible under the laws of the State of Illinois. If, from any circumstances
whatsoever, fulfillment of any provision hereof or of any other Loan Documents,
at the time performance of such provision shall be due, shall involve exceeding
the limit of validity prescribed by law which a court of competent jurisdiction
may deem applicable hereto, then, ipso facto, the obligation to be fulfilled
shall be reduced to the highest lawful rate of interest permissible under the
laws of the State of Illinois, and if for any reason whatsoever, Lender shall
ever receive as interest an amount which would be deemed unlawful, such interest
shall be applied to the payment of the last maturing installment or installments
of the indebtedness secured by the Collateral (whether or not then due and
payable) and not to the payment of interest. To the extent that the Lender
received any payment on account of the Borrower's Liabilities
28
and any such payment(s) and/or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, subordinated
and/or required to be repaid to a trustee, receiver or any other Person under
any bankruptcy act, state or federal law, common law or equitable cause, then to
that of such payment(s) or proceeds received, the Borrower's Liabilities or part
thereof intended to be satisfied shall be revived and continue in full force and
effect, as if such payment(s) and/or proceeds had not been received by Lender
and applied on account of the Borrower's Liabilities; provided, however, if
Lender successfully contests an such invalidation, declaration, set aside,
subordination or other order to pay any such payment and/or proceeds to any
third party, the revived Borrower's Liabilities shall be deemed satisfied.
9.8. NOTICES. Any notice which either party hereto may be required or may
desire to give hereunder shall be deemed to have been given if in writing and if
delivered personally, or if mailed, postage prepaid, by United States registered
or certified mail, return receipt requested, or if delivered by a responsible
overnight courier, addressed:
if to Borrower: ▇▇▇▇▇▇ Capital Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
if to Lender: LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
or to such other address or addresses as the party to be given notice may have
furnished in writing to the party seeking or desiring to give notice, as a place
for the giving of notice, provided that no change in address shall be effective
until seven days after being given to the other party in the manner provided for
above. Any notice given in accordance with the foregoing shall be deemed given
when delivered personally or, if mailed, five Business Days after it shall have
been deposited in the United States mails as aforesaid or, if sent by overnight
courier, the Business Day following the date of delivery to such courier.
9.9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the parties and their respective heirs, legal representatives, successors and
assigns except that, unless Lender consents in writing, no assignment made by
Borrower in violation of this Agreement shall confer any rights on any assignee
of Borrower.
9.10. NO JOINT VENTURE. Nothing contained herein or in any document
executed pursuant hereto and no action or inaction whatsoever on the part of
Lender, shall be deemed to make Lender a partner or joint venturer with
Borrower.
9.11. BROKERAGE COMMISSIONS. Borrower shall indemnify, defend and hold
Lender and its Affiliates harmless from and against any and all losses,
liabilities, obligations, penalties, claims, fines, lost profits, demands,
litigation, defenses, costs, judgments, suits, proceedings, damages,
disbursements or expenses of any kind or nature whatsoever (including, without
limitation, attorneys' fees and expenses), consequential or otherwise, which may
at any time be either directly or indirectly imposed upon, incurred by or
asserted or awarded against Lender or any of its Affiliates in connection with,
arising out of or relating to any claim of a broker's or finder's fee against
Lender or any person or entity in connection with the transaction herein
contemplated arising out of or relating to Borrower's or Lender's action or
inaction.
29
9.12. PUBLICITY. Neither Borrower nor Lender shall publicize any Loan
without the prior written consent of the other party.
9.13. DOCUMENTATION. All documents and other matters required by any of the
provisions of this Agreement to be submitted or furnished to Lender shall be in
form and substance satisfactory to Lender.
9.14. ADDITIONAL ASSURANCES. Borrower agrees that, at any time or from time
to time, upon the written request of Lender, it will execute all such further
documents and do all such other acts and things as Lender may reasonably request
to effectuate the transaction herein contemplated.
9.15. ENTIRE AGREEMENT. This Agreement and the Exhibits hereto constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof and may not be modified or amended in any manner other than by
supplemental written agreement executed by the parties hereto.
9.16. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois. Nothing herein shall
be deemed to limit any rights, powers or privileges which Lender may have
pursuant to any law of the United States of America or any rule, regulation or
order of any department or agency thereof and nothing herein shall be deemed to
make unlawful any transaction or conduct by Lender which is lawful pursuant to,
or which is permitted by, any of the foregoing.
9.17. FORUM; AGENT; VENUE. To induce Lender to accept this Agreement and
the other Loan Documents, Borrower irrevocably agrees that all actions or
proceedings in any way, manner, or respect, arising out of or from or related to
this Agreement or the other Loan Documents shall be litigated only in courts
having suits within Chicago, Illinois. Borrower hereby consents and submits to
the jurisdiction of any local, state, or federal court located within said city.
Borrower hereby irrevocably appoints and designates J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the
chief financial officer of Borrower, whose business address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or any other person having and
maintaining a place of business in such State, whom Borrower may from time to
time hereafter designate (having give five days' written notice thereof to
Lender) as Borrower's true and lawful attorney and duly authorized agent for
acceptance of service of legal process. Borrower agrees that service of such
process upon such person shall constitute personal service of such process upon
Borrower. Borrower hereby waives any right it may have to transfer or change the
venue of any litigation brought against Borrower by Lender.
9.18. NO THIRD PARTY BENEFICIARY. This Agreement is made for the sole
benefit of Borrower and Lender, and no other person shall be deemed to have any
privity of contract hereunder nor any right to rely hereon to any extent or for
any purpose whatsoever, nor shall any other person have any right of action of
any kind hereon or be deemed to be a third party beneficiary hereunder.
9.19. LEGAL TENDER OF UNITED STATES. All payments hereunder shall be made
in coin or currency which at the time of payment is legal tender in the United
States of America for public and private debts.
9.20. DEFINITIONS; CAPTIONS; COUNTERPARTS. With respect to any reference in
this Agreement to any defined term, (a) if such defined term refers to a person,
or a trust, corporation, partnership or other entity, then it shall also mean
all heirs, legal representatives, successors and assigns of such person or
entity, and (b) if such defined term refers to a document, instrument or
agreement, then it shall also include any replacement, extension or other
modification thereof. Captions contained in this Agreement in no way define,
limit or extend the scope or intent of their respective provisions. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
9.21. KNOWLEDGE; DISCRETION. All references herein to a party's best
knowledge shall be deemed to mean the best knowledge of such party based on
commercially reasonable inquiry. All
30
references herein to Borrower's knowledge shall be deemed to refer to the
knowledge of Borrower and each Subsidiary. Unless specified to the contrary
herein, all references herein to an exercise of discretion or judgment by
Lender, to the making of a determination or designation by Lender, to the
application of Lender's discretion or opinion, to the granting or withholding of
Lender's consent or approval, to the consideration of whether a matter or thing
is satisfactory or acceptable to Lender, or otherwise involving the decision
making of Lender, shall be deemed to mean that Lender shall decide unilaterally
using its sole and absolute discretion or judgment.
9.22. WAIVER OF RIGHT TO JURY TRIAL. BORROWER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY
OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR
LENDER. BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH
LEGAL COUNSEL. BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND
UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS
BEEN REVIEWED BY BORROWER AND BORROWER'S COUNSEL AND IS A MATERIAL INDUCEMENT
FOR LENDER TO ENTER INTO THE AGREEMENT AND THE OTHER LOAN DOCUMENTS (c) THIS
WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH OTHER LOAN DOCUMENTS AS IF FULLY
INCORPORATED THEREIN.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
S-1
EXHIBIT A
FORM OF TERM NOTE
$500,000.00 Chicago, Illinois
November 27, 2002
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ CAPITAL GROUP, INC., a Delaware
corporation ("BORROWER"), promises to pay to the order of LASALLE BANK NATIONAL
ASSOCIATION, a national banking association, or the holder hereof from time to
time ("LENDER"), at such place as may be designated in writing by Lender, the
principal sum of FIVE HUNDRED THOUSAND AND NO/100THS DOLLARS ($500,000.00), with
interest thereon as hereinafter provided. This note (this "NOTE") is issued
pursuant to the terms of a Loan and Subordinated Debenture Purchase Agreement of
even date herewith by and between Borrower and Lender (said Loan and
Subordinated Debenture Purchase Agreement together with the Agreed Upon Terms
and Procedures, as each may be amended, restated, supplemented or modified from
time to time, is referred to hereinafter as the "LOAN AGREEMENT"). All
capitalized terms used but not defined herein shall have the respective meanings
ascribed to them in the Loan Agreement.
Interest shall accrue on all sums as advanced and outstanding from time
to time under this Note and Loan Agreement as set forth in the Loan Agreement,
and such interest shall be due and payable on the 27th day of each February,
May, August and November as set forth in the Loan Agreement, commencing February
27, 2003. All sums owing hereunder are payable in lawful money of the United
States of America, in immediately available funds.
The outstanding principal balance of this Note, together with all accrued
and unpaid interest, shall be due and payable on the Term Loan Maturity Date.
Additional principal payments shall be made in accordance with the provisions of
the Loan Agreement.
This Note is issued pursuant to the terms of the Loan Agreement and is
secured by and entitled to the benefits of, among other things, the Collateral
Documents. In case an Event of Default (as defined under any of the Loan
Agreement, the Collateral Documents, or other Loan Document) shall occur and be
continuing (any of the foregoing being a "EVENT OF DEFAULT" hereunder), the
principal of this Note together with all accrued interest thereon may, at the
option of the holder hereof, immediately become due and payable on demand;
provided, however, that if any document related to this Note provides for
automatic acceleration of payment of sums owing hereunder, all sums owing
hereunder shall be automatically due and payable in accordance with the terms of
that document.
Unless otherwise provided in the Loan Agreement, all payments on account of
the indebtedness evidenced by this Note shall be first applied to the payment of
costs and expenses of Lender which are due and payable, then to past-due
interest on the unpaid principal balance and the remainder to principal.
Provided that no Event of Default then exists, this Note may be prepaid
only upon those terms and conditions set forth in the Loan Agreement.
If any interest payment required hereunder is not received by Lender on or
before the 25th day of the month in which it becomes due, Borrower shall pay, at
Lender's option, a late or collection charge equal to 4% of the amount of such
unpaid interest payment.
From and after the Term Loan Maturity Date, or such earlier date as all
sums owing on this Note become due and payable by acceleration or otherwise, or
after the occurrence of an Event of Default, interest shall be computed on all
amounts then due and payable under this Note at a "DEFAULT RATE" equal to 3% per
annum (based on a 360-day year and charged on the basis of actual days elapsed)
in excess of the interest rate otherwise accruing under this Note.
A-1
If any attorney is engaged by Lender to enforce or defend any provision of
this Note or any of the other Loan Documents, or as a consequence of any Event
of Default, with or without the filing of any legal action or proceeding, then
Borrower shall pay to Lender immediately upon demand all attorneys' fees and
expenses, together with interest thereon from the date of such demand until paid
at the rate of interest applicable to the principal balance owing hereunder as
if such unpaid attorneys' fees and expenses had been added to the principal.
No previous waiver and no failure or delay by Lender in acting with respect
to the terms of this Note or any of the other Loan Documents shall constitute a
waiver of any breach, default or failure of condition under this Note, the Loan
Agreement or any of the other Loan Documents or the obligations secured thereby.
A waiver of any term of this Note or any of the other Loan Documents or of any
of the obligations secured thereby must be made in writing and shall be limited
to the express written terms of such waiver. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the Loan evidenced by this Note, the terms of this Note shall prevail.
Except as otherwise provided in the Loan Agreement, Borrower expressly
waives presentment, demand, notice of dishonor, notice of default or
delinquency, notice of acceleration, notice of protest and nonpayment, notice of
costs, expenses or losses and interest thereon, notice of late charges, and
diligence in taking any action to collect any sums owing under this Note or in
proceeding against any of the rights or interests in or to properties securing
payment of this Note. In addition, Borrower expressly agrees that this Note and
any payment coming due hereunder may be extended from time to time without in
any way affecting the liability of any such party hereunder.
Time is of the essence with respect to every provision hereof. This Note
shall be construed and enforced in accordance with the laws of the State of
Illinois, except to the extent that federal laws preempt the laws of the State
of Illinois, and all persons and entities in any manner obligated under this
Note consent to the jurisdiction of any federal or State court within the State
of Illinois having proper venue and also consent to service of process by any
means authorized by Illinois or Federal law. Any reference contained herein to
attorneys' fees and expenses shall be deemed to be to reasonable fees and
expenses and to include all reasonable fees and expenses of in-house or staff
attorneys and the reasonable fees and expenses of any other experts or
consultants.
All agreements between Borrower and Lender (including, without limitation,
this Note and the Loan Agreement, and any other documents securing all or any
part of the indebtedness evidenced hereby) are expressly limited so that in no
event whatsoever shall the amount paid or agreed to be paid to Lender exceed the
highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof, the Loan
Agreement or any other documents securing all or any part of the indebtedness
evidenced hereby at the time performance of such provisions shall be due, shall
involve exceeding the limit of validity prescribed by law which a court of
competent jurisdiction may deem applicable hereto, then, ipso facto, the
obligation to be fulfilled shall be reduced to the highest lawful rate of
interest permissible under such applicable laws, and if, for any reason
whatsoever, Lender shall ever receive as interest an amount which would be
deemed unlawful under such applicable law, such interest shall be automatically
applied to the payment of the principal of this Note (whether or not then due
and payable) and not to the payment of interest or refunded to Borrower if such
principal has been paid in full.
Any notice which either party hereto may be required or may desire to give
hereunder shall be governed by the notice provisions of the Loan Agreement.
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER
STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES THAT IT HAS
BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS
DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL. BORROWER FURTHER
A-2
ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS
OF THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER'S
COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE LOAN
DOCUMENTS, AND (iii) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE LOAN
DOCUMENTS AS IF FULLY INCORPORATED THEREIN.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
A-3
IN WITNESS WHEREOF, the undersigned has executed this Note or caused this
Note to be executed by its duly authorized representative as of the date first
above written.
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
-------------------------------
Name:
Title:
A-4
EXHIBIT B
FORM OF REVOLVING NOTE
$11,500,000.00 Chicago, Illinois
November 27, 2002
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ CAPITAL GROUP, INC., a Delaware
corporation ("BORROWER"), promises to pay to the order of LASALLE BANK NATIONAL
ASSOCIATION, a national banking association, or the holder hereof from time to
time ("LENDER"), at such place as may be designated in writing by Lender, the
principal sum of ELEVEN MILLION FIVE HUNDRED THOUSAND NO/100THS DOLLARS
($11,500,000.00), with interest thereon as hereinafter provided. It is
contemplated that there will be advances and payments under this note (this
"NOTE") from time to time, but no advances or payments under this Note
(including payment in full of the unpaid balance of principal hereof prior to
maturity) shall affect or impair the validity or enforceability of this Note as
to future advances hereunder. This Note is issued pursuant to the terms of a
Loan and Subordinated Debenture Purchase Agreement of even date herewith by and
between Borrower and Lender (said Loan and Subordinated Debenture Purchase
Agreement together with the Agreed Upon Terms and Procedures, as each may be
amended and modified from time to time, is referred to hereinafter as the "LOAN
AGREEMENT"). All capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Loan Agreement.
Interest shall accrue on all sums as advanced and outstanding from time to
time under this Note and Loan Agreement as set forth in the Loan Agreement, and
such interest shall be due and payable on the 27th day of each February, May,
August and November as set forth in the Loan Agreement, commencing February 27,
2003. All sums owing hereunder are payable in lawful money of the United States
of America, in immediately available funds.
The outstanding principal balance of this Note, together with all accrued
and unpaid interest, shall be due and payable on the Revolving Loan Maturity
Date. Additional principal payments shall be made in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to the terms of the Loan Agreement and is
secured by and entitled to the benefits of, among other things, the Collateral
Documents. In case an Event of Default (as defined under any of the Loan
Agreement, the Collateral Documents, or other Loan Document) shall occur and be
continuing (any of the foregoing being a "EVENT OF DEFAULT" hereunder), the
principal of this Note together with all accrued interest thereon may, at the
option of the holder hereof, immediately become due and payable on demand;
provided, however, that if any document related to this Note provides for
automatic acceleration of payment of sums owing hereunder, all sums owing
hereunder shall be automatically due and payable in accordance with the terms of
that document.
Unless otherwise provided in the Loan Agreement, all payments on account of
the indebtedness evidenced by this Note shall be first applied to the payment of
costs and expenses of Lender which are due and payable, then to past-due
interest on the unpaid principal balance and the remainder to principal.
Provided that no Event of Default then exists, this Note may be prepaid
only upon those terms and conditions set forth in the Loan Agreement.
If any interest payment required hereunder is not received by Lender on or
before the 25th day of the month in which it becomes due, Borrower shall pay, at
Lender's option, a late or collection charge equal to 4% of the amount of such
unpaid interest payment.
From and after the Revolving Loan Maturity Date, or such earlier date as
all sums owing on this Note become due and payable by acceleration or otherwise,
or after the occurrence of an Event of Default, interest shall be computed on
all amounts then due and payable under this Note at a "DEFAULT
B-1
RATE" equal to 3% per annum (based on a 360-day year and charged on the basis of
actual days elapsed) in excess of the interest rate otherwise accruing under
this Note.
If any attorney is engaged by Lender to enforce or defend any provision of
this Note or any of the other Loan Documents, or as a consequence of any Event
of Default, with or without the filing of any legal action or proceeding, then
Borrower shall pay to Lender immediately upon demand all attorneys' fees and
expenses, together with interest thereon from the date of such demand until paid
at the rate of interest applicable to the principal balance owing hereunder as
if such unpaid attorneys' fees and expenses had been added to the principal.
No previous waiver and no failure or delay by Lender in acting with respect
to the terms of this Note or any of the other Loan Documents shall constitute a
waiver of any breach, default or failure of condition under this Note, the Loan
Agreement or any of the other Loan Documents or the obligations secured thereby.
A waiver of any term of this Note or any of the other Loan Documents or of any
of the obligations secured thereby must be made in writing and shall be limited
to the express written terms of such waiver. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the Loan evidenced by this Note, the terms of this Note shall prevail.
Except as otherwise provided in the Loan Agreement, Borrower expressly
waives presentment, demand, notice of dishonor, notice of default or
delinquency, notice of acceleration, notice of protest and nonpayment, notice of
costs, expenses or losses and interest thereon, notice of late charges, and
diligence in taking any action to collect any sums owing under this Note or in
proceeding against any of the rights or interests in or to properties securing
payment of this Note. In addition, Borrower expressly agrees that this Note and
any payment coming due hereunder may be extended from time to time without in
any way affecting the liability of any such party hereunder.
Time is of the essence with respect to every provision hereof. This Note
shall be construed and enforced in accordance with the laws of the State of
Illinois, except to the extent that federal laws preempt the laws of the State
of Illinois, and all persons and entities in any manner obligated under this
Note consent to the jurisdiction of any federal or State court within the State
of Illinois having proper venue and also consent to service of process by any
means authorized by Illinois or Federal law. Any reference contained herein to
attorneys' fees and expenses shall be deemed to be to reasonable fees and
expenses and to include all reasonable fees and expenses of in-house or staff
attorneys and the reasonable fees and expenses of any other experts or
consultants.
All agreements between Borrower and Lender (including, without limitation,
this Note and the Loan Agreement, and any other documents securing all or any
part of the indebtedness evidenced hereby) are expressly limited so that in no
event whatsoever shall the amount paid or agreed to be paid to Lender exceed the
highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof, the Loan
Agreement or any other documents securing all or any part of the indebtedness
evidenced hereby at the time performance of such provisions shall be due, shall
involve exceeding the limit of validity prescribed by law which a court of
competent jurisdiction may deem applicable hereto, then, ipso facto, the
obligation to be fulfilled shall be reduced to the highest lawful rate of
interest permissible under such applicable laws, and if, for any reason
whatsoever, Lender shall ever receive as interest an amount which would be
deemed unlawful under such applicable law, such interest shall be automatically
applied to the payment of the principal of this Note (whether or not then due
and payable) and not to the payment of interest or refunded to Borrower if such
principal has been paid in full.
Any notice which either party hereto may be required or may desire to give
hereunder shall be governed by the notice provisions of the Loan Agreement.
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER
STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES THAT
B-2
IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL. BORROWER FURTHER ACKNOWLEDGES
THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS
WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER'S COUNSEL
AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE LOAN DOCUMENTS, AND
(iii) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE LOAN DOCUMENTS AS IF
FULLY INCORPORATED THEREIN.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
B-3
IN WITNESS WHEREOF, the undersigned has executed this Note or caused this
Note to be executed by its duly authorized representative as of the date first
above written.
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
-------------------------------
Name:
Title:
B-4
EXHIBIT C
FORM OF SUBORDINATED DEBENTURE
--------------------------------
THIS SUBORDINATED DEBENTURE IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY FEDERAL AGENCY.
--------------------------------
$10,000,000.00 Chicago, Illinois
November 27, 2002
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ CAPITAL GROUP, INC., a Delaware
corporation ("BORROWER"), hereby promises to pay to the order of LASALLE BANK
NATIONAL ASSOCIATION, a national banking association, or any holder hereof from
time to time ("LENDER"), at such place as may be designated in writing by
Lender, the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) (or
so much thereof that has been advanced and remains outstanding) with interest
thereon as hereinafter provided. This Subordinated Debenture (this "Subordinated
Debenture") is issued pursuant to the terms of a Loan and Subordinated Debenture
Purchase Agreement of even date herewith by and between Borrower and Lender
(said Loan and Subordinated Debenture Purchase Agreement together with the
Agreed Upon Terms and Procedures, as each may be amended, restated, supplemented
or modified from time to time, is referred to hereinafter as the "LOAN
AGREEMENT"). All capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Loan Agreement.
All accrued interest and unpaid principal due and payable under this
Subordinated Debenture shall be paid in full on or before the Subordinated
Debenture Maturity Date.
The unpaid principal amount outstanding under this Subordinated Debenture
from time to time shall bear interest before maturity in accordance with the
Agreement, computed on the basis of a 360-day year and charged for actual days
elapsed. Under certain circumstances as provided in the Agreement, overdue
interest payments under this Subordinated Debenture shall bear interest from the
due date thereof until paid at a daily rate equal to the Default Rate of
Interest, computed on the basis of a 360-day year and charged for actual days
elapsed, except as otherwise provided in the Agreement.
All accrued interest shall be payable at Lender's principal place of
business on a quarterly basis in arrears on the 27th day of each February, May,
August and November, commencing February 27, 2003. The outstanding unpaid
principal balance of this Subordinated Debenture shall be payable in one
installment on the Subordinated Debenture Maturity Date. Whenever any payment to
be made under this Subordinated Debenture shall be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall be included in the computation of interest due
upon this Subordinated Debenture. There shall be no penalties or other charges
payable by Borrower to Lender hereunder other than those payments described in
this Subordinated Debenture or in the Loan Agreement. Borrower may prepay all
or, from time to time, part of the outstanding unpaid principal balance under
this Subordinated Debenture at any time without penalty.
This Subordinated Debenture is not secured by any assets of Borrower.
So long as any portion of the unpaid principal of this Subordinated
Debenture is deemed to be Tier 2 Capital of Borrower in accordance with the
rules and regulations of the FRB applicable to the capital status of the
subordinated debt of bank holding companies, the rights of Lender to the
principal sum hereunder or any part hereof and to any accrued interest thereon
shall remain subject and subordinate to the claims of general creditors of
Borrower (which shall expressly exclude all indebtedness incurred in connection
with, or relating to, any trust preferred securities caused to be issued by, or
reflected in the consolidated financial statements of, Borrower, including the
subordinated indebtedness
C-1
evidenced by the Junior Subordinated Debentures) and, upon dissolution or
liquidation of Borrower, no payment of principal, interest or premium (including
post-default interest) shall be due and payable under the terms of this
Subordinated Debenture until all general creditors of Borrower (which shall
expressly exclude all indebtedness incurred in connection with, or relating to,
any trust preferred securities caused to be issued by, or reflected in the
consolidated financial statements of, Borrower, including the subordinated
indebtedness evidenced by the Junior Subordinated Debentures) shall have been
paid in full. If this Subordinated Debenture ceases to be deemed to be Tier 2
Capital of Borrower in accordance with the rules and regulations of the FRB
applicable to the capital status of the subordinated debt of bank holding
companies, other than due to the limitations imposed by the second sentence of
12 C.F.R ss.250.166(e), which limits the capital treatment of subordinated debt
during the five years immediately preceding the maturity date of the
subordinated debt, Borrower shall: immediately notify Lender; and immediately
upon request of Lender execute and deliver all such agreements (including
without limitation pledge agreements and replacement notes) as Lender may
request in order to restructure the obligation evidenced hereby as a senior
secured obligation of Borrower. If Borrower fails to execute such agreements as
required by Lender within 30 days of Lender's request, such failure shall be
deemed to be an Event of Default as provided in Section 8.1.1 of the Loan
Agreement.
If a Default shall occur, Lender shall have the rights set forth in Section
8.6 of the Loan Agreement.
If any attorney is engaged by Lender to enforce or defend any provision of
this Subordinated Debenture or any of the other Loan Documents, or as a
consequence of any Event of Default, with or without the filing of any legal
action or proceeding, then Borrower shall pay to Lender immediately upon demand
all attorneys' fees and expenses, together with interest thereon from the date
of such demand until paid at the rate of interest applicable to the principal
balance owing hereunder as if such unpaid attorneys' fees and expenses had been
added to the principal.
No previous waiver and no failure or delay by Lender in acting with respect
to the terms of this Subordinated Debenture or any of the other Loan Documents
shall constitute a waiver of any breach, default or failure of condition under
this Subordinated Debenture, the Loan Agreement or any of the other Loan
Documents or the obligations secured thereby. A waiver of any term of this
Subordinated Debenture or any of the other Loan Documents or of any of the
obligations secured thereby must be made in writing and shall be limited to the
express written terms of such waiver. In the event of any inconsistencies
between the terms of this Subordinated Debenture and the terms of any other
document related to the Loan evidenced by this Subordinated Debenture, the terms
of this Subordinated Debenture shall prevail.
Except as otherwise provided in the Loan Agreement, Borrower expressly
waives presentment, demand, notice of dishonor, notice of default or
delinquency, notice of acceleration, notice of protest and nonpayment, notice of
costs, expenses or losses and interest thereon, notice of late charges, and
diligence in taking any action to collect any sums owing under this Subordinated
Debenture. In addition, Borrower expressly agrees that this Subordinated
Debenture and any payment coming due hereunder may be extended from time to time
without in any way affecting the liability of any such party hereunder.
Time is of the essence with respect to every provision hereof. This
Subordinated Debenture shall be construed and enforced in accordance with the
laws of the State of Illinois, except to the extent that federal laws preempt
the laws of the State of Illinois, and all persons and entities in any manner
obligated under this Subordinated Debenture consent to the jurisdiction of any
federal or State court within the State of Illinois having proper venue and also
consent to service of process by any means authorized by Illinois or Federal
law. Any reference contained herein to attorneys' fees and expenses shall be
deemed to be to reasonable fees and expenses and to include all reasonable fees
and expenses of in-house or staff attorneys and the reasonable fees and expenses
of any other experts or consultants.
All agreements between Borrower and Lender (including, without limitation,
this Subordinated Debenture and the Loan Agreement, and any other documents
securing all or any part of the indebtedness evidenced hereby) are expressly
limited so that in no event whatsoever shall the amount
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paid or agreed to be paid to Lender exceed the highest lawful rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision hereof, the Loan Agreement or any other documents
securing all or any part of the indebtedness evidenced hereby at the time
performance of such provisions shall be due, shall involve exceeding the limit
of validity prescribed by law which a court of competent jurisdiction may deem
applicable hereto, then, ipso facto, the obligation to be fulfilled shall be
reduced to the highest lawful rate of interest permissible under such applicable
laws, and if, for any reason whatsoever, Lender shall ever receive as interest
an amount which would be deemed unlawful under such applicable law, such
interest shall be automatically applied to the payment of the principal of this
Subordinated Debenture (whether or not then due and payable) and not to the
payment of interest or refunded to Borrower if such principal has been paid in
full.
Lender may sell, assign, pledge or otherwise transfer or encumber any or
all of its interest under this Subordinated Debenture at any time and from time
to time. In the event of a transfer, all terms and conditions of this
Subordinated Debenture shall be binding upon and inure to the benefit of the
transferee after such transfer.
Upon receipt of notice from Lender advising Borrower of the loss, theft,
destruction or mutilation of this Subordinated Debenture, Borrower shall,
execute and deliver in lieu thereof a new debenture in principal amount equal to
the unpaid principal amount of such lost, stolen, destroyed or mutilated
debenture, dated the date to which interest has been paid on such lost, stolen,
destroyed or mutilated Subordinated Debenture.
Unless otherwise provided in the Loan Agreement, all payments on account of
the indebtedness evidenced by this Subordinated Debenture shall be first applied
to the payment of costs and expenses of Lender which are due and payable, then
to past-due interest on the unpaid principal balance and the remainder to
principal.
Any notice which either party hereto may be required or may desire to give
hereunder shall be governed by the notice provisions of the Loan Agreement.
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH THIS Subordinated Debenture OR ANY OF THE OTHER LOAN DOCUMENTS,
OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES
THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS SUBORDINATED DEBENTURE AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN
FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.
BORROWER FURTHER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING
AND RAMIFICATIONS OF THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY BORROWER
AND BORROWER'S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE
LOAN DOCUMENTS, AND (iii) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE LOAN
DOCUMENTS AS IF FULLY INCORPORATED THEREIN.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has executed this Subordinated
Debenture or caused this Subordinated Debenture to be executed by its duly
authorized representative as of the date first above written.
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
-------------------------------
Name:
Title:
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EXHIBIT D
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "PLEDGE AGREEMENT") is dated as of November 27,
2002 and is made by and between ▇▇▇▇▇▇ CAPITAL GROUP, INC., a Delaware
corporation ("PLEDGOR"), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association ("LENDER").
R E C I T A L S :
A. Borrower is a bank holding company that owns 100% of the issued and
outstanding capital stock of ▇▇▇▇ ▇▇▇▇▇▇ Bank ("SUBSIDIARY BANK"), an Illinois
banking corporation with its main banking premises located in Wheeling,
Illinois.
B. Borrower has requested that Lender provide it with three credit
facilities in the aggregate principal amount of $22,000,000 consisting of a Term
Loan in the principal amount of $500,000, a Revolving Loan in the principal
amount of $11,500,000 and Subordinated Debt in the principal amount of
$10,000,000.
C. This Pledge Agreement has been executed and delivered by Pledgor to
Lender pursuant to Section 3.2.3 of the Loan Agreement (as defined below).
THEREFORE, in consideration of the mutual covenants, conditions and
agreements and to induce Lender to enter into the Loan Agreement and to make
Loans and other financial accommodations to Pledgor, the parties hereby agree as
follows:
A G R E E M E N T :
1. DEFINITIONS
1.1. DEFINED TERMS. The following capitalized terms generally used in this
Pledge Agreement shall have the meanings defined or referenced below (such
meanings to be equally applicable to both the singular and the plural forms of
the term defined). Certain other capitalized terms used in specific sections of
this Agreement may be defined in such sections.
"CERTIFICATES" means any and all notes, warrants, options, stock
certificates or other documents or instruments now or hereafter received or
receivable by Pledgor and representing Pledgor's interest in the Pledged Stock.
"LOAN AGREEMENT" means that Loan and Subordinated Debenture Purchase
Agreement of even date herewith between Lender and Pledgor together with the
Agreed Upon Terms and Procedures, as each may be amended, restated, supplemented
or modified from time to time, both of which are hereby incorporated by
reference in this Pledge Agreement.
"PLEDGED STOCK" means the shares of capital stock described on the attached
Schedule A hereto, together with all substitutions therefor, proceeds thereof
and therefrom and all interest, cash dividends or other payments in respect
thereof, as well as all stock and other securities or property which are issued
pursuant to conversion, redemption, exercise of rights, stock split,
recapitalization, reorganization, stock dividends or other corporate act which
are referable to the Pledged Stock (such stock or other securities are
hereinafter referred to as the "ADDITIONAL PLEDGED SECURITIES"), and all
distributions, whether cash or otherwise, in the nature of a partial or complete
liquidation, dissolution or winding up which are referable to the Pledged Stock
(such distributions are hereinafter referred to as "LIQUIDATING DISTRIBUTIONS").
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1.2. OTHER DEFINED TERMS. All other capitalized terms used herein have the
meanings assigned to them in the Loan Agreement.
1.3. EXHIBITS AND SCHEDULES INCORPORATED. All exhibits and schedules
attached hereto or referenced herein, are hereby incorporated into this
Agreement.
2. PLEDGE AND GRANT OF SECURITY INTERESTS. Pledgor hereby pledges,
collaterally assigns, hypothecates and transfers to Lender all Pledged Stock,
together with appropriate undated assignments separate from the Certificates
duly executed in blank, and hereby grants to and creates in favor of Lender
liens and security interests in the Pledged Stock as collateral security for (a)
the due and punctual payment when due (whether at maturity, by acceleration or
otherwise) in full of all amounts due under the Senior Notes (as the same may be
amended, restated, supplemented, modified, extended or replaced from time to
time) in the aggregate face amount as of the date hereof of Twelve Million
Dollars ($12,000,000) executed and delivered by Pledgor to Lender pursuant to
the Loan Agreement; (b) the due and punctual performance and observance by
Pledgor of all other Borrower's Liabilities; (c) the due and punctual
performance and observance by Pledgor of all of its agreements, obligations,
liabilities and duties under this Pledge Agreement, the Loan Agreement and the
other Loan Documents; (d) all amounts due to the Lender under the Senior Notes,
including any and all modifications, extensions, renewals or refinancings
thereof and including, without limitation, all principal, interest and other
amounts due under the Senior Notes; (e) all sums advanced by, or on behalf of,
the Lender in connection with, or relating to, the Loan Agreement, the Senior
Notes or the Pledged Stock including, without limitation, any and all sums
advanced to preserve the Pledged Stock, or to perfect the Lender's security
interest in the Pledged Stock; (f) in the event of any proceeding to enforce the
satisfaction of the obligations, or any of them, or to preserve and protect
their rights under the Loan Agreement, the Senior Notes, this Pledge Agreement
or any other agreement, document or instrument relating to the transactions
contemplated in the Loan Agreement, the reasonable expenses of retaking,
holding, preparing for sale, selling or otherwise disposing of or realizing on
the Pledged Stock, or of any exercise by the Lender of its rights, together with
reasonable attorneys' fees, expenses and court costs; (g) any indebtedness,
obligation or liability of the Pledgor to the Lender, whether direct or
indirect, joint or several, absolute or contingent, now or hereafter existing,
however created or arising and however evidenced; (h) any indebtedness,
obligation or liability of the Pledgor under or in connection with any Interest
Rate Protection Agreement; and (i) all costs incurred by Lender to obtain,
perfect, preserve and enforce the liens and security interests granted by this
Pledge Agreement, the Loan Agreement and the other Loan Documents, to collect
the Obligations Secured Hereby (as hereinafter defined) and to maintain and
preserve the Pledged Stock, with such costs including, without limitation,
expenditures made by Lender for attorneys' fees and other legal expenses and
expenses of collection, possession and sale of the Pledged Stock, together with
interest on all such costs at the Default Rate (the foregoing subsections (a)
through (i) are collectively referred to herein as the "OBLIGATIONS SECURED
HEREBY"). Notwithstanding anything above in this Section 2 to the contrary, the
Pledged Stock shall not be collateral security for amounts outstanding under the
Subordinated Debenture that are deemed to be Tier 2 Capital of Pledgor in
accordance with the rules and regulations of the FRB applicable to the capital
status of the subordinated debt of bank holding companies, without giving effect
to the limitation imposed by the second sentence of 12 C.F.R. ss.250.166(e),
which limits the capital treatment of subordinated debt during the five years
immediately preceding the maturity date of the subordinated debt.
3. DELIVERY OF PLEDGED STOCK. On the date hereof, Pledgor shall place the
Pledged Stock in pledge by delivering the Certificates to and depositing them
with Lender or its agent appointed in writing by Lender. Pledgor shall also
deliver to Lender or its agent concurrently therewith undated assignments
separate from the Certificates duly executed in blank and all other applicable
and appropriate documents and assignments in form suitable to enable Lender to
effect the transfer of all or any portion of the Pledged Stock to the extent
hereinafter provided.
4. ADDITIONAL COLLATERAL
4.1. DELIVERY OF ADDITIONAL PLEDGED SECURITIES. If Pledgor shall hereafter
become entitled to receive or shall receive any interest, cash dividends, cash
proceeds, any Additional Pledged Securities,
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any Liquidating Distributions, or any other cash or non-cash payments on account
of the Pledged Stock, Pledgor agrees to accept the same as Lender's agent and to
hold the same in trust on behalf of and for the benefit of Lender and agrees to
promptly deliver to same or any Certificates therefor forthwith to Lender or its
agent in the exact form received, with the endorsement of Pledgor, when
necessary, or appropriate undated assignments separate from the Certificates
duly executed in blank, to be held by Lender or its agent subject to the terms
hereof.
4.2. PROCEEDS; DIVIDENDS AND VOTING. Notwithstanding anything contained in
this Pledge Agreement to the contrary, Pledgor shall be entitled to receive or
shall receive such interest and cash dividends paid on account of the Pledged
Stock, and to exercise voting rights with respect to the Pledged Stock, so long
as there has not occurred any Event of Default under the Loan Agreement or this
Pledge Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. To induce Lender to enter
into this Pledge Agreement and the Loan Agreement, Pledgor makes the following
representations and warranties to Lender:
5.1. Pledgor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
5.2. The execution and delivery of this Agreement and the performance by
Pledgor of its obligations hereunder are within Pledgor's corporate powers and
have been duly authorized by all necessary corporate action.
5.3. Pledgor owns beneficially and of record all of the issued and
outstanding shares of capital stock of ▇▇▇▇ ▇▇▇▇▇▇ Bank and has good and
marketable title to all of the Pledged Stock.
5.4. Pledgor holds the Pledged Stock free and clear of all liens, charges,
encumbrances, security interests, options, voting trusts and restrictions of
every kind and nature whatsoever except only the liens and security interests
created by this Pledge Agreement or otherwise in favor of Lender.
5.5. Each security which is a part of the Pledged Stock has been duly
authorized and validly issued and is fully paid and nonassessable.
5.6. This Pledge Agreement has been duly executed and delivered by Pledgor
and constitutes the legal, valid and binding obligation of Pledgor enforceable
against it in accordance with its terms.
5.7. No consent or approval of any governmental body, regulatory authority
or securities exchange or other Person or entity is required to be obtained by
Pledgor in connection with the execution, delivery and performance of this
Pledge Agreement other than those that have been obtained already.
5.8. The execution, delivery and performance of this Pledge Agreement will
not violate any provision of any applicable law or regulation or of any writ or
decree of any court or governmental instrumentality or of any indenture,
contract, agreement or other undertaking to which Pledgor is a party or which
purports to be binding upon Pledgor or upon any of its assets and will not
result in the creation or imposition of any lien, charge or encumbrance on or
security interest in any of the assets of Pledgor except as contemplated by this
Pledge Agreement or otherwise in favor of Lender.
5.9. The pledge, collateral assignment and delivery of the Pledged Stock
pursuant to this Pledge Agreement creates a valid first lien and first and
senior security interest in the Pledged Stock, which lien and security interest
are perfected.
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6. PLEDGOR'S COVENANTS.
6.1. Pledgor covenants and agrees that it will defend Lender's lien and
security interest in and to the Pledged Stock against the claims and demands of
all persons whomsoever.
6.2. Pledgor covenants and agrees that without the prior written consent of
Lender, it will not sell, convey or otherwise dispose of any of the Pledged
Stock, or create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance or
restriction with respect to any of the Pledged Stock, or any interest therein,
or any proceeds thereof, except for the liens and security interests created by
this Pledge Agreement.
6.3. Pledgor covenants and agrees that it will not consent to the issuance
of: (i) any additional shares of capital stock of the Pledged Stock unless such
shares are pledged and the Certificates therefor delivered to Lender,
simultaneously with the issuance thereof, together with appropriate undated
assignments separate from the Certificates duly executed in blank; and (ii) any
options by the issuer of the Pledged Stock obligating such issuer to issue
additional shares of capital stock of any class of such issues.
6.4. At any time from time to time, upon the written request of Lender, and
at the sole expense of Pledgor, Pledgor covenants and agrees that it will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as Lender may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Pledged Stock shall be or become evidenced by any promissory
note, other instrument or chattel paper, such note, instrument or chattel paper
shall be immediately delivered to Lender, duly endorsed in a manner satisfactory
to Lender, to be held as Pledged Stock pursuant to this Pledge Agreement.
6.5. Pledgor covenants and agrees to pay, and to save the Lender harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Pledged Stock or in
connection with any of the transactions contemplated by this Pledge Agreement.
7. RIGHTS AND REMEDIES UPON DEFAULT.
7.1. If any Event of Default under the Loan Agreement or a default or
breach in any respect by Pledgor of any representation, warranty, covenant or
agreement of Pledgor under this Pledge Agreement (after the expiration of any
applicable cure period or grace period hereunder or thereunder, which breach
shall be deemed an Event of Default under the Loan Agreement and an Event of
Default hereunder) shall occur, Lender may do any one or more of the following:
(a) declare the Obligations Secured Hereby to be forthwith due and payable,
whereupon such Obligations Secured Hereby shall become immediately due and
payable without presentment, demand, protest or other notice of any kind; and/or
(b) proceed to protect and enforce its rights under this Pledge Agreement, the
Notes, the Loan Agreement, or any of the other Loan Document through other
appropriate proceedings, and Lender shall have, without limitation, all of the
rights and remedies provided by applicable law, including, without limitation,
the rights and remedies of a secured party under the Illinois Uniform Commercial
Code (the "UCC") and, in addition thereto, Lender shall be entitled, at Lender's
option, to exercise all voting and corporate rights with respect to the Pledged
Stock as it may determine, without liability therefor, but Lender shall not have
any duty to exercise any voting and corporate rights in respect of the Pledged
Stock and shall not be responsible or liable to Pledgor or any other person for
any failure to do so or delay in so doing.
7.2. Without limiting the generality of the foregoing, if any Event of
Default hereunder or under the Loan Agreement shall occur, Lender shall have the
right to sell the Pledged Stock, or any part thereof, at public or private sale
or at any broker's board or on any securities exchange for cash, upon credit or
for future delivery, and at such price or prices as Lender may deem best, and
Lender may be the purchaser of any or all of the Pledged Stock so sold and
thereafter Lender or any other purchaser shall hold the same free from any right
or claim of whatsoever kind. Lender is authorized, at any such sale, if it deems
it advisable so to do, to restrict the number of prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to
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the distribution or resale of the Pledged Stock and may otherwise require that
such sale be conducted subject to restrictions as to such other matters as
Lender may deem necessary in order that such sale may be effected in such manner
as to comply with all applicable state and federal securities laws. Upon any
such sale, Lender shall have the right to deliver, assign and transfer to the
purchaser thereof the Pledged Stock so sold.
7.3. Each purchaser at any such sale shall hold the property sold,
absolutely free from any claim or right of whatsoever kind, including any equity
or right of redemption of Pledgor, who hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any rule of law or
statute now existing or hereafter adopted. Lender shall give Pledgor not less
than ten (10) days' written notice of its intention to make any such public or
private sale or at any broker's board or on any securities exchange (with such
notice to state the time and place of such sale), and Pledgor agrees that such
notice shall be deemed reasonable.
7.4. Any such public sale shall be held at such time or times within the
ordinary business hours and at such place or places as Lender may fix in the
notice of such sale. At any sale, the Pledged Stock may be sold in one lot as an
entirety or in parts, as Lender may determine. Lender shall not be obligated to
make any sale pursuant to any such notice. Lender may, without notice or
publication, adjourn any sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Pledged Stock on credit or for future delivery, the Pledged Stock so sold
may be retained by Lender until the selling price is paid by the purchaser
thereof, but Lender shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Pledged Stock so sold and, in case of any
such failure, such Pledged Stock may again be sold upon like notice.
7.5. Lender, instead of exercising the power of sale herein conferred upon
it, may proceed by a suit or suits at law or in equity to foreclose this Pledge
Agreement and sell the Pledged Stock, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
7.6. On any sale of the Pledged Stock, Lender is hereby authorized to
comply with any limitation or restriction in connection with such sale that it
may be advised by counsel is necessary in order to avoid any violation of
applicable law or in order to obtain any required approval of the purchaser or
purchasers by any third party or any governmental regulatory authority or
officer or court, including, without limitation, all limitations and
restrictions imposed by federal and state banking laws and regulations.
Compliance with the foregoing sentence shall result in such sale or disposition
being considered or deemed to have been made in a commercially reasonable
manner.
7.7. In furtherance of the exercise by Lender of the rights and remedies
granted to it hereunder, Pledgor agrees that, upon request of Lender and at the
expense of Pledgor, it will use its best efforts to obtain all third party and
governmental approvals necessary for or incidental to the exercise of remedies
by Lender with respect to the Pledged Stock or any part thereof, including,
without limitation, approvals from the FRB and the ICB.
8. REGISTRATION RIGHTS; PRIVATE SALES.
8.1. If Lender shall determine to exercise its right to sell any or all of
the Pledged Stock pursuant to Section 7 hereof, and if in the opinion of Lender
it is necessary or advisable to have the Pledged Stock, or that portion thereof
to be sold, registered under the provisions of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Pledgor will cause the issuer of the Pledged
Stock to (a) execute and deliver, and cause to be done all such other acts, as
may be, in the opinion of Lender, necessary or advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (b) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
(1) year from the date of the first public offering of the Pledged Stock, or
that portion thereof to be sold, and (c) make all amendments thereto and/or to
the related prospectus which, in the opinion of Lender, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto. Pledgor agrees to cause such issuer to comply with the provisions of
the
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securities or "Blue Sky" laws of any and all jurisdictions which Lender shall
designate and to make available to its security holders, as soon as practicable,
an earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
8.2. Pledgor hereby acknowledges that, notwithstanding that a higher price
might be obtained for the Pledged Stock at a public sale than at a private sale
or sales, the making of a public sale of the Pledged Stock may be subject to
registration requirements and other legal restrictions compliance with which
could require such actions on the part of Pledgor, could entail such expenses
and could subject Lender and any underwriter through whom the Pledged Stock may
be sold and any controlling Person of any thereof to such liabilities, as would
make the making of a public sale of the Pledged Stock impractical. Accordingly,
Pledgor hereby agrees that private sales made by Lender in accordance with the
provisions of Section 7 hereof may be at prices and on other terms less
favorable to the seller than if the Pledged Stock were sold at public sale, that
Lender shall not have any obligation to take any steps in order to permit the
Pledged Stock to be sold at a public sale complying with the requirements of
federal and state securities and similar laws, and that such sale shall not be
deemed to be made in a commercially unreasonable manner solely because of its
nature as a private sale.
8.3. Pledgor further agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make any sale or sales of all or
any portion of the Pledged Stock pursuant to Section 7 and this Section 8 valid
and binding and in compliance with any and all other applicable requirements of
law. Pledgor further agrees that a breach of any of the covenants contained in
Section 7 and this Section 8 will cause irreparable injury to Lender, that
Lender has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in Section 7 of this Section
8 shall be specifically enforceable against Pledgor, and Pledgor hereby waives
and agrees not to assert any defenses to the granting of equitable relief (such
as, without limitation, any defense that Lender has an adequate remedy at law or
that Lender will not be irreparably injured) in any action for specific
performance of such covenants.
9. LIMITATION ON DUTIES REGARDING PLEDGED STOCK. Lender's sole duty with
respect to the custody, safekeeping and physical preservation of the Pledged
Stock in its possession, under Section 9-207 of the UCC or otherwise, shall be
to deal with it in the same manner as Lender deals with similar securities and
property for its own account. Neither Lender nor any of its directors, officers,
employees or agents shall be liable for any good faith failure to demand,
collect or realize upon any of the Pledged Stock or for any delay in doing so or
shall be under any obligation to see or otherwise dispose of any Pledged Stock
or for any good ▇▇▇▇▇ ▇▇▇▇▇ in doing so or shall be under any obligation to see
or otherwise dispose of any Pledged Stock upon the request of the Pledgor or
otherwise.
10. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies herein
contained with respect to the Pledged Stock are irrevocable and powers coupled
with an interest.
11. INDEMNIFICATION. Pledgor agrees to indemnify and hold harmless Lender (to
the full extent permitted by law) from and against any and all claims, demands,
losses, judgments, liabilities for penalties and excise taxes and other damages
of whatever nature, and to reimburse Lender for all costs and expenses,
including reasonable legal fees and disbursements, growing out of or resulting
from the Pledged Stock, this Pledge Agreement, the Loan Agreement or the other
Loan Documents or the administration and enforcement of this Pledge Agreement,
the Loan Agreement or the other Loan Documents or exercise of any right or
remedy granted to Lender hereunder except with respect to such claims, etc.
arising solely from the gross negligence or willful misconduct of Lender, but
including without limitation, any tax liability incurred by Lender or any of its
affiliates as a result of the exercise by Lender of any of its rights hereunder.
In no event shall Lender be liable to Pledgor for any action taken by Lender
that is permitted under this Pledge Agreement other than to account for proceeds
of the Pledged Stock actually received by Lender.
12. DISTRIBUTION OF PLEDGED STOCK. Upon enforcement of this Pledge Agreement
following the occurrence of an Event of Default under this Pledge Agreement, the
Loan Agreement, or the Notes, the proceeds of the Pledged Stock shall be applied
to the Obligations Secured Hereby in such order and
D-6
manner as Lender may determine. In the event such monies shall be insufficient
to pay all of the Obligations Secured Hereby, Pledgor shall be liable to Lender
for any deficiency therein.
13. NO WAIVER; CUMULATIVE REMEDIES. Lender shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by Lender, and
then such waiver shall be valid to the extent therein set forth. A waiver by
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Lender would otherwise have on
any future occasion. No failure to exercise or any delay in exercising on the
part of Lender any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided by
law.
14. SEVERABILITY OF PROVISIONS. The provisions of this Pledge Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part, then such invalidity or unenforceability
shall attach only to such clause or provision or part thereof and shall not in
any manner affect any other clause or provision in this Pledge Agreement.
15. AMENDMENTS; CHOICE OF LAW; BINDING EFFECT.
15.1. None of the terms or provisions of this Pledge Agreement may be
altered, modified or amended except by an instrument in writing, duly executed
by each of the parties hereto.
15.2. This Pledge Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois. Nothing herein shall
be deemed to limit any rights, powers or privileges which Lender may have
pursuant to any law of the United States of America or any rule, regulation or
order of any department or agency thereof and nothing herein shall be deemed to
make unlawful any transaction or conduct by Lender which is lawful pursuant to,
or which is permitted by, any of the foregoing.
15.3. This Pledge Agreement is made for the sole benefit of Pledgor and
Lender, and no other person shall be deemed to have any privity of contract
hereunder nor any right to rely hereon to any extent or for any purpose
whatsoever, nor shall any other person have any right of action of any kind
hereon or be deemed to be a third party beneficiary hereunder.
16. NOTICES. All notices, consents, requests, demands and other communications
hereunder shall be in writing and shall be given in accordance with Section 9.8
of the Loan Agreement.
17. HEADINGS. The descriptive headings hereunder used are for convenience only
and shall not be deemed to limit or otherwise effect the construction of any
provision hereof.
18. COUNTERPART EXECUTION. This Pledge Agreement may be executed in several
counterparts each of which shall constitute an original, but all of which shall
together constitute one and the same agreement.
19. FORUM; AGENT; VENUE. To induce Lender to accept this Agreement and the
other Loan Documents, Pledgor irrevocably agrees that all actions or proceedings
in any way, manner, or respect, arising out of or from or related to this
Agreement or the other Loan Documents shall be litigated only in courts having
suits within Chicago, Illinois. Pledgor hereby consents and submits to the
jurisdiction of any local, state, or federal court located within said city.
Pledgor hereby irrevocably appoints and designates J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the
chief financial officer of Pledgor, whose business address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or any other person having and
maintaining a place of business in such State, whom Pledgor may from time to
time hereafter designate (having give five days' written notice thereof to
Lender) as Pledgor's true and lawful attorney and duly authorized agent for
acceptance of service of legal process. Pledgor agrees that service of such
process upon such person
D-7
shall constitute personal service of such process upon Pledgor. Pledgor hereby
waives any right it may have to transfer or change the venue of any litigation
brought against Pledgor by Lender.
20. WAIVER OF RIGHT TO JURY TRIAL. PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS PLEDGE AGREEMENT, THE
NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF
PLEDGOR OR LENDER. PLEDGOR ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER
WITH SUCH LEGAL COUNSEL. PLEDGOR FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND
UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS
BEEN REVIEWED BY PLEDGOR AND PLEDGOR'S COUNSEL AND IS A MATERIAL INDUCEMENT FOR
LENDER TO ENTER INTO THE AGREEMENT AND THE OTHER LOAN DOCUMENTS (c) THIS WAIVER
SHALL BE EFFECTIVE AS TO EACH OF SUCH OTHER LOAN DOCUMENTS AS IF FULLY
INCORPORATED THEREIN.
21. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. Pledgor hereby
authorizes and instructs each issuer of Pledged Stock to comply with any
instruction received by it from Lender in writing that (a) states that an Event
of Default has occurred and (b) is otherwise in accordance with the terms of
this Pledge Agreement, without any other or further instructions from Pledgor,
and Pledgor agrees that the issuer shall be fully protected in so complying.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
D-8
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered as of the day and year first above written.
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
-------------------------------
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
D-9
SCHEDULE A
ISSUER: ▇▇▇▇ ▇▇▇▇▇▇ BANK
Certificate
Owner Class Number Number of Shares Percentage of Class
----- ----- ------ ---------------- -------------------
▇▇▇▇▇▇ Capital Group, Inc. Common 029 1,500,000 100%
D-10
ACKNOWLEDGMENT
The undersigned issuer of the Pledged Stock hereby acknowledges receipt of
a copy of this Pledge Agreement and agrees to (a) note the restrictions herein
on its books, records, ledgers and certificates maintained with respect to its
capital stock, (b) not make or permit any dividends or distributions with
respect to its capital stock except as permitted in this Pledge Agreement, and
(c) not make or permit any sale, transfer or issuance of any of its capital
stock or of any rights to acquire its capital stock except as permitted in this
Pledge Agreement.
▇▇▇▇ ▇▇▇▇▇▇ BANK, an Illinois banking
corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
D-11
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ▇▇▇▇▇▇ Capital Group, Inc., does hereby sell, assign
and transfer unto ___________________________, ______________________________
(___) Shares of Common Stock of ▇▇▇▇ ▇▇▇▇▇▇ Bank, standing in his/her/its name
on the books of such corporation represented by Certificate Nos. ___, ___, ___
and ___ and does hereby irrevocably constitute and appoint attorney to transfer
such stock on the books of the within named bank with full power and
substitution in the premises.
Further under penalties of perjury, the undersigned certifies:
1. That the number shown on this form is the undersigned's correct
taxpayer identification number.
2. That the undersigned is not subject to backup withholding either
because the undersigned had not been notified that the
undersigned is subject to backup withholding as a result of a
failure to report all interest or dividends, or the Internal
Revenue Service has notified the undersigned that the undersigned
is no longer subject to backup withholding.
Taxpayer Identification #
----------------------------
Dated:
----------------------------
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
------------------------------
Name:
---------------------------
Title:
---------------------------
In presence of:
-------------------------------------
D-12
EXHIBIT E
FORM OF COLLATERAL SAFEKEEPING AGREEMENT
THIS COLLATERAL SAFEKEEPING AGREEMENT (this "AGREEMENT") dated as of the
27th day of November, 2002, is entered into by ▇▇▇▇▇▇ CAPITAL GROUP, INC., a
Delaware corporation (the "BORROWER"), and LASALLE BANK NATIONAL ASSOCIATION, a
national banking association (the "LENDER"), and STANDARD FEDERAL BANK, a
federal savings bank (the "CUSTODIAN").
R E C I T A L S:
1. The Lender and the Borrower have previously entered into that certain
Loan and Subordinated Debenture Purchase Agreement dated as of November 27, 2002
(the "LOAN AGREEMENT"), and a related Pledge Agreement, dated as of November 27,
2002 (the "PLEDGE AGREEMENT"), in connection with the credit facilities
contemplated in the Loan Agreement in the aggregate principal amount of
$22,000,000 (collectively, and as the same are amended, restated, supplemented,
modified, extended or replaced, the "LOANS").
2. The Loans are is secured by, among other things, 1,500,000 shares (100%)
of the common stock, $10.00 par value per share, of ▇▇▇▇ ▇▇▇▇▇▇ Bank, an
Illinois banking corporation with its main office located in Wheeling, Illinois,
and a wholly-owned subsidiary of the Borrower (the "SUBSIDIARY BANK SHARES").
3. The Borrower has requested the Subsidiary Bank Shares be held by the
Custodian, and the Lender has agreed to such request, subject to the terms and
conditions of this Agreement.
A G R E E M E N T:
THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained, the parties hereto hereby agree as follows:
3.1. COLLATERAL SHARES.
3.2. As security for the payment of the obligations of the Borrower to the
Lender (other than with respect to amounts outstanding under that certain
$10,000,000 Subordinated Debenture dated the date hereof that are deemed to be
Tier 2 Capital of Borrower in accordance with the rules and regulations of the
FRB applicable to the capital status of the subordinated debt of bank holding
companies), whether now or hereafter existing and howsoever evidenced, or any
extension or renewal thereof, including, without limitation, all obligations
under the Loan Agreement, the related Notes, dated as of November 27, 2002, and
the Pledge Agreement (collectively, the "OBLIGATIONS"), the Borrower has
previously pledged and assigned to the Lender under the Loan Agreement and the
Pledge Agreement, the Subsidiary Bank Shares (with all income and profits
thereof, all distributions thereon, all other proceeds thereof and all rights,
benefits and privileges pertaining or arising thereunder, the "Collateral").
3.3. The Collateral is concurrently herewith being delivered to the
Custodian for safekeeping.
4. COLLATERAL SHARES. Until the Custodian shall receive written notice from
the Lender that all of the Obligations have been fully paid and satisfied, the
parties hereto agree as follows:
4.1. The Custodian is hereby appointed as agent for the Lender, as secured
party, and the Custodian shall hold and retain possession of the Collateral for
the Lender as security for the payment of the Obligations;
E-1
4.2. The Borrower shall be unable to withdraw any of the Collateral without
the Lender's prior written consent;
4.3. The Custodian shall deliver all or any part of the Collateral to the
Lender upon its request at any time; and
4.4. The Lender's receipt for any of the Collateral so delivered by the
Custodian shall be a full and complete receipt and acquittance to the Custodian
as fiduciary for the Collateral.
5. ACCEPTANCE. The Custodian hereby acknowledges that the Collateral has been
pledged as security for the Obligations, and the Custodian hereby accepts
appointment as agent for the Lender, as secured party, and agrees to act in
accordance with the terms and provisions hereof. Until the termination of this
Agreement, the Custodian agrees that it shall not have or assert, and waives any
right, whether created by contract, statute or otherwise, to assert any right of
offset against or lien or interest in any of the Collateral. The Collateral has
been coded as assigned in the records of the Custodian, and none of the
Collateral will be released by the Custodian without the prior written consent
of the Lender.
6. INDEMNITY; ASSUMPTION OF RISK.
6.1. To the fullest extent permitted by law, the Borrower shall defend,
indemnify and hold harmless each of the Lender and the Custodian, and their
respective officers, directors, agents, employees, members and affiliated
companies (collectively, the "INDEMNITEES"), from and against all claims,
judgments, damages, losses, penalties, liabilities, costs and expenses of
investigation and defense of any claim and of any good faith settlement of
whatever, kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including, without limitation, reasonable
attorneys' fees and expenses, any of which are incurred at any time as a result
of, or in connection with, the entering into of this Agreement or the
transactions contemplated thereby.
6.2. The Borrower and the Borrower's counsel have requested that the Lender
and the Custodian enter into this Agreement. None of the Indemnitees shall be
liable for any expense, cost, loss or damage of any kind or nature resulting or
sustained by the Borrower as a result of the entering into of this Agreement,
including, without limitation, any franchise or other taxes payable as a result
thereof, and the Borrower expressly assumes all risk of loss or damage by
entering into this Agreement. Notwithstanding anything herein to the contrary,
the Custodian shall remain liable for the actual losses incurred by the Borrower
for the Custodian's failure to return the Collateral to the Lender within a
reasonable period of time following receipt of a proper request to do so from
the Lender, unless the Custodian is prohibited or restrained from delivering the
Collateral by virtue of any judicial order, decree or other legal process.
7. FEES. The Borrower shall pay a $500 fee to the Custodian on each
anniversary of this Agreement until such time as this Agreement has been
terminated, in accordance with Custodian's normal and customary billing
practices.
E-2
IN WITNESS WHEREOF, this Agreement has been signed as of the date first
above appearing.
LASALLE BANK NATIONAL ASSOCIATION
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
------------------------------------------
Name:
Title:
STANDARD FEDERAL BANK
By:
------------------------------------------
Name:
Title:
E-3
EXHIBIT F
FORM OF RATE ELECTION NOTICE
_________________, 2002
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Ladies and Gentlemen:
This will confirm the telephone conversation Ms./Mr. _____________________
had with your office on _____________, 200__, regarding Advances under and as
defined in the Loan Agreement dated as of November ___, 2002 as follows:
FROM LOAN #:______________
AMOUNT OF ADVANCE: $____________
NOTE (CIRCLE AS APPLICABLE):
TERM NOTE / REVOLVING NOTE / SUBORDINATED DEBENTURE
EFFECTIVE DATE:
-------------------------------
LIBOR RATE TRANCHE or BASE RATE TRANCHE (circle one)
Very truly yours,
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
------------------------------------
Authorized Signature
F-1
EXHIBIT G
FORM OF OPINION OF BORROWER'S COUNSEL
November __, ▇▇▇▇
▇▇▇▇▇▇▇ Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Re: Loans to ▇▇▇▇▇▇ Capital Group, Inc.
Ladies and Gentlemen:
We have served as counsel to ▇▇▇▇▇▇ Capital Group, Inc. (the "BORROWER"), a
corporation incorporated under the laws of Delaware, in connection with the
Loans described in that certain Loan and Subordinated Debenture Purchase
Agreement dated as of November ___, 2002 (the "LOAN AGREEMENT") by and between
the Borrower and LaSalle Bank National Association, a national banking
association (the "LENDER"). This opinion is being delivered to you pursuant to
Section ____ of the Loan Agreement. Capitalized terms used herein and otherwise
undefined shall have the meanings given them in the Loan Agreement.
In order to render the opinions expressed herein, we have examined the
following (collectively, the "FINANCING DOCUMENTS"):
1. the executed Loan Agreement and the other Loan Documents; and
2. such other documents, instruments, writings and agreements as we deemed
appropriate.
In our examination of the Financing Documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity of all copies submitted to us with the originals to
be delivered and the due authorization, execution and delivery by each party to
such documents (other than the Borrower).
Based on the foregoing and subject to the qualifications set forth in this
letter, it is our opinion that:
1. Borrower is duly organized, validly existing and in good standing as a
corporation under the laws of Delaware, is qualified to do business in all other
states where the nature and extent of the business or activities transacted by
it or the ownership of its assets makes such qualification necessary, except
where the failure to do so qualify would not have a material adverse effect on
Borrower, and has the requisite corporate power to conduct its business and
activities as they have been and are now being conducted. Borrower is registered
as a bank holding company under the Bank Holding Company Act of 1956, as
amended.
2. Borrower has _________ shares of authorized stock divided into one class
consisting of ___________ shares of Common Stock, of which __________ shares are
issued and _________ shares are outstanding. All of such issued and outstanding
shares are validly issued and outstanding, fully paid and non-assessable.
[CONFORM TO CAPITALIZATION OF BORROWER].
G-1
3. Subsidiary Bank is an Illinois banking corporation duly organized,
validly existing and in good standing under the laws of Illinois. The deposit
accounts of Subsidiary Bank are insured by the FDIC. Subsidiary Bank has the
requisite power and authority, corporate or otherwise, to conduct its business
as it has been and is now being conducted. The authorized capital stock of
Subsidiary Bank is as stated in the Loan Agreement and such stock is validly
issued and outstanding, fully paid and non-assessable. The Pledge Agreement and
the possession of the Subsidiary Bank Shares by the Lender are sufficient to
create a first priority valid and perfected lien on such shares.
4. Borrower owns 100% of the outstanding capital stock of Subsidiary Bank
free and clear of all liens, encumbrances and security interests of others other
than encumbrances in favor of the Lender. None of the issued and outstanding
shares of capital stock of Subsidiary Bank has been issued in violation of any
preemptive rights. There are no options, warrants, or other rights outstanding
to acquire any capital stock of Subsidiary Bank and no person or entity has any
other right to purchase or acquire any unissued shares of capital stock of
Subsidiary Bank, nor does Subsidiary Bank have any obligation of any nature with
respect to its unissued shares of capital stock.
5. Provided that the Lender is an accredited investor within the meaning of
Regulation D as promulgated under the Securities Act of 1933, as amended (the
"ACT"), it is not necessary in conjunction with the issuance of the Subordinated
Debenture, to register the Subordinated Debenture under the Act or the laws of
the State of Illinois.
6. No order, permission, consent or approval of any federal or state
commission, board or regulatory authority is required for the execution and
delivery or performance by Borrower of the Loan Documents.
7. Except as disclosed in the Loan Documents, there are no actions, suits,
investigations, or proceedings pending, or to our knowledge and belief,
threatened against or affecting Borrower, or any Subsidiary or the business or
properties of Borrower, or any Subsidiary, or before or by any governmental
agency or any court, arbitrator or grand jury, which can reasonably be expected
to result in any material adverse change in business, operations or properties
or assets or in the condition, financial or otherwise, of Borrower, or any
Subsidiary or in the ability of Borrower, or any Subsidiary to perform the Loan
Documents. None of Borrower, or any Subsidiary is, to our knowledge and belief,
in default with respect to any judgment, order, writ, injunction, decree,
demand, rules or regulation of any court, arbitrator, grand jury, or of any
governmental agency, default under which might have consequences which would
materially and adversely affect the business, properties or assets of the
condition, financial or otherwise, of Borrower, or any Subsidiary.
8. There is no default by Borrower, or any Subsidiary under any order,
writ, injunction or decree of any court, any applicable law, instrumentality,
any contract, lease, agreement, instrument or commitment to which any of them is
a party or bound, which has or would have a material adverse effect upon the
condition, financial or otherwise, of Borrower, or any Subsidiary or their
ability to perform under the Loan Documents.
9. To the best of our knowledge, no proceeds of the Loans will be used to
purchase or carry any margin stock or to extend credit to others for purposes of
purchasing or carrying margin stock.
10. The execution, delivery and performance by Borrower of the Loan
Documents (i) are within its corporate powers, (ii) have been duly authorized by
all necessary corporate action of Borrower, (iii) do not contravene (1)
Borrower's, Subsidiary Bank or any other Subsidiary's charter or by-laws or (2)
any law or contractual restriction affecting Borrower, Subsidiary Bank or any
other Subsidiary and (iv) other than as contained in the Pledge Agreement, do
not result in the creation of any lien or other encumbrance upon or with respect
to any of the assets or property of Borrower, Subsidiary Bank or any other
Subsidiary.
11. The Loan Documents are legally valid and binding obligations of
Borrower and are enforceable against it in accordance with their respective
terms, except as such enforceability may be
G-2
limiting by bankruptcy, insolvency, reorganization, moratorium, or other laws
relating to or limiting creditors' rights or equitable principles generally.
12. The Loans are entitled to the benefits of the subordination provisions
of that certain Indenture, dated as of __________, 2002, between Borrower and
LaSalle Bank National Association, as trustee (the "Indenture"), entered into in
connection with the loan or loans made to Borrower from the proceeds of certain
trust preferred securities issued by the Trust, as evidenced by the Junior
Subordinated Debentures.
13. The Junior Subordinated Debentures are and will forever be expressly
subordinate and junior in all respects (including, without limitation, with
respect to the right of payment) to the Loans. The Loans constitute "Senior
Indebtedness" as defined in the Indenture.
Very truly yours,
G-3
EXHIBIT H
FORM OF QUARTERLY COMPLIANCE CERTIFICATE
for the Quarter Ended ______________________
The undersigned, the ____________________ of ▇▇▇▇▇▇ Capital Group,
Inc. ("BORROWER"), hereby delivers this certificate pursuant to Section 6.4
of that certain Loan and Subordinated Debenture Purchase Agreement dated as
of November ___, 2002, between Borrower and LaSalle Bank National
Association (the "AGREEMENT") and certifies as of the date hereof as
follows:
1. Attached hereto are the quarterly financial reports described in
Section 6.2 of the Agreement for the above-referenced quarter.
2. Borrower is in compliance in all material respects with all
covenants contained in the Agreement, and has provided a detailed
calculation, as of the above-referenced quarter-end, of the financial
covenants set forth in Section 7 of the Agreement on Annex A attached
hereto.
3. No Event of Default has occurred or is continuing under the
Agreement. [OR, IF INCORRECT, PROVIDE DETAIL REGARDING THE EVENT OF DEFAULT
AND THE STEPS BEING TAKEN TO CURE IT AND THE TIME WITHIN WHICH SUCH CURE
WILL OCCUR.]
Capitalized terms in this Quarterly Compliance Certificate that are
otherwise undefined shall have the meanings given them in the Agreement.
Dated: [INSERT DATE]
▇▇▇▇▇▇ CAPITAL GROUP, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-----------------------------
H-1
ANNEX A
to
QUARTERLY COMPLIANCE CERTIFICATE
[TO BE COMPLETED IN SAME FORMAT AS CURRENTLY USED]
H-2
[DISCLOSURE SCHEDULES TO BE ATTACHED]
* ▇▇▇▇▇▇ CAPITAL GROUP, INC. AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY
OMITTED SCHEDULE TO THE COMMISSION UPON REQUEST.