LOAN AND STOCK PLEDGE AGREEMENT
THIS LOAN AND STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of
August 31, 2000, between PAB BANKSHARES, INC., a Georgia corporation (the
"Borrower"), and THE BANKERS BANK, a Georgia banking corporation (the "Lender").
On the date hereof the Borrower is borrowing the principal amount of
$15,000,000 from the Lender (the "Loan"), which will be evidenced by the Note.
The Lender is willing to make the Loan to the Borrower on the terms and
conditions described below. The Borrower and Lender agree that the payment and
performance of all obligations relating to the Loan will be secured through the
pledge to the Lender of all the issued and outstanding shares of capital stock
owned or hereafter acquired by the Borrower (the "Stock") in The Park Avenue
Bank having its main office at ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Park Avenue"), Farmers and Merchants Bank having its main office at ▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Farmers"), First Community Bank of Southwest
Georgia having its main office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ("First Community"), Baxley Federal Savings Bank having its main office at
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Baxley") and Eagle Bank and Trust
having its main office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Eagle") (collectively, the "Banks"). Certain capitalized terms used in this
Agreement are defined in Section 22 of this Agreement.
In consideration of the premises and the mutual agreements and
representations in this Agreement, the Lender and the Borrower agree as follows:
1. SECURITY INTEREST.
------------------
(a) The Borrower hereby unconditionally grants and assigns to the
Lender and its successors and assigns a continuing security interest in and
security title to the Stock. The Borrower hereby delivers to the Lender all of
its right, title and interest in and to the Stock, together with certificates
representing the Stock and stock powers endorsed in blank, as security for (i)
all obligations of the Borrower to the Lender hereunder, and (ii) payment and
performance of all obligations of the Borrower to the Lender under the Note,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due. If the Borrower receives, for any reason whatsoever,
any additional shares of the capital stock of the Banks, such shares shall
thereupon constitute Stock to be held by the Lender under the terms of this
Agreement and the Borrower shall immediately deliver such shares to the Lender,
together with stock powers endorsed in blank by the Borrower. Beneficial
ownership of the Stock, including all voting, consentual and dividend rights,
shall remain in the Borrower until the occurrence of a Default.
(b) If, prior to repayment in full of the Loan, the aggregate book
value of the Stock becomes less than $30,000,000, the Borrower shall promptly
deliver to the Lender on demand additional collateral of a type and value
acceptable to the Lender (and the Lender's judgment in valuing same shall be
conclusive) so that the sum of the value of such additional collateral plus the
aggregate book value of the Stock is equal to or in excess of $30,000,000. The
Borrower shall also execute any security documents the Lender may request to
evidence and perfect the Lender's rights in such additional collateral. If at
any time such additional collateral is no longer required pursuant to this
Section 1(b), the Lender shall release its security interest in such additional
collateral upon the request of the Borrower.
2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
--------------------------------
warrants to the Lender as follows:
(a) The Borrower is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia and is
qualified to do business in all jurisdictions where such qualification is
necessary. The Borrower is registered as a bank holding company with the Board
of Governors of the Federal Reserve System and the Georgia Department of Banking
and Finance. The chief executive office of the Borrower and the principal place
of business of the Borrower where the records of the Borrower are kept are
located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (Lowndes County), and
the Borrower's U.S. employer identification number is ▇▇-▇▇▇▇▇▇▇.
(b) Park Avenue is a banking corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia. The
Borrower owns all the capital stock of Park Avenue (consisting of 50,000 shares)
and there are no other outstanding shares of capital stock and no outstanding
options, warrants or other rights which can be converted into shares of capital
stock of ▇▇▇▇ ▇▇▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇ has all requisite corporate power and
authority and possesses all licenses, permits and authorizations necessary for
it to own its properties and conduct its business as presently conducted.
- 1 -
(c) Farmers is a banking corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia. The
Borrower owns 99.91% of the capital stock of Farmers (consisting of 17,485
shares) and there are 15 other outstanding shares of capital stock and no
outstanding options, warrants or other rights which can be converted into shares
of capital stock of Farmers. Farmers has all requisite corporate power and
authority and possesses all licenses, permits and authorizations necessary for
it to own its properties and conduct its business as presently conducted.
(d) First Community is a banking corporation duly organized,
validly existing, and in good standing under the laws of the State of Georgia.
The Borrower owns all the capital stock of First Community (consisting of
379,586 shares) and there are no other outstanding shares of capital stock and
no outstanding options, warrants or other rights which can be converted into
shares of capital stock of First Community. First Community has all requisite
corporate power and authority and possesses all licenses, permits and
authorizations necessary for it to own its properties and conduct its business
as presently conducted.
(e) Baxley is a federal savings bank duly organized, validly
existing, and in good standing under the laws of the United States. The
Borrower owns all the capital stock of Baxley (consisting of 551,481 shares) and
there are no other outstanding shares of capital stock and no outstanding
options, warrants or other rights which can be converted into shares of capital
stock of Baxley. Baxley has all requisite corporate power and authority and
possesses all licenses, permits and authorizations necessary for it to own its
properties and conduct its business as presently conducted.
(f) Eagle is a banking corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia. The
Borrower owns all the capital stock of Eagle (consisting of 400,000 shares) and
there are no other outstanding shares of capital stock and no outstanding
options, warrants or other rights which can be converted into shares of capital
stock of Eagle. Eagle has all requisite corporate power and authority and
possesses all licenses, permits and authorizations necessary for it to own its
properties and conduct its business as presently conducted.
(g) Each financial statement of the Borrower or any Subsidiary
which has been delivered to the Lender presents fairly the financial condition
of the Borrower or such Subsidiary as of the date indicated therein and the
results of its operations for the periods shown therein. There has been no
material adverse change, either existing or threatened, in the financial
condition or operations of the Borrower or any Subsidiary since the date of such
financial statement.
(h) The Borrower has full power and authority to execute and
perform the Financing Documents. The execution, delivery, and performance by
the Borrower of the Financing Documents (i) have been duly authorized by all
requisite action by the Borrower, (ii) do not violate any provision of law, and
(iii) do not result in a breach of or constitute a default under any agreement
or other instrument to which the Borrower or any Subsidiary is a party or which
the Borrower or any Subsidiary is bound. Each of the Financing Documents
constitutes the legal, valid, and binding obligation of the Borrower enforceable
in accordance with its terms.
(i) Except for the security interest created by this Agreement,
the Borrower owns the Stock free and clear of all liens, charges, and
encumbrances. The Stock is duly issued, fully paid and non-assessable, and the
Borrower has the unencumbered right to pledge the Stock.
(j) There is no action, arbitration, or other proceeding at law or
in equity, or by or before any court, agency, or arbitrator, nor is there any
judgment, order, or other decree pending, anticipated, or threatened against the
Borrower or any Subsidiary or against any of their properties or assets which
might have a material adverse effect on the Borrower, any Subsidiary, or their
respective properties or assets, or which might call into question the validity
or enforceability of the Financing Documents, or which might involve the alleged
violation by the Borrower or any Subsidiary of any law, rule or regulation.
(k) No consent or other authorization or filing with or of any
governmental authority or other public body on the part of the Borrower or any
Subsidiary is required in connection with the Borrower's execution, delivery, or
performance of the Financing Documents; or if required, all such prerequisites
have been fully satisfied.
(l) None of the transactions contemplated in this Agreement
(including, without limitation, the use of the proceeds of the Loan) will
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, or any regulations issued pursuant thereto.
- 2 -
(m) The following are attached as exhibits hereto: true, correct
and complete copies of (i) the Borrower's, Park Avenue's, Farmers', First
Community's and Eagle's articles of incorporation as in effect as of the date
hereof (as certified by the Georgia Secretary of State on August 22, 2000) and
▇▇▇▇▇▇'▇ charter as in effect as of the date hereof (as certified by the Office
of Thrift Supervision on ________, 2000); (ii) certificates of existence for the
Borrower, Park Avenue, Farmers, First Community and Eagle (issued by the Georgia
Secretary of State on August 22, 2000) and Baxley (issued by the Office of
Thrift Supervision on _______, 2000); (iii) the bylaws of the Borrower in effect
immediately prior to the adoption of the resolutions referred to below (and such
bylaws have not been further altered or amended and have been in full force and
effect at all times since the adoption of such resolutions through the date
hereof); (iv) the bylaws of the Banks as of the date hereof; (v) resolutions
(the "Resolutions") of the Board of Directors of the Borrower duly adopted at a
meeting duly called and held on August 28, 2000. A quorum for the transaction
of business was present and acting throughout the meeting at which the
Resolutions were adopted, and the Resolutions have been since adoption and are
now in full force and effect and have not been modified in any respect. There
have been no further amendments or other documents affecting or altering the
Borrower's or the Banks' articles of incorporation since the date of the
certifications referred to above through the date hereof, and the Borrower and
the Banks have remained in valid existence under the laws of the State of
Georgia or the United States since such dates.
3. AFFIRMATIVE COVENANTS. The Borrower agrees that so long as the Note
---------------------
is outstanding or this Agreement is in effect:
(a) The Borrower shall promptly furnish to the Lender: (i) not
later than 120 days after the end of each fiscal year, audited consolidated
financial statements of the Borrower prepared in accordance with generally
accepted accounting principles ("GAAP") and certified by an independent
accounting firm acceptable to the Lender; (ii) not later than 45 days after each
of the first three quarters of each fiscal year, unaudited consolidated
financial statements of the Borrower, prepared in accordance with GAAP (subject
to changes resulting from normal year-end adjustments) and certified by the
chief financial officer of the Borrower; (iii) not later than 30 days after the
end of each of the first three quarters of each year, copies of the Report of
Condition and the Report of Income and Dividends of each of the Bank
Subsidiaries; (iv) immediately after the occurrence of a material adverse change
in the business, properties, condition, management, or prospects (financial or
otherwise) of the Borrower or any Subsidiary, including, without limitation,
imposition of any letter agreement, memorandum of understanding, cease and
desist order, or other similar regulatory action involving the Borrower or any
Subsidiary, a statement of the Borrower's chief executive officer or chief
financial officer setting forth in reasonable detail such change and the action
which the Borrower or any Subsidiary proposes to take with respect thereto; and
(v) from time to time upon request of the Lender, such other information
relating to the operations, business, condition, management, properties, or
prospects of the Borrower or any Subsidiary as the Lender may request (including
meetings with the Borrower's or Subsidiary's officers and employees).
(b) The Borrower and each Subsidiary shall punctually pay and
discharge all taxes, assessments and other governmental charges or levies
imposed upon it or upon its income or upon any of its property.
(c) The Borrower and each Subsidiary shall comply in all material
respects with all requirements of constitutions, statutes, rules, regulations,
and orders and all orders and decrees of courts and arbitrators applicable to it
or its properties.
(d) The Borrower shall immediately notify the Lender of any change
in the Chief Executive Officer of the Borrower or a material change (greater
than 10%) of beneficial ownership of the Borrower's stock by any officer,
director or 25% or greater shareholder of the Borrower.
4. NEGATIVE COVENANTS. The Borrower agrees that so long as the Note is
------------------
outstanding or this Agreement is in effect:
(a) The Borrower shall not permit the combined tangible Capital
for the Banks at any time during the term of this Agreement to be less than
$54,000,000.
(b) The Borrower shall not permit the ratio of Tier 1 Capital to
average total assets (the Tier 1 Leverage Ratio) of the Borrower as of the end
of any fiscal year to be less than 6.75%.
(c) The Borrower shall not permit the Total Risk Based Ratio of
the Borrower as of the end of any fiscal year to be less than 9.0%.
(d) The Borrower shall not, and shall not permit any of the Banks
to, fail to comply with any minimum capital requirement imposed by any of their
federal or state regulators.
- 3 -
(e) The Borrower shall not permit its Weighted Average Return on
Assets for each fiscal year to be less than 0.50%.
(f) The Borrower shall not permit the ratio (calculated on a
consolidated basis) of its loans classified as "substandard," "doubtful" or
"loss" to the sum of its Tier 1 Capital plus its allowance for loan and lease
losses to exceed 45%.
(g) The Borrower shall not permit the allowance for loan and lease
losses of the Borrower to be less than 1.00% of its gross loans for each fiscal
year.
(h) The Borrower shall not incur or permit to exist any
indebtedness or liability for borrowed money in excess of $800,000 other than to
the Lender or a wholly-owned Subsidiary of the Borrower without prior Lender
approval, except that this covenant shall not apply to deposits, repurchase
agreements, federal funds borrowings, overdrafts, Federal Home Loan Bank
borrowings and other banking transactions entered into by a Subsidiary in the
ordinary course of its business.
(i) The Borrower shall not, directly or indirectly, become a
guarantor of any obligation of, or an endorser of, or otherwise assume or become
liable upon any notes, obligations, or other indebtedness of any other Person
(other than a Subsidiary) except in connection with the depositing of checks in
the normal and ordinary course of business.
(j) The Borrower shall not, nor permit any Subsidiary to, transfer
all or substantially all of its assets to or consolidate or merge with any other
Person, or acquire all or substantially all of the properties or capital stock
of any other Person, or create any Subsidiary or enter into any partnership or
joint venture without the prior written approval of the Lender.
(k) The Borrower shall not permit any Subsidiary to issue, sell or
otherwise dispose or part with control of any shares of any class of its stock
(other than directors' qualifying shares) except to the Borrower or a
wholly-owned Subsidiary of the Borrower.
(l) The Borrower shall not sell or otherwise dispose or part with
control of any of the Stock or any other securities or indebtedness of any
Subsidiary, and the Borrower shall not pledge or otherwise transfer or grant a
security interest in any of the capital stock or other securities of any of its
Subsidiaries.
(m) The Borrower shall not pay any cash dividends if the Loan is
in Default or if the payment of such dividend would create a Default.
5. ADVANCES UNDER THE LOAN. The Lender shall not be obligated to make
------------------------
any advance of the Loan to the Borrower unless:
(a) All representations and warranties of the Borrower contained
in this Agreement or the Note shall be true in all respects on and as of the
date of each advance of the Loan.
(b) The Borrower and each Subsidiary shall have performed in all
material respects all their agreements and obligations required by the Financing
Documents.
(c) No adverse change shall have occurred in the Borrower's or any
Subsidiary's condition (financial or otherwise), or in the business, properties,
assets, liabilities, prospects, or management of the Borrower or any Subsidiary
since the date of this Agreement.
(d) No Default or event which, with the giving of notice or
passage of time (or both), would constitute a Default under the terms of this
Agreement shall have occurred.
(e) All other matters incidental to the Loan shall be satisfactory
to the Lender.
(f) For any advance under the Loan resulting in the aggregate
amount outstanding under the Loan exceeding $13,000,000 unless it shall have
first sold sufficient participations in the Loan such that the aggregate amount
outstanding under the Loan after the proposed advance less the amount of
participations sold does not exceed $13,000,000.
- 4 -
6. DEFAULT. A "Default" shall exist if any of the following occurs:
-------
(a) Failure of the Borrower punctually to make any payment of any
amount payable, whether principal or interest or other amount, on any of the
Liabilities, whether at maturity, or at a date fixed for any prepayment or
partial prepayment, or by acceleration, or otherwise.
(b) Any statement, representation, or warranty of the Borrower
made in any of the Financing Documents or at any time furnished by or on behalf
of the Borrower to the Lender shall be false or misleading in any material
respect as of the date made.
(c) Failure of the Borrower punctually and fully to comply with
(i) any of the covenants in Section 4 of this Agreement or (ii) any of the other
covenants set forth in this Agreement if such failure under this clause (ii) is
not remedied within 30 days for any default other than payment after notice from
the Lender to the Borrower.
(d) The occurrence of a default under any other agreement to which
the Borrower and the Lender are parties or under any other instrument executed
by the Borrower in favor of the Lender.
(e) If the Borrower or any Subsidiary becomes insolvent as defined
in the Georgia Uniform Commercial Code or makes an assignment for the benefit of
creditors; or if any action is brought by the Borrower or any Subsidiary seeking
dissolution of the Borrower or such Subsidiary or liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver, or other
custodian for any of its property; or if the Borrower or any Subsidiary
commences a voluntary case under the Federal Bankruptcy Code; or if any
reorganization or arrangement proceeding is instituted by the Borrower or any
Subsidiary for the settlement, readjustment, composition or extension of any of
its debts upon any terms; or if any action or petition is otherwise brought by
the Borrower or any Subsidiary seeking similar relief or alleging that it is
insolvent or unable to pay its debts as they mature.
(f) Any action is brought against the Borrower or any Subsidiary
seeking dissolution of the Borrower or such Subsidiary or liquidation of any of
its assets or seeking the appointment of a trustee, interim trustee, receiver,
or other custodian for any of its property, and such action is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30
days of the date upon which it was instituted; or any proceeding under the
Federal Bankruptcy Code is instituted against the Borrower or any Subsidiary and
(i) an order for relief is entered in such proceeding or (ii) such proceeding is
consented to or acquiesced in by the Borrower or such Subsidiary or is not
dismissed within 30 days of the date upon which it was instituted; or any
reorganization or arrangement proceeding is instituted against the Borrower or
any Subsidiary for the settlement, readjustment, composition, or extension of
any of its debts upon any terms, and such proceeding is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30
days of the date upon which it was instituted; or any action or petition is
otherwise brought against the Borrower or any Subsidiary seeking similar relief
or alleging that it is insolvent, unable to pay its debts as they mature, or
generally not paying its debts as they become due, and such action or petition
is consented to or acquiesced in by the Borrower or such Subsidiary or is not
dismissed within 30 days of the date upon which it was brought.
(g) The Borrower or any Subsidiary is in default (or an event has
occurred which, with the giving of notice or passage of time, or both, will
cause the Borrower or any Subsidiary to be in default) on indebtedness to
another Person, and the amount of such indebtedness exceeds $250,000 or the
acceleration of the maturity of such indebtedness would have a material adverse
effect upon the Borrower or such Subsidiary.
(h) Any other material adverse change occurs in the Borrower's
financial condition or means or ability to pay the Liabilities.
(i) Any cease and desist or other order has been threatened,
noticed, or entered against the Borrower or any Subsidiary by any bank or bank
holding company regulatory agency or body, or the Borrower or any Subsidiary
enters into any form of memorandum of understanding, plan of corrective action,
or letter agreement with any such regulatory agency or body, or any other
regulatory enforcement action is taken against the Borrower or any Subsidiary
relating to the capitalization, management, or operation of the Borrower or any
Subsidiary.
(j) The Borrower or any Subsidiary is indicted or convicted or
pleads guilty or nolo contendere to any charge that the Borrower or such
---- ----------
Subsidiary has violated any drug, controlled substances, money laundering,
currency reporting, racketeering, or
racketeering-influenced-and-corrupt-organization statute or regulations other
forfeiture statute.
(k) The Borrower ceases to own 100% of the issued and outstanding
capital stock of Park Avenue, First Community, Baxley or Eagle or 99.91% of the
issued and outstanding capital stock of Farmers.
- 5 -
7. REMEDIES UPON DEFAULT. Upon the occurrence of a Default, the Lender
---------------------
shall be entitled, without limitation, to exercise the following rights at any
time and from time to time, which the Borrower hereby agrees to be commercially
reasonable:
(a) declare any of the Liabilities due and payable, whereupon they
immediately will become due and payable (notwithstanding any provisions to the
contrary, and without presentment, demand, notice or protest of any kind (all of
which are expressly waived by the Borrower));
(b) (i) receive all amounts payable in respect of the Collateral
otherwise payable to the Borrower; (ii) settle all accounts, claims, and
controversies relating to the Collateral; (iii) transfer all or any part of the
Collateral into the Lender's or any nominee's name; and (iv) execute all
agreements and other instruments; bring, defend and abandon all actions and
other proceedings; and take all actions in relation to the Collateral as the
Lender in its sole discretion may determine;
(c) enforce the payment of the Stock and exercise all of the
rights, powers and remedies of the Borrower thereunder, including the exercise
of all voting rights and other ownership or consentual rights of the Stock (but
the Lender is not hereby obligated to exercise such rights), and in connection
therewith the Borrower hereby appoints the Lender to be the Borrower's true and
lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Stock in any manner
the Lender deems advisable for or against all matters submitted to a vote of
shareholders, and such power-of-attorney is coupled with an interest and
irrevocable;
(d) sell, assign and deliver, or grant options to purchase, all or
any part of or interest in the Collateral in one or more parcels, at any public
or private sale at any exchange, any of the Lender's offices, or elsewhere,
without demand of performance, advertisement, or notice of intention to sell or
of the time or place of sale or adjournment thereof or to redeem or otherwise
(all of which are hereby expressly and irrevocably waived by the Borrower), for
cash, on credit, or for other property, for immediate or future delivery without
any assumption of credit risk, and for such price and on such terms as the
Lender in its sole discretion may determine; the Borrower agrees that to the
extent that notice of sale shall be required by law that at least five business
days' notice to the Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification; the Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given; the Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and any such sale may, without further notice, be made at the
time and place to which it was so adjourned; the Borrower hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling the Collateral and any other
security for the Loan or otherwise; at any such sale, unless prohibited by
applicable law, the Lender may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption; and the
Lender shall not be liable for failure to collect or realize upon any or all of
the Collateral or for any delay in so doing nor shall any of them be under any
obligation to take any action whatsoever with regard thereto;
(e) appoint and dismiss managers or other agents for any of the
purposes mentioned in the foregoing provisions of this Section 7, all as the
Lender in its sole discretion may determine; and
(f) generally, take all such other action as the Lender in its
sole discretion may determine as incidental or conducive to any of the matters
or powers mentioned in this Section 7 and which the Lender may or can do
lawfully and use the name of the Borrower for such purposes and in any
proceedings arising therefrom.
8. APPLICATION OF PROCEEDS. The proceeds of the public or private sale
-----------------------
or other disposition of any Collateral hereunder shall be applied to (i) the
costs incurred in connection with the sale, expressly including, without
limitation, any costs under Section 11(a) hereof; (ii) any unpaid interest which
may have accrued on any obligations secured hereby; (iii) any unpaid principal
on any obligations secured hereby; and (iv) damages incurred by the Lender by
reason of any breach secured against hereby, in such order as the Lender may
determine, and any remaining proceeds shall be paid over to the Borrower or
others as by law provided. If the proceeds of the sale or other disposition of
the Stock are insufficient to pay all such amounts, the Borrower shall remain
liable to the Lender for the deficiency.
9. ADDITIONAL RIGHTS OF SECURED PARTIES. In addition to its other
----------------------------------------
rights and privileges under this Agreement, the Lender may exercise from time to
time any and all other rights and remedies available to a secured party when a
debtor is in default under a security agreement as provided in the Uniform
Commercial Code of Georgia, or available to the Lender under any other
applicable law or in equity, including without limitation the right to any
deficiency remaining after disposition of the Collateral. The Borrower shall
pay all of the reasonable costs and expenses (including reasonable attorneys'
fees) incurred by the Lender in enforcing its rights under this Agreement.
- 6 -
10. RETURN OF STOCK TO BORROWER. Upon payment in full of all principal
---------------------------
and interest on the Note and full performance by the Borrower of all covenants
and other obligations under this Agreement, the Lender shall return to the
Borrower (i) all of the then remaining Stock and (ii) all rights received by the
Lender as agent for the Borrower as a result of its possessory interest in the
Stock.
11. DISPOSITION OF STOCK BY AGENT. The Stock is not registered under
-------------------------------
the various federal or state securities laws and disposition thereof after
default may be subject to prior regulatory approval and may be restricted to one
or more private (instead of public) sales in view of the lack of such
registration. The Borrower acknowledges that upon such disposition, the Lender
may approach only a restricted number of potential purchasers and that a sale
under such circumstances may yield a lower price for the Stock than if the Stock
were registered pursuant to federal and state securities laws and sold on the
open market. The Borrower, therefore, agrees that:
(a) if the Lender shall, pursuant to the terms of this Agreement,
sell or cause any of the Stock to be sold at a private sale, the Lender shall
have the right to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and experience in connection with
shares of companies in the banking industry (but shall not be obligated to seek
such advice and the failure to do so shall not be considered in determining the
commercial reasonableness of the Lender's action) as to the best manner in which
to expose the Stock for sale and as to the best price reasonably obtainable at
the private sale thereof; and
(b) such reliance shall be conclusive evidence that the Lender has
handled such disposition in a commercially reasonable manner.
12. BORROWER'S OBLIGATIONS ABSOLUTE. The obligations of the Borrower
---------------------------------
under this Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any other remedies against the Borrower or any
other Person, nor against other security or liens available to the Lender or its
successors, assigns or agents. The Borrower hereby waives any right to require
that an action be brought against any other Person or require that resort be had
to any security or to any balance of any deposit account or credit on the books
of the Lender in favor of any other Person prior to any exercise of rights or
remedies hereunder, or to require resort to rights or remedies of the Lender in
connection with the Loan.
13. NOTICES. Except as provided otherwise in this Agreement, all
-------
notices and other communications under this Agreement are to be in writing and
are to be deemed to have been duly given and to be effective upon delivery to
the party to whom they are directed. If sent by U.S. mail, first class,
certified, return receipt requested, postage prepaid, and addressed to the
Lender or to the Borrower at their respective addressees set forth below, such
communications are deemed to have been delivered on the second business day
after being so posted.
If to the Lender: The Bankers Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Credit Administration
If to the Borrower: PAB Bankshares, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Either the Lender or the Borrower may, by written notice to the other,
designate a different address for receiving notices under this Agreement;
provided, however, that no such change of address will be effective until
written notice thereof is actually received by the party to whom such change of
address is sent.
14. BINDING AGREEMENT. The provisions of this Agreement shall be
------------------
construed and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the laws of the State of Georgia. This
Agreement, together with all documents referred to herein, constitutes the
entire Agreement between the Borrower and the Lender with respect to the matters
addressed herein and may not be modified except by a writing executed by the
Lender and delivered by the Lender to the Borrower. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original but
all of which, taken together, shall constitute one and the same instrument.
- 7 -
15. PARTICIPATIONS. The Lender may at any time grant participations in
--------------
or sell, assign, transfer or otherwise dispose of all or any portion of the
indebtedness of the Borrower outstanding pursuant to the Financing Documents.
The Borrower hereby agrees that any holder of a participation in, and any
assignee or transferee of, all or any portion of any amount owed by the Borrower
under the Financing Documents (i) shall be entitled to the benefits of the
provisions of this Agreement as the Lender hereunder and (ii) may exercise any
and all rights of the banker's lien, set-off or counterclaim with respect to any
and all amounts owed by the Borrower to such assignee, transferee or holder as
fully as if such assignee, transferee or holder had made the Loan in the amount
of the obligation in which it holds a participation or which is assigned or
transferred to it.
16. EXPENSES. All reports and other documents or information furnished
--------
to the Lender under this Agreement shall be supplied by the Borrower without
cost to the Lender. Further, the Borrower shall reimburse the Lender on demand
for all out-of-pocket costs and expenses (including legal fees) incurred by the
Lender in connection with the preparation, interpretation, operation, and
enforcement of the Financing Documents or the protection or preservation of any
right or claim of the Lender with respect to such agreements. The Borrower will
pay all taxes (if any) in connection with the Financing Documents. The
obligations of the Borrower under this section shall survive the payment of the
Liabilities and the termination of this Agreement.
17. INDEMNIFICATION. In addition to any other amounts payable by the
---------------
Borrower under this Agreement, the Borrower shall pay and indemnify the Lender
from and against all claims, liabilities, losses, costs, and expenses
(including, without limitation, reasonable attorneys' fees and expenses) which
the Lender may (other than as a result of the gross negligence or willful
misconduct of the Lender) incur or be subject to as a consequence, directly or
indirectly, of (i) any breach by the Borrower of any warranty, term or condition
in, or the occurrence of any default under, any of the Financing Documents,
including all fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default, (ii)
the Lender's making, holding, or administering the Loan or the Collateral, (iii)
allegations of participation or interference by the Lender in the management,
contractual relations or other affairs of the Borrower or any Subsidiary, (iv)
allegations that the Lender has joint liability with the Borrower or any
Subsidiary for any reason, and (v) any suit, investigation, or proceeding as to
which the Lender or such participant is involved as a consequence, directly or
indirectly, of its execution of any of the Financing Documents, or any other
event or transaction contemplated by any of the foregoing. The obligations of
Borrower under this Section 17 shall survive the termination of this Agreement.
18. RIGHT TO SET-OFF. Upon the occurrence of a Default hereunder, the
-----------------
Lender, without notice or demand of any kind, may hold and set off against such
of the Liabilities (whether matured or unmatured) as the Lender may elect any
balance or amount to the credit of the Borrower in any deposit, agency, reserve,
holdback or other account of any nature whatsoever maintained by or on behalf of
the Borrower with the Lender at any of its offices, regardless of whether such
accounts are general or special and regardless of whether such accounts are
individual or joint. Any Person purchasing an interest in debt obligations
under this Agreement held by the Lender may exercise all rights of offset with
respect to such interest as fully as if such Person were a holder of debt
obligations hereunder in the amount of such interest.
19. FURTHER ASSURANCES. If at any time the Lender upon advice of its
-------------------
counsel shall determine that any further document shall be required to effect
this Agreement and the transactions and other agreements contemplated thereby,
the Borrower shall, and shall cause its Subsidiaries to, execute and deliver
such document and otherwise carry out the purposes of this Agreement.
20. SEVERABILITY. If any paragraph or part thereof shall for any
------------
reason be held or adjudged to be invalid, illegal, or unenforceable by any court
of competent jurisdiction, such paragraph or part thereof shall be deemed
separate, distinct, and independent, and the remainder of this Agreement shall
remain in full force and effect and shall not be affected by such holding or
adjudication.
21. BINDING EFFECT. All rights of the Lender under the Financing
---------------
Documents shall inure to the benefit of its transferees, successors and assigns.
All obligations of the Borrower under the Financing Documents shall bind its
heirs, legal representatives, successors, and assigns.
- 8 -
22. DEFINITIONS.
-----------
(a) "Bank Subsidiaries" means each banking Subsidiary of Borrower,
now or hereafter in existence, including but not limited to the Banks.
(b) "Capital" means all capital or all components of capital,
other than any allowance for loan and lease losses and net of any intangible
assets, as defined from time to time by the primary federal regulator of the
Borrower, the Banks, or each of the other Bank Subsidiaries (as the case may
be).
(c) "Collateral" means and includes all property assigned or
pledged to the Lender or in which the Lender has been granted security interest
or to which the Lender has been granted security title, whether under any of the
Financing Documents or any other agreement, instrument, or document, and the
proceeds thereof.
(d) "Financing Documents" means and includes this Agreement, the
Note, and all other associated loan and collateral documents including, without
limitation, all guaranties, suretyship agreements, stock powers, security
agreements, security deeds, subordination agreements, exhibits, schedules,
attachments, financing statements, notices, consents, waivers, opinions,
letters, reports, records, assignments, documents, instruments, information and
other writings related thereto, or furnished by the Borrower to the Lender in
connection therewith or in connection with any of the Collateral, and any
amendments, extensions, renewals, modifications or substitutions thereof or
therefor.
(e) "Liabilities" means all indebtedness, liabilities, and
obligations of the Borrower of any nature whatsoever which the Lender may now or
hereafter have, own or hold, and which are now or hereafter owing to the Lender
regardless of however and whenever created, arising or evidenced, whether now,
heretofore or hereafter incurred, whether now, heretofore or hereafter due and
payable, whether alone or together with another or others, whether direct or
indirect, primary or secondary, absolute or contingent, or joint or several, and
whether as principal, maker, endorser, guarantor, surety or otherwise, and also
regardless of whether such Liabilities are from time to time reduced and
thereafter increased or entirely extinguished and thereafter reincurred,
including without limitation the Note and any amendments, extensions, renewals,
modifications or substitutions thereof or therefor.
(f) "Note" shall mean the promissory note dated the date hereof in
the principal amount of $15,000,000 and any amendments, extensions, renewals,
modifications, or substitutions thereof or therefor in effect at any particular
time.
(g) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
(h) "Subsidiary" means each of the Bank Subsidiaries and each
other corporation for which the Borrower has the power, directly or indirectly,
to direct its management or policies or to vote 50% or more of any class of its
voting securities.
(i) "Tier 1 Capital" means Tier 1 capital as defined by the
capital maintenance regulations of the primary federal bank regulatory agency of
the relevant Bank Subsidiary.
(j) "Total Risk Based Capital Ratio" means the total risk based
capital ratio as defined by the capital maintenance regulations of the primary
federal bank regulatory agency of the Borrower.
(k) "Weighted Average Return on Assets" means with respect to the
Borrower, its net income for the previous calendar year plus the amount of any
interest payments by it on the Loan during the previous calendar year, divided
by its average assets during the previous calendar year.
(l) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in effect from time to time.
- 9 -
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
affixed their seals by and through their duly authorized officers, as of the day
and year first above written.
Borrower:
PAB BANKSHARES, INC.
By: /s/ R. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
R. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
[CORPORATE SEAL]
I hereby certify that the representation and warranty contained in Section
2(m)(v) of this Agreement is true and correct.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
LENDER:
THE BANKERS BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Vice President
[BANK SEAL]
- 10 -
