1
LOAN AGREEMENT
BY AND BETWEEN
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
OF
▇▇▇▇▇▇ CITY SAVINGS BANK
AND
▇▇▇▇▇▇ CITY BANCORP, INC.
MADE AND ENTERED INTO AS OF
[__________], 1999
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 BUSINESS DAY.................................................................................... 1
SECTION 1.2 CODE............................................................................................ 1
SECTION 1.3 DEFAULT......................................................................................... 2
SECTION 1.4 ERISA........................................................................................... 2
SECTION 1.5 EVENT OF DEFAULT................................................................................ 2
SECTION 1.6 FISCAL YEAR..................................................................................... 2
SECTION 1.7 INDEPENDENT COUNSEL............................................................................. 2
SECTION 1.8 LOAN............................................................................................ 2
SECTION 1.9 LOAN DOCUMENTS.................................................................................. 2
SECTION 1.10 PLEDGE AGREEMENT................................................................................ 2
SECTION 1.11 PRINCIPAL AMOUNT................................................................................ 2
SECTION 1.12 PROMISSORY NOTE................................................................................. 2
SECTION 1.13 REGISTER........................................................................................ 2
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY; INDEMNIFICATION
SECTION 2.1 THE LOAN; PRINCIPAL AMOUNT...................................................................... 2
SECTION 2.2 INTEREST........................................................................................ 3
SECTION 2.3 PROMISSORY NOTE................................................................................. 4
SECTION 2.4 PAYMENT OF TRUST LOAN........................................................................... 4
SECTION 2.5 PREPAYMENT...................................................................................... 6
SECTION 2.6 METHOD OF PAYMENTS.............................................................................. 6
SECTION 2.7 USE OF PROCEEDS OF LOAN......................................................................... 7
SECTION 2.9 REGISTRATION OF THE PROMISSORY NOTE............................................................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 3.1 POWER, AUTHORITY, CONSENTS...................................................................... 8
SECTION 3.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY......................................................... 8
SECTION 3.3 PROPERTIES, PRIORITY OF LIENS................................................................... 8
SECTION 3.4 NO DEFAULTS, COMPLIANCE WITH LAWS............................................................... 8
SECTION 3.5 PURCHASES OF COMMON STOCK....................................................................... 8
(i)
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
SECTION 4.1 POWER, AUTHORITY, CONSENTS...................................................................... 9
SECTION 4.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY......................................................... 9
SECTION 4.3 ESOP; CONTRIBUTIONS............................................................................. 9
SECTION 4.4 TRUSTEE; COMMITTEE.............................................................................. 10
SECTION 4.5 COMPLIANCE WITH LAWS; ACTIONS................................................................... 10
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1 EVENTS OF DEFAULT UNDER LOAN AGREEMENT.......................................................... 10
SECTION 5.2 LENDER'S RIGHTS UPON EVENT OF DEFAULT........................................................... 11
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 PAYMENTS DUE TO THE LENDER...................................................................... 11
SECTION 6.2 PAYMENTS........................................................................................ 11
SECTION 6.3 SURVIVAL........................................................................................ 12
SECTION 6.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT........................................... 12
SECTION 6.5 REMEDIES CUMULATIVE............................................................................. 12
SECTION 6.6 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS................................................... 12
SECTION 6.7 NOTICES......................................................................................... 13
SECTION 6.8 COUNTERPARTS.................................................................................... 14
SECTION 6.9 CONSTRUCTION; GOVERNING LAW..................................................................... 14
SECTION 6.10 SEVERABILITY.................................................................................... 14
SECTION 6.11 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION..................................................... 14
EXHIBIT A FORM OF PROMISSORY NOTE................................................................................. A-1
EXHIBIT B FORM OF PLEDGE AGREEMENT................................................................................ B-1
EXHIBIT C FORM OF ASSIGNMENT...................................................................................... C-1
(ii)
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LOAN AGREEMENT
This LOAN AGREEMENT ("Loan Agreement") is made and entered into as of
the [____ day of ____, 199_], by and between the EMPLOYEE STOCK OWNERSHIP PLAN
TRUST OF ▇▇▇▇▇▇ CITY SAVINGS BANK ("Borrower"), a trust forming part of the
Employee Stock Ownership Plan of ▇▇▇▇▇▇ City Savings Bank ("ESOP"), acting
through and by its Trustee, [______________] ("Trustee"), a banking corporation
organized under the laws of [__________] and having an office at
[_____________________]; and ▇▇▇▇▇▇ City Bancorp, Inc. ("Lender"), a corporation
organized and existing under the laws of the state of Delaware, having an office
at West ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H :
WHEREAS, the Human Resources Committee of the Lender ("Committee") has
authorized the Borrower to purchase shares of common stock of ▇▇▇▇▇▇ City
Bancorp, Inc. ("Common Stock"), either directly from ▇▇▇▇▇▇ City Bancorp, Inc.
or in open market purchases in an amount not to exceed [___________] shares of
Common Stock;
WHEREAS, the Committee has further authorized the Borrower to borrow
funds from the Lender for the purpose of financing authorized purchases of
Common Stock; and
WHEREAS, the Lender is willing to make a loan to the Borrower for such
purpose;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply for purposes of this Loan
Agreement, except to the extent that a different meaning is plainly indicated by
the context:
SECTION 1.1 BUSINESS DAY means any day other than a Saturday, Sunday or
other day on which banks are authorized or required to close under federal law
or the laws of the State of New Jersey.
SECTION 1.2 CODE means the Internal Revenue Code of 1986 (including the
corresponding provisions of any succeeding law).
SECTION 1.3 DEFAULT means an event or condition which would constitute
an Event of Default. The determination as to whether an event or condition would
constitute an Event of
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Default shall be determined without regard to any applicable requirement of
notice or lapse of time.
SECTION 1.4 ERISA means the Employee Retirement Income Security Act of
1974, as amended (including the corresponding provisions of any succeeding law).
SECTION 1.5 EVENT OF DEFAULT means an event or condition described in
Article V.
SECTION 1.6 FISCAL YEAR means the fiscal year of ▇▇▇▇▇▇ City Bancorp,
Inc.
SECTION 1.7 INDEPENDENT COUNSEL means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ or other
counsel mutually satisfactory to both the Lender and the Borrower.
SECTION 1.8 LOAN means the loan described in section 2.1.
SECTION 1.9 LOAN DOCUMENTS means, collectively, this Loan Agreement,
the Promissory Note and the Pledge Agreement and all other documents now or
hereafter executed and delivered in connection with such documents, including
all amendments, modifications and supplements of or to all such documents.
SECTION 1.10 PLEDGE AGREEMENT means the agreement described in section
2.8(a).
SECTION 1.11 PRINCIPAL AMOUNT means the face amount of the Promissory
Note, determined as set forth in section 2.1(c).
SECTION 1.12 PROMISSORY NOTE means the promissory note described in
section 2.3.
SECTION 1.13 REGISTER means the register described in section 2.9.
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY; INDEMNIFICATION
SECTION 2.1 THE LOAN; PRINCIPAL AMOUNT.
(a) The Lender hereby agrees to lend to the Borrower such amounts, and
at such times, as shall be determined under this section 2.1; provided, however,
that in no event shall the aggregate amount lent under this Loan Agreement from
time to time exceed the aggregate amount paid by the Borrower, exclusive of
commissions, fees and other charges, to purchase [____________] shares of Common
Stock.
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(b) Subject to the limitations of section 2.1(a), the Borrower shall
determine the amounts borrowed under this Agreement, and the times at which such
borrowings are effected. Each such determination shall be evidenced in a writing
which shall set forth the amount to be borrowed and the date on which the Lender
shall disburse such amount, and such writing shall be furnished to the Lender by
notice from the Borrower. The Lender shall disburse to the Borrower the amount
specified in each such notice on the date specified therein or, if later, as
promptly as practicable following the Lender's receipt of such notice; provided,
however, that the Lender shall have no obligation to disburse funds pursuant to
this Agreement (i) following the occurrence of a Default or an Event of Default
until such time as such Default or Event of Default shall have been cured; and
(ii) on and after the earliest date on which Common Stock is listed or admitted
to trading on an established market (including but not limited to the NASDAQ
Stock Market), while the Borrower is in possession of funds previously advanced
under this Agreement that have not been used to purchase Common Stock; and (iii)
on and after the earliest date on which Common Stock is listed or admitted to
trading on an established market (including but limited to the NASDAQ Stock
Market), to the extent that the making of such advance would permit the Borrower
to purchase more than [ ] shares of Common Stock during the period of [ ]
business days after the making of such advance or the period of [ ] business
days ending on the date of such advance.
(c) For all purposes of this Loan Agreement, the Principal Amount on
any date shall be equal to the excess, if any, of:
(i) the aggregate amount disbursed by the Lender pursuant to
section 2.1(b) on or before such date; over
(ii) the aggregate amount of any repayments of such amounts
made before such date.
The Lender shall maintain on the Register a record of, and shall record on the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.
SECTION 2.2 INTEREST.
(a) The Borrower shall pay to the Lender interest on the Principal
Amount, for the period commencing on the date of this Loan Agreement and
continuing until the Principal Amount shall be paid in full, the rate of eight
percent (8%) per annum. Interest payable under this Agreement shall be computed
on the basis of a year of 360 days and months consisting of 30 days each and
actual days elapsed (including the first day but excluding the last) occurring
in the period to which the computation relates.
(b) Except as otherwise provided in this section 2.2(b), accrued
interest on the Principal Amount shall be payable by the Borrower quarterly in
arrears commencing on the last Business Day of the first calendar quarter to end
following the date of this Agreement and continuing on the last Business Day of
each calendar quarter thereafter and upon the payment or prepay-
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ment of such Loan. All interest on the Principal Amount shall be paid by the
Borrower in immediately available funds. The Lender shall remit to the Borrower,
at least three (3) Business Days before the end of each calendar quarter, a
statement of the interest payment due under section 2.2(a) for such quarter;
provided, however, that a delay or failure by the Lender in providing the
Borrower with such statement shall not alter the Borrower's obligation to make
such payment.
(c) Anything in this Loan Agreement or the Promissory Note to the
contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of interest shall not
be required to be made to the Lender to the extent that the Lender's receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Any
such payment referred to in the preceding sentence shall be made by the Borrower
to the Lender on the earliest interest payment date or dates on which the
receipt thereof would be permissible under the laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Such
deferred interest shall not bear interest.
SECTION 2.3 PROMISSORY NOTE.
The Loan shall be evidenced by a Promissory Note of the Borrower in
substantially the form of Exhibit A attached hereto, dated the date hereof,
payable to the order of the Lender in the Principal Amount and otherwise duly
completed.
SECTION 2.4 PAYMENT OF TRUST LOAN.
(a) The Principal Amount of the Loan shall be repaid in annual
installments payable on the last Business Day of each September ending after the
date of this Agreement. The amount of each such annual installment shall be that
portion of the lesser of (i) that portion of the Principal Amount which will
result in the release for allocation to participants in the ESOP, pursuant to
the Pledge Agreement, of a cumulative fraction of the Collateral (within the
meaning of the Pledge Agreement and determined as of the last Business Day of
September, 1999) equal to the percentage set forth in Column II below and (ii)
that portion of the Principal Amount which will result in the release for
allocation to participants in the ESOP, pursuant to the Pledge Agreement, of
Collateral (within the meaning of the Pledge Agreement and valued as of the date
of payment) having a value equal to twenty-five percent (25%) of the
compensation taken into account under the ESOP for each person entitled to share
in such allocation:
COLUMN I COLUMN II
INSTALLMENT DUE ON CUMULATIVE FRACTION OF
LAST BUSINESS DAY OF COLLATERAL RELEASED
SEPTEMBER
IN
-------------------- ----------------------
1999 1/60
2000 3/60
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COLUMN I COLUMN II
INSTALLMENT DUE ON CUMULATIVE FRACTION OF
LAST BUSINESS DAY OF COLLATERAL RELEASED
SEPTEMBER
IN
-------------------- ----------------------
2001 5/60
2002 7/60
2003 9/60
2004 11/60
2005 13/60
2006 15/60
2007 17/60
2008 19/60
2009 21/60
2010 23/60
2011 25/60
2012 27/60
2013 29/60
2014 31/60
2015 33/60
2016 35/60
2017 37/60
2018 39/60
2019 41/60
2020 43/60
2021 45/60
2022 47/60
2023 49/60
2024 51/60
2025 53/60
2026 55/60
2027 57/60
2028 59/60
2029 60/60
, provided, however, that the Borrower shall not be required to make any payment
of principal due to be made in any Fiscal Year to the extent that such payment
would not be deductible from federal income tax purposes for such Fiscal Year
under Section 404 of the Code. Any payment
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not required to be made pursuant to the above provision shall be deferred to any
payable on the last day of the first Fiscal Year in which each payment may be
made on a tax deductible basis.
SECTION 2.5 PREPAYMENT.
The Borrower shall be entitled to prepay the Loan in whole or in part,
at any time and from time to time; provided, however, that the Borrower shall
give notice to the Lender of any such prepayment. Any such prepayment shall be:
(a) permanent and irrevocable: (b) accompanied by all accrued interest through
the date of such prepayment; (c) made without premium or penalty; and (d)
applied first to the installment of principal due and payable in the Fiscal Year
in which the prepayment is made and second in the order of the maturity of the
remaining installments thereof unless the Lender and the Borrower agree to apply
such prepayments in some order.
SECTION 2.6 METHOD OF PAYMENTS.
(a) All payments of principal, interest, other charges (including
indemnities) and other amounts payable by the Borrower hereunder shall be made
in lawful money of the United States, in immediately available funds, to the
Lender at the address specified in or pursuant to this Loan Agreement for
notices to the Lender, not later than 3:00 P.M., Eastern Standard time, on the
date on which such payment shall become due. Any such payment made on such date
but after such time shall, if the amount paid bears interest, and except as
expressly provided to the contrary herein, be deemed to have been made on, and
interest shall continue to accrue and be payable thereon until, the next
succeeding Business Day. If any payment of principal or interest becomes due on
a day other than a Business Day, such payment may be made on the next succeeding
Business Day, and when paid, such payment shall include interest to the day on
which such payment is in fact made.
(b) Notwithstanding anything to the contrary contained in this Loan
Agreement or the Promissory Note, neither the Borrower nor the Trustee shall be
obligated to make any payment, repayment or prepayment on the Promissory Note or
take or refrain from taking any other action hereunder or under the Promissory
Note if doing so would cause the ESOP to cease to be an employee stock ownership
plan within the meaning of section 4975(e)(7) of the Code or qualified under
section 401(a) of the Code or cause the Borrower to cease to be a tax exempt
trust under section 501(a) of the Code or if such act or failure to act would
cause the Borrower or the Trustee to engage in any "prohibited transaction" as
such term is defined in section 4975(c) of the Code and the regulations
promulgated thereunder which is not exempted by section 4975(c)(2) or (d) of the
Code and the regulations promulgated thereunder or in section 406 of ERISA and
the regulations promulgated thereunder which is not exempted by section 408(b)
of ERISA and the regulations promulgated thereunder; provided, however, that in
each case, the Borrower or the Trustee or both, as the case may be, may act or
refrain from acting pursuant to this section 2.6(b) on the basis of an opinion
of Independent Counsel. The Borrower and the Trustee may consult with
Independent Counsel, and any opinion of such Independent Counsel shall be full
and complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder
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in good faith and in accordance with such opinion of Independent Counsel.
Nothing contained in this section 2.6(b) shall be construed as imposing a duty
on either the Borrower or the Trustee to consult with Independent Counsel. Any
obligation of the Borrower or the Trustee to make any payment, repayment or
prepayment on the Promissory Note or to take or refrain from taking any other
act hereunder or under the Promissory Note which is excused pursuant to this
section 2.6(b) shall be considered a binding obligation of the Borrower or the
Trustee, or both, as the case may be, for the purposes of determining whether a
Default or Event of Default has occurred hereunder or under the Promissory Note
and nothing in this section 2.6(b) shall be construed as providing a defense to
any remedies otherwise available upon a Default or an Event of Default hereunder
(other than the remedy of specific performance).
SECTION 2.7 USE OF PROCEEDS OF LOAN.
The entire proceeds of the Loan shall be used solely for acquiring
shares of Common Stock, and for no other purpose whatsoever.
SECTION 2.8 SECURITY.
(a) In order to secure the due payment and performance by the Borrower
of all of its obligations under this Loan Agreement, simultaneously with the
execution and delivery of this Loan Agreement by the Borrower, the Borrower
shall:
(i) pledge to the Lender as Collateral (as defined in the
Pledge Agreement), and grant to the Lender a first priority lien on and
security interest in, the Common Stock purchased with the Principal
Amount, by the execution and delivery to the Lender of a Pledge
Agreement in the form attached hereto as Exhibit B; and
(ii) execute and deliver, or cause to be executed and
delivered, such other agreements, instruments and documents as the
Lender may reasonably require in order to effect the purposes of the
Pledge Agreement and this Loan Agreement.
(b) The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the Borrower, as of the date on which any payment or
prepayment of the Principal Amount is made, a number of shares of Common Stock
held as Collateral pursuant to section 6.4 of the ESOP.
SECTION 2.9 REGISTRATION OF THE PROMISSORY NOTE.
(a) The Lender shall maintain a Register providing for the registration
of the Principal Amount and any stated interest and of transfer and exchange of
the Promissory Note. Transfer of the Promissory Note may be effected only by the
surrender of the old instrument and either the reissuance by the Borrower of the
old instrument to the new holder or the issuance by the Borrower of a new
instrument to the new holder. The old Promissory Note so surrendered shall be
cancelled by the Lender and returned to the Borrower after such cancellation.
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(b) Any new Promissory Note issued pursuant to section 2.9(a) shall
carry the same rights to interest (unpaid and to accrue) carried by the
Promissory Note so transferred or exchanged so that there will not be any loss
or gain of interest on the note surrendered. Such new Promissory Note shall be
subject to all of the provisions and entitled to all of the benefits of this
Agreement. Prior to due presentment for registration or transfer, the Borrower
may deem and treat the registered holder of any Promissory Note as the holder
thereof for purposes of payment and all other purposes. A notation shall be made
on each new Promissory Note of the amount of all payments of principal and
interest theretofore paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Lender as follows:
SECTION 3.1 POWER, AUTHORITY, CONSENTS.
The Borrower has the power to execute, deliver and perform this Loan
Agreement, the Promissory Note and the Pledge Agreement, all of which have been
duly authorized by all necessary and proper corporate or other action.
SECTION 3.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.
Each of the Loan Documents, including, without limitation, this Loan
Agreement, the Promissory Note and the Pledge Agreement, have been duly executed
and delivered by the Borrower; and each constitutes the valid and legally
binding obligation of the Borrower, enforceable in accordance with its terms.
SECTION 3.3 PROPERTIES, PRIORITY OF LIENS.
The liens which have been created and granted by the Pledge Agreement
constitute valid, first liens on the properties and assets covered by the Pledge
Agreement, subject to no prior or equal lien.
SECTION 3.4 NO DEFAULTS, COMPLIANCE WITH LAWS.
The Borrower is not in default in any material respect under any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound, or any other agreement
or other instrument by which any of the properties or assets owned by it is
materially affected.
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SECTION 3.5 PURCHASES OF COMMON STOCK.
Upon consummation of any purchase of Common Stock by the Borrower with
the proceeds of the Loan, the Borrower shall acquire valid, legal and marketable
title to all of the Common Stock so purchased, free and clear of any liens,
other than a pledge to the Lender of the Common Stock so purchased pursuant to
the Pledge Agreement. Neither the execution and delivery of the Loan Documents
nor the performance of any obligation thereunder violates any provision of law
or conflicts with or results in a breach of or creates (with or without the
giving of notice or lapse of time, or both) a default under any agreement to
which the Borrower is a party or by which it is bound or any of its properties
is affected. No consent of any federal, state or local governmental authority,
agency or other regulatory body, the absence of which could have a materially
adverse effect on the Borrower or the Trustee, is or was required to be obtained
in connection with the execution, delivery or performance of the Loan Documents
and the transactions contemplated therein or in connection therewith, including,
without limitation, with respect to the transfer of the shares of Common Stock
purchased with the proceeds of the Loan pursuant thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
The Lender hereby represents and warrants to the Borrower as follows:
SECTION 4.1 POWER, AUTHORITY, CONSENTS.
The Lender has the power to execute, deliver and perform this Loan
Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no notice by the Lender to, or filing by the Lender with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.
SECTION 4.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.
This Loan Agreement and the Pledge Agreement have been duly executed
and delivered by the Lender; and each constitutes a valid and legally binding
obligation of the Lender, enforceable in accordance with its terms.
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SECTION 4.3 ESOP; CONTRIBUTIONS.
The ESOP and the Borrower have been duly created, organized and
maintained by the Lender in compliance with all applicable laws, regulations and
rulings. The ESOP qualifies as an "employee stock ownership plan" as defined in
section 4975(e) (7) the Code. The ESOP provides that the Lender may make
contributions to the ESOP in an amount necessary to enable the Trustee to
amortize the Loan in accordance with the terms of the Promissory Note and this
Loan Agreement, and the Lender will make such contributions; provided, however,
that no such contributions shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.
SECTION 4.4 TRUSTEE; COMMITTEE.
The Lender has taken such action as is required to be taken by it to
duly appoint the Trustee and the members of the Committee. The Lender expressly
acknowledges and agrees that this Loan Agreement, the Promissory Note and the
Pledge Agreement are being executed by the Trustee not in its individual
capacity but solely as trustee of and on behalf of the Borrower.
SECTION 4.5 COMPLIANCE WITH LAWS; ACTIONS.
Neither the execution and delivery by the Lender of this Loan Agreement
or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the Lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree or any
court or governmental instrumentality, or an event of default under any
agreement, to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject, which violation or event of default would have a
material adverse effect on the Lender. There is no action or proceeding pending
or threatened against either of the ESOP or the Borrower before any court or
administrative agency.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1 EVENTS OF DEFAULT UNDER LOAN AGREEMENT.
Each of the following events shall constitute an "Event of Default"
hereunder:
(a) Failure to make any payment or mandatory prepayment of principal of
the Promissory Note when due, or failure to make any payment of interest on the
Promissory Note not later than five (5) Business Days after the date when due.
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(b) Failure by the Borrower to perform or observe any term, condition
or covenant of this Loan Agreement or of any of the other Loan Documents,
including, without limitation, the Promissory Note and the Pledge Agreement.
(c) Any representation or warranty made in writing to the Lender in any
of the Loan Documents or any certificate, statement or report made or delivered
in compliance with this Loan Agreement, shall have been false or misleading in
any material respect when made or delivered.
SECTION 5.2 LENDER'S RIGHTS UPON EVENT OF DEFAULT.
If an Event of Default under this Loan Agreement shall occur and be
continuing, the Lender shall have no rights to assets of the Borrower other
than: (a) contributions (other than contributions of Common Stock) that are made
by the Lender to enable the Borrower to meet its obligations pursuant to this
Loan Agreement and earnings attributable to the investment of such contributions
and (b) "Eligible Collateral" (as defined in the Pledge Agreement); provided,
however, that: (i) the value of the Borrower's assets transferred to the Lender
following an Event of Default in satisfaction of the due and unpaid amount of
the Loan shall not exceed the amount in default (without regard to amounts owing
solely as a result of any acceleration of the Loan); (ii) the Borrower's assets
shall be transferred to the Lender following an Event of Default only to the
extent of the failure of the Borrower to meet the payment schedule of the Loan;
and (iii) all rights of the Lender to the Common Stock purchased with the
proceeds of the Loan covered by the Pledge Agreement following an Event of
Default shall be governed by the terms of the Pledge Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 PAYMENTS DUE TO THE LENDER.
If any amount is payable by the Borrower to the Lender pursuant to any
indemnity obligation contained herein, then the Borrower shall pay, at the time
or times provided therefor, any such amount and shall indemnify the Lender
against and hold it harmless from any loss or damage resulting from or arising
out of the nonpayment or delay in payment of any such amount. If any amounts as
to which the Borrower has so indemnified the Lender hereunder shall be assessed
or levied against the Lender, the Lender may notify the Borrower and make
immediate payment thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive immediate
reimbursement therefor from the Borrower, together with interest on each such
amount as provided in section 2.2(c). Notwithstanding any other provision
contained in this Loan Agreement, the covenants and agreements of the Borrower
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contained in this section 6.1 shall survive: (a) payment of the Promissory Note
and (b) termination of this Loan Agreement.
SECTION 6.2 PAYMENTS.
All payments hereunder and under the Promissory Note shall be made
without set-off or counterclaim and in such amounts as may be necessary in order
that all such payments shall not be less than the amounts otherwise specified to
be paid under this Loan Agreement and the Promissory Note, subject to any
applicable tax withholding requirements. Upon payment in full of the Promissory
Note, the Lender shall ▇▇▇▇ such Promissory Note "Paid" and return it to the
Borrower.
SECTION 6.3 SURVIVAL.
All agreements, representations and warranties made herein shall
survive the delivery of this Loan Agreement and the Promissory Note.
SECTION 6.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT.
No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or
any of the other Loan Documents, nor consent to any departure from any of the
terms or conditions thereof, shall in any event be effective unless it shall be
in writing and signed by the party against whom enforcement thereof is sought.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.
SECTION 6.5 REMEDIES CUMULATIVE.
Each and every right granted to the Lender hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of the Lender or the holder of the Promissory Note to exercise, and
no delay in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof or the exercise of any other right. The due payment and
performance of the obligations under the Loan Documents shall be without regard
to any counterclaim, right of offset or any other claim whatsoever which the
Borrower may have against the Lender and without regard to any other obligation
of any nature whatsoever which the Lender may have to the Borrower, and no such
counterclaim or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of such
obligations.
16
-13-
SECTION 6.6 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS.
At any time and from time to time, upon the request of the Lender, the
Borrower shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as the Lender may reasonably request in order to fully
effect the terms of this Loan Agreement, the Promissory Note, the Pledge
Agreement, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loan.
SECTION 6.7 NOTICES.
Except as otherwise specifically provided for herein, all notices,
requests, reports and other communications pursuant to this Loan Agreement shall
be in writing, either by letter (delivered by hand or commercial messenger
service or sent by registered or certified mail, return receipt requested,
except for routine reports delivered in compliance with Article VI hereof which
may be sent by ordinary first-class mail) or telex or facsimile, addressed as
follows:
(a) If to the Borrower:
Employee Stock Ownership Plan Trust
of ▇▇▇▇▇▇ City Bancorp, Inc.
c/▇ ▇▇▇▇▇▇ City Savings Bank
West ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [____________]
with copies to:
[Trustee Information]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood
Two World Trade Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(b) If to the Lender:
▇▇▇▇▇▇ City Bancorp, Inc.
West ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [________________]
17
-14-
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
Two World Trade Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.
SECTION 6.8 COUNTERPARTS.
This Loan Agreement may be signed in any number of counterparts which,
when taken together, shall constitute one and the same document.
SECTION 6.9 CONSTRUCTION; GOVERNING LAW.
The headings used in the table of contents and in this Loan Agreement
are for convenience only and shall not be deemed to constitute a part hereof.
All uses herein of any gender or of singular or plural terms shall be deemed to
include uses of the other genders or plural or singular terms, as the context
may require. All references in this Loan Agreement to an Article or section
shall be to an Article or section of this Loan Agreement, unless otherwise
specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and
the other Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New Jersey.
SECTION 6.10 SEVERABILITY.
Wherever possible, each provision of this Loan Agreement shall be
interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Loan Agreement in any jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement is
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any
action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement.
18
-15-
SECTION 6.11 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION.
This Loan Agreement shall be binding upon and inure to the benefit of
the Borrower and its successors and the Lender and its successors and assigns.
The rights and obligations of the Borrower under this Agreement shall not be
assigned or delegated without the prior written consent of the Lender, and any
purported assignment or delegation without such consent shall be void.
19
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed as of the date first above written.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
OF ▇▇▇▇▇▇ CITY SAVINGS BANK
BY [______________], AS TRUSTEE
BY: ________________________________
TITLE: ________________________________
▇▇▇▇▇▇ CITY BANCORP, INC.
BY: ________________________________
TITLE: ________________________________
20
EXHIBIT A
TO LOAN AGREEMENT
BY AND BETWEEN
EMPLOYEE STOCK OWNERSHIP PLAN TRUST OF
▇▇▇▇▇▇ CITY SAVINGS BANK
AND
▇▇▇▇▇▇ CITY BANCORP, INC.
FORM OF PROMISSORY NOTE
$[ ] Paramus, New Jersey
PRINCIPAL AMOUNT [ _____], 1999
FOR VALUE RECEIVED, the undersigned, Employee Stock Ownership Plan
Trust of ▇▇▇▇▇▇ City Savings Bank ("Borrower"), acting by and through its
Trustee, [___________] ("Trustee"), hereby promises to pay to the order of
▇▇▇▇▇▇ City Bancorp, Inc. ("Lender") [________________ ($__________)] payable in
accordance with the Loan Agreement made and entered into between the Borrower
and the Lender as of [________], 1999 ("Loan Agreement") pursuant to which this
Promissory Note is issued, in one annual installment of [$________], payable on
[September 30], 1999 and twenty-nine annual installments of [_______________
($______________)] commencing on the last Business Day of [September, 2000] and
continuing on the last Business Day of September of each calendar year until the
last Business Day of 2028], and one annual installment payable on the last
business day of [June, 2029], at which time the entire Principal Amount then
outstanding and all accrued interest shall become due and payable; provided,
however, that the Borrower shall not be required to make any payment of
principal due to be made in any Fiscal Year (as defined in the Loan Agreement)
to the extent that such payment would not be deductible for federal income tax
purposes for such Fiscal Year under section 404 of the Internal Revenue Code.
Any payment not required to made pursuant to shall be deferred to and be payable
on the last day of the first Fiscal Year in which such payment may be made on a
tax deductible basis.
This Promissory Note shall bear interest at the rate per annum set
forth or established under the Loan Agreement, such interest to be payable
quarterly in arrears, commencing on [_________, 199_] and thereafter on the
last Business Day of each calendar quarter and upon payment or prepayment of
this Promissory Note.
Anything herein to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Lender to the
extent that the Lender's receipt thereof would not be permissible under the law
or laws applicable to the Lender limiting rates of interest which may be charged
or collected by the Lender. Any such payments of interest which are not made as
a result of the limitation referred to in the preceding sentence shall be made
by the Borrower to the Lender on the earliest interest payment date or dates on
which the receipt thereof would be permissible under the laws applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender. Such deferred interest shall not bear interest.
21
A-2
Payments of both principal and interest on this Promissory Note are to
be made at the principal office of the Lender at West ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other place as the holder hereof shall designate
to the Borrower in writing, in lawful money of the United States of America in
immediately available funds.
Failure to make any payment of principal on this Promissory Note when
due, or failure to make any payment of interest on this Promissory Note not
later than five (5) Business Days after the date when due, shall constitute a
default hereunder, whereupon the principal amount of and accrued interest on
this Promissory Note shall immediately become due and payable in accordance with
the terms of the Loan Agreement.
This Promissory Note is secured by a Pledge Agreement between the
Borrower and the Lender of even date herewith and is entitled to the benefits
thereof.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
OF ▇▇▇▇▇▇ CITY SAVINGS BANK
BY [______________], AS TRUSTEE
BY: ________________________________
TITLE: ________________________________
22
EXHIBIT B
TO LOAN AGREEMENT
BY AND BETWEEN
EMPLOYEE STOCK OWNERSHIP PLAN TRUST OF
▇▇▇▇▇▇ CITY SAVINGS BANK
AND
▇▇▇▇▇▇ CITY BANCORP, INC.
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Pledge Agreement") is made as of the [____] day
of [____], 1999, by and between the EMPLOYEE STOCK OWNERSHIP PLAN TRUST OF
▇▇▇▇▇▇ CITY SAVINGS BANK, acting by and through its Trustee, [______________], a
banking corporation organized under the laws of the State of [_________] and
having office at [___________________] ("Pledgor"), and ▇▇▇▇▇▇ City Bancorp,
Inc., corporation organized and existing under the laws of the State of
[Delaware], having an ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ("Pledgee").
W I T N E S S E T H :
WHEREAS, this Pledge Agreement is being executed and delivered to the
Pledgee pursuant to the terms of a Loan Agreement of even date herewith ("Loan
Agreement"), by and between the Pledgor and the Pledgee;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and in the Loan Agreement, the parties hereto do hereby covenant and
agree as follows:
SECTION 1. DEFINITIONS. The following definitions shall apply for
purposes of this Pledge Agreement, except to the extent that a different meaning
is plainly indicated by the context; all capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Loan
Agreement:
(a) Collateral shall mean the Pledged Shares and, subject to
section 5 hereof, and to the extent permitted by applicable law, all
rights with respect thereto, and all proceeds of such Pledged Shares
and rights.
(b) Event of Default shall mean an event so defined in the
Loan Agreement.
(c) Liabilities shall mean all the obligations of the Pledgor
to the Pledgee, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due
or to become due, under the Loan Agreement and the Promissory Note.
23
B-2
(d) Pledged Shares shall mean all the shares of Common Stock
of ▇▇▇▇▇▇ City Bancorp, Inc. purchased by the Pledgor with the proceeds
of the loan made by the Pledgee to the Pledgor pursuant to the Loan
Agreement, but excluding any such shares previously released pursuant
to section 4.
SECTION 2. PLEDGE. To secure the payment of and performance of all the
Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to the
Pledgee a security interest in and lien upon, the Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor
represents, warrants, and covenants to the Pledgee as follows:
(a) the execution, delivery and performance of this Pledge
Agreement and the pledging of the Collateral hereunder do not and will
not conflict with, result in a violation of, or constitute a default
under any agreement binding upon the Pledgor;
(b) the Pledged Shares are and will continue to be owned by
the Pledgor free and clear of any liens or rights of any other person
except the lien hereunder and under the Loan Agreement in favor of the
Pledgee, and the security interest of the Pledgee in the Pledged Shares
and the proceeds thereof is and will continue to be prior to and senior
to the rights of all others;
(c) this Pledge Agreement is the legal, valid, binding and
enforceable obligation of the Pledgor in accordance with its terms;
(d) the Pledgor shall, from time to time, upon request of the
Pledgee, promptly deliver to the Pledgee such stock powers, proxies,
and similar documents, satisfactory in form and substance to the
Pledgee, with respect to the Collateral as the Pledgee may reasonably
request; and
(e) subject to the first sentence of section 4(b), the Pledgor
shall not, so long as any Liabilities are outstanding, sell, assign,
exchange, pledge or otherwise transfer or encumber any of its rights in
and to any of the Collateral.
SECTION 4. ELIGIBLE COLLATERAL.
(a) As used herein the term "Eligible Collateral" shall mean that
amount of Collateral which has an aggregate fair market value equal to the
amount by which the Pledgor is in default (without regard to any amounts owing
solely as the result of an acceleration of the Loan Agreement) or such lesser
amount of Collateral as may be required pursuant to section 13 of this Pledge
Agreement.
(b) The Pledged Shares shall be released from this Pledge Agreement in
a manner conforming to the requirements of Treasury Regulations Section
54.4975-7(b)(8), as the same may be from time to time amended or supplemented,
and section 6.4(a) of the ESOP.
24
B-3
Subject to such Regulations, the Pledgee may from time to time, after any
Default or Event of Default, and without prior notice to the Pledgor, transfer
all or any part of the Eligible Collateral into the name of the Pledgee or its
nominee, with or without disclosing that such Eligible Collateral is subject to
any rights of the Pledgor and may from time to time, whether before or after any
of the Liabilities shall become due and payable, without notice to the Pledgor,
take all or any of the following actions: (i) notify the parties obligated on
any of the Eligible Collateral to make payment to the Pledgee of any amounts due
or to become due thereunder, (ii) release or exchange all or any part of the
Eligible Collateral, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature of any party
with respect thereto, and (iii) take control of any proceeds of the Eligible
Collateral.
SECTION 5. DELIVERY.
(a) The Pledgor shall deliver to the Pledgee upon execution of this
Pledge Agreement (i) an assignment by the Pledgor of all the Pledgor's rights to
and interest in the Pledged Shares and (ii) an irrevocable proxy, in form and
substance satisfactory to the Pledgee, signed by the Pledgor with respect to the
Pledged Shares.
(b) So long as no Default or Event of Default shall have occurred and
be continuing, (i) the Pledgor shall be entitled to exercise any and all voting
and other rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Pledge Agreement, and (ii) the
Pledgor shall be entitled to receive any and all cash dividends or other
distributions paid in respect of the Collateral.
SECTION 6. EVENTS OF DEFAULT.
(a) If a Default or an Event of Default shall be existing, in addition
to the rights it may have under the Loan Agreement, the Promissory Note, and
this Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may
exercise, with respect to the Eligible Collateral, from time to time any rights
and remedies available to it under the Uniform Commercial Code as in effect from
time to time in the State of New Jersey or otherwise available to it and (ii)
the Pledgee shall have the right, for and in the name, place and stead of the
Pledgor, to execute endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral. Written notification of intended disposition of any of the Eligible
Collateral shall be given by the Pledgee to the Pledgor at least three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any disposition of Eligible Collateral may be applied by the Pledgee to the
payment of expenses in connection with the Eligible Collateral, including,
without limitation, reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by the Pledgee toward the payment of
such of the Liabilities as are in Default, and in such order of application, as
the Pledgee may from time to time elect. No action of the Pledgee permitted
hereunder shall impair or affect its rights in and to the Eligible Collateral.
All rights and remedies of the Pledgee expressed hereunder are in addition to
all other rights and remedies possessed by it, including, without limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.
25
B-4
(b) In any sale of any of the Eligible Collateral after a Default or an
Event of Default shall have occurred, the Pledgee is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers or further restrict
such 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 the distribution or resale of such Eligible Collateral), or in order to
obtain such required approval of the sale or of the purchase by any governmental
regulatory authority or official, and the Pledgor further agrees that such
compliance shall not result in such sale's being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Pledgee be
liable or accountable to the Pledgor for any discount allowed by reason of the
fact that such Eligible Collateral is sold in compliance with any such
limitation or restriction.
SECTION 7. PAYMENT IN FULL. Upon the payment in full of all outstanding
Liabilities, this Pledge Agreement shall terminate and the Pledgee shall
forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to this Pledge Agreement.
SECTION 8. NO WAIVER. No failure or delay on the part of the Pledgee in
exercising any right or remedy hereunder or under any other document which
confers or grants any rights in the Pledgee in respect of the Liabilities shall
operate as a waiver thereof nor shall any single or partial exercise of any such
right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy of the Pledgee.
SECTION 9. BINDING EFFECT; NO ASSIGNMENT OR DELEGATION. This Pledge
Agreement shall be binding upon and inure to the benefit of the Pledgor, the
Pledgee and their respective successors and assigns, except that the Pledgor
may not assign or transfer its rights hereunder without the prior written
consent of the Pledgee (which consent shall not unreasonably be withheld). Each
duty or obligation of the Pledgor to the Pledgee pursuant to the provisions of
this Pledge Agreement shall be performed in favor of any person or entity
designated by the Pledgee, and any duty or obligation of the Pledgee to the
Pledgor may be performed by any other person or entity designated by the
Pledgee.
SECTION 10. GOVERNING LAW. This Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of New Jersey applicable
to agreements to be performed wholly within the State of New Jersey.
SECTION 11. NOTICES. All notices, requests, instructions or documents
hereunder shall be in writing and delivered personally or sent by United States
mail, registered or certified, return receipt requested, with proper postage
prepaid, as follows:
26
B-5
(a) If to the Pledgee:
▇▇▇▇▇▇ City Bancorp, Inc.
West ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [___________]
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood
Two World Trade Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(b) If to the Pledgor:
Employee Stock Ownership Plan Trust
of ▇▇▇▇▇▇ City Savings Bank
c/▇ ▇▇▇▇▇▇ City Savings Bank
West ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [________________]
with copies to:
[Trustee Information]
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood
Two World Trade Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or at such other address as either of the parties may designate by written
notice to the other party. If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made, and, if delivered by mail, the date on which such notice,
request, instruction or document is deposited in the mail shall be the date of
delivery. Each notice, request, instruction or document shall bear the date on
which it is delivered.
SECTION 12. INTERPRETATION. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision hereof shall be prohibited by
or invalid under such law, such provisions shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions hereof.
27
B-6
SECTION 13. CONSTRUCTION. All provisions hereof shall be construed so
as to maintain (a) the ESOP as a qualified leveraged employee stock ownership
plan under section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986
(the "Code"), (b) the Trust as exempt from taxation under section 501(a) of the
Code and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the
Treasury Regulations and as described in Department of Labor Regulation section
2550.408b-3.
IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the
parties hereto as of the day and year first above written.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
OF ▇▇▇▇▇▇ CITY SAVINGS BANK
BY [______________], AS TRUSTEE
AND NOT IN ANY OTHER CAPACITY
BY: ________________________________
TITLE: ________________________________
▇▇▇▇▇▇ CITY BANCORP, INC.
BY: ________________________________
TITLE: ________________________________
28
EXHIBIT C
TO LOAN AGREEMENT
BY AND BETWEEN
EMPLOYEE STOCK OWNERSHIP PLAN TRUST OF
▇▇▇▇▇▇ CITY SAVINGS BANK
AND
▇▇▇▇▇▇ CITY BANCORP, INC.
FORM OF ASSIGNMENT
In consideration of the loan made by ▇▇▇▇▇▇ City Bancorp, Inc.
("Lender") to the Employee Stock Ownership Plan Trust of ▇▇▇▇▇▇ City Savings
Bank ("Borrower") pursuant to the Loan Agreement of even date herewith between
the Lender and the Borrower ("Loan Agreement") and pursuant to the Pledge
Agreement between the Lender and the Borrower of even date herewith pertaining
thereto, the undersigned Borrower hereby transfers, assigns and conveys to
Lender all its right, title and interest in and to those certain shares of
common stock of the Lender which it shall purchase with the proceeds of the loan
made pursuant to the Loan Agreement, and agrees to transfer and endorse to
Lender the certificates representing such shares as and when required pursuant
to the Loan Agreement or Pledge Agreement.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
OF ▇▇▇▇▇▇ CITY SAVINGS BANK
BY [______________], AS TRUSTEE
AND NOT IN ANY OTHER CAPACITY
BY: ________________________________
TITLE: ________________________________
[________, 199_]