EXHIBIT 10.2.1
XXXXXXXXXX WEST FINANCIAL GROUP, INC.
FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
To Each of the Lenders Signatory Hereto
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of October 30, 1997 (the Amended and Restated Credit
Agreement, as the same has been amended prior to the date hereof, being referred
to herein as the "Credit Agreement"), among the undersigned, Xxxxxxxxxx West
Financial Group, Inc., a Delaware corporation, the Lenders party thereto, and
Xxxxxx Trust and Savings Bank, as Agent for the Lenders. All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement.
The Company, the Lenders and the Agent wish to amend the Credit Agreement
to (a) increase the aggregate amount of the Commitments to $25,000,000, (b)
remove 1(st) Financial Bank as a Lender thereunder, (c) amend certain financial
covenants, and (d) amend certain other provisions of the Credit Agreement, all
on the terms and conditions set forth below in this amendment (herein, the
"Amendment").
1. REMOVAL OF LENDER.
Upon satisfaction of the conditions precedent set forth in Section 3
below, 1(st) Financial Bank (herein, the "Departing Lender") shall cease to be a
Lender under the Credit Agreement and shall have no rights or obligations
(including any commitment to make Loans under the Revolving Credit) thereunder.
The parties hereto consent to such termination of the Departing Lender's
Percentage of the Revolving Credit and agree that all references in the Loan
Documents to the Lenders (or the Banks) or any Lender (or any Bank) shall no
longer include the Departing Lender.
2. AMENDMENTS.
Upon satisfaction of the conditions precedent set forth in Section 3
below, the Credit Agreement shall be and hereby is amended as follows:
2.1. The amount of each Lender's Revolving Credit Commitment set forth in
the Credit Agreement shall be amended to be, for each period from the effective
date of this Amendment through the Revolving Credit Termination Date, the amount
set forth for such period on Exhibit D attached hereto. The Credit Agreement is
further amended by amending and restating Exhibit D to read as set forth on the
replacement Exhibit D attached hereto and made a part thereof.
2.2. The third sentence of Section 1.2 of the Credit Agreement (Revolving
Credit Loans) is hereby amended to read in its entirety as follows:
Each Borrowing of Revolving Credit Loans shall be in an amount
of $250,000 or such greater amount which is an integral multiple
of $50,000.
2.3. Section 2.2 of the Credit Agreement (Minimum LIBOR Portions) is
hereby amended and restated in its entirety to read as follows:
Section 2.2. Minimum LIBOR Portions. Each LIBOR
Portion shall be in an amount equal to $250,000 or such greater
amount which is an integral multiple of $50,000.
2.4. Section 3.1(a) of the Credit Agreement (Voluntary Prepayments) is
hereby amended and restated in its entirety to read as follows:
(a) Voluntary. The Company shall have the privilege
of prepaying the Revolving Credit Loans in whole or in part (but if
in part, then (i) in an amount not less than $250,000 and (ii) in an
amount such that the minimum amount required for a Borrowing
of Revolving Credit Loans or for a LIBOR Portion of the relevant
Loans pursuant to Sections 1.2 and 2.2 hereof remains outstanding)
at any time upon 1 Business Day prior notice to the Agent (such
notice if received subsequent to 11:00 a.m. (Chicago time) on a
given day to be treated as though received at the opening of
business on the next Business Day), which shall promptly so notify
the Lenders, by paying to the Agent for the account of the Lenders
the principal amount to be prepaid and (i) if such a prepayment
prepays the Revolving Credit Notes in full and is accompanied by
the termination in whole of the Revolving Credit Commitments,
accrued interest thereon to the date of prepayment, and (ii) any
amounts due to the Lenders under Section 2.8 hereof.
2.5. Section 3.5 of the Credit Agreement (Extension of Revolving Credit
Termination Date) is hereby amended and restated in its entirety to read as
follows:
Section 3.5. Intentionally Deleted.
2.6. The definitions of "Level 1 Period," "Level 2 Period," and
"Revolving Credit Termination Date" appearing in Section 5.1 of the Credit
Agreement (Definitions) are hereby amended and restated in their entirety to
read as follows:
"Level 1 Period" is a period commencing on one Pricing
Date and ending on the succeeding Pricing Date with respect to
which the Company's most recent financial statements show both
(i) Core Profitability greater than $1,750,000 for the most recent
fiscal quarter, and (ii) a consolidated Non-Performing Assets Ratio
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(as determined pursuant to Section 8.7(a) hereof) of less than 0.07
to 1.0 as of the end of such fiscal quarter.
"Level 2 Period" is a period commencing on one Pricing
Date and ending on the succeeding Pricing Date which does not
qualify as a Level 1 Period and with respect to which the
Company's most recent financial statements show both (i) Core
Profitability greater than $1,000,000 for the most recent fiscal
quarter, and (ii) a consolidated Non-Performing Assets Ratio (as
determined pursuant to Section 8.7(a) hereof) of less than 0.14 to
1.0 as of the end of such fiscal quarter.
"Revolving Credit Termination Date" means September 30, 2007,
or such earlier date on which the Revolving Credit Commitments are
terminated in whole pursuant to Section 3.2 , 9.2, or 9.3 hereof.
2.7. The definition of "Stock Ownership Event" appearing in Section 5.1
of the Credit Agreement (Definitions) is hereby deleted, and a definition of
"Change of Control" is hereby added to Section 5.1 of the Credit Agreement in
appropriate alphabetical order which shall read as follows:
"Change of Control" means any of (a) after completion of
initial public offering scheduled to occur prior to December 31,
2002, the acquisition by any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) at any time of beneficial ownership of 50% or more
of the outstanding capital stock or other equity interests of the
Company on a fully-diluted basis and (b) the failure of individuals
who are members of the board of directors (or similar governing
body) of the Company on September 1, 2002 (together with any new or
replacement directors whose initial nomination for election was
approved by a majority of the directors who were either directors on
September 1, 2002, or previously so approved) to constitute a
majority of the board of directors (or similar governing body) of
the Company.
2.8. Section 6.8 of the Credit Agreement (Good Title) is hereby amended
and restated in its entirety to read as follows:
Section 6.8. Good Title. The Company and its Subsidiaries
each have good and defensible title to all material portions of
their assets as reflected on the most recent consolidated balance
sheet of the Company and its Subsidiaries furnished to the Lenders
and, in the case of assets consisting of stock or other
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equity interests in Subsidiaries, subject to no Liens other than
Liens granted in favor of the Agent under the Loan Documents.
2.9. Section 8.5(g) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(g) prompt written notice of a Change of Management
Event or Change of Control; and
2.10. Section 8.7 of the Credit Agreement (Non-Performing Assets) is
hereby amended and restated in its entirety to read as follows:
Section 8.7. Non-Performing Assets (a) Consolidated.
The Company shall, as of the last day of each fiscal quarter,
maintain on a consolidated basis with its Banking Subsidiaries, a
ratio (a) of Non-Performing Assets of the Company on such
consolidated basis, to (b) the sum of (i) stockholders' equity for
the Company, plus (ii) loan loss reserves established by the Company
on a consolidated basis in accordance with GAAP or, if applicable,
regulatory accounting principles of not more than .30 to 1.0.
(b) Banking Subsidiaries. The Company shall, as of the
last day of each fiscal quarter, cause each Banking Subsidiary to
maintain a ratio (a) of Non-Performing Assets of such Banking
Subsidiary, to (b) the sum of (i) regulatory "core" capital (Tier I)
of such Banking Subsidiary, plus (ii) loan loss reserves established
by such Banking Subsidiary in accordance with regulatory
accounting principles of not more than .20 to 1.0.
2.11. Section 8.10 of the Credit Agreement (Mortgage Derivatives) is
hereby amended and restated in its entirety to read as follows:
Section 8.10. Mortgage Derivative. The Company shall,
as of the last day of each month, cause Mortgage Derivatives held
by its Banking Subsidiaries to be in an amount not in excess of
$20,000,000.
2.12. Section 8.15 of the Credit Agreement (Dividends and Certain Other
Restricted Payment) is hereby amended and restated in its entirety to read as
follows:
Section 8.15. Dividends and Certain Other Restricted
Payments. The Company shall not declare or pay any dividend on or
make any other distributions in respect of any class or series of
its capital stock (other than dividends payable solely in its
capital stock) or directly or indirectly purchase, redeem or
otherwise acquire or retire any of its capital stock; provided,
however, that
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the Company may pay dividends in an aggregate amount not to
exceed the greater of (a) $300,000 during any fiscal quarter of the
Company, or (b) 25% of consolidated net income of the Company
for the most recently completed fiscal quarter, so long as at the
time of, and after giving effect to, such dividend no Default or
Event of Default exists.
2.13. Section 8.20 of the Credit Agreement (Minimum Core Profitability)
is hereby amended and restated in its entirety to read as follows:
Section 8.20. Minimum Core Profitability. As of the last
day of each fiscal quarter, the Core Profitability for the four
fiscal quarters then ended shall not be less than (a) $5,000,000 as
of the end of each fiscal quarter ending on or before September 30,
2004, (b) $5,500,000 as of the end of each fiscal quarter ending
thereafter.
2.14. Section 9.1(k) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(k) a Change of Management Event or Change of Control
shall occur; or
2.15. The contact information for Xxxxxx Trust and Savings Bank set forth
on its signature page of the Credit Agreement is hereby amended to read in its
entirety as follows:
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
2.16. Schedule 6.2 (Subsidiaries) and Schedule 6.12 (Affiliate
Transactions) to the Credit Agreement are each hereby amended and restated in
their entirety to read as set forth on Schedule 6.2 and 6.12 attached hereto and
made a part hereof.
3. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
3.1. The Company, the Agent and the Lenders, including without limitation
the Departing Lender, shall have executed and delivered this Amendment, and the
Company shall have executed and delivered replacement Notes to the Lenders in
the forms attached hereto as Exhibits A-1 and A-2.
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3.2. The principal amount of all Loans, all accrued interest and all
other amounts accrued and unpaid to the Departing Lender shall be paid in full.
3.3. The Company shall have paid to the Agent for the benefit of the
Lenders (other than the Departing Lender) in accordance with their Percentages
an amendment fee of 0.50% times the Commitment of each Lender on the effective
date of this Amendment, which fee shall be non-refundable and fully earned on
the date hereof.
3.4. The Agent shall have received: (a) copies of resolutions of the
Company authorizing the execution, delivery, and performance of this Amendment
and the consummation of the transactions contemplated thereby, together with
specimen signatures of the persons authorized to execute such documents on such
Person's behalf, certified to by its Secretary or Assistant Secretary, and (b)
original certificates of good standing (or its equivalent from the relevant
jurisdiction) for the Company (dated no earlier than 30 days prior to the date
hereof) from the office of the secretary of the state of incorporation;
3.5. Legal matters incident to the execution and delivery of this
Amendment and the replacement Notes referred to above shall be satisfactory to
the Agent and its counsel; and the Agent shall have received the favorable
written opinion of counsel for the Company in form and substance satisfactory to
the Agent and its counsel.
3.6. The Company shall have paid to the Agent the legal fees called for
by Section 6.3 below.
4. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment, the
Company hereby represents to the Agent and the Lenders that, as of the date
hereof, the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders and the
representations contained in Section 6.6 shall be deemed to refer to December
31, 2001) and the Company is in full compliance with all of the terms and
conditions of the Credit Agreement and no Default or Event of Default has
occurred and is continuing under the Credit Agreement or shall result after
giving effect to this Amendment.
5. EQUALIZATION OF OUTSTANDING LOANS.
Upon the satisfaction of the conditions precedent set forth in Section 3
above, the Lenders shall make such purchases and sales of interests in the
outstanding Loans between themselves so that from and after the date of this
Amendment each Lender's Percentage of outstanding Loans shall be in proportion
to its Commitment after giving effect hereto and, in connection therewith, the
Company agrees to prepay all outstanding LIBOR Portions of the Loans and shall
pay to the Lenders all amounts due under Section 2.8 of the Credit Agreement
with respect thereto (it being understood that the Company may, subject to the
terms and conditions of the Credit Agreement, request a new borrowing of Loans
concurrently with such
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prepayment). Such purchases and sales shall be arranged through the Agent and
each Lender hereby agrees to execute such further instruments and documents, if
any, as the Agent may reasonably request in connection therewith.
6. MISCELLANEOUS.
6.1 Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
6.2 The Company heretofore executed and delivered, among other things,
the Pledge and Security Agreement and hereby acknowledges and agrees that the
security interests and liens created and provided for therein continue to secure
the payment and performance of the Obligations of the Company owing to the
Lenders, including, without limitation, all indebtedness of the Company
evidenced by the Notes, both for principal and interest, which are entitled to
all of the benefits and privileges set forth therein.
6.3. The Company agrees to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment and the other instruments and documents to be
executed and delivered in connection herewith, including the fees and expenses
of counsel for the Agent of $3,000.
6.4. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
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This Fourth Amendment to Amended and Restated Credit Agreement is dated
as of September 17, 2002.
XXXXXXXXXX WEST FINANCIAL GROUP, INC.
By /s/ XXXXX X. XXXXX
------------------------------------
Name Xxxxx X. Xxxxx
-------------------------------
Title Chairman and CEO
------------------------------
Accepted and agreed to as of the date and year last above written.
XXXXXX TRUST AND SAVINGS BANK,
individually and as Agent
By /s/ XXXXXXX X. XXXXXXXX
------------------------------------
Name Xxxxxxx X. Xxxxxxxx
-------------------------------
Title Managing Director
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U.S. BANK, NATIONAL ASSOCIATION
By /s/ XXXXXX XxXXXXXXX
------------------------------------
Name Xxxxxx XxXxxxxxx
-------------------------------
Title Vice President
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1(ST) FINANCIAL BANK, solely with respect
to the provisions of Section 1
regarding its status as a Departing
Lender
By /s/ XXX XXXXXX
------------------------------------
Name Xxx Xxxxxx
-------------------------------
Title EIC
------------------------------
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XXXXXXX X-0
XXXXXXXXXX XXXX FINANCIAL GROUP, INC.
REVOLVING CREDIT NOTE
$14,000,000.00 September 17, 2002
On the Revolving Credit Termination Date, for value received, the
undersigned, XXXXXXXXXX WEST FINANCIAL GROUP, INC., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Xxxxxx Trust and Savings Bank
(the "Lender"), at the principal office of Xxxxxx Trust and Savings Bank in
Chicago, Illinois, the principal sum of (i) Fourteen Million and no/100 Dollars
($14,000,000.00), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all Revolving Credit Loans owing from the Company to the Lender under
the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Amended and
Restated Credit Agreement dated as of October 30, 1997, as amended, between the
Company, Xxxxxx Trust and Savings Bank, individually and as Agent thereunder,
and the other Lenders which are now or may from time to time hereafter become
parties thereto (said Credit Agreement, as heretofore amended and as the same
may be amended, modified or restated from time to time, being referred to herein
as the "Credit Agreement") made and to be made to the Company by the Lender
under the Revolving Credit provided for under the Credit Agreement, and the
Company hereby promises to pay interest at the office described above on each
loan evidenced hereby at the rates and at the times and in the manner specified
therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made
hereon, and certain prepayments are required to be made hereon, all in the
events, on the terms and with the effects provided in the Credit Agreement. All
capitalized terms used herein without definition shall have the same meanings
herein as such terms are defined in the Credit Agreement.
This Note is issued in substitution and replacement for, and evidences in
part the indebtedness currently evidenced by, the Revolving Credit Note of the
Company heretofore issued to the Bank.
The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
XXXXXXXXXX WEST FINANCIAL GROUP, INC.
By
------------------------------------
Name
-------------------------------
Title
------------------------------
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XXXXXXX X-0
XXXXXXXXXX XXXX FINANCIAL GROUP, INC.
REVOLVING CREDIT NOTE
$11,000,000.00 September 17, 2002
On the Revolving Credit Termination Date, for value received, the
undersigned, XXXXXXXXXX WEST FINANCIAL GROUP, INC., a Delaware corporation (the
"Company"), hereby promises to pay to the order of U.S. Bank, National
Association (the "Lender"), at the principal office of Xxxxxx Trust and Savings
Bank in Chicago, Illinois, the principal sum of (i) Eleven Million and no/100
Dollars ($11,000,000.00), or (ii) such lesser amount as may at the time of the
maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid
principal amount of all Revolving Credit Loans owing from the Company to the
Lender under the Revolving Credit provided for in the Credit Agreement
hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Amended and
Restated Credit Agreement dated as of October 30, 1997, as amended, between the
Company, Xxxxxx Trust and Savings Bank, individually and as Agent thereunder,
and the other Lenders which are now or may from time to time hereafter become
parties thereto (said Credit Agreement, as heretofore amended and as the same
may be amended, modified or restated from time to time, being referred to herein
as the "Credit Agreement") made and to be made to the Company by the Lender
under the Revolving Credit provided for under the Credit Agreement, and the
Company hereby promises to pay interest at the office described above on each
loan evidenced hereby at the rates and at the times and in the manner specified
therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made
hereon, and certain prepayments are required to be made hereon, all in the
events, on the terms and with the effects provided in the Credit Agreement. All
capitalized terms used herein without definition shall have the same meanings
herein as such terms are defined in the Credit Agreement.
This Note is issued in substitution and replacement for, and evidences in
part the indebtedness currently evidenced by, the Revolving Credit Note of the
Company heretofore issued to the Bank.
The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
XXXXXXXXXX WEST FINANCIAL GROUP, INC.
By
------------------------------------
Name
-------------------------------
Title
------------------------------
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EXHIBIT D
COMMITMENTS
REVOLVING CREDIT REVOLVING CREDIT REVOLVING CREDIT
COMMITMENT FROM COMMITMENT FROM COMMITMENT FROM
AND INCLUDING 09/17/02 AND INCLUDING AND INCLUDING
THROUGH AND 09/17/05 THROUGH AND 09/17/06 AND AT ALL
NAME OF LENDER INCLUDING 09/17/05 INCLUDING 09/17/06 TIMES THEREAFTER
Xxxxxx Trust and Savings
Bank $14,000,000 $12,250,000 $10,500,000
U.S. Bank, National
Association $11,000,000 $ 9,625,000 $ 8,250,000
----------- ----------- -----------
TOTAL $25,000,000 $21,875,000 $18,750,000
=========== =========== ===========
SCHEDULE 6.2
SUBSIDIARIES
JURISDICTION
NAME OF INCORPORATION PERCENTAGE OWNERSHIP
---- ---------------- --------------------
Los Padres Bank, FSB United States Company - 100%
Valley Oaks Financial Corp. California Los Padres Bank - 100%
Xxxxxxxxxx Wealth Management Company Indiana Los Padres Bank - 100%
Los Padres Mortgage Company, LLC California Los Padres Bank - 51%
SCHEDULE 6.12
AFFILIATE CONTRACTS
Under applicable federal law, the Bank can make loans or extensions of
credit to our and its executive officers and directors only if there are loans
and extensions of credit made on substantially the same terms, including
interest rates and collateral, as the Bank then makes available for comparable
transactions with the general public, unless the loans are made pursuant to a
benefit or compensation program that (i) we make widely available to our
employees and (ii) does not give preference over other employees to any
director, executive officer or principal stockholder or certain affiliates.
Also, if the Bank makes a loan or extends credit to any of our or its executive
officers or directors, the transaction must not involve more than the normal
risk of repayment or present other unfavorable features. In early 2002, we
adopted a mortgage loan program for the benefit of all of our employees. Under
this program, we offer our employees mortgage loans on our customary terms,
provided that during the period they are employed by the Bank the interest rate
on the mortgage loan will be equal to the cost-of-funds index plus one percent.
This results in below market interest rates for our employees. The only
executive officers who have participated in this program are Xxxxx X. Xxxxx, who
had a $349,000 loan outstanding at June 30, 2002, and Xxxx X. Xxxxxxxx, who had
a $180,000 loan outstanding at June 30, 2002. In addition, Xxxxxxx X. Xxxxxxxx,
Xx. had an outstanding loan balance of $218,000 as of such date pursuant to a
program which was offered by the Bank in the late 1980's which offered employees
a below market rate.
As of June 30, 2002, mortgage and consumer loans to directors and
officers in excess of $60,000 aggregated $2.9 million or 9. 1% of our
consolidated stockholders' equity as of such date, including the loans to Xx.
Xxxxx and Xx. Xxxxxxxx described above. All such loans were made by the Bank in
accordance with the policy and program described in the preceding paragraphs.
