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EXHIBIT 10.12
EXECUTION COPY
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CREDIT AGREEMENT
DATED AS OF NOVEMBER 19, 2003
BETWEEN
BLUE RIVER BANCSHARES, INC.,
AS THE BORROWER,
AND
UNION FEDERAL BANK OF INDIANAPOLIS,
AS THE LENDER
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TABLE OF CONTENTS
1. Article 1 DEFINITIONS 99
SECTION 1.01. Accounting Terms; Definitions........................................................ 99
SECTION 1.02. Other Interpretive Provisions........................................................ 108
SECTION 1.03. Accounting Principles................................................................ 109
1. Article 2 TERM LOAN 109
SECTION 2.01. Term Loan............................................................................ 109
SECTION 2.02. Use of Proceeds...................................................................... 110
1. Article 3 ADMINISTRATION OF CREDIT 110
SECTION 3.01. Interest on Term Loans............................................................... 110
SECTION 3.02. Increased Costs...................................................................... 110
SECTION 3.03. Capital Adequacy..................................................................... 111
SECTION 3.04. Prepayment........................................................................... 111
SECTION 3.05. Survival of Provisions............................................................... 111
SECTION 3.06. Computations of Interest............................................................. 111
SECTION 3.07. Payments; Term Loan Accounts......................................................... 112
SECTION 3.08. Interest Following Event of Default.................................................. 112
SECTION 3.09. Deposits; Set Off.................................................................... 112
1. Article 4 CONDITIONS OF BORROWING 112
SECTION 4.01. Corporate Documents.................................................................. 112
SECTION 4.02. Representations...................................................................... 113
SECTION 4.03. Collateral Pledge Agreement.......................................................... 113
SECTION 4.04. Filings.............................................................................. 113
SECTION 4.05. Insurance Certificate................................................................ 113
SECTION 4.06. Form U-1............................................................................. 114
SECTION 4.07. Counsel Opinion...................................................................... 114
SECTION 4.08. Proceedings Satisfactory............................................................. 114
SECTION 4.09. Cash Collateral Account.............................................................. 114
SECTION 4.10. Equity Offering...................................................................... 114
SECTION 4.11. Portfolio Review..................................................................... 114
1. Article 5 REPRESENTATIONS AND WARRANTIES 114
SECTION 5.01. Organization......................................................................... 115
SECTION 5.02. Authority............................................................................ 115
SECTION 5.03. ICA and PUHCA........................................................................ 115
SECTION 5.04. Employee Retirement Income Security Act.............................................. 116
SECTION 5.05. Financial Statements................................................................. 116
SECTION 5.06. Dividends and Redemptions............................................................ 116
SECTION 5.07. Liens................................................................................ 116
SECTION 5.08. Contingent Liabilities............................................................... 116
SECTION 5.09. Taxes................................................................................ 117
SECTION 5.10. Absence of Litigation................................................................ 117
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SECTION 5.11. Absence of Default................................................................... 117
SECTION 5.12. No Burdensome Agreements............................................................. 117
SECTION 5.13. Trademarks, etc...................................................................... 118
SECTION 5.14. Partnerships; Joint Ventures......................................................... 118
SECTION 5.15. Full Disclosure...................................................................... 118
SECTION 5.16. Fiscal Year.......................................................................... 118
SECTION 5.17. Environmental Matters................................................................ 118
SECTION 5.18. Regulation U......................................................................... 119
SECTION 5.19. Solvency and Capital Requirements.................................................... 119
1. Article 6 NEGATIVE COVENANTS 119
SECTION 6.01. Restriction of Indebtedness.......................................................... 119
SECTION 6.02. Amendments and Prepayments........................................................... 120
SECTION 6.03. Restriction on Liens................................................................. 120
SECTION 6.04. Sale and Leaseback................................................................... 120
SECTION 6.05. Dividends and Redemptions............................................................ 120
SECTION 6.06. Restrictions on Subsidiaries......................................................... 121
SECTION 6.07. Acquisitions and Investments......................................................... 121
SECTION 6.08. Sale of Assets....................................................................... 122
SECTION 6.09. Mergers and Dissolutions; Sale of Capital Stock...................................... 123
SECTION 6.10. Accounts Receivable.................................................................. 123
SECTION 6.11. Contingent Obligations............................................................... 123
SECTION 6.12. Affiliates........................................................................... 123
SECTION 6.13. Partnerships; Joint Ventures......................................................... 123
SECTION 6.14. Fiscal Year.......................................................................... 123
SECTION 6.15. Derivatives.......................................................................... 123
1. Article 7 AFFIRMATIVE COVENANTS 123
SECTION 7.01. Financial Status..................................................................... 124
SECTION 7.02. Insurance............................................................................ 124
SECTION 7.03. Corporate Existence; Obligations..................................................... 124
SECTION 7.04. Business Activities.................................................................. 125
SECTION 7.05. Properties........................................................................... 125
SECTION 7.06. Accounting Records; Reports.......................................................... 125
SECTION 7.07. Inspection of Records................................................................ 127
SECTION 7.08. Qualified Thrift Lender Status....................................................... 127
SECTION 7.09. Collateral Account................................................................... 127
SECTION 7.10. Management........................................................................... 128
1. Article 8 DEFAULTS 128
SECTION 8.01. Defaults............................................................................. 128
SECTION 8.02. Termination of Commitments and Acceleration of Obligations........................... 131
SECTION 8.03. Amendments, Etc...................................................................... 131
1. Article 9 MISCELLANEOUS 131
SECTION 9.01. Expenses; Indemnity.................................................................. 131
SECTION 9.02. Successors........................................................................... 133
SECTION 9.03. Survival............................................................................. 133
SECTION 9.04. Governing Law........................................................................ 133
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SECTION 9.05. Counterparts......................................................................... 133
SECTION 9.06. Notices.............................................................................. 133
SECTION 9.07. Participations....................................................................... 134
SECTION 9.08. Confidentiality...................................................................... 134
SECTION 9.09. Entire Agreement; No Agency.......................................................... 134
SECTION 9.10. No Third Party Benefit............................................................... 135
SECTION 9.11. Consent to Jurisdiction.............................................................. 135
SECTION 9.12. Waiver of Jury Trial................................................................. 135
LIST OF EXHIBITS, SCHEDULES AND APPENDICES
Exhibit 2.01 Promissory Note
Exhibit 3.01 Form of Collateral Pledge Agreement
Schedule 5.01 Organization
Schedule 5.06 Dividends and Redemptions
Schedule 5.08 Contingent Liabilities
Schedule 5.10 Litigation
Schedule 5.17 Environmental Matters
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CREDIT AGREEMENT
This Credit Agreement is entered into as of November 19, 2003, between
Blue River Bancshares, Inc., an Indiana corporation (the "Borrower") and Union
Federal Bank of Indianapolis, a federal savings bank (the "Lender").
WHEREAS, the Lender have agreed to make available to the Borrower a
$4,000,000.00 secured term loan, upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. ACCOUNTING TERMS; DEFINITIONS.
As used herein:
(a) the term "Acquisition" means any transaction or series of
related transactions for the purpose of or resulting, directly
or indirectly, in (a) the acquisition of all or substantially
all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any
other combination with another Person (other than a Person
that is a Subsidiary) provided that the Borrower or the
Subsidiary is the surviving entity.
(b) the term "Affiliate" means any person, firm or corporation,
which, directly or indirectly, controls, is controlled by, or
is under common control with, the Borrower or a Subsidiary.
(c) the term "Agreement" means this Credit Agreement.
(d) the term "Applicable Margin" means, as at any date of
determination, the rate per annum then applicable to the Term
Loan determined from time to time by reference to the table
set forth below, on the basis of the then applicable
Non-Performing Loan Ratio:
NON PERFORMING LOAN RATIO APPLICABLE MARGIN
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Greater than 20% for either SCB or UBC 0.75%
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Greater than 10% but less than 20% for either
SCB or UBC 0.50%
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Less than 10% for either SCB or UBC 0.00%
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For purposes of clarity, it is intended that the higher
Applicable Margin applies to the entire Term Loan if the
Non-Performing Loan Ratios of SCB and UBC indicate different
Applicable Margins.
(e) the term "Bank Subsidiaries" means SCB, UBC and any other
Subsidiaries that are state or federally chartered banking or
thrift institutions.
(f) the term "Bankers Blanket Bond" means the bond or bonds, and
any renewals, extensions or modifications thereof, issued with
respect to losses incurred by the Bank Subsidiaries,
including, without limitation, all bonds represented by
Bankers Blanket Bond, Standard Form No. 24, with attached
riders, as revised, and Bank Employee Dishonesty Blanket Bond,
Standard Form No. 28, with attached rider, as revised, both as
published by Surety Association of America.
(g) the term "Business Day" means any date other than a Saturday,
Sunday or other day on which Lender in the States of Indiana
are required or authorized to close.
(h) the term "Capitalized Lease" means any lease which is
capitalized on the books of the lessee, or should be so
capitalized under GAAP.
(i) the term "Change of Control" means with respect to the
Borrower, the transfer of beneficial ownership of the
outstanding stock of the Borrower such that any Person, group
of related Persons, or Affiliate of a Person, owns, directly
or indirectly, more than 50% of the Voting Stock of the
Borrower.
(j) the term "Closing Date" means the date upon which this
Agreement has been executed by the Borrower and Lender and all
conditions precedent specified in Article IV have been
satisfied or waived.
(k) the term "Collateral" means (i) the Collateral Account, and
(ii) the property pledged pursuant to the Collateral Pledge
Agreement.
(l) the term "Collateral Account" means that certain deposit
account maintained by Borrower at Lender numbered 593061111
and titled Blue River Bancshares, Inc. into which Borrower has
deposited $500,000.00 of the proceeds of the Term Loan and
from which withdrawals by Borrower will only be permitted as
specified in Section 7.09 hereof.
(m) the term "Collateral Documents" means all pledge agreements
and financing statements at any time delivered to the Lender
to create or evidence Liens securing the Obligations, together
with all reaffirmations, amendments and modifications thereof
or supplements thereto.
(n) The term "Collateral Pledge Agreement" is defined in Section
4.03 hereof.
(o) the term "Consolidated Net Earnings" means:
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(1) all revenues and income derived from operation in the
ordinary course of business (excluding extraordinary
gains and profits upon the disposition of investments
and fixed assets, as determined in accordance with
GAAP),
Minus:
(2) all expenses and other proper charges against income
(including payment or provision for all applicable
income and other taxes, but excluding extraordinary
losses and losses upon the disposition of investments
and fixed assets, as determined in accordance with
GAAP),
all as determined in accordance with GAAP as applied
on a consolidated basis to the Borrower and its
Subsidiaries.
(p) the term "Consolidated Net Income" means, for any period and
any Person, all amounts, which in conformity with GAAP, would
be included in that Person's net income on a consolidated
income statement.
(q) the term "Contingent Obligation" means, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to any
Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person
(i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefore, (ii) to advance or
provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or
financial condition of the primary obligator, (iii) to
purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against
loss in respect thereof (each, a "Guaranty Obligation"); (b)
with respect to any surety bond, performance bond or letter of
credit issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings
or payments; (c) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation
requires that payment for such materials, supplies or the
property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other property
is ever made or tendered, or such services are ever performed
or tendered; or (d) in respect of any Derivative Contract. The
amount of any Contingent Obligation, (w) in the case of
guaranty obligations, shall be deemed equal to the lesser of
(i) the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and (ii)
the stated amount of the guaranty, (x) in the case of
Contingent Obligations in respect of Derivative Contracts,
shall be deemed equal to the aggregate Termination Value of
such Derivative
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Contracts, (y) in the case of Contingent Obligations in
respect of surety bonds, performance bonds or letters of
credit, shall be deemed equal to the maximum liability of the
Borrower and its Subsidiaries thereunder.
(r) the term "Controlled Group" means a controlled group of
corporations as defined in Section 1563 of the Internal
Revenue Code of 1986, as amended, of which the Borrower is a
part.
(s) the term "Default" means any condition or event which with the
passage of time or the giving of notice or both would
constitute an Event of Default.
(t) the term "Derivative Contract" means any agreement, whether or
not in writing, relating to any transaction that is a rate
swap, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap or option, bond,
note or xxxx option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption, currency
option or any other, similar transaction (including any option
to enter into any of the foregoing) or any combination of the
foregoing, and, unless the context otherwise clearly requires,
any master agreement relating to or governing any or all of
the foregoing.
(u) the term "Distribution" means, for any Person, with respect to
any shares of any capital stock or other equity securities
issued by such Person, (a) the retirement, redemption,
purchase, or other acquisition for value of any such
securities, (b) the declaration or payment of any dividend on
or with respect to any such securities, and (c) any other
payment by such Person with respect to such securities.
(v) the term "Environmental Laws" means all federal, state and
local laws including rules of common law, statutes,
regulations, ordinances, codes, rules and other governmental
restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or
otherwise relating to the environment or hazardous substances
including, but not limited to, the Federal Solid Waste
Disposal Act, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Toxic Substances
Control Act, the Hazardous Materials Transportation Act,
regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Agency, and regulations
of any state department of natural resources or state
environmental protection agency now or at any time hereafter
in effect.
(w) the term "ERISA" means the Employee Retirement Income Security
Act of 1974, as the same may be in effect from time to time.
(x) the term "ERISA Affiliate" means any company or trade or
business (whether or not incorporated) which, for purposes of
Title IV of ERISA, is a member of the Borrower's Controlled
Group or which is under common control with
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the Borrower within the meaning of Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended.
(y) The term "Event of Default" is defined in Article VIII.
(z) The term "FDIC" means the Federal Deposit Insurance
Corporation, and any successors thereto.
(aa) the term "FHLB" means the Federal Home Loan Bank and any
successor thereto.
(bb) the term "GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and pronouncements
of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of
determination.
(cc) the term "Governmental Authority" means any nation or
government, any state or other political subdivision thereof,
any central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing (including, without
limitation, the Board of Governors of the Federal Reserve
System, the FDIC, the OTS, the Office of the Comptroller of
the Currency, and the Department of Financial Institutions of
the State of Indiana).
(dd) the term "Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade
payables entered into in the ordinary course of business on
ordinary terms); (c) all Contingent Obligations; (d) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of
the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property);
(f) all obligations with respect to Capitalized Leases; (g)
all indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness;
and (h) all guaranty obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a)
through (g) above. For all purposes of this Agreement, the
Indebtedness of any
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Person shall include all recourse Indebtedness of any
partnership or joint venture or limited liability Borrower in
which such Person is a general partner or a joint venturer or
a member and as to which such Person is or may become directly
liable.
(ee) the term "Investment" means (i) any purchase or acquisition
(or commitment to make any purchase or acquisition) by the
Borrower or any Subsidiary of any capital stock, equity
interest, or any obligations or other securities of, or any
interest in, any Person, and (ii) any advance, loan, extension
of credit or capital contribution to or other investment in
any Person, including any Affiliate of the Borrower, or any
commitment to do any of the foregoing.
(ff) the term "Lien" means any security interest, mortgage, deed of
trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or other) or similar
interest of any kind or nature whatsoever in respect of any
property (including those created by, arising under or
evidenced by conditional sale or other title retention
agreement, the interest of a lessor under a Capitalized Lease,
any financing lease having substantially the same economic
effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code of any
comparable law) and any contingent or other agreement to
provide any of the foregoing.
(gg) the term "Loan Documents" means this Agreement, the Term Note,
the Guaranties, the Collateral Pledge Agreement and all other
instruments, documents and agreements now or hereafter
executed and delivered by the Borrower or any Subsidiary in
connection with this Agreement.
(hh) the term "Material Adverse Effect" means any set of one or
more circumstances or events which, individually or
collectively, could reasonably be expected to result in any
(a) material impairment of the ability of the Borrower to
perform any of its payment or other material obligations under
the Loan Documents or the ability of the Lender to enforce
such obligations or any of their respective rights under the
Loan Documents, (b) material and adverse effect on the
business, properties, condition (financial or otherwise) or
results of operations of the Borrower, or any Subsidiary
either singly or in the aggregate, or (c) Default or Event of
Default.
(ii) the term "Multiemployer Plan" means a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA or Section
414(f) of the Internal Revenue Code of 1986, as amended, to
which the Borrower or any of its Subsidiaries or any ERISA
Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
(jj) the term "Non-Bank Subsidiaries" means Subsidiaries of the
Borrower other than the Bank Subsidiaries.
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(kk) the term "Non-Performing Loans" means, for any Subsidiary, the
sum of: (a) all loans which are 90 days or more past due, but
which are still treated as accrual loans, and (b) non-accrual
loans.
(ll) the term "Non-Performing Loan Ratio" means, for any
Subsidiary, the ratio of (a) Non-Performing Loans to (b) the
sum of (i) Tier l capital (as defined in 12 C.F.R. 567.5(a))
plus (ii) the loan loss reserve.
(mm) the term "Obligations" means any and all present and future
debts, obligations and liabilities of the Borrower or any
Subsidiary under or in connection with this Agreement, the
Term Note, any other Loan Document or in connection with any
Permitted Derivative Obligation between the Borrower or any
Subsidiary and the Lender or an Affiliate of the Lender,
whether now or hereafter made, incurred, or created, whether
voluntary or involuntary and however arising, whether due or
not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, whether the Borrower is liable
individually or jointly with others, whether for principal,
interest or other debts, obligations or liabilities.
(nn) the term "OTS" means the Office of Thrift Supervision, and any
successor thereto.
(oo) the term "Outstanding Credit Exposure" means the aggregate
principal amount of the Term Loan outstanding at such time.
(pp) the term "Permitted Derivative Obligations" means all
obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under Derivative Contracts,
provided that each of the following criteria is satisfied: (a)
such obligations are (or were) entered into by such Person in
the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or
assets held or reasonably anticipated by such Person, or
changes in the value of securities used by such Person in
conjunction with a securities repurchase program not otherwise
prohibited hereunder, and not for purposes of speculation or
taking a "market view"; (b) such Derivative Contracts do not
contain any provision ("walk-away" provision) exonerating the
non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party; (c) the
Lender or financial institution issuing such Derivative
Contract shall calculate its credit exposure in a reasonable
and customary manner; (d) all documentation for such
Derivative Contract shall conform to ISDA standards and, if
the Derivative Contract is entered into with a non-Lender,
must be acceptable to the Lender with respect to any
intercreditor issues; and (e) if issued by the Lender or an
Affiliate of the Lender to the Borrower or any Subsidiary, the
credit exposure under such Derivative Contract may be secured
by Liens in and to the Collateral as evidenced by the
Collateral Pledge Agreement.
(qq) the term "Permitted Liens" means:
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(1) liens outstanding on November 19, 2003, and shown on
Schedule 5.07 hereto;
(2) liens for taxes, assessments or governmental charges,
and similar liens incident to the operation of the
business of the Borrower and its Subsidiaries in the
ordinary course, which are either not delinquent or
are being contested in good faith by the Borrower or
a Subsidiary by appropriate proceedings which will
prevent foreclosure of such liens, and against which
adequate reserves have been provided; and easements,
restrictions, minor title irregularities and similar
matters which have no adverse effect as a practical
matter upon the ownership and use of the affected
property by the Borrower or any Subsidiary;
(3) liens or deposits in connection with worker's
compensation or other insurance or to secure customs'
duties, public or statutory obligations in lieu of
surety, stay or appeal bonds, or to secure
performance of contracts or bids (other than
contracts for the payment of money borrowed), or
deposits required by law or governmental regulations
or by any court order, decree, judgment or rule as a
condition to the transaction of business or the
exercise of any right, privilege or license; or other
liens or deposits of a like nature made in the
ordinary course of business;
(4) liens of landlords and mortgagees of landlords,
arising solely by operation of law, on fixtures and
moveable property located on premises leased in the
ordinary course of business;
(5) liens required by this Agreement as security for the
Obligations; and
(6) purchase money liens on property (other than
inventory) (including the interest of a lessor under
a Capitalized Lease and liens to which any property
is subject at the time of the Borrower's acquisition
thereof) securing Permitted Purchase Money
Indebtedness; provided that such liens shall not
apply to any property of the Borrower or its
Subsidiaries other than that purchased or subject to
such Capitalized Lease.
(rr) the term "Permitted Purchase Money Indebtedness" is defined in
Section 6.01(f).
(ss) the term "Person" includes an individual, partnership,
corporation, limited liability Borrower, business trust, joint
stock Company, trust, unincorporated association, joint
venture, or Governmental Authority.
(tt) the term "Plan" means any employee pension benefit plan
subject to Title IV of ERISA maintained by the Borrower, any
of its Subsidiaries, or any member of the Controlled Group, or
any such plan to which the Borrower, any of its Subsidiaries,
or any member of the Controlled Group is required to
contribute on behalf of any of its employees.
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(uu) the term "Prime Rate" means the rate of interest published in
the Wall Street Journal from time to time as the Prime Rate,
as such rate may change from time to time, and is intended by
the Lender to be a reference rate and may not be the lowest
interest rate charged by the Lender.
(vv) the term "Regulatory Change" means any change enacted or
issued after the date of this Agreement of any (or the
adoption after the date of this Agreement of any new) federal
or state law, regulation, interpretation, direction, policy or
guideline, or any court decision, which affects the treatment
of any extensions of credit of the Lender.
(ww) the term "Reportable Event" means a reportable event as that
term is defined in Title IV of ERISA.
(xx) the term "Restricted Payment" means distributions in respect
of the Borrower's stock.
(yy) the term "SCB" means Shelby County Bank, a federal savings
bank.
(zz) the term "Subsidiary" means a corporation, partnership or
other entity of which the Borrower owns, directly or through
another Subsidiary, at the date of determination, more than
50% of the outstanding stock (or other shares of beneficial
interest) having ordinary voting power for the election of
directors, irrespective of whether or not at such time stock
of any other class or classes might have voting power by
reason of the happening of any contingency, or holds at least
a majority of partnership or similar interests, or is a
general partner, and any other Affiliate that is included in
the Borrower's consolidated financial statements furnished to
the Lender pursuant to Section 7.06 hereof.
(aaa) the term "Tangible Equity Capital" means, on any date and for
any Person, all amounts, which in conformity with GAAP, would
be included in that Person's stockholder's equity on its
consolidated balance sheet, less the amount of any amortizing
intangible assets included on its consolidated balance sheet.
(bbb) the term "Term Debt Service Coverage Ratio" means as of any
date of determination for any period, the relationship,
expressed as a numerical ratio, between:
(1) the Consolidated Net Earnings of the Borrower for a
period of four fiscal quarters plus interest expense
on the Term Loan for such period, and
(2) the sum of (A) interest expenses on the Term Loan for
such period, plus (B) scheduled principal payments on
the Term Loan during such period.
(ccc) the term "Term Loan" is defined in Section 2.01.
(ddd) the term "Termination Value" means, in respect of any one or
more Derivative Contracts, after taking into account the
effect of any legally enforceable netting
13
agreement relating to such Derivative Contracts, (a) for any
date on or after the date such Derivative Contracts have been
closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date
prior to the date referenced in clause (a) the amount(s)
determined as the xxxx-to-market value(s) for Derivative
Contracts, as determined by the Borrower based upon one or
more mid-market or other readily available quotations provided
by any recognized dealer in such Derivative Contracts (which
may include the Lender).
(eee) the term "UBC" means Unified Banking Company, a federal
savings bank.
(fff) the term "Unfunded Liabilities" means, with regard to any
Plan, the excess of the current value of the Plan's benefits
guaranteed under ERISA over the current value of the Plan's
assets allocable to such benefits.
(ggg) The term "Voting Stock" means securities (as such term is
defined in Section 2 of the Securities Act of 1933, as
amended) of any class or classes, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect
a majority of the corporate directors (or Persons performing
similar functions).
SECTION 1.02. OTHER INTERPRETIVE PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", and similar words refer to this
Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule, Exhibit and
Appendix references are to this Agreement unless otherwise
specified.
(c) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and
other writings, however evidenced.
(d) The term "including" is not limiting and means "including
without limitation."
(e) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(f) The term "property" includes any kind of property or asset,
real, personal or mixed, tangible or intangible.
(g) Unless otherwise expressly provided herein, (i) references to
agreements, (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not
prohibited by the terms of the Loan Document, and (ii)
references to any statute or regulation are to
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be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing
or interpreting the statute or regulation.
(h) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the
interpretation of this Agreement.
(i) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms.
(j) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the
Lender and the Borrower and are the products of all parties.
Accordingly, they shall not be construed against the Lender
merely because of the Lender's involvement in their
preparation.
SECTION 1.03. ACCOUNTING PRINCIPLES.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied throughout
all accounting periods and consistent with those applied in
the preparation of the financial statements referred to in
Section 5.05.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Borrower.
(c) In the event that any changes in GAAP occur after the date of
this Agreement and such changes result in material variation
in the method of calculation of financial covenants or other
terms of this Agreement, then the Borrower, the Lender and the
Lender agree to amend such provisions of this Agreement so as
to equitably reflect such changes so that the criteria for
evaluating the Borrower's financial condition will be the same
after such changes as if such changes had not occurred.
ARTICLE 2
TERM LOAN
SECTION 2.01. TERM LOAN.
(a) On the Closing Date, and subject to all of the terms and
conditions of this Agreement, the Borrower shall obtain a term
loan from the Lender in the amount of $4,000,000.00 (the "Term
Loan"). The Term Loan hereunder shall be evidenced by a single
promissory note (the "Term Note") in the principal amount of
the Term Commitment, payable to the order of the Lender, in
the form of Exhibit 2.02 attached hereto. The Term Note shall
be executed by the Borrower and delivered to the Lender on or
prior to the Closing Date.
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(b) Interest on the Term Note shall be payable monthly beginning
December 19, 2003 and continuing on the 19th day of each
calendar month thereafter, to and including November 19, 2005,
in the amount invoiced by Lender each month. Beginning on
November 19, 2005, and continuing on the 19th day of each
calendar month thereafter until the Term Note has been paid in
full, the Borrower shall make a payment of principal and
interest in the amount invoiced by Lender each month which
represents the level monthly payment amount required to (i)
pay interest at the interest rate in effect during the prior
month pursuant to Section 3.01 and (ii) amortize the remaining
outstanding principal amount over the period ending on
November 19, 2013. On the earlier of November 19, 2013 and the
date on which the Term Note is accelerated pursuant to Section
8.02, the entire unpaid principal balance of the Term Note
shall be due and payable.
SECTION 2.02. USE OF PROCEEDS.
The Borrower represents, warrants and agrees that:
(a) The proceeds of the loan made hereunder will be used solely
for the purpose of financing the Acquisition of UBC for an
aggregate purchase price of no more than $8.2 million.
(b) No part of the proceeds of the loan made hereunder will be
used to "purchase" or "carry" any "margin stock" or to extend
credit to others for the purpose of "purchasing" or "carrying"
any "margin stock" (as such terms are defined in the
Regulation U of the Board of Governors of the Federal Reserve
System), and the assets of the Borrower and its Subsidiaries
do not include, and neither the Borrower nor any Subsidiary
has any present intention of acquiring, any such security.
ARTICLE 3
ADMINISTRATION OF CREDIT
SECTION 3.01. INTEREST ON TERM LOANS.
The Term Loan shall bear interest on the outstanding principal amount
thereof from the Closing Date at a rate per annum equal to the Prime Rate plus
the Applicable Margin according to the terms of this Article III. Adjustments in
the interest rate on the Term Loan occasioned by changes in the Applicable
Margin will be made as of the first calendar day of each fiscal quarter (the
"Change Date") based upon the Nonperforming Loan Ratio of SCB and UBC as of the
end of the second fiscal quarter preceding the Change Date. The full amount of
the Term Loan will be disbursed to Borrower on the Closing Date.
SECTION 3.02. INCREASED COSTS.
If any Regulatory Change,
(a) shall subject the Lender to any tax, duty or other charge with
respect to any of its loan hereunder, or shall change the
basis of taxation of payments to the Lender of
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the principal or interest on its loan hereunder, or any other
amounts due under this Agreement in respect of such loan, or
its obligation to make the loan hereunder (except for changes
in the rate of tax on the overall net income of the Lender);
(b) shall impose, modify or make applicable any reserve
(including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System), special
deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, the Lender;
or
(c) shall impose on the Lender any other condition affecting its
loan hereunder;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D or any other analogous law, rule or regulation, to impose a
cost on) the Lender of making or maintaining the Term Loan hereunder, or to
reduce the amount of any sum received or receivable by the Lender under this
Agreement and any document or instrument related hereto; then upon notice from
the Lender (which notice shall be sent to the Lender and the Borrower and shall
be accompanied by a statement setting forth in reasonable detail the basis of
such increased cost or other effect on the loans), the Borrower shall pay
directly to the Lender, on demand, such additional amount or amounts as will
compensate the Lender for such increased cost or such reduction.
SECTION 3.03. CAPITAL ADEQUACY.
If any Regulatory Change affects the treatment of the Term Loan
hereunder as an asset or other item included for the purpose of calculating the
appropriate amount of capital to be maintained by the Lender or any corporation
controlling the Lender and has the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of the obligations of
the Lender hereunder to a level below that which the Lender or such corporation
could have achieved but for such Regulatory Change (taking into account the
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed in good faith by the Lender to be material, then the Borrower
shall pay to the Lender, on demand, such additional amount or amounts as will
compensate the Lender or such corporation, as the case may be, for such
reduction.
SECTION 3.04. PREPAYMENT.
The Term Loan may be prepaid at the option of the Borrower in whole or
in part at any time without premium or penalty. In case of a prepayment of less
than all of the outstanding principal amount of the Term Note, each total
prepayment shall be not less than $100,000 and shall be applied to the remaining
principal installments of the Term Note in the inverse order of their
maturities.
SECTION 3.05. SURVIVAL OF PROVISIONS.
The provisions of Sections 3.02 and 3.03 shall survive the repayment of
the Term Loan.
SECTION 3.06. COMPUTATIONS OF INTEREST.
All computations of interest on the Term Loan will be based on a 360
day year using the actual number of days occurring in the period for which such
interest is payable.
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SECTION 3.07. PAYMENTS; TERM LOAN ACCOUNTS.
(a) All payments and prepayments of principal, interest and fees
under this Agreement and the Term Note shall be made to the
Lender prior to 1:00 p.m., Indianapolis, Indiana time, in
immediately available funds. The Lender may charge the
Collateral Account maintained at the Lender for any payment
due under the Term Note, or any fee or expense payable
hereunder, on or after the date due.
(b) The accounts or records maintained by the Lender shall be
conclusive absent manifest error of the amount of the
outstanding Term Loan and the interest and payments thereon.
Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the
Term Loan.
(c) If the date on which interest or principal are to be paid
falls on a day which is not a Business Day, such payment shall
be due on the next succeeding Business Day.
SECTION 3.08. INTEREST FOLLOWING EVENT OF DEFAULT.
From and after the occurrence and during the continuance of an Event of
Default, the unpaid principal amount of all loans and all other amounts due and
unpaid under this Agreement and the Term Note will bear interest until paid
computed at a rate equal to 2% per annum in excess of the rate or rates
otherwise payable hereunder.
SECTION 3.09. DEPOSITS; SET OFF.
The Borrower grants the Lender, as security for the Term Note, a lien
and security interest in any and all monies, balances, accounts and deposits
(including certificates of deposit) of the Borrower at the Lender now or at any
time hereafter, including, but not limited to the Collateral Account. If any
Event of Default occurs hereunder or any attachment of any balance of the
Borrower occurs, the Lender may offset and apply any such security toward the
payment of the Term Note, whether or not such Term Note, or any part thereof,
shall then be due. Promptly upon its charging any account of the Borrower
pursuant to this Section, the Lender shall give the Borrower notice thereof.
ARTICLE 4
CONDITIONS OF BORROWING
Without limiting any of the other terms of this Agreement, the Lender
shall not be required to make the Term Loan to the Borrower hereunder unless the
following conditions have been satisfied:
SECTION 4.01. CORPORATE DOCUMENTS.
(a) Copies of a certificate of existence or good standing for the
Borrower and each Subsidiary, certified by the appropriate
governmental officer in its jurisdiction of organization;
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(b) Copies, certified by the Secretary, Assistant Secretary, or
Chief Executive Officer, as the case may be, of the Borrower,
of (i) its respective Articles of Incorporation (together with
all amendments thereto) and By-Laws, (ii) resolutions of its
Board of Directors (and resolutions of other bodies, if any
are deemed necessary by counsel for any Lender) authorizing
the execution of the Agreement, the Term Note and the other
Loan Documents;
(c) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by
name and title and bear the signature of the officers of the
Borrower, authorized to sign the Loan Documents and to make
borrowings hereunder, upon which certificate the Lender shall
be entitled to rely until informed of any change in writing by
the Borrower; and
(d) A certificate, in form and substance satisfactory to the
Lender, signed by the chief financial officer of the Borrower,
stating that on the Closing Date no Default or Event of
Default has occurred and is continuing.
SECTION 4.02. REPRESENTATIONS.
As of the Closing Date the representations and warranties contained in
Article V hereof shall be true and correct on the date of such loan or extension
of credit; no Default or Event of Default hereunder shall have occurred and be
continuing; and there has been no material adverse change in the business
operations or financial condition of the Borrower and its Subsidiaries, taken as
a whole, since December 31, 2002.
SECTION 4.03. COLLATERAL PLEDGE AGREEMENT.
The Borrower shall have executed and delivered to the Lender a
collateral pledge agreement in the form of Exhibit 4.03 annexed hereto (the
"Collateral Pledge Agreement"); stock certificates representing all outstanding
capital stock of the Bank Subsidiaries as collateral; and appropriate stock
powers executed in blank.
SECTION 4.04. FILINGS.
All documents (including, without limitation, financing statements)
required to be filed in order to create, in favor of the Lender, first perfected
security interests in the collateral shall have been properly filed in each
office in each jurisdiction in which such filings are required; the Lender shall
have received acknowledgment copies of all such filings stamped by the
appropriate filing officer (or, in lieu thereof, other evidence satisfactory to
the Lender that all such filings have been made); and the Lender shall have
received such evidence as it may deem satisfactory that all necessary filing and
other similar fees, and all taxes and other expenses related to such filings
have been paid in full.
SECTION 4.05. INSURANCE CERTIFICATE.
The Lender shall have received evidence satisfactory to it that the
Borrower maintains hazard and liability insurance coverage reasonably
satisfactory to the Lender.
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SECTION 4.06. FORM U-1.
The Borrower shall have executed and delivered to the Lender a Federal
Reserve Form U-1 provided for in Regulation U of the Board of Governors of the
Federal Reserve System, and the statements made therein shall be such, in the
opinion of the Lender, as to permit the transactions contemplated hereby without
violation of Regulation U.
SECTION 4.07. COUNSEL OPINION.
The Lender shall have received from Borrower's counsel, satisfactory
opinions as to such matters relating to the Borrower and its Subsidiaries, the
validity and enforceability of this Agreement, the loans to be made hereunder
and the other documents required by this Article III as the Lender shall
reasonably require. The Borrower shall execute and/or deliver to the Lender or
their respective counsel such documents concerning its corporate status and the
authorization of such transactions as may be requested.
SECTION 4.08. PROCEEDINGS SATISFACTORY.
The Borrower shall have executed this Agreement, the Term Note and all
other Loan Documents. All proceedings taken in connection with the transactions
contemplated by this Agreement, and all instruments, authorizations and other
documents applicable thereto, shall be satisfactory in form and substance to the
Lender and its counsel.
SECTION 4.09. CASH COLLATERAL ACCOUNT.
The Borrower shall have established the Cash Collateral Account with
the Lender and shall agree to fund such account with $500,000.00 of the proceeds
of the Term Note.
SECTION 4.10. EQUITY OFFERING.
The Lender shall have received evidence satisfactory to it that the
Borrower has raised at least $3,500,000.00 (before issue costs) from its
offering of common stock.
SECTION 4.11. PORTFOLIO REVIEW.
The Lender shall have completed an onsite review of the loan portfolios
of SCB and UBC and shall be satisfied with such loan portfolios in its sole
discretion.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to make the loans and other financial
accommodations as provided herein, the Borrower represents and warrants to the
Lender as follows as of the date of this Agreement.
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SECTION 5.01. ORGANIZATION.
The Borrower and each of its Subsidiaries is a corporation duly
organized and in existence (having made all required corporate filings and
reports) under the laws of the jurisdiction under which it was incorporated, and
has all requisite power and authority, corporate or otherwise, to conduct its
business and to own its properties. Set forth in Schedule 5.01 hereto is a
complete and accurate list of all of the Borrower's Subsidiaries, showing as of
the date hereof (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock authorized,
the number outstanding, the percentage of the outstanding shares of each such
class owned (directly or indirectly) by the Borrower and the number of shares
covered by all outstanding options, warrants, rights of conversion or purchase,
and similar rights. All of the outstanding stock of all of the Subsidiaries has
been legally and validly issued, is fully paid and non-assessable and is owned
by the Borrower or one or more other Subsidiaries free and clear of all pledges,
liens, security interests and other charges or encumbrances. The Borrower and
each of its Subsidiaries is duly licensed or qualified to do business in all
jurisdictions in which such qualification is required, and failure to so qualify
could have a Material Adverse Effect on the property, financial condition or
business operations of the Borrower or any Subsidiary.
SECTION 5.02. AUTHORITY.
The execution, delivery and performance of the Loan Documents are
within the corporate powers of the Borrower, have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the stockholders of the Borrower, (ii) violate any provision of the
articles of incorporation or by-laws of the Borrower or of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Borrower or any Subsidiary;
(iii) require the consent or approval of, or filing or registration with, any
governmental body, agency or authority; or (iv) result in a breach of or
constitute a default under, or result in the imposition of any lien, charge or
encumbrance upon any property of the Borrower or any Subsidiary pursuant to, any
indenture or other agreement or instrument under which the Borrower or any
Subsidiary is a party or by which it or its properties may be bound or affected.
This Agreement constitutes, and each of the Term Note and Loan Documents when
executed and delivered hereunder will constitute, legal, valid and binding
obligations of the Borrower or other signatory enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy or similar
laws affecting the enforceability of creditors' rights generally.
SECTION 5.03. ICA AND PUHCA.
Neither the Borrower nor any Subsidiary is an "investment company" or a
Borrower "controlled" by an "investment company" within the meaning of the
Investment company Act of 1940, as amended. Neither the Borrower nor any
Subsidiary is subject to regulation under the Public Utility Holding company Act
of 1935, as amended.
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SECTION 5.04. EMPLOYEE RETIREMENT INCOME SECURITY ACT.
All Plans are in compliance in all material respects with the
applicable provisions of ERISA. Neither the Borrower nor any Subsidiary has
incurred any material "accumulated funding deficiency" within the meaning of
section 302(a)(2) of ERISA in connection with any Plan. There has been no
Reportable Event for any Plan, the occurrence of which could reasonably be
expected to have a materially adverse effect on the Borrower or any Subsidiary,
nor has the Borrower or any Subsidiary incurred any material liability to the
Pension Benefit Guaranty Corporation under section 4062 of ERISA in connection
with any Plan. The Unfunded Liabilities of all Plans do not in the aggregate
exceed $50,000. Neither the Borrower nor any ERISA Affiliate has withdrawn in
whole or in part from participation in a Multiemployer Plan.
SECTION 5.05. FINANCIAL STATEMENTS.
The consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as of December 31, 2002, and the consolidated and consolidating
statements of profit and loss and cash flow of the Borrower and its Subsidiaries
for the year ended on that date, as prepared by management and heretofore
furnished to the Lender, have been prepared in accordance with GAAP, audited by
Deloitte & Touche and are correct and complete in all material respects. The
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of September 30, 2003, and the consolidated and consolidating
statements of profit and loss and cash flow of the Borrower and its Subsidiaries
for the quarter ended on that date, heretofore furnished to the Lender, have
been prepared in accordance with GAAP and are correct and complete in all
material respects. Since December 31, 2002 there has been no material adverse
change in the property, financial condition or business operations of the
Borrower or any Subsidiary that has had or would have a Material Adverse Effect.
SECTION 5.06. DIVIDENDS AND REDEMPTIONS.
Except as set forth on Schedule 5.06, the Borrower has not, between
December 31, 2002 and the date of this Agreement, paid or declared any dividend,
or made any other distribution on account of any shares of any class of its
stock, or redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of any class of its stock. The Borrower is not a party to any agreement,
the performance of which would give rise to a Default or an Event of Default,
which may require it to redeem, purchase or otherwise acquire any shares of any
class of its stock.
SECTION 5.07. LIENS.
The Borrower and each Subsidiary has good and marketable title to all
of its assets, real and personal, free and clear of all Liens, except Permitted
Liens. All owned and leased buildings and equipment of the Borrower and its
Subsidiaries are in good condition, repair and working order in all material
respects and, to the best of the Borrower's knowledge and belief, conform in all
material respects to all applicable laws, regulations and ordinances.
SECTION 5.08. CONTINGENT LIABILITIES.
Neither the Borrower nor any Non-Bank Subsidiary has any material
Contingent Obligations, except those permitted by Section 6.11 hereof or set
forth on Schedule 5.08 hereto.
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SECTION 5.09. TAXES.
Except as expressly disclosed in the financial statements referred to
in Section 5.05 above, neither the Borrower nor any Subsidiary has any material
outstanding unpaid tax liability (except for taxes which are currently accruing
from current operations and ownership of property, which are not delinquent and
those taxes being contested in good faith for which reserves have been
established in accordance with GAAP), and no tax deficiencies have been proposed
or assessed against the Borrower or any Subsidiary. Borrower's federal income
tax returns have been filed for all years through December 31, 2002 and all
taxes shown by such returns (together with any adjustments arising out of
audits, if any) have been paid.
SECTION 5.10. ABSENCE OF LITIGATION.
Except as set forth on Schedule 5.10 hereto, neither the Borrower nor
any Subsidiary is a party to any litigation or administrative proceeding, nor so
far as is known by the Borrower is any litigation or administrative proceeding
threatened against it or any Subsidiary, which in either case (i) relates to the
execution, delivery or performance of this Agreement, the Term Note, or any of
the Loan Documents, (ii) could, if adversely determined, reasonably be expected
to have a Material Adverse Effect, (iii) asserts or alleges the Borrower or any
Subsidiary violated Environmental Laws which could reasonably be expected to
have a Material Adverse Effect, (iv) asserts or alleges that Borrower or any
Subsidiary is required to cleanup, remove, or take remedial or other response
action due to the disposal, depositing, discharge, leaking or other release of
any hazardous substances or materials which could reasonably be expected to have
a Material Adverse Effect, (v) asserts or alleges that Borrower or any
Subsidiary is required to pay all or a portion of the cost of any past, present
or future cleanup, removal or remedial or other response action which arises out
of or is related to the disposal, depositing, discharge, leaking or other
release of any hazardous substances or materials by Borrower or any Subsidiary
which could reasonably be expected to have a Material Adverse Effect.
SECTION 5.11. ABSENCE OF DEFAULT.
No event has occurred and is continuing which either of itself or with
the lapse of time or the giving of notice or both, would give any creditor of
the Borrower or any Subsidiary the right to accelerate the maturity of any
Indebtedness of the Borrower or any Subsidiary, other than those that have been
permanently waived. Neither the Borrower nor any Subsidiary is in default under,
or in violation of the requirements of, any other lease, agreement or
instrument, or any law, rule, regulation, order, writ, injunction, decree,
determination or award, non-compliance with which could reasonably be expected
to have a Material Adverse Effect.
SECTION 5.12. NO BURDENSOME AGREEMENTS.
Neither the Borrower nor any Non-Bank Subsidiary is a party to any
agreement, instrument or undertaking, or subject to any other restriction, (i)
which materially adversely affects or could reasonably be expected to in the
future so affect the property, financial condition or business operations of the
Borrower or any Non-Bank Subsidiary, or (ii) under or pursuant to which the
Borrower or any Non-Bank Subsidiary is or will be required to place (or under
which any other person may place) a lien upon any of its properties securing
indebtedness either upon
23
demand or upon the happening of a condition, with or without such demand other
than Permitted Liens.
SECTION 5.13. TRADEMARKS, ETC.
The Borrower and its Subsidiaries possess adequate trademarks, trade
names, copyrights, patents, permits, service marks and licenses, or rights
thereto, for the present and planned future conduct of their respective
businesses substantially as now conducted, without any known conflict with the
rights of others which could reasonably be expected to result in a Material
Adverse Effect on the Borrower or any Subsidiary.
SECTION 5.14. PARTNERSHIPS; JOINT VENTURES.
Neither the Borrower nor any Subsidiary is a member of any partnership
or joint venture.
SECTION 5.15. FULL DISCLOSURE.
No information, exhibit or report furnished by the Borrower or any
Subsidiary to the Lender in connection with the negotiation or execution of this
Agreement contained any material misstatement of fact as of the date when made
or omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading as of the date when made.
SECTION 5.16. FISCAL YEAR.
The fiscal year of the Borrower and each Subsidiary ends on December 31
of each year.
SECTION 5.17. ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 5.17:
(a) With respect to the period during which the Borrower or any
Subsidiary owned or occupied its real estate, and to the
Borrower's knowledge after reasonable investigation, with
respect to the time before the Borrower or any Subsidiary
owned or occupied its real estate, no person or entity has
caused or permitted materials to be stored, deposited,
treated, recycled or disposed of on, under or at any real
estate owned or occupied by the Borrower or any Subsidiary,
which materials, if known to be present, would require
cleanup, removal or some other remedial action under
Environmental Laws, except as permitted by applicable law and
only in such amounts or quantities as are required for the
operation of the business of the Borrower and its Subsidiaries
in the ordinary course;
(b) To the Borrower's knowledge after reasonable investigation,
there are no conditions existing currently or likely to exist
during the term of this Agreement which would subject the
Borrower or any Subsidiary to damages, penalties, injunctive
relief or cleanup costs under any Environmental Laws or which
require or are likely to require cleanup, removal, remedial
action or other response pursuant to Environmental Laws by the
Borrower or any Subsidiary which could reasonably be expected
to have a Material Adverse Effect;
24
(c) Neither the Borrower nor any Subsidiary is subject to any
judgment, decree, order or citation related to or arising out
of Environmental Laws and neither the Borrower nor any
Subsidiary has been named or listed as a potentially
responsible party by any governmental body or agency in a
matter arising under any Environmental Laws which could
reasonably be expected to have a Material Adverse Effect; and
(d) The Borrower and each Subsidiary has all permits, licenses and
approvals required under Environmental Laws which the failure
to possess could reasonably be expected to have a Material
Adverse Effect.
SECTION 5.18. REGULATION U.
Neither the Borrower nor the Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended. No part of the proceeds of the Term Loan will be used, directly or
indirectly, for a purpose that violates any law, including, without limitation,
the provisions of Regulations T, U or X of the Board of Governors of the Federal
Reserve System, as amended. "Margin Stock," as defined in Regulation U,
constitutes less than 25% of those assets of the Borrower that are subject to
any limitation on sale, pledge, or other restrictions hereunder.
SECTION 5.19. SOLVENCY AND CAPITAL REQUIREMENTS.
On the Closing Date, the Borrower is (and after giving effect to the
transactions contemplated by the Loan Documents, will be) solvent. Each of the
Bank Subsidiaries has (and has not received any notice from the OTS that it does
not have) an amount of capital that satisfies its minimum capital requirements.
ARTICLE 6
NEGATIVE COVENANTS
While any part of the principal of or interest on the Term Note or any
of the other Obligations remains unpaid, the Borrower covenants and agrees (and
agrees to cause its Subsidiaries) to perform, observe and comply with each of
the following, unless the Borrower receives the prior written consent of the
Lender:
SECTION 6.01. RESTRICTION OF INDEBTEDNESS.
The Borrower shall not, nor shall it permit any of its Non-Bank
Subsidiaries to directly or indirectly, create, incur, assume or have
outstanding any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness incurred by the Borrower under any Permitted
Derivative Obligation; and
25
(c) other Indebtedness outstanding on September 30, 2003, and
shown on the financial statements referred to in Section 5.05
above; and
(d) the Contingent Obligations existing on the date hereof as
disclosed on Schedule 5.08;
(e) Indebtedness incurred by the Borrower from any of its
Subsidiaries; and
(f) secured or unsecured purchase money Indebtedness (including
Capitalized Leases) incurred by the Borrower or any of its
Subsidiaries after the Closing Date to finance the acquisition
of fixed assets, if (1) at the time of such incurrence, no
Event of Default or Default has occurred and is continuing or
would result from such incurrence, (2) such Indebtedness has a
scheduled maturity and is not due on demand, (3) such
Indebtedness does not exceed the lower of the fair market
value or the cost of the applicable fixed assets on the date
acquired, (4) such Indebtedness does not exceed $50,000 in the
aggregate outstanding at any time, (5) any lien securing such
Indebtedness is a Permitted Lien (such Indebtedness being
referred to herein as "Permitted Purchase Money
Indebtedness").
SECTION 6.02. AMENDMENTS AND PREPAYMENTS.
The Borrower shall not, nor shall it permit any of its Non-Bank
Subsidiaries to agree to any amendment, modification or supplement, or obtain
any waiver or consent in respect of compliance with any of the terms of, or call
or redeem, or make any purchase or prepayment of or with respect to, any
instrument or agreement evidencing or relating to any Indebtedness.
SECTION 6.03. RESTRICTION ON LIENS.
The Borrower shall not, nor shall it permit any of its Non-Bank
Subsidiaries to create or permit to be created or allow to exist any Lien on any
property or asset now owned or hereafter acquired by the Borrower or any such
Non-Bank Subsidiary, except Permitted Liens.
SECTION 6.04. SALE AND LEASEBACK.
The Borrower shall not, nor shall it permit any of its Non-Bank
Subsidiaries to enter into any agreement providing for the leasing by the
Borrower or a Non-Bank Subsidiary of property which has been or is to be sold or
transferred by the Borrower or a Non-Bank Subsidiary to the lessor thereof, or
which is substantially similar in purpose to property so sold or transferred.
SECTION 6.05. DIVIDENDS AND REDEMPTIONS.
The Borrower shall not directly or indirectly declare, make or pay any
Restricted Payment, except for:
(a) Distributions approved by Lender; and
(b) On or after November 19, 2006, Distributions so long as no
Event of Default exists or would exist after giving effect to
such Distribution;
26
Notwithstanding the foregoing, Restricted Payments and Distributions
are permitted hereunder only to the extent such Restricted Payment or
Distribution is made in accordance with applicable law and constitutes a valid,
non-voidable transaction.
SECTION 6.06. RESTRICTIONS ON SUBSIDIARIES.
The Borrower shall not permit any Subsidiary to enter into or permit to
exist any arrangement or agreement (such arrangement or agreement not to include
compliance with applicable OTS rules and regulations) which directly or
indirectly prohibits any such Subsidiary from (a) declaring, making, or paying,
directly or indirectly, any Distribution to the Borrower, (b) paying any
Indebtedness owed to the Borrower or any of its Subsidiaries, (c) making loans,
advances, or investments to or in the Borrower, or (d) transferring any of its
property or assets to the Borrower.
SECTION 6.07. ACQUISITIONS AND INVESTMENTS.
The Borrower shall not, nor shall it permit any of its Subsidiaries to
make any Acquisitions and Borrower shall not, nor shall it permit any of its
Non-Bank Subsidiaries to make any Investments, except:
(a) Investments in (i) U.S. government obligations which include
(a) direct obligations of the United States of America for the
full and timely payment of which the full faith and credit of
the United States of America is pledged, (b) obligations
issued by a person controlled or supervised by and acting as
an agency or instrumentality of the United States of America,
the payment of the principal of, premium, if any, and interest
on which is fully guaranteed as a full faith and credit
obligation of the United States of America (including any
securities described in (a) or (b) issued or held in
book-entry form on the books of the Department of Treasury of
the United States of America or Federal Reserve Bank), and (c)
securities which represent an interest in the obligations
described in (a) and (b) above; (ii) Senior debt obligations,
letter of credit backed issues, and participation certificates
which are fully amortizing, of the following federal agencies:
(a) Farmers Home Administration, (b) Federal Farm Credit Bank,
(c) Federal Home Loan Bank, (d) Federal Home Loan Mortgage
Corporation, (e) Federal Housing Administration, (f) Federal
National Mortgage Association, (g) Financial Assistance
Corporation, (h) Financing Corporation (FIOC), (i) General
Services Administration, (j) Government National Mortgage
Association, (k) Resolution Funding Corporation, (l) Small
Business Administration, (m) Student Loan Marketing
Association, and (n) Tennessee Valley Authority; (iii) Federal
funds, certificates of deposit, time deposits and bankers'
acceptances (having original maturities of not more than 365
days) of any bank the unsecured, uninsured and unguaranteed
debt obligations of which (or, in the case of a bank
subsidiary in a bank holding company, debt obligations of the
bank holding company) have been rated at least "A" or "A-l" or
its equivalent by either rating service; (iv) commercial paper
(having original maturities of not more than 270 days) rated
at least "A-1" or its equivalent by either rating service; (v)
obligations rated at least investment grade by either rating
service, or unrated general
27
obligations of any Person which has outstanding other unsecured, uninsured and
unguaranteed obligations which are so rated by either rating service; or unrated
obligations of any Person which are secured by a letter of credit from banks
which are so rated by either rating service; (vi) repurchase agreements with any
institution the unsecured, uninsured and unguaranteed debt obligations of which
(or, in the case of a bank subsidiary in a bank holding company, debt
obligations of the bank holding company) are rated at least "A" or its
equivalent by either rating service; (vii) tax-exempt obligations of any state
of the United States of America or any political subdivision or other
instrumentality of any such state and such obligations are rated at least "A" or
its equivalent by either rating service and are not "specified private activity
bonds" as defined in Section 57(a)(5)(C) of the Code; (viii) tax-exempt money
market funds which are "qualified regulated investment companies" within the
meaning of IRS Notice 87-22, and which meet the other requirements of IRS Notice
87-22 and any subsequent regulations necessary to exempt investments in such
funds from the definition of "investment property" under Section 148 of the Code
whose assets are solely invested in obligations rated at least "A" or its
equivalent by either rating service; (vix) money market funds the assets of
which are obligations of or guaranteed by the United States of America and which
funds are rated "Am" or "Am-G" or higher by S&P; (x) investment in money market
mutual funds provided that such funds are invested solely in obligations or
securities otherwise permitted by this Section 6.07(a); and (xi) obligations
approved in writing by the Lender.
(b) loans and advances made to employees and agents in the
ordinary course of business, such as travel and entertainment
advances and similar items;
(c) Investments in the Borrower by a Subsidiary;
(d) inter-company transactions described in Sections 6.01(e);
(e) trade accounts receivable which are for goods furnished or
services rendered in the ordinary course of business and are
payable in accordance with customary trade terms;
(f) Investments made in connection with Permitted Derivative
Obligations;
(g) Investments outstanding on September 30, 2003, and shown on
the financial statements referred to in Section 5.05 above;
and
(h) the acquisition of UBC on the terms disclosed by Borrower to
Lender.
SECTION 6.08. SALE OF ASSETS.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, sell, assign, transfer, or otherwise dispose of all or substantially all of
its assets. The Borrower shall not dispose of, sell, or transfer any stock of
the Bank Subsidiaries.
28
SECTION 6.09. MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, merge or consolidate with any other Person. The
Borrower shall not and shall not permit any Subsidiary to liquidate, wind up,
dissolve (or suffer any liquidation or dissolution). The Borrower shall not, and
shall not permit any of its Subsidiaries to, sell, assign, lease, transfer, or
otherwise dispose of the capital stock (or other ownership interests) of the
Borrower or any Subsidiary.
SECTION 6.10. ACCOUNTS RECEIVABLE.
The Borrower shall not, nor shall it permit any of its Non-Bank
Subsidiaries to discount or sell with recourse, or sell for less than the face
amount thereof, any of its notes or accounts receivable, whether now owned or
hereafter acquired.
SECTION 6.11. CONTINGENT OBLIGATIONS.
The Borrower shall not, nor shall it permit any of its Non-Bank
Subsidiaries to incur or permit to exist any material Contingent Obligation,
except pursuant to the deposit and collection of checks and similar items in the
ordinary course of business and except for Indebtedness permitted under Section
6.01.
SECTION 6.12. AFFILIATES.
The Borrower shall not, nor shall it permit any of its Subsidiaries to
suffer or permit any transaction with any Affiliate, except on terms not less
favorable to the Borrower or Subsidiary than would be usual and customary in
similar transactions with non-affiliated persons.
SECTION 6.13. PARTNERSHIPS; JOINT VENTURES.
The Borrower shall not, nor shall it permit any of its Subsidiaries to
become a member of any partnership or joint venture.
SECTION 6.14. FISCAL YEAR.
The Borrower shall not, nor shall it permit any of its Subsidiaries to
change its fiscal year.
SECTION 6.15. DERIVATIVES.
The Borrower shall not, nor shall it permit any of its Subsidiaries to
enter into any Derivative Contract except Permitted Derivative Obligations.
ARTICLE 7
AFFIRMATIVE COVENANTS
While any part of the credit granted to the Borrower is available and
while any part of the principal of or interest on any Note or any of the other
Obligations remains unpaid, and unless waived in writing by the Lender, the
Borrower shall:
29
SECTION 7.01. FINANCIAL STATUS.
At all times:
(a) On the Closing Date and thereafter as of each fiscal
quarter-end, maintain Tangible Equity Capital in the amount of
at least $12,000,000.
(b) Beginning as of the quarter ended December 31, 2004, maintain
a Term Debt Service Coverage Ratio as of each fiscal quarter
end of at least 1.50 to 1.00 for the four quarter period then
ended.
(c) Cause both SCB and UBC to maintain a "Total risk-based capital
ratio," as defined in 12 C.F.R. Section 565.2(j), stated as a
percentage, of at least 10%.
(d) Cause both SCB and UBC to maintain a "Tier 1 risk-based
capital ratio," as defined in 12 C.F. R. Section 565.2(h),
stated as a percentage, of at least 6%.
(e) Cause both SCB and UBC to maintain a "Leverage ratio" as
defined in 12 C.F.R. Section 565.2(c), stated as a percentage,
of at least 5%.
(f) Cause UBC to maintain a Non-Performing Loan Ratio as of each
fiscal quarter end of not more than 10%.
(g) Cause SBC to maintain a Non-Performing Loan Ratio as of each
fiscal quarter end of not more than: (i) 50% through September
30, 2004, (ii) 40% from December 31, 2004 through September
30, 2005, (iii) 30% from December 31, 2005 through September
30, 2006, (iv) 20% from December 31, 2006 through September
30, 2007, and (v) 10% from December 31, 2007 and at all times
thereafter.
SECTION 7.02. INSURANCE.
Maintain insurance in such amounts and against such risks as is
customary by companies engaged in the same or similar businesses and similarly
situated.
SECTION 7.03. CORPORATE EXISTENCE; OBLIGATIONS.
Do, and cause each Subsidiary to do, all things necessary to: (i)
maintain its corporate existence and all rights and franchises necessary or
desirable for the conduct of its business; (ii) comply with all applicable laws,
rules, regulations and ordinances, and all restrictions imposed by Governmental
Authorities, including Environmental Laws; and (iii) pay, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and other
governmental charges against it or its property, and all of its Indebtedness and
other liabilities, except to the extent and so long as the same are being
contested in good faith by appropriate proceedings in such manner as not to
cause any material adverse effect upon its property, financial condition or
business operations, with adequate reserves provided for such payments.
30
SECTION 7.04. BUSINESS ACTIVITIES.
Continue to carry on its financial services business activities in
substantially the manner such activities are conducted on the date of this
Agreement and not make any material change in the nature of its business,
including entering into businesses outside the financial services industry or
reasonably related thereto.
SECTION 7.05. PROPERTIES.
Keep and cause each Subsidiary to keep its properties (whether owned or
leased) in good condition, repair and working order, ordinary wear and tear and
obsolescence excepted, and make or cause to be made from time to time all
necessary repairs thereto (including external or structural repairs) and
renewals and replacements thereof.
SECTION 7.06. ACCOUNTING RECORDS; REPORTS.
Maintain and cause each Subsidiary to maintain a standard and modern
system for accounting in accordance with GAAP consistently applied throughout
all accounting periods and consistent with those applied in the preparation of
the financial statements referred to in Section 5.05; and furnish to the Lender
such information respecting the business, assets and financial condition of the
Borrower and its Subsidiaries as the Lender may reasonably request and, without
request, furnish to the Lender:
(a) As soon as available, but no more than sixty (60) days after
the last day of each fiscal quarter of the Bank Subsidiaries,
copies of each of the Bank Subsidiaries' thrift financial
reports or other quarterly and annual reports of condition or
income furnished to Governmental Authorities, including but
not limited to the Quarterly Thrift Financial Report to the
OTS and the Quarterly FHLB Credit Availability Report to the
FHLB; and
(b) Notice, promptly after the Borrower or any of its Subsidiaries
knows, or has reason to know, of any notice or capital
directive from OTS to any of the Bank Subsidiaries indicating
that it does not have an amount of capital satisfying its
minimum capital requirements or imposing any restrictions on
such Bank Subsidiary's ability to declare and pay cash
Distributions to the Borrower; and
(c) Contemporaneous with the filing of such report, copies of (i)
any audits completed by the Government National Mortgage
Association, the Federal Home Loan Mortgage Corporation, or
Federal National Mortgage Association ("FNMA"), (ii) Mortgage
Bankers' Financial Reporting Forms (FNMA Form 1022) which the
Borrower or any of its Subsidiaries shall have filed with
FNMA, and (iii) all annual, quarterly, or extraordinary
reports filed by the Borrower or any of its Subsidiaries with
the OTS or, if applicable, the Federal Reserve System; and
(d) As soon as available, and in any event within ninety (90) days
after the close of each fiscal year of the Borrower, a copy of
the audit report for such year and accompany consolidated and
consolidating financial statements of the Borrower
31
and its Subsidiaries, as prepared by independent public
accountants of recognized standing selected by the Borrower
and satisfactory to the Lender, which audit report shall be
accompanied by an opinion of such accountants, in form
satisfactory to the Lender, to the effect that the same fairly
present the financial condition of the Borrower and its
Subsidiaries and the results of its and their operations as of
the relevant dates thereof; together with copies of any
management letters issued by such accountants in connection
with such audit; and
(e) As soon as available, copies of all reports or materials
submitted or distributed to shareholders of the Borrower or
filed with the SEC or other governmental agency having
regulatory authority over the Borrower or any Subsidiary or
with any national securities exchange; and
(f) Promptly after the furnishing thereof, copies of any statement
or report regarding the financial condition of the Borrower or
any Subsidiary or notices of default given by the Borrower or
any Subsidiary furnished to any other holder of obligations of
the Borrower or any Subsidiary pursuant to the terms of any
indenture, loan or similar agreement and not otherwise
required to be furnished to the Lender pursuant to any other
clause of this Section 7.06; and
(g) Promptly, and in any event within ten (10) days, after
Borrower has knowledge thereof a statement of the chief
financial officer of the Borrower describing: (i) any event
which, either of itself or with the lapse of time or the
giving of notice or both, would constitute a default hereunder
or under any other material agreement to which the Borrower or
any Subsidiary is a party, together with a statement of the
actions which the Borrower proposes to take with respect
thereto; (ii) any pending or threatened litigation or
administrative proceeding of the type described in Section
5.10; (iii) any other condition or event which would make any
of the warranties contained in this Agreement incomplete or
inaccurate; and (iv) any fact or circumstance which is
materially adverse to the property, financial condition or
business operations of the Borrower or any Subsidiary,
including, without limitation (w) the issuance of any notice
of cease-and-desist order (temporary or otherwise) or any
other formal notice, complaint, suit, claim, investigation, or
proceeding initiated at or by any Governmental Authority or
any judgment, decree, or order of any Governmental Authority;
(x) the service of notice or intention to remove from office
or notice of intention to suspend from office by any
Governmental Authority upon any director or officer of the
Borrower or any of its Subsidiaries; (y) the issuance of a
notice of termination of the status of any of the Bank
Subsidiaries as an insured bank under the Federal Deposit
Insurance Corporation Act, as amended, or (z) the entering
into of a memorandum of understanding or formal written
agreement between any Governmental Authority and the Borrower,
any Subsidiary, or any director, officer, employee, or agent
of the Borrower or any Subsidiary; and
(h) (i) Promptly, and in any event within thirty (30) days, after
the Borrower knows that any Reportable Event with respect to
any Plan has occurred, a statement of the chief financial
officer of the Borrower setting forth details as to such
32
Reportable Event and the action which the Borrower proposes to
take with respect thereto, together with a copy of any notice
of such Reportable Event given to the Pension Benefit Guaranty
Corporation if a copy of such notice is available to the
Borrower, (ii) promptly after the filing thereof with the
Internal Revenue Service, copies of each annual report with
respect to each Plan administered by the Borrower and (iii)
promptly after receipt thereof, a copy of any notice (other
than a notice of general application) the Borrower, any
Subsidiary or any member of the Controlled Group may receive
from the Pension Benefit Guaranty Corporation or the Internal
Revenue Service with respect to any Plan administered by the
Borrower; and
(i) Promptly upon receipt, copies of any correspondence, notice,
pleading, citation, indictment, complaint, order, decree, or
other document from any source asserting or alleging a
circumstance or condition which requires or may require a
financial contribution by the Borrower or any Subsidiary or a
cleanup, removal, remedial action, or other response by or on
the part of the Borrower or any Subsidiary under Environmental
Laws or which seeks damages or civil, criminal or punitive
penalties from the Borrower or any Subsidiary for an alleged
violation of Environmental Laws; and
(j) The financial statements referred to in (a) and (d) above
shall be accompanied by a certificate by the chief financial
officer of the Borrower showing computations demonstrating
compliance or non-compliance with Section 7.01 and stating
that, as of the close of the last period covered in such
financial statements, no condition or event had occurred which
constitutes a default hereunder or which, after notice or
lapse of time or both, would constitute a default hereunder
(or if there was such a condition or event, specifying the
same); and
(k) Copies of annual federal tax returns for the Borrower and the
Subsidiaries within thirty (30) days after filing the same
with the Internal Revenue Service or successor agency.
SECTION 7.07. INSPECTION OF RECORDS.
Permit representatives of the Lender to visit and inspect any of the
properties and examine any of the books and records of the Borrower and its
Subsidiaries at any reasonable time during normal business hours and as often as
may be reasonably desired.
SECTION 7.08. QUALIFIED THRIFT LENDER STATUS.
Cause the Bank Subsidiaries to maintain their status as a Qualified
Thrift Lender as defined in 12 U.S.C. Section 1467a(m).
SECTION 7.09. COLLATERAL ACCOUNT.
Maintain the Collateral Account with the Borrower with a minimum
balance of $500,000.00; provided that if no Default or Event of Default has
occurred and is continuing (i) after November 19, 2005 Borrower may direct the
Lender to withdraw scheduled payments of
33
principal from the Collateral Account, and (ii) after November 19, 2006, the
Lender shall remove any restrictions on the ability of the Borrower to withdraw
the remaining balance from the Collateral Account. Borrower acknowledges that
(i) pursuant to Section 3.09 it has granted Lender a security interest in the
Collateral Account, and (ii) except as set forth above it shall not be permitted
to make withdrawals from the Collateral Account. Borrower further authorizes
Lender to note such security interest and restrictions on withdrawal in its
records relating to the Collateral Account.
SECTION 7.10. MANAGEMENT.
Until November 19, 2007, the Borrower shall employ Xxxxxxx Xxxxxxx, III
as its chief executive officer.
ARTICLE 8
DEFAULTS
SECTION 8.01. DEFAULTS.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(a) The Borrower shall fail to pay (i) any interest due on the
Term Note, or any other amount payable hereunder (other than a
principal payment on the Term Note) by five (5) days after the
same becomes due; or (ii) any principal amount due on the Term
Note when due;
(b) The Borrower shall default in the performance or observance of
any agreement, covenant, condition, provision or term
contained in Article VI or Section 7.01 of this Agreement;
(c) The Borrower or other signatory other than the Lender shall
default in the performance or observance of any of the other
agreements, covenants, conditions, provisions or terms in this
Agreement or the Term Loan Document continuing for a period of
thirty days after written notice thereof is given to the
Borrower by any of the Lender;
(d) Any representation or warranty made by the Borrower herein or
any certificate delivered pursuant hereto, or any financial
statement delivered to the Lender hereunder, shall prove to
have been false in any material respect as of the time when
made or given;
(e) The Borrower or any Subsidiary shall fail to pay as and when
due and payable (whether at maturity, by acceleration or
otherwise) all or any part of the principal of or interest on
any indebtedness of or assumed by it, or of the rentals due
under any lease or sublease, or of any other obligation for
the payment of money, and such default shall not be cured
within the period or periods of grace, if any, specified in
the instruments governing such obligations; or a default
(other than a payment default) shall occur under any evidence
of, or any indenture, lease,
34
sublease, agreement or other instrument governing such
obligations pursuant to which the aggregate amount owing by
the Borrower or a Subsidiary is in excess of $50,000.00, and
such non-payment default shall continue for a period of time
sufficient to permit the acceleration of the maturity of any
such indebtedness or other obligation or the termination of
such lease or sublease;
(f) A final judgment which, together with all other outstanding
final judgments against the Borrower and its Subsidiaries, or
any of them, exceeds an aggregate of $50,000.00 shall be
entered against the Borrower or any Subsidiary and shall
remain outstanding and unsatisfied, unbonded, unstayed or
uninsured after 60 days from the date of entry thereof; or any
judgment which exceeds $50,000.00 shall be entered against the
Borrower or any Subsidiary and shall not be covered, for the
benefit of the Borrower or such Subsidiary, by insurance
provided by a financially responsible insurance carrier;
(g) The Borrower or any Subsidiary shall: (i) become insolvent; or
(ii) be unable, or admit in writing its inability to pay its
debts as they mature; or (iii) make a general assignment for
the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its property; or (iv)
become the subject of an "order for relief" within the meaning
of the United States Bankruptcy Code; or (v) become the
subject of a creditor's petition for liquidation,
reorganization or to effect a plan or other arrangement with
creditors; or (vi) apply to a court for the appointment of a
custodian or receiver for any of its assets; or (vii) have a
custodian or receiver appointed for any of its assets (with or
without its consent); or (viii) have any of its assets
garnished, seized or forfeited, or threatened with
garnishment, seizure or forfeiture; or (ix) otherwise become
the subject of any insolvency proceedings or propose or enter
into any formal or informal composition or arrangement with
its creditors;
(h) This Agreement, the Term Note or the Loan Document shall, at
any time after their respective execution and delivery, and
for any reason, cease to be in full force and effect or be
declared null and void, or be revoked or terminated, or the
validity or enforceability thereof or hereof shall be
contested by the Borrower or any shareholder of the Borrower,
or the Borrower shall deny that it has any or further
liability or obligation thereunder or hereunder, as the case
may be;
(i) Any Reportable Event, which the Lender determine in good faith
to constitute grounds for the termination of any Plan by the
Pension Benefit Guaranty Corporation or for the appointment by
the appropriate United States District Court of a trustee to
administer any Plan, shall have occurred, or any Plan shall be
terminated within the meaning of Title IV of ERISA, or a
trustee shall be appointed by the appropriate United States
District Court to administer any Plan, or the Pension Benefit
Guaranty Corporation shall institute proceedings to terminate
any Plan or to appoint a trustee to administer any Plan, and
in case of any event described in the preceding provisions of
this subsection (i) the Lender determine in good faith that
the aggregate amount of the liability of the Borrower and its
Subsidiaries' to the Pension Benefit Guaranty Corporation
under ERISA
35
shall exceed $50,000.00 and such liability is not covered, for
the benefit of the Borrower, by insurance; or the Borrower or
any of its Subsidiaries shall have fully or partially
withdrawn from any Multiemployer Plan and such withdrawal
results in liability on the part of the Borrower or any of its
Subsidiaries (individually or collectively) in excess of
$50,000.00; or
(j) (i) The Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability (within the meaning of Section
4201 of ERISA) to such Multiemployer Plan, (ii) the Borrower
or such ERISA Affiliate does not have reasonable grounds for
contesting such withdrawal liability or is not contesting such
withdrawal liability in a timely and appropriate manner and
(iii) the amount of such withdrawal liability specified in
such notice, when aggregated with all amounts required to be
paid to Multiemployer Plans in connection with withdrawal
liabilities (determined as of the date or dates of such
notification), exceeds $50,000.00; or
(k) The Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination the aggregate annual
contribution of the Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or have
been or are being terminated have been or will be increased
over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan
years by an amount exceeding $50,000.00; or
(l) Any Change of Control shall occur, or
(m) Any of the Bank Subsidiaries (i) has (or receives notice or
directive from the OTS that it has) inadequate capital to
satisfy its minimum capital requirements, (ii) receives any
notice or capital directive from the OTS restricting its
ability to pay cash Distributions to the Borrower, other than
any regulation generally applicable to federal savings banks,
(iii) lose their borrowing privileges from the FHLB for any
reason, or (iv) receives notice of intention to cancel or
cancellation of its Bankers Blanket Bond; or
(n) If any event or condition shall exist which could reasonably
be expected to be a Material Adverse Effect, or
(o) If Lender ceases to hold (for the benefit of Lender) 100% of
the issued and outstanding shares of common stock of SCB and
UBC, as collateral, or
(p) If any event or condition shall occur or exist with respect to
any activity or substance regulated under the Environmental
Laws and as a result of such event or condition, the Borrower
or any of its Subsidiaries shall have incurred, or in the
opinion of the Lender be reasonably likely to incur, a
liability in excess of $50,000.00 during any consecutive 12
month period.
36
SECTION 8.02. TERMINATION OF COMMITMENTS AND ACCELERATION OF
OBLIGATIONS.
Upon the occurrence of any Event of Default:
(a) As to any Event of Default and at any time thereafter, and in
each case, the Lender may, by written notice to the Borrower,
declare the unpaid principal balance of the Term Note,
together with all interest accrued thereon, to be immediately
due and payable; and the unpaid principal balance of and
accrued interest on such Term Note shall thereupon be due and
payable without further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary
herein or in the Term Note contained; and
(b) As to each Event of Default, the Lender shall have all the
remedies for default provided by the Loan Documents, as well
as applicable law.
SECTION 8.03. AMENDMENTS, ETC.
No waiver, amendment, settlement or compromise of any of the rights of
the Lender under this Agreement, the Term Note or any of the Loan Documents
shall be effective for any purpose unless it is in a written instrument executed
and delivered by the parties to this Agreement.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. EXPENSES; INDEMNITY.
(a) The Borrower shall pay or reimburse (i) the Lender for all
reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses,
including the fees and expenses of in-house counsel) paid or
incurred by the Lender in connection with the negotiation,
preparation, execution, delivery, and administration of this
Agreement, the Term Note, the Loan Documents and any other
document required hereunder or thereunder, including without
limitation any amendment, supplement, modification or waiver
of or to any of the foregoing; (ii) the Lender for all
reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses,
including the fees and expenses of in-house counsel) paid or
incurred by the Lender before and after judgment in enforcing,
protecting or preserving its rights under this Agreement, the
Term Note, the Loan Documents and any other document required
hereunder or thereunder, including without limitation the
enforcement of rights against, or realization on, any
collateral or security therefore or in defending against any
claim made against the Lender by the Borrower, any Subsidiary
or any third party as a result of or in any way relating to
any matter referred to in subsection (i) or (ii) of this
Section; and (iii) the Lender for any and all recording and
filing fees and any and all stamp, excise, intangibles and
other taxes, if any, (including, without limitation, any
sales, occupation, excise, gross receipts, franchise, general
corporation, personal property, privilege or license taxes,
but not including taxes levied upon the net income of the
Lender
37
by the federal government or the state (or political
subdivision of a state) where the Lender's principal office is
located), which may be payable or determined to be payable in
connection with the negotiation, preparation, execution,
delivery, administration or enforcement of this Agreement, the
Term Note, the Loan Documents or any other document required
hereunder or thereunder or any amendment, supplement,
modification or waiver of or to any of the foregoing, or
consummation of any of the transactions contemplated hereby or
thereby, whether such taxes are levied by reason of the acts
to be performed by the Borrower hereunder or are levied upon
the Lender, the Borrower, any Subsidiary, the property of the
Lender or otherwise, including all costs and expenses incurred
in contesting the imposition of any such tax, and any and all
liability with respect to or resulting from any delay in
paying the same, whether such taxes are levied upon the
Lender, the Borrower, any Subsidiary, or otherwise.
(b) The Borrower agrees to indemnify the Lender against any and
all losses, claims, damages, liabilities and expenses,
(including, without limitation, reasonable attorneys' fees and
expenses, including the fees and expenses of in-house
counsel), incurred by the Lender arising out of, in any way
connected with, or as a result of (i) any acquisition or
attempted acquisition of stock or assets of another person or
entity by the Borrower or any Subsidiary, (ii) the use of any
of the proceeds of any loans made hereunder by the Borrower or
any Subsidiary for the making or furtherance of any such
acquisition or attempted acquisition, (iii) any breach or
alleged breach by the Borrower or any Subsidiary of or any
liability or alleged liability of the Borrower or any
Subsidiary under any Environmental Law, or any liability or
alleged liability incurred by the Lender under any
Environmental Law in connection with this Agreement, the Loan
Document or the transactions contemplated hereunder or
thereunder, (iv) the negotiation, preparation, execution,
delivery, administration, and enforcement of this Agreement,
the Term Note, the Loan Documents and any other document
required hereunder or thereunder, including without limitation
any amendment, supplement, modification or waiver of or to any
of the foregoing or the consummation or failure to consummate
the transactions contemplated hereby or thereby, or the
performance by the parties of their obligations hereunder or
thereunder, (v) any claim, litigation, investigation or
proceedings related to any of the foregoing, whether or not
the Lender is a party thereto; provided, however, that such
indemnity shall not apply to -------- ------- any such losses,
claims, damages, liabilities or related expenses arising from
the gross negligence or willful misconduct of the Lender.
(c) The foregoing agreements and indemnities shall remain
operative and in full force and effect regardless of
termination of this Agreement, the consummation of or failure
to consummate either the transactions contemplated by this
Agreement or any amendment, supplement, modification or
waiver, the repayment of any loans made hereunder, the
invalidity or unenforceability of any term or provision of
this Agreement or the Term Note or the Loan Document, or any
other document required hereunder or thereunder, any
investigation made by or on behalf of the Lender, the Borrower
or any Subsidiary, or the content or accuracy of any
38
representation or warranty made under this Agreement, the Loan
Document or any other document required hereunder or
thereunder.
SECTION 9.02. SUCCESSORS.
The provisions of this Agreement shall inure to the benefit of the
Lender, and shall inure to the benefit of and be binding upon any successor to
the Lender. No delay on the part of the Lender, in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege hereunder preclude other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein specified are cumulative and are not exclusive of
any rights or remedies which the Lender would otherwise have.
SECTION 9.03. SURVIVAL.
All agreements, representations and warranties made herein shall
survive the execution of this Agreement, the making of the loans hereunder and
the execution and delivery of the Term Note.
SECTION 9.04. GOVERNING LAW.
This Agreement and the Notes issued hereunder shall be governed by and construed
in accordance with the internal laws of the State of Indiana (without reference
to conflict of law principles), except to the extent superseded by federal law.
SECTION 9.05. COUNTERPARTS.
This Agreement may be signed in any number of counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 9.06. NOTICES.
All communications or notices required under this Agreement shall be in
writing and shall be deemed to have been given (i) on the date when sent by
facsimile transmission to the facsimile number set forth below, or (ii) on the
date when delivered, sent by nationally recognized overnight delivery service,
or deposited in the United States mail, postage prepaid, in each case to the
following address (unless and until any of such parties advises the other in
writing of a change in such address):
If to the Borrower: Blue River Bancshares, Inc.
00 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
If to the Lender: Union Federal Bank of Indianapolis
00 X. Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
39
Attention: Xxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
SECTION 9.07. PARTICIPATIONS.
(a) Participations. The Lender may sell participations to one or
more Persons in all or a portion of its rights, obligations or
rights and obligations under this Agreement (including all or
a portion of its Term Note); provided, however, that (i) the
Lender's obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to
the other parties hereto for the performance of such
obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions contained in
Article III, inclusive, and the right of set-off contained in
Section 3.09, and (iv) the Borrower shall continue to deal
solely and directly with the Lender in connection with the
Lender's rights and obligations under this Agreement, and the
Lender shall retain the sole right to enforce the obligations
of the Borrower relating to the Term Note and to approve any
amendment, modification, or waiver of any provision of this
Agreement.
(b) Information. The Lender may furnish any information concerning
the Borrower in the possession of the Lender from time to time
to assignees and participants (including prospective assignees
and participants), provided that such assignee or participant
(or prospective assignee or participant) agrees to be bound by
the confidentiality restrictions of Section 9.08).
SECTION 9.08. CONFIDENTIALITY.
The Lender agrees it will use its best efforts not to disclose without
the Borrower's consent (other than to its employees, auditors, counsel or other
professional advisors, to its Affiliates) any information concerning the
Borrower or any of its Subsidiaries furnished pursuant to this Agreement;
provided, that the Lender may disclose any such information (a) that has become
generally available to the public, (b) if required or appropriate in any report,
statement or testimony submitted to any regulatory body having or claiming to
have jurisdiction over the Lender, (c) if required or appropriate in response to
any summons or subpoena or in connection with any litigation, (d) in order to
comply with any law, order, regulation or ruling applicable to the Lender, and
(e) to any prospective or actual purchaser of a loan participation in accordance
with Section 9.07 hereof; provided, that such actual or prospective participant
agrees to be bound by the provisions of this Section 9.08.
SECTION 9.09. ENTIRE AGREEMENT; NO AGENCY.
This Agreement and the other documents referred to herein contain the
entire agreement between the Lender and the Borrower with respect to the subject
matter hereof, superseding all previous communications and negotiations, and no
representation, undertaking, promise or condition concerning the subject matter
hereof shall be binding upon the Lender unless clearly expressed in this
Agreement or in the other documents referred to herein. Nothing in this
Agreement or in the other documents referred to herein and no action taken
pursuant hereto shall
40
cause the Borrower to be treated as an agent of the Lender, or shall be deemed
to constitute the Lender and the Borrower a partnership, association, joint
venture or other entity.
SECTION 9.10. NO THIRD PARTY BENEFIT.
This Agreement is solely for the benefit of the parties hereto and
their permitted successors and assigns. No other person or entity shall have any
rights under, or because of the existence of, this Agreement.
SECTION 9.11. CONSENT TO JURISDICTION.
The Borrower hereby consents to the jurisdiction of any state or
federal court situated in Xxxxxx County, Indiana, and waives any objection based
on lack of personal jurisdiction, improper venue or forum non conveniens, with
regard to any actions, claims, disputes or proceedings relating to this
Agreement, the Term Note, any of the Loan Documents, or any other document
delivered hereunder or in connection herewith, or any transaction arising from
or connected to any of the foregoing. The Borrower waives personal service of
any and all process upon it, and consents to all such service of process made by
mail or by messenger directed to it at the address specified below. Nothing
herein shall affect the right of the Lender, or any of them, to serve process in
any manner permitted by law, or limit the right of the Lender, or any of them,
to bring proceedings against the Borrower or its property or assets in the
competent courts of any other jurisdiction or jurisdictions.
SECTION 9.12. WAIVER OF JURY TRIAL.
THE BORROWER AND THE LENDER HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE TERM NOTE, ANY OF THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENT
DELIVERED HEREUNDER OR IN CONNECTION HEREWITH, OR ANY TRANSACTION ARISING FROM
OR CONNECTED TO ANY OF THE FOREGOING. THE BORROWER AND THE LENDER EACH REPRESENT
THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Indianapolis, Indiana by their proper and duly
authorized officers as of the day and year first above written.
BLUE RIVER BANCSHARES, INC.
Address: 00 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
(CORPORATE SEAL)
By: ______________________________________
President
UNION FEDERAL BANK OF INDIANAPOLIS, as the Lender
By: _____________________________________
Title: __________________________________
42
EXHIBIT 2.01
PROMISSORY NOTE
Indianapolis, Indiana
November 19, 2003 $4,000,000.00
FOR VALUE RECEIVED, the undersigned, BLUE RIVER BANCSHARES, INC., an
Indiana corporation ("Borrower"), hereby unconditionally promises to pay to the
order of UNION FEDERAL BANK OF INDIANAPOLIS (the "Lender"), without relief from
valuation or appraisement laws, the principal sum of Four Million Dollars
($4,000,000.00), such amount representing the original principal amount of the
"Term Loan" (as defined in the Credit Agreement referred to below) made by the
Lender to the Borrower pursuant to the "Credit Agreement" (as defined below).
Capitalized terms used herein and not otherwise defined herein are as defined in
the Credit Agreement.
Unless otherwise required to be paid sooner pursuant to the provisions
of the Credit Agreement, the principal indebtedness evidenced hereby shall be
payable in installments as set forth in the Credit Agreement with a final
installment payable on November 19, 2013.
The Borrower promises to pay interest on the unpaid principal amount of
the Term Loan from the date of such Term Loan until such principal amount is
paid in full at a rate or rates per annum determined in accordance with the
terms of the Credit Agreement. Interest hereunder is due and payable at such
times and on such dates as set forth in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Lender, to such domestic account as the Lender may
designate, in same day funds. At the time of each payment or prepayment of
principal of the Term Loan, the Lender shall make a notation either on the
schedule attached hereto and made a part hereof, or in such Lender's own books
and records, in each case specifying the amount of principal paid or prepaid
with respect to such Term Loan; provided that the failure of the Lender to make
any such recordation or notation shall not affect the Obligations of the
Borrower hereunder or under the Credit Agreement.
This Promissory Note is the "Term Note" referred to in, and is entitled
to the benefits of, the Credit Agreement dated as of November 19, 2003 (as
amended, restated, supplemented or modified from time to time, the "Credit
Agreement") among the Borrower and the Lender. The Credit Agreement, among other
things, (i) provides for the making of the Term Loan in an amount equal to the
U.S. Dollar amount above, the indebtedness of the Borrower resulting therefrom
being evidenced by this Promissory Note and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments of the principal hereof prior to the maturity hereof
without penalty or premium, upon the terms and conditions therein specified.
Demand, presentment, protest and notice of nonpayment are hereby waived
by the Borrower.
43
Whenever in this Promissory Note reference is made to the Lender or
Borrower, such reference shall be deemed to include, as applicable, a reference
to their respective successors and assigns permitted pursuant to the Credit
Agreement. The provisions of this Promissory Note shall be binding upon and
shall inure to the benefit of said successors and assigns. Borrower's successors
and assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for Borrower.
This Promissory Note shall be governed by, interpreted and enforced,
and the rights and liabilities of the parties hereto determined, in accordance
with the internal laws (without regard to the conflicts of law provisions) of
the State of Indiana. This Promissory Note is secured by and entitled to the
benefit of all of the Loan Documents referred to in the Credit Agreement and all
other existing and future security agreements between maker and payee.
BLUE RIVER BANCSHARES, INC.
By: ______________
Name:
Title:
44
SCHEDULE OF TERM LOAN PAYMENTS OR PREPAYMENTS
Principal Paid Amount of Unpaid
Date Amount of Loan or Prepaid Principal Balance Notation Made By
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
45
FORM OF COLLATERAL PLEDGE AGREEMENT
THIS AGREEMENT is entered into as of November 19, 2003, between BLUE
RIVER BANCSHARES, INC., an Indiana corporation ("DEBTOR"), and UNION FEDERAL
BANK OF INDIANAPOLIS, as the "SECURED PARTY".
Debtor and Secured Party have entered into the Credit Agreement (as
renewed, extended, amended, or restated from time to time, the "CREDIT
AGREEMENT") dated as of November ___, 2003. As a continuing inducement to the
Secured Party to extend credit to Debtor under the Credit Agreement, and as a
condition precedent to that credit, Debtor is executing and delivering this
agreement for the benefit of Secured Party.
ACCORDINGLY, for adequate and sufficient consideration, Debtor and
Secured Party agree as follows:
SECTION 1
DEFINITIONS AND REFERENCES
UNLESS STATED OTHERWISE, (A) TERMS DEFINED IN THE CREDIT AGREEMENT OR
THE UCC (AS HEREINAFTER DEFINED) HAVE THE SAME MEANINGS WHEN USED IN THIS
AGREEMENT, AND (B) TO THE EXTENT PERMITTED BY LAW, IF IN CONFLICT (I) THE
DEFINITION OF A TERM IN THE CREDIT AGREEMENT CONTROLS OVER THE DEFINITION OF
THAT TERM IN THE UCC, AND (II) THE DEFINITION OF A TERM IN ARTICLE 9 OF THE UCC
CONTROLS OVER THE DEFINITION OF THAT TERM ELSEWHERE IN THE UCC.
(a) COLLATERAL is defined in SECTION 2.2 of this
agreement.
(b) CONSTITUENT DOCUMENTS means, with respect to any
Person, its articles or certificate of incorporation, charter, bylaws,
certificates of limited partnership, partnership AGREEMENTS, limited
liability Borrower agreements, organizational documents, and such other
documents as may govern such Person's formation or organization.
(c) DEBTOR is defined in the preamble to this agreement
and includes, without limitation, Debtor, DEBTOR as a
debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian, or similar party appointed for Debtor or for
substantially all of Debtor's assets under any Debtor Relief Law (as
defined in the Guaranty).
(d) EVENT OF DEFAULT means the occurrence of any one or
more of the following: (a) any Event of Default specified in the Credit
Agreement; (b) the failure or refusal of Debtor to punctually and
properly observe, keep, and perform any covenant, agreement, or
undertaking contained in this agreement; or (c) the Liens granted
hereby shall ever become unenforceable, or cease to be perfected, first
priority Liens.
46
(e) INVESTMENT PROPERTY shall have the meaning set forth
in Section 9-102(a)(49) of the UCC.
(f) OBLIGOR means any Person obligated with respect to
any Collateral (whether as an ACCOUNT DEBTOR, obligor on an instrument,
issuer of securities, or otherwise).
(g) PLEDGED SECURITIES is defined in SECTION 2.2 of this
agreement.
(h) SECURED PARTY IS defined in the preamble to this
agreement.
(i) SECURITY INTEREST means the security interest granted
and the pledge and assignment made UNDER SECTION 2.1 of this agreement,
which is a Lien in favor of Secured Party.
(j) UCC means the Uniform Commercial Code as enacted in
the State of Indiana or other applicable jurisdiction, as amended at
the time in question.
SECTION 2
SECURITY INTEREST AND COLLATERAL
Section 2.1 SECURITY INTEREST. To secure the full payment and
performance of the Obligations, Debtor grants to Secured Party a security
interest in the Collateral and pledges and assigns the Collateral to the Secured
Party, all upon and subject to the terms and conditions of this agreement. The
grant of the Security Interest does not subject the Secured Party to the terms
of any Collateral or in any way transfer, modify, or otherwise affect any of
Debtor's obligations with respect to any Collateral or the Lien in favor of
Secured Party under the Credit Agreement.
Section 2.2 COLLATERAL. As used in this agreement, the term
"Collateral" means the present and future items and types of property described
below, whether now owned or acquired in the future by Debtor, and wherever
located.
(a) All present and future shares of stock or other
ownership interests (the "BANK SECURITIES") issued by Shelby County
Bank, a federal savings bank and Unified Banking Company, a federal
savings bank (the "BANK SUBSIDIARIES") and the certificates
representing the Bank Securities, and all cash, Investment Property,
dividends, increases, distributions, and profits received or receivable
therefrom, or in connection therewith, including distributions or
payments in partial or complete liquidation or redemption, or as a
result of reclassifications, readjustments, reorganizations, or changes
in the capital structure of the Bank Subsidiaries thereof, and any
other property, at any time and from time to time received, receivable,
or otherwise distributed or delivered in respect of or in exchange for
any of the Bank Securities to Secured Party, and all rights and
privileges pertaining thereto and all present and future cash and
noncash proceeds thereof; and
(b) All securities hereafter delivered to Secured Party
in substitution for, or in addition to, any of the foregoing, all
certificates representing or evidencing such securities, and all cash,
securities, instruments, documents, dividends, increases,
DISTRIBUTIONS, and profits received or receivable therefrom, and any
other property, at any
47
time and from time to time received by, receivable by, or otherwise
distributed or delivered to Secured Party, in respect of, or in
exchange for, any or all of the property described above (the property
described in PARAGRAPHS 2.2(a) AND 2.2(b) being referred to herein as
the "PLEDGED SECURITIES").
SECTION 3
REPRESENTATIONS AND WARRANTIES
By entering into this agreement, and by each subsequent delivery of
additional Collateral under this agreement, Debtor reaffirms the representations
and warranties contained in the Credit Agreement. Debtor further represents and
warrants to Secured Party as follows:
Section 3.1 BINDING OBLIGATION. This agreement creates a legal, valid,
and binding Lien in and to the Collateral in favor of Secured Party and is
enforceable against Debtor. The taking by Secured Party of physical possession
in Indiana of the stock certificates or other instruments representing the
Pledged Securities will perfect the Security Interest in that Collateral. Once
perfected, the Security Interest will constitute a first priority Lien on the
Collateral. The creation of the Security Interest does not require the consent
of any Person that has not been obtained.
Section 3.2 SECURITIES. All Pledged Securities are duly authorized,
validly issued, fully paid, and non-assessable, and the transfer of them is not
subject to any restrictions other than restrictions imposed by applicable
corporate, banking and securities laws.
Section 3.3 MISCELLANEOUS REPRESENTATIONS. Debtor hereby represents and
warrants that: (a) Debtor is the legal and beneficial owner of the Collateral
free and clear of all Liens, charges, pledges, encumbrances, and security
interests of every kind and nature other than Liens in favor of Secured Party;
(b) each Pledged Security has been validly authorized and issued, and is fully
paid and nonassessable; (c) Debtor has good right and lawful authority to pledge
the Collateral in the manner hereby done or contemplated; (d) no consent or
approval of or notice to any Governmental Authority, or of any securities
exchange, is necessary to effect the validity of the rights created hereunder
which have not been obtained; (e) except for any financing statement which may
have been filed by Secured Party, no financing statement covering the
Collateral, or any part thereof, has been filed with any filing officer; (f) no
presently effective security agreement covering the Collateral, or any part
thereof, has been made, and no presently effective security interest, other than
the one herein created, has attached or been perfected in the Collateral, or any
part thereof; (g) the execution, delivery, and consummation of this agreement
(i) have been duly authorized by all requisite corporate action on the part of
Debtor, and (ii) will not violate the Constituent Documents of Debtor or any
issuer, or any law, regulation, mortgage, indenture, contract, instrument,
judgment, or decree applicable to or binding on Debtor or the issuers of the
Pledged Securities; (h) the Bank Securities constitute 100% of the issued and
outstanding voting stock of the Bank Subsidiaries; (i) all other Pledged
Securities constitute all of the stock of the Bank Subsidiaries owned directly
or indirectly by Debtor; (j) none of the Pledged Securities are subject to any
options or other rights of third parties, and (k) Debtor's chief executive
office is located at 00 X. Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000. Debtor has
not used or transacted business under any other corporate name or tradename in
the five year period preceding the date hereof.
48
Section 3.4 ADDITIONAL COLLATERAL. The foregoing representations and
warranties will be true and correct in all respects with respect to any
additional Collateral or additional specific descriptions of certain Collateral
delivered to Secured Party in the future by Debtor.
The failure of any of these representations or warranties to be
accurate and complete does not impair the Security Interest in any Collateral.
SECTION 4
SECURED PARTY AS CUSTODIAN
Secured Party shall have physical possession of the certificates or
instruments representing or evidencing the Collateral. Debtor agrees that either
(a) all certificates representing Pledged Securities shall, after the occurrence
of an Event of Default, be registered in the appropriate stock record books in
the name of Secured Party or a nominee or nominees of Secured Party, or (b) in
lieu of presently registering the Pledged Securities in the name of Secured
Party or its nominee as provided in CLAUSE (a) above, Debtor will deposit with
Secured Party, along with the certificates or instruments representing or
evidencing the Pledged Securities, duly executed stock powers in favor of
Secured Party or its nominee with signatures guaranteed by a member or member
organization of the New York Stock Exchange or by a commercial bank or trust
Borrower acceptable to the transfer agent. In addition, Secured Party shall,
after the occurrence of an Event of Default, have the right to exchange
certificates or instruments representing or evidencing the Pledged Securities
for certificates or instruments of smaller or larger denominations for any
purpose consistent with its performance of this agreement.
SECTION 5
COVENANTS
Until all commitments by Secured Party to extend credit under the
Credit Agreement have been canceled or terminated and the Obligations are fully
paid and performed, Debtor covenants and agrees with Secured Party as follows:
Section 5.1 ADDITIONAL DOCUMENTS AND INFORMATION. Debtor shall: (i)
from time to time, at Debtor's expense, promptly execute and deliver to Secured
Party all such stock powers, assignments, certificates, supplemental writings,
financing statements, and other items, and do all other acts or things as
Secured Party may reasonably request in order more fully to evidence and perfect
the security interest of Secured Party in the Collateral or enable it to
exercise and enforce its rights hereunder; (ii) punctually and properly perform
all of Debtor's covenants and duties under any other security agreement, deed of
trust, collateral agreement, or contract of any kind now or hereafter existing
as security for, or in connection with, payment of the Obligations (to the
extent liable thereon) in accordance with the terms hereof, and in accordance
with the terms of the Term Note; (iii) promptly furnish Secured Party with any
information or writings which Secured Party may reasonably request concerning
the Collateral; (iv) allow Secured Party to inspect all records of Debtor
relating to the Collateral or to the Obligations, and to make and take away
copies of such records; (v) promptly notify Secured Party of any change in any
fact or circumstances warranted or represented by Debtor in this agreement that
could reasonably be expected to result in a Material Adverse Effect, or in any
other writing furnished by Debtor to
49
Secured Party in connection with the Collateral or the Obligations; (vi)
promptly notify Secured Party of any claim, action, or proceeding affecting
title to the Collateral, or any part thereof, or the security interest therein,
and, at the request of Secured Party, appear in and defend, at Debtor's expense,
any such action or proceeding; and (vii) promptly, after being requested by
Secured Party, pay to Secured Party the amount of all reasonable expenses,
including reasonable attorneys' fees and other legal expenses, incurred by
Secured Party in perfecting, maintaining, and enforcing the security interest.
Section 5.2 PROCEEDS. Should the Pledged Securities, or any part
thereof, ever be in any manner converted by its issuer or maker into another
type of property, or any money or other proceeds ever be paid or delivered to
Debtor as a result of Debtor's rights in the Pledged Securities, then, in any
such event, all such property, money, and other proceeds, except only ordinary
cash dividends (unless and until payable to Secured Party, pursuant to Section
6.2 hereof), shall become part of the Pledged Securities, and shall be delivered
to Secured Party by Debtor.
Section 5.3 PERFORMANCE BY SECURED PARTY. Should any covenant, duty, or
agreement of Debtor fail to be performed in accordance with its terms hereunder,
Secured Party may, but shall never be obligated to, after three (3) Business
Days written notice thereof to Debtor, perform or attempt to perform such
covenant, duty, or agreement on behalf of Debtor, and any amount expended by
Secured Party in such performance or attempted performance shall become a part
of the Obligations, and, at the request of Secured Party, Debtor agrees to pay
such amount promptly to Secured Party, at Secured Party's office in
Indianapolis, Indiana, together with interest thereon at the rate provided in
the Credit Agreement.
Section 5.4 COVENANT REGARDING REGISTRATION. If Secured Party shall
determine to exercise its right to sell any or all of the Pledged Securities
pursuant to Section 7.2 hereof, and if, in the opinion of counsel for Secured
Party, it is necessary, or if, in the opinion of Secured Party, it is advisable
to have the Pledged Securities, or that portion thereof to be sold, registered
under the provisions of any applicable banking and securities laws (the
"Securities Act"), then Debtor will, at Secured Party's request and at Debtor's
expense, cause each issuer of the Pledged Securities, or of that portion thereof
to be sold, to execute and deliver, and cause the directors and officers of each
such issuer to execute and deliver, all such instruments and documents, and
cause such issuer(s), directors, and officers to do or cause to be done all such
other acts and things as may be necessary or, in Secured Party's opinion,
advisable to register the Pledged Securities, or that portion thereof to be
sold, under the provisions of the Securities Act, and to cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged
Collateral, or that portion thereof to be sold, and to make all amendments
thereto and/or to the related prospectus that, in Secured Party's opinion, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations applicable thereto:
Section 5.5 NEGATIVE COVENANTS. Without the prior written consent of
Secured Party, Debtor will not: (i) sell, assign, or transfer any rights of
Debtor in the Collateral; (ii) grant any options or other rights in the
Collateral; (iii) create any other Lien or security interest in, mortgage, or
otherwise encumber the Collateral, or any part thereof, or permit the same to be
or become subject to any Lien, attachment, execution, sequestration, other legal
or equitable
50
process, or any encumbrance of any kind or character, except the security
interest herein created; (iv) vote for, or consent to, any amendment of the
Constituent Documents of any issuer that might reasonably be expected to
materially adversely affect the value of the Pledged Securities; (v) permit the
issuers of the Pledged Securities to merge or consolidate with or into any
corporation or other Person, except as expressly permitted by the Credit
Agreement; or (vi) permit the issuers of the Pledged Securities to issue any
shares to any other Person.
Section 5.6 OTHER NOTICES AND ACTIONS. Debtor shall promptly notify
Secured Party of (a) any change in any material fact or circumstance represented
or warranted by Debtor with respect to any of the Collateral, and (b) any claim,
action, or proceeding challenging the Security Interest or affecting title to
all or any material portion of the Collateral or the Security Interest (and, at
Secured Party's request, Debtor shall appear in and defend any such action or
proceeding at Debtor's expense).
Section 5.7 IMPAIRMENT OF COLLATERAL. Debtor shall not do or permit any
act that is reasonably likely to adversely impair the value of any Collateral.
SECTION 6
VOTING RIGHTS, DIVIDENDS, ETC., PRIOR TO EVENT OF DEFAULT
Section 6.1 RIGHTS PRIOR TO EVENT OF DEFAULT. So long as no Event of
Default shall have occurred after the date hereof and be continuing, and Secured
Party shall not have given written notice to Debtor of its intention to exercise
its voting rights pertaining to the Pledged Securities as set forth in Section
6.2 below:
(a) Debtor shall be entitled to exercise any and all
voting and/or consensual rights and powers relating or pertaining to
the Pledged Securities, or any part thereof, for any purpose not
inconsistent with the terms of this agreement.
(b) Debtor shall be entitled to receive, retain, and
expend or use in its business any and all ordinary cash dividends and
non-liquidating distributions in-kind payable on the Pledged
Securities, but any and all stock and/or liquidating dividends, returns
of capital, or other distributions made on or in respect of the Pledged
Securities, whether resulting from a subdivision, combination, or
reclassification of the outstanding capital stock of any issuer
thereof, or received in exchange for Pledged Securities or any part
thereof, or as a result of any merger, consolidation, acquisition, or
other exchange of assets to which any such issuer may be a party or
otherwise, and any and all cash and other property received in exchange
for the Pledged Securities or received in payment of the principal of,
or in redemption of, the Pledged Securities (either at maturity, upon
call for redemption, or otherwise), shall be and become part of the
collateral pledged hereunder, and if received by Debtor, shall be held
in trust for the benefit of Secured Party, and forthwith be delivered
to Secured Party (accompanied by proper instruments of assignment
and/or stock powers executed by Debtor in accordance with Secured
Party's instructions) to be held subject to the terms of this
agreement.
(c) Secured Party shall execute and deliver (or cause to
be executed and delivered) to Debtor all such proxies, powers of
attorney, dividend orders, and other
51
instruments as Debtor may request for the purpose of enabling Debtor to
exercise the voting and/or consensual rights and powers which it is
entitled to exercise pursuant to SUBSECTION (a) above and/or to receive
the dividends which it is authorized to receive and retain pursuant to
SUBSECTION (b) above.
Section 6.2 TERMINATION OF RIGHTS. Upon (i) the occurrence after the
date hereof of an Event of Default, and (ii) the giving of written notice by
Secured Party to Debtor of its intention to (A) foreclose upon, or otherwise
dispose of, the Pledged Securities, or (B) exercise its voting rights pertaining
to the Pledged Securities, subject to the receipt by Secured Party of required
federal or state regulatory approvals, if any, all rights of Debtor to exercise
the voting and/or consensual rights and powers which it is entitled to exercise
pursuant to Section 6.1(a) hereof, and/or to receive the dividends which it is
authorized to receive and retain pursuant to Section 6.1(b) hereof, shall cease,
at the option of Secured Party, and all such rights shall thereupon become
vested in Secured Party, who shall have the sole and exclusive right and
authority to exercise such voting and/or consensual rights and powers, and/or to
receive and retain the dividends which Debtor would otherwise be authorized to
retain pursuant to Section 6.1(b) hereof. Further, Secured Party shall have the
right upon the occurrence of an Event of Default, to notify and direct the
issuers of the Pledged Securities to thereafter make all payments,
distributions, dividends, and any other distributions payable in respect thereof
directly to Secured Party. The issuers of the Pledged Securities making any such
payment or distribution to Secured Party hereunder shall be fully protected in
relying on the written statement of Secured Party that it then holds a security
interest which entitles it to receive such payments and distributions. Any and
all money and other property paid over to, or received by, Secured Party
pursuant to the provisions of this Section 6.2 shall be retained by Secured
Party as additional collateral hereunder, and may be applied (and upon Debtor's
written request all cash shall promptly be applied) in accordance with the
provisions hereof.
SECTION 7
EVENT OF DEFAULT AND REMEDIES
Section 7.1 REMEDIES. Upon the occurrence of an Event of Default, in
addition to any and all other rights and remedies which Secured Party may then
have hereunder, under the Loan Documents, under applicable law, under the UCC,
as applicable, or otherwise, Secured Party shall have the right to: (i) declare
the entire unpaid balance of principal and all accrued interest on the
Obligations immediately due and payable, without written notice, demand, notice
of intent to accelerate, notice of acceleration, or presentment, all of which
are hereby waived; (ii) reduce any claims to judgment, foreclose, or otherwise
enforce its Security Interest in all or any part of the Collateral by any
available judicial procedure; (iii) after notification, if any, expressly
provided for herein, sell or otherwise dispose of, at the office of Secured
Party or elsewhere, as chosen by Secured Party, all or any part of the
Collateral, and any such sale or other disposition may be as a unit or in
parcels, by public or private proceedings, and by way of one or more contracts,
(it being agreed that the sale of any part of the Collateral shall not exhaust
Secured Party's power of sale, but sales may be made from time to time until all
of the Collateral has been sold, or until the Obligations have been paid in
full, provided, however, that Secured Party shall have no obligation to sell the
Collateral piecemeal, it being specifically acknowledged that a sale of all of
the Collateral to one purchaser in single transaction shall be conclusively
presumed to be commercially reasonable), and at any such sale it shall not be
necessary to
52
exhibit the Collateral; (iv) retain the Collateral in satisfaction of the
Obligations whenever the circumstances are such that Secured Party, is entitled
to do so under the UCC; (v) apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part thereof; and Debtor
hereby consents to any such appointment; (vi) purchase the Collateral at any
public sale in accordance with the UCC; (vii) purchase the Collateral at any
private sale in accordance with the UCC; and (viii) exercise the rights set
forth in this agreement in accordance with the UCC.
Section 7.2 SALE OF PLEDGED SECURITIES. Secured Party is authorized, at
any sale of the Pledged Securities, if it deems it advisable, to restrict the
prospective bidders or purchasers to those persons who will represent and agree
that they are purchasing for their own account, for investment, and not with a
view to distribution or sale of any of the Pledged Securities. Upon any such
sale, Secured Party shall have the right to deliver, assign, and transfer to the
purchaser thereof the Pledged Securities so sold. Each purchaser at any such
sale shall hold the property sold absolutely, free from any claim or right of
whatsoever kind, including any equity or right of redemption, of Debtor which
hereby specifically waives all rights of redemption, stay, or appraisal which it
has or may have under any rule of law or statute now existing or hereafter
adopted, and such waiver shall be deemed to have been made after an Event of
Default. Secured Party shall give Debtor seven days written notice of its
intention to make any such public or private sale, or sale at broker's board or
on a securities exchange. Such notice, in case of sale at broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made, and the day on which the Pledged Securities, or that portion thereof so
being sold, which will first be offered for sale at such board or exchange.
Secured Party shall have no obligation to disclose or provide any information
concerning the issuers or the Pledged Securities to prospective purchasers of
the Pledged Securities, other than information in its possession at such time,
and Debtor agrees and acknowledges that it shall be commercially reasonable for
any notices of any such sale, published or otherwise, to specifically so state.
At any such sale the Pledged Securities may be sold in one lot as an entirety or
in separate parcels, as Secured Party may elect, and any such election shall be
presumed to be commercially reasonable. Secured Party shall not be obligated to
make any such sale pursuant to any such notice. Secured Party may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the same may
be so adjourned. In case of any sale of all or any part of the Pledged
Securities on credit or for future delivery, the Pledged Securities so sold may
be retained by Secured Party until the selling price is paid by the purchaser
thereof; but Secured Party shall not incur any liability in case of the failure
of such purchaser to take and pay for the Pledged Securities so sold, and, in
case of any such failure, such Pledged Securities may again be sold upon like
notice. Secured Party may also, at its discretion, proceed by a suit or suits at
law or in equity to foreclose the pledge and sell the Pledged Securities, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction. If any consent, approval, or authorization of any federal, state,
municipal, or other governmental department, agency, or authority should be
necessary to effectuate any sale or other disposition of the Pledged Securities,
or any part disposition of the Pledged Securities, or any part thereof; Debtor
will execute all such applications and other instruments as may be required in
connection with securing any such consent, approval, or authorization, and will
otherwise use its best efforts to secure the same. Any sale of the Pledged
53
Securities conditioned upon the receipt of any such consent, approval, or
authorization shall be presumed to be commercially reasonable.
Section 7.3 POSSIBLE RESTRICTIONS ON SALE OF PLEDGED COLLATERAL.
Because of the Securities Act and other applicable laws or regulations, there
may be legal restrictions or limitations affecting Secured Party in any attempts
to dispose of certain portions of the Pledged Securities in the enforcement of
its rights and remedies hereunder. For these reasons, Secured Party is hereby
authorized by Debtor, but not obligated, in the event of any Event of Default
hereunder giving rise to Secured Party's rights to sell or otherwise dispose of
the Pledged Securities, and after the giving of any notices required herein, to
sell all or any part of the Pledged Securities at private sale, subject to an
investment letter or subject to any purchase agreement, or receipt of any
regulatory approvals regarding change of control approvals, or with respect to
any other matter, or in any other manner which will not require the Pledged
Securities, or any part thereof; to be registered in accordance with the
Securities Act, as amended, or other applicable rules and regulations
promulgated thereunder, or any other law or regulation, at the best price
reasonably obtainable by Secured Party at any such private sale or other
disposition in the manner mentioned above, and Debtor specifically acknowledges
that any such disposition shall be commercially reasonable under the UCC.
Secured Party is also hereby authorized by Debtor, but not obligated, to take
such actions, give such notices, obtain such consents, and do such other things
as Debtor may deem required or appropriate in the event of a sale or disposition
of any of the Pledged Securities. Debtor clearly understands that Secured Party
may, at its discretion, approach a restricted number of potential purchasers,
and may impose such other conditions in connection with any such sale as Secured
Party deems necessary or desirable in order to comply with the Securities Act
and other applicable laws, and that a sale under such circumstances may yield a
lower price for the Pledged Securities, or any part or parts thereof, than would
otherwise be obtainable if same were registered and sold in the open market.
Debtor agrees (i) in the event Secured Party shall, upon an Event of Default
hereunder, sell the Pledged Securities, or any portion thereof, at such private
sale or sales, Secured Party shall have the right to rely upon the advice and
opinion of any member firm of a national securities exchange as to the best
price reasonably obtainable upon such private sale thereof, and (ii) that such
reliance shall be conclusive evidence that Secured Party handled such matter in
a commercially reasonable manner under the UCC.
If an Event of Default exists, then Secured Party may, at its election
(but subject to the terms and conditions of the Credit Agreement), exercise any
and all rights available to a secured party under the UCC, in addition to any
and all other rights afforded by the Loan Documents, at law, in equity, or
otherwise, including, without limitation (a) requiring Debtor to assemble all or
part of the Collateral and make it available to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to Debtor and Secured
Party, and (b) applying to the Obligations any cash held by Secured Party under
the Loan Documents.
Section 7.4 NOTICE. Reasonable notification of the time and place of
any public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Debtor and to any other Person entitled to notice under
the UCC. If any Collateral threatens to decline speedily in value or is of the
type customarily sold on a recognized market, Secured Party may sell or
otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. Notice
54
sent or given not less than seven calendar days before the taking of the action
to which the notice relates is reasonable notification and notice for the
purposes of this section.
Section 7.5 OTHER SALES. Secured Party's sale of less than all
Collateral does not exhaust Secured Party's rights under this agreement and
Secured Party is specifically empowered to make successive sales until all
Collateral is sold. If the proceeds of a sale of less than all Collateral are
less than the Obligations, then this agreement and the Security Interest remain
in full force and effect as to the unsold portion of the Collateral just as
though no sale had been made. In the event any sale under this agreement is not
completed or is, in Secured Party's opinion, defective, that sale does not
exhaust Secured Party's rights under this agreement, and Secured Party is
entitled to cause a subsequent sale or sales to be made. All statements of fact
or other recitals made in any xxxx of sale or assignment or other instrument
evidencing any foreclosure sale under this agreement (whether about nonpayment
of the Obligations, the occurrence of any Event of Default, Secured Party's
having declared all of the Obligations to be due and payable, notice of time,
place, and terms of sale and the properties to be sold having been duly given,
or any other act or thing having been duly done by Secured Party) shall be taken
as prima facie evidence of the truth of the facts so stated and recited. Secured
Party may appoint or delegate any one or more Persons as agent to perform any
act or acts necessary or incident to any sale held by Secured Party, including
the sending of notices and the conduct of sale, but such acts must be done in
the name and on behalf of Secured Party.
Section 7.6 POWER-OF-ATTORNEY. Secured Party is deemed to be
irrevocably appointed as Debtor's agent and attorney-in-fact with the right to
enforce all of Debtor's rights under or in connection with the Collateral
effective and operable at all times while an Event of Default exists. All
reasonable costs, expenses, and liabilities incurred and all payments made by
Secured Party as Debtor's agent and attorney-in-fact (including, without
limitation, reasonable attorney's fees and expenses) are considered a loan by
Secured Party to Debtor that is repayable on demand, accrues interest at the
rate specified in the Credit Agreement to be applied upon an Event of Default
until paid, and is part of the Obligations.
Section 7.7 APPLICATION OF PROCEEDS. Secured Party shall apply the
proceeds of any sale or other disposition of the Collateral under this Section 7
in the order and manner specified in Article III of the Credit Agreement. Any
surplus remaining shall be delivered to Debtor or as a court of competent
jurisdiction may direct. If the proceeds are insufficient to pay the Obligations
in full, Debtor remains liable for any deficiency.
SECTION 8
AUTHORITY OF SECURED PARTY
Secured Party shall have and be entitled to exercise all such powers
hereunder as are specifically delegated to Secured Party by the terms hereof,
together with such powers as are reasonably incidental thereto. Secured Party
may execute any of its duties hereunder by or through sub-agents or employees,
and shall be entitled to retain counsel and to act in reliance upon the advice
of such counsel concerning all matters pertaining to said duties. Secured Party
and any director, officer, or employee of Secured Party shall not be liable for
any action taken or omitted to be taken by them or any of them hereunder or in
connection herewith, except for their own gross negligence or willful
misconduct; nor shall Secured Party be responsible for the
55
validity, effectiveness, or sufficiency hereof, or of any document or security
furnished pursuant hereto or in connection herewith. Secured Party shall be
entitled to rely on any communication, instrument, or document believed by it to
be genuine and correct and to have been signed or sent by the proper Person or
Persons.
SECTION 9
OTHER RIGHTS; PERFORMANCE
If Debtor fails to preserve the priority of the Security Interest in
any of the Collateral or otherwise fails to perform any of its obligations under
the Loan Documents with respect to the Collateral, then Secured Party may, at
its option, but without being required to do so, prosecute or defend any suits
in relation to the Collateral or take all other action which Debtor is required,
but has failed or refused, to take under the Loan Documents. Any sum which may
be expended or paid by Secured Party under this section (including, without
limitation, court costs and attorneys' fees) shall bear interest from the dates
of expenditure or payment at the rate specified in the Credit Agreement to be
applied upon an Event of Default until paid and, together with such interest,
shall be payable by Debtor to Secured Party upon demand and is part of the
Obligations.
XXXXXXX 00
XXXXXXXXXXXXXXX
Xxxxxx hereby agrees to reimburse Secured Party, on demand, for all
reasonable expenses incurred by it in connection with the administration and
enforcement of this Agreement, and agrees to indemnify and hold harmless Secured
Party from and against any and all liability incurred by it hereunder or in
connection herewith, unless such liability shall be due to willful misconduct or
gross negligence on the part of Secured Party. Other than the exercise of
reasonable care in the physical custody of the Pledged Securities while held by
Secured Party, Secured Party shall have no responsibility for or obligation or
duty with respect to all or any part of the Collateral, or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof, or to protect
or preserve any rights against prior parties, or any other rights pertaining
thereto, it being understood and agreed that Debtor shall be responsible
generally for the preservation of all rights in the Collateral. Without limiting
the generality of the foregoing, Secured Party shall be conclusively deemed to
have exercised reasonable care in the custody of the Collateral if secured party
takes such action, for purposes of preserving rights in the Collateral, as
Debtor may reasonably request in writing, but no failure or omission or delay by
Secured Party in complying with any such request by Debtor, and no refusal by
Secured Party to comply with any such request by Debtor shall be deemed to be a
failure to exercise reasonable care.
SECTION 11
SECURED PARTY APPOINTED ATTORNEY-IN-FACT
Debtor hereby appoints Secured Party as Debtor's attorney-in-fact to
act, after the occurrence and during the continuance of an Event of Default, in
the name of Debtor or otherwise for the purpose of carrying out the provisions
of this agreement, and taking any action, and executing any instrument which
Secured Party may deem necessary or advisable to
56
accomplish the purposes hereof. Without limiting the generality of the
foregoing, Secured Party shall have the right and power, after the occurrence
and during the continuance of an Event of Default, to receive, endorse, and
collect all checks and other orders for the payment of money made payable to
Debtor representing any dividend or other distribution payable or distributable
in respect of the Collateral, or any part thereof, and to give full discharge
for the same.
SECTION 12
MISCELLANEOUS
Section 12.1 TERM. This agreement terminates upon full payment and
performance of the Obligations. No Obligor is ever obligated to make inquiry of
the termination of this agreement but is fully protected in making any payments
on the Collateral directly to Secured Party.
Section 12.2 MATTERS NOT RELEVANT. The Security Interest, Debtor's
obligations, and Secured Party's rights under this agreement are not released,
diminished, impaired, or adversely affected by any one or more of the following:
(a) Secured Party's taking or accepting any additional--or any release,
surrender, exchange, subordination, or loss of any other -- guaranty, assurance,
or security for any of the Obligations; (b) any full or partial release of any
other Person obligated on any of the Obligations; (c) the modification or
assignment of-- or waiver of compliance with-- any other Term Loan Document; (d)
any present or future insolvency, bankruptcy, or lack of corporate, partnership,
or trust power of any other Person obligated on any of the Obligations; (e) any
renewal, extension, or rearrangement of any of the Obligations, or any
adjustment, indulgence, forbearance, or compromise granted to any Person
obligated on any of the Obligations; (f) any Person's neglect, delay, omission,
failure, or refusal to take or prosecute any action in connection with any of
the Obligations; (g) any existing or future affect, claim, or defense (other
than credits toward outstanding amounts in respect of application of proceeds of
Collateral under this agreement and except for the defense of full and final
payment of the Obligations) of Debtor or any other Person against Secured Party;
(h) the unenforceability of any of the Obligations against any Person obligated
or any of the Obligations because it exceeds the amount permitted by law, the
act of creating it is ultra xxxxx, or the officers, partners, or trustees
creating it exceeded their authority or violated their fiduciary duties, or
otherwise; (i) any payment of the Obligations is held to constitute a preference
under the United States Bankruptcy Code or any similar state or federal debtor
relief laws or for any other reason Secured Party is required to refund any
payment or make payment to another Person; or (j) any Person's failure to notify
Debtor or the Secured Party of their acceptance of this agreement or any
Person's failure to notify Debtor about the foregoing events or occurrences, and
Debtor waives any notice of any kind under any circumstances whatsoever with
respect to this agreement or any of the Obligations other than as specifically
provided in this agreement.
Section 12.3 WAIVERS. Except to the extent expressly otherwise provided
in the Loan Documents, Debtor waives (a) any right to require Secured Party to
proceed against any other Person, to exhaust its rights in the Collateral, or to
pursue any other right which Secured Party may have, and (b) all rights of
marshaling in respect of the Collateral.
57
Section 12.4 FINANCING STATEMENT. Secured Party may, at any time, file
a financing statement accurately describing the Collateral, but Secured Party's
failure to do so does not impair the validity or enforceability of this
agreement.
Section 12.5 PARTIES. This agreement binds and inures to Debtor,
Secured Party, and their respective successors and permitted assigns. Only those
Persons may rely or raise any defense about this agreement. Debtor may not
assign any rights or obligations under this agreement without first obtaining
the written consent of Secured Party. The Secured Party may assign, pledge, and
otherwise transfer all or any of its rights under this agreement to any
participant or transferee permitted by the Credit Agreement.
Section 12.6 SURVIVAL. All agreements, representations and warranties
made herein shall survive the execution of this Agreement.
Section 12.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Indiana (without
reference to conflict of law principles), except to the extent superseded by
federal law.
Section 12.8 COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument.
Section 12.9 NOTICES. All communications or notices required under this
Agreement shall be in writing and shall be deemed to have been given (i) on the
date when sent by facsimile transmission to the facsimile number set forth
below, or (ii) on the date when delivered, sent by nationally recognized
overnight delivery service, or deposited in the United States mail, postage
prepaid, in each case to the following address (unless and until any of such
parties advises the other in writing of a change in such address):
If to the Debtor: Blue River Bancshares, Inc.
00 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
If to the Secured Party: Union Federal Bank of Indianapolis
00 X. Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
Section 12.10 NO AGENCY. Nothing in this Agreement or in the other
documents referred to herein and no action taken pursuant hereto shall cause the
Borrower to be treated as an agent of the Secured Party, or shall be deemed to
constitute the Secured Party and the Borrower a partnership, association, joint
venture or other entity.
58
Section 12.11 NO THIRD PARTY BENEFIT. This Agreement is solely for the
benefit of the parties hereto and their permitted successors and assigns. No
other person or entity shall have any rights under, or because of the existence
of, this Agreement.
Section 12.12 CONSENT TO JURISDICTION. The Borrower hereby consents to
the jurisdiction of any state or federal court situated in Xxxxxx County,
Indiana, and waives any objection based on lack of personal jurisdiction,
improper venue or forum non conveniens, with regard to any actions, claims,
disputes or proceedings relating to this Agreement or any other document
delivered hereunder or in connection herewith, or any transaction arising from
or connected to any of the foregoing. The Borrower waives personal service of
any and all process upon it, and consents to all such service of process made by
mail or by messenger directed to it at the address specified below. Nothing
herein shall affect the right of the Secured Party, to serve process in any
manner permitted by law, or limit the right of the Secured Party, to bring
proceedings against the Borrower or its property or assets in the competent
courts of any other jurisdiction or jurisdictions.
Section 12.13 WAIVER OF JURY TRIAL. The Borrower and the Secured Party
hereby jointly and severally waive any and all right to trial by jury in any
action or proceeding relating to this Agreement or any other document delivered
hereunder or in connection herewith, or any transaction arising from or
connected to any of the foregoing. The Borrower and the Secured Party each
represent that this waiver is knowingly, willingly and voluntarily given.
Section 12.14 LIMITATION OF LIABILITY. The Borrower and the Secured
Party hereby waive any right any of them may now or hereafter have to claim or
recover from any other party hereto any consequential, exemplary or punitive
damages.
Section 12.15 ENTIRE AGREEMENT. This Agreement and the other Loan
Documents represent the final agreement between the parties with respect to the
subject matter thereof and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGE FOLLOWS
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EXECUTED as of the date first stated above.
BLUE RIVER BANCSHARES, INC., UNION FEDERAL BANK OF
as Debtor INDIANAPOLIS, as Secured Party
By: __________________________________ By: ___________________________________
Name: ________________________________ Name: _________________________________
Title: _______________________________ Title: ________________________________
The undersigned agrees that to the extent that any of the stock
certificates evidencing any of the capital stock that is included in the
Collateral bear any restrictive legend in respect of the transfer of those
certificates, then, in each case, the undersigned waives the requirements of
those restrictive legends in respect of the pledge of those shares of capital
stock to Secured Party.
SHELBY COUNTY BANK
By: __________________________________
Name: ________________________________
Title: _______________________________
UNIFIED BANKING COMPANY
By: __________________________________
Name: ________________________________
Title: _______________________________
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