EXHIBIT C
[LETTERHEAD OF STAR BANK]
May 19, 1995
Xx. Xxxxx Xxxxxxx
President
Xx. Xxxxxxx Xxxxxxxxx
Treasurer
First Southern Funding, Inc.
P.O. Box 328
Stanford, KY 40484
Gentlemen:
This Loan Agreement shall set out the terms and conditions under which Star
Bank, N.A. (hereafter referred to as the "Bank," "Star" or "Star Bank")
agrees to lend First Southern Funding, Inc. (hereafter called the "Company"
or "the Borrower") Ten Million Dollars ($10,000,000) under this Revolving
Credit Agreement (the "Agreement"). The purpose of this Loan is to
purchase commercial real estate loans. Initially, proceeds shall be used
to pay off an existing revolving Loan at Liberty National Bank, Louisville,
Kentucky.
THE REVOLVING CREDIT
Subject to the terms hereof, there being no event of default (or
circumstance which would, with the passage of time or the giving of notice
become an event of default) the Bank agrees to make revolving credit loan
to the Company (as described below) from the date of this Agreement through
May 19, 1996 (the "Maturity Date"). The loan will be evidenced by a
revolving promissory note (the "Revolving Note") substantially in the form
of Exhibit A attached hereto.
Under the Revolving Note, the Company may borrow, repay, and reborrow up to
$10,000,000 (the "Available Amount"). Should the total loan amount
outstanding at any time exceed the Amount Available, the Company shall,
upon notification, reduce the amount outstanding to an amount that is less
than or equal to the Amount Available.
The Revolving Note shall bear interest at three-eights of one percent
(3/8%) over the Bank's prime rate (the "Prime Rate"). The Prime Rate is
the rate announced as such from time to time by the Bank. The Prime Rate
is determined solely by the Bank pursuant to market factors and its own
operating needs, and is not necessarily the Bank's best or most favorable
rate for commercial or other loans. The Prime Rate is currently 9%. The
interest rate on the
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First Southern Funding, Inc.
Page 2
Revolving Note shall be adjusted on the effective date of any change in the
Bank's Prime Rate. Interest shall accrue in arrears and be payable
beginning June 30, 1995 and quarterly thereafter and on the Maturity Date.
Interest shall be calculated on the basis of a 360 day year.
REPRESENTATIONS & WARRANTIES
To induce the Bank to enter into this Agreement and to agree to make the
Loan described herein, the Company and the Guarantors, joint and severally,
represent and warrant that:
A. The Company and First Southern Bancorp, Inc., (Bancorp) are duly
organized, validly existing and in good standing as a corporation
and bank holding company respectively under the laws of the
Commonwealth of Kentucky and the United States of America, and
the Affiliate Banks of the Bancorp have been granted their
charters and are in good standing under the applicable laws and
regulations of Kentucky and other governing bodies.
B. The Company, the Guarantors and the Bancorp have full power and
authority to own their properties and to conduct their business
as such business is now being conducted and the Company and the
Bancorp have full power and authority to execute, deliver and
perform under this Agreement, the Note, the Negative Stock Pledge
Agreement and all other documents or instruments executed or
delivered in connection herewith and/or with the Loan described
herein (collectively, the "Loan Documents").
C. The execution, delivery and performance by the Company and the
Guarantors of this Loan Agreement and the other Loan Documents
(i) have been fully authorized by all requisite corporate action
and been duly authorized by all requisite corporate action and
(ii) do not and will not violate (A) any provision of law, (B)
any order of any court or other agency of government, affecting
the Company, a Guarantor or Bancorp, (C) any organizational or
government documents of the Company or Bancorp, or (D) any
provision of any agreement to which the Company, a Guarantor or
Bancorp is a party, or by which any of their respective
properties or assets are bound including, without limitation, any
outstanding debentures issued by the Company.
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First Southern Funding, Inc.
Page 3
D. The Bancorp now owns and at all time hereafter will own not less
than 100 percent of the issued and outstanding shares of the
Affiliate Banks of the Bancorp.
E. The Company, the Guarantors and the Bancorp are current on all
taxes and assessments applicable to them, and Company and Bancorp
agree to pay all taxes and assessments when due, except those
Company or Bancorp are contesting in good faith (and then only
providing same are properly reserved against in Company's or
Bancorp's financial statements).
F. There is no action or proceeding pending, or to the best of the
Company's or a Guarantor's knowledge threatened, against or
affecting the Company, a Guarantor or Bancorp which might result
in any material adverse change in any of their businesses or
financial conditions.
G. The Company, the Guarantors and Bancorp are in compliance in all
material respects with all applicable laws, statutes, ordinances,
rules, regulations and orders of any federal, state or local
governmental entity, and Company and Guarantors agree that
Company and the Bancorp and the Guarantors shall continue to be
in compliance therewith.
H. There has been no material adverse change in the financial
condition of the Company or Bancorp since the financial
statements received by the Bank for the period ending December
31, 1994.
I. If applicable, Company and Bancorp are in compliance with all
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
J. All of the Capital stock of the Affiliate Banks of the Bancorp
will be free, clear and unencumbered prior to any disbursement of
Loan proceeds, and the Bancorp will not create, incur or permit
to exist an encumbrance, pledge or lien against the capital stock
of the Affiliate Banks of the Bancorp (except to the Bank) and
will not execute any Security Agreement or Stock Pledge Agreement
with respect thereto (except to the Bank).
K. The Affiliate Banks of the Bancorp deposits are and will at all
times be insured by the Federal Deposit Insurance Corporation.
L. This Loan Agreement, the Note, the Stock Pledge Agreement and all
other Loan Documents are the legal and binding obligations of the
Company and the Guarantors enforceable in accordance with their
terms, subject to bankruptcy, insolvency, and similar laws as may
be enforced from time to time and
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First Southern Funding, Inc.
Page 4
equitable principles whether determined in a court of law or
equity.
COLLATERAL
All obligations of the Company to the Bank under this Agreement and the
Note shall be secured by the following (collectively called the
"Collateral"):
(A) Pledge of 100% of the common stock of the Company.
(B) A security interest, pledge, assignment, power of attorney and other
documents (as determined by the Bank) as to the notes, mortgages or
real estate being purchased by the Company with the loan proceeds.
(C) The personal guaranty of Xxxxx Xxxxxxx ("Guarantor") evidenced by the
Guaranty Agreement attached hereto as Exhibit B. This Guaranty shall
be secured by 27,473 shares of the common stock of First Southern
Bancorp, Inc. and 484.58 shares of the common stock of First Southern
Funding, Inc.
(D) The personal guaranty of Xxxxxxx Xxxxxxxxx ("Guarantor") evidenced by
the Guaranty Agreement attached hereto as Exhibit C. This guaranty is
secured by 44.05 shares of the common stock of First Southern Funding,
Inc.
The Collateral and all documentation with respect thereto shall be in a
form satisfactory to the Bank, and the Company and Guarantors agree to
execute any and all documents necessary to assure the protection,
perfection, and/or enforcement of the Bank's security interest in the
Collateral.
COVENANTS
In consideration of the Bank's promise to make the loans described herein,
the Company agrees that, from the date of this Agreement until the Note is
paid in full and canceled, it shall:
(A) The following Covenants must be complied with by the Company, Bancorp
and/or the Guarantors as applicable or there will be an Event of
Default under this Agreement:
- Any violation of the Negative Pledge of the voting common stock
of the Affiliate Banks of the Bancorp.
Xx. Xxxxx Xxxxxxx
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First Southern Funding, Inc.
Page 5
- The Bancorp will incur no additional debt without written consent
of Star Bank except that the Bancorp may borrow from the Company
up to the Bancorp's previous calendar year's post-tax net income.
The Bancorp will execute a Promissory Note as evidence of such
borrowing and the Note will be assigned to the Bank.
- The Bancorp will at all times, during the term of this Agreement,
own 100% of the Affiliate Banks of the Bancorp.
- The Bancorp will achieve the following minimum performance ratios
on a calendar year basis:
Return of Assets 1.25%
Return of Equity 15%
Capital to Assets 8%
*Non-Performing Loans/Primary Capital 16%
Allowance to Total Loans 1.6%
*Allowance to Non-Performing Loans 100%
*For purposes of this calculation, purchased loans, which are
classified as nonaccrual, but are performing, will be excluded
from the total of nonaccrual loans. However, should these loans
actually become non-performing, then the allowance to non-
performing ratio must be increased to 100%. The allowance to
non-performing loans including the purchased loans that are
classified as nonaccrual but are performing, must equal or
exceed 75%. This exception will apply to any performing
purchased loans that are placed on nonaccrual by the Company.
- The Bancorp will not pay dividends to the shareholders during the
term of this Agreement and so long as the Company has any
unsatisfied obligations to the Bank.
(B) The Bancorp will not enter into or allow the Affiliate Banks of the
Bancorp to enter into or consummate any plan for the creation of any
additional subsidiaries or any merger, acquisition, consolidation or
reorganization OR sell, transfer, assign, convey or lease any
substantial part of its or their property, tangible or intangible
(other than transfers in the normal course of banking business), OR
contract to do any of the foregoing, OR materially change the nature
of its or their business, provided however, that Star Bank shall
promptly consider and not unreasonably withhold its
Xx. Xxxxx Xxxxxxx
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First Southern Funding, Inc.
Page 6
consent to such transactions as do not, in the reasonable judgment of
Star Bank, materially adversely affect the financial or operating
condition of the Bancorp or the Affiliate Banks or adversely affect
the collateral security given under this Loan Agreement.
(C) The maximum advance rate will be $2.5 million per loan. Star will
consider increasing this limit but only on a case by case basis as
requested by the Company. All loans purchased by First Southern will
be located in the Southeast, Midwest or Mid Atlantic regions of the
United States. Star is willing to consider purchases outside of these
regions on a loan by loan basis.
(D) Star Bank will retain as collateral at least 80% of the voting common
stock of First Southern Bancorp, Inc. at all times during the life of
this Agreement and so long as the Company has any unsatisfied
obligations to the Bank.
(E) The Company will be allowed to borrow from any affiliated Company on
an unsecured basis only. Any borrowings by the Company will be
subordinated to the Bank. No other borrowings will be allowed.
(F) The Company and the Guarantors will give the Bank prompt notice of
any: (i) default of this or any other Agreement or contract under
which the Company or a Guarantor or Bancorp is liable; (ii)
environmental or labor dispute; (iii) lawsuit filed naming the Company
or a Guarantor or Bancorp as a defendant; (iv) reportable event under
ERISA; or (v) material change in the Company's, a Guarantor's or
Bancorp's business prospects or financial condition.
(G) The Company and Bancorp will maintain its corporate existence and
remain in good standing under the laws of each jurisdiction where it
is duly qualified to conduct its business.
(H) Any variance from these covenants shall be permitted only with the
prior written consent and/or waiver of the Bank in its discretion.
Any such waiver shall not preclude the exercise of any power or right
under this Agreement by the Bank.
Xx. Xxxxx Xxxxxxx
Xx. Xxxxxxx Xxxxxxxxx
First Southern Funding, Inc.
Page 7
CLOSING CONDITIONS
The obligation of the Bank to make the loan described by this Agreement is
subject to the satisfaction of each of the following conditions:
(A) RESOLUTIONS. The Company shall have delivered to the Bank a copy of
the resolutions of the Company's Board of Directors authorizing the
loans described herein and the execution and delivery of this
Agreement, the Note, and other documents the Bank deems necessary for
this loan, certified and executed (as applicable) by an appropriate
officer of the Company.
(B) OPINION. The Company and Bancorp shall have delivered to the Bank an
opinion of Counsel acceptable to the Bank, to the effect that: (i)
the Company or Bancorp is duly incorporated and validly existing under
the laws of the State of Kentucky and is qualified to do business
under the laws of the State of Kentucky; (ii) the Company has full
power to execute and deliver the Agreement, the Note, and other
documents hereunder and to perform its obligations under these
documents; (iii) these actions have been authorized by all necessary
corporate action, and such actions are not in conflict with any
provision of law or of the Articles of Incorporation of the Company,
nor in any conflict with any agreement, order or decree binding upon
the Company which counsel has knowledge after investigation; and (iv)
this Agreement, the Note, and other documents are the legal and
binding obligations of the Company, enforceable in accordance with
their terms.
(C) DEFAULT. Before and after giving effect to the loan described herein,
no event of default (as defined below) or event which would with the
passage of time or the giving of notice mature into an Event of
Default shall have occurred and/or be continuing.
(D) WARRANTIES. Before and after giving effect to the loan described
herein, the representations and warranties noted above shall be true
and correct on the date of this Agreement.
(E) FEES AND EXPENSES. The Company agrees to pay the Bank a one-time
nonrefundable commitment fee of $2,000.
- The Company agrees to pay attorney's fees not to exceed $2,500.
Xx. Xxxxx Xxxxxxx
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First Southern Funding, Inc.
Page 8
- The Company agrees to pay for any filing fees incurred with the
filing of liens on the notes, mortgages and related loan
documents.
- The Company agrees to pay the Bank an unused line fee of one
quarter of one percent (1/4%) on the daily unused balance of the
Loan. This fee will be calculated on a daily basis and is
payable quarterly in arrears.
(G) OTHER LOANS. The revolving loans at Liberty National Bank will be
paid and canceled by the Company and the Bancorp.
EVENTS OF DEFAULT
If any of the following event (each, an "Event of Default") shall occur,
then the Bank may then accelerate the Loan and declare it to be, and
thereupon the Loan shall become, immediately due and payable AND the Bank
shall have all rights provided herein or in any of the other Loan Documents
or otherwise provided by law to realize on the Collateral Security. To the
extent the maximum amount available is not being utilized by the Company,
the Bank may upon such Declaration of Default terminate any unused balance:
a. Failure by Company or the Guarantors to pay or repay any principal or
interest on the Loan, or any other amounts due to the Bank hereunder,
within 5 (five) business days after the date due in accordance with
the payment schedule outlined in both the Note and/or this Loan
Agreement; or
b. Failure by Company or a Guarantor to comply, or cause compliance with,
any other covenant, condition or agreement contained herein or in
connection herewith or to cure such failure within 30 (thirty)
business days after the occurrence of such failure; or
c. Any representation or warranty made herein or in connection herewith
shall be untrue or misleading; or
d. Company or a Guarantor or Bancorp (i) makes any assignment for the
benefit of creditors; (ii) is insolvent or unable to pay its debts as
they become due; (iii) applies for the appointment of a receiver or
trustee for any part of its assets or commences any proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction (or any
Xx. Xxxxx Xxxxxxx
Xx. Xxxxxxx Xxxxxxxxx
First Southern Funding, Inc.
Page 9
such application is filed, or any such proceedings are commenced,
against Company or a Guarantor or Bancorp and any such party indicates
its approval, consent or acquiescence thereto, or any order is entered
appointing such trustee or receiver, or adjudicating any such party
bankrupt or insolvent, or approving the petition in any such
proceedings); or
e. Company or a Guarantor or Bancorp shall not have paid when due any
other borrowed money obligation or shall be in default under any other
material agreement; or
f. There shall have been rendered and not discharged any judgment or
judgments against Company or a Guarantor or Bancorp which might
endanger the solvency or viability of the Company or such Guarantor.
g. In the reasonable opinion of the Bank, there has been a material
adverse change in the consolidated financial affairs or consolidated
operating condition of the Company, a Guarantor or the Bancorp, or in
the value of the Collateral Security which, in the reasonable judgment
of the Bank, imperils the Company's or such Guarantor's ability to
repay its/his obligations to the Bank under this Loan Agreement.
The following Financial Reporting will be required by the Company and the
Guarantors:
(A) The Borrower will provide the Lender an end of the month listing of
all loans outstanding. Star's outstanding loan balance at the end of
the same month should equal or be less than the total of loan listing.
If Xxxx's loan balance exceeds the listing provided by the Borrower,
then Star's loan will be paid down appropriately within five (5)
business days of Star notifying the Borrower.
(B) Star reserves the right to inspect the purchased loan files at anytime
upon reasonable notice and at a minimum, files will be inspected at
the time of renewal.
(C) Star will receive monthly financial statements on the Borrower as well
as an annually audited statement.
(D) Star will receive quarterly call reports on each Affiliated Bank owned
by First Southern Bancorp and on the Bancorp. An annual audited
financial statement will be provided on the Bancorp.
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First Southern Funding, Inc.
Page 10
(E) Star reserves the right to inspect the books and records of the
Borrower at anytime upon reasonable notice.
(F) Star reserves the right to require the Guarantors to provide the books
and records of the Bancorp and/or its Affiliate Banks at anytime upon
reasonable notice.
(G) The Borrower will submit a one page summary, and such other
information as Star may request, to the Lender detailing the loan
being purchased prior to funding of the loan. The funded loan
portfolio must generate sufficient cash flow to service the Lender's
loan or the Borrower will summit its cash flow plan to the Lender.
LAW/JURISDICTION
This Agreement, the Loan, and the Note shall be deemed made in Ohio, and
all the rights and obligations of the parties hereunder shall in all
respects be governed by and construed in accordance with the laws of the
State of Ohio, including all matters of construction, validity, and
performance. Without limitation on the ability of the Bank to exercise all
its rights as to the Collateral security for any loan or note, or to
initiate and prosecute actions for repayment in any applicable
jurisdiction, Bank, Company and Guarantors agree that any action or
proceeding commenced by or on behalf of the parties relating to this
Agreement, the loan, or the Note shall be commenced and maintained
exclusively in courts of applicable jurisdiction located in Xxxxxxxx
County, Ohio.
Xx. Xxxxx Xxxxxxx
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First Southern Funding, Inc.
Page 11
STAR BANK, N.A.
By: /S/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
Vice President
Accepted this 25TH day of MAY , 1995.
First Southern Funding, Inc.
By: /S/ XXXXX XXXXXXX /S/ XXXXXXX XXXXXXXXX
Xxxxx Xxxxxxx Xxxxxxx Xxxxxxxxx
President Treasurer
/S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, Guarantor
/S/ XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx, Guarantor
[LETTERHEAD OF STAR BANK]
June 5, 1996
Xx. Xxxxx Xxxxxxx
President
Xx. Xxxxxxx Xxxxxxxxx
Treasurer
First Southern Funding, Inc.
P O Box 328
Stanford, KY 40484
Dear Gentlemen:
This Letter Amendment shall amend the terms and conditions of the Loan
Agreement dated May 19, 1995 between Star Bank, N.A. (Star) and First
Southern Funding, Inc. (Borrower). The only terms and conditions amended
are specified in this letter and are as follows:
- The terms of the Agreement will be renewed for the period May 19,
1996 to May 19, 1997.
- The Revolving Note shall bear interest at the rate of one quarter
of one percent (1/4%) over Star's prime rate. The prime rate is
currently 8.25%.
- First Southern Bancorp will achieve the following minimum
performance rates:
Return on Assets 1.25%
Return on Equity 15%
Tangible Capital to Assets 8.5%
*Non-Performing Loans/Primary Capital 10%
Allowance to Total Loans 1.4%
*Allowance to Non-Performing Loans 100%
* For purposes of this calculation, any purchased loans that are
current and performing as agreed but are carried as non-
performing by the Bancorp will be excluded from this calculation.
- The Borrower will be allowed to borrow up to $3 million from
the Bancorp.
- The Borrower will not be allowed to make loans to First
Southern Bancorp, Inc.
Xx. Xxxxx Xxxxxxx
Xx. Xxxxxxx Xxxxxxxxx
June 4, 1996
Page 2
If you are in agreement with the foregoing, please execute the counterpart
of this letter below and return to the undersigned whereupon this letter
will become a legally binding amendment to the Loan Agreement dated May 19,
1995.
Sincerely,
/S/ XXXX
Xxxxxxx X. Xxxxxxxx
Vice President
Agreed and Accepted:
First Southern Funding, Inc.
By: /S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, President
/S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, Guarantor
/S/ XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx, Guarantor
[LETTERHEAD OF STAR BANK]
May 15, 1997
Xx. Xxxxx Xxxxxxx
President
Xx. Xxxxxxx Xxxxxxxxx
Treasurer
First Southern Funding, Inc.
P. O. Box 328
Stanford, KY 40484
Dear Xxxx and Xxxxx:
This second letter amendment shall amend the terms and conditions of the
Loan Agreement dated May 19, 1995, as amended on May 19, 1996 , between
Star Bank, N.A. (Star) and First Southern Funding, Inc. (Borrower). The
only terms and conditions amended are specified in this letter and are as
follows:
1) The term of the agreement will be renewed for the period May 19, 1997
to May 18, 1998.
2) The unused line fee has been reduced from one quarter of one percent to
one eighth of one percent.
3) The annual performance ratios for First Southern Bancorp. Inc. will be
as follows:
Return on assets .75%
Return on equity 8.00%
Tangible capital to assets 8.50%
Allowance to total loans 1.00%
*Non-performing loans to capital 10.00%
*Allowance on non-performing loans 100.00%
*For purposes of this calculation, any purchased loans that are
current and performing as agreed but are carried as non-performing by
the Bancorp will be excluded from this calculation.
4) The loan will be secured by 75% of the outstanding voting common stock
of First Southern Bancorp, Inc.
5) The Bancorp agrees not to pay any dividends to its shareholders during
the term of this agreement.
6) The Borrower agrees to pay Star a renewal fee of $3,000.
If you are in agreement with the foregoing, please execute the counterpart
of this letter and return it to me, whereupon this letter will become a
legally binding amendment to the Loan Agreement dated May 19, 1997.
Sincerely,
/S/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
Senior Vice President
Agreed and Accepted:
First Southern Funding, Inc.
/S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, President
/S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, Guarantor
/S/ XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx, Guarantor
Enclosure(s)
[LETTERHEAD OF STAR BANK]
May 19, 1997
Xx. Xxxxx Xxxxxxx
Chairman
Xx. Xxxxxxx Xxxxxxxxx
Chief Financial Officer
First Southern Funding, Inc.
P. O. Box 328
Stanford, KY 40484
Dear Xxxx and Xxxxx:
This letter is an addendum to the Third Amendment to the Loan Agreement
dated May 19, 1995, as amended on May 19, 1996 and May 19, 1997. The
following change is effective as of the date of this letter:
1) Any discrepancies between the Loan Agreement, as amended and the note,
shall be governed by the Loan Agreement, as amended.
If you are in agreement with the foregoing, please execute the counterpart
of this letter and return it to me, whereupon this letter will become a
legally binding part of the Third Amendment to the Loan Agreement dated May
19, 1997.
Sincerely,
/S/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
Senior Vice President
Agreed and Accepted:
First Southern Funding, Inc.
/S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, Chairman
/S/ XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx, CFO
[LETTERHEAD OF STAR BANK]
June 8, 1998
Xx. Xxxxx Xxxxxxx
Chairman
Xx. Xxxxxxx Xxxxxxxxx
First Southern Bancorp, Inc.
First Southern Funding, Inc.
P. O. Box 328
Stanford, KY 40484
Dear Xxxx and Xxxxx:
This letter agreement is to serve as the fourth amendment to the Loan
Agreement (hereafter referred to as "Agreements") dated May 19, 1995, as
amended on May 19, 1996 and May 19, 1997 between First Southern Funding,
Inc. (hereafter referred to as "Funding") and Star Bank, N.A. (hereafter
referred to as "Star"). This letter agreement is to also serve as the
second amendment to the Loan Agreement (hereafter referred to as
"Agreements") dated August 9, 1996 and as amended on May 19, 1997 between
First Southern Bancorp, Inc. (hereafter referred to as "Bancorp") and Star
Bank, N.A.
The only terms and conditions amended are specified in this letter
agreement and are as follows:
1. Funding and Bancorp, collectively, will have a revolving line of
credit available in the amount of $15 million (Fifteen million
dollars). This revolving line of credit shall be evidenced by a $15
million note dated May 19, 1998 with Funding and Bancorp listed as
individual borrowers. Funding incurs no liability for draws made by
Bancorp and Bancorp incurs no liability for draws made by Funding, and
no cross-collateralization exists. Either Funding or Bancorp may
borrow, pay and re-borrow under this revolver. Draws made by Funding
or Bancorp will be governed based on their Agreements, respectively,
and this amendment to those Agreements. Both Funding and Bancorp
agree and acknowledge that this combined note for $15 million, dated
May 18, 1998 is a renewal of the two existing individual notes, for
$10 million and $5 million, and all documentation relative to those
notes is now a legal binding document tied to this one note for $15
million. Any discrepancies between the note and the Agreements are
governed by the Agreements.
2. The terms of the Agreements will be renewed for the period May 18,
1998 to May 18, 1999.
3. The revolving notes shall bear interest at the interest rate as
specified on the note, which will be Star prime minus one percent (1%)
floating.
4. Each Limited Liability Company, whose assets are purchased with Star
loan proceeds, will assign their interest in the purchased asset to
Star, agrees not to incur any additional debt and will execute an
amendment to the note which documents the Limited Liability Company as
a co-borrower at the time of the purchase for the amount borrowed from
Star. The Limited Liability Company's liability to Star will
terminate when the amount borrowed for that asset is repaid.
5. Funding agrees to execute a negative stock pledge in reference to any
United Trust, Inc. common stock which is purchased.
6. Funding and Bancorp agree to pay renewal fees of $10,000 and $5,000
respectively.
If you are in agreement with the foregoing, please execute the counterpart
of this letter agreement below and return it to me, whereupon this letter
will become a legally binding amendment to the Agreements.
Sincerely,
/S/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
Senior Vice President
Agreed and Accepted:
By: /S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, Guarantor
By: /S/ XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx, Guarantor
By: /S/ XXXXX XXXXXXX
Xxxxx Xxxxxxx, Chairman
By: /S/ XXXXXXX XXXXXXXXX
Xxxxxx Xxxxxxxxx, Chief Financial Officer
Page 2
PROMISSORY NOTE
===================================================================
Borrower: FIRST SOUTHERN FUNDING, INC.; ET. AL. Lender: STAR BANK, NATIONAL ASSOCIATION
000 Xxxxxx Xxxxxx, X.X. 8105 c/o Xxxxxx Financial Institutions Division
Xxxxxx 000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
========================================================================
Principal Amount: $15,000,000.00 Initial Rate: 7.500% Date of Note: May 18, 1998
PROMISE TO PAY. FIRST SOUTHERN FUNDING, INC. and FIRST SOUTHERN BANCORP,
INC. (referred to in this Note individually and collectively as "Borrower")
[INDIVIDUAL -- SEE LOAN AGREEMENT] promise to pay to STAR BANK,
NATIONAL ASSOCIATION ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Fifteen Million & 00/100 Dollars
($15,000,000.00) or so much as may be outstanding together with interest on
the unpaid outstanding principal balance of each advance. Interest shall
be calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on May 18, 1999. In addition,
Borrower will pay regular quarterly payments of accrued unpaid interest
beginning August 18, 1998, and all subsequent interest payments are due on
the same day of each quarter after that. The annual interest rate for this
Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Xxxxxx's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to
change from time to time based on changes in an index which is Xxxxxx's
Prime Rate (the "Index"). This is the rate Lender charges, or would
charge, on 90-day unsecured loans to the most creditworthy corporate
customers. This rate may or may not be the lowest rate available from
Lender at any given time. Lender will tell Borrower the current Index rate
upon Xxxxxxxx's request. Borrower understands that Lender may make loans
based on other rates as well. The interest rate changes will not occur
more often than each DAY. The Index currently is 8.500% per annum. The
interest rate to be applied to the unpaid principal balance of this Note
will be at a rate of 1,000 percentage point under the Index, resulting in
an initial rate of 7.500% per annum. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed by
applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full
prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $50.00. Other than Xxxxxxxx's obligation to pay
any minimum interest charge, Borrower may pay without penalty all or a
portion of the amount owed earlier than it is due. Early payments will
not, unless agreed to by Xxxxxx in writing, relieve Xxxxxxxx of Xxxxxxxx's
obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be
charged 5.000% of the regularly scheduled payment or $50.00, whichever is
greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any
promise Borrower has made to Lender, or Borrower fails to comply with or to
perform when due any other term, obligation, covenant, or condition
contained in this Note or any agreement related to this Note, or in any
other agreement or loan Borrower has with Lender. (c) Any representation
or statement made or furnished to Lender by Borrower or on Xxxxxxxx's
behalf is false or misleading in any material respect either now or at the
time made or furnished. (x) Xxxxxxxx becomes insolvent, a receiver is
appointed for any part of Xxxxxxxx's property. Xxxxxxxx makes an
assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency
laws. (e) Any creditor tries to take any of Xxxxxxxx's property on or in
which Xxxxxx has a lien or security interest. This includes a garnishment
of any of Xxxxxxxx's accounts with Xxxxxx. (f) Any guarantor dies or any
of the other events described in this default section occurs with respect
to any guarantor of this Note. (g) A material adverse change occurs in
Borrower's financial condition, or Xxxxxx believes the prospect of payment
or performance of the indebtedness is impaired. (h) Lender in good xxxxx
xxxxx itself insecure.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, without notice, and then Borrower will pay that amount. Upon default,
including failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable interest
rate on this Note 5.000 percentage points. The interest rate will not
exceed the maximum rate permitted by applicable law. Lender may hire or
pay someone else to help collect this Note if Borrower does not pay.
Xxxxxxxx also will pay Lender that amount. This includes, subject to any
limits under applicable law, Xxxxxx's attorneys' fees and Xxxxxx's legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Xxxxxxxx also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by
Lender in the State of Ohio. If there is a lawsuit, Xxxxxxxx agrees upon
Xxxxxx's request to submit to the jurisdiction of the courts of XXXXXXXX
County, the State of Ohio. Xxxxxx and Xxxxxxxx hereby waive the right to
any jury trial in any action, proceeding or counterclaim brought by either
Xxxxxx or Borrower against the other. This Note shall be governed by and
construed in accordance with the laws of the State of Ohio.
CONFESSION OF JUDGMENT. Xxxxxxxx hereby irrevocably authorizes and
empowers any attorney-at-law, including an attorney hired by Xxxxxx, to
appear in any court of record and to confess judgment against Xxxxxxxx for
the unpaid amount of this Note as evidenced by an affidavit signed by an
officer of Lender setting forth the amount then due, plus attorneys' fees
as provided in this Note, plus costs of suit, and to release all errors,
and waive all rights of appeal. If a copy of this Note, verified by an
affidavit, shall have been filed in the proceeding, it will not be
necessary to file the original as a warrant of attorney. Borrower waives
the right to any stay of execution and the benefit of all exemption laws
nor or hereafter in effect. No single exercise of the foregoing warrant
and power to confess judgment will be deemed to exhaust the power, whether
or not any such exercise shall be held by any court to be invalid,
voidable, or void; but the power will continue undiminished and may be
exercised from time to time as Lender may elect until all amounts owing on
this Note have been paid in full. Xxxxxxxx waives any conflict of interest
that an attorney hired by Xxxxxx may have in acting on behalf of Xxxxxxxx
in confessing judgment against Xxxxxxxx while such attorney is retained by
Xxxxxx. Xxxxxxxx expressly consents to such attorney acting for Xxxxxxxx
in confessing judgment.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if
Borrower makes a payment on Borrower's loan and the check or preauthorized
charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory
security interest in, and hereby assigns, conveys, delivers, pledges and
transfers to Lender all Borrower's right, title and interest in and to,
Xxxxxxxx's accounts with Lender (whether checking, savings, or some other
account), including without limitation all accounts held jointly with
someone else and all accounts Borrower may open in the future, excluding
however all IRA and Xxxxx accounts, and all trust accounts for which the
grant of a security interest would be prohibited by law.
PROMISSORY NOTE Page 2
(Continued)
=================================================
Borrower authorizes Xxxxxx, to the extent permitted by applicable law, to
charge or setoff all sums owing on this Note against any and all such
accounts.
COLLATERAL. This Note is secured by various marketable securities.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested orally by Borrower or as provided in this
paragraph. Lender may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Xxxxxx's office
shown above. Advances under this Note may be requested in amounts of
$25,000.00 or greater. Any request for advances of less than $25,000.00
will not be honored. Xxxxxxxx agrees to be liable for all sums either:
(a) advanced in accordance with the instructions of an authorized person or
(b) credited to any of Xxxxxxxx's accounts with Xxxxxx. The unpaid
principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Xxxxxx's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under
this Note if: (a) Borrower or any guarantor is in default under the terms
of this Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent;
(c) any guarantor seeks, claims or otherwise attempts to limit, modify or
revoke such guarantor's guarantee of this Note or any other loan with
Lender; (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (e) Lender in good xxxxx
xxxxx itself insecure under this Note or any other agreement between Lender
and Borrower.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact
will not affect the rest of the Note. In particular, this section means
(among other things) that Borrower does not agree or intend to pay, and
Lender does not agree or intend to contract for, charge, collect, take,
reserve or receive (collectively referred to herein as "charge or
collect"), any amount in the nature of interest or in the nature of a fee
for this loan, which would in any way or event (including demand,
prepayment, or acceleration) cause Lender to charge or collect more for
this loan than the maximum Lender would be permitted to charge or collect
by federal law or the law of the State of Ohio (as applicable). Any such
excess interest or unauthorized fee shall, instead of anything stated to
the contrary, be applied first to reduce the principal balance of this loan
and when the principal has been paid in full, be refunded to Borrower.
Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Each Borrower understands and agrees that,
with or without notice to Borrower, Lender may with respect to any other
Borrower (a) make one or more additional secured or unsecured loans or
otherwise extend additional credit; (b) alter, compromise, renew, extend,
accelerate, or otherwise change one or more times the time for payment or
other terms any indebtedness, including increases and decreases of the rate
of interest on the indebtedness; (c) exchange, enforce, waive, subordinate,
fail or decide not to perfect, and release any security, with or without
the substitution of new collateral; (d) apply such security and direct the
order or manner of sale thereof, including without limitation, any
nonjudicial sale permitted by the terms of the controlling security
agreements, as Lender in its discretion may determine; (e) release,
substitute, agree not to sue, or deal with any one or more of Borrower's
sureties, endorsers, or other guarantors on any terms or in any manner
Lender may choose; and (f) determine how, when and what application of
payments and credits shall be made on any other indebtedness owing by such
other borrower. Borrower and any other person who signs, guarantees or
endorses this Note, to the extent allowed by law, waive presentment, demand
for payment, protest and notice of dishonor. Upon any change in the terms
of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that
Lender may renew or extent (repeatedly and for any length of time) this
loan or release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Xxxxxx's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Xxxxxx may modify this
loan without the consent of or notice to anyone other than the party with
whom the modification is made. The obligations under this Note are joint
and several.
PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
EACH BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THE NOTE.
=================================================================
NOTICE: FOR THIS NOTICE "YOU" MEANS THE BORROWER AND "HIS" MEANS LENDER.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY
WITH THE AGREEMENT, OR ANY OTHER CAUSE.
=================================================================
BORROWER:
FIRST SOUTHERN FUNDING, INC.
/S/ XXXXXXX XXXXXXXXX
Authorized Officer
FIRST SOUTHERN BANCORP, INC., Co-Borrower
By: /S/ XXXXXXX XXXXXXXXX
Authorized Officer
