LOAN AGREEMENT
Exhibit
10.16
THIS
LOAN AGREEMENT (hereinafter
called “Agreement”) made and entered into this ____ day of March, 2006, by and
between VINEYARD
NATIONAL BANCORP,
a
California corporation, (hereinafter called “Borrower”) and FIRST
TENNESSEE BANK NATIONAL ASSOCIATION,
a
national banking association having its principal office located in Memphis,
Tennessee (“Lender”).
W
I T
N E S S E T H :
WHEREAS,
the Borrower desires to borrow from Lender Seventy
Million Dollars
($70,000,000.00). NOW, THEREFORE, in consideration of the premises and the
mutual agreements, covenants and conditions herein contained, the parties hereto
hereby agree as follows:
AGREEMENTS
1. COMMITMENT
AND FUNDING.
1.1 The
Commitment.
Subject
to the terms and conditions herein set out, Lender agrees and commits to make
a
revolving loan (the “Loan”) to Borrower in the amount of Seventy
Million
Dollars
($70,000,000.00). Such borrowing shall be evidenced by, and shall be payable
in
accordance with the terms and provisions of the Note (as hereinafter defined).
1.2 Funding.
The
advance of Loan proceeds hereunder shall be made, upon Borrower’s request, by
depositing the same into a demand deposit account with Lender or wire transfer
to Borrower’s account. The Loan to Borrower may be made, at Borrower’s request,
in one or more advances, each of which shall be subject to the terms and
conditions of this Agreement, including but not limited to Sections 2.1 and
2.2
hereof. Advances under the Loan may be requested either orally or in writing
by
Borrower 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 Lender’s
office set forth below. The following persons, acting individually, currently
are authorized to request advances and authorize payments under the Loan until
Lender receives from Borrower, at Lender’s address set forth below, written
notice of revocation of their authority: Xxxxxx Xxxxxxx, President & Chief
Executive Officer of Borrower, Xxxxxx Xxxx, Chief Financial Officer of Borrower,
or Xxxxx Xxxxxxx, Senior Vice President of Borrower.
1.3 Prepayments.
The
Borrower may, at its option, at any time and from time to time, without
prepayment penalty or premium, prepay the Loan in whole or in part; provided,
however, that any such prepayment of principal shall be accompanied by the
payment of accrued interest on the amount of such prepayment to the date
thereof. Any such prepayment shall be applied to reduce the principal
installments under the Note in the inverse order of their maturities, and shall
not have the effect of suspending or deferring payments thereunder. Principal
amounts repaid by Borrower under the Loan may be re-borrowed from time to time
commencing on the date of execution of the promissory note (the “Closing Date”)
through the Maturity Date in accordance with this Agreement and the other Loan
Documents (defined below).
1.4 Interest
Rate.
The
Loan indebtedness evidenced by the Note shall bear interest from date at the
variable rate determined in accordance with the terms and provisions of the
Note
which will be 90-day LIBOR (as defined in the Note) plus 225 basis
points.
1.5
Maturity.
The
line of credit will expire 364 days from the Closing Date (the “Maturity
Date”).
2. CONDITIONS
OF LENDING.
2.1 Loan
Documents.
The
obligation of Lender to fund the Loan is subject to the condition precedent
that
Lender shall have received at or before the execution of this Agreement all
of
the following in form and substance satisfactory to Lender.
a) A
promissory note evidencing the Loan, in a form and substance acceptable to
Borrower and Lender, executed by Borrower, as maker (such promissory note
together with any renewals, modifications and extensions thereof is herein
referred to as the “Note”);
| b) |
This
Loan Agreement;
|
| c) |
Current
certificates of good standing for the Borrower in the State of
California;
|
| d) |
Certified
corporate resolutions of Borrower authorizing the execution, delivery
and
performance of this Loan Agreement and of the other instruments and
documents to be executed and delivered in connection herewith, and
a
certified copy of Borrower’s charter and
bylaws;
|
| e) |
True
and exact copies of the current financial statements of the Borrower
and
its subsidiary, Vineyard Bank (hereinafter called “Bank”). It being
understood that Lender is relying upon such audit report and opinion
in
entering into this Loan Agreement including the unaudited financial
statements of Borrower and Bank as of December 31, 2005 and the December
31, 2005 F.R. Y-6 Annual Report and F.R. Y-9 Parent Company only (and
Consolidated, if applicable) financial statement(s) filed by Borrower
with
the Federal Reserve;
|
| f) |
The
opinion of Borrower’s independent, third party counsel in the form
approved by Lender, as to the due organization and valid existence
of
Borrower, the due authorization and execution by Borrower of the Loan
Documents, the validity and enforceability of the Loan Documents against
Borrower and such other matters as Lender shall require;
and
|
| g) |
The
Pledge and Security Agreement (hereinafter called “Pledge Agreement”),
executed by Borrower, granting to Lender a security interest in 100%
of
Borrower’s capital stock in Vineyard Bank (“Pledged Shares”) as security
for the Line of Credit, together with irrevocable stock powers executed
in
blank with respect to such Pledged Shares, and the original certificates
representing such Pledged Shares.
|
The
Note,
this Loan Agreement, and any other documents executed by Borrower in connection
herewith shall be referred to hereinafter as the “Loan Documents”.
2.2 Other
Conditions.
The
obligation of the Lender to fund the Loan is subject to each of the following
further terms and conditions:
a) At
the
time of funding, each of the Loan advances hereunder and each of Borrower’s
warranties and representations contained herein shall be and remain true and
correct in all material respects. In addition, no Event of Default (as defined
in Section 6 hereof) shall have occurred and be continuing, and, if requested
by
Lender, Borrower shall execute a certificate verifying each of such matters
to
be true in all respects, if such be the case.
b)
At the
time the loan is funded hereunder, there shall have occurred, in the reasonable
opinion of Lender, no material adverse changes in the condition, financial
or
otherwise, of Borrower or its Bank from that reflected in the financial
statements furnished pursuant to Section 2.1 hereof, including without
limitation any such material adverse change resulting from or following the
Conversion or a Merger, as defined below.
2
3. REPRESENTATIONS
AND WARRANTIES.
In
order
to induce the Lender to enter into this Agreement and to make the Loan, the
Borrower represents and warrants to the Lender (which representations and
warranties shall survive the delivery of the Loan Documents and the funding
of
the Loan) that:
3.1 Corporate
Status.
Borrower is a corporation duly organized and existing under the laws of the
State of California, is duly qualified to do business and is in good standing
under the laws of the State of California, and has the corporate power and
authority to own its properties and assets and conduct its affairs and business.
Lender acknowledges that Borrower has notified Lender of its intent to convert
the Bank to a national bank and/or convert the Borrower to a financial holding
company (collectively, the “Conversion”). Concurrently with such Conversion,
Borrower shall execute, deliver, provide and perform any documents and
instruments reasonably required by Lender to ensure the continuing validity,
priority and enforceability of the Loan, the Loan Documents and the liens
created thereunder notwithstanding such Conversion.
3.2 Corporate
Power and Authority.
Borrower has full power and authority to enter into this Agreement, to borrow
funds contemplated herein, to execute and deliver this Agreement, the Note
and
other Loan Documents executed and delivered by it, and to incur the obligations
provided for herein, all of which have been duly authorized by all proper and
necessary corporate action; and the officer executing each of the Loan Documents
is duly authorized to do so by all necessary corporate action. Any consents
or
approval of shareholders or directors of Borrower required as a condition to
the
validity of any Loan Document have been obtained; and each of said Loan
Documents is the valid, legal, and binding obligation of Borrower enforceable
in
accordance with its terms.
3.3 No
Violation of Agreements or Law.
To
Borrower’s knowledge, neither Borrower nor Bank is in default under any
indenture, agreement or instrument to which it is a party or by which it may
be
bound, nor in violation of any state or federal statute, rule, ruling, or
regulation governing its operations and the conduct of its business, operations
or financial condition of Borrower or Bank. Neither the execution and delivery
of the Loan Documents nor the consummation of the transactions herein
contemplated, or compliance with the provisions hereof will conflict with,
or
result in the breach of, or constitute a default under, any indenture, agreement
or other instrument to which Borrower is a party or by which it may be bound,
or
result in the creation or imposition of any lien, charge or encumbrance upon
any
of the property of Borrower except for the security interest in Borrower’s
common stock of the Bank as set forth herein, or violate or be in conflict
with
any provision of the charter or bylaws of Borrower.
3.4 Compliance
With Law; Government Approvals.
(a)
To
Borrower’s knowledge, Borrower has complied and is complying with all
requirements, made all applications, and submitted all reports required by
The
Bank Holding Company Act of 1956, as amended, and any regulations or rulings
issued in connection therewith, and the transaction contemplated hereby will
not
violate any such statutes, rules, rulings, or regulations nor will the
consummation of said actions and transactions cause Borrower to be in violation
thereof. Borrower has, if required, received all governmental approvals
necessary for the consummation of the transactions described herein.
(b) To
Borrower’s knowledge, Borrower has complied and is complying with all other
applicable state or federal statutes, rules, rulings and regulations. To
Borrower’s knowledge, the borrowing of money as described herein and said
actions and transactions will not violate any of such statutes, rules, rulings,
or regulations. Borrower has, if required, made all filings and received all
governmental or regulatory approvals necessary for the consummation of the
transactions described herein.
3.5 Litigation.
There
are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against before any court, arbitrator or governmental or
administrative body or agency which, if adversely determined, would result
in
any material and adverse change in the financial condition, business operation,
or properties or assets of the Borrower or Bank. Without limiting the generality
of the foregoing, neither Borrower nor Bank is subject to any Supervisory Action
(herein defined) by any federal or state bank regulatory authority. As used
herein, “Supervisory Action” shall mean and include the issuance by any bank
regulatory authority of a letter agreement or memorandum of understanding
(regardless of whether consented or agreed to by the party to whom it is
addressed); or the issuance by or at the behest of any bank regulatory authority
of a cease and desist order, injunction, directive, restraining order, notice
of
charges, or civil money penalties, against Borrower, Bank or the directors
or
officers of either of them, whether temporary or permanent.
3
3.6 Financial
Condition.
The
balance sheets and the related statements of income of Borrower and Bank, which
have been delivered to the Lender pursuant to Section 2.1 hereof and the
financial reports of Borrower and Bank which will be delivered to Lender
pursuant to Section 4.5 hereof are, or will be as of their respective dates
and
for the respective periods stated therein, complete and correctly and fairly
present the financial condition of Borrower and Bank, and the results of their
operations, respectively, as of the dates and for the periods stated therein,
and have been, or will be as of their respective dates and for the respective
periods stated therein, prepared in accordance with generally accepted
accounting principles consistently applied throughout the period involved.
There
has been no material adverse change in the business, properties or condition
of
Borrower or Bank since the date of the financial statement furnished to Lender
pursuant to Section 2.1 hereof.
3.7 Tax
Liability.
Borrower and Bank have filed all tax returns which are required to be filed
by
them, and have paid all taxes which have become due pursuant to such returns
or
pursuant to any assessments received by them.
3.8 Subsidiaries.
As of
the date first above written, Borrower has no subsidiaries and owns stock in
no
corporation or banking association other than Bank; and, other than Vineyard
Service Corporation, Inc., a California corporation, Bank has no subsidiaries
and owns no stock in any other corporation.
3.9 Bank
Stock.
The
Pledged Shares are duly authorized and validly issued by the Bank and include
all of Borrower’s common stock in the Bank. The total number of shares of common
stock of the Bank issued and outstanding as of the date hereof is 1,218,700
shares, of which all 1,218,700 shares are being pledged for this transaction.
The Pledged Shares are free and clear of all liens, encumbrances, security
interests or pledges except the pledge to Lender described herein; said Pledged
Shares are fully paid and non-assessable; the Bank stock certificates delivered
to Lender pursuant to the Pledge Agreement will be genuine and comply with
applicable laws concerning form, content, and manner of preparation and
execution; there are no outstanding warrants or options to acquire any common
stock of the Bank; there are no outstanding securities convertible or
exchangeable into shares of common stock of the Bank; there are no restrictions
on the transfer or pledge of any shares of common stock of the Bank; Borrower
has the right to pledge and transfer the Pledged Shares and assign the income
therefrom without obtaining the consent of any other person or entity; and
the
Pledge Agreement creates for the benefit of Lender a first security interest
in
the Pledged Shares, subject to no other interests or claims.
4.0 AFFIRMATIVE
COVENANTS.
Borrower covenants and agrees that, until the Note together with interest
thereon is paid in full, unless specifically waived by the Lender in writing,
Borrower will, or will cause Borrower and Bank to:
4.1 Business
and Existence.
Both
preceding and following any Conversion, perform all things necessary to preserve
and keep in full force and effect the existence, rights and franchises of
Borrower and Bank and to comply with all laws and regulations then applicable
to
Borrower and Bank, including, but not limited to, laws and regulations of state
and federal authorities applicable to banks, bank holding companies and/or
financial holding companies.
4.2 Maintain
Property.
Maintain, preserve, and protect all properties used or useful in the conduct
of
Borrower’s and Bank’s business and keep the same in good repair, working order
and condition.
4.3 Insurance.
At all
times keep the insurable properties of Borrower and Bank adequately insured
and
maintain in force (i) insurance, to such an extent and against such risks,
including fire, as is customary with companies in the same or similar business,
(ii) necessary workmen’s compensation insurance, fidelity bonds and directors’
and officers’ insurance coverage in amounts reasonably satisfactory to Lender,
and (iii) such other insurance as may be required by law; and if reasonably
requested by Lender, deliver to the Lender a copy of the bonds and policies
providing such coverage and a certificate of Borrower’s or Bank’s chief
executive officer, as the case may be, setting forth the nature of the risks
covered by such insurance, the amount carried with respect to each risk, and
the
name of the insurer.
4
4.4 Taxes
and Liens.
Pay and
discharge promptly all taxes, assessments, and governmental charges or levies
imposed upon Borrower or Bank or upon any of their respective income and
profits, or their properties, real, personal or mixed, or any part thereof,
before the same shall become delinquent; provided, however, that Borrower and
Bank shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the amount
or validity thereof shall be contested in good faith by appropriate
proceedings.
4.5 Financial
Reports.
Furnish
to Lender (a) as soon as available and in any event within ninety (90) days
after the end of each calendar year, consolidated and consolidating balance
sheets of Borrower and Bank, as of the end of such year and consolidated and
consolidating statements of income of Borrower and Bank for the year then ended,
together with the audit report and opinion of independent Certified Public
Accountants acceptable to the Lender with respect thereto, such audit report
and
opinion shall contain no exceptions or qualifications unacceptable to Lender;
(b) promptly upon receipt, copies of all management letters and other
assessments and recommendations, formal or informal, submitted by the Certified
Public Accountants to Borrower or Bank; (c) a copy of Borrower’s FR Y-9 Parent
Company Only (and Consolidated, if applicable) financial statement(s) and (d)
a
copy of Borrower’s F.R. Y-6 Annual Report promptly upon the filing of the same
with the Federal Reserve Board; and (e) a copy of Bank’s Quarterly Report of
Condition and Income (“Call Report”) promptly upon the filing with the
appropriate regulatory agency. The parties hereto acknowledge and agree that
Borrower’s filing of its Form 10K report with the Securities and Exchange
Commission shall satisfy the provisions of clause (a) of the preceding
sentence.
4.6 Regulatory
Examinations.
If
legally permitted to do so, (a) promptly notify Lender upon receipt of any
material correspondence, report, memoranda or other written communication
between any federal or state regulatory body or authority, with respect to
the
properties, loans, operations and/or condition of Borrower, Bank or both; and
(b) if required by Lender following an Event of Default (defined below), fully
and completely assist and cooperate with Lender in requesting approval by such
regulatory body or authority of the furnishing to Lender of any such report,
and
furnish such report to Lender if such approval is given; provided, however,
that
Lender shall take such steps as may be necessary to assure that all such reports
shall remain confidential and shall be used by Lender solely in connection
with
the administration of the Loan in accordance with the provisions of this
Agreement.
4.7 Additional
Information.
Furnish
such other information regarding the operations, business affairs and financial
condition of Borrower and Bank as Lender may from time to time reasonably
request, including but not limited to true and exact copies of any monthly
management reports to their respective directors, their respective tax returns,
and all information furnished to shareholders.
4.8 Right
of Inspection.
Except
to the extent, if any, prohibited by applicable law, permit any person
designated by Lender, to inspect any of the properties, books and financial
and
other reports and records of Borrower and Bank, including, but not limited
to,
all documentation and records pertaining to Bank’s loans, investments and
deposits; and to discuss their affairs; finances and accounts with Borrower’s
and Bank’s principal officers, at all such reasonable times and as often as
Lender may reasonable request; provided, however, prior to the occurrence of
an
Event of Default, such inspections shall occur no more frequently than once
per
calendar quarter; provided, further, however, that Lender shall, and shall
cause
each person designated by Lender to conduct such inspections to, take such
steps
as may be necessary, to assure that all such inspections, together with the
information resulting therefrom, shall remain confidential and shall be used
by
Lender and such persons solely in connection with the administration of the
Loan
in accordance with the provisions of this Agreement.
5
4.9 Notice
of Default.
At the
time of Borrower’s first knowledge or notice, furnish the Lender with written
notice of the occurrence of any event or the existence of any condition which
constitutes or upon written notice or lapse of time or both would constitute
a
default or an Event of Default under the terms of this Loan
Agreement.
4.10 Compliance
with Banking Regulations.
At all
times be in compliance with, cause Bank to be in compliance with, all banking,
bank holding company and other laws, rules and regulations applicable to
Borrower or Bank.
4.11 Capital
Ratio/Equity Capital Adequacy.
Borrower and Bank shall maintain at all times a “Well Capitalized” rating as
required by any applicable regulatory authority as such requirement may be
revised from time to time; provided, however, Borrower shall maintain a
consolidated leverage ratio (Tier 1 Capital to tangible assets) of not less
than
Seven Percent (7.00%) and Bank not less than $191,961,000 in Capital. For
purposes hereof, “Tier 1 Capital” is defined in Appendix A to Title 12, Code of
Federal Regulations, Part 225n, Capital Adequacy Guidelines for Bank Holding
Companies.
4.12 Loan
Loss Reserves.
With
respect to Bank, maintain at all times loan loss reserves in amounts deemed
adequate by all federal and state regulatory authorities.
4.13 Compliance
Certificate. Furnish
Lender a certificate of compliance duly certified by the Chief Financial Officer
of Borrower within thirty (30) days after the end of each calendar quarter
stating that Borrower and Bank are in compliance with all terms, covenants
and
conditions of this Loan Agreement and all related Loan Documents.
5.0 NEGATIVE
COVENANTS.
Borrower covenants and agrees that, until the indebtedness evidenced by the
Note, together with interest, is paid in full, Borrower will not, without the
prior written consent of the Lender:
5.1 Indebtedness.
Create,
incur, assume or suffer to exist, contingently or otherwise, any indebtedness,
except for the following indebtedness:
i) the
indebtedness of Borrower under the Loan;
ii) operating
expenses incurred by Borrower in the ordinary course of business;
| iii) |
indebtedness
reflected on Borrower’s financial statements dated as of December 31,
2005;
|
| iv) |
federal
funds purchased and borrowings from the Federal Home Loan Bank in the
ordinary course of business;
|
| v) |
that
certain proposed borrowing base revolving line of credit secured by
a
portion of the Bank’s construction loan portfolio to be made by Lender, as
“Lead Bank,” and such other lenders that may participate in such loan;
|
| vi) |
any
indebtedness contemplated under that certain Form S-3 Registration
Statement under the Securities Act of 1933 filed with the Securities
and
Exchange Commission August 31, 2005; and
|
| vii) |
Any
indebtedness that is not superior or senior in the right of payment
to the
Loan.
|
5.2 Dividends,
Redemptions and Other Payments.
Declare
or pay any dividends if an Event of Default has occurred and is continuing
under
this Agreement or the payment of a dividend would create an Event of Default.
The payment of any dividend shall in all respects comply with the Rules and
Regulations of the Federal Reserve Board.
6
5.3 Capital
Expenditures.
Make or
become committed to make, or permit Bank to make or to become committed to
make,
directly or indirectly, during any calendar year, capital expenditures which
for
Borrower and Bank exceed amounts deemed acceptable to applicable regulatory
authorities.
5.4 Relocation.
Cause
or permit Borrower or the bank to relocate their principal office, principal
banking office, principal registered office or approved charter location except
as deemed acceptable to applicable regulatory authorities. Lender will not
unreasonably withhold its consent to a relocation as set forth in the preceding
sentence. Notwithstanding the provisions of the preceding sentence, Lender
hereby consents to the Conversion, subject to the provisions of Section
3.1.
5.5 Sale
of Assets.
Sell,
lease, transfer or dispose of all or any material part of its assets, including
the assets of any of its subsidiaries, other than in the normal course of
business.
5.6 Mergers,
Consolidations and Restructuring.
Merge,
consolidate with any entity or restructure, or allow the Bank to merge,
consolidate with any entity, or restructure (collectively, a “Merger”) other
than (i) the Conversion (subject to Section 3.1 hereof), and (ii) one or more
Merger transactions where the Borrower or the Bank (as applicable) is the
surviving entity and, concurrently with such Merger, Borrower or the Bank (as
applicable) executes, delivers, provides and performs any documents and
instruments reasonably required by Lender to ensure the continuing validity,
priority and enforceability of the Loan, the Loan Documents and the liens
created thereunder notwithstanding such Merger.
5.7 Stock.
Sell,
transfer or otherwise dispose of or further encumber any Pledged Shares or
permit the Bank to issue additional shares of stock or rights, options or
securities convertible into capital stock of the Bank except in connection
with
a Merger contemplated under (and subject to the terms and conditions of) clause
(ii) of Section 5.6 hereof.
5.8 Charter
or By-Law Amendments.
Other
than in connection with the Conversion (subject to Section 3.1 hereof) or a
Merger contemplated under (and subject to the terms and conditions of) clause
(ii) of Section 5.6 hereof, adopt, amend or enter into, as applicable (or permit
the Bank to adopt, amend or enter into, as applicable), any charter, articles
of
incorporation, bylaws or other provisions or agreements that would affect in
any
way the rights, obligations and/or preferences of the Pledged
Shares.
6.0 DEFAULT
AND REMEDIES.
6.1 Events
of Default.
Any one
or more of the following events shall constitute a default (“Event of Default”)
under the terms of this Agreement:
(a) Default
in the payment when due of the principal of or interest on the
Note.
(b) Default
in the performance of any provisions or breach of any covenant of this Agreement
or any other Loan Document.
(c) If
any
representation or warranty or any other statement of fact contained herein,
in
any other Loan Document, or in any writing, certificate, or report or statement
at any time furnished to Lender pursuant to or in connection with this Agreement
shall prove to be false or misleading in any material respect.
(d) If
Borrower or Bank files a petition in bankruptcy or seeks reorganization or
arrangements under the Bankruptcy Code (as it now exists or as amended); is
unable or admits in writing its inability to pay its debts as they become due
or
is not generally paying its debts as they come due; makes an assignment for
the
benefit of creditors; has a receiver, custodian or trustee appointed voluntarily
or involuntarily, for its property; or is adjudicated bankrupt; or if an
involuntary petition is filed in bankruptcy, for reorganization or arrangements,
or for the appointment of a receiver, custodian or trustee of Borrower or Bank
on their respective properties and if Borrower or Bank either acquiesce therein
or fails to have such petition dismissed within sixty (60) days of the filing
thereof.
7
(e) If
Bank
shall fail to maintain an annualized return on total average assets of at least
Ninety
one hundredths of one percent (.90%)
as of
the date of all financial reports required by regulatory authorities. “Total
average assets” shall be deemed to mean the year-to-date average of total assets
of Bank.
(f) If
the
Bank’s non-performing loans exceed Two
and one quarter percent (2.25%)
of the
Bank’s gross loans. For purposes hereof, “non-performing loans” shall be defined
as the sum of all loans whose installments or prepayments are 90 days or more
past due plus all loans that are on non-accrual plus those loans which have
been
renegotiated (as defined by the regulatory agencies) or restructured to provide
a reduction in either interest or principal because of a deterioration in the
financial position of the borrower.
(g) If
there
shall at any time occur without the prior written approval of Lender a change
in
control (including any change in control under the Change in Bank Control Act
of
1978, as amended, and any transaction or restructuring which requires approval
under the Bank Holding Company Act of 1956, as amended) of Bank or
Borrower.
(h) If
there
shall occur the issuance by or at the request of any bank regulatory authority
of any Supervisory Action (as defined in Section 3.5 hereof) or the taking
by
Borrower or Bank of any action of the sort described in Section 3.5 to prevent
or forestall the imposition by such bank regulatory authority of any such
Supervisory Action.
(i) If
Borrower or Bank shall default beyond any applicable cure or grace period in
the
timely payment or performance of any obligation now or hereafter owed to Lender
in connection with any other loan facility of Borrower or Bank now or hereafter
owed to Lender.
6.2 Cure
Periods.
If any
Event of Default, other than a payment default (whether of principal, interest
or any other sum required to be paid under any Loan Documents) or a default
under paragraphs 6.1(d) or 6.1(i) hereof, is curable and if Borrower has not
been given notice of a breach of the same provision of this Agreement within
the
preceding twelve (12) months, it may be cured if Borrower, after receiving
written notice from Lender demanding cure of such Event of Default: (1) cures
the default within fifteen (15) days after receipt of such notice; or (2) if
the
cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in its reasonable discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps to
cure the default within ninety (90) days after delivery of Lender’s original
default notice.
6.3 Remedies.
If an
Event of Default shall occur, at any time thereafter, Lender may, at its option
without demand or notice (except as otherwise provided herein), the same being
expressly waived, declare the Loan, with interest thereon, to be immediately
due
and payable, and may proceed to exercise all rights and remedies available
under
the Loan Documents, at law or in equity, concurrently or sequentially, in such
order as Lender may elect, all such rights and remedies being cumulative.
7.0 MISCELLANEOUS.
7.1 Amendments.
The
provisions of this Loan Agreement and the other Loan Documents may be amended
or
modified only by an instrument in writing signed by the parties
thereto.
7.2 Notices.
All
notices and other communications provided for hereunder shall be in writing
and
shall be mailed, certified mail, return receipt requested or personally
delivered or delivered by recognized overnight courier service such as Federal
Express, if to the Borrower, at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
XX
00000 attention: Xxxxxx Xxxx, CFO, and if to the Lender, to it at 000 Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx, 00000, Attention: Correspondent Services;
or as to any such person at such other address as shall be designated by such
person in a written notice to the other parties hereto complying as to delivery
with the terms of this Section 7.2. All such notices and other communications
shall be effective (i) if mailed, when received or three business days after
mailing, whichever is earlier; or (ii) if personally delivered, upon delivery;
or (iii) if sent by a recognized overnight courier service, on the next business
day after being deposited with such overnight courier service.
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7.3 No
Waiver, Cumulative Remedies.
No
failure to exercise and no delay in exercising, on the part of the Lender,
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 any other or further exercise thereof or the exercise of any other
right, power or privilege. Waiver of any right, power, or privilege hereunder
or
under any instrument or document now or hereafter evidencing or securing the
Loan is a waiver only as to the specified item. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided
by
law.
7.4 Binding
Effect.
This
Loan Agreement shall be binding upon, and inure to the benefit of the parties
hereto and their respective heirs, successors, and assigns, except that Borrower
shall not have the right to assign its rights hereunder or any interest therein
without the prior written consent of Lender.
7.5 Governing
Law.
This
Loan Agreement shall be governed and construed in accordance with the laws
of
the State of Tennessee.
7.6 Venue
of Actions.
As an
integral part of the consideration for the making of the Loan hereunder, it
is
expressly understood and agreed that no suit or action shall be commenced by
Borrower, or by any successors, personal representatives or assignees of it,
with respect to the Loan contemplated hereby, or with respect to any of the
Loan
Documents, other than in a state court of competent jurisdiction in and for
the
County of the State in which the principal place of business of the Lender
is
situated, or in the United States District Court for the District in which
the
principal place of business of the Lender is situated, and not elsewhere.
Nothing in this paragraph contained shall prohibit Lender from instituting
suit
in any court of competent jurisdiction for the enforcement of its rights
hereunder or under any other Loan Document, but the parties stipulate and agree
that the courts specified in the preceding sentence of this section shall be
an
appropriate forum for any such suit.
7.7 Terminology;
Section Headings.
All
personal pronouns used in this Loan Agreement whether used in the masculine,
feminine, or neuter gender, shall include all other genders; and the singular
of
any such pronoun or of any term defined herein shall include the plural, and
vice versa. Section headings are for convenience only and neither limit nor
amplify the provisions of this Loan Agreement.
7.8 Enforceability
of Agreement.
Should
any one or more of the provisions of this Loan Agreement be determined to be
illegal or unenforceable, all other provisions nevertheless, shall remain
effective and binding on the parties hereto. In the event that the provisions
of
the Note or this Loan Agreement governing the determination of the rate of
interest on the Loan should be construed by a court of competent jurisdiction
not to constitute a valid, enforceable designation of a rate of interest or
method of determining the same, the Loan indebtedness shall bear interest at
the
maximum effective variable contract rate which may be charged by Lender under
applicable law from time to time in effect.
7.9 Interest
Limitations.
It is
the intention of the parties hereto to comply strictly with all applicable
usury
laws; and, accordingly, in no event and upon no contingency shall Lender ever
be
entitled to receive, collect, or apply as interest any interest, fees, charges
or other payments equivalent to interest, in excess of the maximum rate for
which Borrower may lawfully contract under applicable law, from time to time
in
effect. Any provision hereof, or of any other agreement executed by Borrower
that would otherwise operate to bind, obligate or compel Borrower to pay
interest in excess of such maximum lawful rate shall be construed to require
the
payment of the maximum rate only. The provisions of this paragraph shall be
given precedence over any other provisions of this paragraph shall be given
precedence over any other provisions contained herein or in any other agreement
applicable to the Loan, that is in conflict with the provisions of this
paragraph.
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7.10 Non-Control.
In no
event shall Lender’s rights hereunder be deemed to indicate that Lender is in
control of the business, management or properties of Borrower or Bank or has
power over the daily management functions and operating decisions made by
Borrower or Bank.
7.11 Fees
and Expenses.
Borrower agrees to pay Lender a fee of Ten Thousand Dollars ($10,000) for actual
out-of-pocket expenses, including due diligence expenses, incurred by Lender
in
connection with the development, preparation, execution, recording of loan
and
loan documents. In addition to such $10,000.00, Borrower shall pay Lender’s
legal fees. Any expenses related to future amendment, administration or
enforcement of, or the preservation of any rights under this Loan Agreement
and
the other Loan Documents, or the collection of the Loan therefore will also
be
at the expense of the Borrower.
7.12 Indemnification.
Borrower hereby agrees to indemnify Lender against, and hold Lender harmless
from, any and all claims, suits and damages asserted against Lender by any
person or entity arising out of or asserted with respect to the transactions
contemplated by this Loan Agreement and shall pay all attorneys’ fees and costs
in connection with the defense of any such claim; provided, however, Borrower
shall have no obligation to indemnify Lender to the extent such claims, suits
or
damages arise from or relate to Lender’s gross negligence or willful
misconduct.
7.13 Borrower’s
Knowledge.
As used
herein, the terms “to the knowledge of the Borrower,” “Borrower’s first
knowledge or notice,” and “to Borrower’s knowledge” shall mean the knowledge of
the officers and employees of the Bank directly engaged in the transactions
contemplated under the Loan Documents.
7.14 Further
Assurances.
Borrower agrees to furnish a current financial statement upon the request of
Lender from time to time, and further agrees to execute and deliver all other
instruments and take such other actions as Lender may from time to time
reasonably request in order to carry out the provisions and intent
hereof.
7.15 Waiver
of Right to Trial by Jury.
EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT
OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH WHETHER NOW
EXISTING OR HEREAFTER ARISING: AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
[SIGNATURES
ON FOLLOWING PAGE]
10
IN
WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BORROWER
By:_/s/
Xxxxxx Fong___________________________
Name:_Gordon
Xxxx ____________________________
Title:_Executive
Vice President and Chief Financial Officer
ATTEST
By:_/s/
Xxxxx Snavely___________________________
Name:_Terry
Snavely___________________________
Title:_Senior
Vice President and Controller___________
LENDER
FIRST
TENNESSE BANK,
National
Association
By:_/s/
Xxxxx House___________________________
Name:_David
House___________________________
Title:_Vice
President___________________________
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