SUBORDINATED TERM LOAN AGREEMENT dated as of September 26, 2008 among CRESCENT STATE BANK as Borrower and UNITED COMMUNITY BANK as Lender
Exhibit
2.1
dated
as
of September 26, 2008
among
CRESCENT
STATE BANK
as
Borrower
and
UNITED
COMMUNITY BANK
as
Lender
TABLE
OF CONTENTS
|
ARTICLE I.
|
DEFINITIONS;
CONSTRUCTION
|
1
|
|
|
Section 1.1.
|
Definitions.
|
1
|
|
|
Section 1.2.
|
Terms
Generally
|
6
|
|
|
ARTICLE II.
|
AMOUNT AND TERMS OF THE SUBORDINATED TERM LOAN |
6
|
|
|
Section 2.1.
|
Loan
Commitment
|
6
|
|
|
Section 2.2.
|
Procedure
for Borrowing
|
6
|
|
|
Section 2.3.
|
Funding
of the Loan.
|
6
|
|
|
Section 2.4.
|
Termination
of Commitment.
|
6
|
|
|
Section 2.5.
|
Repayment
and Prepayments of Loan.
|
7
|
|
|
Section 2.6.
|
Interest
on the Loan.
|
7
|
|
|
Section 2.7.
|
Certain
Fees.
|
8
|
|
|
Section 2.8.
|
Computation
of Interest and Fees
|
8
|
|
|
Section 2.9.
|
Inability
to Determine Interest Rates
|
8
|
|
|
Section 2.10.
|
Evidence
of Indebtedness
|
8
|
|
|
Section 2.11.
|
Illegality
|
9
|
|
|
Section 2.12.
|
Increased
Costs.
|
9
|
|
|
Section 2.13.
|
Funding
Indemnity
|
10
|
|
|
Section 2.14.
|
Taxes.
|
10
|
|
|
Section 2.15.
|
Payments
Generally.
|
11
|
|
|
Section 2.16.
|
Mitigation
of Obligations; Replacement of Lender
|
12
|
|
|
Section 2.17.
|
Subordinated
and Unsecured Obligations
|
12
|
|
|
ARTICLE III.
|
CONDITIONS TO EFFECTIVENESS AND MAKING OF LOANS |
13
|
|
|
Section 3.1.
|
Conditions
To Effectiveness
|
13
|
|
|
Section 3.2.
|
Each
Loan
|
14
|
|
|
ARTICLE IV.
|
REPRESENTATIONS AND WARRANTIES |
15
|
|
|
Section 4.1.
|
Existence;
Power
|
15
|
|
|
Section 4.2.
|
Organizational
Power; Authorization
|
15
|
|
|
Section 4.3.
|
Governmental
Approvals; No Conflicts
|
15
|
|
|
Section 4.4.
|
Financial
Statements
|
15
|
|
|
Section 4.5.
|
Litigation
Matters and Enforcement Actions
|
16
|
|
|
Section 4.6.
|
Compliance
with Laws and Agreements
|
16
|
|
|
Section 4.7.
|
Investment
Company Act
|
17
|
|
|
Section 4.8.
|
Taxes
|
17
|
|
|
Section 4.9.
|
Margin
Regulations
|
17
|
|
|
Section 4.10.
|
Disclosure
|
17
|
|
|
Section 4.11.
|
Dividend
Restrictions; Other Restrictions.
|
18
|
|
|
Section 4.12.
|
Capital
Measures
|
18
|
|
|
Section 4.13.
|
FDIC
Insurance
|
18
|
|
|
Section 4.14.
|
Ownership
of Property.
|
18
|
|
|
Section 4.15.
|
OFAC
|
18
|
|
|
Section 4.16.
|
Patriot
Act
|
19
|
|
|
Section 4.17.
|
Solvency
|
19
|
|
|
ARTICLE V.
|
COVENANTS |
19
|
|
|
Section 5.1.
|
Financial
Statements and Other Information
|
19
|
|
|
Section 5.2.
|
Notices
of Material Events
|
22
|
|
|
Section 5.3.
|
Existence;
Conduct of Business
|
22
|
|
|
Section 5.4.
|
Compliance
with Laws, Etc.
|
22
|
|
|
Section 5.5.
|
Payment
of Obligations
|
22
|
|
|
Section 5.6.
|
Books
and Records
|
22
|
|
-
i -
|
Section 5.7.
|
Visitation,
Inspection, Etc.
|
22
|
|
|
Section 5.8.
|
Maintenance
of Properties; Insurance.
|
22
|
|
|
Section 5.9.
|
Use
of Proceeds
|
23
|
|
|
Section 5.10.
|
Subordination
of Loans
|
23
|
|
|
ARTICLE VI.
|
EVENTS OF DEFAULT |
23
|
|
|
Section 6.1.
|
Events
of Default
|
23
|
|
|
ARTICLE VII.
|
MISCELLANEOUS |
24
|
|
|
Section 7.1.
|
Notices.
|
24
|
|
|
Section 7.2.
|
Waiver;
Amendments.
|
25
|
|
|
Section 7.3.
|
Expenses;
Indemnification.
|
26
|
|
|
Section 7.4.
|
Successors
and Assigns.
|
27
|
|
|
Section 7.5.
|
Governing
Law; Jurisdiction; Consent to Service of Process.
|
28
|
|
|
Section 7.6.
|
WAIVER
OF JURY TRIAL
|
29
|
|
|
Section 7.7.
|
Counterparts;
Integration
|
29
|
|
|
Section 7.8.
|
Survival
|
29
|
|
|
Section 7.9.
|
Severability
|
30
|
|
|
Section 7.10.
|
Confidentiality
|
30
|
|
|
Section 7.11.
|
Interest
Rate Limitation
|
33
|
|
|
Section 7.12.
|
Waiver
of Effect of Corporate Seal
|
31
|
|
|
Section 7.13.
|
Patriot
Act
|
31
|
|
|
Schedules
|
|||
|
|
Schedule I |
-
|
Commitment
Amounts
|
|
Exhibits
|
|||
|
|
Exhibit A |
-
|
Form
of Subordinated Term Note
|
| Exhibit 3.1(b)(iii) |
-
|
Form
of Secretary’s Certificate
|
|
| Exhibit 3.1(b)(v) |
-
|
Form
of Opinion
|
|
| Exhibit 3.1(b)(vi) |
-
|
Form
of Officer’s Certificate
|
-
ii -
THIS
SUBORDINATED TERM LOAN AGREEMENT
(this
“Agreement”) is
made
and entered into as of September 26, 2008, by and among CRESCENT
STATE BANK,
a North
Carolina state bank (the “Borrower”)
and
UNITED
COMMUNITY BANK
(the
“Lender”).
WHEREAS,
the
Borrower has requested the Lender, and the Lender has agreed, subject to the
terms and conditions of this Agreement, to make a subordinated term loan in
the
principal amount of $7,500,000, which loan is intended to qualify as Tier 2
Capital;
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants herein contained, the
Borrower and the Lender agree as follows:
DEFINITIONS;
CONSTRUCTION
Definitions. In
addition to the other terms defined herein, the following terms used herein
shall have the meanings herein specified (to be equally applicable to both
the
singular and plural forms of the terms defined):
“Base
Rate”
shall
mean the higher of (i) the per annum rate which the Lender publicly
announces from time to time to be its prime lending rate, as in effect from
time
to time, and (ii) the Federal Funds Rate, as in effect from time to time,
plus
one-half
of one percent (0.50%). The Lender’s prime lending rate is a reference rate and
does not necessarily represent the lowest or best rate charged to customers.
The
Lender may make commercial loans or other loans at rates of interest at, above
or below the Lender’s prime lending rate. Each change in the Lender’s prime
lending rate shall be effective from and including the date such change is
publicly announced as being effective.
“Base
Rate Loan”
shall
mean any Loan accruing interest at the Base Rate.
“Base
Rate Margin”
shall
mean 2.50% per annum.
“Borrowing” shall
mean the borrowing consisting of the Loan.
“Business
Day”
shall
mean any day other than a Saturday, Sunday or other day on which commercial
banks in Atlanta, Georgia are authorized or required by law to
close.
“Call
Report”
shall
mean, with respect to the Borrower, the “Consolidated Reports of Condition and
Income” (FFIEC Form 031 or 041 or any successor form of the Federal Financial
Institutions Examination Council).
“Change
in Law”
shall
mean (i) the adoption of any applicable law, rule or regulation after the
date of this Agreement, (ii) any change in any applicable law, rule or
regulation, or any change in the interpretation or application thereof, by
any
Governmental Authority after the date of this Agreement, or
(iii) compliance by any Lender (or for purposes of Section 2.12(b),
by such
Lender’s holding company, if applicable) with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.
“Closing
Date”
shall
mean the date on which the conditions precedent set forth in Section 3.1
have
been satisfied or waived, and unless otherwise indicated, shall be the date
of
this Agreement.
“Commitment”
shall
mean the obligation of the Lender to make the Loan hereunder on the Closing
Date. On the Closing Date, the Commitment shall equal $7,500,000.
“Dollar(s)”
and
the
sign “$”
shall
mean lawful money of the United States of America.
“Environmental
Laws”
shall
mean all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by or with any Governmental Authority, relating in any way to
the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters.
“Environmental
Liability”
shall
mean any liability, contingent or otherwise (including any liability for
damages, costs of environmental investigation and remediation, costs of
administrative oversight, fines, natural resource damages, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly resulting
from or based upon (a) any actual or alleged violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment
or disposal of any Hazardous Materials, (c) any actual or alleged exposure
to any Hazardous Materials, (d) the Release or threatened Release of any
Hazardous Materials or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect
to
any of the foregoing.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor statute.
“ERISA
Affiliate”
shall
mean any trade or business (whether or not incorporated), which, together with
the Borrower, is treated as a single employer under Section 414(b) or (c)
of the Code or, solely for the purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
“ERISA
Event”
shall
mean (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event
for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of
ERISA
with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator appointed
by the PBGC of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability with respect to
the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by the Borrower or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent
or
in reorganization, within the meaning of Title IV of ERISA.
-
1 -
“Event
of Default”
shall
have the meaning provided in Article VI.
“Excluded
Taxes”
shall
mean with respect to the Lender or any other recipient of any payment to be
made
by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of the
Lender, in which its applicable lending office is located and (b) any
branch profits taxes imposed by the United States of America or any similar
tax
imposed by any other jurisdiction in which the Lender is located.
“FDIC”
shall
mean the Federal Deposit Insurance Corporation.
“Federal
Funds Rate”
shall
mean, for any day, the rate per annum (rounded upwards, if necessary, to the
next 1/100th
of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with member banks of the Federal Reserve System arranged by Federal
funds brokers, as published by the Federal Reserve Bank of New York on the
next
succeeding Business Day or if such rate is not so published for any Business
Day, the Federal Funds Rate for such day shall be the average rounded upwards,
if necessary, to the next 1/100th of 1% of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.
“Fiscal
Quarter”
shall
mean each fiscal quarter (including the fiscal quarter at the fiscal year-end)
of the Borrower.
“FRB”
shall
mean the Board of Governors of the Federal Reserve System.
“FR
Y-9C Report”
shall
mean the “Consolidated Financial Statements for Bank Holding Companies (FR
Y-9C)” submitted by the Parent as required by Section 5(c) of the Bank
Holding Company Act (12 U.S.C. 1844) and Section 225.5(b) of Regulation Y
(12 CFR 225.5(b)), or any successor or similar replacement report.
-
2 -
“FR
Y-9LP Report”
shall
mean the “Parent Company Only Financial Statements for Large Bank Holding
Companies (FR Y-9LP)” submitted by the Parent as required by Section 5(c) of the
Bank Holding Company Act (12 U.S.C. 1844) and Section 225.5(b) of Regulation
Y
(12 CFR 225.5(b)), or any successor or similar replacement report.
“GAAP”
shall
mean generally accepted accounting principles in the United States applied
on a
consistent basis.
“Governmental
Authority”
shall
mean the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, including
without limitation, the FRB, the FDIC, the North Carolina Commissioner of Banks
and any other federal or state agency charged with the supervision or regulation
of depositary institutions or holding companies of depositary institutions
(as
used herein, including any trust company subsidiaries whether or not they take
deposits), or engaged in the insurance of depositary institution deposits,
or
any court, administrative agency or commission or other governmental agency,
authority or instrumentality having supervisory or regulatory authority with
respect to the Borrower and/or any of its Subsidiaries.
“Hazardous
Materials”
means
all explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances
or
wastes of any nature regulated pursuant to any Environmental Law.
“Indemnified
Taxes”
shall
mean Taxes other than Excluded Taxes.
“Interest
Payment Date”
shall
have the meaning assigned to such term in Section 2.6.
“Interest
Rate”
shall
have the meaning assigned to such term in Section 2.6.
“Interest
Reset Date”
shall
mean the first Business Day of April, July, October and January of each
year.
“Lender”
shall
have the meaning assigned to such term in the opening paragraph of this
Agreement.
“LIBOR”
shall
mean that rate per annum that is equal to the rate per annum for deposits in
Dollars for a three-month period, which rate appears on Reuters Screen LIBOR01
Page (or any successor page), or such similar service as determined by the
Lender that displays the British Bankers’ Association Interest Settlement Rates
for deposits in Dollars as of 11:00 a.m. (London, England time) on the day
that is two (2) Business Days prior to the Closing Date and each Interest Reset
Date; provided,
that if
the Lender determines that no such offered rate appears on such page, the rate
used will be the per annum rate of interest determined by the Lender to be
the
average (rounded upward, if necessary, to the nearest 1/100th of 1%) of the
rates per annum at which deposits in Dollars for a three-month period are
offered to the Lender by leading banks in the London interbank market as of
10:00 a.m. (New York, New York time) on the day that is two (2) Business Days
prior to each Interest Reset Date.
-
3 -
“Loan”
shall
have the meaning set forth in Section
2.1.
“Loan
Documents”
shall
mean this Agreement, the Subordinated Term Note and any and all other
instruments, agreements, documents and writings executed in connection with
any
of the foregoing.
“Material
Adverse Effect”
shall
mean, with respect to any event, act, condition or occurrence of whatever nature
(including any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in conjunction
with
any other event or events, act or acts, condition or conditions, occurrence
or
occurrences whether or not related, a material adverse change in, or a material
adverse effect on, (i) the business, results of operations, financial
condition, assets, liabilities or prospects of either (x) the Borrower or (y)
the Parent and its Subsidiaries taken as a whole, (ii) the ability of the
Borrower to perform any of its obligations under the Loan Documents,
(iii) the rights and remedies of the Lender under any of the Loan Documents
or (iv) the legality, validity or enforceability of any of the Loan
Documents.
“Maturity
Date”
shall
mean October 1, 2018.
“Multiemployer
Plan”
shall
have the meaning set forth in Section 4001(a)(3) of ERISA.
“Other
Taxes”
shall
mean any and all present and future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies, other than Excluded Taxes,
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Documents.
“Parent”
shall
mean Crescent Financial Corporation, a North Carolina corporation, and its
successors and assigns.
“Participant”
shall
have the meaning set forth in Section 7.4(b).
“Payment
Office”
shall
mean the office of the Lender located at X.X. Xxx 000, 00 Xxxxxxx 000,
Xxxxxxxxxxx, Xxxxxxx 00000, or such other location as to which the Lender shall
have given written notice to the Borrower.
-
4 -
“PBGC”
shall
mean the Pension Benefit Guaranty Corpora-tion referred to and defined in ERISA,
and any successor entity performing similar functions.
“Person”
shall
mean any individual, partnership, firm, corporation, association, joint venture,
limited liability company, trust or other entity, or any Governmental
Authority.
“Plan”
means
any employee pension benefit plan (other than a Multiemployer Plan) subject
to
the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.
“Release”
means
any release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater, land surface or subsurface
strata) or within any building, structure, facility or fixture.
“Responsible
Officer”
shall
mean any of the president, the chief executive officer, the chief operating
officer, the chief financial officer, the treasurer or a vice president of
the
Borrower or such other representative of the Borrower as may be designated
in
writing by any one of the foregoing with the consent of the Lender.
“Subordinated
Term Note”
shall
mean the promissory note of the Borrower payable to the order of the Lender
in
substantially the form of Exhibit A.
“Subsidiary”
shall
mean, with respect to any Person (the “parent”),
any
corporation, partnership, joint venture, limited liability company, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any
other corporation, part-nership, joint venture, limited liability company,
association or other entity (i) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power, or in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (ii) that is, as of such date, otherwise controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. Unless otherwise indicated, all references to
“Subsidiary” hereunder shall mean a Subsidiary of the Borrower.
“Taxes”
means
all present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable
thereto.
“Tier
2 Capital”
shall
have the definition provided in, and shall be determined in accordance with,
the
rules and regulations of the FDIC.
-
5 -
“Type”,
when
used in reference to the Loan, refers to whether the rate of interest on such
Loan, is determined by reference to LIBOR or the Base Rate.
“Withdrawal
Liability”
shall
mean liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part
I of
Subtitle E of Title IV of ERISA.
Terms
Generally
.
The
definitions of terms herein shall apply equally to the singular and plural
forms
of the terms defined. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. In the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the word “to” means “to but excluding”. Unless
the context requires otherwise (i) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as it was originally executed
or
as it may from time to time be amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and permitted assigns,
(iii) the words “hereof”, “herein” and “hereunder” and words of similar
import shall be construed to refer to this Agreement as a whole and not to
any
particular provision hereof, (iv) all references to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles, Sections,
Exhibits and Schedules to this Agreement and (v) all references to a
specific time shall be construed to refer to Atlanta, Georgia time, unless
otherwise indicated.
AMOUNT
AND TERMS OF THE SUBORDINATED
TERM LOAN
Loan
Commitment
.
Subject
to the terms and conditions set forth herein, the Lender agrees to make a single
term loan (the “Loan”)
to the
Borrower on the Closing Date in a principal amount not to exceed the Commitment
of the Lender; provided,
that if
for any reason the full amount of the Lender’s Commitment is not fully drawn on
the Closing Date, the undrawn portion thereof shall automatically be cancelled.
Procedure
for Borrowing
.
The
execution and delivery of this Agreement by the Borrower and the satisfaction
of
all conditions precedent pursuant to Section 3.1
and
Section 3.2
shall be
deemed to constitute the Borrower’s request to borrow the Loan on the Closing
Date.
Funding
of the Loan.
The
Lender will make the proceeds of the Loan available to the Borrower by promptly
effecting a wire transfer of the Loan proceeds to an account designated by
the
Borrower to the Lender in writing for such purpose.
Termination
of Commitment.
The
Commitment shall terminate on the Closing Date upon the making of the Loan.
-
6 -
Repayment
and Prepayments of Loan.
(a) The
aggregate outstanding principal amount of the Loan shall be due and payable
(together with accrued and unpaid interest thereon) on the Maturity Date. All
payments in respect of the Loan shall be applied first to accrued interest
and
the balance, if any, to principal. Once repaid, the Loan may not be reborrowed.
(b) The
Borrower shall have the right at any time and from time to time, subject to
the
approval of the FDIC and other Governmental Authorities (if applicable), to
prepay the Loan, in whole or in part, without premium or penalty, by giving
irrevocable written notice to the Lender no later than five (5) Business Days
prior to any such prepayment. Each such notice shall be irrevocable and shall
specify the proposed date of such prepayment and the principal amount of the
Loan or portion thereof to be prepaid. If such notice is given, the aggregate
amount specified in such notice shall be due and payable on the date designated
in such notice, together with accrued interest to such date on the amount so
prepaid in accordance with Section 2.15(a).
Each
partial prepayment of the Borrowing shall be in a minimum aggregate amount
of
not less than $500,000. Each prepayment of the Borrowing shall be applied first
to accrued interest and then to the principal balance. Notwithstanding anything
to the contrary herein or otherwise, except as provided in Section
5.10,
the
Borrower shall not (and shall not have the right to) prepay the Loan prior
to
October 1, 2013.
Interest
on the Loan.
(a) Interest
on the principal amount of the Loan shall accrue from and including the date
the
Loan is made to but excluding the date of any repayment thereof. The Borrower
shall pay interest on the Loan in arrears on the first day of April, July,
October and January of each year and on the Maturity Date (each, an
“Interest
Payment Date”)
at a
rate equal to LIBOR plus
four
percent (4%) per annum (the “Interest
Rate”).
The
initial Interest Payment Date in respect of the Loan shall be October
1, 2008.
(b) The
Interest Rate in respect of the Loan for the period from the Closing Date to
October 1, 2008 shall be 7.21% per annum, which was determined by reference
to
the then prevailing LIBOR. Thereafter, the Interest Rate shall be reset on
a
quarterly basis on the first day of each Interest Reset Date by reference to
the
then prevailing LIBOR. If any Interest Reset Date falls on a day that is not
a
Business Day, the Interest Reset Date shall be postponed to the next succeeding
Business Day, except if that Business Day is in the next succeeding calendar
month, the Interest Reset Date shall be the immediately preceding Business
Day.
(c) Following
the occurrence of an Event of Default, and in any event after acceleration,
interest on the Loan shall cease to accrue interest at the Interest Rate and
shall thereafter bear interest at the Base Rate plus
the
Base
Rate Margin plus
2% per
annum. All interest payable under this clause (c) shall be payable on
demand.
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7 -
(d) The
Lender shall determine each interest rate applicable to the Loan hereunder
and
shall promptly notify the Borrower of such rate in writing (or by telephone,
promptly confirmed in writing). Any such determination shall be conclusive
and
binding for all purposes, absent manifest error.
Certain
Fees. The
Borrower shall pay to the Lender, the upfront fees agreed upon in writing by
the
Borrower, which upfront fees shall be due and payable on the Closing Date.
The
Borrower shall also pay to Sandler X’Xxxxx & Partners, L.P. (“Sandler”) such
fees in the amounts and at the times mutually agreed upon by the Borrower and
Sandler.
Computation
of Interest and Fees.
All
computations of interest and fees hereunder shall be made on the basis of a
year
of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or
fees
are payable (to the extent computed on the basis of days elapsed). Each
determination by the Lender of an interest amount or fee hereunder shall be
made
in good faith and, except for manifest error, shall be final, conclusive and
binding for all purposes.
Inability
to Determine Interest Rates.
If prior
to the occurrence of any Interest Reset Date, the Lender shall have determined
(which determination shall be conclusive and binding upon the Borrower absent
manifest error) that by reason of circumstances affecting the relevant interbank
market, adequate means do not exist for ascertaining LIBOR, the Lender shall
give written notice (or telephonic notice, promptly confirmed in writing) to
the
Borrower as soon as practicable thereafter. Until the Lender notifies the
Borrower that the circumstances giving rise to such notice no longer exist,
the
Loan shall be deemed to be converted into a Base Rate Loan as of such date
and
shall bear interest at the Base Rate plus
the Base
Rate Margin.
Evidence
of Indebtedness.
The
Lender shall maintain in accordance with its usual practice appropriate records
evidencing the indebtedness of the Borrower to the Lender resulting from the
Loan, including the amounts of principal and interest payable thereon and paid
to the Lender from time to time under this Agreement. The Lender shall maintain
appropriate records in which shall be recorded (i) the Commitment of the
Lender, (ii) the amount of the Loan made hereunder by the Lender, including
the Type thereof, (iii) the date of each required conversion of the Loan to
a Base Rate Loan, (iv) the date and amount of any principal or interest due
and payable or to become due and payable from the Borrower to the Lender
hereunder in respect of such Loan, and (v) both the date and amount of any
sum received by the Lender hereunder from the Borrower in respect of the Loan.
The entries made in such records shall be prima facie evidence of the existence
and amounts of the obligations of the Borrower therein recorded; provided,
that
the failure or delay of the Lender in maintaining or making entries into any
such record or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loan (both principal and unpaid accrued interest)
in accordance with the terms of this Agreement. On the Closing Date, the
Borrower will execute and deliver a Subordinated Term Note to the Lender in
a
principal amount equal to the amount of the Loan funded by the Lender on the
Closing Date.
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8 -
Illegality.
If
any
Change in Law shall make it unlawful or impossible for the Lender to make,
maintain or fund the Loan, the Lender shall promptly give notice thereof to
the
Borrower, whereupon until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the obligation
of
the Lender to make the Loan shall be suspended.
Increased
Costs.
(a) If
any
Change in Law shall:
(i)
impose,
modify or deem applicable any reserve, special deposit or similar requirement
that is not otherwise included in the determination of LIBOR hereunder against
assets of, deposits with or for the account of, or credit extended by, the
Lender; or
(ii) impose
on
the Lender or the eurodollar interbank market any other condition affecting
this
Agreement;
and
the
result of the foregoing is to reduce the amount received or receivable by the
Lender hereunder (whether of principal, interest or any other amount), then
the
Borrower shall promptly pay, upon written notice from and demand by the Lender,
to the Lender, within five (5) Business Days after the date of such notice
and
demand, additional amount or amounts sufficient to compensate the Lender for
such additional costs incurred or reduction suffered.
(b) If
the
Lender shall have determined that on or after the date of this Agreement any
Change in Law regarding capital requirements has or would have the ef-fect
of
reducing the rate of return on the Lender’s capital (or on the capital of the
Lender’s parent corporation) as a consequence of its obligations here-under to a
level below that which the Lender or the Lender’s parent corporation could have
achieved but for such Change in Law (taking into consideration the Lender’s
policies or the policies of the Lender’s parent corporation with respect to
capital adequacy) then, from time to time, within five (5) Business Days after
receipt by the Borrower of written demand by the Lender, the Borrower shall
pay
to the Lender such additional amounts as will compensate the Lender or the
Lender’s parent corporation for any such reduction suffered.
(c) A
certificate of the Lender setting forth the amount or amounts necessary to
compensate the Lender or its parent corporation, as the case may be, specified
in paragraph (a) or (b) of this Section shall be delivered to the Borrower
and shall be con-clusive, absent manifest error. The Borrower shall pay the
Lender such amount or amounts within ten (10) days after receipt
thereof.
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9 -
(d) Failure
or delay on the part of the Lender to demand compensation pursuant to this
Section shall not constitute a waiver of the Lender’s right to demand such
compensation; provided,
however,
that
the Borrower shall not be required to compensate the Lender pursuant to this
Section for (x) any increased cost or reduction of amounts received or
receivable described in paragraph (a) or (y) any reduction of the rate of return
on the Lender’s capital described in paragraph (b), if such increase or
reduction, as the case may be, is suffered more than 180 days prior to the
date
that the Lender gives any required notice and demand (except that, if the Change
in Law that causes such increase or reduction, as the case may be, is
retroactive, then the 180 day period referred to above shall be extended to
include the period of retroactive effect thereof).
Funding
Indemnity.
In
the
event of (a) the payment of any principal of the Loan other than on an
Interest Payment Date or the Maturity Date or (b) the failure by the
Borrower to borrow or prepay the Loan on the date specified
in any applicable notice (regardless of whether such notice is withdrawn or
revoked), then, in such event, the Borrower shall compensate the Lender, within
five (5) Business Days after written demand from the Lender, for any loss,
cost
or expense attributable to such event; provided, however, that the Borrower
shall not be required to compensate the Lender pursuant to this Section if
such
written demand is delivered more than 90 days after the Loan and all other
amounts outstanding hereunder are repaid in full in cash. Such loss, cost or
expense shall be deemed to include an amount determined by the Lender to be
the
excess, if any, of (A) the amount of interest that would have accrued on
the principal amount of the Loan if such event had not occurred at LIBOR
applicable to the Loan for the period from the date of such event to the next
Interest Reset Date (or in the case of a failure to borrow, for the period
that
would have been the period through the next Interest Reset Date) over
(B) the amount of interest that would accrue on the principal amount of the
Loan for the same period if LIBOR were set on the date such Loan was prepaid
or
the date on which the Borrower failed to borrow such Loan. A certificate as
to
any additional amount payable under this Section 2.13 submitted to the
Borrower by the Lender shall be conclusive, absent manifest error.
Taxes.
(a) Any
and
all payments by or on account of any obligation of the Borrower hereunder shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided,
that
if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Lender shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
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10 -
(c) The
Borrower shall indemnify the Lender, within five (5) Business Days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Lender on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by the Lender shall be conclusive absent manifest error.
(d) As
soon
as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Lender
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the
Lender.
Payments
Generally.
(a) The
Borrower shall make each payment required to be made by it hereunder (whether
of
principal, interest or fees or of amounts payable under Section 2.5,
Section 2.6
or
Section 2.7
or
otherwise) prior to 4:00 p.m., on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time
on
any date may, in the discretion of the Lender, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Lender at the Payment Office,
except that payments pursuant to Section 2.12,
Section 2.13
and
Section 7.3
shall be
made directly to the Persons entitled thereto. If any payment hereunder shall
be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be made payable for the period of such
extension. All payments hereunder shall be made in Dollars.
(b) If
at any
time insufficient funds are received by and available to the Lender to pay
fully
all amounts of principal, interest and fees then due hereunder, such funds
shall
be applied first, towards payment of interest and fees then due hereunder and
second, towards payment of principal then due hereunder.
(c) The
Lender agrees that, so long as the proceeds of the Loan are deemed to be Tier
2
Capital, and notwithstanding the limitation imposed by the second sentence
of 12
C.F.R. Part 325, App. A(I)(A)(2)(e), the Lender waives its right to exercise
any
set-off or other right to appropriate and to apply any deposits or other assets
of the Borrower at any time held by the Lender against or on account of the
Loan
owing hereunder or owing under the Subordinated Term Note to the
Lender.
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11 -
Mitigation
of Obligations;
Replacement of Lender
(a) Prior
to
the Lender requesting compensation under Section 2.12,
or the
Borrower being required to pay any additional amount to the Lender or any
Governmental Authority for the account of the Lender pursuant to Section 2.14,
the
Lender shall use reasonable efforts to designate a different lending office
for
funding or booking the Loan hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the sole
judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable under Section 2.12
or
Section 2.14,
as the
case may be, in the future and (ii) would not subject the Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to
the
Lender. The Borrower hereby agrees to pay all costs and expenses incurred by
the
Lender in connection with such designation or assignment.
(b) If
the
Lender requests compensation under Section 2.12,
or if
the Borrower is required to pay any additional amount to the Lender or any
Governmental Authority for the account of the Lender pursuant to Section 2.14,
then
the Borrower may, at its sole cost and expense, upon notice to the Lender,
require the Lender to assign and delegate, without recourse (in accordance
with
and subject to the restrictions set forth in Section 7.4
all of
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations; provided,
that
(i) the Lender shall have received payment of an amount equal to the outstanding
principal amount of the Loans owed to it, accrued interest thereon, accrued
fees
and all other amounts payable to it hereunder, from the assignee (in the case
of
such outstanding principal and accrued interest) and from the Borrower (in
the
case of all other amounts) and (ii) in the case of a claim for compensation
under Section 2.12
or
payments required to be made pursuant to Section 2.14,
such
assignment will result in a reduction or elimination of such compensation or
payments. The Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of an irrevocable waiver by the
Lender, the circumstances entitling the Borrower to require such assignment
and
delegation ceases to apply.
Subordinated
and Unsecured Obligations.
The
Loan
is an unsecured obligation of the Borrower and is subordinated to the extent
set
forth in the Subordinated Term Note.
CONDITIONS
TO EFFECTIVENESS AND MAKING OF LOANS
Conditions
To Effectiveness.
The
effectiveness of this Agreement, and the willingness of the Lender to make
the
Loan hereunder, shall not become effective until the date on which each of
the
following conditions is satisfied (or waived in accordance with
Section 8.2).
(a) The
Lender shall have received all fees and other amounts due and payable on or
prior to the Closing Date, including (i) reimbursement or payment of all
out-of-pocket expenses (including $5,000 of fees, charges and disbursements
of
counsel to the Lender) required to be reimbursed or paid by the Borrower
hereunder, under any other Loan Document and as otherwise agreed in writing
and
(ii) the upfront fees payable to the Lender.
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12 -
(b) The
Lender (or its counsel) shall have received the following, each in form and
substance satisfactory to the Lender:
(i) a
counterpart of this Agreement signed by or on behalf of each party hereto or
written evidence satisfactory to the Lender (which may include facsimile
transmission of a signed signature page of this Agreement) that such party
has
signed a counterpart of this Agreement;
(ii) a
duly
executed Subordinated Term Note payable to the Lender in respect of the
Loan;
(iii) a
certificate of the Secretary or Assistant Secretary of the Borrower in the
form
of Exhibit 3.1(b)(iii), attaching and certifying copies of its bylaws and of
the
resolutions of its board of directors, authorizing the execution, delivery
and
performance of the Loan Documents and certifying the name, title and true
signature of each officer of the Borrower executing the Loan Documents;
(iv) (a)
a
copy of the charter of the Borrower, certified by the appropriate Governmental
Authority and (b) a certificate of good standing for the Borrower issued by
the
North Carolina Commissioner of Banks;
(v) a
favorable written opinion of Xxxxx & Xxxxxx, P.A., counsel to the Borrower,
addressed to the Lender, and covering such matters relating to the Borrower,
the
Parent, the Loan Documents and the transactions contemplated therein, that
are
set forth in Exhibit 3.1(b)(v), subject to reasonable and customary
qualifications and assumptions for transactions like the Loan;
(vi) a
certificate in the form of Exhibit 3.1(b)(vi), dated the Closing Date and signed
by a Responsible Officer, certifying that (w) no Event of Default exists, (x)
all representations and warranties of the Borrower set forth in the Loan
Documents are true and correct, and (y) since the date of the financial
statements of the Parent described in Section 4.4,
there
shall have been no change, event or other circumstance which has had or could
reasonably be expected to have a Material Adverse Effect;
(vii) certified
copies of all consents, approvals, authorizations, registrations and filings
and
orders required to be made or obtained under any applicable laws in connection
with the execution, delivery, performance, validity and enforceability of the
Loan Documents or any of the transactions contemplated thereby, and such
consents, approvals, authorizations, registrations, filings and orders shall
be
in full force and effect and all applicable waiting periods shall have expired,
and no investigation or inquiry by any Governmental Authority regarding the
Commitment or any transaction being financed with the proceeds thereof shall
be
ongoing;
(viii) a
duly
executed copy of the Call Report of the Borrower most recently available as
of
the Closing Date;
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13 -
(ix) evidence
that the Loan will be deemed to be Tier 2 Capital by the applicable Governmental
Authorities;
(x) a
written
waiver of default executed by Silverton Bank, National Association based on
the
making of the Loan pursuant to this Agreement with respect to that certain
Loan
Agreement, dated as of June 27, 2008, by and between such bank and the Parent
(the “Holding
Company Loan Agreement”);
and
(xi) such
other documents, agreements and instruments as the Lender may reasonably
request.
Loan.
The
willingness of the Lender to make the Loan under this Agreement is subject
to
the satisfaction of the following conditions:
(a) at
the
time of and immediately after giving effect to the Loan, no Event of Default
shall exist;
(b) all
representations and warranties of the Borrower herein shall be true and correct
in all material respects on and as of the date of the Loan both before and
after
giving effect thereto;
(c) since
December 31, 2007, there shall have been no change which has had or could
reasonably be expected to have a Material Adverse Effect;
(d) no
legislation has been passed or any suit or other proceeding has been instituted
the effect of which is to prohibit, enjoin (or to declare unlawful or improper)
or otherwise adversely affect the Borrower’s performance of its obligations
hereunder, and no litigation or governmental proceeding has been instituted
or
threatened against the Parent or the Borrower or any of their officers or
shareholders which may adversely affect the financial condition or operations
of
the Parent or the Borrower;
(e) the
Lender shall have received such other documents, certificates, information
or
legal opinions as it may reasonably request, all in form and substance
reasonably sat-isfactory to the Lender.
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14 -
REPRESENTATIONS
AND WARRANTIES
The
Borrower represents and warrants to the Lender as follows:
Existence;
Power.
The
Borrower (i) is duly organized and validly existing as a bank under the
laws of the jurisdiction of its organization, (ii) has all requisite power
and authority to carry on its business as now conducted, and (iii) is duly
qualified to do business, and is in good standing, in each jurisdiction where
such qualification is required, except where a failure to be so qualified could
not reasonably be expected to result in a Material Adverse Effect.
Organizational
Power; Authorization.
The
Borrowing, and the execution, delivery and performance by the Borrower of each
of the Loan Documents are within the Borrower’s powers and have been duly
authorized by all necessary corporate, and if required, stockholder, action.
This Agreement has been duly executed and delivered by the Borrower and
constitutes, and each other Loan Document when executed and delivered by the
Borrower will constitute, valid and binding obligations of the Borrower,
en-forceable against it in accordance with their re-spective terms, except
as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity.
Governmental
Approvals; No Conflicts.
The
execution, delivery and performance by the Borrower of this Agreement and the
other Loan Documents (a) do not require any consent or approval of,
registration or filing with, or any action by, any Governmental Authority,
except those as have been obtained or made and are in full force and effect,
(b) will not violate any applicable law or regulation or the charter or
by-laws of the Borrower or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, material
agreement or other material instrument binding on the Parent or any of its
Subsidiaries (including the Borrower), or any of their respective assets or
give
rise to a right thereunder to require any payment to be made by the Parent
or
any such Subsidiary (including the Borrower) and (d) will not result in the
creation or imposition of any lien, security interest or other encumbrance
on
any asset of the Parent or any of its Subsidiaries (including the Borrower).
All
necessary regulatory approvals have been obtained for the Parent and each of
its
Subsidiaries (including the Borrower) to conduct their respective
businesses.
Financial
Statements.
The
Borrower has furnished to the Lender (i) the audited consolidated balance sheet
of the Parent and its Subsidiaries as of December 31, 2007 and the
related consolidated statements of income, shareholders’ equity and cash flows
for the fiscal year then ended audited by Xxxxx Xxxxxx PLLC and (ii) the
unaudited consolidated balance sheet of the Parent and its Subsidiaries as
of
June 30, 2008, and the related unaudited consolidated statements of income
and
cash flows for the fiscal quarter and year-to-date period then ending, certified
by a Responsible Officer. Such financial statement fairly presents, in all
material respects, the consolidated financial position of the Parent and its
Subsidiaries as of such date and the consolidated results of operations and
cash
flows for such period in conformity with GAAP consistently applied, subject
to
year end audit adjustments and the absence of footnotes in the case of the
statements referred to in clause (ii). Since December 31, 2007, there have
been
no changes with respect to the Parent and its Subsidiaries which have had or
could reasonably be expected to have, singly or in the aggregate, a material
adverse change in, or a material adverse effect on, the business, results of
operations, financial condition, assets, liabilities or prospects of the Parent
and its Subsidiaries, taken as a whole. In addition, the Borrower has provided
to the Lender a copy of the Call Report of the Borrower for the period ending
June 30, 2008. Such Call Report is true and correct and is in
accordance with the respective books of account and records of the Borrower,
and
has been prepared in accordance with applicable banking regulations, rules
and
guidelines on a basis consistent with prior periods, and fairly and accurately
presents the financial condition of the Borrower and its assets and liabilities
and the results of its operations as of such date.
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15 -
Litigation
Matters
and Enforcement Actions.
No
litigation, investigation or proceeding of or before any arbitrators or
Governmental Authorities is pending against, or, to the knowledge of the
Borrower, threatened against or affecting the Parent or any of its Subsidiaries
(including the Borrower) (i) as to which there is a reasonable possibility
of an adverse determination that could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect or (ii) which
in any manner draws into question the validity or enforceability of this
Agreement or any other Loan Document. Neither the Parent nor any of its
Subsidiaries (including the Borrower), nor any of their respective officers,
directors, employees or representatives, is subject or is party to, or has
received any notice from any Governmental Authority that any of them will become
subject or party to any investigation with respect to, any cease-and-desist
order, agreement, civil monetary penalty, bar or suspension from the securities
investment or banking businesses, consent agreement, memorandum of understanding
or other regulatory enforcement action, proceeding or order with or by, or
is a
party to any commitment letter or similar undertaking to, or is subject to
any
directive by, or has been a recipient of any supervisory letter specifically
addressed to the Borrower that are from, or has adopted any board resolutions
at
the request or suggestion of, any Governmental Authority that, in any such
case,
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a “Regulatory Action”), nor
has the Parent or any of its Subsidiaries (including the Borrower) been advised
by any Governmental Authority that it is considering issuing or requesting
any
such Regulatory Action; and there is no unresolved violation, criticism or
exception by any Governmental Authority with respect to any report or statement
relating to any examinations of the Parent or any of its Subsidiaries (including
the Borrower), except where such unresolved violation, criticism or exception
would not, singly or in the aggregate, have a Material Adverse
Effect.
Compliance
with Laws and Agreements.
The
Parent and each of its Subsidiaries (including the Borrower) is in compliance
with all applicable laws (including without limitation all Environmental Laws
and all federal and state banking statutes) and all rules, regulations
(including without limitation all applicable federal and state banking
regulations) and orders of any Governmental Authority, except where such
non-compliance could not be reasonably be expected, singly or in the aggregate,
to have a Material Adverse Effect. Neither the Parent nor any of its
Subsidiaries (including the Borrower) is in default in the performance,
observance or fulfillment of any of the terms, obligations, covenants,
conditions or provisions contained in any indenture or other agreement
creating, evidencing or securing indebtedness of any kind or pursuant to which
any such indebtedness is issued, or other agreement or instrument to which
the
Parent or any of its Subsidiaries (including the Borrower) is a party or by
which the Parent or any of its Subsidiaries (including the Borrower) or any
of
their respective properties may be bound or affected, except where such default
could not reasonably be expected, singly or in the aggregate, to have a Material
Adverse Effect. The Parent has not received any notice of any default or event
of default, and no default or event of default, or any event that with notice
or
the lapse of time would become an event of default, has occurred and is
continuing (or would occur after giving effect to the making of the Loan
pursuant to this Agreement) under (i) that certain Indenture, dated as of August
27, 2003, by and between the Parent and Xxxxx Fargo Bank, National Association,
or (ii) the Holding Company Loan Agreement.
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16 -
Investment
Company Act.
The
Borrower is not an “investment company”, as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended.
Taxes.
The
Parent
and each of its Subsidiaries (including the Borrower) has
timely filed or caused to be filed all Federal income tax returns and all other
material tax returns that are required to be filed by it, and have paid all
taxes shown to be due and payable on such returns or on any assessments made
against it or its property and all other taxes, fees or other charges imposed
on
it or any of its property by any Governmental Authority, except (i) to the
extent the failure to do so would not have a Material Adverse Effect or
(ii) where the same are currently being contested in good faith by
appropriate proceedings and for which the Parent or the applicable Subsidiary
(including the Borrower) has set aside on its books adequate
reserves.
Margin
Regulations.
None of
the proceeds of any of the Loans will be used for “purchasing” or “carrying” any
“margin stock” with the respective meanings of each of such terms under
Regulation U as now and from time to time hereafter in effect or for any purpose
that violates the provisions of Regulation U.
Disclosure.
The
Borrower has disclosed to the Lender all agreements, instruments, and corporate
or other restrictions to which the Parent or any of its Subsidiaries (including
the Borrower) is subject, and all other matters known to any of them, that,
individually or in the aggregate, could reasonably be expected to result in
a
Material Adverse Effect. None of the reports (including Call Reports), financial
statements, certificates or other information furnished by or on behalf of
the
Borrower to the Lender in connection with the negotiation of this Agreement
or
any other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by any other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make
the
statements therein, taken as a whole, in light of the circumstances under which
they were made, not misleading.
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17 -
Dividend
Restrictions; Other Restrictions.
(a) Neither
of the Parent nor any of its Subsidiaries (including the Borrower) has violated
any applicable regulatory restrictions on dividends, and no Governmental
Authority has taken any action to restrict the payment of dividends by the
Parent or any of its Subsidiaries (including the Borrower).
(b) Neither
of the Parent nor any of its Subsidiaries (including the Borrower) is under
investigation by, or is operating under any restrictions (excluding any
restrictions on the payment of dividends referenced in subsection (a)
above) imposed by or agreed to with, any Governmental Authority, other than
routine examinations by such Governmental Authorities.
Capital
Measures
.
(a) The
Parent is “adequately capitalized”, as determined in accordance with any
regulations established by such Governmental Authority.
(b) The
Borrower has been, or is deemed to have been, notified by the appropriate
Governmental Authority having regulatory authority over it that it is “well
capitalized”, as determined in accordance with any regulations established by
such Governmental Authority.
FDIC
Insurance.
The
deposits of the Borrower are insured by the FDIC and no act has occurred that
would adversely affect the status of the Borrower as an FDIC insured
bank.
Ownership
of Property.
(a) The
Parent and each of its Subsidiaries (including the Borrower) has good title
to,
or valid leasehold interests in, all of its real and personal property material
to the operation of its business, free and clear of all liens, security
interests or other encumbrances. All leases that individually or in the
aggregate are material to the business or operations of the Parent and each
of
its Subsidiaries (including the Borrower) are valid and subsisting and are
in
full force.
(b) The
Parent and each of its Subsidiaries (including the Borrower) owns, or is
licensed, or otherwise has the right, to use, all patents, trademarks, service
marks, trade names, copyrights and other intellectual property material to
its
business, and the use thereof by such Person does not infringe on the rights
of
any other Person except
to
the extent that any such infringement could
not
reasonably be expected to have a Material Adverse Effect.
(c) The
properties of the Parent and each of its Subsidiaries (including the Borrower)
are insured with financially sound and reputable insurance companies which
are
not affiliates of such Person, in such amounts with such deductibles and
covering such risks as are customarily carried by banks engaged in similar
businesses and owning similar properties in localities where such Person
operates.
OFAC.
The
Borrower (i) is not a person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order
13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079
(2001)), (ii) does not engage in any dealings or transactions prohibited by
Section 2 of such executive order, or is otherwise associated with any such
person in any manner violative of Section 2 or (iii) is not a person
on the list of Specially Designated Nationals and Blocked Persons or subject
to
the limitations or prohibitions under any other U.S. Department of Treasury’s
Office of Foreign Assets Control regulation or executive order.
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18 -
Patriot
Act.
The
Borrower is in compliance, in all material respects, with (i) the Trading
with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) and any other enabling legislation or executive order
relating thereto and (ii) the Uniting And Strengthening America By
Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
Patriot Act of 2001). No part of the proceeds of the Loans will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as
amended.
Solvency.
After
giving effect to the execution and delivery of the Loan Documents and the making
of the Loan under this Agreement, the Borrower will not be “insolvent,” within
the meaning of such term as defined in § 101(32) of Title 11 of the United
States Code, as amended from time to time, or be unable to pay its debts
generally as such debts become due, or have an unreasonably small capital to
engage in any business or transaction, whether current or
contemplated.
COVENANTS
The
Borrower covenants and agrees that so long as the Lender has a Commitment
hereunder or the principal of and interest on the Loan or any fee remains
unpaid:
Financial
Statements and Other Information.
The
Borrower will deliver to the Lender:
(a) as
soon
as available and in any event within 90 days after the end of each fiscal year
of the Parent, a copy
of
the annual audited report for such fiscal year for the Parent and its
Subsidiaries, containing (i) a consolidated and consolidating balance sheet
and the related consolidated and consolidating statements of income, of changes
in shareholders’ equity and of cash flows (together with all footnotes thereto),
and (ii) a condensed balance sheet of the Parent only and the related
condensed statements of income and of cash flows, setting forth in each case
in
comparative form the figures for the previous fiscal year, all in reasonable
detail and reported on by Xxxxx Xxxxxx PLLC or other independent public
accountants of regionally recognized standing (without a “going concern” or like
qualification, exception or explanation and without any qualification or
exception as to scope of such audit) to the effect that such financial
statements present fairly in all material respects the financial condition
and
the results of operations and cash flows on a consolidated and consolidating
basis of the Parent for such fiscal year in accordance with GAAP and that the
examination by such accountants in connection with such financial statements
has
been made in accordance with generally accepted auditing standards; provided,
that the requirements set forth in this clause (a), other than the certification
of the Parent’s certified public accountants set forth in clause (ii) above, may
be fulfilled by providing to the Lender the report of the Parent to the
Securities and Exchange Commission (or any successor thereto) on Form 10-K
for
the applicable fiscal year;
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19 -
(b)
as
soon
as available and in any event within 45 days after the end of each of the first
three Fiscal Quarters of each fiscal year of the Parent, an unaudited balance
sheet of the Parent and its Subsidiaries on a consolidated and consolidating
basis and of the Parent on a stand alone basis as of the end of such Fiscal
Quarter and the related unaudited statements of income and cash flows of the
Parent and its Subsidiaries on a consolidated and
consolidating basis and of the Parent on a stand alone basis, each for such
Fiscal Quarter and the then elapsed portion of such fiscal year, setting forth
in each case in comparative form the figures for the corresponding quarter
and
the corresponding portion of the Parent’s previous fiscal year, all certified by
the chief financial officer or
treasurer of
the
Parent as presenting fairly in all material respects the financial condition
and
results of operations of the Parent and its Subsidiaries on a consolidated
and
consolidating basis and of the Parent on a stand alone basis in accordance
with
GAAP, subject to normal year-end audit adjustments and the absence of footnotes;
provided,
that
the requirements set forth in this clause (b) with respect to the financial
information of the Parent and its Subsidiaries on a consolidated and
consolidating basis may be fulfilled by providing to the Lender the report
of
the Parent to the Securities and Exchange Commission (or any successor thereto)
on Form 10-Q for the applicable fiscal quarter and with respect to the financial
information of the Parent on a stand alone basis may be fulfilled by the
delivery of the Parent’s FRY-9LP Report for such fiscal quarter;
(c)
concurrently
with the delivery of the financial statements referred to in clauses (a) and
(b)
above, duly executed copies of the Parent’s then-current FR Y-9C Report and FR
Y-9LP Report and duly executed copies the then-current Call Report for the
Borrower;
(d) promptly
after the same become publicly available, copies of all Form 8-Ks, proxy
statements and other materials filed with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all functions
of
said Commission, or with any national securities exchange, or distributed by
the
Parent to its shareholders generally, as the case may be (to the extent not
otherwise required to be delivered to the Lender hereunder);
(e) immediately
after receiving knowledge thereof, written notice of all charges, assessments,
actions, suits and proceedings (as well as notice of the outcome of any such
charges, assessments, orders, actions, suits and proceedings) that are proposed
or initiated by, or brought before, any court or Governmental Authority, in
connection with the Parent or any of its Subsidiaries (including the Borrower),
other than ordinary course of business litigation or proceedings which, if
adversely decided, could not reasonably be expected to have a Material Adverse
Effect; provided,
however,
that
nothing in this Section shall require the Borrower to provide notice of such
charges, assessments, actions, suits or proceedings to the extent that providing
such notice would be prohibited by 12 C.F.R. § 350.9.; and
(f) promptly
following any request therefor, such other information regarding the results
of
operations, business affairs and financial condition of the Parent or any
Subsidiary (including the Borrower) as the Lender may reasonably
request.
Documents
required to be delivered pursuant to Section 5.1(a)
or
(b)
or
Section 5.1(d)
(to the
extent any such documents are included in materials otherwise filed with the
Securities and Exchange Commission) may be delivered electronically and if
so
delivered, shall be deemed to have been delivered on the date (i) on which
the Borrower or the Parent posts such documents or provides a link thereto
on
the Borrower’s or the Parent’s website on the internet at the website address
set forth in Section 7.1
or
(ii) on which such documents are posted on the Borrower’s internet or
intranet website, if any, to which the Lender has access; provided,
that
(A) the Borrower shall deliver paper copies of such documents to the Lender
and (B) the Borrower shall notify (which may be by facsimile or electronic
mail) the Lender of the posting of any such documents and provide to the Lender
by electronic mail electronic versions (i.e. soft copies) of such documents,
if
so requested until a written notice is received by the Borrower from the Lender
to cease delivering such paper and electronic copies.
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20 -
Notices
of Material Events.
The
Borrower will furnish to the Lender prompt written notice of the
following:
(a) the
occurrence of any Event of Default;
(b) the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or, to the knowledge of the
Borrower, affecting the Borrower or any Subsidiary which, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;
(c) the
occurrence of any ERISA Event that alone, or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower or its Subsidiaries in an aggregate amount exceeding $750,000;
(d) any
investigation of the Parent or any of its Subsidiaries (including the Borrower)
by any Governmental Agency having regulatory authority over the Parent or any
such Subsidiary (other than examinations of the Parent and/or any such
Subsidiary);
(e) the
issuance of any cease and desist order or the receipt of any oral notification
that a cease and desist order will be forthcoming, written agreement,
cancellation of insurance or other public or enforcement action by the FDIC
or
other Governmental Authority having regulatory authority over the Parent or
any
of its Subsidiaries (including the Borrower);
(f) the
issuance of any informal enforcement action, including, without limitation,
a
memorandum of understanding, or proposed disciplinary action by or from any
Governmental Authority having regulatory authority over the Parent or any of
its
Subsidiaries (including the Borrower), to the extent that such Person is
permitted to disclose such information (provided that the Borrower shall, and
shall cause any such Person to, take all reasonable efforts to obtain any
necessary regulatory consents); and
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21 -
(g) any
other
development that results in, or could reasonably be expected to result in,
a
Material Adverse Effect.
Each
notice delivered under this Section shall be accompanied by a written
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Existence;
Conduct of Business.
The
Borrower will do or cause to be done all things necessary to preserve, renew
and
maintain in full force and effect its legal existence and its respective rights,
licenses, permits, privileges, franchises, patents, copyrights, trademarks
and
trade names material to the conduct of its business and will continue to engage
in the same business as presently conducted or such other businesses that are
closely related thereto.
Compliance
with Laws, Etc. The
Borrower will comply with all laws, rules, regulations and requirements of
any
Governmental Authority (including without limitation all federal and state
banking statutes and regulations) applicable to its assets, except where the
failure to do so, either individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.
Payment
of Obligations.
The
Borrower will pay and discharge at or before maturity, all of its obligations
and liabilities (including without limitation all tax liabilities and all claims
that could result in a statutory lien) before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) the Borrower has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.
Books
and Records.
The
Borrower will keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation
to
its business and activities to the extent necessary to prepare the consolidated
and consolidating financial statements of Borrower in conformity with
GAAP.
Visitation,
Inspection, Etc. Subject
to Section 7.10, the Borrower will permit any representative of the Lender
to visit and inspect its properties, to examine its books and records and to
make copies and take extracts therefrom, and to discuss its affairs, finances
and accounts with any of its officers and with its independent certified public
accountants, all at such reasonable times and as often as the Lender may
reasonably request after reasonable prior notice to the Borrower; provided,
however, that nothing in this Section shall require the Borrower to permit
the
inspection of exam reports and other supervisory materials to the extent such
inspection would be prohibited by 12 C.F.R. § 350.9.
Maintenance
of Properties; Insurance.
(a) The
Borrower will (i) keep and maintain all property material to the conduct of
its business in good working order and condition, except for ordinary wear
and
tear and except where the failure to do so, either individually or it the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect and (ii) maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business against loss
or
damage of the kinds customarily insured against by banks in the same or similar
businesses.
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22 -
(b) The
deposits of the Borrower will at all times be insured by the Federal Deposit
Insurance Corporation (“FDIC”).
Use
of Proceeds.
The
Borrower will use the proceeds of all Loans to finance working capital needs
and
for other general corporate purposes of the Borrower. No part of the proceeds
of
any Loan will be used, whether directly or indirectly, for any purpose that
would violate any rule or regulation of the FRB, including Regulation T, U
or X.
Subordination
of Loans.
If the
Loan ceases to be deemed to be Tier 2 Capital other than due to the limitation
imposed by the second sentence of 12 C.F.R. Part 325, App. A(I)(A)(2)(e), which
limits the capital treatment of subordinated debt during the five years
immediately preceding the maturity date of the subordinated debt, the Borrower
shall: (a) immediately notify the Lender; and (b) within thirty (30) days
thereafter either: (1) upon request of the Lender execute and deliver all such
agreements (including, without limitation, replacement notes) as the Lender
may
reasonably request in order to restructure the obligations evidenced by the
Loans as a senior obligations of the Borrower; or (2) prepay the Loan in whole
in the manner described in Section 2.5(b).
EVENTS
OF DEFAULT
Events
of Default.
If any
of the following events (each an “Event of Default”) shall occur (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any
court or any decree, order, rule or regulation of any Governmental
Authority):
(a) the
Borrower shall fail to pay any principal of, or interest on, any Loan when
and
as the same shall become due and payable, whether at the due date thereof or
at
a date fixed for prepayment or otherwise, and such failure shall continue
unremedied for a period of fifteen (15) days; or
(b) the
Borrower shall fail to pay any indebtedness for borrowed money (other than
under
this Agreement) in excess of the greater of (i) $250,000 and (ii) 5.0% of the
capital of the Borrower (such greater amount, a “Material
Amount”),
when
and as the same shall become due and payable (whether at scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument evidencing such indebtedness; or
(c) any final
judgment or order for the payment of money in excess of a Material Amount shall
be rendered against the Borrower and the Borrower shall fail to pay such amount
within the time period required to be so paid; or
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23 -
(d) the
Borrower shall consent to the appointment of a receiver, conservator,
liquidator, trustee or other similar official in any receivership, liquidation,
readjustment of debts, insolvency or similar proceeding with respect to the
Borrower or all or substantially all of the property of the Borrower;
or
(e) a
Governmental Authority having jurisdiction in the premises shall enter a decree
or order for the appointment of a receiver, conservator, liquidator, trustee
or
other similar official of the Borrower in any receivership, liquidation,
readjustment of debts, insolvency or similar proceeding with respect to the
Borrower or all or substantially all of the property of the Borrower, or for
the
winding up or liquidation of the affairs or business of the Borrower;
or
(f) the
Borrower shall admit in writing its inability to pay its debts as they become
due; or
(g) the
Borrower shall fail to observe or perform any covenant or agreement contained
in
Article V of this Agreement and such failure shall remain unremedied for
30 days;
then,
and
in every such event (other than an event with respect to the Borrower described
in clause (d), (e) or (f) of this Section) and at any time thereafter during
the
continuance of such event, the Lender may by notice to the Borrower, take any
or
all of the following actions, at the same or different times: (i) declare
the principal of and any accrued interest on the Loans, and all other
obligations owing hereunder, to be, whereupon the same shall become due and
payable immediately, without presentment, demand, protest or other notice of
any
kind, all of which are hereby waived by the Borrower and (ii) exercise all
remedies contained in any other Loan Document; and that, if an Event of Default
specified in clause (d), (e) or (f) shall occur, the principal of the Loans
then
outstanding, together with accrued interest thereon, and all fees, and all
other
obligations hereunder shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
MISCELLANEOUS
Notices.
(a)
Except
in
the case of notices and other communications expressly permitted to be given
by
telephone, all notices and other communications to any party herein to be
effective shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by facsimile,
as
follows:
|
To
the Borrower:
|
Crescent
State Bank
|
0000
Xxxx
Xxxxx Xxxx
Xxxx,
Xxxxx Xxxxxxxx 00000
|
Attn:
|
Xxxxx
X. Xxxxx
|
|
Telephone
Number:
|
(000)
000-0000
|
|
Fax
Number:
|
(000)
000-0000
|
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24 -
|
To
the Lender:
|
United
Community Bank
|
00
Xxxxxxx 000
Xxxxxxxxxxx,
Xxxxxxx 00000
|
Attn:
|
Xxx
X. Xxxxxxxx
|
|
Telephone
Number:
|
(000)
000-0000
|
|
Fax
Number:
|
(000)
000-0000
|
Any
party
hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall, when transmitted by overnight delivery, or
faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the mails or if hand
delivered, upon delivery.
The
website referenced in Section 5.1(f) is:
xxxx://xxx.xxx.xxx/xxxxxxxxxx/xxxx.xxxx?xxxx0000000
(b) Any
agreement of the Lender herein to receive certain notices by telephone or
facsimile is solely for the convenience and at the request of the Borrower.
The
Lender shall be entitled to rely on the authority of any Person purporting
to be
a Person authorized by the Borrower to give such notice, and the Lender shall
not have any liability to the Borrower or other Person on account of any action
taken or not taken by the Lender in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Loan and all other
obligations hereunder shall not be affected in any way or to any extent by
any
failure of the Lender to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Lender of a confirmation which is at
variance with the terms understood by the Lender to be contained in any such
telephonic or facsimile notice.
Waiver;
Amendments.
(a) No
failure or delay by the Lender in exercising any right or power hereunder or
any
other Loan Document, and no course of dealing between the Borrower and the
Lender,
shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power or any abandonment or discontinuance of steps to enforce
such right or power, preclude any other or further exercise thereof or the
exercise of any other right or power hereunder or thereunder. The rights and
remedies of the Lender hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies provided by law.
No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the specific instance
and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of the Loan shall not be construed as a waiver of any
Event of Default, regardless of whether the Lender may have had notice or
knowledge of such Event of Default at the time.
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25 -
(b) No
amendment or waiver of any provision of this Agreement or the other Loan
Documents, nor consent to any departure by the Borrower therefrom, shall in
any
event be effective unless the same shall be in writing and signed by the
Borrower and the Lender and then such waiver or consent shall be effective
only
in the specific instance and for the specific purpose for which given;
provided,
that no
amendment or waiver shall: (i) increase the Commitment without the express
written consent of the Lender, (ii) reduce the principal amount of the Loan
or reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the express written consent of the Lender, (iii) extend the
Maturity Date or otherwise postpone the date fixed for any payment of any
principal of, or interest on, any Loan or interest thereon or any fees hereunder
or reduce the amount of, waive, forgive or excuse any such payment, without
the
express written consent of the Lender, (iv) change any of the provisions of
this Section 7.2;
(vi) release any guarantor, if any, or limit the liability of any such
guarantor under any guaranty agreement. Notwithstanding anything herein or
otherwise to the contrary, any Event of Default occurring hereunder shall
continue to exist (and shall be deemed to be continuing) until such time as
such
Event of Default is waived in writing in accordance with the terms of this
Section notwithstanding (i) any attempted cure or other action taken by the
Borrower or any other Person subsequent to the occurrence of such Event of
Default or (ii) any action taken or omitted to be taken by the Lender prior
to
or subsequent to the occurrence of such Event of Default (other than the
granting of a waiver in writing in accordance with the terms of this Section).
Expenses;
Indemnification.
(a) The
Borrower shall pay all out-of-pocket costs and expenses (including, without
limitation, the reasonable fees, charges and disbursements of outside counsel
and the allocated cost of inside counsel) incurred by the Lender in connection
with the enforcement or protection of its rights in connection with this
Agreement, including its rights under this Section, or in connection with the
Loan made hereunder, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loan.
(b) The
Borrower shall indemnify the Lender and each officer, director, employee,
agents, advisors and affiliates of the Lender (each, an “Indemnitee”)
against, and hold each of them harmless from, any and all costs, losses,
liabilities, claims, damages and related expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, which may be incurred
by
any Indemnitee, or asserted against any Indemnitee by the Borrower or any third
Person, arising out of, in connection with or as a result of (i) the
execution or delivery of any this Agreement or any other agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of any of the transactions
contemplated hereby, (ii) any Loan or any actual or proposed use of the
proceeds therefrom, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned by the Borrower or any
Subsidiary or any Environmental Liability related in any way to the Borrower
or
any Subsidiary or
(iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether brought by the Borrower
or
any third Person and whether based on contract, tort, or any other theory and
regardless of whether any Indemnitee is a party thereto; provided, that
such
indemnity shall not, as to any Indemnitee, be available to the extent that
such
losses, claims, damages, liabilities or related expenses are determined by
a
court of competent jurisdiction in a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such
Indemnitee.
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26 -
(c) The
Borrower shall pay, and hold the Lender harmless from and against, any and
all
present and future stamp, documentary, and other similar taxes with respect
to
this Agreement and any other Loan Documents, or any payments due thereunder,
and
save the Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay such taxes.
(d) TO
THE
EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER SHALL NOT ASSERT, AND HEREBY
WAIVES, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY THEORY OF LIABILITY, FOR
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO ACTUAL
OR
DIRECT DAMAGES) ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF, THIS
AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS
CONTEMPLATED THEREIN, ANY REVOLVING LOAN OR THE USE OF PROCEEDS
THEREOF.
(e) All
amounts due under this Section shall be payable promptly after written
demand therefor.
Successors
and Assigns.
(a) The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns, except that
the
Borrower may not assign or transfer any of its rights hereunder without the
prior written consent of the Lender (and any attempted assignment or transfer
by
the Borrower without such consent shall be null and void).
(b) Lender
may at any time assign to one or more assignees its rights and obligations
under
this Agreement and the other Loan Documents; provided,
that
the Borrower must give its prior written consent (which consent shall not be
unreasonably withheld or delayed), provided,
that
the consent of the Borrower shall not be required during the existence of an
Event of Default. Upon the execution and delivery of an assignment and
acceptance agreement by Lender and an acceptance hereunder, such assignee shall
become a party to this Agreement and any other Loan Documents to which such
Lender is a party and shall have the rights and obligations of Lender under
this
Agreement, and the Lender shall be released from its obligations hereunder
and
cease to be party hereto but shall continue to be entitled to the benefits
of
Section
2.11,
Section
2.12,
Section
2.13
and
Section
7.3).
Upon
the consummation of any such assignment hereunder, the Lender and the Borrower
shall make appropriate arrangements to have new promissory notes issued if
so
requested by either or both the Lender or the assignee. Any assignment or other
transfer by Lender that does not fully comply with the terms of this clause
(b)
shall be treated for purposes of this Agreement as a sale of a participation
pursuant to clause (c) below.
-
27 -
(c) The
Lender may at any time, without the consent of the Borrower, sell participations
to one or more banks or other entities (a “Participant”)
in all
or a portion of the Lender’s rights and obligations under this Agreement;
provided,
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 its obligations hereun-der, and (iii) 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 other Loan
Documents. Any agreement between the Lender and the Participant with respect
to
such participation shall provide that the Lender shall retain the sole right
and
responsibility to enforce this Agreement and the other Loan Documents and the
right to approve any amendment, modification or waiver of this Agreement and
the
other Loan Documents; provided,
that
such participation agreement may provide that the Lender will not, without
the
consent of the Participant, agree to any amendment, modification or waiver
of
this Agreement described in the first proviso of Section 7.2(b)
that
affects the Participant. The Borrower agrees that each Participant shall be
entitled to the benefits Section 2.11,
Section 2.12
and
Section 2.13
to the
same extent as if it were the Lender hereunder and had acquired its interest
by
assignment pursuant to paragraph (b); provided,
that
(x) no Participant shall be entitled to receive any greater payment under
Section 2.13 than
the
Lender would have been entitled to receive with respect to the participation
sold to such Participant unless the sale of such participation is made with
the
Borrower’s prior written consent and (y) the Lender shall not be entitled to
receive compensation under Section 2.12
or
Section 2.13
on the
portion of its Loan in which it has sold a participation pursuant to this
paragraph (b) to the extent its Participant has requested the same compensation
as provided in this Section.
(d) The
Lender may at any time pledge or assign a security interest in all or any
por-tion of its rights under this Agreement and the Subordinated Term Note
to
secure its obligations to a Federal Reserve Bank without complying with this
Section; provided,
that no
such pledge or assignment shall release the Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for the Lender as a party
hereto.
Governing
Law; Jurisdiction; Consent to Service of Process.
(a) THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH
AND
BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.
(b) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the non-exclusive jurisdiction of any Federal and/or state court
located in the State of Georgia and any appellate court from any thereof, in
any
action or proceeding arising out of or relating to this Agreement or any other
Loan Document or the transactions contemplated hereby or thereby, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any
such action or proceeding may be heard and determined in such Georgia state
court or, to the extent permitted by applicable law, such Federal court. Each
of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
or
any other Loan Document shall affect any right that the Lender may otherwise
have to bring any action or proceeding relating to this Agreement or any other
Loan Document against the Borrower or its properties in the courts of any
jurisdiction.
-
28 -
(c) The
Borrower irrevocably and unconditionally waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action
or proceeding described in paragraph (b) of this Section and brought
in any court referred to in paragraph (b) of this Section. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by applicable law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each
party to this Agreement irrevocably consents to the service of process in the
manner provided for notices in Section 7.1.
Nothing
in this Agreement or in any other Loan Document will affect the right of any
party hereto to serve process in any other manner permitted by law.
WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT
OR
ANY OTHER THEORY).
Counterparts;
Integration.
This
Agreement may be executed by one or more of the parties to this Agreement on
any
number of separate counterparts (including by facsimile), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This Agreement, the other Loan Documents and that certain separate
letter agreement(s) between the parties dated as of the date hereof, constitute
the entire agreement among the parties hereto and thereto regarding the subject
matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters.
Survival.
All
covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection
with
or pursuant to this Agreement shall be considered to have been relied upon
by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of the Loan, regardless of any investigation made
by
any such other party or on its behalf and notwithstanding that the Lender may
have had notice or knowledge of any incorrect representation or warranty at
the
time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on the Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
and so long as the Commitment has not expired or terminated. The provisions
of
Section 2.13 and Section 7.3 shall survive and remain in full force
and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loan, the expiration or termination of the
Commitment or the termination of this Agreement or any provision hereof. All
representations and warranties made herein, in the certificates, reports,
notices, and other documents delivered pursu-ant to this Agreement shall survive
the execution and delivery of this Agreement and the other Loan Documents,
and
the making of the Loan.
-
29 -
Severability.
Any
provision of this Agreement or any other Loan Document held to be illegal,
invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be
ineffective to the extent of such illegality, invalidity or unenforceability
without affecting the legality, validity or enforceability of the remaining
provisions hereof or thereof; and the illegality, invalidity or unenforceability
of a particular provision in a particular jurisdiction shall not invalidate
or
render unenforceable such provision in any other jurisdiction.
Confidentiality.
The
Lender agrees to take normal and reasonable precautions to maintain the
confidentiality of any information designated in writing as confidential and
provided to it by the Borrower or any Subsidiary, except that such information
may be disclosed (i) to any officer, director, agent, affiliate or
representative of the Lender, including without limitation accountants, legal
counsel and other advisors, (ii) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process, (iii) to the
extent requested by any regulatory agency or authority, (iv) to the extent
that such information becomes publicly available other than as a result of
a
breach of this Section, or which becomes available to the Lender on a
nonconfidential basis from a source other than the Borrower, (v) in
connection with the exercise of any remedy hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(vi) subject to provisions substantially similar to this Section 7.10,
to any actual or prospective assignee or Participant, or (vii) with the
consent of the Borrower. Any Person required to maintain the confidentiality
of
any information as provided for in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such information as such
Person would accord its own confidential information.
Interest
Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time the interest
rate applicable to any Loan, together with all fees, charges and other amounts
which may be treated as interest on the Loan under applicable law (collectively,
the “Charges”),
shall
exceed the maximum lawful rate of interest (the “Maximum
Rate”)
which
may be contracted for, charged, taken, received or reserved by the Lender
holding the Loan in accordance with applicable law, the rate of interest payable
in respect of the Loan hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of the Loan but
were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to the Lender in respect of
other
loans or periods shall be increased (but not above the Maximum Rate therefor)
until such cumulated amount, together with interest thereon at the Federal
Funds
Rate to the date of repayment, shall have been received by the
Lender.
-
30 -
Waiver
of Effect of Corporate Seal.
The
Borrower represents and warrants that it is not required to affix its corporate
seal to this Agreement or any other Loan Document pursuant to any requirement
of
law or regulation, agrees that this Agreement is delivered by Borrower under
seal and waives any shortening of the statute of limitations that may result
from not affixing the corporate seal to this Agreement or such other Loan
Documents.
Patriot
Act.
The
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot Act”), it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address
of
the Borrower and other information that will allow the Lender to identify the
Borrower in accordance with the Patriot Act. The Borrower shall, and shall
cause
each of its Subsidiaries to, provide to the extent commercially reasonable,
such
information and take such other actions as are reasonably requested by the
Lender in order to assist the Lender in maintaining compliance with the Patriot
Act.
-
31 -
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above
written.
| CRESCENT STATE BANK | ||
| |
as
Borrower |
|
| By: | /s/ Xxxxx X. Xxxxx | |
|
Name:
Xxxxx
X. Xxxxx
|
||
| Title: Senior Vice President and Chief Financial Officer | ||
| UNITED COMMUNITY BANK | ||
| |
as
Lender |
|
| By: | /s/ Xxxxx Xxxxxxxx | |
|
Name: Xxxxx Xxxxxxxx |
||
| Title: Executive Vice President | ||
[SIGNATURE
PAGE TO SUBORDINATED TERM LOAN AGREEMENT
WITH
CRESCENT STATE BANK]
Schedule
I
COMMITMENT
AMOUNTS
|
Lender
|
Commitment
|
|
|
United
Community Bank
|
$7,500,000.00
|
|
EXHIBIT
A
FORM
OF SUBORDINATED TERM NOTE
THIS
OBLIGATION IS NOT A DEPOSIT AND IT IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION. THIS OBLIGATION IS UNSECURED, AND IS JUNIOR AND
SUBORDINATE IN RIGHT OF PAYMENT TO ALL SENIOR DEBT OF THE BORROWER, WHETHER
NOW
EXISTING OR HEREAFTER CREATED, WHICH SENIOR DEBT INCLUDES ALL INDEBTEDNESS
OWED
BY THE BORROWER TO ITS SECURED CREDITORS, ITS GENERAL CREDITORS AND DEPOSITORS.
THIS OBLIGATION IS INELIGIBLE AS COLLATERAL FOR ANY LOAN OR EXTENSION OF CREDIT
BY THE BORROWER.
|
$7,500,000
|
September
26, 2008
|
FOR
VALUE
RECEIVED, the undersigned, CRESCENT STATE BANK, a North Carolina bank (the
“Borrower”),
hereby
promises to pay to United Community Bank (the “Lender”)
or its
registered assigns at the principal office of the Lender or any other office
that the Lender designates, on the Maturity Date (as defined in the Subordinated
Term Loan Agreement dated as of September 26, 2008 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit
Agreement”;
all
capitalized terms used herein but not defined herein shall have the respective
meanings given to them as set forth in the Credit Agreement), among the Borrower
and the Lender, the principal amount of Seven Million, Five Hundred Thousand
and
no/100 Dollars ($7,500,000) in lawful money of the United States of America
in
immediately available funds, and to pay interest from the date hereof on the
principal amount thereof from time to time outstanding, in like funds, at said
office, at the rate or rates per annum (including post-default rate) as provided
in the Credit Agreement. In addition, should legal action or an attorney-at-law
be utilized to collect any amount due hereunder, the Borrower further promises
to pay all costs of collection, including the reasonable attorneys’ fees of the
Lender.
All
accrued interest shall be payable at the Lender’s principal office as provided
above on a quarterly basis in arrears on the first day of each October, January,
April and July, commencing October 1, 2008. The outstanding unpaid principal
balance of this Subordinated Term Note shall be payable in a single installment
on the Maturity Date. Whenever any payment to be made under this Subordinated
Term Note shall be due on a day that is not a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall
be
included in the computation of interest due upon this Subordinated Term Note.
The Borrower shall have the right and privilege of prepaying all or any part
of
this Subordinated Term Note at any time in accordance with the terms of the
Credit Agreement, subject to (a) the restrictions on prepayments set forth
in
Section 2.5(b)
of the
Credit Agreement, (b) Federal Deposit Insurance Corporation (“FDIC”)
approval, and (c) North Carolina Commissioner of Banks (“Commissioner”)
approval.
The
indebtedness of the Borrower evidenced by this Subordinated Term Note, including
the principal and premium, if any, and interest shall be subordinate and junior
in right of payment to its obligations to its depositors, its obligations under
bankers’ acceptances and letters of credit, and its obligations to its other
creditors, including its obligations to the Federal Reserve Bank, FDIC, and
any
rights acquired by the FDIC as a result of loans made by the FDIC to the
Borrower or the purchase or guarantee of any of its assets by the FDIC pursuant
to the provisions of 12 USC 1823(c), (d) or (e), whether now outstanding or
hereafter incurred. In the event of any insolvency, receivership,
conservatorship, reorganization, readjustment of debt, marshaling of assets
and
liabilities or similar proceedings or any liquidation or winding up of or
relating to the Borrower, whether voluntary or involuntary, all such obligations
shall be entitled to be paid in full before any payment shall be made on account
of the principal of, or premium, if any, or interest, on this Subordinated
Term
Note. In the event of any such proceedings, after payment in full of all sums
owing on such prior obligations, the holder of this Subordinated Term Note,
together with any obligations of the Borrower ranking on a parity with this
Subordinated Term Note, shall be entitled to be paid from the remaining assets
of the Borrower the unpaid principal hereof and any unpaid premium, if any,
and
interest before any payment or other distribution, whether in cash, property,
or
otherwise, shall be made on account of any capital stock or any obligations
of
the Borrower ranking junior to this Subordinated Term Note. Nothing herein
shall
impair the obligation of the Borrower, which is absolute and unconditional,
to
pay the principal of and any premium and interest on this Subordinated Term
Note
according to its terms.
Notwithstanding
any other provisions of this Subordinated Term Note or the Credit Agreement,
including specifically those set forth in the sections relating to
subordination, events of default and covenants of the Borrower, it is expressly
understood and agreed that the FDIC or any receiver or conservator of the
Borrower appointed by the FDIC shall have the right in the performance of his
legal duties, and as part of liquidation designed to protect or further the
continued existence of the Borrower or the rights of any parties or agencies
with an interest in, or claim against, the Borrower or its assets, to transfer
or direct the transfer of the obligations of this Subordinated Term Note to
any
bank or bank holding company selected by such official which shall expressly
assume the obligation of the due and punctual payment of the unpaid principal,
and interest and premium, if any, on this Subordinated Term Note and the due
and
punctual performance of all covenants and conditions; and the completion of
such
transfer and assumption shall serve to supersede and void any default,
acceleration or subordination which may have occurred, or which may occur due
or
related to such transaction, plan, transfer or assumption, pursuant to the
provisions of this Subordinated Term Note, and shall serve to return the holder
to the same position, other than for substitution of the obligor, it would
have
occupied had no default, acceleration or subordination occurred; except that
any
interest and principal previously due, other than by reason of acceleration,
and
not paid shall, in the absence of a contrary agreement by the holder of this
Subordinated Term Note, be deemed to be immediately due and payable as of the
date of such transfer and assumption, together with the interest from its
original due date at the rate provided for herein.
If
this
Subordinated Term Note ceases to be deemed to be Tier 2 Capital of the Borrower
in accordance with the rules and regulations of the FDIC applicable to the
capital status of the subordinated debt of state chartered, non-member banks,
other than due to the limitations imposed by the second sentence of 12 C.F.R
Part 325A(I)(A)(2)(e), which limits the capital treatment of subordinated debt
during the five years immediately preceding the maturity date of the
subordinated debt, the Borrower shall: (a) immediately notify the Lender; and
(b) within thirty (30) days thereafter either: (1) upon request of the Lender
execute and deliver all such agreements (including, without limitation,
replacement notes) as the Lender may reasonably request in order to restructure
the obligations evidenced by the Loans as a senior obligations of the Borrower;
or (2) prepay the Loan in whole in the manner described in Section
2.5(b).
If the
Borrower fails to execute such agreements as requested within 30 days of such
request, such failure shall be deemed to be an Event of Default as provided
in
Section
6.1
of the
Credit Agreement.
By
accepting this Subordinated Term Note, the Lender agrees that, so long as this
Subordinated Term Note is deemed to be Tier 2 Capital, other than due to the
limitation imposed by the second sentence of 12 C.F.R. Part 325, App.
A(I)(A)(2)(e), it waives its right to exercise any set-off or other right to
appropriate and to apply any deposits or other assets of the Borrower at any
time held by such Lender against or on account of amounts owing hereunder to
such Lender.
The
Loan
evidenced by this Subordinated Term Note and all payments and prepayments of
the
principal hereof and the date thereof shall be endorsed by the holder hereof
on
the schedule attached hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof, or otherwise recorded
by
such holder in its internal records; provided,
that
the failure of the holder hereof to make such a notation or any error in such
notation shall not affect the obligations of the Borrower to make the payments
of principal and interest in accordance with the terms of this Subordinated
Term
Note and the Credit Agreement.
Notwithstanding
anything herein or in the Credit Agreement to the contrary, this Subordinated
Term Note is not subject to any sinking fund.
This
Subordinated Term Note is issued in connection with, and is entitled to the
benefits of, the Credit Agreement which, among other things, contains provisions
for the acceleration of the maturity hereof upon the happening of certain
events, for prepayment of the principal hereof prior to the maturity hereof
and
for the amendment or waiver of certain provisions of the Credit Agreement,
all
upon the terms and conditions therein specified. THIS SUBORDINATED TERM NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF
GEORGIA (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS) AND ANY APPLICABLE
LAWS
OF THE UNITED STATES OF AMERICA.
| CRESCENT STATE BANK | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
EXHIBIT
3.1(b)(iii)
FORM
OF SECRETARY’S CERTIFICATE OF
CRESCENT
STATE BANK
Reference
is made to that certain Subordinated Term Loan Agreement dated as of September
__, 2008 (the “Credit Agreement”) among CRESCENT
STATE BANK (the
“Borrower”) and United Community Bank (the “Lender”). Terms defined in the
Credit Agreement are used herein with the same meanings. This certificate is
being delivered pursuant to Section 3.1
of the
Credit Agreement.
I,
______________________, Secretary of the Borrower, DO HEREBY CERTIFY
that:
a) there
have been no amendments or supplements to, or restatements of, the articles
of
incorporation of the Borrower delivered pursuant to Section 3.1 of
the
Credit Agreement;
b) no
proceedings have been instituted or are pending or contemplated with respect
to
the dissolution, liquidation or sale of all or substantially all the assets
of
the Borrower or threatening its existence or the forfeiture or any of its
rights;
c) annexed
hereto as Exhibit
A is
a true
and correct copy of the bylaws of the
Borrower
as in effect on [insert
date of board resolutions in (d) below]
and at
all times thereafter through the date hereof;
d) annexed
hereto as Exhibit
B is
a true
and correct copy of certain resolutions duly adopted by the Board of Directors
of the Borrower at a meeting of said Board of Directors duly called and held
on
____________, 2008, which resolutions are the only resolutions adopted by the
Board of Directors of the Borrower or any committee thereof relating to the
Credit Agreement and the other Loan Documents to which the Borrower is a party
and the transactions contemplated therein and have not been revoked, amended,
supplemented or modified and are in full force and effect on the date hereof;
and
e) each
of
the persons named below is a duly elected and qualified officer of the Borrower
holding the respective office set forth opposite his or her name and the
signature set forth opposite of each such person is his or her genuine
signature:
|
Name
|
Title
|
Specimen
Signature
|
|
[Include
all officers who are signing the Credit Agreement or any other Loan
Documents.]
|
||
|
_________________________
|
||
|
_________________________
|
||
|
¦
¦
|
¦
¦
|
¦
¦_________________________
|
IN
WITNESS WHEREOF, I have hereunto signed my name as Secretary of the Borrower
and
not in an individual capacity this __ day of September, 2008.
|
|
|||
|
Name:
|
|||
|
Title:
|
Secretary |
||
|
|
|||
I,
____________, _____________ of the Borrower, do hereby certify that
_______________ has been duly elected, is duly qualified and is the Secretary
of
the Borrower, and that the signature set forth above is [his/her] genuine
signature.
|
|
|||
|
Name:
|
|||
|
Title:
|
|
||
|
|
|||
EXHIBIT
3.1(b)(v)
FORM
OF OPINION OF COUNSEL
We
have
acted as counsel to Crescent State Bank, a North Carolina state bank (the
“Borrower”),
in
connection with the Subordinated Term Loan Agreement dated as of September
__, 2008 (the “Loan
Agreement”),
among
the Borrower and United Community Bank, as Lender (the “Lender”).
We
also acted as counsel to Crescent Financial Corporation, a North Carolina
corporation (the “Parent”),
in
connection with that certain Loan Agreement, dated as of June 27, 2008, by
and
between Silverton Bank, National Association and the Parent and that certain
Indenture, dated as of August 27, 2003, by and between the Parent and Xxxxx
Fargo Bank, National Association (together, the “Credit
Agreements”).
We
are furnishing this opinion letter to you pursuant to Section 3.1(b)(v) of
the Loan Agreement. Capitalized terms that are defined in the Loan Agreement
and
not otherwise defined in this opinion letter are used in this opinion letter
with the meaning ascribed to them in the Loan Agreement.
In
the
capacity described above, we have examined, reviewed and relied upon
the
following (collectively, the “Loan
Documents”):
1. the
Loan
Agreement; and
2. the
Subordinated Term Notes.
In
addition to the foregoing, we
have
examined, reviewed and relied on
the
articles of incorporation and bylaws of the Borrower and certain resolutions
of
the Borrower related to the Loan Agreement (collectively, the “Organizational
Documents”),
the
Credit Agreements and on originals
or copies, certified or otherwise identified to our satisfaction, of such
documents, corporate records, and other instruments, and made such other
investigations of law and fact, as we have deemed necessary or advisable for
the
purposes of furnishing this opinion letter.
In
our
examination of documents, we assumed (i) the genuineness of all signatures,
the
authenticity of all documents presented to us as originals, the conformity
to
original documents of all documents presented
to us as conformed or reproduced copies,
(ii)
that all Lender Parties (as defined below) had and/or have the power, corporate
or other, to enter into and perform all obligations under such documents, (iii)
the due authorization by all requisite action, corporate or other, by the Lender
Parties of such documents, (iv) the due execution and delivery by the Lender
Parties of such documents, (v) the validity and binding effect of such documents
on the Lender Parties, and (vi) that the documents examined by us express the
entire understanding of the parties thereto with respect to the subject matter
thereof and have not been modified, supplemented or otherwise amended. The
term
“Lender Parties” means all parties to the Loan Documents other than the
Borrower.
Based
on
and subject to the foregoing, it is our opinion that:
1. The
Borrower (i) was
duly organized and is validly existing and in good standing as a bank under
the
laws of North Carolina, (ii) is qualified to do business in all
other
states where the nature and extent of the business or activities transacted
by
it or the ownership of its assets makes such qualification
necessary,
except
where the failure to be so qualified would not have a material adverse effect
on
the Borrower,
and
(iii) has all requisite corporate power to conduct its business as now
conducted.
2. The
execution, delivery and performance by the Borrower of the Loan Documents,
including the borrowing of funds constituting Loans thereunder (i) are within
its corporate powers; (ii) have been duly authorized
by all necessary corporate action of the Borrower; (iii) do not result in any
(A) violation of the Borrower’s Organizational
Documents, (B) violation of any existing law to which the Borrower is subject,
(C) breach of or default under any material written agreement to which, to
our
knowledge, the Borrower is a party or by which its assets are bound or (D)
breach of or default under any Credit
Agreement;
and (iv)
creation of
any
lien or security interest in, on or against any of the assets or property
of the Borrower.
3. The
Borrower has duly authorized the execution and delivery of the Loan Documents
and all performance by the Borrower thereunder and has duly executed and
delivered the Loan Documents.
4. The
Loan
Documents are valid and legally binding obligations of the Borrower and are
enforceable against it in accordance with their respective
terms.
5. The
deposits of the Borrower are insured by the FDIC to the extent permitted under
applicable federal law.
6. No
order,
permission, consent or approval of any Governmental Authority, other than those
permissions, consents or approvals as have been obtained on or prior to the
Closing Date, is required for the execution, delivery and performance by the
Borrower of the Loan Documents.
7. To
our
knowledge, the Borrower is not, and after giving effect to the execution,
delivery and performance by the Borrower of the Loan Documents, the Borrower
will not be, in violation of any judgment, order,
writ, injunction, decree, demand, rules or regulation of any court, arbitrator
or any Governmental Authority.
8. Assuming
that the Borrower applies the proceeds of the Loans as provided in the Loan
Agreement, the execution, delivery and performance by the Borrower of the Loan
Documents will not violate the provisions of Regulations T, U or X of the
FRB.
9. The
Borrower is not, and, immediately after the Closing Date, will not be, required
to be registered under the Investment Company Act of 1940.
10. All
Loans
made at the Closing Date will qualify as Tier 2 Capital.
Based
on
and subject to the foregoing, we confirm to you that, to our knowledge, no
litigation
or proceeding against
the Borrower or the Borrower’s business or properties, or before or by any
Governmental
Authority or any court or arbitrator is
pending or overtly threatened by a written communication to the
Borrower
which
can reasonably be expected to result in any material adverse change in the
Borrower’s business, operations
or properties or assets or in the condition, financial or otherwise, or in
the
Borrower’s ability to
perform under the Loan Documents.
EXHIBIT
3.1(b)(vi)
FORM
OF OFFICER’S CERTIFICATE
Reference
is made to that certain Subordinated Term Loan Agreement dated as of __________,
2008 (the “Credit Agreement”) among CRESCENT STATE BANK (the “Borrower”) and
United Community Bank (the “Lender”). Terms defined in the Credit Agreement are
used herein with the same meanings. This
certificate is being
delivered pursuant to Section 3.1(b)(vi)
of the
Credit Agreement.
I,
______________________, the ______________________of the Borrower, DO HEREBY
CERTIFY that:
| (a) |
the
representations and warranties of the Borrower set forth in the Credit
Agreement are true and correct on and as of the date
hereof;
|
| (b) |
no
Event of Default has occurred and is continuing at the date
hereof;
|
| (c) |
since
December 31, 2007 there has been no change, event or other circumstance
which has had or could reasonably be expected to have a Material
Adverse
Effect; and
|
| (d) |
the
Borrower has received all consents, approvals, authorizations,
registrations and filings and orders required to be made or obtained
under
any applicable laws in connection with the execution, delivery,
performance, validity and enforceability of the Loan Documents or
any of
the transactions contemplated thereby, and such consents, approvals,
authorizations, registrations, filings and orders are in full force
and
effect and all applicable waiting periods have expired, and no
investigation or inquiry by any Governmental Authority regarding
the
Commitment or any transaction being financed with the proceeds thereof
is
ongoing.
|
IN
WITNESS WHEREOF, I have hereunto signed my name as _________ of the Borrower
and
not
in an
individual capacity this __ day
of
September, 2008.
|
|
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|
Name:
|
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|
Title:
|
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