Exhibit 10.2.2
Third Amendment and Loan Modification Agreement
between Xxxxxxxxxx Financial Group, Inc. and
Xxxx Xxxxx Kansas City Bank, dated January
13, 1997 (modifies versions set forth in
Exhibits 10.2 and 10.2.1)
THIRD AMENDMENT AND LOAN MODIFICATION AGREEMENT
This Agreement ("Third Amendment") is entered into on January 13, 1997,
by and among XXXX XXXXX KANSAS CITY BANK, a Missouri banking association and
successor-in-interest to Xxxx Xxxxx Kansas Bank ("Lender") and XXXXXXXXXX
FINANCIAL GROUP, INC., formerly known as Financial Research Corporation, an
Indiana corporation ("Borrower").
RECITALS
A. Borrower is presently indebted to Lender as evidenced by that
certain Second Amended and Restated Promissory Note, dated July 26, 1996, in the
original maximum principal amount of $12,263,102.21, executed by Borrower in
favor of Lender (the "Second Amended Note").
B. The Second Amended Note was issued pursuant to that certain Second
Amendment and Loan Modification Agreement, dated July 26, 1996 (the "Second
Amendment"), among Borrower and Lender, which amended that certain First
Amendment and Loan Modification Agreement dated July 21, 1995 among Borrower,
Lender, Xxxxx Xxxxxxx Associates, Inc., a Kansas corporation, and Xxxxxxx X.
Xxxxxxx (the "Amended Loan Agreement") and that certain Loan Agreement dated
April 14, 1994, between Borrower and Lender (collectively, the "Loan
Agreement"). The Second Amended Note, the Second Amendment, the Amended Loan
Agreement and the Loan Agreement are sometimes collectively referred to herein
as the "Loan Documents."
C. The Loan Documents are secured by (i) a General Pledge Agreement
from Borrower, pledging 100% of the outstanding stock of Xxxxxxxxxx Bank, FSB
("Xxxxxxxxxx") to Lender ("Pledge Agreement"); (ii) a Security Agreement from
Borrower in favor of Lender providing a blanket security interest in all of
Borrower's assets ("Security Agreement"); (iii) an Assignment of Life Insurance
Policy, dated July 21, 1995, on the life of Xxxxxxx X. Xxxxxxx in the amount of
$1,000,000 from Borrower ("Xxxxxxx Life Insurance Assignment"); and (iv) an
Assignment of Life Insurance Policy, dated June 13, 1994, on the life of Xxxxx
Xxxxx in the amount of $250,000 from Borrower ("Xxxxx Life Insurance
Assignment"). The Pledge Agreement, the Security Agreement, the Xxxxxxx Life
Insurance Assignment and the Xxxxx Life Insurance Assignment are collectively
referred to as the "Security Documents."
D. The outstanding principal balance of the Second Amended Note as of
the date hereof is $11,007,176.40.
NOW, THEREFORE, the parties hereby agree as follows:
1. Conditions Precedent. The modifications described in this
Third Amendment and the obligations of Lender set forth in this Third
Amendment will not be effective unless and until each of the following
conditions precedent have been satisfied, in form, manner and substance
satisfactory to Lender:
a. Documents to be Delivered. Borrower shall have
delivered or caused to be delivered to Lender the following
documents, all of which shall be properly completed, fully
executed, and otherwise satisfactory to Lender:
i. this Third Amendment;
ii. the Third Amended and Restated
Promissory Notes in the form attached hereto as
Exhibit "A" and Exhibit "B" (collectively the "Third
Amended Note and individually the "Term Note" and the
"Capital Note," respectively");
iii. a copy of resolutions of the Board of
Directors of Borrower, duly adopted, which authorize
the execution, delivery and performance of this Third
Amendment and the Third Amended Note, certified by
the Secretary of Borrower;
iv. an incumbency certificate, executed by
the Secretary of Borrower, which shall identify by
name and title and bear the signatures of all of the
officers of Borrower executing this Amendment and the
Third Amended Note;
v. certificates of corporate good standing
of Borrower issued by the Secretaries of State for
the States of Indiana and Kansas;
vi. an opinion of Borrower's corporate
counsel, in a form satisfactory to Lender, stating
the opinions set forth on Exhibit "C" hereto;
b. Transactional Fees. Borrower hereby agrees to pay
upon demand any and all reasonable costs and expenses,
including, but not limited to, attorneys fees and
disbursements, incurred by Lender in connection with the
negotiation and preparation of this Third Amendment and all
other documents and instruments executed pursuant hereto;
If all of the above-described conditions precedent are not satisfied by
January 15, 1997, this Third Amendment shall be null and void, and the Loan
Documents and Security Documents shall remain in full force and effect as if
this Third Amendment shall have never been executed by the parties.
2. Amendments to Loan Agreement. The Loan Agreement is hereby amended
as follows:
a. Definitions. Section 1 of the Loan Agreement is hereby
amended to include the following:
"Advance" means each of the advances from Lender to Borrower
under the Capital Note, on terms and subject to the conditions of this
Agreement, from time to time, prior to the Maturity Date, at such times
and in such amounts as Borrower shall request up to but not exceeding
the maximum principal amount of the Loan Commitment.
"Loan Commitment" means the maximum principal amount that may
be outstanding under the Capital Note, equal in the amount of Five
Million Dollars ($5,000,000).
b. Maximum Facility. Section 2.01 of the Loan Agreement is
hereby amended and restated in its entirety as follow:
2.01 Maximum Facility. The total principal amount to be advanced by
Lender to Borrower under this Agreement shall be Fifteen Million Dollars
($15,000,000) (the "Loan Facility"). The Loan Facility shall be divided into two
loans, and evidenced by two Promissory Notes, as follows:
a. Term Loan. A $10,000,000 nonrevolving loan which has been
fully funded prior to the date of this Third Amendment (the "Term
Loan") and evidenced by that certain Promissory Note of even date
herewith in the original principal amount of $10,000,000 (the "Term
Note").
b. Capital Loan. A $5,000,000 revolving line of credit (the
"Capital Loan") evidenced by that certain Promissory Note of even date
herewith in the original principal amount of $5,000,000 (the "Capital
Note"). Lender, in its sole discretion, may terminate Borrower's
ability to draw on the Capital Loan upon the occurrence of any Event of
Default. All Advances under the Capital Loan must be contributed to the
capital of Xxxxxxxxxx or used to pay debt-service to Lender only (but
shall not be used to pay debt-service to any other creditor). Lender
agrees, on the terms and subject to the conditions of this Agreement,
to make Advances. At anytime the Borrower borrows the maximum principal
amount of the Loan Commitment and pays to Lender on one or more
occasions any part of the principal amount, including interest thereon,
prior to the Maturity Date, then Borrower, subject to the terms and
conditions of this Agreement may reborrow an amount equal to the
difference between (i) the Loan Commitment and (ii) Borrower's
outstanding principal balance under the Capital Note after such payment
or payments. In no event, however, shall Borrower's outstanding
principal balance after any Advance exceed the Loan Commitment.
Borrower shall notify Lender in writing by 11:00 a.m. (Central Standard
Time) three (3) business days prior to the date Borrower desires to
obtain an Advance, specifying the aggregate principal amount to be
advanced. Lender shall disburse such Advance to an account established
in Borrower's name or otherwise disburse any such Advance to or for the
benefit or account of Borrower. All Advances shall be charged to the
loan account in Borrower's name on Lender's books.
c. Purpose. Section 2.02 (b) of the Loan Agreement is hereby
deleted in its entirety.
d. Conditions of Advances Under Capital Loan. Section 2.03 of
the Loan Agreement is hereby deleted in its entirety.
e. Note. Section 2.04 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
2.04 Note. The Loan shall be evidenced by and repaid
in accordance with two (2) promissory notes in the form
attached hereto as Exhibit "A", and incorporated herein by
this reference (as the same may from time to time be amended
or modified (the "Note").
f. Interest Rate. Section 2.05 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
2.05 Interest Rate. The Loan outstanding shall bear interest as of the
date hereof at a rate equal to the Base Rate, adjusted daily.
g. Principal and Interest Payments. Section 2.06 (a) of the
Loan Agreement is hereby amended and restated in its entirety as
follows:
(a) Beginning March 1, 1997, and on the first day of
each quarter thereafter (June 1, September 1, December 1 and
March 1) Borrower shall make quarterly interest payments to
Lender at the place designated in Section 2.09 hereof.
h. 2.07 Maturity Date. The maturity date of the Loan shall be
June 30, 2000 (the "Maturity Date"). The rights of Lender and the
Obligations of Borrower shall nonetheless survive the Maturity Date of
the Loans and continue until all amounts due under the Note and all
Obligations of Borrower to Lender have been paid and discharged in
full.
i. Limitation on Margin Borrowings. Section 6.01 of the Loan
Agreement is hereby amended and restated in its entirety as follows:
6.01 Additional Debt. Issue any additional debt
instrument, borrow any monies or incur any Indebtedness
outside the ordinary course of business other than margin
borrowings of 50% or less, not to exceed $1,000,000, to
purchase investment securities.
j. Restriction on Dividends. Section 6.03 of the Loan
Agreement is hereby amended and restated in its entirety as follows:
6.03 Restriction on Dividends. (i) Pay any dividends
or any distributions on stock in excess of 35% of Borrower's
average consolidated earnings for the prior four fiscal
quarterly periods previous to the date on which the dividend
payment is to be made or (ii) without the prior written
consent of Lender, redeem any of Borrower's issued and
outstanding stock.
k. Restriction on Business Activities. Section 6.05 of the
Loan Agreement is hereby amended and restated in its entirety as
follows:
6.05 Change in Business Activity. Borrower shall not
and shall not permit Xxxxxxxxxx to change (i) the business
activities which it is presently conducting or (ii) its loan
portfolio mix to include commercial real estate or commercial
and industrial loans which in the aggregate exceed 10% of
Xxxxxxxxxx'x assets without Lender's prior written consent.
Borrower shall give Lender 30 days prior written notice of
such change, which shall include a detailed analysis of the
effect of any new activity or portfolio mix change on Borrower
and Xxxxxxxxxx. If Borrower desires to establish a service
corporation to engage in a new business activity, such notice
shall also include the resumes of the proposed management in
addition to the above-stated analysis.
l. Restriction on Management Agreements and Employment
Contracts. Section 6.11 of the Loan Agreement is hereby deleted in its
entirety.
m. 7.02 Shares of Borrower. Section 7.02 of the Loan Agreement
is hereby amended to delete in its entirety the second sentence of said
section.
n. Events of Default. Section 8.01 of the Loan Agreement is
hereby amended as follows:
i. Subsections (g), (j), (k) and (l) are hereby
deleted in their entirety;
ii. Subsection (m) is hereby amended and restated as
follows:
(m) Xxxxxxxxxx incurs a loss, other than a
loss due solely to a change in accounting principles
promulgated under the Federal Accounting Standards
Board in two quarterly fiscal periods during any
twelve-month rolling period which causes the ratio of
the total outstanding Loans to Xxxxxxxxxx'x net worth
to exceed .40; provided, however, that Borrower shall
have a 30-day grace period to cure any default under
this Section 8.01(m).
iii. Subsection (w) is hereby amended and restated as
follows:
(w) The occurrence of any material change in
Borrower or Xxxxxxxxxx which Lender in good faith
determines will have a material adverse effect on the
business prospects of Borrower or Xxxxxxxxxx or
Borrower's ability to perform its obligations under
any of the Loan Documents.
o. Notices. Section 9.05 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
9.05 Notices. Any notice, request, demand, consent,
confirmation or other communication hereunder shall be in
writing and delivered in person or sent by telegram, telex, or
by nationally recognized overnight delivery (including Fed X),
or registered or certified mail, return receipt requested and
postage prepaid.
If to Borrower at: Xxxxxxxxxx Financial Group, Inc.
0000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx
With a copy to: Elias, Matz, Xxxxxxx &
Xxxxxxx, L.L.P.
000 00xx Xx., X.X., 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx, Esq.
If to Lender at: Xxxx Xxxxx Kansas City Bank
0000 Xxxx
Xxxxxxx, Xxxxxx 00000
Attn: Xxxx Xxxxxxxxx
With a copy to: Polsinelli, White, Xxxxxxxx
& Shalton
0000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
or at such other address as either party may
designate as its address for communications hereunder by
notice so given. Such notices shall be deemed effective on the
day on which delivered or sent if delivered or sent in person
or sent by telegram or telex, or nationally recognized
overnight delivery, or on the third (3rd) Business Day after
the day on which mailed, if sent by registered or certified
mail.
3. No Default. Borrower hereby represents and warrants that it is not
in default under any of the terms or provisions of the Loan Documents or
Security Documents, and no "Event of Default" (as such term is defined in any of
the Loan Documents), nor any condition, event, act or omission which would
constitute, with notice, or the passage of time, or both, an "Event of Default,"
exits as of the date of this Third Amendment.
4. Due Authorization, Valid and Binding on Borrower. Borrower
represents and warrants to Lender that the execution and delivery by Borrower of
this Third Amendment and the Third Amended Note has been duly and properly made
and authorized, and the Loan Documents and Security Documents, as modified by
this Third Amendment, and the Third Amended Note constitute the valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms.
5. Ratification of Loan Documents. Except as specifically modified
hereby, the Loan Documents, the Security Documents and all of the terms,
conditions, and covenants contained therein shall remain in full force and
effect, and Borrower hereby fully ratify and confirm such Loan Documents and
Security Documents. Without limiting the generality of the forgoing, Borrower
(i) hereby confirm that the Security Documents continue to secure the Third
Amended Note, the Loan Agreement (as modified by this Third Amendment) and the
other Security Documents, and (ii) hereby ratifies and reaffirms, as if made on
the date of this Third Amendment, each of the representations and warranties
contained in the Loan Documents and the Security Documents.
6. Release of Lender. Borrower for itself and for its heirs, executors,
successors and assigns, hereby releases, acquit and forever discharges Lender
and all of Lender's stockholders, directors, officers, employees, agents and
representatives (collectively, the "Released Parties") from any and all actions,
causes of action, claims, counterclaims, debts, demands, liabilities,
obligations, and setoffs of any kind and character, whether known or unknown,
which arise out of acts or omissions of the Released Parties prior to or on the
date hereof, and relating in any manner whatsoever to Borrow-er's dealings and
communications with Lender, the Loan Documents, the Security Documents and/or
the negotiation and execution of this Third Amendment.
7. Governing Law. This Third Amendment shall be construed and enforced
in accordance with the laws of the State of Kansas.
8. Defined Terms. Except as otherwise specifically defined herein, all
capitalized terms shall have the same meaning given to such term in the Loan
Agreement.
9. Entire Agreement. THE PARTIES AGREE THAT THIS ENTIRE AGREEMENT IS
NONSTANDARD AND CONTAINS SUFFICIENT SPACE FOR THE PLACEMENT OF NONSTANDARD
TERMS. THIS AGREEMENT (AND THE EXHIBITS AND SCHEDULES ATTACHED HERETO) CONTAIN
ALL OF THE AGREEMENTS AND IS INTENDED TO BE THE FINAL EXPRESSION OF THE CREDIT
AGREEMENT OF BORROWER AND LENDER, AND SUPERSEDES ANY AND ALL PRIOR DISCUSSIONS
AND/OR AGREEMENTS RELATIVE THERETO. THIS AGREEMENT MAY NOT BE CONTRADICTED BY
EVIDENCE OF ANY PRIOR ORAL CREDIT AGREEMENT OR OF A CONTEMPORANEOUS ORAL CREDIT
AGREEMENT BETWEEN BORROWER AND LENDER. BORROWER AND LENDER HEREBY INITIAL THIS
PROVISION AS AN AFFIRMATION THAT NO UNWRITTEN, ORAL CREDIT AGREEMENTS BETWEEN
THE PARTIES EXIST.
Borrower's Initials /s/CJC
Lender's Initials /s/MJ
IN WITNESS WHEREOF, the parties have executed this Third Amendment on
the day and year first above written.
XXXXXXXXXX FINANCIAL GROUP, INC., an Indiana corporation (formerly
known as Financial Research Corporation)
By: /s/Xxxxx X. Xxxxx
-----------------
Xxxxx X. Xxxxx
Title: President
XXXX XXXXX KANSAS CITY BANK, a Missouri banking association and
successor in interest to Xxxx Xxxxx Kansas Bank
By: /s/Xxxx Xxxxxxxxx
-----------------
Xxxx Xxxxxxxxx
Title: EVP
