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EXHIBIT 10.8
CREDIT AUTHORIZATION AGREEMENT
NBD BANK (the "Bank"), whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000-0000, has approved the credit facilities listed below (collectively, the
"Credit Facilities," and individually, as designated below) to Michigan
Community Bancorp Limited (the "Borrower"), whose address is 00000 Xxxx Xxxx,
Xxxxxxxx Xxxxxxx, XX 00000, subject to the terms and conditions set forth in
this agreement.
1.0 Credit Facilities
1.1 UNCOMMITTED CREDIT AUTHORIZATIONS. The Bank has approved the
uncommitted credit authorizations listed below (collectively,
the "Credit Authorizations," and individually, as designated
below) subject to the terms and conditions of this agreement
and the Bank's continuing satisfaction with the Borrower's
financial status. Disbursements under the Credit
Authorizations are solely at the Bank's discretion. Any
disbursement on one or more occasions shall not commit the
Bank to make any subsequent disbursement.
A. FACILITY A. The Bank has approved an uncommitted Credit
Authorization to the Borrower in the principal sum not to
exceed $500,000.00 in the aggregate at any one time
outstanding ("Facility A"). Credit under Facility A shall be
in the form of disbursements evidenced by credits to the
Borrower's account and shall be repayable as set forth in a
Master Demand Note executed concurrently (referred to in this
agreement both singularly and together with any other
promissory notes referenced in the Section 1 as the "Notes").
The proceeds of Facility A shall be used for the following
purpose: Prepay lease on branch and working capital. Facility
A shall expire on August 31, 1998 unless earlier withdrawn.
2.0 CONDITIONS PRECEDENT.
2.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. Before
the first extension of credit under this agreement, whether by
disbursement of a loan, issuance of a letter of credit, the
funding of a Lease or otherwise, the Borrower shall deliver to
the Bank, in form and substance to satisfactory to the Bank:
A. LOAN DOCUMENTS. The Notes, and if applicable, the
Leases, the letter of credit applications, the
security agreement, financing statements, mortgage
guaranties, subordination agreements and any other
loan documents which the Bank may reasonably required
to give effect to he transactions described by this
agreement;
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B. EVIDENCE OF DUE ORGANIZATION AND GOOD STANDING.
Evidence satisfactory to the Bank of the due
organization and good standing of the Borrower and
every other business entity that is a part to his
agreement or any other loan document required by this
agreement; and
C. EVIDENCE OF AUTHORITY TO ENTER INTO LOAN DOCUMENTS.
Evidence satisfactory to the bank that (i) each party
to this agreement and any other loan document
required by this agreement is authorized to enter
into the transactions described by this agreement and
the other loan documents, and (ii) the person signing
on behalf of each part is authorized to do so.
2.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. Before any extension
o credit under this agreement, whether by disbursement of a loan,
issuance of a letter of credit, the finding of a Lease or otherwise,
the following conditions shall have been satisfied:
A. REPRESENTATIONS. The Representations contained in this
agreement shall be true on and as of the date of the extension
of credit;
B. NO EVENT OF ACCELERATION. No event of acceleration shall have
occurred and be continuing or would result from the extension
of credit;
C. CONTINUED SATISFACTION. The Bank shall have remained
satisfied with the Borrower's managerial and financial
status;
D. ADDITIONAL APPROVALS, OPINIONS, AND DOCUMENTS. The Bank shall
have received such other approvals, opinions, and documents as
it may reasonably request.
3.0 FEES AND EXPENSES.
4.1 FEES. Upon execution of this agreement, or as set forth below,
the Borrower shall pay the Bank the following fees, all of
which the Borrower acknowledges have been earned by the Bank:
$3,500.00 facility fee.
4.2 OUT-OF-POCKET EXPENSES. The Borrower shall reimburse the Bank
for its out-of-pocket expenses and reasonable attorney's fees
(including the fees of in-house counsel) allocated to the
Credit Facilities.
4.0. SECURITY.
4.1 Payment of the borrowings and all other obligations under the
Credit Facilities shall be secured by a first security
interest and/or real estate
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mortgage, as the case may be, covering the following property
and all its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"):
A. REAL ESTATE The real property, including
improvements, located at Part of Lot 1 of North Hills
Subdivision situated in the Township of Avon, Oakland
County, Michigan. The Borrower shall deliver to the
Bank an executed mortgage, consent of landlord and
mortgage survey, all in form and substances
satisfactory to the Bank.
4.2 No forbearance or extension of time granted any subsequent
owner of the Collateral shall release the Borrower form
liability.
4.3 ADDITIONAL COLLATERAL/SETOFF. To further secure payment of the
borrowing and all other obligations under the Credit
Facilities and all of the Borrower's other liabilities to the
Bank, the Borrower grants to the Bank a continuing security
interest in (i) all securities and other property of the
Borrower in the custody, possession or control of the Bank
(other than property held by the Bank solely in a fiduciary
capacity) and (ii) all balances of deposit accounts of the
Borrower with the Bank. The Bank shall have the right at any
time to apply its own debt or liability to the e Borrower, or
to any other party liable for payment of the obligations under
the Credit Facilities, in whole or partial payment of such
obligations or other present or future liabilities, without
any requirement of mutual maturity.
4.4 CROSS LIEN. Any of the Borrower's other property in which the
Bank has a security interest to secure payment of any other
debt, whether absolute, contingent, direct or indirect,
including the Borrower's guaranties of the debts of others,
shall also security payment of and be part of the Collateral
for the Credit Facilities.
5.0 GUARANTIES. Payment of the Borrower's obligations under the Credit
Facilities shall be guaranteed by Xxxxx X. XxXxxxxx, by execution of
the Bank's form of guaranty agreement. The liability of the guarantors,
if more than one, shall be e joint and several.
6.0 SUBORDINATION. The Credit facilities shall be supported by the
subordination of all debt owing form the Borrower to _______, including
without limitation debt currently owing in the amount of $_________, in
manner and by agreement satisfactory to the Bank.
7.0 AFFIRMATIVE COVENANTS. So long as any debt or obligation remains
outstanding under the Credit Facilities, the Borrower, and each of its
subsidiaries, if any, shall:
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7.1 INSURANCE. Maintain insurance with financially sound and
reputable insurers covering its properties and business
against those casualties and contingencies and in the types
and amounts as shall be in accordance with sound business and
industry practices.
7.2 EXISTENCE. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and
regulations, pay its debts and obligations when due under
normal terms, and pay on or before their due date, all taxes,
assessments, fees and other governmental monetary obligations,
except as they may be contested in good faith if they have
been properly reflected on its books and, at the Bank's
request, adequate funds or security has been pledged to insure
payment.
7.3 FINANCIAL RECORDS. Maintain proper books and records of
account, in accordance with generally accepted accounting
principles where applicable, and consistent with financial
statements previously submitted to the Bank. The Bank retains
the right to inspect the Collateral and business records
related to it at such times and at such intervals as the Bank
may reasonably require.
7.4 NOTICE. Give prompt notice to the Bank of the occurrence of
(i) any Event of Acceleration, and (ii) any other development,
financial or otherwise, which would affect the Borrower's
business, properties or affairs in a materially adverse
manner.
7.5 COLLATERAL AUDITS. Permit the Ban or it agents to perform
audits of the Collateral. The Borrower shall compensate the
Bank for such audits in accordance with the Bank's schedule of
fees as amended from time to time.
7.6 MANAGEMENT. Maintain Xxxxx X. XxXxxxxx as Chief Executive
Officer.
7.7 FINANCIAL REPORTS. Furnish to Bank whatever information,
books, and records the Bank may reasonably request, including
at a minimum: If the Borrower has subsidiaries, all financial
statements required will be provided on a consolidated and on
a separate basis.
A. Within 45 days after and as of the end of each
calendar year, the signed personal financial
statement of Guarantor.
7.8 ENVIRONMENTAL CERTIFICATE. Furnish to the Bank an
Environmental Certificate on the Bank's form on and as of the
date of this agreement and thereafter as required by the
Environmental Certificate.
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8. NEGATIVE COVENANTS.
8.1 DEFINITIONS. As used in this agreement, the following terms
shall have the following respective meanings:
A. "Debt Service" means for any period, principal and
interest payments either paid or due during that
period [on all debt of the Borrower] [on all debt of
the Borrower to the Bank] [on all debt of the
Borrower except Subordinated Debt].
B. "EBITDA" means for any period, net income plus to the
extent deducted in determining net income, interest
expense (including but not limited to imputed
interest on capital leases), tax expense,
depreciation, and amortization.
C. "Subordinated Debt" means debt subordinated to the
Bank in manner and by agreement satisfactory to the
Bank.
D. "Tangible Net Worth" means total assets less
intangible assets, total liabilities, and all sums
owing form stockholders, members, or partners, as the
case may be, and from officers, managers, and
directors. Intangible assets include goodwill,
patents, copyrights, mailing lists, catalogs,
trademarks, bond discount and underwriting expenses,
organization expenses, and all other intangibles.
8.2 Unless otherwise noted, the financial requirements set forth
in this section shall be computed in accordance with generally
accepted accounting principles applied on a basis consistent
with financial statements previously submitted by the Borrower
to the Bank.
8.3 Without the written consent of the Bank, so long as any debt
or obligation remains outstanding under the Credit Facilities,
the Borrower shall not: (where appropriate, covenants apply on
a consolidated basis)
A. DIVIDENDS. Acquire or retire an o its shares of
capital stock, or declare or pay dividends or make
any other distributions upon any of its shares of
capital stock or percentage ownership interests,
except dividends payable in its capital stock and
dividends payable to "Subchapter S" corporation
shareholders and distributions payable to LLC members
in amounts sufficient to pay the shareholders' or
members' income tax obligations related to the
Borrower's taxable income.
B. DEBT. Incur, or permit to remain outstanding, debt or
borrowed money or installment obligations, except
debt reflected in the latest
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financial statement of the Borrower furnished to the
Bank prior to execution o this agreement and not to
be paid with proceeds of borrowings or leases under
the Credit Facilities. For purposes of this covenant,
the sale of an accounts receivable shall be deemed
the incurring of debt for borrowed money.
C. GUARANTIES. Guarantee or otherwise become or remain
secondarily liable on the undertaking of another,
except for the endorsement of drafts for deposit and
collection in the ordinary course of business.
D. LIENS. Create or permit to exist an lien on an of its
property, real or personal, except: existing liens
known to the Bank; liens to the Bank; liens incurred
in the ordinary course of business securing current
nondelinquent liabilities for taxes, worker's
compensation, unemployment insurance, social security
and pension liabilities; and liens for taxes being
contested in good faith.
E. ADVANCES AND INVESTMENTS. Purchase or acquire any
securities of, or make any loans or advances to, or
investments in, an person, firm or corporation,
except obligations of the United States Government,
open market commercial paper rated one of the top two
ratings by a rating agency of recognized standing, or
certificates of deposit in insured financial
institutions.
F. USE OF PROCEEDS. Use, or permit any proceeds of the
Credit Facilities to be used, directly or indirectly,
for the purpose of "purchasing or carrying any bargin
stock" within the meaning of Federal Reserve Board
Regulation U. At the Bank's request, the Borrower
shall furnish to he Bank a completed Federal Reserve
Board Form U-1.
G. FAILURE OF INITIAL PUBLIC OFFERING. Fail to raise
necessary capital funds through an initial public
offering before July 31, 1998, in an amount necessary
to open subsidiary banks as outlined in application
to the Financial Institutions Bureau of the State of
Michigan. If sufficient funds are not raised,
Guarantor agrees to pledge additional personal
collateral in the form of residential real estate
and/or marketable securities in an amount and type
acceptable to the Bank.
9.0 REPRESENTATIONS BY BORROWER. Each Borrower represents that (a)
the execution and delivery of this agreement, the Notes, and
Leases and the performance of the obligations they impose do
not violate any law, conflict with any agreement by which the
Borrower is bound, or require the
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consent or approval of any governmental authority or other
third party; (b) this agreement, the Notes, and the Leases are
valid and binding agreements, enforceable in accordance with
their terms; and (c) all balance sheets, profit and loss
statements, and other financial statement furnished to the
Bank are accurate and fairly reflects the financial condition
of the organizations and persons to which they apply on their
effective dates, including contingent liabilities of every
type which financial condition has not changed materially and
adversely since those dates. Each Borrower, if other than a
natural person, further represents that: (a) it is duly
organized, existing and in good standing under the laws of the
jurisdiction under which it was organized; and (b) the
execution and delivery of this agreement, the Notes, and the
Leases and the performance of the obligations they impose (i)
are within its power; (ii) have been duly authorized by all
necessary action of its governing body; and (iii) do not
contravene the terms of its articles of incorporation or
organization, its bylaws, or any partnership, operating or
other agreement governing its affairs.
10.0 ACCELERATION.
10.1 EVENTS OF ACCELERATION. If any of the following
events occurs, the Credit Facilities shall terminate
and all borrowings and other obligations under them
shall be due immediately, without notice, at the
Bank's option, whether or not the Bank has made
demand.
A. The Borrower or any guarantor of any of the
Credit Facilities, the Notes or the Leases
("Guarantor") fails to pay when due any
amount payable under the Credit Facilities
or under any agreement or instrument
evidencing debt to any creditor;
B. The Borrower or any Guarantor (a) fails to
observe or perform any other term of this
agreement, the Notes or the Leases; (b)
makes any materially incorrect or misleading
representation, warranty, or certificate to
the Bank; (c) makes any materially incorrect
or misleading representation in any
financial statement or other information
delivered to the Bank; or (d) defaults under
the terms of any agreement or instrument
relating to any debt for borrowed money
(other than borrowings under the Credit
Facilities) such that the creditor declares
the debt due before its maturity;
C. There is a default under the terms of any
loan agreement, mortgage, security agreement
or any other document executed as part of
the Credit Facilities, or any guaranty of
the obligations under the Credit Facilities
becomes
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unenforceable in whole or in part, or any
guarantor fails to promptly perform under
its guaranty;
D. A "reportable event" (as defined in the
Employee Retirement Income Security Act of
1974 as amended) occurs that would permit
the Pension Benefits Guaranty Corporation to
terminate any employee benefit plan o the
Borrower or any affiliate of the Borrower;
E. The Borrower or any Guarantor becomes
insolvent or unable to pay its debts as they
become due;
F. The Borrower or any Guarantor (a) makes an
assignment for the benefit of creditors; (b)
consents to the appointment of a custodian,
receive or trustee for it or for a
substantial part of its assets; or (c)
commences any proceeding under any
bankruptcy, reorganization, liquidation or
similar laws of any jurisdiction;
G. A custodian, receiver or trustee is
appointed for the Borrower or any Guarantor
or for a substantial part of its assets
without its consent and is not removed
within 60 days after such appointment;
H. Proceedings are commenced against the
Borrower or any Guarantor under any
bankruptcy, reorganizations, commencement;
or the Borrower or Guarantor consents to the
Commencement of such proceedings;
I. Any judgment is entered against the Borrower
or any Guarantor, or any attachment, levy or
garnishment is issued against any property
of the Borrower or any Guarantor;;
J. The Borrower or any Guarantor dies;
K. The Borrower or any Guarantor, without the
Bank's written consent, (a) dissolved, (b)
merges or consolidates with any third party,
(c) leases, sells or otherwise conveys a
material part of its assets or business
outside the ordinary course of business, (d)
leases, purchases or otherwise acquires a
material part of the assets of any other
corporation or business entity, except in
the ordinary course of business, or (e)
agrees to do any of the foregoing,
(notwithstanding the foregoing, any
subsidiary may merge or consolidate with any
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other subsidiary, or with the Borrower, so
long as the Borrower is the survivor);
L. The loan-to-value ratio of any pledged
securities at any time exceeds _____% and
such excess continues for five (5) days
after notice from the Bank to the Borrower;
M. There is a substantial change in the
existing or prospective financial condition
of the Borrower or any Guarantor which the
Bank in good faith determines to be
materially adverse; or
N. The Bank in good faith shall deem itself
insecure.
10.2 REMEDIES. If the borrowings and all other obligations
under the Credit Facilities are not paid at maturity,
whether by demand, acceleration or otherwise, the
Bank shall have all of the rights and remedies
provided by any law or agreement. Any requirement of
reasonable notice shall be met if the Bank sends the
notice to the Borrower at least seven (7) days prior
to the date of sale, disposition or other event
giving rise to the required notice. The Bank is
authorized to cause all or any part of the Collateral
to be transferred to or registered in its name or in
the name of any other person, firm or corporation,
with or without designation of the capacity of such
nominee. The Borrower shall be liable for any
deficiency remaining after disposition of any
Collateral. The Borrower is liable to he Bank for all
reasonable costs and expenses of every kind incurred
in the making or collection of the Credit Facilities,
including, without limitation, reasonable attorney's
fees and court costs (whether attributable to the
Bank's in-house or outside counsel). These costs and
expense shall include, without limitation, any costs
or expenses incurred by the Bank in any bankruptcy,
reorganization, insolvency or other similar
proceedings.
11.0 MISCELLANEOUS.
11.1 Notice from one party to another relating to this
agreement shall be deemed effective if made in
writing including telecommunications) and delivered
to the recipient's address, telex number or fax
number set forth under its name below by any of the
following means (a) hand delivery, (b) registered or
certified mail, postage prepaid, with return receipt
requested (c) first c lass or express mail, postage
prepaid, (d) Federal Express, or like overnight
courier service or (e) fax, telex or other wire
transmission with request for assurance of receipt in
a manner typical with respect to
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communication of that type. Notice made in accordance
with this section shall be deemed delivered upon
receipt if delivered by hand or write transmission, 3
business days after mailing if mailed by first class,
registered or certified mail, or one business day
after mailing or deposit with an overnight courier
service if delivered by express mail or overnight
courier.
11.2 No delay on the part of the Bank in the exercise of
any right or remedy shall operate as a waiver. No
single or partial exercise by the Bank of any right
or remedy shall preclude any other future exercise of
it or the exercise of any other right or remedy. No
waiver or indulgence by the Bank of any default shall
be effective unless in writing and signed by the
Bank, nor shall a waiver on one occasion be construed
as a bar to or waiver of that right on any future
occasion.
11.3 This agreement, the Notes, the Leases and any related
loan documents embody the entire agreement and
understanding between the Borrower and the Bank and
supersede all prior agreements and understandings
relating to their subject matter. If any one or more
of the obligations of the Borrower under this
Agreement, the Notes or the Leases shall be invalid,
illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the
remaining obligations of the Borrower shall not in
any way be affected or impaired, and such invalidlty,
illegality or unenforceability in one jurisdiction
shall not affect the validity, legality or
enforceability of the obligations of the Borrower
under this Agreement, the Notes or the Leases in any
other jurisdiction.
11.4 The Borrower, if more than one, shall be jointly and
severally liable.
11.5 This agreement is delivered in the State of Michigan
and governed by Michigan law. This agreement is
binding on the Borrower and its successors, and shall
inure to the benefit of the Bank ,its successors and
assigns.
11.6 Section headings are for convenience of reference
only and shall not affect the interpretation of
this agreement.
12.0 WAIVER OF JURY TRIAL. The Bank and the Borrower knowingly and
voluntarily waive any right either of them have to a trial by
jury in any proceeding (whether sounding in contract or tort)
which is in any way connected with this or any related
agreement, or the relationship established under them. This
provision may only be modified in a written instrument
executed by the Bank and the Borrower.
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Executed by the parties on:
NBD BANK BORROWER:
Vice President Chief Executive Officer
ADDRESS FOR NOTICES: ADDRESSES FOR NOTICES:
000 Xxxxxxxx Xxxxxx, XX 8077 00000 Xxxx Xxxx, Xxx. 000
Xxxxxxx, XX 00000 Xxxxxxxx Xxxxxxx, XX 00000
