March 15, 2001
Xxxx X. Xxxx
President & CEO
Essex Bancorp, Inc.
Interstate Corporate Center
Building #0, Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxxx:
Centura Bank (the "Bank") is pleased to offer to Essex Acquisition Corp., a
Virginia corporation (the "Borrower"), financing on the terms and conditions as
hereinafter provided.
Loan Amount: Six month closed end line of credit not to exceed
$2,000,000. Proceeds of the Loan are to be used
exclusively for the repurchase of 100% of the
outstanding common stock of Essex Bancorp, Inc.
("Essex Bancorp") and to pay associated expenses as
approved by the Bank.
Interest Rate: A floating rate equal to Wall Street Journal
Prime Rate less .25% or 30 day LIBOR plus 2.5%, to be
selected by the Borrower upon the acceptance of this
commitment. All interest will be calculated on a
360-day year based upon the actual number of days
elapsed.
Commitment Fee: Non-refundable 1/2% fee on borrowed funds ($5,000 to
be paid upon advance of initial $1,000,000 and the
remainder paid with each advance).
Term: Quarterly interest payments for the initial six
months followed by nineteen quarterly payments of
principal and interest with a final payment of the
unpaid balance due at the end of five years from the
date of the note evidencing the Loan. Debt
amortization will be based on a seven year repayment
schedule.
Collateral: Pledge at all times of not less than 51% of common
stock of Essex Savings Bank, F.S.B. ("Essex Bank").
Loan Agreement: The Borrower will execute and deliver a Loan
Agreement with the Bank which will contain
representations, warranties, affirmative and negative
covenants and will be otherwise satisfactory to the
Bank. In addition to standard covenants, the Loan
Agreement will contain the following provisions:
The Borrower will not create any additional
indebtedness for borrowed money.
Borrower will maintain its existence in good standing
as a financial holding company and will not merge,
consolidate, dissolve or sell or otherwise dispose of
any subsidiary or any of its material assets (as
determined by the Bank).
The Borrower will not create, permit or suffer to
exist any lien on its assets, other than liens in
favor of the Bank.
The Borrower will not take any action which would
cause a dilution of the common stock of Essex Bank.
The Borrower shall maintain a depository relationship
with the Bank.
During the term of the commitment, there shall be no
change in control, ownership, or legal structure of
the Borrower without the prior written consent of the
Bank.
Financial Reporting: Year end audited consolidated financial statements of
the Borrower within 90 days of fiscal year end
prepared by a certified public accounting firm
acceptable to the Bank.
Quarterly internally prepared consolidated financial
statements of the Borrower within 45 days of fiscal
Quarter end, to include balance sheet and profit and
loss statements, prepared in a form acceptable to the
Bank, and signed by an officer of the Borrower
attesting to their accuracy.
Conditions: The Bank shall not be obligated to make the Loan
until all conditions precedent have been fulfilled to
the Bank's satisfaction including:
Receipt of a non-objection letter regarding the Loan
and stock repurchase plan from the Office of Thrift
Supervision.
Receipt of a "fairness opinion" from an investment
banker acceptable to the Bank regarding the purchase
price of the Essex Bancorp stock.
Receipt of a satisfactory opinion of Xxxxxxxx's
counsel regarding the transactions contemplated
hereby and the validity and enforceability of the
Loan and the security therefor, including the senior
status of the Loan to the Series B and C Preferred
stock of the Borrower.
The form, scope and substance of all documents and
liens must be satisfactory to the Bank in all
respects.
Other Conditions: This commitment is subject to the maintenance by the
Borrower of a condition satisfactory to Bank and the
delivery and/or execution of Loan, Loan Agreement,
security, opinions of counsel and informational
documents satisfactory to the Bank. Examples of an
unsatisfactory condition include, but are not limited
to, a material change in management, an adverse
change in financial condition, or any default by the
Borrower on any obligation to the Bank or to a third
party.
In no event shall either the Borrower or the Bank be
liable to the other for indirect, special, or
consequential damages which may arise out of or are
in any way connected with the issuance of this
commitment.
All costs, expenses and fees incurred to date, as
well as, to close the commitment and perfect the
Bank's security interest will be the responsibility
of the Borrower, whether or not the transaction
contemplated herein closes.
All information and representations made by the
Borrower to the Bank are and will be accurate at
closing.
This commitment shall be governed by the laws of the
Commonwealth of Virginia.
This commitment is for the sole and exclusive benefit
of the Borrower and may not be assigned by the
Borrower.
This commitment and all terms and provisions outlined
above shall survive the closing and shall be binding
on the Borrower after such closing. In the event of
any inconsistency between any provisions in this
commitment letter and any provisions in the loan
documents, the loan documents shall govern.
No condition or other term of this commitment may be
waived or modified except by modifications in writing
signed by the Borrower, and the Bank.
Please call me if you have any questions about the terms of this offer. If this
commitment is not accepted with an executed copy received by the Bank by March
30, 2001, and closed by April 30, 2001, this commitment shall be null and void
at the option of the Bank. To acknowledge your acceptance, please sign below and
return to me. We look forward to working with you.
Sincerely,
Xxxxxxx X. Xxxxxxxxx
Accepted and agreed to this ____________ day of _______________, 2001.
Essex Acquisition Corp.
By: _________________________________________
Title: _________________________________________
Interest Rate Selected:
_____ Prime Rate
_____ 30-Day LIBOR Rate
