LOAN AGREEMENT
This agreement is made this 14th day of December, 1998, between Union
Bankshares, Ltd., a Delaware corporation (the "Borrower"), and Union Bank &
Trust, a state chartered bank in Colorado (the "Subsidiary Bank") and Exchange
National Bank (the "Bank"), having its principal office at 00000 Xxxx Xxxxxx,
Xxxxxxx, Xxxxxx.
Subject to the terms and conditions of this Agreement and the Note and
Security Agreement issued hereunder, the Bank agrees to extend credit to the
Borrower in an amount not to exceed Three Million Dollars ($3,000,000).
1. PROMISSORY NOTE. The loan to be made hereunder will be
evidenced by the Note which will be payable on the following
terms:
1.1 TYPE. The Note will be in the form of a Revolving
Line of Credit with interest due quarterly as
described in Section 1.2 and with principal due at
maturity as described in Section 1 .3.
1.2 INTEREST. The interest rate will be equal to "Prime"
as published in The Wall Street Journal, Midwest
Edition, under the column "Money Rates" under the
heading "Prime", and adjusting from time to time
effective the same day a rate change occurs with the
Prime Rate. Interest will be payable commencing
December 31, 1998 and on the last day of each quarter
thereafter. The interest rate will be calculated on
the basis of the actual days elapsed in a 365/360 day
year.
1.3 MATURITY. The entire unpaid balance of the Note and
all accrued interest will be due and payable on
December 31, 1999. During the pendency of any
"Material Adverse Change" as defined in Section 4,
the Bank may, upon written notice to the Borrower,
declare the entire principal amount outstanding on
the Note, together with accrued interest thereon, to
be immediately due and payable.
1.4 RENEWAL. It is the Bank's expectation that, upon the
maturity date of December 31, 1999 and each December
31st thereafter, the Note will be renewed at the
Prime Rate.
1.5 FEE FOR NON-USAGE. A fee of one-quarter of one
percent (0.25%) will be charged in arrears for the
annual average non-usage of the Revolving Line of
Credit.
1.6 OTHER EVENTS OF DEFAULT. Subject to the provisions of
Section 7, each of the following shall constitute an
event of default under this Agreement.
1.6.1 Borrower fails to pay when due any amount
payable on the Note.
1.6.2 The Borrower or the Subsidiary Bank which
have signed any instrument, document or
agreement evidencing any of the Obligations,
as defined in the security agreement, is
dissolved or liquidated.
1.6.3 Borrower makes an assignment for the benefit
of its creditors, ceases to operate its
business, or files or has filed against it a
petition for relief under the United States
Bankruptcy Code or any other federal or
state law pertaining to the relief of
debtors or a receiver is appointed with
respect to any of the Collateral.
1.6.4 There is a levy on, seizure or attachment to
any of the Collateral.
1.6.5 Any warranty or representation made herein
or furnished to Bank pursuant hereto by or
on behalf of Borrower or Subsidiary Bank is
found to have been false or untrue in any
material respect when made or furnished, and
the result is that the ability of Borrower
to meet its Obligations hereunder is
materially adversely affected.
1.6.6 Borrower fails to perform any covenant or
agreement in the Note and the Security
Agreement executed in connection with the
Loan Agreement which are not in specific
conflict to this agreement and the result is
that the ability of Borrower to meet its
Obligations hereunder is materially
adversely affected, provided that Borrower
shall be entitled to cure such breach within
a period of ninety (90) days from receipt of
a notice of default from the Bank.
2. COLLATERAL SECURITY. Payment of the Note will be secured by a
first pledge and security interest covering 100% (470 shares)
of the capital stock of the Subsidiary Bank,
(the"Collateral").
3. CONDITIONS OF LENDING. Until payment in full of the Note, the
Borrower agrees that, unless the Bank otherwise consents in
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writing, the Borrower will perform or cause to be performed
the following:
3.1 RECORDS. Accurate books and records of account will
be maintained by the Borrower and the Subsidiary Bank
in accordance with sound accounting practices
consistently applied, and the Bank and its designated
representatives will have the right to examine such
books and records, and to discuss the affairs,
finances, accounts, and content of such books and
records of the Borrower and the Subsidiary Bank.
3.2 FINANCIAL STATEMENTS. Furnish within ninety (90) days
after the close of each fiscal year of the Borrower,
complete copies of the balance sheets as of the close
of such fiscal year and the profit and loss
statements and surplus reconciliations of the
Borrower for such fiscal year prepared in accordance
with sound accounting principles by accountants and
in form satisfactory to the Bank.
3.3 REPORTS. Furnish within thirty (30) days after each
filing thereof: (a) copies of the FRY-6 Annual Report
of the Borrower to the Federal Reserve System; and
(b) copies of all Consolidated Reports of Condition
and Consolidated Reports of Income and Call Reports
filed by the Subsidiary Bank with the appropriate
regulatory agency.
3.4 OTHER INFORMATION. Such other information concerning
the Borrower and Subsidiary Bank as the Bank might
reasonably request.
4. ADVERSE CHANGE. The Borrower will immediately advise the Bank
of any requirement by the regulatory authorities for
additional capital in the Subsidiary Bank, or the institution
of any agreement, order, or proceeding between any regulatory
authority and the Borrower or Subsidiary Bank, whether or not
such agreement, order, or proceeding is agreed to by the
Borrower or Subsidiary Bank. The Borrower will immediately
advise the Bank of any significant litigation or other
matters, including Y2K, which if adversely determined would
reasonably be expected to result in a material change in the
financial condition of the Borrower or the Subsidiary Bank.
Any event requiring such notice, if not cured in all material
respects within a reasonable period of time, satisfactory to
the Bank, shall constitute a "Material Adverse Change"
hereunder.
5. CHANGE IN MANAGEMENT. Any change in the management of the
Borrower or any merger or consolidation with or into another
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corporation or other disposition of all or substantially all
of the assets of the Borrower, without prior written consent
of the Bank, shall constitute an event of default and upon
such an occurrence the Bank may demand the entire obligation
of the Borrower to be immediately due and payable. Borrower
agrees to immediately notify Bank of any such change in
management.
6. CAPITAL INJECTION. In the event additional capital shall be
injected in Subsidiary Bank, whether by capital note, stock,
or in other form, such capital note, stock or other instrument
shall be immediately pledged to the Bank.
7. DEFAULT. If default shall be made in the due observance or
performance of any terms, covenants or agreements in this
Agreement, the Bank may demand the entire obligation of the
Borrower to be due and payable, provided that Borrower shall
be entitled to cure such breach within a period of ninety (90)
days from receipt of a notice of default from the Bank. No
failure on the part of the Bank to exercise and no delay in
exercising any right hereunder shall operate as a waiver
thereof.
8. GOVERNING LAW. This Agreement and the rights and obligations
of the parties shall be governed by and interpreted in
accordance with the laws of the state of Kansas.
9. ENTIRE AGREEMENT. THIS AGREEMENT INCLUDING THE EXHIBIT HERETO
IS THE FINAL EXPRESSION OF THE AGREEMENT BETWEEN BORROWER AND
BANK. THIS AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF
ANY PRIOR ORAL AGREEMENT OR OF A CONTEMPORANEOUS ORAL
AGREEMENT BETWEEN THE PARTIES. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THIS AGREEMENT AND THOSE OF ANY AGREEMENT
OR COMMITMENT ENTERED INTO IN CONNECTION HEREWITH, THE TERMS
OF THIS AGREEMENT SHALL GOVERN.
ALL OF THE TERMS OF THE FINAL AGREEMENT OF THE PARTIES NOT SET
FORTH ABOVE OR WHICH VARY ANY TERMS SET FORTH ABOVE, INCLUDING
ANY PREVIOUS ORAL AGREEMENTS ARE AS FOLLOWS:
NO UNWRITTEN ORAL AGREEMENT BETWEEN THE PARTIES EXISTS.
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IN WITNESS WHEREOF, the parties have executed and delivered this
agreement effective on the date first above written.
Exchange National Bank Union Bankshares, Ltd.
a Delaware Corporation
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxxx X. Xxxx
-------------------------------- --------------------------------
Xxxxxx Xxxxxxxxx Xxxxx X. Xxxx
Executive Vice President Vice President & Chief Financial
Officer
Union Bank & Trust
/S/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
Chairman & Chief Executive
Officer
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