EXHIBIT 2.6
GUARANTY OF PAYMENT AGREEMENT
THIS GUARANTY OF PAYMENT AGREEMENT (this "Agreement") is made this
11th day of February, 1998, by XXXXX-XXXXX BANCSHARES, INC., a corporation
organized under the laws of the State of Maryland (the "Guarantor") for the
benefit of NATIONSBANK, N.A., a national banking association, as both
administrative and collateral agent for itself and other Banks (as defined
below) (the "Agent").
RECITALS
A. Bay Finance, LLC, a limited liability company organized under the
laws of the State of Maryland and soon to be known as "Xxxx Xxxxxx Loans, LLC"
(the "Borrower"), has entered into a Loan Agreement of even date herewith (as
amended, modified, restated, substituted, extended and renewed at any time and
from time to time, the "Loan Agreement") with NationsBank, N.A., a national
banking association ("NationsBank"), CoreStates Bank, N.A., a national banking
association ("CoreStates"), Xxxxxx Trust and Savings Bank ("Xxxxxx") (each of
NationsBank, CoreStates and Xxxxxx individually a "Bank" and collectively the
"Banks") and the Agent.
B. Pursuant to the terms and conditions of the Loan Agreement, the
Banks have agreed to provide to the Borrower a revolving credit facility in the
maximum principal amount of $38,000,000.
C. All defined terms used in this Agreement and not defined herein
shall have the meaning given to such terms in the Loan Agreement.
D. The Guarantor has requested that the Banks enter into the Loan
Agreement with the Borrower and make the credit facilities described in the Loan
Agreement available to the Borrower.
E. The Banks and the Agent have required, as a condition to entering
into the Loan Agreement, that the Guarantor execute this Agreement as additional
security for the payment and performance of the "Obligations" (as defined in the
Loan Agreement).
NOW, THEREFORE, in order to induce the Banks and the Agent to enter
into the Loan Agreement, the Guarantor covenants and agrees with the Banks and
the Agent as follows:
I. THE GUARANTY
1.1 Guaranty.
The Guarantor hereby unconditionally and irrevocably guarantees to the
Banks and the Agent:
a) the due and punctual payment in full (and not merely the
collectibility) of the principal of the Obligations and the interest thereon, in
each case when due and payable, all
according to the terms of any promissory note evidencing all or any part of the
Obligations and the other Loan Documents (as that term is defined in the Loan
Agreement);
b) the due and punctual payment in full (and not merely the
collectibility) of all other sums and charges which may at any time be due and
payable in accordance with, or secured by, any promissory note evidencing all or
any part of the Obligations or any of the other Loan Documents;
c) the due and punctual performance of all of the other terms,
covenants and conditions contained in the Loan Documents; and
d) all indebtedness, obligations and liabilities of any kind and nature
of the Borrower to the Banks and the Agent, whether now existing or hereafter
created or arising, direct or indirect, matured or unmatured, and whether
absolute or contingent, joint, several or joint and several, and howsoever
owned, held or acquired.
1.2 Guaranty Unconditional.
The obligations and liabilities of the Guarantor under this Agreement
shall be absolute and unconditional, irrespective of the genuineness, validity,
priority, regularity or enforceability of the Loan Agreement, any promissory
note evidencing all or any part of Obligations, or any of the other Loan
Documents or any other circumstance which might otherwise constitute a legal or
equitable discharge of a surety or guarantor. The Guarantor expressly agrees
that each of the Banks and the Agent may, in its sole and absolute discretion,
without notice to or further assent of the Guarantor and without in any way
releasing, affecting or in any way impairing the obligations and liabilities of
the Guarantor hereunder:
a) waive compliance with, or any defaults under, or grant any other
indulgences under or with respect to any of the Loan Documents;
b) modify, amend, change or terminate any provisions of any of the Loan
Documents;
c) grant extensions or renewals of or with respect to any promissory
note evidencing all or any part of Obligations, any of the other Loan Documents
or any of the Obligations;
d) affect any release, subordination, compromise or settlement in
connection with any promissory note evidencing all or any part of the
Obligations, any of the other Loan Documents, or any of the Obligations;
e) agree to the substitution, exchange, release or other disposition of
the Collateral (as defined in that certain Security Agreement of even date
herewith by and among the Guarantor, the Agent and the Banks) (as amended,
modified, restated, substituted, extended and renewed at any time and from time
to time, the "Security Agreement") or any part thereof, or any other collateral
for the Obligations or to the subordination of any lien or security interest
therein;
f) make advances for the purpose of performing any term, provision or
covenant contained in the Loan Agreement or any of the other Loan Documents with
respect to which the Borrower shall then be in default;
g) make future advances to the Borrower pursuant to the Loan Agreement
or any of the other Loan Documents;
h) assign, pledge, hypothecate or otherwise transfer the Loan
Agreement, any of the Loan Documents or this Agreement or any interest therein;
i) deal in all respects with the Borrower as if this Agreement were not
in effect; and
j) effect any release, compromise or settlement with another guarantor.
1.3 Guaranty Primary.
The obligations and liabilities of the Guarantor under this Agreement
shall be primary, direct and immediate, shall not be subject to any
counterclaim, recoupment, setoff, reduction or defense based upon any claim that
the Guarantor may have against the Borrower, the Banks and/or the Agent, and/or
any other guarantor and shall not be conditional or contingent upon pursuit or
enforcement by the Banks and the Agent of any remedies they may have against the
Borrower with respect to any promissory note evidencing all or any part of the
Obligations or any of the other Loan Documents, whether pursuant to the terms
thereof or by operation of law. Without limiting the generality of the
foregoing, the Banks and the Agent shall not be required to make any demand upon
the Borrower, or to sell the Collateral or otherwise pursue, enforce or exhaust
their remedies against the Borrower or the Collateral either before,
concurrently with or after pursuing or enforcing their rights and remedies
hereunder. Any one or more successive or concurrent actions or proceedings may
be brought against the Guarantor under this Agreement, either in the same
action, if any, brought against the Borrower or in separate actions or
proceedings, as often as the Banks and the Agent may deem expedient or
advisable. Without limiting the foregoing, it is specifically understood that
any modification, limitation or discharge of any of the liabilities or
obligations of the Borrower, any other guarantor or any obligor under any of the
Loan Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against the Borrower or the Guarantor or any obligor
under any of the Loan Documents shall not modify, limit, lessen, reduce, impair,
discharge, or otherwise affect the liability of the Guarantor hereunder in any
manner whatsoever, and this Agreement shall remain and continue in full force
and effect. It is the intent and purpose of this Agreement that the Guarantor
shall and does hereby waive all rights and benefits which might accrue to any
other guarantor by reason of any such proceeding, and the Guarantor agrees that
it shall be liable for the full amount of the obligations and liabilities under
this Agreement, regardless of, and irrespective to, any modification, limitation
or discharge of the liability of the Borrower, any other guarantor or any
obligor under any of the Loan Documents, that may result from any such
proceedings.
1.4 Certain Waivers by the Guarantor.
The Guarantor hereby unconditionally, irrevocably and expressly waives:
a) presentment and demand for payment of the principal of or interest
on any promissory note evidencing all or any part of Obligations and protest of
non-payment;
b) notice of acceptance of this Agreement and of presentment, demand
and protest thereof;
c) notice of any default hereunder or under the Loan Agreement, or any
of the other Loan Documents and notice of all indulgences;
d) notice of any increase in the amount of any portion of or all of the
indebtedness guaranteed by this Agreement;
e) demand for observance, performance or enforcement of any of the
terms or provisions of this Agreement, the Loan Agreement or any of the other
Loan Documents;
f) all errors and omissions in connection with the Banks' and the
Agent's administration of all indebtedness guaranteed by this Agreement, except
errors and omissions resulting from acts of gross negligence or bad faith;
g) any right or claim of right to cause a marshalling of the assets of
the Borrower;
h) any act or omission of the Banks and the Agent (except acts or
omissions in gross negligence or bad faith) which changes the scope of the
Guarantor's risk hereunder; and
i) all other notices and demands otherwise required by law which the
Guarantor may lawfully waive.
1.5 Reimbursement for Expenses.
In the event the Banks and the Agent shall commence any action or
proceeding for the enforcement of this Agreement, then the Guarantor will
reimburse the Banks and the Agent, promptly upon demand, for any and all
reasonable expenses incurred by the Banks and the Agent in connection with such
action or proceeding including, without limitation, reasonable attorneys' fees
together with interest thereon at the Post-Default Rate (as defined in the
Security Agreement).
1.6 Events of Default.
Without implying any limitation of the Banks' and the Agent's rights to
immediate payment at any time of any Obligations which are payable on demand,
the occurrence of any one or more of the following events shall constitute an
"Event of Default" under the provisions of this Agreement (individually, an
"Event of Default" and collectively, the "Events of Default"):
a) The failure of the Guarantor to pay any of the Obligations as and
when due and payable in accordance with the provisions of this Agreement and,
except a the failure to pay the Obligations at maturity, such failure continues
uncured for five (5) days following written notice from the Agent to the
Guarantor of the failure.
b) Any representation or warranty made in this Agreement or in any
report, statement, schedule, certificate, opinion (including any opinion of
counsel for the Guarantor), financial statement or other document furnished in
connection with this Agreement, shall prove
to have been false or misleading when made (or, if applicable, when reaffirmed)
in any material respect.
c) The failure of the Guarantor to perform, observe or comply with any
covenant, condition or agreement contained in this Agreement, which default
shall remain unremedied for thirty (30) days after written notice thereof to the
Guarantor by the Agent.
d) The pledge by the Guarantor of any of the common stock of either of
Xxxxxxx County Bank and Trust or Bank of Maryland (collectively, the "Subsidiary
Banks").
e) The failure of the Subsidiary Banks to maintain a "well-capitalized"
equity position as defined in Section 1831(o)(b) of the Federal Deposit
Insurance Corporation Improvement Act of 1991, as amended.
f) The failure of the Guarantor to maintain, tested as of the last day
of each of the Guarantor's fiscal quarters for the four (4) quarter period
ending on that date, a ratio of "Cash Flow" to "Debt Service" of not less than
1.75 to 1.0. "Cash Flow" is defined as dividends and other cash distributions
available to be paid to the Guarantor by its Subsidiaries (not to exceed 100% of
such Subsidiaries' pretax income and, in the case of the Borrower, also not to
exceed the limitations in subsection (g) immediately following) less all taxes,
shareholder dividends and holding company expenses. "Debt Service" means for any
period of determination thereof an amount equal to the total of the aggregate
amount of all payments of principal and interest with respect to Indebtedness
(as defined in the Loan Agreement) of the Guarantor and its subsidiaries
scheduled to be due and payable during such period.
g) The payment of distributions by the Borrower to the Guarantor which
distributions exceed the lesser of (i) fifty percent (50%) of net income after
tax for the period or (ii) $1,300,000 measured annually.
h) A default shall occur under any other Indebtedness (other than that
with respect to the Loan Agreement) of the Guarantor in excess of $100,000,
which Indebtedness is not subordinated in writing to the payment by the
Guarantor of the Obligations in a manner approved by the Agent in writing and
the default is a failure to pay at maturity or the result of the default is the
acceleration of the maturity of such Indebtedness prior to its stated maturity.
i) A default shall occur under any of the other Loan Documents and such
default is not cured within any applicable grace period provided therein.
j) The Guarantor shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of itself or any of its property, (ii) admit in
writing its inability to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or
insolvent, (v) file a voluntary petition in bankruptcy or a petition or an
answer seeking or consenting to reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, or take corporate action for the purposes of effecting any of the
foregoing, or (vi) by any act indicate its consent to, approval of or
acquiescence in any such proceeding or the appointment of any receiver of or
trustee for any of its property, or suffer any such receivership, trusteeship or
proceeding to continue undischarged for a period of sixty (60) days, or (vii) by
any act indicate its consent to, approval of or
acquiescence in any order, judgment or decree by any court of competent
jurisdiction or any Governmental Authority (as defined in the Loan Agreement)
enjoining or otherwise prohibiting the operation of a material portion of the
Guarantor's business or the use or disposition of a material portion of the
Guarantor's assets.
k) (i) An order for relief shall be entered in any involuntary case
brought against the Guarantor under the Bankruptcy Code, or (ii) any such case
shall be commenced against the Guarantor and shall not be dismissed within sixty
(60) days after the filing of the petition, or (iii) an order, judgment or
decree under any other law is entered by any court of competent jurisdiction or
by any other Governmental Authority on the application of a Governmental
Authority or of a person (as defined in the Loan Agreement) other than the
Guarantor (A) adjudicating the Guarantor bankrupt or insolvent, or (B)
appointing a receiver, trustee or liquidator of the Guarantor, or of a material
portion of the Guarantor's assets, or (C) enjoining, prohibiting or otherwise
limiting the operation of a material portion of the Guarantor's business or the
use or disposition of a material portion of the Guarantor's assets, and such
order, judgment or decree continues unstayed and in effect for a period of
thirty (30) days from the date entered.
l) Unless adequately insured in the opinion of the Agent, the entry of
a final judgment for the payment of money involving more than $100,000 against
the Guarantor, and the failure by the Guarantor to discharge the same, or cause
it to be discharged, within thirty (30) days from the date of the order, decree
or process under which or pursuant to which such judgment was entered, or to
secure a stay of execution pending appeal of such judgment.
m) If the Agent in its sole discretion determines in good faith that a
material adverse change has occurred in the financial condition of the
Guarantor.
n) If the Guarantor shall liquidate, dissolve or terminate its
existence or if the majority of the issued and outstanding common shares of the
Guarantor are owned or controlled by a single person, without the prior written
consent of the Agent.
o) If the Guarantor transfers any of the Guarantor's respective assets,
without the Agent's prior written consent, except for transfers for which the
Guarantor receives consideration substantially equivalent to the fair market
value of the asset transferred.
1.7 Rescission of Election to Accelerate.
In the event the Banks and the Agent shall elect to accelerate the
maturity of any promissory note evidencing all or any part of Obligations as to
the Guarantor pursuant to the provisions of this Agreement, such election may be
rescinded by written acknowledgment to that effect by the Banks and the Agent;
provided, however, that the acceptance of a partial payment on account of any
promissory note evidencing all or any part of Obligations shall not alone effect
or rescind such election.
1.8 Subordination; Subrogation.
In the event the Guarantor shall advance any sums to the Borrower, or
in the event the Borrower has heretofore or shall hereafter become indebted to
the Guarantor before the Obligations have been paid in full, all such advances
and indebtedness shall be subordinate in all respects to the Obligations (the
"Guarantor Subordinated Debt"). Any payment to the
Guarantor on account of the Guarantor Subordinated Debt shall be collected and
received by the Agent or the Guarantor in trust for the Agent for itself and for
the ratable benefit of the Banks and shall be paid over to the Agent for itself
and the ratable benefit of the Banks on account of the Obligations without
impairing or releasing the obligations of the Guarantor hereunder.
Without the prior written consent of the Agent, the Guarantor shall not
ask, demand, receive, accept, xxx for, set off, collect or enforce the Guarantor
Subordinated Debt or any collateral and security therefor. The Guarantor
represents and warrants to the Agent that the Guarantor Subordinated Debt is
unsecured and agrees not to receive or accept any collateral or security
therefor without the prior written permission of the Agent. The Guarantor shall
not assign, transfer, hypothecate or dispose of the Guarantor Subordinated Debt
while this Agreement is in effect. In the event of any sale, receivership,
insolvency or bankruptcy proceeding, or assignment for the benefit of creditors,
or any proceeding by or against the Borrower for any relief under any bankruptcy
or insolvency law or other laws relating to the relief of debtors, readjustment
of indebtedness, reorganizations, compositions or extensions, then and in any
such event any payment or distribution of any kind or character, either in cash,
securities or other property, which shall be payable or deliverable upon, or
with respect to, all or any part of the Guarantor Subordinated Debt or otherwise
shall be paid or delivered directly to the Agent for application to the
obligations and liabilities of the Guarantor under this Agreement (whether due
or not due and in such order and manner as the Agent may determine in the
exercise of its sole discretion) until the obligations of the Guarantor
hereunder shall have been fully paid and satisfied. The Guarantor hereby
irrevocably authorizes and empowers the Agent to demand, xxx for, collect and
receive every such payment or distribution on account of the Guarantor
Subordinated Debt and give acquittance therefor and to file claims and take such
other proceedings in the Agent's own name or in the name of the Guarantor or
otherwise, as the Agent may deem necessary or advisable to carry out the
provisions of this Agreement. The Guarantor hereby agrees to execute and deliver
to the Agent such powers of attorney, assignments, endorsements or other
instruments as may be requested by the Agent in order to enable the Agent to
enforce any and all claims upon, or with respect to, the Guarantor Subordinated
Debt, and to collect and receive any and all payments or distributions which may
be payable or deliverable at any time upon or with respect thereto.
Nothing contained in this Agreement shall be construed to give the
Guarantor any right of subrogation in or to the Obligations or any of the Loan
Documents, or all or any part of the interest of the Agent therein, until the
Obligations have been paid in full.
1.9 CONFESSED JUDGMENT.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE GUARANTOR HEREBY
AUTHORIZES ANY ATTORNEY DESIGNATED BY THE AGENT OR ANY CLERK OF ANY COURT OF
RECORD TO APPEAR FOR THE GUARANTOR IN ANY COURT OF RECORD AND CONFESS JUDGMENT
AGAINST THE GUARANTOR WITHOUT PRIOR HEARING, IN FAVOR OF THE AGENT AND/OR THE
BANKS FOR, AND IN THE AMOUNTS OF, THE BALANCE THEN DUE UNDER ANY ONE OR MORE OF
THE PROMISSORY NOTES EVIDENCING ALL OR ANY PART OF OBLIGATIONS, ALL ACCRUED AND
UNPAID INTEREST THEREON, ALL OTHER AMOUNTS PAYABLE BY THE GUARANTOR TO THE AGENT
AND/OR THE BANKS UNDER THE TERMS OF THIS AGREEMENT, COSTS OF SUIT, AND
ATTORNEYS' FEES OF FIFTEEN PERCENT (15%) OF THE UNPAID PRINCIPAL SUM. BY ITS
ACCEPTANCE OF THIS NOTE, HOWEVER, THE BANK AGREES THAT IN THE EVENT THAT THE
BANK EXERCISES
ITS RIGHT TO CONFESS JUDGMENT UNDER THIS NOTE, THE BANK SHALL USE ITS BEST
EFFORTS TO OBTAIN LEGAL COUNSEL WHO WILL CHARGE THE BANK FOR ITS SERVICES ON AN
HOURLY BASIS, AT ITS CUSTOMARY HOURLY RATE(S) AND ONLY FOR THE TIME AND
REASONABLE EXPENSES INCURRED. IN NO EVENT SHALL THE BANK ENFORCE THE PORTION OF
THE LEGAL FEES PORTION OF A CONFESSED JUDGMENT FOR AN AMOUNT IN EXCESS OF SUCH
FEES AND EXPENSES CHARGED TO THE BANK FOR SERVICES RENDERED BY ITS COUNSEL IN
CONNECTION WITH SUCH CONFESSION OF JUDGMENT AND THE COLLECTION OF SUMS OWED TO
THE BANK. THE GUARANTOR HEREBY RELEASES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ALL ERRORS AND ALL RIGHTS OF EXEMPTION, APPEAL, STAY OF EXECUTION,
INQUISITION, AND OTHER RIGHTS TO WHICH THE GUARANTOR MAY OTHERWISE BE ENTITLED
UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR OF ANY STATE OR POSSESSION OF
THE UNITED STATES OF AMERICA NOW IN FORCE AND WHICH MAY HEREAFTER BE ENACTED.
THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE GUARANTOR
SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF OR BY ANY IMPERFECT
EXERCISE THEREOF AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT
THERETO. SUCH AUTHORITY MAY BE EXERCISED ON ONE OR MORE OCCASIONS OR FROM TIME
TO TIME IN THE SAME OR DIFFERENT JURISDICTIONS AS OFTEN AS THE AGENT SHALL DEEM
NECESSARY AND DESIRABLE, FOR ALL OF WHICH THIS AGREEMENT SHALL BE A SUFFICIENT
WARRANT.
II. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties.
The Guarantor represents and warrants to the Banks and the Agent as
follows:
2.2 Good Standing.
The Guarantor (a) is a corporation duly organized, existing and in good
standing under the laws of the jurisdiction of its incorporation, (b) has the
corporate power to own its property and to carry on its business as now being
conducted, and (c) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned by it therein
or in which the transaction of its business makes such qualification necessary.
2.3 Corporate Power and Authority.
The Guarantor has full corporate power and authority to execute and
deliver this Agreement and the other Loan Documents to which it is a party and
to incur and perform the Obligations whether under this Agreement, the other
Loan Documents or otherwise, all of which have been duly authorized by all
proper and necessary corporate action. No consent or approval of shareholders or
any creditors of the Guarantor, and no consent, approval, filing or registration
with or notice to any Governmental Authority on the part of the Guarantor, is
required as a condition to the execution, delivery, validity or enforceability
of this Agreement or the other Loan Documents or the performance by the
Guarantor of the Obligations.
2.4 Binding Agreements.
This Agreement and the other Loan Documents executed and delivered by
the Guarantor have been properly executed and delivered and constitute the valid
and legally binding obligations of the Guarantor and are fully enforceable
against the Guarantor in accordance with their respective terms.
2.5 No Conflicts.
Neither the execution, delivery and performance of the terms of this
Agreement or of any of the other Loan Documents executed and delivered by the
Guarantor nor the consummation of the transactions contemplated by this
Agreement will conflict with, violate or be prevented by (a) the Guarantor's
charter or bylaws, (b) any existing mortgage, indenture, contract or agreement
binding on the Guarantor or affecting its property, or (c) any laws.
2.6 Compliance with Laws.
The Guarantor is not in violation of any applicable laws (including,
without limitation, any laws relating to employment practices, to environmental,
occupational and health standards and controls) or order, writ, injunction,
decree or demand of any court, arbitrator, or any Governmental Authority
affecting the Guarantor or any of its properties, the violation of which,
considered in the aggregate, could materially adversely affect the business,
operations or properties of the Guarantor.
2.7 Litigation.
There are no proceedings, actions or investigations pending or, so far
as the Guarantor knows, threatened before or by any court, arbitrator or any
Governmental Authority which, in any one case or in the aggregate, if determined
adversely to the interests of the Guarantor, would have a material adverse
effect on the business, properties, condition (financial or otherwise) or
operations, present or prospective, of the Guarantor.
2.8 Financial Condition.
The financial statements of the Guarantor dated September 30, 1997, are
complete and correct and fairly present the financial position of the Guarantor
and the results of its operations and transactions in its surplus accounts as of
the date and for the period referred to and have been prepared in accordance
with GAAP applied on a consistent basis throughout the period involved. There
are no liabilities, direct or indirect, fixed or contingent, of the Guarantor as
of the date of such financial statements that are not reflected therein or in
the notes thereto. There has been no adverse change in the financial condition
or operations of the Guarantor since the date of such financial statements and
to the Guarantor's knowledge no such adverse change is pending or threatened.
The Guarantor has not guaranteed any Indebtedness for borrowed money or made any
investment in or advances to, any person, except as disclosed in such financial
statements and except in the ordinary course of the Guarantor's business and
except as disclosed to the Agent prior to the date of this Agreement. The
representations and warranties contained in this Section shall also cover
financial statements furnished from time to time to the Agent and the Banks
pursuant to (Financial Records; Inspection).
2.9 Full Disclosure.
The financial statements referred to in Section (Financial Condition),
the Loan Documents (including, without limitation, this Agreement), and the
statements, reports or certificates furnished by the Guarantor in connection
with the Loan Documents (a) do not contain any untrue statement of a material
fact and (b) when taken in their entirety, do not omit any material fact
necessary to make the statements contained therein not misleading. There is no
fact known to the Guarantor which the Guarantor has not disclosed to the Agent
in writing prior to the date of this Agreement which materially and adversely
affects or in the future could, in the reasonable opinion of the Guarantor
materially adversely affect the condition, financial or other wise, results of
operations, business, or assets of the Guarantor.
2.10 Financial Interest.
The Guarantor has a financial interest in the Borrower and will derive
a benefit from the credit facilities extended to and the Obligations incurred by
the Borrower, and hereby waives any claim that the Agent violated the Equal
Credit Opportunity Act (15 U.S.C. 1691 et seq.) in connection with the credit
facilities, any of the Loan Documents or any of the other Obligations or
security for any obligation which is the subject thereto.
2.11 Survival; Updates of Representations and Warranties.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Loan Documents shall survive the
closing date, the making of any advance under the credit facilities and the
incurring of any Obligations.
III.AFFIRMATIVE COVENANTS
The Guarantor hereby covenants and agrees as follows:
3.1 Corporate Existence.
The Guarantor shall maintain its corporate existence in good standing
in the jurisdiction in which it is incorporated and in each other jurisdiction
where it is required to register or qualify to do business if the failure to do
so in such other jurisdiction might have a material adverse effect on the
ability of the Guarantor to perform the Obligations, on the conduct of the
Guarantor's operations, on the Guarantor's financial condition, or on the value
of, or the ability of the Agent to realize upon, the Collateral.
3.2 Further Assurances.
The Guarantor will make, execute, acknowledge and deliver all and every
such further acts and assurances as the Banks and the Agent shall from time to
time require for confirming or carrying out the intentions or facilitating the
performance of the terms of this Agreement.
3.3 Financial Records; Inspection.
The Guarantor will (a) maintain or cause to be maintained full,
complete, accurate and adequate records and books of account in accordance with
generally accepted accounting
principles consistently applied; and (b) permit the Banks and the Agent and
their duly authorized agents, attorneys and accountants to inspect, examine, and
copy its records and books of account at all reasonable times.
3.4 Financial Statements.
The Guarantor will furnish to the Agent in writing: (a) as soon as
available but in no event more than 45 days after the end of each fiscal
quarter, (i) a consolidated and consolidating financial statements of Guarantor
and any Subsidiaries for such period, (ii) a computation of the ratio set forth
in Section 1.6(f) computed for the applicable fiscal quarter, and (iii) a
compliance certificate of the President or chief financial officer of the
Guarantor concurrently with, and dated as of the date required for delivery of
each of, the financial statements containing a certification that the financial
statements of even date are true and correct and that there exists no Event of
Default, all in detail and scope reasonably satisfactory to the Agent, prepared
in accordance with GAAP consistently applied; (b) as soon as available but in no
event more than 120 days after the end of each fiscal year of Guarantor, a
consolidated and consolidating financial statements for such year, all in detail
and scope reasonably satisfactory to the Agent, prepared and audited in
accordance with GAAP consistently applied by independent certified public
accountants reasonably satisfactory to the Agent, accompanied by a report of
such independent certified public accountants with respect to such financial
statements; (c) promptly upon transmission thereof, copies of any financial
statements, proxy statements, reports and the like which Guarantor or any
Subsidiary sends to its shareholders and copies of all registration statements
(with exhibits) and all regular, special or periodic reports which Guarantor or
any Subsidiary files with the United States Securities and Exchange Commission
(or any governmental body or agency succeeding to the functions of the United
States Securities and Exchange Commission) or with any national stock exchange
on which any of Guarantor's or any Subsidiary's securities are listed and copies
of all press releases and other statements made available by Guarantor or any
Subsidiary to the public concerning material developments in the business of
Guarantor and/or any Subsidiary; and (d) promptly after request, such other
information with respect to the financial statements of the Guarantor as the
Banks and the Agent may from time to time reasonably require.
3.5 Estoppel Certificates.
Within ten (10) days following any reasonable request of the Agent so
to do, the Guarantor will furnish the Agent and such other persons as the Agent
may direct with a written certificate, duly acknowledged stating in detail
whether or not any credits, offsets or defenses exist with respect to this
Agreement.
IV. MISCELLANEOUS
4.1 Notices.
All notices, requests and demands to or upon the parties to this
Agreement shall be in writing and shall be deemed to have been given or made
when delivered by hand on a Banking Day, or three (3) days after the date when
deposited in the mail, postage prepaid by registered or certified mail, return
receipt requested, or when sent by overnight courier, on the Banking Day next
following the day on which the notice is delivered to such overnight courier,
addressed as follows:
Guarantor: Xxxxx-Xxxxx Bancshares, Inc.
00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx. X. Xxxxxx
with a copy to:
Xxxxx Xxxxx Xxxxxx, Esquire
Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Agent and: NationsBank, N.A.
the Banks Commercial Banking
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxxxxx X. Xxxxx, Xx., Esquire
Miles & Stockbridge P.C.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
By written notice, each party to this Agreement may change the address
to which notice is given to that party, provided that such changed notice shall
include a street address to which notices may be delivered by overnight courier
in the ordinary course on any Banking Day.
4.2 Amendments; Waivers.
This Agreement may not be amended, modified, or changed in any respect
except by an agreement in writing signed by the Agent and the Guarantor. No
waiver of any provision of this Agreement, nor consent to any departure by the
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing. No course of dealing between the Guarantor and the Banks and the Agent
and no act or failure to act from time to time on the part of the Banks and the
Agent shall constitute a waiver, amendment or modification of any provision of
this Agreement or any right or remedy under this Agreement or under applicable
laws.
Without implying any limitation on the foregoing:
a) Any waiver or consent shall be effective only in the specific
instance, for the terms and purpose for which given, subject to such conditions
as the Banks and the Agent may specify in any such instrument.
b) No waiver of any Event of Default shall extend to any subsequent or
other Event of Default, or impair any right consequent thereto.
c) No notice to or demand on the Guarantor in any case shall entitle
the Guarantor to any other or further notice or demand in the same, similar or
other circumstance.
d) No failure or delay by the Banks and the Agent to insist upon the
strict performance of any term, condition, covenant or agreement of this
Agreement or of any of the other Loan Documents, or to exercise any right, power
or remedy consequent upon a breach thereof, shall constitute a waiver, amendment
or modification of any such term, condition, covenant or agreement or of any
such breach or preclude the Banks and the Agent from exercising any such right,
power or remedy at any time or times.
e) By accepting payment after the due date of any amount payable under
this Agreement or under any of the other Loan Documents, the Banks and the Agent
shall not be deemed to waive the right either to require prompt payment when due
of all other amounts payable under this Agreement or under any of the other Loan
Documents, or to declare a default for failure to effect such prompt payment of
any such other amount.
4.3 Cumulative Remedies.
The rights, powers and remedies provided in this Agreement and in the
other Loan Documents are cumulative, may be exercised concurrently or
separately, may be exercised from time to time and in such order as the Agent
shall determine and are in addition to, and not exclusive of, rights, powers and
remedies provided by existing or future applicable laws. In order to entitle the
Agent to exercise any remedy reserved to it in this Agreement, it shall not be
necessary to give any notice, other than such notice as may be expressly
required in this Agreement. Without limiting the generality of the foregoing,
the Agent may:
a) proceed against the Guarantor with or without proceeding against the
Borrower or any other person who may be liable for all or any part of the
Obligations;
b) proceed against the Guarantor with or without proceeding under any
of the other Loan Documents or against any Collateral or other collateral and
security for all or any part of the Obligations;
c) without reducing or impairing the obligation of the Guarantor and
without notice, release or compromise with any other person liable for all or
any part of the Obligations under the Loan Documents or otherwise; or
d) without reducing or impairing the obligations of the Guarantor and
without notice thereof: (i) fail to perfect the Lien in any or all Collateral or
to release any or all the Collateral or to accept substitute Collateral, (ii)
approve the making of advances under the credit facilities under the Loan
Agreement, (iii) waive any provision of this Agreement or the other Loan
Documents, (iv) exercise or fail to exercise rights of set-off or other rights,
or (v) accept partial payments or extend from time to time the maturity of all
or any part of the Obligations.
4.4 Severability.
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Loan Documents shall be invalid, illegal or
unenforceable in any respect under any law, then without need for any further
agreement, notice or action:
a) the validity, legality and enforceability of the remaining
provisions shall remain effective and binding on the parties thereto and shall
not be affected or impaired thereby;
b) the obligation to be fulfilled shall be reduced to the limit of such
validity;
c) if such provision or part thereof pertains to repayment of the
Obligations, then, at the sole and absolute discretion of the Agent, all of the
Obligations shall become immediately due and payable; and
d) if the affected provision or part thereof does not pertain to
repayment of the Obligations, but operates or would prospectively operate to
invalidate this Agreement in whole or in part, then such provision or part
thereof only shall be void, and the remainder of this Agreement shall remain
operative and in full force and effect.
4.5 Assignments by Agent.
The Banks and/or the Agent may, without notice to, or consent of, the
Guarantor, sell, assign or transfer to or participate with any person or persons
all or any part of the Obligations, and each such person or persons shall have
the right to enforce the provisions of this Agreement and any of the other Loan
Documents as fully as the Banks and/or the Agent, provided that the Agent shall
continue to have the unimpaired right to enforce the provisions of this
Agreement and any of the other Loan Documents as to so much of the Obligations
that the Agent has not sold, assigned or transferred. In connection with the
foregoing, the Banks and the Agent shall have the right to disclose to any such
actual or potential purchaser, assignee, transferee or participant (provided,
however, that prior to the earlier of June 11, 1998 or an Event of Default, the
Agent shall obtain the Guarantor's prior written consent to such disclosure,
which consent shall not be unreasonably withheld or delayed) all financial
records, information, reports, financial statements and documents obtained in
connection with this Agreement and any of the other Loan Documents or otherwise.
4.6 Successors and Assigns.
This Agreement shall be binding upon the Guarantor and its personal
representatives, heirs, successors and assigns, and shall inure to the benefit
of the Banks and the Agent and their successors and assigns.
4.7 Continuing Agreements.
All covenants, agreements, representations and warranties made by the
Guarantor in this Agreement and in any certificate delivered pursuant hereto
shall survive the making by the Banks and/or the Agent of advances and other
extensions of credit under the credit facilities and the execution and delivery
of each promissory note evidencing all or any part of Obligations, shall be
binding upon the Guarantor regardless of how long before or after the date
hereof any of the Obligations were or are incurred, and shall continue in full
force and effect so long as any of the Obligations are outstanding and unpaid.
From time to time upon the Agent's request, and as a condition of the release of
any one or more of the Security Documents, the Guarantor and other persons
obligated with respect to the Obligations shall provide the Agent with such
acknowledgements and agreements as the Agent may reasonably require to the
effect that there exists no defenses, rights or setoff or recoupment, claims,
counterclaims, actions or causes of action of any kind or nature whatsoever
against the Agent, its agents and others, or to the extent there are, the same
are waived and released.
4.8 Enforcement Costs.
The Guarantor agrees to pay to the Agent on demand all Enforcement
Costs (as defined in the Security Agreement), together with interest thereon
from the date incurred or advanced until paid in full at a per annum rate of
interest equal at all times to the Post-Default Rate. Enforcement Costs shall be
immediately due and payable at the time advanced or incurred, whichever is
earlier. Without implying any limitation on the foregoing, the Guarantor agrees,
as part of the Enforcement Costs, to pay upon demand any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution and delivery of this Agreement and to save the Agent harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay any taxes or fees referred to in this Section. The
provisions of this Section shall survive the execution and delivery of this
Agreement, the repayment of the Obligations and the termination of this
Agreement.
4.9 Applicable Law.
As a material inducement to the Banks and the Agent to enter into this
Agreement, the Guarantor acknowledges and agrees that the Loan Documents,
including, this Agreement, shall be governed by the laws of the State of
Maryland, as if each of the Loan Documents and this Agreement had each been
executed, delivered, administered and performed solely within the State of
Maryland even though for the convenience and at the request of the Borrower, one
or more of the Loan Documents may be executed elsewhere. The Banks and the Agent
acknowledge, however, that remedies under certain of the Loan Documents that
relate to property outside the State of Maryland may be subject to the laws of
the state in which the property is located.
4.10 Duplicate Originals and Counterparts.
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
4.11 Headings; Etc.
The headings in this Agreement are included herein for convenience
only, shall not constitute a part of this Agreement for any other purpose, and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof. The above Recitals are part of this Agreement.
4.12 No Partnership; Third Parties.
Nothing contained in this Agreement shall be construed in a manner to
create any relationship between the Guarantor and the Banks and the Agent other
than the relationship of guarantor and lender and the Guarantor, the Banks and
the Agent shall not be considered partners or co-venturers for any purpose. The
terms and provisions of this Agreement are for the benefit of the Banks and the
Agent and their successors, assigns, endorsees and transferees and all persons
claiming under or through it and no other person shall have any right or cause
of action on account thereof. The Banks and the Agent have no obligation to make
any advance of any loan provided for in the Loan Agreement or otherwise for the
benefit of the Guarantor; the Guarantor has no beneficial interest in the
proceeds of any of the loans or otherwise under the Obligations or rights or
claims under the Loan Agreement or any of the other Loan Documents. The
obligations and liabilities of the Guarantor shall in no manner be affected by
the actual use
of the proceeds of the credit facilities under the Loan Agreement or otherwise
or whether the Banks and the Agent waive any or all of the conditions to
advances set forth in the Loan Agreement or any of the other Loan Documents.
4.13 Entire Agreement.
This Agreement is intended by the Agent and the Guarantor to be a
complete, exclusive and final expression of the agreements contained herein.
Neither the Agent nor the Guarantor shall hereafter have any rights under any
prior agreements pertaining to the matters addressed by this Agreement but shall
look solely to this Agreement for definition and determination of all of their
respective rights, liabilities and responsibilities under this Agreement.
4.14 Consent to Jurisdiction.
The Guarantor, irrevocably submits to the jurisdiction of any state or
federal court sitting in the State of Maryland over any suit, action, or
proceeding arising out of or relating to this Agreement. The Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to laying the venue of any such suit, action, or
proceeding brought in any such court and any claim that any such suit, action,
or proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment in any such suit, action, or proceeding brought in any
such court shall be conclusive and binding upon the Guarantor and may be
enforced in any court to the jurisdiction of which the Guarantor is subject, by
a suit upon such judgment provided that service of process is effected upon the
Guarantor in a manner specified in this Agreement or as otherwise permitted by
applicable law.
4.15 Service of Process.
The Guarantor hereby consents to process being served in any suit,
action, or proceeding instituted in connection with this Agreement by (a) the
mailing of a copy thereof by certified mail, postage prepaid, return receipt
requested, to the Guarantor at the Guarantor's address designated in (Notices)
and (b) serving a copy thereof upon Xxxx X. Xxxxxx, the agent hereby designated
and appointed by the Guarantor as the Guarantor's agent for service of process.
The Guarantor irrevocably agrees that such service (y) shall be deemed in every
respect to be effective service of process upon it in any such suit, action, or
proceeding and (z) shall, to the fullest extent permitted by law, be taken and
held to be valid personal service upon the Guarantor. Nothing in this Section
shall affect the right of the Agent to serve process in any manner otherwise
permitted by law or limit the right of the Agent otherwise to bring proceedings
against the Guarantor in the courts of any other appropriate jurisdiction or
jurisdictions.
4.16 WAIVER OF TRIAL BY JURY.
THE GUARANTOR, THE BANKS AND THE AGENT HEREBY JOINTLY AND SEVERALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE GUARANTOR AND THE
LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS
AGREEMENT, (B) ANY OF THE LOAN DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the
Guarantor, the Banks and the Agent, and the Guarantor, the Banks and the Agent
hereby represent that no representations of fact or opinion have been made by
any individual to induce this waiver of trial by jury or to in any way modify or
nullify its effect. The Guarantor, the Banks and the Agent further represent
that they have been represented in the signing of this Agreement and in the
making of this waiver by independent legal counsel, selected of their own free
will, and that they have had the opportunity to discuss this waiver with
counsel.
4.17 Liability of the Agent.
Except for willful misconduct, the Guarantor hereby agrees that the
Agent shall not be chargeable for any negligence, mistake, act or omission of
any accountant, examiner, agency or attorney employed by the Agent in making
examinations, investigations or collections, or otherwise in perfecting,
maintaining, protecting or realizing upon any lien or security interest or any
other interest in the Collateral or other security for the Obligations.
By inspecting the Collateral or any other properties of the Borrower or
by accepting or approving anything required to be observed, performed or
fulfilled by the Borrower or to be given to the Agent pursuant to this Agreement
or any of the other Loan Documents, the Agent shall not be deemed to have
warranted or represented the condition, sufficiency, legality, effectiveness or
legal effect of the same, and such acceptance or approval shall not constitute
any warranty or representation with respect thereto by the Agent.
4.18 Reinstatement.
If at any time any payment, or portion thereof, made by, or for the
account of, the Borrower or the Guarantor on account of any of the obligations
and liabilities arising hereunder or under any of the Loan Documents is set
aside by any court or trustee having jurisdiction as a voidable preference or
fraudulent conveyance or must otherwise be restored or returned by the Banks and
the Agent to the Borrower or to the Guarantor under any insolvency, bankruptcy
or other federal and/or state laws or as a result of any dissolution,
liquidation or reorganization of the Borrower or upon, or as a result of, the
appointment of any receiver, intervenor or conservator of, or trustee, or
similar officer for, the Borrower or any substantial part of its properties or
assets, the Guarantor hereby agrees that this Agreement shall continue and
remain in full force and effect or be reinstated, as the case may be, all as
though such payment(s) had not been made.
4.19 Complete and Final Expression of Agreement.
This Agreement is intended by the Banks, the Agent and the Guarantor to
be a complete, exclusive and final expression of the agreements contained
herein. No course of dealing, course of performance or trade usage, and no parol
evidence of any nature, shall be used to supplement or modify any terms of this
Agreement. The Banks, the Agent and the Guarantor further agree that there are
no conditions to the full effectiveness of this Agreement, unless otherwise
expressly stated herein. The Guarantor has unconditionally delivered this
Agreement to the Banks and the Agent, and failure to sign this or any other
guarantee by any other person shall not discharge the liability of the Guarantor
hereunder.
WITNESS the signature and seal of the Guarantor as of the day and year
first above written.
WITNESS OR ATTEST: XXXXX-XXXXX BANCSHARES, INC.
/s/ Xxxxx Xxxx-Xxxxx By:/s/ Xxxxxx X. Xxxxxxxx (SEAL)
Xxxxxx X. Xxxxxxxx
President
