LOAN AGREEMENT
EXHIBIT
10.1
This
Loan Agreement is made and entered into as of the 10th
day of November, 2006, by and between THE
BANKERS’ BANK OF KENTUCKY, INC.,
a Kentucky banking organization with main offices in Frankfort, Kentucky
(“Bankers’”) and PREMIER
FINANCIAL BANCORP, INC.,
a Kentucky corporation (“Borrower”) and a multi-bank holding company under the
Bank Holding Company Act of 1956, as amended, for various banking
organizations;
WHEREAS,
the parties hereto have reached an understanding as to the lending of money
by
Bankers’ to Borrower which Borrower will use to retire in full existing Trust
Preferred Securities and from time to time, for general corporate
purposes.
NOW,
THEREFORE, in consideration of the mutual representations, covenants and
agreements and undertakings contained in this Agreement, which Borrower
acknowledges Bankers’ is relying upon in granting, renewing, and making advances
upon the Credit Facility referred to below, and for all the good and valuable
consideration, Bankers’ and Borrower hereby agree as follows:
I.
Loan.
1.
The
Loan.
(a)
Bankers’ agrees, on the terms and conditions set forth herein, to make a Credit
Facility (“Facility”) in the maximum amount of Ten Million ($10,000,000) Dollars
through the lending to Borrower of Six Million Five Hundred Thousand
($6,500,000) Dollars under that Term Note of even date herewith (“Term Note”)
and the lending to Borrower from time to time of up to Three Million Five
Hundred Thousand ($3,500,000) Dollars under that Promissory Note of even date
herewith (“Promissory Note”) all in accordance with the terms hereof and the
Stock Pledge and Security Agreement of even date herewith; provided, that the
outstanding principal balance at any time through advances of funds under the
Promissory Note shall not exceed $3,500,000 (the “Maximum Amount”).
(b)
Advances by Bankers’ to Borrower under the Promissory Note shall be made by
Bankers’ within three (3) business days after written request for an advance is
received by Bankers’ from Borrower; provided, however, that any advance by
Bankers’ shall be contingent and conditioned upon:
(i)
receipt of a written Request for Advance by Bankers’ from Borrower, which shall
state the amount requested to be advanced; and
(ii)
no Default or Event of Default shall have occurred under this Agreement;
and
(iii)
no material adverse change shall have occurred with respect to the business,
assets, or operations of Borrower or its subsidiaries which, in the sole
discretion of the Bankers’, would adversely effect Borrower, its subsidiaries or
their businesses; and
(iv)
the amount requested to be advanced by Bankers’ to Borrower shall not cause or
result in the outstanding amount owed under the Promissory Note to exceed the
Maximum Amount.
1.2
Security.
The
Credit Facility (including both the Term Note and the Promissory Note) to
Borrower, including all costs, expenses and interest thereunder, shall be
continuously secured by a first and prior pledge and security interest in a
minimum of one hundred (100%) percent of (a) the outstanding shares of common
capital stock, $1 par value, of Citizens Deposit Bank and Trust, Inc.,
Vanceburg, Kentucky (“Citizens”) and (b) the outstanding shares of common
capital stock, $25 par value, of Farmers-Deposit Bank, Eminence, Kentucky
(“Farmers”), and any other equity security of Citizens and Farmers as may be
outstanding from time to time and as allowed under this Agreement, the Stock
pledge and Security Agreement or the Term Note or the Promissory
Note.
II.
Closing.
2.1
The
Closing.
The
closing (“Closing”) shall take place at ____ o’clock _M, local time, on November
10, 2006, at the main offices of Bankers’.
2.2
Documents
at Closing.
At
or prior to Closing, Borrower shall deliver to Bankers’ each of the following
documents duly authorized, and executed, and in form acceptable to
Bankers’:
(a)
This Agreement;
(b)
The Term Note and the Promissory Note (Exhibits “A” and “B”) evidencing the
obligation of Borrower to Bankers’ pursuant to this Agreement;
(c)
The Stock Pledge and Security Agreement attached hereto as Exhibit “C”, together
with original Certificates representing the shares specified in Subsection
1.2
hereof, (clear of all liens and encumbrances) with duly executed stock powers;
(d)
Certificates executed by Borrower affirming that, as of the date of Closing
(i)
the representations and warranties set forth herein are true, complete and
accurate; (ii) Borrower is not in breach of any covenants contained herein;
and
(iii) no Event of Default has occurred or is existing;
(e)
An Opinion of Counsel for Borrower dated the date of Closing in the form of
Exhibit “D”, attached hereto and otherwise in form and substance satisfactory to
Bankers’ in its sole discretion;
(f)
A copy of the Articles of Incorporation of Borrower, Citizens and Farmers,
and a
copy of the By-Laws of each said Organization, certified by the Secretary of
each of said Organizations to be true, complete and correct copies thereof,
as
of the date of Closing;
(g)
Copies of Minutes of Borrower, certified by its Secretary, evidencing due and
proper authorization for Borrower to enter into this Agreement, the Stock Pledge
Agreement and Security Agreement, the Term Note and the Promissory Note and
supplemental documents thereto and to engage in the acts and transactions
specified therein;
(h)
A Certificate of the Secretary of Borrower certifying the names of the officers
authorized to execute and deliver this Agreement, the Note, the Stock Pledge
and
Security Agreement and other documents supplemental thereto and to which the
Borrower is party, together with the true signatures of such officers so
authorized;
(i)
Borrower’s check in an amount sufficient too pay the costs of preparation of
this Loan Agreement, supplemental documents and closing this loan
transaction.
(j)
Such other documents and instruments as Bankers’ may request to insure the
binding effect in accordance with the terms thereof of any document supplemental
to this Agreement, or to effect the intent of this Agreement.
2.3
Further
Considerations to Closing.
The
obligation of Bankers’ to enter into the Credit Facility and to make the loans
under the Term Note and the Promissory Note at Closing is subject additionally
to the following conditions:
(a)
Accuracy
of Representations:
The representations and warranties made herein and in any document supplemental
hereto shall be true and correct as of the date of Closing;
(b)
Compliance
of Covenants:
There shall be no violation of, and no event or condition shall have occurred
which could or would result in a violation of, any covenant or other provision
contained in this Agreement, the Term Note and the Promissory Note, the Stock
Pledge and Security Agreement, or any document supplemental hereto;
(c)
Event
of Default:
No Event of Default shall have occurred or be continuing or be threatened as
of
the date of Closing;
(d)
Satisfactory
Financial Condition:
Borrower’s financial condition and that of Bank, shall be satisfactory to
Bankers’, in its sole discretion, as of Closing;
(e)
Proceedings:
All proceedings to be taken in connection with the transactions contemplated
by
this Agreement and all documents instrumental thereto, shall be satisfactory
in
form and substance to Bankers’ and their counsel, in Bankers’ sole and absolute
discretion.
III.
Representations
and Warranties.
To
induce Bankers’ to enter into this Agreement, Borrower makes the following
representations and warranties as of the date hereof, and, except where
specified, to be effective and true at all times throughout the term of this
Agreement, which shall survive the Closing and shall be deemed to be restated
each time Borrower delivers documents or reports required hereby pursuant to
this Agreement or receives an advance of funds under the Promissory
Note:
3.1
Organization:
(a)
Borrower is a corporation duly organized and validly existing under the laws
of
the Commonwealth of Kentucky, has paid all fees due and owing to the Office
of
the Kentucky Secretary of State, and has delivered to that Office its most
recent Annual Report as required, has never filed Articles of Dissolution,
has
the requisite power and authority (corporate and otherwise), to own its property
and conduct its business as such business presently is being conducted, and
is
qualified and in good standing as a foreign corporation in all jurisdictions
where such qualification is required. Borrower maintains its principal office
at
0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxx Xxxxxxxx, 00000. Borrower is authorized
to
become a bank holding company and is duly registered by the Board of Governors
of the Federal Reserve System under the Bank Holding Company Act of 1956, as
amended, and the regulations promulgated thereunder. Borrower owns all of the
outstanding shares of stock of Citizens and Farmers.
(b)
Citizens is a Kentucky banking organization, validly existing under the laws
of
the Commonwealth of Kentucky, has paid all fees due and owing to Kentucky and/or
regulatory entities and agencies, has never filed Articles of Dissolution,
is a
member in good standing of the Federal Deposit Insurance Corporation, is not
subject to any Order, Memorandum or Letter of Agreement with any bank regulatory
agency, and has all requisite power and authority (corporate or otherwise)
to
own its assets and to conduct its business as such business is presently being
conducted. Citizens does not own any property or carry on any activities that
do
or will require it to qualify to do business as a foreign organization in any
state other than Kentucky. Citizens presently has authorized, and has issued
and
outstanding 559,800 shares of Common Capital Stock, $1 par value. All of such
outstanding shares have been duly and validly issued, are fully paid and
non-assessable, have not been issued in violation of any person’s pre-emptive
rights and no options, rights or agreements to issue shares of Citizens exist.
Citizens has no subsidiaries.
(c)
Farmers is a Kentucky banking organization, validly existing under the laws
of
the Commonwealth of Kentucky, has paid all fees due and owing to Kentucky and/or
regulatory entities and agencies, has never filed Articles of Dissolution,
is a
member in good standing of the Federal Deposit Insurance Corporation, is not
subject to any Order, Memorandum or Letter of Agreement with any bank regulatory
agency (except for a Board Resolution entered into on October 30, 2006, at
the
direction of the Federal Deposit Insurance Corporation), and has all requisite
power and authority (corporate or otherwise) to own its assets and to conduct
its business as such business is presently being conducted. Farmers does not
own
any property or carry on any activities that do or will require it to qualify
to
do business as a foreign organization in any state other than Kentucky. Farmers
presently has authorized, and has issued and outstanding 18,750 shares of Common
Capital Stock, $25 par value. All of such outstanding shares have been duly
and
validly issued, are fully paid and non-assessable, have not been issued in
violation of any person’s pre-emptive rights and no options, rights or
agreements to issue shares of Farmers exist. Farmers has no
subsidiaries.
3.2
Authorization.
Borrower has full right, power and authority to execute and deliver this
Agreement, the Term Note and Promissory Note, Stock Pledge and Security
Agreement and other documents supplemental thereto, and to consummate the
transactions contemplated hereby and thereby, and such actions have been duly
and validly authorized by all necessary corporate actions. The documents
executed by Borrower will be valid, legal and binding obligations, enforceable
and in accordance with their respective terms.
3.3
Financial
Statements.
Borrower has delivered to Bankers’ audited financial statements for Borrower,
consolidated with its subsidiaries for the twelve month period ended December
31, 2005, and they are hereby certified by Borrower to be complete and accurate
in all respects. (“Financial Statements”). To the best of Borrower’s knowledge,
after good faith investigation, the Financial Statements fairly present the
financial condition of Borrower and any banks owned by Borrower, respectively,
as of the date stated, and have been prepared in conformity with Generally
Accepted Accounting Principals applied on a consistent basis for such
periods.
3.4
Taxes.
Borrower and all of its subsidiaries have filed all tax returns which are
required to be filed and each such party has paid, or has made adequate
provision for the payment of, all taxes which are, or may become, due pursuant
to such returns or to assessments received by each of them and neither of them
has been advised of or is aware of any deficiency with respect to any such
periods which has not been paid or settled except for a deficiency of
approximately $56,000 which is being contested.
3.5
Litigation.
There are no actions or proceedings pending, or to the knowledge of Borrower,
threatened, against or effecting Borrower or its subsidiaries, or any of the
rights or properties of any of them in any Court or before any governmental
authority, or in any other forum, which involve the possibility of materially
or
adversely affecting Borrower’s, or its subsidiaries, their respective
businesses, properties or rights, or the ability of Borrower to comply with
the
provisions of this Agreement and the documents supplemental hereto, and neither
Borrower nor its subsidiaries is in default with respect to any Order or
directive of any Court or governmental authority.
3.6
Compliance
with Instruments.
Neither Borrower nor its subsidiaries are, to the extent applicable, in default
under or violating:
(a)
Any provisions of their respective Articles of Incorporation or By-Laws;
or
(b)
Any indenture, agreement, deed, lease, loan agreement, note or other instrument
to which it is a party or is bound or to which it or its assets is subject.
Neither the execution or delivery of this Agreement, the Term Note and
Promissory Note, or the documents supplemental thereto, nor the consummation
of
the transactions contemplated therein, nor compliance with the terms, conditions
or provisions thereof, will (i) conflict with or result in the breach of, or
constitute a default under, any of the foregoing, (ii) result in the creation
of
any lien or encumbrance upon the assets of Borrower or its subsidiaries, other
than the lien created thereby, or (iii) violate, or cause Borrower or its
subsidiaries to violate, any statute, law, rule, regulation, interpretation
or
ordinance of any governmental authority. No Event of Default, or condition
which
could reasonably result in an Event of Default, has occurred or is
continuing.
3.7
Enforceability.
No registration with, notice to, consent or approval of any third party,
including any governmental agency of any kind, is required for the due execution
and delivery, or the enforceability of, this Agreement, or the documents
supplemental hereto, or for the consummation of the loan transactions specified
herein.
3.8
Disclosure.
Neither this Agreement, nor the Financial Statements referred to in Section
3.3
hereof, nor any other document, certificate or statement referred to herein,
or
furnished to Bankers’ by or on behalf of Borrower in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein
not
misleading. There is no fact which does or may materially or adversely effect
the business, operations, affairs, prospects or condition of Borrower or its
subsidiaries, or any of the properties or assets of any of them, which has
not
been specifically identified in this Agreement or in the Financial Statements.
3.9
Special
Contracts.
Except as specified in Attachment 3.9, there are no contracts or agreements
of
Borrower or Citizens or Farmers, which:
(a)
Require any of them to repurchase any assets previously sold by them except
for
repurchase agreements entered into in the ordinary course of business;
or
(b)
Obligate Borrower beyond one year or in an amount greater than Five Hundred
Thousand ($500,000) Dollars; or
(c)
Obligate Citizens or Farmers beyond one year or in an amount greater than One
Hundred Thousand ($100,000) Dollars; or
(d)
Are otherwise material to the business of any of them.
3.10
Title
to Shares and Assets.
Except as specified on Attachment 3.10, Borrower and Citizens and Farmers have
good and marketable title to all their assets and property. None of the Shares
of Citizens or Farmers covered by this Agreement are subject to any lien,
charge, pledge, encumbrance, claim or security interest other than Bankers’
created hereby, nor are those shares subject to a voting trust or any other
agreement or understanding which effects the ability of Borrower to vote or
dispose of them. Other than liens or encumbrances permitted hereunder, there
are
no liens or encumbrances existing with respect to any assets of Borrower or
Citizens or Farmers, except as specified on Attachment 3.10.
3.11
Compliance
with Laws.
Borrower and Citizens and Farmers are in compliance with all applicable
governmental, occupational safety and health, workers compensation laws and
regulations applicable to the conduct of their business and the ownership of
their properties and they have obtained such licenses, permits, and governmental
authorizations as are necessary to the carrying on of their
businesses.
3.12
Use
of Proceeds.
Borrower shall use the proceeds of the Term Note solely and exclusively to
retire all of the trust preferred securities Borrower has outstanding. Borrower
shall use the proceeds of the Promissory Note for general corporate purposes
(not including retiring trust preferred securities).
3.13
Loans
and Allowance for Loan and Lease Losses.
Each of the allowances for possible loan and lease losses and any allowance
for
real estate owned for Citizens and Farmers is adequate (i) in all material
respects to provide for all known and anticipated losses of each of them and
(ii) in all material respects under the requirements of GAAP and standard
banking practice to provide for possible losses, net recoveries relating to
loans and leases previously charged off, on loans outstanding, lease receivables
or real estate owned by them (including, without limitation, accrued interest
receivable).
3.14
Repurchase
Agreements.
With respect to all repurchase agreements to which Borrower, Citizens or Farmers
is a party, (i) where either Borrower, Citizens or Farmers has the obligation
to
sell securities, it has a valid, perfected first lien or security interest
in
the government securities or other collateral securing the repurchase agreement,
and the value of the collateral securing each such repurchase agreement equals
or exceeds the amount of the debt secured by such collateral under such
agreement, and (ii) where either Borrower, Citizens or Farmers has the
obligation to buy securities, the value of the collateral securing such
obligation does not materially exceed the amount of the obligation.
3.15
Absence
of Changes.
Except as specified on Attachment 3.15, since December 31, 2005, the business
of
Borrower and its subsidiaries has been conducted in the ordinary course of
business and none of said entities has otherwise:
(a)
experienced or suffered any material adverse change in their assets, revenue
or
business;
(b)
borrowed or agreed to borrow any funds or incurred, or become subject to, any
other absolute or contingent obligation or liability, or guaranteed any
liabilities or obligations of any other person;
(c)
created any encumbrance with respect to its properties, business or
assets;
(d)
sold, pledged, transferred or otherwise disposed of, or agreed to sell, transfer
or otherwise dispose of any portion of its assets, properties or rights, except
in the ordinary course of business;
(e)
incurred or become subject to any claim or liability for any damages which
could
have a material adverse effect on it, for negligence or any other tort, or
for
breach of contract;
(f)
entered into any contract other than in the ordinary course of business;
(g)
forgiven or canceled any debts or claims, or waived or permitted to lapse any
rights, other than in the ordinary course of business; or
(h)
committed any act or omitted to do any act which would cause a breach of any
contract to which it is a party or by which it is bound on the date hereof,
which breach may reasonably result in a material adverse effect.
3.16
Environmental
Matters.
Except as specified on Attachment 3.16, apart from non-compliance which could
not have a material adverse effect, Borrower, Citizens and Farmers have
complied, and are currently in compliance, with all Environmental Laws, and
neither of Borrower, Citizens or Farmers, nor any assets at any time owned,
leased, operated or held as collateral by any of them is or has been (to their
knowledge) in violation of any Environmental Laws. There are (to the knowledge
of Borrower, Citizens or Farmers) no locations at any real estate or facilities
now or heretofore owned, leased, operated or held as collateral by them or
at
which they have disposed of (or arranged for the disposal of) hazardous
materials, where hazardous materials have caused conditions in the environment
that require or required remedial action in order to comply with Environmental
Laws, or the common law of nuisance, or which locations are the subject of
any
governmental body enforcement action or other investigation under any
Environmental Laws, which may lead to any material adverse consequences for
Borrower, Citizens or Farmers.
3.17
ERISA.
Each employee benefit plan, including these defined in Section 3(3) of ERISA,
which is maintained by Borrower, Citizens or Farmers for the benefit of their
employees is in compliance with all applicable requirements of ERISA, the
Internal Revenue Code and other applicable laws. No Reportable Event within
the
meaning of Section 4043 of ERISA has occurred and is outstanding with regard
to
any such employee benefit plan.
3.18
Contract
Status.
Borrower, Citizens or Farmers is not in default under any contract, entered
into
in the ordinary course of business or otherwise, which default is reasonably
likely to result in a material adverse effect with respect to Borrower, Citizens
or Farmers.
3.20
Full
Disclosure.
None of the representations, warranties and statements of Borrower made in
this
Section III or in any other provisions of this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make
the statements therein, in light of the circumstances under which they were
made, not misleading.
IV.
Covenants.
Borrower
covenants that so long as this Agreement is in effect and until all obligations
of Borrower to Bankers’ have been paid or satisfied in full, Borrower shall
comply with the following covenants and shall take all necessary and appropriate
action to cause its subsidiaries, as applicable, to so comply and therefore,
warrants and agrees to their respective compliance with the following
covenants:
4.1
Financial
Statements and Other Information.
If not available through electronic media, within the time frames specified,
Borrower shall furnish to Bankers’ (i) copies of all Call and other Reports
submitted by them to any Federal regulatory agency having or claiming
supervisory authority over Borrower, Citizens or Farmers, promptly after such
reports are submitted; (ii) if not included within the reports described in
Subsection (i) of this sentence, copies, at least quarterly within forty-five
(45) days after the end of each fiscal quarter of Citizens or Farmers, of the
reports submitted to any federal agency which disclose the “average daily
assets” and the “average net outstanding loans” of Citizens and Farmers, or if
no reports containing such information are so submitted, a calculation in
reasonable detail of such amounts certified as correct by their Chief Executive
Officer(s) and Chief Financial Officer(s); (iii) as soon as practicable, and
in
any event within ninety (90) days after the end of each fiscal year, an annual
audit, including an audit of the balance sheet of Borrower on a consolidated
basis with its subsidiaries, as of the end of the applicable fiscal year, and
related audited statements of operations, changes in stockholders’ equity and
cash flows for such years, setting forth in comparative form the figures for
such fiscal year and the prior fiscal year, prepared in reasonable detail,
and
in conformity with Generally Accepted Accounting Principles accompanied by
an
opinion of Borrower’s Certified Public Accountants stating such facts, it being
agreed that Bankers’ personnel shall have the right to on site review of the
management report of such accounting firm to the Board of Directors of Borrower;
and (iv) with reasonable promptness, such other information concerning the
business affairs and financial condition of Borrower and its subsidiaries as
Bankers’ may reasonably request.
In
conjunction with Borrower’s delivery of the information specified above,
Borrower shall also submit a Certificate stating that there exists no Event
of
Default under this Agreement at the time of delivery. Borrower will, and will
cause Citizens and Farmers, upon obtaining knowledge of an Event of Default,
or
any facts or events which could reasonably lead to an Event of Default
hereunder, to deliver within three (3) days of obtaining such knowledge to
Bankers’ a Certificate specifying the nature thereof, the period of existence
thereof, and what action has been taken or is proposed to be taken with respect
thereto.
4.2
Financial
Records and Assets.
Borrower and its subsidiaries shall: (i) keep true and complete financial
records in accordance with Generally Accepted Accounting Principles consistently
applied; (ii) maintain and make readily available to Bankers’ the books and
records of each of them at their principal offices; and (iii) permit authorized
representatives of Bankers’ to visit and inspect their respective properties and
books and records, upon reasonable notice, and to discuss said matters with
their respective officers and directors at reasonable times.
4.3
Insurance.
Borrower, Citizens and Farmers shall each procure, maintain and carry in full
force and effect general liability, public liability, workmens’ compensation
liability and property damage insurance with respect to their respective
operations to such extent, in such amounts and with such deductibles as are
commonly carried by prudent businesses similarly situated, and shall cause
Citizens and Farmers to obtain and maintain “standard bankers bond insurance”
protecting it from loss.
4.4
Obligations.
Borrower and its subsidiaries, respectively, shall pay in full, and when due,
all taxes, assessments, governmental charges and levies (except those being
contested in good faith) and all obligations for, or on account of, borrowed
funds.
4.5
Corporate
Existence.
Borrower and its subsidiaries will do or cause to be done all things necessary
to preserve in good standing and keep in full force and effect the corporate
existence and rights and franchises of Borrower and its subsidiaries, and to
comply with all applicable laws and regulations applicable to them.
4.6
Maintenance
of Properties.
Borrower, Citizens and Farmers will maintain in good repair, working order
and
condition all property owned by them or used in their businesses.
4.7
Disclosure.
Borrower and its subsidiaries shall promptly notify Bankers’ of any fact or
event, including the institution of any litigation, investigation or proceeding,
which could reasonably have a material adverse effect upon the businesses or
assets of any of them, or their subsidiaries, and shall provide prompt notice
to
Bankers’ of any default by any of them under any obligation, deed, indenture,
liability, indebtedness, agreement, contract or note or other instrument or
document to which any of them is a party, of any breach or failure of any
covenant made herein, and of any proceeding, investigation, order, judgment,
memorandum or letter of agreement against Borrower or its subsidiaries affecting
or relating to any property or business of Borrower or its subsidiaries in
any
material adverse respect.
4.8
Performance
Agreements.
Unless disputed in good faith, Borrower and its subsidiaries shall comply with
all their respective agreements and obligations to and with all parties, and
will not permit any event or fact to exist which could have a material adverse
effect upon their businesses or assets.
4.9
Compliance
with Laws.
Borrower and its subsidiaries shall comply with all applicable material laws,
regulations and orders, so long as the applicability thereof is not being
continuously and promptly contested in good faith, but in any event, each shall
promptly advise Bankers’ of any such contest, and the pertinent facts applicable
thereto.
4.10
Use
of Proceeds.
Borrower shall not, directly or indirectly, use any part of the Credit Facility
provided for under this Agreement for any purpose other than as provided for
herein.
4.11
Loan
to Officers and Directors.
Borrower shall cause Citizens and Farmers to be in continuous compliance with,
and shall not violate, the provisions of Regulation O as promulgated by the
Federal Reserve Board of Governors.
4.12
Dividend
and Stock Ownership Restriction.
Citizens and Farmers may pay, declare or make any dividend payments during
any
calendar year during the term of this Agreement in compliance with both federal
and Kentucky law; provided, however, that at no time shall Borrower’s
outstanding obligations to Bankers’ under this Credit Facility exceed
seventy-five (75%) percent of the combined equity of Citizens and Farmers.
So
long as this Agreement is in effect, neither Citizens nor Farmers shall return
any capital to their stockholders as such or make any distribution of assets
to
their stockholders, and neither Citizens nor Farmers shall create or issue
any
new shares of any class of stock without prior written consent of Bankers’.
Borrower will continue to own l00% of the outstanding capital stock of Citizens
and Farmers, all of such shares of Citizens and Farmers to be free and clear
of
all liens, encumbrances or any cloud of title whatsoever, except as granted
to
Bankers’ hereunder. Bankers’ shall continue to hold and own a first priority
security interest in and to one hundred (100%) percent of the issued and
outstanding capital stock of Citizens and Farmers. Citizens and Farmers shall
issue no additional capital stock without the prior written consent of Bankers’.
4.13
Limitation
of Debt or Stock Issuances.
Borrower shall not incur debt except in the ordinary course of its business.
Neither Citizens nor Farmers shall issue bonds, debentures, trust preferred
securities, capital or other notes, or debt of similar nature. Farmers and
Citizens shall be permitted to borrow from the Federal Home Loan Bank on a
short
and/or long term basis in the ordinary course of business.
4.14
Limitation
on Encumbrances.
Neither Borrower nor its subsidiaries will directly or indirectly, subordinate
to any other person the payment of any indebtedness owed by any person to any
of
them, nor, except as specified on Attachment 3.10, shall they incur, create,
assume or suffer to exist, any pledge, lien or encumbrances upon any properties
or assets owned by any of them, except for security interest held by Bankers’,
but so long as no other provision of this Loan Agreement and the documents
supplemental hereto is violated, the following are permitted:
(a)
Mechanics, materialmens, carriers and other similar liens incurred in the
ordinary course of business; and
(b)
Liens of taxes or assessments not at the time due, or the liens of taxes or
assessments already due, but the validity of which is being contested in good
faith and which adequate reserves have been established; and
(c)
Judgment liens, so long as the finality of such Judgment is being contested
in
good faith and execution thereon is stayed; and
(d)
Easements, zoning restrictions or similar defects, encumbrances or restrictions
the existence of which does not impair the use of the property subject thereto;
and
(e)
Actions appropriate under customary banking practices in dealing with past-due
“work-out” loans.
4.15
Contingent
Liabilities.
Except for customary actions and procedures under the Gold Medallion Guaranty
Program, neither Borrower nor its subsidiaries will guarantee or become a surety
for or otherwise become contingently liable for any obligations of any other
person.
4.16
Lease
Obligation.
Except as specified on Attachment 4.16, without Bankers’ prior written consent,
which shall not be unreasonably withheld by Bankers’, neither Borrower, Citizens
nor Farmers will enter into any arrangements with any person involving the
leasing by one or either of them of any real or personal property or interest
therein which requires payment with respect to Borrower in excess of Five
Hundred Thousand ($500,000), in the aggregate, or with respect to either
Citizens or Farmers in excess of One Hundred Thousand ($100,000) Dollars in
aggregate in any calendar year.
4.17
Subsidiaries.
Except as presently existing, neither of Borrower, Citizens nor Farmers shall
create or acquire any subsidiaries without Bankers’ prior written consent, which
shall not be unreasonably withheld.
4.18
Amendment
to Articles or By-Laws.
Neither Citizens nor Farmers will amend their respective Articles of
Incorporation or any material provisions of their By-Laws, without the prior
written consent of Bankers’.
4.19
Transactions
with Affiliates.
Neither Borrower, Citizens nor Farmers shall make any advances to, or enter
into
any contract or agreement material to the business of either of them, with
any
affiliate, other than in the ordinary course of banking business, without the
prior written consent of Bankers’, which shall not be unreasonably
withheld.
4.20
Sale
of Assets, Merger, Dissolution.
Neither Borrower, Citizens nor Farmers shall dispose of all or substantially
all
their assets, or any portion of their assets which are material to either of
them, their business operations or their financial condition, except in the
ordinary course of business. None of them shall purchase all or substantially
all of the assets of any person, purchase, create or acquire any interest in
any
other enterprise or entity, liquidate, dissolve, consolidate or merge with
any
other person or effect a split, reverse split, recapitalization, reorganization,
reclassification or take any similar corporate action without the prior written
consent of Bankers’.
4.21
Financial
Condition.
The financial condition of Borrower, Citizens and Farmers, shall at all times
be
acceptable to Bankers’, in its sole discretion.
4.22
Hazardous
Waste.
Except as specified at Attachment 3.16, neither Borrower nor its subsidiaries
have or will permit to be stored or released or discharged upon, in or under
any
premises or property owned or leased by them, any toxic materials or hazardous
substance as defined under applicable federal and state law; nor do either
of
them have any knowledge of the prior storage of any such substance or material
in, on or under any of their respective properties, nor do either of them have
any knowledge of any environmental spill, damage or release or any environmental
lien on any of their respective properties.
4.23
Conduct
of Business in Ordinary Course.
Without in any way limiting or otherwise altering the terms, promises, covenants
and agreements contained herein, Borrower nor its subsidiaries shall not engage
in any transaction other than in good faith in the ordinary course of
business.
4.24
Regulatory
Proceedings.
Borrower shall notify Bankers’ in writing within three (3) business days should
Borrower, Citizens, or Farmers become subject to any Order, Memorandum, Letter
of Agreement or any proceeding instituted by any governmental regulatory agency
having jurisdiction over any of them. Upon such notice, Borrower shall provide
Bankers’ with a plan of action addressing any such proceeding within 90 calendar
days of the effective date of the proceeding. Furthermore, Borrower shall
provide updates as to the progress toward achieving satisfactory resolution
of
any such proceeding within 30 days of each March 31, June 30, September 30
and
December 31 of each year during the term of this Loan Agreement and such
information pertaining to the proceedings as Bankers’ may request at any
time.
4.25
Financial
Status.
Citizens and Farmers shall maintain at the end of each fiscal quarter a ratio
of
Tier 1 Capital to Risk Based Assets and a ratio of Total Qualifying Capital
to
Risk Based Assets, in amounts to qualify as, and meet the criteria of, “well
capitalized” as specified and defined by the Federal Deposit Insurance
Corporation.
4.26
Return
on Assets.
Citizens shall maintain a rate of Net Income to Total Assets of a minimum of
.75
percent for each fiscal year this Credit Facility is in effect. Farmers shall
maintain such a ratio of 0.5 percent for fiscal year 2007, 0.6 percent for
fiscal year 2008, and .75 percent for each fiscal year thereafter that this
Credit Facility is in effect.
4.27
Loan
Loss Reserve.
Each of Citizens and Farmers shall, at all times, maintain an adequate loan
loss
reserve to provide for all of its known and anticipated losses and adequate
under the requirements of GAAP and standard banking practices. Adequacy shall
be
calculated using the methodology determined by Citizens and Farmers and approved
by their Boards of Directors and validated by their primary bank regulatory
agency. The reserve shall be at least equal to the lowest amount calculated
to
be adequate under their methodology and shall be reported promptly to Bankers’
as of December 31, March 31, June 30 and September 30 of each year.
4.28
Designation
of Loans as Non-Accruing.
Citizens and Farmers shall place each loan made by either of them or in which
they have purchased a non-recourse participation interest on a non-accrual
basis
on their books and records in accordance with the requirements and guidelines
of
the governmental body having jurisdiction over Citizens and
Farmers.
4.29
Non-Performing
Loans.
(A)
Citizens shall not permit the sum of (i) its aggregate unpaid principal and
accrued interest on loans and leases or in which it has purchased a non-recourse
participation and which is more than ninety (90) days past due, (ii) the
aggregate of its unpaid principal and accrued interest on loans and leases
or in
which it has purchased a non-recourse participation and which have been placed
in a non-accrual basis and (iii) the value on its books of other real estate
owned as determined by reference to its most recent quarterly report of
condition and income, to exceed (a) as of any two consecutive fiscal year ends
2% of the total loans and leases made by Citizens or in which it has purchased
a
non-recourse participation, net of unearned income or (b) as of its fiscal
year
ends, 5% of the total loans and leases made by Citizens or in which it has
purchased a non-recourse participation, in each case net of unearned
income.
(B)
Farmers shall not permit the sum of (i) its aggregate unpaid principal and
accrued interest on loans and leases or in which it has purchased a non-recourse
participation and which is more than ninety (90) days past due, (ii) the
aggregate of its unpaid principal and accrued interest on loans and leases
or in
which it has purchased a non-recourse participation and which have been placed
in a non-accrual basis and (iii) the value on its books of other real estate
owned as determined by reference to its most recent quarterly report of
condition and income, to exceed as of its fiscal year ending December 31, 2006,
6.5% of the total loans and leases made by Farmers or in which it has purchased
a non-recourse participation, in each case net of unearned income. Further,
with
respect to the fiscal year ending December 31, 2007, this percentage shall
decrease to 6% and with respect to the fiscal year ending December 31, 2008,
this percentage shall decrease to 5%. Thereafter, this percentage shall remain
below 5.0% with respect to each calendar quarter-end.
4.30
Principal
Office.
Borrower shall not change its principal office, or that of Citizens or Farmers,
without Bankers’ written consent, which shall not be unreasonably withheld by
Bankers’.
V.
Events
of Default
Each
of the following shall constitute an Event of Default under this Agreement
(whether the occurrence of same shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of
any
governmental body):
5.1
Payments.
Failure to make payment of the principal of, or interest or cost upon, the
Term
Note or the Promissory Note within ten (10) days after the due date of such
payment.
5.2
Covenants
and Agreements.
If any covenant or agreement required pursuant to this Agreement, the Term
Note
and Promissory Note, the Stock Pledge or Security Agreement or any other
documents supplemental thereto, (other than as referred to in Section 5.1 above)
to be kept or performed by Borrower or its subsidiaries, shall not be kept
or
performed and such failure or breach shall not be remedied within the time
period, if any, provided in any such loan document; provided that in the case
of
a breach of any provision of this Loan Agreement, such failure or breach shall
not be remedied within thirty (30) days after Bankers’ provides Borrower with
notice of such breach. Borrower shall be strictly liable and accountable for
any
such default by such other person specified.
5.3
Other
Obligations.
If any default shall be made in the due and punctual payment or performance
of
any of the other obligations of Borrower or its subsidiaries other than the
Agreement, the Term Note or the Promissory Note or the Stock Pledge and Security
Agreement, and such default shall not be remedied within thirty (30) days after
the date for such payment and/or performance.
5.4
Representations
and Warranties.
If any representation or warranty contained herein shall be untrue at the time
when made or during the terms of this Agreement.
5.5
Judgments
and Liens.
If a final judgment or judgments for the payment of money in excess of the
sum
of Two Hundred Fifty Thousand ($250,000) Dollars in the aggregate shall be
rendered against either Borrower, Citizens or Farmers and such judgment or
judgments shall remain unsatisfied and in effect and shall not have been
discharged by the last to occur of: (i) the expiration of thirty (30)
consecutive days after the entry thereof, if execution thereon shall not have
been stayed pending appeal, or (ii) if so stayed, thirty (30) days after the
expiration of such stay; or if a lien or notice of lien is filed against any
of
Borrower’s, Citizens’ or Farmers’ assets (other than a lien of ad valorem taxers
not yet due and payable or any mechanics’ or materialmen or suppliers’ lien
filed pursuant to applicable law for monies not yet due and payable), and the
same is not released within twenty (20) days after the filing
thereof.
5.6
Solvency.
If Borrower or any banking subsidiary of Borrower, as applicable, shall (a)
discontinue business; or (b) make a general assignment for the benefit of
creditors; or (c) apply for or consent to the appointment of a receiver, trustee
or liquidator of all or a substantial part of their assets; (d) be adjudicated
bankrupt or insolvent; or (e) file a voluntary petition in bankruptcy or file
a
petition or answer seeking reorganization or an arrangement with creditors
to
seek to take advantage of any other law (whether federal or state) relating
to
relief from debtors, or admit (by answer, default or otherwise) the material
allegations of any involuntary petition filed against it in any bankruptcy,
reorganization, insolvency or other proceeding (whether federal or state)
relating to relief from debtors; or (f) suffer the filing of any involuntary
petition in any bankruptcy, reorganization, insolvency or other proceeding
(whether federal or state), if the same is not dismissed within thirty (30)
days
after the date of such filing; or (g) suffer or permit any judgment, decree
or
order entered by a court or governmental agency of competent jurisdiction which
assumes control of any of them or approves a petition seeking reorganization,
composition or arrangement of any of them or any other judicial modification
of
the rights of any of their respective creditors, or appoints a receiver, trustee
or liquidator for any of them or for all or a substantial part of any of the
businesses or assets of any of them; or (h) be enjoined or restrained from
conducting all or a material part of any of the businesses as then conducted
and
the same is not dismissed and dissolved within thirty (30) days after the entry
thereof.
5.7
Impairment
of Permits, Security of Payment.
If Borrower, Citizens or Farmers shall fail to seek, gain, obtain, and retain
all licenses, permits and all other approvals of any governmental agency or
other person necessary to continue their respective businesses.
5.8
Borrower
Impairment.
If Bankers’, at any time in good faith, shall deem itself insecure or shall
determine that a substantial likelihood exists that Borrower will be unable
to
repay the Credit Facility in accordance with its terms, or perform the other
obligations of Borrower to Bankers’ arising under this Agreement or any other
document supplemental hereto.
5.9
Change
of Control.
If Borrower, Citizens or Farmers experiences a Change of Control as defined
by
applicable laws and regulations of federal and state agencies.
VI.
Rights
and Remedies Upon Default.
Notwithstanding
any contrary provision or inference herein or elsewhere:
6.1
Bankers’
Right to Declare Default in its Sole Discretion.
If any Event of Default referred to in this Agreement entitled “Events of
Default”, except for Section 5.6 of that Article, shall occur or begin to exist,
Bankers’ may declare the Credit Facility, including the Term Note and the
Promissory Note, and each or all of the other obligations of the Borrower to
Bankers’ to be, whereupon the same shall be, immediately due and payable in
full, all without any presentment, demand or notice of any kind, all of which
are hereby expressly waived by Borrower; and
6.2
Automatic
Default.
If any Event of Default referred to in Section V of the Article of this
Agreement entitled “Events of Default” shall occur, the Credit Facility, and all
of Borrower’s other obligations to Bankers’ shall thereupon become immediately
due and payable in full, all without presentment, demand or notice of any kind,
all of which are hereby expressly waived by Borrower; and
6.3
Enforcement.
Immediately upon a declaration of a Default pursuant to Section 6.1 of this
Article or the occurrence of an Event of Default resulting in automatic Default
pursuant to Section 6.2 of this Article, Bankers’ may exercise any and all
rights at law or in equity to realize upon the security afforded herein or
under
any other loan document, including without limitation, the security secured
pursuant to the Stock Pledge and Security Agreement, the right to seize any
collateral securing the Credit Facility and the right to commence proceedings
for the foreclosure upon and sale of any or all of the collateral in any
sequence or order whatsoever and to pursue all remedies afforded under the
terms
of any Loan Document; and
6.4
Right
of Set-Off.
If any Event of Default or default conditions shall occur or begin to exist,
Bankers’ shall have the right then, or any time thereafter, to set off against,
and to appropriate and apply toward the payment of the unpaid principal of
and
accrued and unpaid interest on the Term Note and/or the Promissory Note, in
such
order as Bankers’ may select in its sole and absolute discretion, whether or not
the Term Note and/or the Promissory Note shall then have matured or be due
and
payable and whether or not Bankers’ has declared the Term Note or the Promissory
Note to be in default and immediately due and payable, any and all deposit
balances, other sums, indebtedness and other property then held or owed by
Bankers’ or for the credit or account of Borrower, and in and on all of which
Borrower hereby grants Bankers’ a first priority security interest and lien to
secure the payment of the Note, all without notice to or demand upon Borrower
or
any person, all such notices and demands being hereby expressly
waived.
6.5
Rights
Cumulative.
All of the rights and remedies of Bankers’ upon occurrence of an Event of
Default hereunder shall be cumulative to the greatest extent permitted by law
and shall be in addition to all those rights and remedies afforded Bankers’ at
law or in equity or bankruptcy.
VII.
Miscellaneous
7.1
Courses
of Dealing; No Waiver.
No course of dealing in respect of, nor any omission or delay in the exercise
of, any right, power, remedy or privilege by Bankers’ shall operate as a waiver
thereof, nor shall any right, power, remedy or privilege of Bankers’ be
exclusive of any other right, power, remedy or privilege referred to herein
or
in any related document, or now or hereafter available at law, in equity, in
bankruptcy, by statute or otherwise. Each such right, power, remedy or privilege
may be exercised by Bankers’, either independently or concurrently with others,
and as often and in such order as Bankers’ may deem expedient. Bankers’ shall
not be deemed to have waived any rights under this Agreement, unless such waiver
is given in writing and signed by Bankers’. No delay or omission on the part of
Bankers’ in exercising any right shall operate as a waiver of such right or any
other right. A waiver by Bankers’ of a provision of this Agreement shall not
prejudice or constitute a waiver of Bankers’ right otherwise to demand strict
compliance with that provision or any other provision of this Agreement. No
prior waiver by Bankers’, nor any course of dealing between Bankers’ and
Borrower, shall constitute a waiver of any of Bankers’ rights or of any of
Borrower’s obligations as to any future transactions. Whenever the consent of
Bankers’ is required under this Agreement, the granting of such consent by
Bankers’ in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be
granted or withheld in the sole discretion of Bankers’.
7.2
No
Oral Amendment.
No amendment or modification of any provision of the Loan Agreement, Note,
Stock
Pledge and Security Agreement, or documents supplemental thereto, nor consent
to
any departure by any party therefrom, shall be binding and effective unless
the
same shall be in writing and signed by Bankers’, which writing shall be strictly
construed.
7.3
Indemnification.
Borrower agrees to indemnify Bankers’, and to defend and hold harmless Bankers’,
its affiliates, officers, directors, employees and agents from, all claims,
demands, causes of action, damages, settlement costs and/or expenses (including
without limitation, attorneys’ fees of counsel selected by Bankers’ to defend)
which arise out of or in any way connected with the making, maintenance or
collection of the Credit Facility (including without limitation, claims,
demands, causes of action, damages, settlement costs and/or expenses resulting
from or involving the Borrower’s or its subsidiaries, acts or omissions, and
which are asserted by a third party). This Agreement and all obligations
provided for by this Section 7.3 shall survive the termination or cancellation
of this Agreement. All amounts due pursuant to these provisions shall constitute
a part of the Credit Facility, payable upon demand, and until all such amounts
are paid, interest shall accrue at the rate set forth in the Term Note and
Promissory Note as applicable to overdue payments of the principal and/or
interest.
7.4
Time
of Essence.
Time shall be of the essence in the performance of all of the obligations of
Borrower.
7.5
Successors.
The provisions of this Loan Agreement shall bind and benefit Borrower and
Bankers’, and the respective heirs, successors, legal representatives and
assigns of each of them, including each subsequent holder, if any, of the Term
Note and Promissory Note.
7.6
Captions.
The several captions, section heading and subsection headings of this Agreement
are inserted for convenience only and shall be ignored in interpreting the
provision of this Agreement.
7.7
Governing
Law.
This Agreement, the Note, and documents supplemental thereto and all other
related writings and the respective rights and obligations of the parties
thereto shall be construed in accordance with and governed by the laws of the
Commonwealth of Kentucky.
7.8
Severability.
The invalidity or unenforceability of any provision hereof shall not affect
or
impair the validity or enforceability of any other provisions.
7.9
Entire
Agreement.
This Agreement, the Term Note, the Promissory Note, the Stock Pledge and
Security Agreement and the documents supplemental thereto contain the final,
complete and exclusive agreement of the parties pertaining to its subject matter
and cancel and supersede all prior written and oral agreements pertaining
hereto.
7.10
Notices.
All notices required or permitted to be given hereunder shall be sufficient
if
given in writing and delivered personally, or delivered or sent by registered
or
certified mail, postage prepaid, addressed as follows:
Borrower: Xxxxxx
X. Xxxxxx, President/CEO
Premier
Financial Bancorp, Inc.
0000
0xx
Xxxxxx
Xxxxxxxxxx,
Xxxx Xxxxxxxx 00000
Bankers’: The
Bankers’ Bank of Kentucky, Inc.
Attention:
Xxxx Xxxxx, Executive Vice
President
Xxxx
Xxxxxx Xxx 000
Xxxxxxxxx,
Xxxxxxxx 00000
or,
as to each party, at such other address as such party shall have designated
in a
written notice to the party giving such notice or communication. All such
notices and communications shall be, when mailed, in accordance with the
foregoing, deemed given one (1) day following the date deposited in the United
States mails, first class mail, postage prepaid.
7.11
No
Third Party Beneficiaries.
The provisions of this Agreement shall inure to the benefit and responsibility
of the parties hereto, their heirs, successors and assigns (but only to the
extent such assignment is permitted herein) and shall not benefit or affect
any
third party.
7.12
Gender,
Number: Accounting Principles.
As used herein, any gender includes all other genders, the singular includes
the
plural, and the plural includes the singular. Except as otherwise provided
herein, all accounting terms used herein shall be defined in accordance with
Generally Accepted Accounting Principles.
7.13
Exhibits.
Any Exhibits and Attachments hereto, and all terms and provisions thereof,
are
deemed to be a part hereof as if fully set forth herein and are deemed to be
incorporated by reference herein.
7.14
Compliance
with Covenants.
Each covenant by the Borrower contained in the Article of this Agreement
entitled “Covenants” shall be construed without reference to any other such
covenant, and any determination of whether is in compliance with any such
covenant shall be made without reference to whether Borrower is in compliance
with any other such covenant.
7.15
Consent
to Jurisdiction and Venue; Waiver of Jury Trial.
BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT THE CIRCUIT COURTS
OF FRANKLIN COUNTY, KENTUCKY AND/OR UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF KENTUCKY, SITTING IN FRANKFORT, KENTUCKY, SHALL BE THE SOLE PROPER
VENUE FOR THE RESOLUTION OF ANY DISPUTES, CLAIMS OR PROCEEDINGS REGARDING THE
OBLIGATIONS AND LIABILITIES OF BORROWER UNDER THIS AGREEMENT AND BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A DETERMINATION OF ANY
SUCH
PROCEEDING AGAINST OR INVOLVING BANK BY A COURT IN ANY OTHER VENUE AND AGREE
NOT
TO PLEAD OR CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN THE CIRCUIT COURT OF
FRANKLIN COUNTY, KENTUCKY AND/OR THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF KENTUCKY, SITTING IN FRANKFORT, KENTUCKY, HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. BORROWER FURTHER AGREES THAT SERVICE OF PROCESS BY
ANY
JUDICIAL OFFICER OR BY REGISTERED OR CERTIFIED U.S. MAIL SHALL ESTABLISH
PERSONAL JURISDICTION OVER BORROWER AND BORROWER WAIVES ANY RIGHTS UNDER THE
LAWS OF ANY STATE TO OBJECT TO JURISDICTION WITHIN THE COMMONWEALTH OF
KENTUCKY.
7.16
Waiver
of a Jury Trial.
BORROWER HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED
IN
ANY COURT THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER ACKNOWLEDGES THAT THIS WAIVER
IS
A MATERIAL INDUCEMENT FOR BANK TO ENTER INTO A BUSINESS RELATIONSHIP WITH
BORROWER AND THAT BANK HAS ALREADY RELIED ON THE WAIVER IN ITS RELATED FUTURE
DEALINGS WITH BORROWER. BORROWER FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT (IF ANY). IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE
COURT.
7.17
Relationship
of the Parties.
Bankers’ and Borrower intend that the relationship between them be solely that
of creditor and debtor. Nothing contained in the Loan Documents shall be deemed
or construed to create a partnership, fiduciary relationship, joint venture
or
co-ownership by or between the parties herein. Bankers’ shall not, in any way,
be responsible or liable for the debts, losses, obligations or duties of
Borrower. All obligations to pay property or other taxes, assessments, insurance
on the collateral and all other fees and charges arising from the ownership
and
operation of the assets of Borrower shall be the sole responsibility of the
Borrower.
IN
WITNESS WHEREOF,
the parties have caused this Agreement to be signed by their duly authorized
representatives as of the date first set forth above.
The
Bankers’ Bank of Kentucky, Inc.:
/s/
Xxxx Xxxxx
By:
Xxxx Xxxxx
Title:
Executive Vice President
Premier
Financial Bancorp, Inc.:
/s/
Xxxxxx X. Xxxxxx
By:
Xxxxxx X. Xxxxxx
Title:
President/CEO
ATTACHMENTS
3.9 - Contracts
3.10 - Title
to Shares and Assets
3.15 -
Absence of
Changes
3.16 -
Environmental
Matters
4.16 -
Exceptions to Lease
Obligations
Schedule
3.9 Contracts
1.) Loan
Agreement dated January 31, 2006 between Borrower and First Guaranty Bank,
Hammond, Louisiana
2.) Data
processing contract dated December 20, 2004 between Borrower and Fiserv
Solutions, Inc. also obligating Farmers and Citizens for their respective
portions of services rendered.
3.) Item
processing contract dated December 30, 2004 between Borrower and Fiserv
Solutions, Inc. also obligating Farmers and Citizens for their respective
portions of services rendered.
4.) ATM
processing contract dated November 28, 2001 between Farmers and Fifth Third
Bank.
5.) ATM
processing contract dated November 28, 2001 between Citizens and Fifth Third
Bank.
6.) Overdraft
permission (Bounce Protection) contract dated November 9, 2001 between Citizens
and Pinnacle.
7.) Overdraft
permission (Bounce Protection) contract dated January 31, 2003 between Farmers
and Pinnacle.
8.) Internet
access and xxxx payment services contract dated March 14, 2005 between Citizens
and Funds Xpress.
9.) Checkbook
printing services contract dated February 23, 2006 between Borrower and Xxxxxx
American.
Schedule
3.10 Title to Shares and Assets
1.) Loan
Agreement dated January 31, 2006 between Borrower and First Guaranty Bank,
Hammond, Louisiana encumbering Borrower’s stock ownership of Xxxxx County Bank,
Inc.
2.) Standard
FHLB blanket lien on 1-4 family mortgages at Citizens to secure the following
FHLB borrowings:
$2,000,000
bullet
maturity on May 3, 2010
$2,000,000 bullet maturity on May 24, 2010
3.) Standard
FHLB blanket lien on 1-4 family mortgages at Farmers to secure the following
FHLB borrowings:
$1,000,000
amortizing 10 year note maturing on March 9, 2011,
Sept
30, 2006 balance, $407,905$2,000,000
amortizing 10 year note maturing on March 27, 2011,
Sept
30, 2006 balance, $811,045
$400,000
amortizing 10 year note maturing on April 4, 2011,
Sept
30, 2006 balance, $165,000
$1,000,000
amortizing 10 year note maturing on June 1, 2011,
Sept
30, 2006 balance, $427,791
$1,500,000
amortizing 10 year note maturing on June 5, 2011,
Sept
30, 2006 balance, $640,262
$1,200,000
amortizing 10 year note maturing on October 31, 2011,
Sept
30, 2006 balance, $554,659
$1,500,000
amortizing 10 year note maturing on June 11, 2012,
Sept
30, 2006 balance, $625,774
4.) FHLB
holds bonds totaling $4,400,000 face value $4,323,000 market value as of
September 30, 2006 in safekeeping as collateral securing the FHLB borrowings
at
Farmers detailed in item 3 above.
5.) Citizens
and Farmers routinely pledge investment portfolio securities in the normal
course of business to collateralize certain deposits from customers that
exceed
$100,000. The aggregate pledged balance is reported quarterly in the FDIC
call
report on Schedule RC-B.
Schedule
3.15 Absence of Changes
Since
December 31, 2005 the following events have occurred:
1.) Borrower
entered into a $7.0 million loan agreement dated January 31, 2006 with First
Guaranty Bank, Hammond, Louisiana. The proceeds were used to redeem $7.0
million
of Trust Preferred Securities outstanding. After the redemption there were
$8.25
million of Trust Preferred Securities still outstanding.
2.) A
decision was made to terminate in due course the trust department line of
business at Farmers. This process is on-going as trust agreements expire
and are
not renewed.
Schedule
3.16 Environmental Matters
1.) Mt.
Xxxxxx Financial Holdings, Inc. (Mt. Xxxxxx), a wholly owned non-banking
subsidiary of Borrower, owns title to a tract of land acquired through
foreclosure that was once a Petroleum Storage Tank Facility. In preparing
the
property for sale, Mt. Xxxxxx contracted for remedial environmental clean-up
services in order to secure compliance with the 401 KAR 100:030 remediation
requirements. Notice of such compliance was obtained from the Kentucky Division
of Waste Management in a letter dated October 14, 2005 whereby no further
action
was required.
Schedule
4.16 Exceptions to Lease Obligations
1.) Lease
agreement between Borrower and River City Properties, LLC (“lessor”) dated
September 1, 2002.
2.) Lease
agreement between Citizens and Triad Exchange, LLC (“lessor”) dated March 9,
2004.
3.) Lease
agreement between Citizens and Bee Mart Express, Inc. now FDE Properties
(“lessor”) dated September 18, 1997.
