REVOLVING LOAN AGREEMENT
Exhibit
10.2
THIS
REVOLVING LOAN AGREEMENT ("Agreement") is made this 29th day
of
September, 2006, by and between LEGENT GROUP, LLC, a Delaware limited liability
company ("Borrower") and UNITED WESTERN BANK, a Colorado banking corporation
("Lender").
RECITALS
A. Borrower
is the sole owner of Legent Clearing, LLC, a Delaware limited liability company
("Legent Clearing"). Legent Clearing provides correspondent clearing services
for the securities industry.
B. Borrower
has requested and applied to Lender for a loan not to exceed Five Million and
No/100ths Dollars ($5,000,000.00) ("Loan") to permit it to provide funds to
Legent Clearing in the event such funds are necessary to facilitate the
operation of Legent Clearing.
C. Lender
has agreed to provide such Loan to Borrower upon the condition that any advance
made upon the Loan be utilized only for the purposes and pursuant to the terms
and conditions contained herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE
1
INCORPORATION
OF RECITALS
1. Incorporation
of Recitals.
The
foregoing preambles and all other recitals set forth herein are made a part
of
this Agreement.
ARTICLE
2
BORROWER'S
REPRESENTATIONS AND WARRANTIES
1. Representations
and Warranties.
To
induce Lender to execute this agreement and perform the same, Borrower hereby
represents and warrants as follows:
(a) The
Borrower is a duly organized and validly existing limited liability company,
in
good standing under the laws of the State of Delaware and is duly qualified
to
do business and is in good standing in each jurisdiction within the conduct
of
its business or the ownership or operation of its properties require such
qualification;
(b) Legent
Clearing is a duly organized and validly existing limited liability company,
in
good standing under the laws of the State of Delaware and is duly qualified
to
do business and is in good standing in each jurisdiction within the conduct
of
its business or the ownership or operation of its properties require such
qualification;
(c) That
the
execution and performance of this Agreement are permitted under Borrower's
governing documents;
(d) That
no
conditions exist that would prevent Borrower or Legent Clearing from fully
complying with the conditions and provisions of this Agreement within the time
limits provided;
(e) That
no
litigation or proceedings are pending or threatened that could or might
materially affect Borrower's or Legent Clearing's ability to perform this
Agreement;
(f) That
Borrower has full power and authority to execute, deliver, and perform this
Agreement and all other applicable documents to which Borrower is a
party;
(g) That
the
execution, delivery, and performance of this Agreement, the execution and
payment of the Promissory Note, as described below, have not constituted and
will not constitute a breach or default under any other agreement under which
Borrower is a party or may be bound or affected, or violation of any law or
court order that may affect the Borrower;
(h) That
all
financial statements and other information previously furnished by Borrower
and
Legent Clearing to Lender in connection with the Loan hereunder are true,
complete, and correct in all material respects, and that no material adverse
change has occurred since the furnishing of such statements and
information.
2. Borrower
agrees that all of said representations and warranties will be true at the
date
of the execution of this Agreement and at all times thereafter.
ARTICLE
3
TERMS
OF
LOAN AND DOCUMENTS
1. Agreement
to Borrow and Lend.
Subject
to the terms and conditions herein contained, Borrower agrees to borrow from
Lender and Lender commits to lend to Borrower a revolving loan in an amount
that, in the aggregate, will not exceed a total outstanding and committed Loan
amount of $5,000,000.00 at any one time.
2. Method
of Disbursements.
This
Loan is a revolving loan, which contemplates disbursements by and repayments
to
Lender of portions of the Loan in accordance with the terms and conditions
herein. Borrower shall provide a written request to Lender for any advance
hereunder, which may be sent by hand delivery or by telecopy. Upon receipt
of
such written request, Lender shall promptly transfer the amount of the requested
advance to an account designated by Borrower.
3. Loan
Origination Fee.
Borrower shall pay to Lender a loan origination fee equal to $50,000.00, which
shall be payable at the execution of this Agreement.
4. Loan
Documents.
Borrower agrees that it will execute and deliver or deliver to Lender the
following documents in form, substance, and execution acceptable to
Lender:
(a) Promissory
Note payable to the order of Lender in accordance with the terms of this
Agreement;
2
(b) Security
Agreement pledging the 100% member's interest in Legent Clearing owned by
Borrower, together with all stock owned by Borrower in Xxxx Xxxx Securities
Group, Inc. ("Xxxx Xxxx") and all warrants held by Legent Clearing to purchase
shares of common stock of in Xxxx Xxxx;
(c) Unconditional
Limited Guarantees and Subordinations of Xxxxx X. Xxxxxx and Xxxxx Xxxxxxxxx
("Guarantors"); and
(d) Evidence
satisfactory to Lender as to the power and authority of the persons executing
this Agreement, the Promissory Note, and the Security Agreement to act for
and
bind the executing entity.
5. Interest.
Notwithstanding the rate of interest, time of accrual, or time for payment
thereof to be provided for in the Note:
(a) Said
interest shall be computed only upon advances of proceeds made hereunder from
and after the date of each advance; and
(b) Said
interest shall be computed on the basis of a 360-day year, but for the actual
number of days in the period for which interest is charged.
6. Interest
After Acceleration or Maturity.
Any
principal not paid when due shall bear interest at the Default Rate of the
Promissory Note.
ARTICLE
4
LOAN
EXPENSE AND ADVANCES
1. Loan
Expense.
Borrower agrees to pay all expenses of the Loan ("Loan Expense"), including
all
amounts payable pursuant to Sections 2 and 3 hereof.
2. Lender's
Origination Fees.
Borrower agrees, as consideration for the execution of this Agreement by Lender,
to pay origination fees to Lender at the times and in the amounts set forth
in
Article 3 of this Agreement.
3. Lender's
Attorney Fees.
Borrower agrees to pay reasonable fees for services of Lender's attorneys and
said attorneys' reasonable out-of-pocket expenses in the preparation and
attendance upon the execution of this Agreement and of the Loan Documents,
and
in connection with the disbursement of the proceeds of the Loan.
4. Right
of Lender to Make Advances to Cure Borrower's Defaults.
In the
event that Borrower shall fail to perform any of Borrower's covenants or
agreements herein contained after the applicable grace or cure period (as stated
in Article 9 for monetary and nonmonetary defaults) following Borrower's receipt
of Lender's written notice of such failure, Lender may (but shall not be
required to) perform any of such covenants and agreements, and any amounts
expended by Lender in so doing and any amounts expended by Lender pursuant
to
Article 10 hereof shall constitute additional indebtedness
hereunder.
3
ARTICLE
5
REQUIREMENTS
PRECEDENT
TO
THE
LENDER'S OBLIGATION UNDER THE LOAN
Borrower
agrees that Borrower will perform, and that Lender's obligation to make advances
under the Loan, and thereafter to make further disbursements of proceeds
thereof, is conditioned upon Borrower's performance of the following conditions
precedent:
1. Borrower
shall have complied with and performed all of the terms and provisions of
Article 3 and such other provisions of this Agreement as by their terms are
to
have been complied with and performed;
2. Borrower
and Legent Clearing shall have furnished Lender with copies of those financial
statements, tax returns and other documents requested by Lender for Borrower
and
Legent Clearing.
ARTICLE
6
BORROWER'S
AGREEMENTS
1. Furnishing
Information.
Borrower will (i) promptly supply Lender with such information concerning its
affairs and property as Lender may reasonably request from time to time
hereafter; (ii) promptly notify Lender of any condition or event that
constitutes a breach or event of default of any term, condition, warranty,
representation, or provisions of this Agreement or any other agreement, and
of
any material adverse change in its financial conditions; (iii) maintain a
standard and modern system of accounting in accordance with generally accepted
accounting principles; (iv) permit Lender or any of its agents or
representatives to have access to and to examine all of their books and records
regarding the development at any time or times hereafter during business hours;
and (v) permit Lender to copy and make abstracts from any and all of said books
and records.
2. Documents
of Further Assurance.
Borrower will, on request of Lender, from time to time execute, deliver, and
furnish documents as may be necessary to undertake the transactions contemplated
under this Agreement, as Lender may reasonably request in writing.
3. Financial
Information.
Not
later than seventeen (17) days after the end of each calendar month, Borrower
shall provide to Lender internally-prepared financial statements, for month-end,
including a balance sheet, income and expense statement for Borrower and Legent
Clearing, including the FOCUS Report for Legent Clearing. Not later than ninety
(90) days after the end of each fiscal year, Borrower shall provide to Lender
financial statements, including a balance sheet, income and expense statement,
and sources and uses of funds for Borrower and Legent Clearing, prepared in
accordance with generally accepted accounting principles and certified by an
independent accounting firm.
4. Corporate
Status.
Borrower shall not, and shall not permit Legent Clearing to, reorganize,
restructure, merge, divest itself of any major assets or in any other way
change, alter or revise its corporate structure, without the advance written
consent of the Lender, which shall not be unreasonably withheld. Borrower shall
not sell, assign, encumber or convey any of its interest in Legent Clearing
or
Xxxx Xxxx during the term of this Loan.
4
5. Required
Capital.
Borrower shall not permit the minimum regulatory capital of Legent Clearing
to
fall to less than Twenty Million and No/100ths Dollars ($20,000,000.00), as
determined by the monthly FOCUS Report, after advance of any Loan Proceeds.
Further, Borrower shall assure that Legent Clearing shall maintain capital
of at
least Twenty-Five Million and No/100ths Dollars ($25,000,000.00), as determined
in accordance with Generally Accepted Accounting Principles, during this term
of
the Loan.
6. Use
of
Proceeds.
Borrower shall use all proceeds from the Loan as equity injections or the making
of subordinated loans to Legent Clearing to facilitate its
operations.
7. No
Additional Debt.
Borrower shall not borrow additional funds during the term of this Loan, other
than incurring ordinary business trade debt payable currently, without the
advance written approval of Lender. For purposes of this section, "borrowing
of
additional funds" shall not include that existing loan in the amount of Five
Million Dollars ($5,000,000.00) payable from Borrower to the order of Xxxxx
X.
Xxxxxx, which loan is fully subordinate to the terms and conditions of this
Loan.
ARTICLE
7
ASSIGNMENTS
1. Lender's
Right to Assign.
Lender
may assign, negotiate, pledge, participate or transfer otherwise hereunder,
this
Agreement, the Promissory Note, and all other Loan Documents to any banks or
financial institutions and, in case of such assignment, rights, and remedies
of
Lender in connection with the interest so assigned shall be enforceable against
Borrower by such banks or financial institutions with the same force and effect
and to the same extent as the same would have been enforceable by Lender but
for
such assignment. As used herein the term financial institution shall include,
but not be limited to, a REIT, insurance company, pension fund, educational
institution, building and loan or savings and loan association, welfare or
retirement fund, or fraternal or religious organization.
2. Prohibition
of Assignments by Borrower.
Borrower shall not assign or attempt to assign its rights under this Agreement.
ARTICLE
8
TIME
IS
OF THE ESSENCE
1. Time
Is of the Essence.
Borrower agrees that time is of the essence in this Agreement.
ARTICLE
9
EVENTS
OF
DEFAULT
1. The
occurrence of any one or more of the following shall constitute an "Event of
Default" as said term is used herein:
(a) Failure
of Borrower to observe or perform any of the conditions by Borrower to be
performed under the terms of this Agreement;
5
(b) The
occurrence of any default under the Promissory Note or any of the other
documents evidencing or securing the Loan, which default remains uncured after
the expiration of any applicable cure period;
(c) If
at any
time or times hereafter any material representation, statement, report, or
certificate is made now or hereafter by Borrower or Legent Clearing that is
not
materially true and correct;
(d) If
all or
a substantial part of the assets of Borrower or Legent Clearing are attached,
seized, subjected to a writ or distress warrant, or are levied upon, or come
into the possession of any receiver, trustee, custodian, or assignee for the
benefit of creditors and the same is not dismissed or withdrawn within sixty
(60) days;
(e) If
Borrower or Legent Clearing is enjoined, restrained, or in any way prevented
by
court order, or if any proceeding is filed or commenced seeking to enjoin,
restrain, or in any way prevent Borrower from conducting all or a substantial
part of its business affairs, and such order or proceeding is not vacated or
dismissed within forty-five (45) days of Borrower's or Legent Clearing's receipt
of notice of such order or proceeding;
(f) If
there
occurs the appointment of a receiver, trustee, or custodian of all or any
substantial part of the assets of Borrower, or Legent Clearing, or either of
them, and the same is not dismissed or withdrawn within sixty (60)
days;
(g) If
a
notice of lien, levy, or assessment is filed of record with respect to all
or
any part of the property of Borrower, Legent Clearing, or either of them, by
the
United States or any department and not released within sixty (60) days of
Borrower's receipt of notice of filing;
(h) Failure
to promptly pay to Lender the amount by which the indebtedness hereunder may,
at
any time, exceed the face amount of the Promissory Note, which failure remains
uncured after any applicable grace or cure period;
(i) Filing
of
any petition by or against Borrower, or Legent Clearing, or either of them,
under Federal Bankruptcy Act or any similar law, state or federal, whether
now
or hereafter existing, which is not dismissed within forty-five (45) days of
Borrower's receipt of notice of such filing.
Unless
otherwise provided in this Article 9, Lender shall provide Borrower with notice
of any default and a period of ten (10) days to cure a monetary default and
thirty (30) days to cure a nonmonetary default.
ARTICLE
10
LENDER'S
REMEDIES IN EVENT OF DEFAULT
1. Remedies
Conferred Upon Lender.
Upon
the occurrence of any event of default, which remains uncured after any
applicable grace or cure period, Lender may, in addition to all remedies
conferred upon Lender by law and the terms of this Agreement, the Promissory
Note and other Loan Documents, pursue any one or more of the following remedies
concurrently or successive being the intent hereof that none of such remedies
shall be to the exclusion of any other:
6
(a) Withhold
further disbursement of any proceeds of the Promissory Note;
(b) Declare
the Promissory Note to be due and payable forthwith; or
(c) Exercise
or pursue any other remedy or cause of action permitted under this Agreement
or
any Loan Documents, or conferred upon Lender by operation of law.
2. Nonwaiver
of Remedies.
No
waiver of any breach or default hereunder shall constitute or be construed
as a
waiver by Lender of any subsequent breach or default or of any breach or default
of any other provision of this Agreement.
ARTICLE
11
CAPTIONS
The
captions and headings of various Articles and Sections of this Agreement and
exhibits pertaining hereto are for convenience only and are not to be considered
as defining or limiting in any way the scope or intent of the provisions
hereof.
ARTICLE
12
NOTICES
Any
notice that any party hereto may be required or may desire to give hereunder
shall be deemed to have been given on the date telecopied or hand delivered,
and
addressed to the other party at its address as shown below or at such other
address as the party to be served may have furnished to the party seeking or
desiring to serve notice.
If
to
Borrower: Legent
Group, LLC
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxx Sime___________
Tel: 402-384-6122-_______
Fax: 000-000-0000________
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxx Sime___________
Tel: 402-384-6122-_______
Fax: 000-000-0000________
If
to
Lender: United
Western Bank
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Regional President
Tel: (000) 000-0000
Fax: (000) 000-0000
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Regional President
Tel: (000) 000-0000
Fax: (000) 000-0000
7
ARTICLE
13
MISCELLANEOUS
1. No
Partnership.
Nothing
contained herein, or in any other Loan Document, and no action or inaction
whatsoever on the part of Lender, shall be deemed to make Lender a partner
or
joint venturer with Borrower.
2. Successors
and Assigns.
This
Agreement shall inure to the benefit of the parties and their respective
successors and permitted assigns. No assignment made by Borrower in violation
of
this Agreement shall confer any rights on any assignee of Borrower.
3. Entire
Agreement.
This
Agreement and the other Loan Documents and other documents referred to herein
constitute the entire agreement between the Lender and Borrower with respect
to
the subject matter hereof and may not be modified or amended in any manner
other
than by supplemental written agreement executed by the parties
hereto.
4. Counterparts.
This
Agreement may be executed in any number of counterparts and each such duplicate
original shall be deemed to be an original.
5. Choice
of Law; Venue.
This
Agreement and any of the documents executed in conjunction herewith shall be
construed in accordance with the laws of the State of Colorado. Venue shall
be
proper in any federal district court located in the City and County of Denver,
Colorado, or any state court located within the City and County of Denver,
Colorado.
IN
WITNESS WHEREOF, this Agreement is executed this day and date above
written.
LEGENT
GROUP, LLC,
a
Delaware limited liability company
By:
/s/Xxxxx
McPartland___________________________
Name:
Xxxxx
McPartland_____________________
Its:
Member/Manager________________________
UNITED
WESTERN BANK,
a
Colorado banking corporation
By:
/s/Xxxx
X. Fiedler_____________________________
Name:
Xxxx X. Xxxxxxx
Its:
Regional President
8
